Case Study: Eliminating a $2 Million Backlog for Leading Aftermarket Manufacturer
One of the world’s leading manufacturers of high-quality, custom-engineered towing, trailer, cargo management and other related accessories was struggling to overcome a backlog. The company – which is the category leader in the automotive, leisure and agricultural markets – serves retailers, dealer networks, and the end consumer.
Their Cequent Performance Products plant in Reynosa, Mexico had nearly $2 million in past due work orders and financial variances, leading to customer dissatisfaction with both product quality and delivery. Factors contributing to this backlog included an inexperienced leadership team, lack of quality systems, low overall productivity, material shortages, sub-optimal machinery and equipment, and high employee absenteeism and turnovers.
Cornerstone Consulting Organization (CCO) was called in to examine these contributing factors of weak performance and provide an aggressive but achievable corrective action plan to drive operational improvement at the plant.
The Cornerstone team was quick to deploy the OpEx method at the plant, starting with an independent and objective assessment of business operations in the areas of Quality, Operations, CI/IE and Supply Chain. Evaluations of the organizational structure and talent, equipment condition and maintenance program, facility condition, current business profitability, and growth capacity were also completed.
This assessment informed the creation of several short- and long-term improvement projects that the Cornerstone team executed in collaboration with the plant staff:
- Deploy OpEx system on the shop floor to improve throughput
- Limit investment to critical equipment requirements only and remove non-repairable, not required equipment to drive supply chain improvements
- Reduce inventory and the cost of goods manufactured to improve EBITDA and cash flow
- Adjust area layouts to improve material flow and create a more efficient workplace
- Establish benchmarks and new process standards for painting and welding
- Fill critical plant roles and introduce an employee transportation project to resolve the labor retention situation
To keep those at the corporate level informed of progress, the Cornerstone team presented a weekly report of findings and opportunities. The detailed Operational Improvement Report described actions taken and actions planned, helping to establish an operational cadence at the plant that enhanced overall performance and returned operations to profitability.
The OpEx process began working almost immediately. Within just three months, all past due work orders were eliminated. Other key results included:
- 30% improved throughput
- $5 million reduction in inventory
- More than $2 million in cost savings through improvement projects
- 100% insourcing of all paint applications
- 10% improvement in employee absenteeism and turnover
After the Cornerstone team left the Cequent Performance Products plant in Reynosa, Mexico, the manufacturer was able to maintain the same level of performance by following CCO’s corrective action plan.
Cornerstone has collectively performed hundreds of turnarounds across various industries throughout the world. Whether you need to revamp a single plant or turnaround multiple locations at once, the team gets in quick to assess the situation and implement a proven process – shoulder-to-shoulder with your staff – to deliver profitable results. And before we leave, Cornerstone sets you up for continued success.