Cost Reduction Through Near Shore Manufacturing Optimization and Low Cost Country Sourcing

by | Dec 14, 2021 | Operations Improvement, Strategic Sourcing

A major consumer products US company aimed to significantly reduce COGS through their OPEX manufacturing strategic plan.  The company understood that in order to significantly reduce COGS, they needed to diversify their manufacturing footprint and simultaneously optimize the Product Portfolio, and Low-Cost Procurement and Low-Cost Manufacturing Practices. SITUATION OVERVIEW The company had a number of plants across different regions in the US but no international plants.  The current manufacturing footprint could not sustain the market pressure caused by the lower prices of competitors with plants in Asia and Latin America despite all the cost reduction efforts.  Driven by the new aggressive cost reduction mandate Senior Management decided to start up a manufacturing plant in Mexico to take advantage of the low-cost manufacturing labor in the country as a key strategic initiative to reduce COGS and improve EBITDA. The company hired OnDemand Professional Network member Juan-Luis Munoz as the VP/GM of International Operations to lead this strategic endeavor. APPROACH The team first performed an assessment of the OPEX Current State, Product Portfolio, Manufacturing Network, OTC Lead Times (Order-To-Cash) and top spending accounts. The company graded poorly along several high-level OPEX critical elements:  Fragmented and isolated improvement effortsLack of manufacturing standardization and best practice deployment systemPeople engagement, motivation and empowermentStructural misalignmentUnstandardized KPI measurement and reportingBusiness macro flows not properly connectedObsolete manufacturing methodologies Understanding the current state was crucial in planning a successful manufacturing plant in another country.  Among other things, the team uncovered significant manufacturing practices being conducted with the use of “tribal knowledge” only. When some level of standardization of processes was found, this was executed by multiple individuals in different...

Drive Explosive Growth With Comprehensive Business Assessment

by | Oct 9, 2020 | Operations Improvement

An Independent Business Assessment presents an often overlooked opportunity to drive dramatic value creation and profitable growth.  Given the ever-increasing pace of change driven by enabling technologies and emerging risks such as pandemics, it is more essential than ever for businesses to drive their offerings and performance to the highest possible levels.  The Assessment can be done quickly (typically 4 to 5 weeks for small to medium sized businesses), does not require a significant resource commitment and delivers prioritized opportunities to improve business performance and mitigate risk.  This comprehensive Assessment covers Business Strategy, Deployment, Value Stream Core and Support Processes, Organization Design, Competencies and Performance, and Hard Assets (Footprint, Systems, Facilities, Equipment). Below are several areas where opportunities are often found: Business Strategy, Plan and Deployment – maintains a realistic, actionable Strategy Deployment with demonstrates progress on plan.Management Operating System – has effective PDCA (Plan-Do-Check-Act) based Business Management System with effective design of KPIs, reports, meetings to plan and achieve the business annual and strategic goals.Value Stream Best Practice Processes – standard work is documented, deployed and managed for compliance, effectiveness and continual improvementHigh Performing Team Culture – maintains and demonstrates progress to plan on an Organization Development Plan driven by Business Strategy Jim Schoen, a member of our OnDemand Professional Network has has completed many assessments during his Executive and Consulting career and has a structured approach for delivering the best value creation opportunities.  His recent work is highlighted in the Case Study below. CASE STUDY – $25M Consumer Packaged Goods (Cannabis) Supplier The Venture Capital Board of a $5M Cannabis start-up asked for a comprehensive business assessment...