electric motor manufacturer
pivotal strategies' services: interim management, business processes and systems
core proficiencies: operational assessments and initiatives, post-acquisition integration, business process reengineering
pivotal strategies' role: interim VP Operations
company ownership: privately owned
This $75 million company designed and manufactured highly engineered, fractional HP electric motors. It had grown by acquisition over a number of years, resulting in three independently operating US plants in different states. While marginally profitable, the company was experiencing flat sales due to increased price competition within the markets for its products.
While production at all three of the company’s plants could be characterized as high-mix/low-volume, each plant specialized in motors of different types with varied processes and equipment. Many of the manufacturing processes were poorly documented and relied heavily upon “tribal knowledge” within the plants’ existing workforces. The plants also ran on different ERP systems with separate data bases and one of the plants was unionized.
As interim VP of Operations, a Pivotal Strategies professional led an internal team in developing and implementing initiatives to transition the company to a new US manufacturing strategy. He guided the company through the following measures:
· Analyzed capability and capacity needs for current and future customers;
· Designed a plan to close one plant and rebalance all production between the remaining two plants;
· Developed a detailed implementation plan covering customer fulfillment during the consolidation, people issues, facilities and equipment transfer, ERP system reconciliation, data base integration, and materials procurement/suppliers;
· Implemented a retention and training program for employees of the closing plant to transfer process knowledge to the employees of the two remaining plants. Communicated the plan to employees and negotiated the plan with the union;
· Utilized Lean concepts of “pull”, value stream mapping, continuous improvement and respect for employees in the process of moving five major product lines.
The consolidation was completed ahead of schedule and on budget, with negligible impact on customers’ requirements, and overhead costs were reduced by $1million. The lower overhead and the experience gained in the broader use of Lean tools resulted in the company’s enhanced ability to compete effectively in the markets for its products.