Case Study: Spicing Up Operations: A Recipe for Global Success
The Challenge:
A Venture Capital firm decided to invest in the food additive business, expanding to 52 different locations across 30 countries and 6 continents. While each site offered similar products, they operated in vastly different ways, had distinct salesforces, and lacked cohesion as a unified entity. The executives felt they were leaving significant potential untapped and aimed to standardize operations to manage costs more effectively. The organization targeted a $100M USD cost reduction across all sites.
The Approach:
We agreed on an approach to develop an organizational design framework that could be applied to each site. This framework allowed site teams to work with local management to tailor the design, within reason, to the local context.
We focused on Process Optimization and Systems of Work in their top 10 sites globally (United States x4, Germany, France, Switzerland, India, China x2). The main objective was to align Operations and Maintenance with standardized and optimized processes across all sites, establishing a clear escalation process and cascading metrics to hold each site accountable.
We standardized calculations for key top-level measurements, such as OEE (Overall Equipment Effectiveness), Availability, and Schedule Attainment. Additionally, we explored new ways to manage costs and operationalize energy usage at the sites.
The Results:
The standardized organizational design led to a more effective organization across all sites, with similar Systems of Work. The initiative resulted in a $125M reduction in costs, with labor, contractor costs, and energy costs being the largest contributing factors. Additionally, we saw a 19% improvement in OEE in the top 10 sites and an improved maintenance schedule attainment.
“I didn’t believe that it was going to work. But working with the team, we changed our structure and added the right people to the organization to help improve quality. Our Operations and Maintenance Teams are working better together and our throughput is the highest I have seen. And, they listened. Our main cost driver was energy costs. They helped us reduce our energy costs by 45%. That was the best part of it. I am having more fun at work now and our team have a common goal. We get better everyday.”
