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Case Studies
Airline equipment manufacturer
Aerospace Case Study
Airline equipment manufacturer
Poor customer delivery, unknown financial position
Overdue order book eliminated and delivery lead time dramatically reduced. Project return 32:1
THE ORGANISATION
Subsidiary of a major plc, specializing in the manufacture and supply of equipment for use in most of the world's commercial airlines
Subsidiary employs 130 staff, (1100 in the Group)
Direct sales within UK, but world wide to the end user
THE ISSUES / PROBLEMS
Unaware of own financial position or performance
Poor customer performance, 3 month overdue on delivery
Excess stock of raw material
Little control over buying policy
65% un-utilized capacity
Little knowledge of the market in terms of customers and competitors
No product costs or pricing policy
Business estimated to have a pre-tax loss of £2m on sales of £5m
PROJECT ACTIVITIES
Created separate stand alone accounting system
Installed independent manufacturing IT systems to allow full visibility of production processes
Linked manufacturing software to stand alone accounting system
Utilized new manufacturing IT package to identify exact un-utilized capacity, in order to eliminate overdue delivery performance
Balanced capacity to meet demand by the reduction in the payroll from 130 to 98
Reduced inventory by 50%, by the utilization of the MRP processes on the new manufacturing package and with the introduction of JIT methods
Conducted a full marketing study in order to fully understand major competitive forces
Defined clear roles and responsibilities and created budget holders with financial accountability
Installed full budgets, forecasting, monthly management accounts with variance analysis
PROJECT RESULTS
Overdue order book eliminated and delivery lead time 3-4 weeks, has become standard
Working capital reduced by 50% by the reduction of inventory and prompt collection of receivables
Full understanding of the market place, thus allowing focus on high margin output
Created greater customer confidence, thus gaining access to larger orders in more cost effective batch sizes
A project return of 32:1 over a 2 year period
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