Case Study
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Project “Operations Footprint”

On course for growth with standards

A world market leader for injection moulding machines wants to achieve a significant target for sales by 2020. Together with ROI, the company redesigned the manufacturing footprint of four locations in its European production network.

 

 

Challenge

A significant increase in sales by 2020 is the goal of a world market leader for injection moulding machines. A redesign of the manufacturing footprint of four locations in the European manufacturing network opened the way to this goal.

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ROI approach

With ROI's Manufacturing Footprint Methodology, the company received concrete and well-founded solutions for redesigning its manufacturing landscape and organization in a short period of time.

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Lessons learned

Start a clear role allocation of the plants at an early stage; consider criteria of "best cost country sourcing" and indirect areas.

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ROI success model

Focused approach in several dimensions to quickly and accurately determine the critical analyses and data for the customer-specific Manufacturing Footprint project.

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Where is the leverage applied when the goal is clear, but the products and production landscape are among the most complex in mechanical engineering? This was the challenge faced by a world market leader for injection moulding machines who wants to break through a significant sales target by 2020. With ROI, the company put the manufacturing footprint of four locations in its European production network to the test. Among other things, it analysed the product groups, segmented the production landscape and compared the direct and indirect functions to create the "ideal factory". 

Dimensions and weights such as a heavy transporter, several thousand individual parts and a clamping force range of up to 55,000 kN - injection moulding machines occupy a special place among technologically sophisticated industrial products. The machines used to produce plastic parts from plastic in granulate or cord form are manufactured by the company in two product classes: so-called "engineered machines", which are particularly large, are created very individually according to customer specifications and whose market is clearly divided. The second class consists of smaller, standardized products, i.e. "standard machines", which serve a strong growth market.

„Engineered“ vs „Standard“

Exactly this division resulted in a central task for the project. This is because the portfolio of injection moulding machines is increasingly shifting in the direction of "standard", which confronts the company with a triad of particularly difficult challenges: firstly, the market is much more competitive here, also thanks to new competitors from the Far East. Secondly, customers expect shorter delivery times. And thirdly, the cost base of the smaller "standard" machines must be geared to market conditions, so it is hardly possible to calculate for longer periods of time.

Four plants shape the European Operations Footprint

In order to expand the product portfolio of standardized machines in the shortest possible time, the company, together with ROI, concentrated on the Manufacturing Operations Footprint of four European plants. To date, they have manufactured the injection moulding machines according to a clear division: one site in Germany was responsible for the more individual large machines, one site in Slovenia manufactured the smaller machines and two other, smaller plants produced and supplied components. 

Production landscape mapped

The project team, which consisted of company managers and ROI consultants, first had to map and understand the structures and processes of an extraordinarily complex manufacturing landscape. This is because the injection moulding machines consist of a large number of individual parts of very high quality. These include large special parts such as locking cylinders or screws with long, complex production processes. And despite a high vertical range of manufacture at all four plants, numerous components are supplied, such as plastic parts or drive systems. In order to obtain clarity about the criteria according to which this production landscape can be reorganized, the project team applied the ROI methodology for the "Manufacturing Footprint".

ROI's Manufacturing Footprint Approach

An essential value of this methodology lies in its systematic approach. For example, the project team does not consider the suggestions and experiences of the employees at the locations in the initial phase of the project. This is because they usually exclude certain variants of production or Value stream design, based on the general conditions of day-to-day business. The ROI consultants gave the project team an external perspective on as many meaningful solutions as possible for redesigning the production landscape. A simple but important aspect. This is precisely where many companies try to solve the problem internally, which often ends up in fruitless debates about trifles. 

Zero base approach identifies indirect expenses

Another special feature of the ROI approach is the analysis of indirect areas, i.e. the planning and control of the entire complexity in the plant or plant group. The project team analyzed which plant needs which overhead in the broader sense. For this purpose, it accurately mapped all indirect functions: from maintenance personnel to logisticians, from plant managers to foremen. In other words, everyone who does not work directly on the line, but has supporting functions for Value creation. After all, in Footprint projects there is an idea of the ideal organization - how do I manage a plant network? How much centrality is necessary, who needs which capacities? - is just as important as the ideal allocation of machines and products.

With the help of the zero-base approach, the project team determined how the organization could be best designed in terms of its structures and dimensions if it were to be rebuilt from scratch (zero). Especially in historically grown organizations, interesting, alternative approaches can be developed so quickly. Thus the project team pursued among other things the question, how many foremen, foremen etc. are needed for 100, 200 or 300 direct coworkers - and which functions one could assign thereby again. In combination with the empirical values of the company, this resulted in a target image of the "ideal organization" for each plant.

Solution via role determination

This approach very quickly led to the crucial initial question: How must the role of the two large plants in Germany and Slovenia be structured in the future? For the other two locations, it was clear that they would retain their supplier function in the four-member alliance. With this role assignment, the project team had to make two important decisions. First, to design the final assembly according to "engineered" and "standard" products. Second, to reorganize the production of complex machine components (see chart). 

Final assembly of the machines

Here the discussion was about either splitting up the final assembly after a series split, i.e. concentrating large and small assemblies at one location each. Or to divide the production according to complexity instead, so that one plant focuses on standard machines and the other on "engineered" variants. 

Production of complex components

At this point, the project team had to make another either-or decision: Will one of the two locations be developed as a competence centre for these elements (e.g. columns, cylinders or large plates)? Or is an approach based on the "local for local" principle the better choice, with each site producing the required components itself?

Local for Local approach improves final assembly

When dividing up the series for final assembly, the company decided against the separation into four series that had previously been practised. Instead, it opted for a new, customer-specific approach based on a "complexity split". Most of the production is now to be based on the "local for local" principle: with the focus on "engineered" machines in the German plant and "standard" machines in the Slovenian plant. This was all the easier because there can be no standard case for the series of few but complex large machines. The other three series of injection moulding machines, which the company had already largely standardized, were assigned to the location in Slovenia according to criteria of "best cost country sourcing". 

Network plans drive complexity

This division saves the company the logistical challenges of series separation and avoids the expense of the already very complex production control of the injection moulding machines. Because there is almost no batch production, all components - tailored to the respective machine - are manufactured directly on site according to a network plan. Since customers often have to postpone deadlines, adapting these network plans across more than one location would be an additional, considerable complexity driver and thus also a risk factor for errors and delays. 

Overall strategy at a glance

All in all, it turned out that the series split is attractive in monetary terms, but that the complexity split is the winner in terms of quality. This approach also lays the foundation for strong growth in the standard market, which should make a significant contribution to achieving the targeted sales mark. This is because both plants can play to their strengths to the full. One because it uses its core advantage in a lean and labour-intensive Best Cost Country location. The other, because at a constant size it can excellently cover the topic of "Engineered". 

Competence Center

With this decision, however, the project team did not reject the idea of the competence centers. These are to be developed for individual core components, provided that their installation is worthwhile. This is the case, for example, with control cabinets that are assembled with a great deal of manual work. In addition, the team decided to manufacture a core component of the injection moulding machines, the "Plasticizing Unit", only at a corresponding competence center at the "Engineered" location. The essential elements of all machines - such as platen, column, injection and clamping units - are prepared completely at each of the two locations. 

On course for growth thanks to transparency

From the complexity split and the results of the zero base analysis, the company already derived concrete improvement measures during the current project. The project team also made cost differences transparent, for example with regard to automation in the future "standard" plant. This provides ideal conditions for achieving the sales target within the next two years. The company is now tackling the implementation of its European Manufacturing Footprint strategy itself.