Professional Documents
Culture Documents
Benefits if Improved
Rework reduced to
1%=$900 /day savings
Inventory reduction =
$20,000
Benefits if Improved
Downtime reduced by
50%
Profit improvement by
25%
Quality Improvement
Benefits if Improved
$2,000,000 Recovered +
Increased market
The sales force take too many orders for non-standard product configuration causing an increase infactory expediting. Sales Bonus based on quantity with no reward system for sale of standard product.
Distribution channel requires consigned finished goods inventory to reside in showrooms causing working
capital to be invested too long.
Customer order administration and credit approval processes take longer time than the actual
manufacturing process.
$75, 000,000
250
Daily Rates
400/Day
Product Families
Seasonality
Shipping Volumes
100,000 Annually
May-June &
October-November
Production Lines
People
1
Annual Compensation
2A Benefits %
3
Total Compensation
Union
% Overtime
Days Inventory
Current
FGI
10
WIP
21
5
5
1
3
Initial Reduction Target Ranges
From
To
16%
13%
35%
13%
Inventory Valuation
Current
$986,300
After Lean-High
Future Lean-Low
Cost to Carry
$493,150
$98,630
$11,836
Material COGS
Average Inventory
Before Lean
After Lean
$2,071,230
$493,150
$295,890
$35,507
Turn Rates
$5,760,000
$12,600,000
RAW
30
TOTAL
61
30
15
40
19
49%
75%
$2,958,900
$6,016,430
$2,958,900
$1,479,450
$177,534
$3,945,200
$1,873,970
$224,876
$17,640,000
$36,000,000
$986,300
$2,071,230
$2,958,900
Inventory Mix Target-- % of Total Inventory
16%
13%
35%
13%
$6,016,430
49%
75%
Lead Time-Days
Order Request to Ship
Current
20
After Lean
7
Benefit
13
Administrative
Process
Inventory
Transportation
2
10
1
2
1
2
1
2
1
8
0
0
After Lean
% Reduction
Benefit
90,000 sq ft
18,000 sq ft.
10%
28%
Aluminum Inc.
Los Angeles CA
60 days
75
30
10
80%
90%
Electronics Inc.
Austin TX
30 days
45
15
5
75%
90%
Motors R Us Inc.
Miami FL
30 days
60
20
10
80%
80%
Market price
dictates delivery
We are small
volume
Transportation
Specialty products
Motors R Us Inc.
Miami FL
30 Days
60
20
10
80%
80%
Supply Chain
Logistics
Sole Supplier
Cost of Quality
First Pass Yield
INTERNAL COSTS
Rework
Workmanship
Process
Supplier Related
Scrap
Workmanship
Process
Infant Mortality
EXTERNAL COSTS
Current
85%
After Lean
99%
% Improvement
Benefit
16% @ 400/day Rework & Scrap
$40,000
$7,500
$15,000
$10,000
$3,750
$7,500
75%
50%
50%
$30,000
$3,750
$7,500
$10,000
$2,500
$12,500
$2,000
$1,250
$2,000
80%
50%
85%
$8,000
$1,250
$10,500
Warranty Costs
Brand Loyalty Loss
$12,500
$50,000
$2,000
$10,000
85%
80%
$10,500
$40,000
Key
Company Data
Data Developed from Survey
Benefits if Improved
1
2
3
Benefits if Improved
1
2
3
1
2
3
Daily Rates
Product Families
Seasonality
Shipping Volumes
Production Lines
Benefits if Improved
Shipping Volumes
Production Lines
People
1
Annual Compensation
2A Benefits %
3
Total Compensation
Union
% Overtime
Days Inventory
FGI
WIP
RAW
Current
After Lean High
After Lean Low
TOTAL
0
0
0
After Lean-High
After Lean-Low
Cost to Carry
0
0
Turn Rates
Material COGS
Average Inventory
Inventory Mix Target-- % of Total Inventory
Before Lean
After Lean
Lead Time-Days
Current
After Lean
Benefit
% Reduction
Benefit
After Lean
Supplier #2
Location
Supplier #3
Location
Supplier #4
Location
Typical LT
Longest LT
Target LT
Desired LT
On Time Delivery %
Quality
Issues
Supplier #2
Location
Supplier #3
Location
Typical LT
Longest LT
Target LT
Desired LT
On Time Delivery %
Quality
Issues
Cost of Quality
Current
First Pass Yield
INTERNAL COSTS
Rework
Workmanship
Process
Supplier Related
Scrap
Workmanship
Process
Infant Mortality
EXTERNAL COSTS
Warranty Costs
Brand Loyalty Loss
After Lean
% Improvement
Benefit