EBITDA improvement through inventory and lead time reduction

EBITDA improvement through inventory and lead time reduction

Ma Foi’s systematic intervention reduced the lead time of an Aluminium utensil manufacturer by 40% and inventory by 70%

Situation

The client is a leading aluminium utensils manufacturer in South India, the group based out of Tirunelveli is engaged in manufacturing and distribution of over 75 varieties of non-stick and normal utensils. The client was facing an impending financial crunch due to legacy systems and processes being followed in manufacturing and sales.

Corrective Action

We undertook a holistic approach to remedy the situation and conducted a 360⁰ study of the existing manufacturing process, material procurement, inventory management, people deployment, skill development and HR practices of the organisation. We observed that every production department was working in silos and they were rewarded as per their local efficiency, this created  a glut in raw materials and WIP, resulting in increased inventory, low transparency and inability to service market requirements as per demand fluctuations.

We streamlined the production layout, introduced small batch processing system, enabled multiskilling of employees, improved the production, quality and maintenance reporting systems and implemented a revised performance management system.

Result

• WIP inventory reduced by 80%
• FG inventory reduced by 75%
• The TAT of the largest contributor to sale came down by 40%