Increasing profits for a global cable and wire manufacturer
Overcoming supply chain and operational challenges to unlock profits for a cable and wire manufacturer
A subsidiary of a global cable manufacturer was struggling to take advantage of robust industry demand. Customer orders had recovered from pandemic-era 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. An implementation and execution phase followed to help enable 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 our 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
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
Developed a System for Management to increase operator engagement and supervisor capabilities
Working alongside plant management, WP&C were able to capture multiple quick-wins including:
Decreased setup times across the plant by 68% from peak and enabled a throughput increase on bottleneck production line by more than 50%
Reversed trend of growing lead times and decreased 10% from peak within 3 months
Dollar value of monthly bookings increased by ~2x, supported by margins that grew 10 percentage points in one year
Developed roadmap to increase EBITDA by 2-3x and started value capture resulting in one of the most profitable months on record
Results were immediate and fully embraced by the client leadership:
“In January, we had one of the most profitable months we’ve ever had and a lot of it was because of the help you’ve given us.” – Subsidiary CEO
“I think this engagement has been very, very successful. The results are clearly there. The testimonials from the team are there.” – Corporate Executive Vice President
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. An implementation and execution phase followed to help enable 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 our 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
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
Developed a System for Management to increase operator engagement and supervisor capabilities
Working alongside plant management, WP&C were able to capture multiple quick-wins including:
Decreased setup times across the plant by 68% from peak and enabled a throughput increase on bottleneck production line by more than 50%
Reversed trend of growing lead times and decreased 10% from peak within 3 months
Dollar value of monthly bookings increased by ~2x, supported by margins that grew 10 percentage points in one year
Developed roadmap to increase EBITDA by 2-3x and started value capture resulting in one of the most profitable months on record
Results were immediate and fully embraced by the client leadership:
“In January, we had one of the most profitable months we’ve ever had and a lot of it was because of the help you’ve given us.” – Subsidiary CEO
“I think this engagement has been very, very successful. The results are clearly there. The testimonials from the team are there.” – Corporate Executive Vice President
