Continuous Improvement Kaizen Events Lead to Production Increase

A global supplier of engineered cooling systems for the power generation industry has a manufacturing site in China that produces heat exchange bundles. The client was short of production capacity to meet booked customer demand and hired ARGO-EFESO to evaluate and recommend steps for improving its manufacturing operations. After conducting an analysis of the facility, ARGO-EFESO implemented a series of continuous improvement Kaizen events to deliver an average 20% productivity increase and $1 million in savings.

Situation

Due to the client’s need to more than double production capacity, ARGO-EFESO was invited to perform an analysis of its Chinese production facility to identify productivity improvements to meet customer demand. Even after the installation of a second production line already planned for two weeks after the end of our analysis, it was clear that further improvement was needed to meet capacity requirements. Compounding the need for rapid improvement, during the analysis, ARGO-EFESO discovered that due to lack of adequate project oversight and risk escalation, the second production line would be weeks or months late, creating a significant risk of late deliveries and resulting penalties.

Actions

First, ARGO-EFESO immediately implemented a clear and rigorous project and risk management structure and quality process for the second production line — to reduce delays and speed up ramp-up time.

On the production side, ARGO-EFESO’s manufacturing analysis defined a target of $620,000 in savings to be delivered through a series of Kaizen events across the production process, including CNC, welding, surface treatment, press machine, assembly, and inventory management. We also developed an outsourcing plan for several components – to reduce production complexity and expand capacity by focusing on core capabilities.

Finally, the ARGO-EFESO team conducted management training, establishing key performance indicators and training shop floor supervisors to effectively define and achieve daily targets and sustain improvements.

Results

Implementing productivity improvement actions from the Kaizen events led to an average productivity improvement of 20%, with the highest improvement (57%) occurring in CNC machining. Moreover, the team delivered a 50% reduction raw material inventory and Work in Progress inventory levels.

In total, after the Kaizen events and installation and ramp up of the second production line, ARGO-EFESO delivered $1 million in annualized savings— significantly higher than the $620,000 target.