A stock and custom Point-of-Purchase displays manufacturer had labor and work flow inefficiencies, could not fill demand in the current facility, and was also pursuing near term acquisitions. Their actual labor hours per part were much higher than their quoted labor hours per part. Based on current operating practices, the existing facility was over capacity and could not support additional volumes.
The company engaged The ProAction Group to demonstrate how line balancing would increase production per labor hour and throughput, develop a Future State Facility Layout to achieve the improved throughput, and free up space for acquisition work.
Background
Point-of-Purchase Display Manufacturing
Grown from $5M to over $20M in 4 years
Pursing acquisitions, but had limited space
Lacked line balance and unable to fill orders on time
The ProAction Group worked with the client to demonstrate how a line could be balanced and what an improved flow throughout the plant could achieve. Process maps, a Gap Analysis, and 9-Box inventory analysis were conducted. Line balancing allowed WIP inventory to be eliminated in the production line as well as increased production per labor hour and plant throughput. A model outlining space requirements at various growth levels was created to quantify the space/facility they currently need (based on the new processes/flows) as well as what they will need in the future.
Actions Taken
Process maps, Gap analysis, 9-Box Inventory Analysis
Line Balancing
The project demonstrated the ability to improve the level of performance on the plant floor. The specific SKU’s that were rebalanced achieved an 11% to 74% labor hour per part improvement and production per labor hour increased by more than 30%.
By sustaining these efforts and expanding them throughout the facility, we modeled a 200% improvement in production per sq ft per labor hour. In the end, the improvements allowed the company to avoid moving to a larger facility (in essence we freed up capacity in their current facility that they didn’t know they had).
The new plant layout showed a reduction of the Production area from 4,200 sq ft to 1,600 sq ft, allowing 2,600 sq ft for ongoing growth. With continued line balancing and adding minimal equipment (i.e. tables), the client could now handle 3 times the production on 1 shift in 2,500 sq ft.
This was all completed in 30 days.
Implementation Impact
Improved labor hour/part 11-74%
Production per labor hour improved 30%
200% improvement in production per sq ft/ labor hour
3X growth in capacity
Production area reduced from 4,200 to 1,600 sq ft
About The ProAction Group
The ProAction Group helps private equity firms increase investment returns by providing variable operating resources. Pre-acquisition, we quantify risks and opportunities, helping clients refine valuations, avoid bad deals, and prepare post-deal value creation plans. For portfolio companies, we work with management to identify and implement high-impact revenue growth and profit improvement initiatives. We focus on four sectors: consumer products, manufacturing, distribution, and business services. We have experts in marketing, sales, manufacturing, supply chain, and human capital development. We were founded in 1995 and are headquartered in Chicago.
For Further Information
Timothy Van Mieghem
The ProAction Group, LLC
Chicago, IL
Tel: (312) 371-8323
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