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Investment in Lean and Supply Chain Training Pays Off for Instrument Manufacturer

 

Investment in Lean and Supply Chain Training Pays Off for Instrument Manufacturer

How CLM & CPIM Training Contributed to Improved Financial Performance and Competitiveness

thom-mandl-apics-noco  By Thom Mandl, President, Mount Sopris Instrument Company, Inc.


Challenging Market Conditions Required Increased Operational Efficiency

Mount Sopris Instrument Company is a leading manufacturer of geophysical instrumentation for subsurface investigations, focusing on the groundwater, mining, environmental, and geotechnical markets. For over 60 years, Mount Sopris has delivered innovative solutions to drillers, miners, engineers, and researchers in over 120 countries around the world.

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Given that Mount Sopris supplies instruments to the mining and natural resource markets, sales can be substantially impacted by fluctuations in commodity prices. The current down cycle, while beneficial to many industries, has resulted in decreased demand and stiffer competition from other geophysical instrument manufacturers – some of whom are in lower cost regions of the world.

The current down cycle, while beneficial to many industries, has resulted in decreased demand and stiffer competition from other geophysical instrument manufacturers–some of whom are in lower cost regions of the world.

To address this challenge and grow market share, the Mount Sopris leadership team determined that operational improvements were an important element in increasing the company’s competitiveness. Specifically, it was recognized that reducing customer order fulfillment time represented significant value to customers and would create a compelling competitive advantage.

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Goal Established to Build and Ship Any Product Within 10 Days

Typical industry lead-times are 8-10 weeks, due to the high cost of materials, semi-custom nature of the products, and low volume/high mix demand. The leadership team believed, however, that much shorter lead-times were possible using advanced supply chain practices and lean manufacturing techniques, and established a target of less than 10 days from the receipt of a sales order to shipment.

To achieve this goal, there were many concerns that needed to be overcome, including the following:

    • Demand forecast didn’t inform supply (no master schedule)
    • Purchasing didn’t have visibility until a sales order was issued
    • Long lead-times and uneven quality from suppliers
    • Item master information inaccurate or missing
    • Batch manufacturing and the lack of visual work instructions

Considering these challenges and the need to move quickly, Mount Sopris sought outside assistance from local training organizations, including APICS Northern Colorado, Manufacturers Edge, and Transformance Advisors. To accelerate the transformation, we also applied for and received grant money through the Colorado Office of Economic Development, the Denver Office of Economic Development, and the Rocky Mountain Trade Adjustment Assistance Center.

The Engagement: Lean Culture Begins to Take Root

Mount Sopris began its transformation by enrolling two of its operations leaders in the APICS NOCO Certified Lean Master program, which includes 9 days of training over a 3-month timeframe. In addition to learning lean concepts and techniques, the hands-on program also required that the trainees lead a lean project at Mount Sopris. At the same time, the entire company participated in lean training classes delivered by Manufacturers Edge, helping everyone develop a common understanding of the “Lean Tool Box.”

The first project was a huge success. Focusing on the winch assembly area, the team reduced the labor content by 50% and the time required to build, test, and ship a winch to just a few days. Two new lean projects were started. Visual management boards were created, work instructions developed, and the right performance metrics established. Momentum was building.

Strategic Sourcing: Building Win-Win Relationships with the Right Suppliers

To deal with the long lead-times and uneven quality of incoming parts, a strategic sourcing initiative was launched. This included a thorough qualification of suppliers followed by a competitive bid on machined parts and other critical components. When the dust settled, Mount Sopris significantly reduced its supply base and signed long-term agreements with key suppliers. These agreements ensured prompt delivery and price stability in return for a consistent and substantial portion of our purchasing spend.

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Implementing World-Class Supply Chain Practices

Next, Mount Sopris assessed and addressed internal supply chain practices, with the assistance of APICS NOCO CPIM Value Stream Manager, Bob Forshay. Bob led the team in establishing formal processes for forecasting, sales & operations planning, and master scheduling. He also provided guidance in the development of effective inventory control practices and the establishment of an kanban replenishment system.

Perhaps most importantly, three Mount Sopris supply chain employees completed the CPIM (Certified in Production & Inventory Management) program provided through APICS NOCO. These employees are now well equipped to sustain and drive further process improvements in planning, scheduling, and production management.

“I’m very impressed with the transformation at Mount Sopris. They are on their way to becoming a true quick turn manufacturer… in just a matter of months!”
– Chris Stone, Project Manager, Rocky Mountain Trade Adjustment Assistance Center

Lean and Supply Chain Training Led to Measurable Improvements

As time went on, Mount Sopris employees fully owned the transformation and are finding ways to continually improve operational efficiencies and reduce customer lead-times. About 18 months following the start of the journey, average customer lead-time has dropped from 8-10 weeks to 12 days, while on-time delivery has increased to over 90%.

About 18 months following the start of the journey, average customer lead-time has dropped from 8-10 weeks to 12 days, while on-time delivery has increased to over 90%.

The ability to rapidly fulfill customer orders has, in fact, led to greater competitive advantage and increased market share growth. Despite continued strong headwinds in the mining sector, Mount Sopris is on track to grow revenue by 20% this year.

In addition to the competitive advantage of quick delivery, Mount Sopris has also benefitted from increased customer loyalty, improved product quality, and lower labor costs. Inventory turns have tripled, as the dollar value of inventory has dropped by about 50%–producing a substantial positive cash flow.

While delighted with the progress to date, Mount Sopris is well aware of the need for further improvements in its supply chain and manufacturing operations. However, due to the investment in lean and supply chain training, the company now has the knowledge and skills to continue improving operational performance to support profitable top-line growth and a strong balance sheet.

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