How Chelsea Frames Improved Production Efficiency
A Case Study of how KB Consulting’s programs streamlined workflow
Overview of the original situation:
The Chelsea Frames staff had an unpredictable workload
Busy companies who produce a custom product soon find that managing labor costs is vital to the profitability of their company. Chelsea Frames found that to be true, especially in unpredictable times when workload was inconsistent, causing there to be either too many “hands” or not enough help, depending on the week. In addition, the production team was making many mistakes and too much time was being spent on solving problems as they happened. The company decided that it was time to reduce overhead, confusion and mistakes while improving their ability to produce products on time.
What we did to change things:
Forecasted upcoming workloads for scheduling
First, we set new goals for the production department which included:
- 90% of all projects being completed by their due date
- Customer order problems reduced to 2% or less
- Production labor costs restricted to less than 10% of sales
To achieve these goals, the company began forecasting production demand so that workloads for each day were anticipated. First, time studies for each production task were conducted so that we knew how long it took to complete every phase of production. Next, all incoming projects began to be “graded” by degree of difficulty so that total workload could be calculated instead of the number of projects. By assigning a grade of difficulty to each project based on time required to complete it, the production department now knew how many hours of work it faced each day, week and month.
Once workload could be determined in hours, a new labor schedule was created to accommodate typical workloads. Doing this solved the problem of too many workers on hand during light production loads and not enough help in busy times. Matching workload to labor schedules allowed management to increase or decrease staffing in advance of needs and dramatically improved profitability.
To ensure customer satisfaction, we added quality control steps into the process and double checked the finished project for accuracy before customers were notified that orders were ready. Scorekeeping was also initiated so that every mistake or customer problem as documented and categorized.
Next, new equipment was added in areas of production where labor costs could be reduced enough to pay for these investments within 24 months. Finally, the company created a very detailed training manual, documenting the “Chelsea Way” of producing every aspect of production. This training program included testing and certification allowing consistency in performance. The documented training program also allowed management to interchange team members and shift them to production areas based on project demand.
The results of this program:
A stronger team, better profits, and happier clients
The company now exceeds the 90% completion by due date goal almost every month which has improved customer satisfaction and created team accountability. Problems with orders have been drastically reduced and gross margin has improved by 4% due to reduction in material replacement costs. Labor has been reduced by 6% which has saved the company thousands of dollars due to training, improved procedures and better equipment. Today, the company is setting new goals and scorekeeping them every day so that production efficiency can continue to improve.
Now that this program is in place, President Jaclyn Acker says she appreciates the ability to forecast workload demand and adjust staffing accordingly which removes the necessity to constantly react to unforeseen problems.
“There is a lot less stress on the team when someone calls in sick or takes a vacation. There is a lot more predictability and we can plan much better without risking a promise to a client that we cannot keep. Even rushing orders for clients needing work faster than normal is easier to accommodate. Living day to day with deadlines was once stressful but now much easier to manage and we have better team moral since we operate in crisis-mode much less frequently and client satisfaction has gone way up since turnaround is now predictable and product quality is improved. So yes, it worked for our company!”