Our client is a diversified food company operating in most Australian states. The business is divided into two divisions: chilled foods, and meats.
The chilled foods division sells approximately 80% of its produce to the largest supermarket chains in the country. The meat division sells the majority of its produce to fast food chains.
“The food company was part of the supply chain to the real money maker – the fast food business. Although the company was running at a loss, it was kept going by the owner in order to retain control of the total supply chain. This was the first time the company had used the services of an external business improvement specialist, making it an interesting experiment all round.”
A significant number of the operational staff and the factory’s management had worked in the business for decades. GPR Dehler was asked to address the entrenched culture of the business that had resisted efficiency gains for many years and to increase productivity at the factory. This involved and improves the skill levels of the client’s people on site.
During the Rehearsal, two main problems were immediately highlighted. One, the process was heavily labour intensive. Two, there was an imbalance in the production line – in effect a mismatch between the speed at which machinery could operate and the tasks and staffing along the production line.
As a result staff frequently stood around waiting for the production process to catch up with them. It also created the problem of different people being responsible for the same activity. This led to, at times, tasks being undertaking twice, and variations in the quantity of ingredients and washing chemicals being used.
In the engagement the client’s team made and set about testing them in a Rehearsal before going live.
The company’s operational staff generated and rehearsed a series of design changes to the production line in a simulation, and therefore participated enthusiastically in implementing changes on the factory floor. This approach ensured that the cultural change came from within and as a result encountering minimal resistance.
Senior management were surprised and impressed by the magnitude of the results. And even more so when the Rehearsal was applied to other aspects of the business, such as vegetable packs (raw vegetables, cut, washed, packed and shipped).
The company’s owners then extended the scope of the assignment. We set about redesigning and implementing a new organisational structure for the company. This involved establishing new roles and responsibilities, tools for measuring and monitoring production performance and reporting techniques to ensure management and the company’s owners had the information they required.
Moving on from a small loss to a bigger one
Due to this success, the company’s owners asked our firm to analyse operations at their second factory, a co-packaging business producing both branded and packaged goods.
This company was making a significant loss, equivalent to approximately 43% of its turnover. Our analysis showed that the business could not be profitable at its current revenue level as this was exceeded by the costs of labour and ingredients. The business was being retained on the same rationale of keeping control of the total supply chain.
Using the Rehearsal, we again engaged the workforce with outstanding results, this time adding the complexity of implementing a more effective organisational structure with new roles and responsibilities.
Annual losses were reduced from 43% of turnover to breakeven.