A medical-device manufacturer challenged its supply chain paradigms to establish a lean, focused and connected manufacturing network
Low performance levels, underperforming acquisitions and high demand fluctuations
A global manufacturing company present in Europe, South East Asia and the Americas was in a situation threatening its future global competitiveness with increasing pressure from low-cost competitors, and a global acquisition in the Americas that did not materialize required integration benefits.
This led to a production network that was lacking required performance levels to fulfill the overall company goals while trying to compensate for weak performances in own and acquired manufacturing sites, as well as an increase in global demand fluctuations.
A focused production network, lean operations and global leadership buy-in
Based on a thorough analysis of the value-stream DNAs of the production sites (products, technologies, competencies, production processes), the production network was redesigned to mirror a clear focus and role for each site in the overall network: a technology center was defined to design, test and ramp up new production streams and approaches, and a core component center was established as the internal supplier of critical, internally produced components.
In addition, two major types of productions sites, focusing either on high-volume, low-cost products or on high-margin products with high demand fluctuations, were set up.
Besides the network redesign, several lean methods were implemented, boosting value-stream efficiency, while the overall production principle was shifted from a push manufacturing principle based on own capabilities and plans to a pull principle focusing the manufacturing streams on actual customer demands.
One key success factor for the acceptance and actual implementation was, furthermore, an integrated change approach bringing the leadership from all sites together, pushing for joint vision and implementation.
Step changes in efficiency, reduced quality costs and increased operational margins
Theses measures led to a significant reduction in quality costs (especially reduction in warranty and scrap), as well as a boost in supply chain performance, improving efficiency and reliability throughout the overall supply chain set-up (i.e., lead-time reduction and reliability increase).
The overall improvements led to an increase in the operational margin by 12%.