Deliver Value In Engineered Systems Through Process Improvement
Industry: Agriculture – Dairy Equipment
Function: Finance, IT, Business Development
Our client (a $1.5 billion portfolio company owned by a European PE firm) designed, sold, and installed sophisticated, customized agricultural systems globally. The process of design selection, delivery, onsite installation, and startup would often be the first experience a customer would have with the company. A positive experience would lead to higher wallet share capture with increasing margins in the aftermarket sale of parts, service and consumables. Conversely a negative experience would often lead to only minimal purchases (i.e. sole sourced items) and alternate vendor selections for service and material for the installation lifecycle that averaged upwards of ten years. The primary metric was the On-Time, In-Full Delivery (OTIF) of capital sales for projects. Our client was experiencing an unprecedented level of backlog and missed deliveries due to both internal and external factors primarily:
- The implementation of a new ERP system,
- A new organizational design splitting the order fulfillment process into two different legal entities,
- A new management team at a key supplier, and
- Record capital sales in 2008 as a result of high milk prices.
These factors created a degradation of capital order delivery to an estimated OTIF rate of less than 20% for the first nine months of 2008.
An MMG associate joined in the last quarter of 2008 through the end of 2009 to lead the day-to-day capital goods order management and delivery process–and to improve delivery performance and operational effectiveness, reduce inventory levels, and improve customer service. Our guy led a cross functional Project Sales team to establish processes, roles and responsibilities, documentation, and metrics for managing project orders. In addition, the team sought to improve communications between the supply chain, the sales team and independent distributors, and key suppliers. Finally, significant coordination and management was required to ensure that consistency and commonality was achieved in the North America and the European designs.
As a result, the OTIF percentage on a monthly basis improved to over 90% on a consistent basis by the beginning of 2010.
As part of the project, we also designed and led a ‘voice of the customer’ survey creating a discussion and scoring template, conducting customer/ distributor interviews, analyzing data, and reporting results and actionable recommendations to the senior management committee. This allowed the MMG team to identify and address the systemic root causes of the On Time, In Full delivery failures.
Finally, the effort also included the re-implementation of the risk management system for capital good sales (suspended during the ERP installation). We introduced a customer sign-off process that validated the training, documentation delivery, and system performance–creating a written record to reference against potential, future claims, and providing critical “post-sales” expectation-setting and support.