Implementing Lean Manufacturing Increases Profits and Competitive Strength in CNC Contract Shop

The Challenge:

In the highly competitive CNC precision machining industry a contract shop sought to improve competitive strength and profits by decreasing costs, delivery time, and improving work flow.

The Results:

Growth of 15.3%+ and 18.7%+ margin within within 12 months, and sustained over multiple years until sale of business.

How We Did It:

Developed a strategy, and conducted Value Stream Mapping, with key initiatives identified as implementing Lean Manufacturing initiatives, just-in-time (JIT) material movement throughout the supply chain, KanBan, set-up reduction, and additional investment in state-of-the-art machine tools, automation, and quick-change tooling. Investments noted below were ongoing.

Practices that equal high performance

  • Analyzed and assesses current state value stream map to identify opportunities to enhance flow by eliminating waste.
  • Proposals offered to top customers with repeat work to propose JIT/KanBan methodology to improve delivery times, and reduce customers' costs through inventory reduction.
  • Proposed JIT/KanBan, negotiated, and coordinated with supply chain vendors to reduce inventory turnover from 45 days to less than 7 days.
  • Established a certification requirement of major suppliers.  
  • Established a Set-Up reduction  Team and completed time studies of set-ups; identified ways to reduce set-up times from hours to minutes.
  • Applied Theory of Constraints philosophy to identify and eliminate bottlenecks.
  • Implemented a Tool Inventory Management system; reduced operating costs from 5.0% to 2.2% of revenues.
  • Just-in-time deliveries to customers, reducing lead times for some parts from 14 weeks to 2 days.
  • Invested in quick-change devices, tombstones, and other tooling for quick changeovers to reduce set-up time.
  • Implemented MRP software system.
  • Invested in state-of-the-art high-speed machining equipment and employed lights-out machining strategies.