MEASURABLE MARGIN GAINS

A Lean Approach Delivers Measurable Margin Gains

CLIENT

Pelikan Hardcopy Limited

Jock Wilson - Commercial Director

Tim Nattress - Operations Director

ACTIVITY

Manufacturer of

Thermal Transfer Ribbon

“Working with Andrew to improve our overall productivity has proven to be a very useful exercise, opening us up to alternative & quite straight forward techniques to reduce non productive time on our main coating line by a significant amount. In addition to the highlighted savings gained on this line we are continuing with the methods learned to make other improvements to our productivity in the factory.”

- Tim Nattress, Operations Director at Pelikan Hardcopy Limited

THE CHALLENGE

The site in Scotland has had a long and illustrious history where up to 500 staff once worked. The commoditisation of the product has led to a massive reduction in site capacity to just 50 staff.

Following a Scottish Manufacturing Advisory Service (SMAS) operational review, a number of key challenges were highlighted as follows:

  • The site is at a critical strategic situation in terms of the viability.
  • The new factory layout could deliver significant benefits and act as a springboard for continuous improvement activities.
  • The factory is living with a high-degree of inefficiency, which must be tackled if the site is to improve profitability.
  • Constraints around the main production asset, the High Volume Coater, must be addressed, as this is the largest profit centre in the production facility.

The result was a Scottish Manufacturing Advisory Service funded project with the strategic objective of delivering 6.3% additional margin contribution.

 

THE APPROACH

Definition:

One of the contributing factors to the success of this project was the time taken by the Senior Managers to truly define the strategic objectives of the business. Without these group discussions, there would have been a risk that the improvement activities would not have resulted in the financial benefits required.

Alignment:

The second activity that the Senior Management team spent time on was organisational alignment. It was important at such a critical and sensitive time to have all staff engaged in achieving the targets agreed in the definition phase. This took the form of intimate group meetings with the three shifts with very open and frank discussions on the state of the business and direction of travel. After this, staff from across the organisation engaged in delivering improvements on a day-to-day basis.

The commercial organisation focused on savings from material purchases and increases in sales prices with great success. The operational function focused on productivity increases.

The Productivity Approach split the project into 3 discreet elements:

  • Agile Decision Making: We analysed the management process and key activities and then designed an organisation-wide process focusing on the manufacturing function. This was to support and sustain continuous improvement initiatives as well as enabling management to react quickly to lost time situations.
  • Single Minute Exchange of Die: This was initially focused on the High Volume Coater. Once the methodology was known within the organisation, this would be rolled out to the other machines. Subsequent process stability was measured using Statistical Process Control (SPC)
  • Total Productive Maintenance: The focus of this pilot was the slitting process and packing operations The section looked at designing tools to make improvements to the cycle time and output of good parts. The team used observations to highlight lost time within the productive cycle.

 

THE OUTCOME

 Management Process Design

The Project Team designed a set of performance indicators and visual displays for the various operational meetings and reviews. Coaching during the meetings allowed staff to focus on taking decisions with an immediacy that was not previously present. This contributed to improvements in machine availability.

Productivity Savings

The SMED intervention created an addition 147 hours of production time per annum for the High Volume Coater hitting their 2.1% margin benefit.

Total Productive Maintenance and Shopfloor Layout

The Senior Team used observation study yet again and highlighted that motion; waiting, inventory and defects were evident between the slitters and packing function. By moving the packing function, potential savings in cycle time were calculated at approximately 10%.

The Management Team were committed to redesign the production area moving the packing function closer to the slitting as a precursor to increases in sales volume.

Raw Material Savings

During the consultation phase, the team set themselves a target save level of 2.2% margin improvement.

After extensive negotiations by the Commercial Director, the target reached was 7% improvement.

The main reasons for the success of the project were:

  • A clear focus on the measurable strategic objectives defined at the beginning of the project.
  • Time and effort at the beginning of the project on alignment, communications and generally getting the whole workforce involved in the project. Afterall, knowledge is mostly and often found on the shop floor.