A Smart Business Doctor Success Story

A Manufacturing Case Study

Manufacturing Job Shop Productivity Problems!

The Challenges

Our client has been in business for over 50 years, and is family owned and operated. Sales volume last year was in excess of 5 Million Dollars. One would think with such a large volume of money going through the doors every year, that the owners would be happy, not so!

In the Discovery stage of the Smart Business Doctor process, we conducted a Business Assessment, which, is designed to determine the core reason why profits are not as high as they should be.

The clients were perplexed as to why they worked so hard all year long, to bring in the most sales, pay the bills, and find out at the end of the year, there was no money (profits) left over?

The business assessment process identified, very quickly, the very high labor costs that were associated with COGS, was inconsistent year to year, and represented an unusually high percentage of over over-all Sales. This was extremely problematic because, it had been going on for many years, without knowing why, and without correction. Also, problematic because high labor costs, directly impact and drop to the bottom line of profitability of the business.

The Solution

Smart Business Doctor Engineers went right to work...analyzing workflow, equipment efficiencies, plant layout, raw materials procurement, time study assessments, training, communication, bottlenecking, incentivization, compensation, downtime, shift efficiencies, worker safety, loss time, and many more key operational contributors to how productivity and labor costs are affected.

It was evident, immediately, that the client did not have any productivity measurement mechanism in place, no measurement tools or indicators to determine a productivity rate or factor.

In addition, a variety of tooling set ups had to be changed from one customer to another, and each customer or, "run" of product assembly and production, would have different productivity standards and outcomes. All that would impact labor costs and production efficiencies.

In just about every area of contact, no accountability and/or standard was in place, for any employee or management supervision. This lack of structure and operational design for production had an incredible amount of holes in it, and was a major source of why labor production costs were determined to be so high.

An independent assessment of labor talent and experience was also evaluated to determine that many employees, and even family management, was not placed in a position for highest and best use of their expertise and experience.

The Results

The positive impact Smart Business Doctor was able to have on the client was very high, and proper data collecting, statistical tracking and reporting was installed to provide our client with consistent labor costs and productivity stats. All in all, it created in excess of 15% cost reduction in labor costs. A huge savings, which also resulted in higher morale for the employees and actually stimulated the development of a profit sharing plan that was tied to productivity performance individually and collectively.

"My brothers and I were blown away by the (​take charge) approach to solve our productivity problems. The attention to detail by the Smart Business Doctor staff, was more than we could have ever expected. Even my job description was changed, and I am working in the business, contributing in a much better way. The greatest benefit we received is that because our labor costs are much lower, we are more competitive with our bids and we have started to pick up more work and more customers. On behalf of our entire family, we appreciate all you have done."

Billy O. New Orleans

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