Case Study: Cost-Reduction/Productivity Improvement
The following Case Study shows how Gagnon Associates’ approach to Change Management and Business Process Improvement reduced costs and improved productivity for this global client:
A 700MM+ worldwide maker of large-scale mining machinery and equipment.
Caught between low demand growth for original equipment and emerging new competition, the Company struggles with legacy issues of high costs and underutilization while lagging industry counterparts on key measures such as profitability, inventory turns, quality, etc. New CEO seeks to improve the Company’s standing and financial position by launching a global change process focused on cost-effectiveness and productivity improvement in all aspects of the business.
Every 90 days for over a year, the Company assembles and charters four global teams, each focused on some aspect of a critical productivity issue: inventory turns, product build/rebuild cycle times, product quality, etc. During intensive three-day problem-solving sessions, designed and facilitated by Gagnon Associates consultants, teams analyze and develop recommendations for addressing these issues. At session close, all teams present recommendations to the Company’s Executive Committee who must evaluate and render decisions on the spot. Implementation begins immediately and progress is checked for each team at 30 and 60 days. Project completion and evaluation takes place at the 90-day checkpoint. Teams are disbanded as soon as their work is completed.
Over slightly more than a year, four “waves” of teams are chartered and fielded. Results highlights include: doubled inventory turns in one key product area; reductions of from 30% to 60% in “build,” “rebuild” and “repair” cycle-times for key machinery sub-assemblies and motors; and reduction in slow-moving parts inventory equivalent to 6.2 million dollars.
Given its success, the Company makes the commitment to continue the so-called “30/60/90 Process” and make it an ongoing part of its working culture. “Real-time” training of client participants by Gagnon Associates during year one has built the nucleus of an internal capability to conduct “30/60/90” sessions. Company appoints internal, worldwide “30/60/90” Program Manager and takes over management of the change process for year two and beyond.