Case Histories

A. Conducted a two-year, pilot re-engineering project within the regional network of the primary blood provider in the United States, including their New York/Penn Region (Syracuse), Central Ohio Region (Columbus), and Tennessee Valley Region (Nashville). This effort netted more than $10,000,000 in savings and led to a further project focused on developing best practices to be rolled out through the remaining 35 regions. Main savings contributions included:

• 8% increase in blood donations
• (better donor recruitment, fewer deferred donors)
• 13% reduction in unit collection costs
• (increased staff productivity)
• 12% increase in margin
• (collect and sell higher-margin products)
• 7% reduction in staff
• (productivity gains, attrition)
• 40% reduction in staff overtime consumption
• (improved staff/drive scheduling)
• 50% reduction in employee turnover
• (better hiring practices, improved morale)
• 11% decrease in distribution costs
• (established hospital delivery patterns)
• 14% reduction in waste
• (better staff training, quality control procedures)
• Improved organizational structure
• (redefinition of core capabilities)
• Implemented Organizational Effectiveness element
• (manage performance targets)
• Installed an employee suggestion program to enhance inclusion
• Performed market demographic studies to specify market segments & targets
• Performed supervisory training to improve supervisory performance
• Facilitated implementation of logistics software to maximize transportation assets
• Developed volunteer program to increase community visibility & reduce labor costs
• Designed staffing matrices for all departments to determine staffing needs `formally'
• Implemented sales management control system to increase Sales productivity
• Embedded `focus group strategy' to allow regions to solve problems methodically

B. Performed regional performance assessments, each lasting four to eight weeks, to pinpoint key operational needs in regions located in Los Angeles, Dallas, Charlotte, Baltimore, Columbia (South Carolina), Richmond, Roanoke, and San Juan. We identified more than $18,000,000 in savings opportunities within these regions.

C. Developed 41 best practices in seven key operating areas, including Sales & Marketing, Production & Distribution, Blood Collection, Donor Recruitment, Quality Support Systems, Organizational Effectiveness, and Performance Management. These practices, once implemented, will result in more than $50,000,000 in regional savings.

Our client was comprised of thirteen sub-divisions prior to privatization. In preparation of the targeted transformation date, our staff was retained by one division of this company in order to improve the productivity of the Track Maintenance, Signal Maintenance, and Facilities departments–entailing nearly 85% of the costs associated with running the company. Our 24-staff member team was able to decrease the operating costs by more than $14,000,000–with another $16,000,000 identified–principally by implementing a "PDR System." This closed-loop Plan-Do-Review program allowed each department to identify its backlog of work, prioritize these requirements, estimate labor requirements, schedule tasks, make assignments, establish work-to-time relationships, follow-up on the work, report performance and variances, and adjust labor as the workflow decreased. The major accomplishments of this project included:

• Reduced rail traffic `wait time' by 13% (improved maintenance and communication programs), resulting in $4,000,000 in savings.
• Reduced signal failures by 17% (improved quality and maintenance programs)
• Improved Track staff productivity by 14% (improved supervision and clarity of assignments), resulting in $3,500,000 in savings
• Improved Signals staff productivity by 16% (improved supervision and clarity of assignments), resulting in $1,750,000 in savings
• Closed three supply depots, cutting Materials Department operating costs by 16%
• Retired approximately 2,000 miles of track (23%), saving future maintenance and allowing staff reductions in all departments
• Outsourced repair of major tools & equipment, decreasing turnaround time and significantly cutting tool/equipment leasing costs
• Recommended closure of 11% of rail stations (36/327) based on volume of freight traffic and fare paying customers
• Trained more than 500 front-line supervisors in "how to manage performance"
• Installed an employee suggestion program, resulting in nearly $500,000 in savings
• An additional 850 jobs were identified as being redundant and an action plan (with time schedule) was developed to eliminate these positions after the privatization date
• The improved track and signal conditions assured a larger price for the company when it was privatized. Some estimates determined this project added $25,000,000 to the final price paid for the company.

An American subsidiary of a Swiss aluminum corporation retained the services of ProGuide Management Resources to re-engineer the production process at its main US facility in Ohio. The project eventually led into every department of the facility, including: Production Control, Purchasing, Material Acquisition, Shipping/Receiving, Warehousing, Plant Maintenance, Engineering, Casting, Hot-Rolling, Cold-Rolling, Finishing, Traffic, Laboratory, Sales, Customer Service, MIS, Quality Assurance and Labor Relations. The plant recovered from a $5,000,000 loss to post a $17,000,000 profit in 3 years, facilitating the sale of the company the following year. "This Project was the major improvement program undertaken during these three years at our facility and can be attributed with much of the success we enjoyed in turning things around," according to the Vice President of Manufacturing. There were no capital outlays on new equipment as the parent corporation was hopeful to sell the company. The major steps to this turnaround included:

• Reduced manufacturing `conversion' cost by nearly 22% by increasing casting efficiency and increasing hot line & cold mill process speeds. Most of this enhancement was attributable to improved maintenance on older equipment, though the intangible benefits of improved teamwork between maintenance and production personnel cannot be discounted.
• Enhanced the Preventive Maintenance program, adjusted maintenance staff work hours, reassigned maintenance workers to the production departments (accountability and ownership), replaced key management staff members, enhanced communication and planning, and developed specific performance targets for each piece of equipment within the mill. These actions reduced downtime by more than 25%, allowing for significantly lower conversion cost.
• Reduced raw material costs by nearly $2,000,000 by enhancing alloy segregation in the Receiving Department. Expensive alloys were separated and cordoned off from lower-cost materials.
• Established "Min/Max" targets for each recipe, reducing the usage of high-cost alloys to a bare minimum while increasing the use of scrap materials. Savings were estimated to reach $7,000,000 annually by the plant's CFO.
• Reduced annual demurrage costs by nearly $500,000 by improving railcar-scheduling and unloading procedures.
• Improved number of casts per day by increasing front-line supervision and installing incentives for the unionized labor force. The number of drops increased 11%.
• Reduced transportation costs by more than $1,000,000 annually by initiating the use of traffic management software, as well as outsourcing the negotiation of major logistics contracts.
• Increased on-time delivery to customers from 29% to 84%.
• Developed on-site training for corporate Sales staff to improve intra–company communication and to provide a sense of "the real world" to use when establishing promise dates for products to customers.
• Established Performance Improvement Teams to tackle key operating issues through focusing on cause/effect /solution models. These groups were responsible for reducing pin-holes in beverage can aluminum, improving the effectiveness of the pit annealing furnaces, etc.–all of which resulted in substantial savings for the company.
• Eliminated the in-house trucking fleet of 40 vehicles, creating substantial cost savings.
• Improved in-process quality checks to reduce end-of-process quality failures. This resulted in a 15% reduction in re-work.
• Participated in labor negotiations by providing an analysis of staff needs, conducted jointly with the client's Industrial Engineering Department. This unbiased data upheld management's contention that the plant was overstaffed and aided the company's discussions: one hundred terminations were agreed with the union.
• Redesigned the organizational chart to reduce senior positions, thus improving the speed at which decisions could be made.
• Eliminated two levels of management in a union environment–one was salaried, the other hourly–resulting in savings of $500,000 annually.
• Conducted one-on-one coaching of middle-management (25 key managers) to instill greater management awareness as a means of improving productivity in all departments.

Biotech Company–Project #1
Operations Department

We led a year-long project to improve the efficiency of the Operations Department, which included manufacturing, warehousing, logistics, maintenance, production planning, purchasing and inventory management.

• Reduced the raw materials inventory by 26%, from $30MM to $22MM. Reduced work-in-process inventory by 28%. Reduced finished goods inventory by 32%.
• This was accomplished by returning to purchasing basics and reinforcing the MRP2 system. This improved cash-flow.
• Eliminated a second manufacturing shift at the primary production facility by improving line speeds and increasing uptime of equipment.
• Reduced capacity at the secondary operations plant to balance capacity with demand. This resulted in a reduction of 14 staff.
• Streamlined management, thereby eliminating three high-level positions.
• Worked with QC Department to improve the daily inspection plan to ensure that all materials necessary to meet the production schedule were available. This had been a large problem.
• Conducted Lean manufacturing training with 40% of departmental staff (including labor force) to increase awareness of cost optimization strategies.
• Restructured the warehouse locator system and material flow ... and terminated 10 staff.

Biotech Company–Project #2 Regulatory, Clinical and Quality Departments

We led an eight-month organizational restructuring and process enhancement project at a major San Diego-based biotech company. The focus was on their Clinical Affairs, Validation, Regulatory Compliance, Quality Control and Quality Assurance Departments.

Reduced headcount by approximately 26%, from 125 personnel to 92. This was done by reducing the number of temporary staff, outside contractors (consultants) and supervisory/management personnel.

Improved key operating processes, including the PPD (Pre-Planned Deviation) and DCR (Document Change Record) systems. This reduced the administrative workload and allowed for time to be better utilized in proactive and value-added tasks.

• Reduced the number of incoming goods inspections by (a) improving the vendor certification system and (b) reviewing each and every item to determine the risk factors associated with non-inspection.
• This led to a reduction of more than 30% in the frequency of inspections.
• Transferred inspection personnel from QC to the warehousing department, allowing for a reduction in personnel by reducing duplication of inspection effort.
• Eliminated several senior management positions, as well as a few middle managers.
• Transferred Clinical Affairs role to the R&D Department.
• Transferred Equipment Validation to Operations Technical Support Department.
• Trained staff in 'Theory of Constraints' management techniques to improve their awareness of operational waste.
• Reduced meetings by 35% and reports by 30%.
• Implemented new e-mail policies to reduce time wasted handling unnecessary messages.
• Developed mission statements and key performance indicators (metrics) for each department of QA, QC, Regulatory Affairs, Clinical Affairs and Validation.

Biotech Company–Project #3
Sales, Service and Marketing

We led a twenty-six week engagement with the objective of improving the Sales, Service and Marketing functions within a leading San Diego biotech company. The project savings goal was $1,000,000 in savings/benefits with a cost of approximately $450,000. We delivered a 2-to-1 ROI in ‘actualized’ savings, with additional identified opportunity that should be realized over the remainder of the current year and following year. The savings were comprised approximately half by cost reductions and the other half attributable to substantial revenue enhancement.

There were numerous problems and issues we had to overcome or deal with during the project, including:

• Lack of accurate data at a usable level of detail
• Lack of detailed historical sales performance data
• Weak performance evaluation process - subjective not objective
• Poor communication - vertically and horizontally
• Poor planning and forecasting processes
• Lack of root-cause analysis and corrective action processes
• Poor project management skills (client)
• Lack of documented/formalized sales management system
• Lack of appropriate input into the product design process from customers and service departments
• Top-down budget process with virtually no input from the field sales force
  • Current year budgeted revenue increase triple the historical rate
  • No details of how to achieve such an aggressive target
• Compensation system not aligned with organization goals
• Little if any consequences for poor performance
• No established system or process for designing or realigning sales territories
• Do not provide 24/7 service support to customers who typically operate 24/7
• Functions and responsibilities 'crept' from R&D into Service inappropriately
• Lack of understanding of total organizational process flow and interface requirements

Project accomplishments that contributed to the project benefits include:

• Developed an analysis matrix tool to evaluate strategic placement of sales territories, including determining capacity for growth
• Created new tools and reports to enhance existing mechanisms in a new sales management system
  • Meeting plan/results memo
  • Sales Index/Progress tool based on AIDDA principles
  • Weekly Plan versus Actual reports for:
    • Sales Reps
    • Regional Sales Managers
    • Director of Sales
  • Year-end Revenue Forecasting tool
    • Each Sales Territory with roll up by region
  • Monthly performance summary report for senior management
  • Utilization of the new sales management system data will enable management to set better data based goals for the future.
• Calculated realistic revenue goals, by territory and product category, with year-over-year increases ranging from 5.1% to 36.4%, with an overall average of 16%.
• Developed a tool to determine resource needs based on product/sales forecasts and required service functions for the Technical Service Department
• Refined skill-set needs, by position as necessary, for all support positions
• Redesigned/realigned organization to eliminate excess positions and better utilize existing resources to avoid additional hires. Overall, contributed to a reduction of nearly 10% of the labor force.
• Analyzed employee time utilization to ascertain composition of 'value-added' versus 'non value-added' workload in daily routines of ALL personnel in SS&M ... and then recommended changes to increase 'value-added' portion
  • Recommended I/S and telephone changes to increase hardware reliability
  • Eliminated unnecessary documentation, reports and meetings
  • Altered travel policies to maximize time in front of prospect/clients
  • Recommended alterations to corporate e-mail practices to reduce volume of time spent on computer
• Assisted with development of strategic plan for Marketing Department, tying it into R&D more comprehensively and freeing up time for genuine strategic growth modeling
• Performed gap analysis in Marketing to determine why senior management's desires were unfulfilled. That is, what tasks were done in Marketing that prevented them from delivering adequate marketing plans to senior management?
• Traveled with field staff from Service Department, as well as sales reps, as they conducted their normal routine to determine their bottlenecks and concerns, thereby allowing us to raise these issues independently to senior management in order to develop changes in bothersome SOPs.

International Medical Device Manufacturer Business Development Strategy

We led an engagement with an international medical device manufacturer to determine whether there were new lines of business that our client could add to its portfolio in order to increase revenues and enhance operating margins. Our initial brainstorming sessions with the client‘s senior executive team revealed five potential areas for new business. After thorough research and analysis, only one met the key criteria of offering substantial profitability with minimal financial risk or risk of impugning their excellent reputation.

Our methodology included the following:

• Develop list of new business opportunities with key executives
• Determine data needed to evaluate each opportunity and analyze it
• Owing to our unique position within the healthcare industry, we had key contacts that allowed us to vet our client‘s interests
• Established “gating process” to determine “go/fail”
• Validation of business concepts through statistical, anecdotal, and financial means
• Evaluation of investment, break-even, and profitability potential
• Thorough reports outlining logic behind “pass/go” determinations

Project accomplishments that contributed to the project benefits include:

• Wrote comprehensive ‘Cessation Reports’ to outline why certain ideas were curtailed after failing to pass through various “gates”
• Developed financial spreadsheets to display the potential results of different market entry strategies, allowing the client to make an informed decision about how to pursue these new opportunities (build vs. buy)
• Prepared several PowerPoint presentations, including one for the senior management team to gain buy-in, as well as one for the client to use in his discussions with the Corporate Board of Directors
• Presented a comprehensive report that discussed the ‘pros and cons’ of each possible market entry strategy and made a recommendation
• Maintained an impartial approach, which proved valuable in changing some preconceived notions about which ideas might pass or fail

Aerospace Company

A Canadian aerospace design, engineering and manufacturing firm retained ProGuide to introduce comprehensive LEAN manufacturing principles to their two manufacturing plants and one assembly plant. This desire arose principally from the client‘s inability to meet delivery expectations and, in fact, they were beginning to incur litigated damage costs associated with untimely deliveries. Further, manufacturing costs were too high and cycle times too long. Accordingly, we led a 20-week engagement using a ‘bottom-up’ methodology to ensure a total change in corporate culture. Some of the steps we undertook included:

• Mentored supervisory and management personnel, providing training in skills assessment, assigning responsibility, shop floor measurements and controls, effective meetings and schedule attainment
• Implemented inventory controls, such as cycle counting, kanbans, vendor owned inventory, just in time and point-of-use deliveries
• Conducted extensive 5S exercises to remove clutter, organize work areas, identify tooling needs, identify safety issues and establish worker initiated workplace rules
• Collaborated with manufacturing and assembly personnel to identify bottlenecks in their work processes and then developed an action plan to remove these obstacles from the work flow
• Utilized ‘poka-yoke’ methodology to permanently reduce the volume of internal errors
• Eliminated finished goods inspection and introduced in-process inspections performed by the operators
• Created process flows for all functions as a tool to identify and eliminate waste in the processes
• Created value stream maps for all products to balance flow and identify areas of improvement
• Initiated daily production meetings between all locations to improve communication and allow final assembly to pull product from the supplying plants
• Worked with engineering to improve the engineering change process and reduced change time from 6 months to 3-5 days

This engagement required us to work extensively with Purchasing, Receiving, Planning, Machining, Fabrication, Quality, Assembly and Shipping and achieved the following tangible results:

• Improved cycle time from 9 weeks to 5 weeks
• Reduced WIP by 65%
• Reduced Raw Material inventory by 50%
• Increased throughput by 45%
• Eliminated Final Quality Inspection and its cost
• Reduced changeover time by an average of 15%
• Implemented a comprehensive tooling maintenance program
• Error-proofed shipping crates
• Reduced inter-plant shipping discrepancies by 95%

As a result of the success in this project, the client awarded ProGuide an additional project in Procurement (30 weeks).