Rapid Improvement Event Targets 9% Increase in EBITA

A Springfield, Ohio-based contract manufacturer of metal stampings and assemblies, specialized in producing heavy gauge and intricately formed components for sectors such as commercial trucking, automotive, medical, and off-road industries. Historically led by two generations of family leadership, the company transitioned to new management, with the primary objective to elevate the company’s financial metrics. To achieve an ambitious target of enhancing EBITDA from 6% to 15% by 2025, the company sought a collaboration with Lean Resources, aiming to refine strategic and tactical measures that would spur growth and profitability.

Opportunities

Lean Resources’ preliminary analysis, based on a select data set, revealed that a substantial $7.0 million of operating costs were directly tied to its manufacturing efficacy. By targeting these addressable costs, Lean Resources’ interventions have historically resulted in a throughput increase of approximately 50% and cost savings ranging from 20% to 30%. This translates to a potential annual revenue augmentation of $10 million, accompanied by a cost curtailment between $1.4 million and $2.1 million.

Quick Response Teams

Results

Lean Resources identified product lines were lagging by 39% due to factors such as unplanned downtime, mechanical hitches, and the absence of a production-ready culture. Our Rapid Improvement Event laid the groundwork for standardizing tasks, refining the production layout and processes, and introducing a 1-touch environment. Consequently, these measures trimmed costs by $97,000 and expanded the company’s capacity, enabling the support of an incremental $2.5 million in sales.

Key Outcomes

  • Identified $7.0 million in addressable manufacturing costs, paving the way for potential annual revenue growth of $10 million.
  • Implemented strategic interventions leading to cost savings between $1.4 million and $2.1 million.
  • Through the Rapid Improvement Event, achieved cost reductions of $97,000 and unlocked the capacity for an additional $2.5 million in sales.
  • Successfully integrated Lean principles, revamped the workspace, and adopted industry-leading practices to boost operational performance.

Of Significance

This endeavor underscores Lean Resources’ commitment to delivering rapid and impactful results. Through the execution of an Operation Diagnostic and the Rapid Improvement Event, Lean Resources integrated Lean principles, transformed the production environment, and instated industry-best practices. Furthermore, a nexus was established between daily operations and pivotal elements of the company’s performance goals, setting the stage for continuous enhancements in operational efficiency.