The case being highlighted is of a listed auto ancillary company which has all top OEMs as its customers. The company went through some soul searching and took up the transformation journey basis the areas it had identified for change.
The company had grown with the auto industry and remained profitable for decades. However, with increasing cost pressure, quality and environmental issues, the firms in the auto ancillary industry were struggling to meet up to the requirements of the OEMs.
This company was also afflicted with,
★ quality issues,
★ high rework costs,
★ delay in delivery and
★ lowering margins across most of its plants (and half of them were collocated with the OEMs).
In addition, the teams across production and procurement were struggling with daily tasks' completion and were finding it challenging to keep a motivated workforce.
Based on a review of information, discussion with the top management, and onsite visits with the floor managers, we agreed to work on three challenges to transform the company in achieving improved operations, margin and information system and to sustain them.
★ High rework and repair costs due to quality issues on the shop floor.
★ Inability of the production/operations team to resolve issues amongst themselves without delays and external interventions, leading to loss of share of the business and higher lower margins
★ High and non-standard review systems lead to increased dissatisfaction in review and lack of trust in the information/data fed for review.
★ Overburden of data but lacking in trust in the data/information due to multiple and parallel information systems.
★ Challenge -1
High rework, and repair costs, delay in delivery and reduced share of business from OMEs owing to such increase in repair/quality issues
How we helped -1
* Created a repeatable method for the plant operations team to identify the root cause of production-related issues leading to quality, rework, repair and lower customer satisfaction scores.
* Instituted decision tree method for root cause analysis and developing solutions. This method was disseminated through workshops with teams across all the identified plant locations.
* The team also shared solutions sets to augment learnings across different locations and the challenges faced by them.
* The team developed the ability to resolve their issues without external help.
* The result led to lower repair/quality issues within the OEMs' standards. It also improved the chance for the company to earn a higher share or keep the 100% share of business in their applicable segments.
★ Challenge - 2
The plant operating team across departments was lacking in coordination and not able to resolve quality issues without heavy overburden of time, costs and increasing friction among the departments
How we helped - 2
* Complete mapping of the existing processes and training to the plant team on the new method of resolving plant issues.
* Using FMEA (Failure Mode and Effects Analysis), identify all the weak areas by design and process and put a framework to address the same within the organization.
* Mapped all activities by the person in the plant, responsible/ accountable using RACI charts.
* Identification of duplicate and redundant activities thereby improving productivity.
* Delivered a high-level roadmap for achieving the suggested improvements.
* Identification of people-dependent processes and suggested organizational changes.
★ Challenge – 3
- Multiple sources of information due to poor implementation of ERP leading to inter-departmental issues and a drop in motivation amongst employees.
- Bottlenecks caused in business processes due to ERP significantly impacted critical operations like increased quality issues in production and delays in dispatches to OEMs.
- Inability to get timely information about operations due to performance issues in ERP
- ERP was not feeding the Monthly Information System but was running in parallel, leading to low reliability of the information.
How we helped – 3
* Develop and devise information systems, reports, and data/metrics at different levels for decision-making without compromising on the quality of the information.
* Recommended and implemented changes in the business processes to bring remove redundancy & align with the usage of the ERP in an efficient way
* Recommended changes to how master data was set up in older instances.
* Created a Single point of truth in the ERP system for the shift team to use the ERP screen for their daily stand-up meetings
* Recommended usage & implementation of certain features of ERP that would have eased the strain on the process by eliminating redundancy
* Drove the entire engagement as a Program, covering planning, execution, coordination with all stakeholders (including third-party technology vendor) and ensuring timeliness.
★ Challenge – 4
Overburdening data in the systems, but lacking in trust due to multiple and parallel information systems.
How we helped
* Root-cause analysis revealed implementation gaps in the way the system was set up. This was further exacerbated by some business processes that were designed faultily – thereby causing strain on the last man in the process chain
* It was also established in the root-cause analysis that handing over of transactions - between 2 processes (like dispatch planning and inventory) - resulted in wastage of time in a subsequent process.
Overall Benefits
The rework and repair costs were significantly lower and within the acceptable standards in the industry.
Costs of rework and repairs were eliminated due to the elimination of recurring issues. Also, a systematic methodology was adopted, across plants, to resolve any new issue.
The plant operating team learned a repeatable method to identify root causes and resolve issues the first time they occurred.
Created a single source of truth for data/information/metrics across departments with the comprehensive deployment of all modules in ERP rolling up to the MIS reports in the Board room.
Developed a systematic method for immediately addressing customer issues (OEMs) without delays, thereby improving customer ratings amongst the partners.
Shivkumar Swaminathan
Advisor - Transformation
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