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Factory Optimization

Patriot Insight

January 22, 2024

Recent Client Engagement

 

Patriot Industrial Partners recently completed an engagement where we developed an industrial strategy for a multi-site aerospace factory business to become EBITDA and cash flow positive on a year-to-year basis. Patriot collaborated with the customer’s teams to gather insight and understanding of the business. Specific initiatives were developed to get the business to become EBITDA and cash flow positive. Collaboration with the Company corporate and site leadership level refined the initiatives into effective, executable actions. Patriot team finalized plans, initiatives, and supporting financial modeling into initiatives that were organized into three distinct plans: 

  • 1 year EBITDA improvement plan while utilizing limited CapEx and minimal cost expenditures. 

  • 3-year transformational plan that optimized flow and capabilities into Centers of Excellence. 

  • Footprint consolidation plan as an alternative option 

 

By harnessing the expertise of the Patriot team and establishing effective communication channels with the client, the client received three specialized, high level, executable business performance improvement plans with detailed implementation measures. The manufacturing facilities are positioned to execute on a rapid turnaround which will achieve EBITDA and cash flow targets from the transformational strategy. 

Factory Optimization Process 

In the pursuit of positive EBITDA performance and positive cash flow results, Patriot develops impactful, executable business performance improvement plans that can be individually implemented with respect to given circumstances. These plans are divided into three phased improvement projects based on duration. Each phase is comprised of specific initiatives that cater to the available timelines and resources of the client.  

Factory Optimization Phase 1 

A quick improvement plan that emphasizes the optimization of current processes and resources in place while utilizing limited Capital expenditures and operational costs. 

Gemba Walks, SQDCP, and Visual KPI Metrics - Establishing Gemba walks, engaging employees and implementing a foster a culture of continuous improvement. Implementing visual boards at Tier 1 and Tier 2 levels using Safety, Quality, Delivery, Cost, and Productivity (SQDCP) metrics to facilitate real-time tracking of performance metrics. Regularly analyzing and assessing Key Performance Indicators with the team to identify trends, areas of improvement, and strategic adjustments for optimal performance. 

Factory Flow Enhancement - Restructuring the factory flow to minimize travel between stations and ensuring a clear and efficient path for the value stream from order to ship. Improving setup and changeover times to boost throughput are implemented.  

Establish Lean Plan and Conduct Bottleneck Analysis - Implementing lean principles and initiatives to identify and eliminate waste, improve process efficiency, and enhance overall productivity through continuous improvement methodologies.  

Management Alignment Meetings - Establishing management alignment meetings to review performance, address challenges, and strategize improvements. This approach encourages collaboration and aligns the team with organizational goals. 

Financial Assessment - Review of the current financials and appropriate short-term actions to be taken while emphasizing minimal capital expenditure during the short term, utilizing existing resources efficiently, and prioritizing improvements that yield immediate benefits.  Limiting the external resources and maximizing internal capabilities and expertise, minimizing reliance on external resources to ensure better control over the optimization process. 

Factory Optimization Phase 2 

A mid-term improvement plan that builds upon phase 1 initiatives and extends into product line transfers, more in-depth process improvements and commercial improvements. 

Scheduling and SIOP - Systematic planning and coordination of production activities to optimize resources and meet delivery timelines. A comprehensive approach that integrates sales forecasts, inventory management, and operational planning to ensure efficient production, supply chain management and sales forecasting is accomplished.   

 

Product Line Transfers - Strategically transferring product lines to optimize production efficiency, reduce costs, and align manufacturing capabilities within business objectives. 

 

Process Improvements - Undertaking comprehensive evaluations of existing processes, mapping out the current and future states, and implementing improvements to enhance overall workflow and efficiency. Focus on New Product Introduction processes and existing production processes to enhance efficiency, reduce lead times, and ensure a smoother transition from product development to manufacturing. 

 

Quality Improvements - Upholding the highest standards of safety, reliability, and performance in aerospace components and systems through the implementation of effective quality monitoring such as root cause analyses and statistical process control. 

 

Commercial Improvements - Enhancing commercial strategies, such as contract pricing and improving customer relationships will ensure sustained business growth and competitiveness. In addition, leveraging local government business incentives. 

Factory Optimization Phase 3 

A long term, transformative improvement plan built off the two previous phases that emphasizes industrial footprint optimization, site synergy realignment, and new contracts to optimize and grow the business. 

Financial Planning - Developing and executing a comprehensive capital expenditure plan to invest in advanced technologies, infrastructure, and equipment for sustained long-term growth. 

 

Industrial Footprint Optimization - Assessing and optimizing the industrial footprint by strategically locating facilities, consolidating operations, aligning product lines to optimal machines, adding capacities, and leveraging economies of scale. 

 

Site Synergies and Vertical Integration - Realignment of site synergies to enhance coordination and collaboration between different manufacturing sites, ensuring optimal resource utilization. Exploring opportunities for vertical integration to bring more stages of the production process in-house, ensuring greater control over the supply chain and reducing dependencies. 

 

Strategic Sourcing - Implementing strategic sourcing practices to secure key inputs efficiently, reduce costs, and enhance overall supply chain resilience for long-term success. 

 

New Contracts Aligned with Site Capabilities - Securing new contracts that align with the manufacturing site's capabilities, expertise, and strategic objectives to maximize production efficiency. 

Next Steps 

Please contact Patriot for future engagement opportunities if the above insight outline matches your current business needs.

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