Rouster Foods1 was a food processing company founded in the 1980s. In mid-2009, they entered a crucial transition period, having self-financed a new, purpose-built manufacturing facility in anticipation of a large contract that had not yet materialized. In the meantime, Rouster had also purchased but only partially implemented a new Materials Resource Planning (MRP) software system – the company was bearing all costs, and few of the rewards of the software. The new manufacturing contract, if signed, would effectively quadruple production volume, but repeated delays made the likelihood of the deal closing increasingly elusive, and the facility sat empty. Rouster’s owner/operator had also been ready to retire, but was waiting for the contract to be signed before initiating negotiations with a buyer.
Beyond the transitions, the company faced further challenges. Waiting for the move to the new facility, plant efficiency had fallen from 97% to 74% and equipment failures occurred almost daily. Growth had squeezed the warehouse space, causing misplaced materials, downtime for people and equipment, and shipping delays. The imminent move precipitated a sudden turnover of the warehouse staff and the new, inexperienced staff were error prone, negatively impacting both profitability and customer satisfaction. The global markets weren’t helping matters. Raw ingredient costs had risen while clients were squeezing the company to reduce prices. Some of these losses would be resolved with a move to the larger, more modern facility; but as the bottom line shrank, so did the ultimate sale price of the firm. The owner’s goals included:
- Increasing manufacturing efficiency.
- Fully implementing the MRP system.
- Improving management functionality and team work.
- Improving financial results to ready the company for sale.
Bellrock worked alongside the management team for about 6 months. Together we:
- Designed, documented and trained a new, highly visual scheduling system to set expectations and monitor progress with manufacturing staff.
- Applied measurement systems to communicate and quantify performance expectations and results on the warehouse floor.
- Implemented a previously abandoned (but highly functional) inventory management system.
- Transitioned the management team from fragmented and dysfunctional to one that could effectively orchestrate both the plant move and production improvements.
Results – Four Months Later
- The MRP and scheduling systems were fully utilized resulting in labour efficiency hovering around 100%, up from 74% at the beginning of the engagement.
- Profitability saw a $250,000 swing within one quarter.
- The owner was able to conclude the negotiations and sell his business.
1. Company name changed for confidentiality reasons. No other details were changed in the case study.