Company E is a small manufacturing facility specializing in gourmet bread and bakery. Their main facility is located in Central Ontario and services over 50 customers including large grocery chains to corner lot variety stores. Company E was gaining popularity and won several awards in the local market which increased demand for their products. They operated out of a 20,000 sq ft facility and had the capacity to produce up to 100,000 bread and bakery products per day. Company E used batched manufactured and allocated merchandise to their customers based on availability of product and customer orders. Management felt that there was a large gap between what was requested and what was produced. They felt that customer were willing to purchase more but Company E was constrained on how much they produce each day.
Company E initially wanted to increase utilization within their facility but we conducted a test showing that their man power and machine usage was near safe capacity. Company E then decided to purchase neighboring land in an effort to build a new facility. This included understanding the machine, labour and material requirements. Company E was concerned that it would build a new facility with little notion of how to build it based on their business needs.
OUR APPROACH AND RESULTS
Once we got access to some of Company E’s sales orders and production metrics, the following was clear:
- Sales were increasing year over year by an average of 6%
- The constraint was the number of machines and not the batch size or people per machine
- There was no logical grouping of machines within the facility
- Some machines were approaching their end of life cycle (noteworthy but didn’t impact the strategy)
Our first approach was to group machines based on their logic order, that is group machines next to one another that share a similar product. This process change enables them to produce an additional 800 units of merchandise per day or a 0.8% productivity gain.
Next our time studies yielded the correct number of machines, layout and resource requirements for the new facility. Our numbers were based on Company E’s five year growth strategy. The final result was an efficient warehouse with enough slotted and allocated space for the next 5 years. Company E is able to meet its customer needs and have seen a positive increase in its growth and sales volumes.