Automotive Supplier
SITUATION
Major Tier One automotive supplier needed help to reduce supply chain and Engineering costs and increase on-time delivery.
DRIVER GOAL
- Reduce system inventory levels by $18 million and expedited freight costs by 75%.
- Improve order to cash process cycle time.
RESULT
- Reduced expedited freight by 62%.
- Improved line fill by 40% and customer backorders by 61%.
- Reduced WIP inventories by $1.5 million.
Case Study
Reduce Costs & Optimize Margins
Issue
A major Tier One automotive supplier had moved its primary manufacturing operations to Mexico and Korea in order to maintain its competitive cost position. The move dramatically changed its supply chain and lead times, and its Engineering organization was fractured, ineffective and costly. The Highland Group was asked to reduce supply chain and Engineering costs and increase on-time delivery.
Highland Approach
The Highland Group conducted a high-level analysis of the company’s operations in North America, Mexico and Korea to identify major contributors to excessive cost and lead times and other opportunities for improvement. The result was a prioritized and targeted action plan, which served as a roadmap to achieve leadership’s Driver Goals.
Actions Taken
- Developed a Sales and Operations Planning (S&OP) process for North American Operations.
- Established an A,B,C (Runners, Repeaters & Strangers) Production Planning & Scheduling system.
- Redesigned the Order Entry & Order Management systems.
- Implemented a surcharge of 25% for rush orders.
- Installed kanban material flows in the manufacturing facilities in San Luis Potosi, Mexico.
- Installed electronic kanban with local suppliers in San Luis Potosi, Mexico.
- Developed and implemented a System For Managing in all Engineering areas.
