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Problem: Offsetting Negative Effects of Severe Price Competition
Background
Our client, a leading regional food manufacturer faced shrinking gross margins
resulting from severe price competition. Looking to avoid potentially damaging
cost cuts to offset the negative effects of price concessions, manufacturing
employee productivity was identified as a potential area for improvement.
Although the production process was already highly automated, there still
remained a significant number of manual operations. Typically these processes
had proved too expensive or complex to automate and were very difficult to
actively manage with a small supervisory staff.
Intelligent-Information Solution
Additional supervisory personnel
could be added to try and boost productivity, however, the cost of adding more
costs to payroll was not attractive. The idea surfaced to use an employee
incentive program instead. To create the desired effect, a comprehensive
program was designed to emphasize safety and maintain production quality, while
increasing productivity. The program foundation was an Intelligent-Information
Solution designed to capture employee production operations in a real-time
mode and compare them with the operational standards. Key Performance Metrics
were developed to calculate performance to standard and to graphically display
the results by workstation, production line, and department. These metrics were
then broadcast on the wall for each production area for all employees and
management to see.
Results
A brief pilot project was implemented to fine-tune both
the technology and the incentive program design. Quickly it became apparent the
concept was a success. Almost immediately productivity began to rise. Although
there were some start-up problems, these were ironed-out and the program began
to encourage good old-fashioned competition among the work-teams. Eventually,
the company obtained the productivity it targeted and more. This was for a lot less
cost than hiring a small army of new supervisors. The client is now in the
process of implementing this program at its other manufacturing facilities, and
now is actively looking for new large grocery clients, because it now has more
room to aggressively compete.
For more information contact:
Mike Restle 920-882-1904 or
restlem@versifit.com
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