Logistics Coordination: How a Tractor Company Improved Its Logistics in 6 Months leading to $700,000 in Annual Savings
Situation
Logistics involved the combination of multiple attachments and heavy equipment together with no coordination. This will help in understanding the supply chain and the effects of interactions with manufacturing and scheduling. The overall focus is on logistics improvement and large parts from Mexico to Illinois. Currently, the communication of logistics is not effective for the organization, which has significantly contributed to poor customer satisfaction and higher costs. Overall, the coordination for the company is not effective and needs to be improved in order to improve the bottom line of the customer and increase satisfaction.
Actions
The organization was guided to meet its challenge: to optimize its total supply chain to or from customers back through the supply chain. The initial delivery performance was poor at 7%. Prior to the project, the organization was over-ordering unneeded and wrong tractor attachments. This led to surplus inventory, poor customer satisfaction, and increased costs that were not necessary due to longer lead times due to lack of communication. Thus, there was a lack of effective coordination throughout the organization to achieve better lead times for the customers. One of the biggest influencers to improve this was the provision of education to all individuals across multiple divisions to increase coordination, reduce delivery time, and improve customer satisfaction.
Results
The results of the intervention are shown below and emphasize what was done and what the outcome was.
- Broke down the supply chain and coordinated the individual pieces.
- Breaking down the supply chain led to an estimated $700,000 in annual savings in equipment.
- Lead times improved by 75% from the baseline of 7%.
- Customer satisfaction ratings improved from 0 on a scale of 1 to 5 to 4 on the same scale.
- Education was provided across all dimensions about how to effectively coordinate the supply chain.
- The scrap rate improved because of the improved coordination.
- There was a 3.2 million inventory reduction, a 100% increase in turns, 60% reduction in touches, 100% improvement in delivery time, and 59% improvement in response time.
- There was better utilization of lot sizes.
- Improved total cost of steel.
- Improved process across all divisions of the organization.
- Improved education of all individuals in the different divisions to improve communication and coordination skills.
- Decreased expenses, which led to a better bottom line for the organization.
Return on Investment
Performance measurements: Lead time, response time, customer satisfaction
Project Details
Client required skills: Advanced assembly facility layout skills, lean production, facilitation skills, coordination skills, workflow layout, value stream mapping, standard work documentation, logistics skills, performance measurement skills
MetaOps, Inc.expert skills: Communication, understanding customer requirements, inventory management, demand management, logistics, financial performance knowledge, supply chain knowledge, integration knowledge
Contract length: 6 months
MetaOps, Inc.support: Training materials, mentoring in divisions to increase logistics education, mentoring for communication, mentoring to improve coordination
The interesting part about this case study is that it was originally expected to take 3 years. Instead, MetaOps, Inc.was able to address the issues and reverse the negative trend in 6 months, which meant that, within a year, the organization was seeing better outcomes and better performance measures based on the efforts of MetaOps. This was beneficial because it shows a strong element of teamwork and how working together can lead to long-term benefits in a much shorter time period. The organization expressed immense satisfaction with the MetaOps, Inc.services received, especially in consideration of the phenomenal results it saw on its side with its clients.