Overview of Project
Our client is a small screw machine shop specializing in both midsized and long runs with three primary customers - its own proprietary product line as well as two Fortune 500 OEMs. The company is a division of a larger vertically integrated manufacturing company known as a national leader in the manufacturing of close tolerance parts and assemblies.

The division had a history of profitability, but at the time of our engagement had experienced 13 months of operating losses.  The most recent financial statements reflected a 13% loss. Manchester’s professional acted as interim plant manager for seven months, at which time it was near break-even with a .04% loss.

The Challenge
Our client was experiencing downward pricing pressure and demands for shorter lead-times and was unable to economically react, which eroded profitability and fulfillment rates.

The Engagement
The initial engagement was a productivity improvement project in an effort to turnaround the financial performance of the machining division. Upon our arrival at the plant, the existing plant manager resigned. Consequently, the scope of the engagement was altered to include serving as interim plant manager until a permanent replacement was found.

The Solution
Manchester’s professional implemented a comprehensive plan to make the plant profitable once again.  Key areas of focus included productivity improvement, quality, management systems, personnel, and training.

His major initiatives included:

• Establishing a reduction both in the number of set-ups and the cycle time of set-ups. 
• Implementing a cycle scheduling discipline to shorten set-up times since sequential parts were from the same family, which allowed them to often share tools and tool adjustments were faster.  This allowed the machines to run a higher percentage of time and lower the barrier to changing parts to meet demand.  The net result was a 15% increase in throughput without any additional labor or equipment.
• Introducing real-time production measures so operators and supervisors knew how well the job was running so that performance could be maintained during the run.  If the rate of quality product was running behind, the problem could be analyzed and dealt with, sometimes including more expertise being brought to bear on the subject. Traditionally, performance was only known after the job was completed, when it was too late to change the performance.
• Training supervisors to monitor and manage the production floor.  Supervisors were trained to use real-time measures to monitor the floor, identify and react to bottlenecks, cross train employees, communicate with production workers and more effectively deal with disciplinary events.
• Retaining key employees and attracting new skilled labor while adjusting headcount and job assignments to match the plant’s needs.  With a very rural location, qualified skilled labor was difficult to find.  Key employees were identified and individual plans of retention were developed and executed including an incentive package for increase productivity.  Two key personnel were recruited from outside the area.  After a comprehensive evaluation of performance a number of underperformers were reassigned which resulted in noticeable improvements. 
• A high concentration of losses came from one product family.  Despite extensive efforts to successfully make the parts to specification, the family was ultimately “de-selected”. The tolerance specifications were simply beyond the plant’s capabilities
• Implementing stricter control over expenditures.
• Adding preventative maintenance processes as well as defined repair needs for each machine to address excessive down time and quality problems.
• Correcting errors in the MRP system that drove over-production.  In addition a new forecasting system was utilized to better match inventory to demand.  The current system did not include variability of demand in its calculations, which resulted in under production of parts with high variability in demand and subsequently lower fulfillment rates.
• Initiating a quality training module for new employees.  Formal training was offered followed by practical tests.  Sample parts with known dimensions and defects were intermixed.  Trainees had to be able to find the defects, both dimensional and cosmetic before passing.  The practical test ensured employees knew how to read prints, use measurement tools, understood sampling and could use SPC.  In short, employees new what quality was and whether or not they were producing it.

In addition to these initiatives to improve productivity and reduce expenses, our professional also managed the introduction of over 100 new products into the manufacturing plant during his engagement.

The Impact
After 13 consecutive months of operating losses, our client recorded its first profitable month in the third month of our engagement. After seven months, the client had moved from a 13% loss to near break-even at .04% loss.  The new plant manager successfully continued the trend and the plant is now profitable.