Driving market focused resource allocation decisions
The issue
- A business unit of a global speciality chemicals producer supplying catalysts for industrial applications to multiple markets across all geographies
- Capacity constrained and being challenged to improve overall business profitability
- Shared manufacturing assets serving multiple market-facing business units
- Upcoming regulatory changes required product recipe changes with implications on the existing production process
- Limited attempts to address supply constraints in an effective manner, with over-stated demand and poor sales & operations planning disciplines
Solution
- Establish & exploit true production capacity of existing assets:
- Identification and elimination of bottlenecks in supply chain & productions
- Drive for OEE in existing plant (batch size & sequencing, down time & maintenance etc.)
- Identify options to reallocate capacity use to more profitable customers
- Identification of customers & volumes yielding below average contribution allowing for either renegotiation or re-allocation
- Establish cross-market segment view of long-term demand
- Markets & functions created fact base & presented in facilitated cross functional sessions to build cross markets view & build priorities for overall business
- Revamped S&OP including product profitability of prospect pipeline to ensure capacity is utilised for highest financial returns
The results
- CAPEX spend avoidance of £18m with extrapolated implications to the whole division of c. £100m
- Improved joint-management understanding on the levers of capacity & profitability, supported by a cross-market decision making governance process to make data based trade-offs
- Increased production capacity through de-bottlenecking (e.g. batch sequence & maintenance optimisation) with potential resulting contribution uplift of ~ £ 10m p.a.
- 235 tonnes of unlocked capacity through selective elimination of low margin product variants and Sales re-alignment
An award-winning team
