Improving the Operational Aspects of a Multi-Site Turnaround in Europe

Client Context

• Our client is a leading global provider of returnable plastic packaging with +25% market share, serving a multitude of markets, such as automotive, manufacturing, food, agriculture.
• The injection molding machine park consists of +170 injection molding machines in 12 factories

Key Challenges

• After investing into the renewal of the machine park, the Board did not see a meaningful performance improvement, missing budget EBITDA, increasing indebtedness of the business, and thus a large underperformance of the value creation vs. the underwritten plan.
• With limited central control, all 12 factories in Europe were working nearly independent with lack of  best practices and coordination
• ARGO-EFESO was called in to solve the immediate cost issues bottom-up from the plant level, and top-down from the planning
• The company implemented  “make to stock” on request of sales  without coordination and ended up with overstock in all sites, blocking space and capacity for needed products
• Make-to-order – products were suffering long  lead times of > 6 weeks and longer (total production time was only 4 days)
• The inventory was not structured, no ABC/YXZ  classification and aligned production strategies existing. With a lack of central control, overaged inventory added up to > 20 % of total.

Approach & Key Success Factors

We analyzed operations in their biggest 3 plants. From that analysis, we identified 4 workstreams:

• SIOP / planning: increase the maturity of the process by a proper ABC/XYS clustering exercise, resulting in specific operational strategies at plant level to improve throughput of the assets and process efficiencies. The strategies were translated into a “plan-for-every-part” of the +10.000 SKUs
• Mold / machine capacity utilization: implement total productive maintenance practices for both machines and molds, reduce changeover times by applying SMED techniques and implement “best demonstrated speed” techniques
• Assembly: optimize assembly operations (some containers entail +40 components) for efficiency, flexibility, and throughput. Dissociate assembly from injection molding to eliminate waiting times
• Order-to-delivery process: optimize the lead time between order receipt and product delivery, smoothing out all pre-production administrative operations

We analyzed all sales data, based on single SKU – level :

• SIOP / planning: Implementation and rule setting for the process by a proper ABC/XYS clustering exercise. This enabled us to defining production strategies, maintenance and value creation based TPM strategy at plant level to improve throughput of the assets and process efficiencies. The strategies were translated into a “plan-for-every-part” of the +10.000 SKUs
• Value transparency: The clustering exercise combined sales, margins and customers in one database, providing an overall transparency by product family and single SKU to support business ans production decisions
• Mold / machine capacity utilization: Organization of priorities by value creation (and not only throughput)
• Order-to-delivery process: Reduction of lead time between order receipt and product delivery, smoothing out all pre-production administrative operations and create a frozen planning period.

The results  within the 3 sites (in FR & GER) were subsequently transferred to to all sites in Europe, and integrated into the supply chain organization.

Results

€7m

EBITDA Savings (11% of site labor costs)

€1.7m

Working capital reduction through adjusting inventory

46%

Reduced unplanned downtimes on injection molding machines

49%

Reduced unplanned downtimes on the molds for injection molding

30%

Improved efficiency in assembly operations

30%

Lead time reduction through adjusted inventory

44%

Contribution to reduced changeover times through prioritization by ABC/XYZ (volume / frequency)