Profit Enhancement

Project Details

Upon arriving to this job, the company was currently selling $4 million of their formed nylon hose product line to a tier one automotive customer annually at a cost of goods of $8 million. Clearly, the company was running at a deficit and was in need of a renewed supply chain strategy and a manufacturing management plan.

Processes and Solutions

First, we assessed the management team. It quickly became apparent that the product line wasn’t the primary focus of the management. As a result, we began to run the product line as a separate company while eliminating input from all but top management.

Next, we collected data, ran designed experiments, conducted tooling studies, gauged reliability, and ran gauge reliability and repeatability studies along with capability studies. We quickly found that the products hadn’t been optimized through manufacturing management.

Lastly, we had to prove to the client and the final OEM customer that we had the process under control and didn’t need controlled sorting 1 and 2, respectively meaning sorting of inspection done 100% on one’s own and 100% inspection by an outside, customer-specified source. This proved to be harder than fixing the process. Eventually, it became apparent that the sorting was unnecessary, and we were able to eliminate it.

To maintain our process capability and supply chain strategy over time, we brought in a Manufacturing Manager to continue running this product line as a separate division within the company to promote ultimate success. This helped to promote success from a long-term perspective while also maintaining the results that we had achieved in such a short period of time.

 Results

Within just six months, we were able to:

  • Implement processes that meant that the product line was running at an 18% net margin.
  • Hire a Business Unit Manager to run the product line as a separate division within the company to retain focus.

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