A 2-Phase Approach for a New Operational Model

A 2-Phase Approach for a New Operational Model

A man's hand, preventing from small bricks to fall on the others

Background

A large global chemical company sought to develop an optimal operational model for its branches around the world. It also sought to reduce the headcount and inventory levels by 10%-20%.

Methodology

To achieve these goals, Tefen predefined a two-phase process. In order to identify the company's precise needs, Tefen held a workshop with the participation of managers and "offsite" managers.

1. The workshop phase was split into three stages:

a. Pre Workshop:
In this phase, Tefen interviewed managers from the company in order to gather data, identify "high potential" topics for assessment, identify main strategic questions, and perform gap analysis.

b. Workshop:
In the workshop, Tefen included the "offsite" managers and discussed with them the "high potential" topics, identified in the pre workshop phase.

Tefen held several parallel session that included in depth discussion in various areas (such as production, maintenance, etc.).

c. Post Workshop:
After the workshop, Tefen prepared a high level mapping for leading alternatives (according to the topics raised in the previous two phases), and identified initial steps for improvement and reflect expected implications due to the planned changes.
In addition, Tefen defined the new concept and organizational structure.

The workshop yielded data that assisted in producing a detailed plan regarding the new organizational structure.

two-phase process table

Fig. 1: The project's methodology phases 

2. Detailed Design and Definition: 

Tefen defined a new and detailed concept for the new organizational structure. It also defined detailed rules & R&Rs new changed functions.

While so, Tefen reflected the implications due to the planned changes, and above all – defined the initial implementation plan.

Work process in maintenance alignment

Fig. 3: Work process in maintenance alignment

Outcomes and Results

The project achieved its goals: reduced 15% of the total operation headcount and 10% of inventory.

In addition, as a result of the project the company defined and implemented an improved operational model:

1. Standardization, and Organizational Structure:
• Centralized departments, as a way to share resources, improve professionalism and efficiencies
• Work studies order to establish time standards, reduced non-value added activities, improved shifts’ structure, reduced hierarchy levels, expanded span of control, and production and efficiency KPIs

2. Organization and Methods Improvement:
• Defined improved work processes in manufacturing, maintenance, logistics, and quality operations
• Improved interfaces between all department, define clear SLAs; and establish improved management routines.
• Improved planning and control practices focusing on maximizes bottle neck equipment OEE
• Established ongoing performances internal benchmark across global operation

Field work analysis

Fig. 2: Field work analysis

3. Inventory Modeling Simulation:
• Built a statistical inventory model, which takes into consideration the monthly sales forecasts and statistical variance of previous years.
• Defined safety inventory levels based on lead time, materials, and product’s importance
• Test-ran the model and production using recommended reduced inventory, while maintained required service levels

Zeev Aharonson

Partner at Tefen Israel

Operational Excellence, Lean Six Sigma, Production Optimization, Supply Chain and Purchasing,  R&D DFX NPI and Project Management Expert. Six Sigma Black Belt and PMP certified

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