Opex in Manufacturing
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BearingPoint's operational excellence approach in consumer packaged goods (CPG) manufacturing focuses on reducing production costs and fostering a culture of continuous improvement. The strategy offers benefits such as increased profitability, enhanced flexibility, and improved organizational leadership, resulting in average conversion cost reductions of 10-15% and EBIT improvements of 5-10%. Specific case studies demonstrate successful implementations across various sectors, including food & beverage and dairy industries, where operational efficiency was maximized through process standardization and workforce optimization.
Opex in Manufacturing
- 1. OPEX in CPG Manufacturing A BearingPoint Accelerator BearingPoint’s operational excellence approach in CPG Manufacturing primarily aims to reduce costs in production and to support clients in their transformation journey. Our operational excellence approach contributes to the creation of a culture of continuous improvements in factories.
- 2. Contents Market Drivers Our Approach Client Benefits References Contact OPEX in CPG Manufacturing | A BearingPoint Accelerator
- 3. OPEX in CPG Manufacturing | A BearingPoint Accelerator In today’s globalized market, manufacturing companies in the consumer packaged goods (CPG) industry experience increased competitiveness and price pressure, which force them to focus on cost cutting initiatives in production and the supply chain set-up. Market Drivers • Due to the competitive landscape, CPG companies are required to focus on continuous efficiency improvements in order to minimize their cost base • In order to stay profitable and reach EBIT targets, factories need to utilize their full capacity when it comes to machinery, input material, and personnel • In the CPG industry, acquisitions and volume consolidations are necessary in order to stay competitive • However, due to a large degree of uncertainty it is more of a norm than an exception that companies miscalculate expected impact and the effects of these events, why it is important to secure the variables that are possible to control – such as production capabilities • Customers demand a greater variety of products while simultaneously altering trends give rise to fluctuations in volumes • This requires factories to manage volume variety and adapt both machinery and processes to enable efficient delivery of small batches Profitability Need for flexibilityUncertainty
- 4. OPEX in CPG Manufacturing | A BearingPoint Accelerator Our approach centers around the BearingPoint Operational Excellence framework, which covers the three main dimensions: core operations, management control systems, and culture. While planning and maintenance are crucial enablers for efficient production, it is within the production elements where the main part of the financial potential lies The Core operations analysis seeks to improve production related activities focusing on labor productivity, machine OEE and yield, while securing optimized production & workforce planning and increasing the proactive focus in the maintenance department Core operations Ensure an efficient flow of information and an optimized organizational structure for quick actions and improvement work Analysis of the organizational structure including span of control, roles and responsibilities as well as performance management and meeting structure Management control systems The cultural dimension aims to improve the organizational mindset and behavior to support the continuous improvement capabilities In this dimension, we’re looking at leadership capabilities, corporate structures and competence development, as well as environment, health and safety (EHS) culture Culture Management control systems Culture Production M aintenanc e Planning
- 5. OPEX in CPG Manufacturing | A BearingPoint Accelerator Improvement actions are developed in close collaboration with the client within each of the dimensions, and lays the foundation for the improvement work. • Set the project foundation: establish the business case, define the project mandate and stakeholders • Solution design of the core operation elements • Planning process analysis to minimize planning related costs with maximum flexibility • Maintenance work order processes analysis • Development of implementation plans • Detailed estimations of potential Investments • Secure and plan resources • Quick wins • Implementation activities conducted • Define follow-up metrics • Fine tune and standardize new ways of working • Follow-up up on defined metrics to secure sustainable improvements • Pre-analysis: data gathering, management interviews and employee survey • Analysis preparation: set up war room, establish hypothesis and plan analysis activities • Established baseline • Initial hypothesis & analysis activity plan Core operations Mobilize 1-2 weeks Analyze & Design 4-5 weeks Plan 1-2 weeks Implement ~ 20 weeks Follow-up 12 weeks • Design of organizational setup, effective meeting structures and control system • Secure metrics and plan organizational change • Preparations for a new meeting structure • Implement org. change and control system • Daily coaching in meeting execution • Follow-up on overall reporting and meeting adherence Management Control Systems • Design future ways of working for leadership and structure enabling as well as favoring CI culture • Improvement areas with calculated savings • Future state design supporting CI and operational excellence targets in all areas • Plan activities for an improved CI culture • Tactical implementation plans for each work stream • Management coaching in CI and safety culture • Sustainable OPEX design in place • Quick wins realized • Secure continuous improvement culture • Goal fulfillment through implementation follow-up Culture Deliverables > > > >
- 6. OPEX in CPG Manufacturing | A BearingPoint Accelerator Our approach not only improves profitability and production agility, but also enhances the organization, its leadership and the control systems to enable a continuous improvement culture. Culture Even though the easy-to-measure and direct effects, such as increased profitability, stability and flexibility are some very pleasant results to be expected from an operational excellence project, the cultural improvement should be considered as one of the major benefits. Expect an organization with positivism and pride in what they do while your EHS KPIs improve. Expect an organization ready for continuous improvement delivering on the YoY savings target for the coming decade. • From previous experience BearingPoint estimates an average reduction in conversion cost ranging between 10-15% • Also, an EBIT improvement of around 5-10% is to be expected • Reduced variability in production efficiency gives more accurate capacity estimations and thus reduces planning complexity and provides less risk when consolidating volumes • Efficient planning and optimized changeover routines allow for increased product complexity without losing valuable production time or building up stock Improved Profitability Increased FlexibilityStability and Predictability
- 7. OPEX in CPG Manufacturing | A BearingPoint Accelerator Leading global food & beverage company The client initiated a comprehensive program with an ambitious cost-out target addressing several factories. BearingPoint was engaged as a partner where several operational excellence projects within food & beverage, home & personal care, and confectionery and snacks was conducted. BearingPoint helped the client to reduce conversion costs in the production of goods by standardizing processes to optimize the use of the workforce, maximizing machine utilization, and building capabilities that drive continuous improvement. BearingPoint supported the initiatives with its hands-on approach and analytical and functional experience. Leading dairy producer The client was challenged by decreasing milk consumption volumes, increased international competition and high cost-levels. BearingPoint was chosen to do a full analysis followed by implementation at one of the dairies. The project included an overall redesign and improvement of the organization and processes within production, maintenance, management systems and planning. References
- 8. OPEX in CPG Manufacturing | A BearingPoint Accelerator Contact Peter Brente Partner BearingPoint Sweden peter.brente@bearingpoint.com Linda Helsing Manager BearingPoint Sweden linda.helsing@bearingpoint.com About BearingPoint BearingPoint is an independent management and technology consultancy with European roots and a global reach. The company operates in three units: Consulting, Solutions and Ventures. Consulting covers the advisory business; Solutions provides the tools for successful digital transformation, regulatory technology and advanced analytics; Ventures drives the financing and development of start-ups. BearingPoint’s clients include many of the world’s leading companies and organizations. The firm has a global consulting network with more than 10,000 people and supports clients in over 75 countries, engaging with them to achieve measurable and sustainable success. For more information, please visit: Homepage: www.bearingpoint.com LinkedIn: www.linkedin.com/company/bearingpoint Twitter: @BearingPoint © 2019 BearingPoint. All rights reserved