At any point of time, the ability of an equipment manufacturing company to grow its sales and profits consistently is limited by any of the following constraints.
Most equipment manufacturing companies typically struggle between periods of flood and famine. When market is booming and the backlog goes up significantly, the constraint of the system is experienced in operations. Expediting to ensure timely delivery and the perennial struggle for matching parts leads to significant wastage of capacity and month end skew in production, preventing a company from exploiting its operational assets to its full potential.
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- Increase in on-time delivery performance to more than 95% as per the originally committed dates
- Reduction in overall lead time (and work in progress) by around 30% to 50%
- Increase in output of plants by around 25% to 40%
- Reduction in overall inventory by 10-20%
- Drastic reduction of expediting costs like overtime and emergency freights
- Improved cash-to-cash cycle
In the period of underload, the stress in operations dips but the pressure increases on sales team to procure orders. But, the ability of sales team to expand their efforts in the market gets restricted as their band-width seems to be occupied in many other transactional activities.
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- More than 50% release in capacity of sales team
- Increase the rate of acquisition of new customers
- Maximize sale rate from existing customer base
- Increase overall enquiry base
Spares and Services
In many equipment categories, uptime of equipment at customer premises is one of critical factor. Hence, easy availability of spares and rapid resolution of service issues is key to expand market share in many segments. But ensuring sales availability is a major challenge for companies considering the enormous variety of parts involved. To complicate things further, some of these parts are in frequent demand while others, often called “stranger” parts, are needed infrequently. Often, when companies try to improve sales and service, they suffer the downside of cash being tied up in slow-moving inventory.
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- Enhance availability of spares at the point of service to near 100% on a daily basis
- Reduce inventory in the overall supply chain by around 25%.
- Reduce as much as 50% in Turn Around Time (TAT) at service centers
- Increase on-time performance of service to more than 90%
- Increase sales of spares by more than 20%
New Product Development
Enormous workload, highly uncertain environment, heavy dependence on external suppliers together makes the task of creating new equipment and variants very challenging. Added to this is the complexity of being forced to multitask across the initial stages of projects planned in the pipeline and the emergent residual work on variants for which orders are secured. The process seems stuck in a vicious loop of rework, delays in production stabilization, and delays in launch. Even after launch, quality issues are not uncommon!
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- Reduce project lead time by 33- 50%
- Increase Output by 30-50% from existing resource base
- Reduced rework
- Improved quality of output
- Rapid mass production stabilization
- Reduced stress on people and other resources
Discover how organizations like Kirloskar Oil Engine, Godrej & Boyce and many others are using “pull” systems of Theory of Constraints to transform their operations for a competitive advantage in their markets
Enabling assured one-week delivery at Kirloskar Oil Engines Ltd
Indicators Remark Order to Dispatch Reduced from 35-45 days to 7 days Daily Availability of engines Increased to 99% Credit Policy Reduced by 95% Debtors Reduced by 96% RM Inventories Reduced by 18% Net Cash Improved from cash- negative to cash-rich
By moving away from a forecast-based model to consumption-based operations, KOEL is now not only able to offer guaranteed deliveries in ONE WEEK (industry standard is four-six weeks) but have also reaped several financial and operational benefits.
Aligning delivery with dynamic site conditions - Godrej MHE
Indicators Remark On-Time Performance Improved to 85% WIP (days) Reduced by 33% Output (Export Line) Increased by 54% Output (Domestic Line) Increased by 24% FG (count) Reduced by 75% RM Availability Improved to 97% RM Inventory (in Days) Reduced 44%
GODREJ-MHE, India's largest lift truck Manufacturer, significantly improved its operational parameters including output and on time performance to enable it to better meet customer expectations.
Increasing output of New Product Development - Kirloskar Oil Engines Ltd
Indicators Remark NPD contribution to sales Near 20% (up from 4%) Short-Term projects 63% faster Long-term Projects 56% faster New parts developed Increased 75% CRE Engine drawings Increased 68% AE Industrial drawings Increased 88%
By focusing on enabling flow of projects in the New Product Development funnel using the principles of TOC, KOEL crashed lead time of projects by more than 50%!
We have partnered some of the major names in the equipment manufacturing industry to create and implement radical solutions which have helped redefine industry benchmarks. These include:
Dara ByramjeeExecutive Vice President & Business-Head, Godrej Security Solutions
With three times more output from the same capacity and reduced working capital requirement, we were able to improve our ROCE by three times.Know More