Case Study

Increasing profits for a global manufacturer

Overcoming supply chain and operational challenges to increase EBITDA by 12x

A global manufacturer was struggling to take advantage of robust industry demand. Customer orders had recovered from pandemic lows but supply chain challenges led to ballooning lead times and a significant order backlog. They sought out Wilson Perumal & Company to help unlock manufacturing capacity and optimize pricing strategies to take advantage of industry tailwinds and to increase profits.

Demand had recovered in the wake of the pandemic, but profits had been slow to follow. Product portfolio complexity, supply chain disruptions, and manufacturing challenges were hampering their ability to convert robust demand into increased EBITDA. Customer lead times increased rapidly and created a 6-9-month order backlog. Given capacity constraints amid sustained demand, they were unsure where to focus their efforts to maximize EBITDA potential. Which products should they offer, how should they price them, and how can they bring lead times down to an acceptable level?

With recognized experience identifying and executing on profit improvement opportunities, WP&C started with an initial rapid assessment to identify value creation levers and develop an execution roadmap. Following the assessment, WP&C carried out the implementation and execution phase, which enabled the plant team to rapidly increase EBITDA. Over the course of the project, the WP&C team:

  • Deployed Square Root Costing to quickly assess product portfolio complexity and identify profit improvement opportunities
  • Evaluated pricing strategy of customer base and product offering in conjunction with Square-Root Costing model with input from sales team
  • Leveraged WP&C's Optimal Batch Sizing Equation to identify opportunities to increase efficiency via fewer equipment setups
  • Conducted workshops with plant schedulers and production personnel to optimize production sequencing in order to minimize setup times
  • Assessed inventory levels and analyzed production data to quantify impact of raw material shortages
  • Leveraged production data to identify bottlenecks in plants and identify levers for increasing throughput
  • Shadowed production supervisors to assess plant culture and operator capabilities as well as identify root causes of production challenges

Wire and Cable Case Study Image 1

 

After the assessment phase, the WP&C team worked with the management team to develop and execute a roadmap for increasing plant throughput and overall profitability. Actions included:

  • Identified 540 unprofitable SKUs and identified targets for rationalization, consolidation, and pricing adjustments
  • Developed pricing strategy tool to aid sales team in setting appropriate prices based on customer segment and anticipated demand
  • Implemented Optimal Batch Sizing tool to aid in production planning and free up 1,800 production hours via reduced setups
  • Created production sequencing tool to optimize production schedule and minimize setup time, resulting in a 30%+ reduction of planned setup times
  • Utilized industry best practices to set optimal inventory targets in order to maximize production efficiency and reduce raw material delays
  • Held four Kaizen events on bottleneck production lines to increase uptime, resulting in record weekly output on several work centers
  • Developed a System for Management to increase operator engagement and strengthen supervisor capabilities

Nexans image 2

Working with plant management and supervision in the implementation phase, the WP&C team was able to capture value quickly to culminate ongoing efforts:

  • Decreased setup times by 68% (from peak) to enable a throughput increase of 5-50% across production lines
  • Turned the trend of growing lead times with decreases within 3 months through better planning and inventory management
  • Increased the dollar value of monthly bookings by ~2x supported by 10% higher margins
  • Achieved one of the most profitable months on record and increased annual EBITDA run rate by 12x

Demand had recovered in the wake of the pandemic, but profits had been slow to follow. Product portfolio complexity, supply chain disruptions, and manufacturing challenges were hampering their ability to convert robust demand into increased EBITDA. Customer lead times increased rapidly and created a 6-9-month order backlog. Given capacity constraints amid sustained demand, they were unsure where to focus their efforts to maximize EBITDA potential. Which products should they offer, how should they price them, and how can they bring lead times down to an acceptable level?

With recognized experience identifying and executing on profit improvement opportunities, WP&C started with an initial rapid assessment to identify value creation levers and develop an execution roadmap. Following the assessment, WP&C carried out the implementation and execution phase, which enabled the plant team to rapidly increase EBITDA. Over the course of the project, the WP&C team:

  • Deployed Square Root Costing to quickly assess product portfolio complexity and identify profit improvement opportunities
  • Evaluated pricing strategy of customer base and product offering in conjunction with Square-Root Costing model with input from sales team
  • Leveraged WP&C's Optimal Batch Sizing Equation to identify opportunities to increase efficiency via fewer equipment setups
  • Conducted workshops with plant schedulers and production personnel to optimize production sequencing in order to minimize setup times
  • Assessed inventory levels and analyzed production data to quantify impact of raw material shortages
  • Leveraged production data to identify bottlenecks in plants and identify levers for increasing throughput
  • Shadowed production supervisors to assess plant culture and operator capabilities as well as identify root causes of production challenges

Wire and Cable Case Study Image 1

 

After the assessment phase, the WP&C team worked with the management team to develop and execute a roadmap for increasing plant throughput and overall profitability. Actions included:

  • Identified 540 unprofitable SKUs and identified targets for rationalization, consolidation, and pricing adjustments
  • Developed pricing strategy tool to aid sales team in setting appropriate prices based on customer segment and anticipated demand
  • Implemented Optimal Batch Sizing tool to aid in production planning and free up 1,800 production hours via reduced setups
  • Created production sequencing tool to optimize production schedule and minimize setup time, resulting in a 30%+ reduction of planned setup times
  • Utilized industry best practices to set optimal inventory targets in order to maximize production efficiency and reduce raw material delays
  • Held four Kaizen events on bottleneck production lines to increase uptime, resulting in record weekly output on several work centers
  • Developed a System for Management to increase operator engagement and strengthen supervisor capabilities

Nexans image 2

Working with plant management and supervision in the implementation phase, the WP&C team was able to capture value quickly to culminate ongoing efforts:

  • Decreased setup times by 68% (from peak) to enable a throughput increase of 5-50% across production lines
  • Turned the trend of growing lead times with decreases within 3 months through better planning and inventory management
  • Increased the dollar value of monthly bookings by ~2x supported by 10% higher margins
  • Achieved one of the most profitable months on record and increased annual EBITDA run rate by 12x

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