An SME (Small to Medium Enterprise) based in the North West of England. The business recycled, remanufactured toners, inks and other printer consumables, then distributed directly to end users and through a van based franchising network. At the backbone of the business was an established and very successful recycling scheme.
Having had credible success from a new business start-up the business had grown quickly but had started to become sluggish and cash flow became an immediate problem. Secondary to the immediate issues of survival was the desire to take advantage of changes in the marketplace and further grow the business distinguishing itself from any competition as an innovative market leader. Market changes included;
- The introduction of the Waste Electrical and Electronic Equipment recycling (WEEE) Directive in the UK.
- A growing recognition of the requirement for business to become carbon neutral.
- The introduction of colour toners to the market place, but no established re-manufacturing provider.
En-Sync 8020 Consultants conducted a review of the situation and suggested a transparent scope of work to secure the future of the business.
The Implementation Process
The challenge to saving any business that finds itself in considerable financial difficulty is to decide what activities, materials and resources are required and add direct value to the business. Then decide and prioritise which of those elements are causing a constraint and need to be halted or removed. Stopping the drain on the cash flow, stifling the business and enabling the conditions for a more stable and efficient environment. Any successful implementation requires a few critical steps:
- Support at the most senior level of the business.
- Agreement on the problems identified, and the priority is to resolve.
- Communications plan to ensure awareness and a sense of urgency to change.
- A clear understanding of the current position of the business and a description of what the future business will look like.
- Training, development and ownership of changes by the incumbent employees.
The client moved from a cash-strapped business to one with increased liquidity, a growing network of franchisees and/or faster turnover of stock within 6 months.
The management team had a better-developed skill set and a clear understanding of the business strategy and their part in enacting the strategy. With the learning and development of their management systems and lean processes, managers were much more confident in their ability in creating and sustaining a profitable business.
Giving back Control
It was fairly obvious from the outset that the business was holding the wrong type and too much inventory (Raw and Finished Goods).
Further analysis showed that this was done intentionally in an effort to ensure the franchisees and customers had their orders fulfilled as quickly as possible and saving any additional distribution and shipping costs. So rather than dealing with the root cause, the business tried to mitigate the issues by holding large amounts of inventory which were causing a drain on the company’s finances. The priority is on keeping the customer happy had come with excepted risk. The size of the risk or value in stocks had become hidden; as the business grew so did the risk.
Management had to change focus from reacting to small issues to focusing on the system constraints affecting the lead-time of the manufacturing facilities, better stock control and additional third-party suppliers.
By implementing lean manufacturing techniques, developing capacity plans and structuring the activities within the manufacturing plants the client was able to receive the benefits of ordering just the right components to fulfil orders based on predictable consumption rates, allowing optimal stock turnover. Several lean tools were utilised to bring about the required changes.
Hoshin Kanri (strategy, tactics and actions) ensured the increase of market share through the introduction of remanufactured colour toners, whilst incorporating better manufacturing techniques and increased quality by further training and developing the employees.
Gemba (The Real Place) to ensure exposure of the workplace and better team working between management and employees. Audits and observations became part of a weekly routine.
Raising standards through 5S to organise the work area and eliminate waste, gave a visual impact that changes were happening and allowed rules to be put in place. It allowed effective feedback to be given and helped clarify some of the accountabilities of managers and supervisors.
SMART (Specific, Measurable, Achievable, Resources and Time-framed) goals, were set in all functions to enable better Communication, feedback and raising of issues. Visual Factory, Visual indicators, white board displays and production controls used throughout the manufacturing plants and warehousing to improve communication of information and understanding.
JIT, (just in time) manufacturing techniques, incorporating the use of (Kanbans) to give binary signals to purchasing and warehousing systems to ensure inventory was kept to an optimum level.
Heijunka (levelling and scheduling) ensured batches were produced at the right size and only when required. Additionally resourcing and levelling of pick and pack operations made additional financial savings.
Kaizen (continuous improvement), time was dedicated on a weekly basis to specifically look at how the workplace could be improved and further elimination of (Muda) waste.
Quality issues were addressed with Poka-Yoke (Error Proofing), Root Cause Analysis.
Specific focus on the Six Big Losses (Breakdowns, set-up / Adjustments, Small Stops, Reduction in speed, Startup Rejects, Production Rejects), resulted in the better recovery of recycled toners, better packaging and organisation of work. Standardised work, further improved both quality and productivity, moving from individual techniques to one best way of completing tasks, and then further improving.
Output and efficiency gains were obtained by bottleneck analysis, allowing controls to be put in place when the flow through the manufacturing facilities did not produce the desired outcomes allowing focus by management and subject matter experts.
Continuous flow, by identifying appropriate layout changes and implementing buffers at the appropriate points to ensure a consistent and reliable flow of products being produced.
Once production plans had been developed in line with the new flow and stock requirements suppliers were contacted and returned all slow-moving or obsolete materials and stock, which in turn developed cash or credit notes enabling better liquidity of the business.
- Reduced Costs
- Increased Sales
- Quality improvement
- Increased Market Share
- New product development
The next challenge was to generate more sales and generate further cash for the business.
The business received cash by either increasing the number of product sales or by securing more franchisees to bind the business and grow a network. As part of the sales strategy, franchisees were asked to come and view the manufacturing facilities in the head office. Initially, the lack of standards throughout the business and manufacturing facilities lacked credibility from a visible point of view and did not build confidence in the business with respect to standards, quality or management discipline.
Prior to implementation, lots of time, effort and money had gone into securing visits from potential franchisees. Once the potential franchisees had visited the facilities, many were lost due to the belief they were buying into a risky venture or investment due to a lack of visible standards.
By educating and guiding the clients to develop their own standards, the business took on a rapid transformation. This raised staff morale reduced safety risks and created a professional working environment. Fundamentally this assisted the business in securing new franchisees and aiding the sales process.
Similar to many businesses both young and old many of the management teams had been given management roles, due to their technical expertise. They had been given no formal management training, resulting in poor morale, poor decision-making and a lack of leadership confidence. The En-Sync 8020 consultants coached, mentored, and trained all levels of management.
“En-Sync 8020 consultants were responsible for project and change management at the organisation and implemented manufacturing, storage and logistics improvements which brought about huge profit gains and changes to the effectiveness of resources and staff.
Bringing about alterations in manufacturing, forecasting and stock management, they were able to both implement the change but also bring staff with them on the journey” – Paul Brewer Business Development and Franchisee Manager
Whilst this case study has demonstrated many flaws within our clients business our experience has been that this does not relate solely to small and medium enterprises. In fact, in larger businesses, it becomes the easier to hide many of the issues discussed.
En-Sync 8020 predominantly starts most of our projects with the review phase, and our ability to identify and demonstrate the key constraints that cause poor performance within businesses. This enables us to set clear programs of work to help businesses become more efficient and effective regardless of their size or composition.
En-Sync 8020 is a professional consulting and business services provider. Our experience in business consultation, organisation design, modern manufacturing techniques, mining methods and process technologies allow us to facilitate our client’s success by ensuring that they have a robust and well-communicated strategy, a healthy structure and reliable systems and processes, supporting the right people in the right roles.