While non-high-tech manufacturing production is expected to increase in 2016, there are many challenges facing the manufacturing industry. To stay competitive, manufacturers are investing in logistics efficiency such as maximizing factory floor space and time. Apex International wants to face these challenges head on.
A Company in Need
Growing at a rate of 30 percent for the past 15 years, Apex International — a manufacturer of personal and home care products — was struggling to maintain its positive reputation and customer expectations. Apex specializes in mixing and filling containers with proprietary recipes for household liquids, including soaps, creams, lip balms and topical over-the-counter (OTC) lotions and ointments. The company makes, packages and ships between eight and 10 million units of about 500 different household formulas each month. Products are manufactured in facilities in Eden Prairie and Chaska, Minnesota, with a combined 380,000 feet of manufacturing space.
With inconsistencies delivering quality products on time or in a cost-effective manner, Apex faced frustrated employees and unacceptable profitability. Long cycle times — the total time from the beginning to the end of a process — led to a delay in customer response and, ultimately, a loss of customer trust. Excess documentation requirements also slowed down the product compounding or mixing process, reducing employee morale and creating equipment bottlenecks. Apex executives were concerned that if they did not address challenges, they might lose existing customers and growth opportunities, creating unwanted distance from the company’s expectation of being a world-class manufacturer.
Implementing Lean and Setting Goals
In order to root out inefficient practices and accommodate continued growth, Apex evaluated its manufacturing processes with lean management — a practice that enables the true performance potential of a business or process to be realized. The concept was developed by Toyota and has become a fundamental business strategy around the world. By seeing their organizations through a “lean lens” and searching for opportunities to improve, lean empowers leaders, managers and frontline workers to transform the culture of their organizations and achieve favorable business results.
Working with Simpler Consulting, a global management consulting firm that helps organizations improve processes through lean transformation, Apex aimed to reduce costs and waste by implementing lean manufacturing. Apex’s goal in implementing lean was to bring speed, productivity and quality to their organization.
When Apex began working with Simpler in June 2014, managers identified key areas for improvement:
- Growing past due orders
- Decreased customer confidence/satisfaction
- High employee frustration
- High waste costs
- Inadequate process execution
- Poor asset utilization
- High overhead costs
- Long cycle times
Apex aimed to reduce change-over time and improve product quality by streamlining and improving the equipment set-up process. Specific goals included:
- Increase sales by 10 percent
- Reduce overhead per unit costs by 50 percent
- Cut cycle times in half
- Achieve 100 percent on-time delivery
- Achieve record-high customer and employee satisfaction
Since September 2014, Apex has held at least one Rapid Improvement Event (RIE) each month. An RIE is a four-and-a-half day team collaboration focused on improving a specific area or process of the business. Teams comprise six to nine individuals from departments throughout the company, bringing diverse viewpoints and expertise on internal processes and customer concerns relating to the RIE focus area. To date, 33 percent of full-time employees have participated in an RIE.
RIEs continue to guide Apex’s transformation and enable process improvement. For instance, one of Apex’s most significant accomplishments to date is the implementation of flow cells — logical and efficient self-contained arrangements of supplies, equipment and personnel to complete a service sequence. Apex’s initial value stream map, a lean methodology for analyzing the current state of an organization, was incredibly intense — the company had approximately 53 information handoffs between different groups and a siloed organizational structure with a tremendous amount of waste in the process.
Using flow cells, Apex has seen a dramatic reduction in the amount of time and human capital needed to complete a task. This improvement in manufacturing floor consistency and workflow enabled the company to redeploy employees to different tasks, creating added value for customers.
Reaping the Benefits
Through RIEs and other lean process improvements, Apex achieved strong results that helped them to better serve customers. Apex has experienced dramatic improvements in delivery and overall productivity. They have also seen large reductions in documentation errors and excess fill. By honing in on their supply chain, Apex reduced inventory by 60 percent, which opened up more floor space to accommodate growth.
These specific and tangible improvements yielded an increase in customer confidence and satisfaction. Feeling confident the quality of product they deliver and customer service levels — not to mention the reduction of paperwork and unnecessary processes — Apex employees’ morale was higher than ever. In addition, employees are more aware of big-picture processes, which has improved the cohesiveness and productivity of the company.
About The Author: David Goldberg is the CEO of Apex International.