Inventory Reduction and Lean Roadmap Identifies $4M in EBITDA Expansion Opportunities

The Challenge

A $250 million machined aerospace structures company with seven global production facilities serving both military and commercial aerospace markets had made multiple acquisitions each year for several years and had significant discrepancies in operational performance from factory to factory (7 total). Many of the acquisitions had been long time family run businesses that had limited operational best practice implementation or adaption. As a result, several of the facilities were operating at sub-optimal performance level. The holding company turned to TriVista, leveraging our expert team to identify manufacturing and inventory opportunities within two production facilities representing approximately $140 million in sales. A key deliverable was to determine why these two facilities, despite exceeding growth expectations on topline revenue, were lagging on margin, EBITDA and cash flow performance compared to the remaining five sites.

Our Approach

TriVista’s team of experts applied Lean Six Sigma methodologies to evaluate the operational performance of the 2 production facilities. Utilizing tools such as Pareto Charts, DMAIC Principals (Define, Measure, Analyze, Improve, and Control) and extensive employee interviews, TriVista developed detailed value stream maps and spaghetti diagrams to paint an exact picture of the current state of the operation. Once this baseline understanding of current performance had been established, TriVista teams proceeded with an in depth diagnostic evaluation focused on:

• Sales & Operations Planning
• Inventory Management
• Inventory Analysis
• Procurement
• Operational Performance

Upon completion of the analysis, TriVista presented the findings to the COO and Business Unit General Manager with detailed suggestions on improvement opportunities and a clear roadmap for implementation.

The Results

TriVista identified over $4.0 million in EBITDA expansion opportunities, and more than $4.5 million in inventory savings, all of which could be realized in a 12 month time period. Our team identified sub-optimized processes, found ways to reduce setup times and reduce significant amounts of both scrap and rework at the two facilities. In addition, we also delivered the following measurable results:

• Identified that certain SKUs were experiencing 100% rework – reduced rework by more than 50%
• Identified that optimization opportunities existed within machine programming – reduced run hours by 5%
• Improved scheduling and established overtime rules – reduced overtime by 15%
• Identified improvement opportunities within the operations planning process – reduced cycle time by 10%