PIT_ZXG779_medproducts2_deepdivedx_na-2-10-02.ppt2-WeekAssessmentSummaryMEDICALDEVICEMANUFACTURERSanitizedexampleDateCONFIDENTIALThisreportcontainsinformationthatisconfidentialandproprietarytoMcKinsey&CompanyandissolelyfortheuseofMcKinsey&Companypersonnel.Nopartofitmaybeused,circulated,quoted,orreproducedfordistributionoutsideMcKinsey&Company.Ifyouarenottheintendedrecipientofthisreport,youareherebynotifiedthattheuse,circulation,quoting,orreproducingofthisreportisstrictlyprohibitedandmaybeunlawful.PIT_ZXG779_medproducts2_deepdivedx_na-2-10-02.ppt2CLIENTOPPORTUNITYSUMMARYSignificantgainsinleadtimefromsubassemblytoshipfrom32daysto4•E.g.,ProductAleadtime=32daysto<4daysParallelreductionininventoryofpotentially70%overall•SubassemblyWIPfrom183,600to7,200units•FinalAssemblyandProductAWIP=17,000to1,920unitsSignificantqualitygainsinselectedareas•Subassemblyfrom83%to95%•ComponentForm,Foldfrom85%to95%to98%+•FinalAssemblyfrom90%to95%Laborproductivitygainsof25%+fromremovingwaste(e.g.,handling)andworkcombinationPotentialimprovementinfloorspaceutilizationallowingbetterflowandincreasingplantcapacitySimplifiedinformationflow,switchfromSAPforecastcontroltodistributioncenterreplenishmentPIT_ZXG779_medproducts2_deepdivedx_na-2-10-02.ppt3CONTENTS•Currentstateassessment•Targetstatedesign•OpportunityandfutureoperatingmetricsPIT_ZXG779_medproducts2_deepdivedx_na-2-10-02.ppt42-WEEKASSESSMENT(OBJECTIVESANDAPPROACH)*JointMcKinsey/clientTeamactivitiesSource:McKinseyMainactivities•Understandcurrentdemandpatternforproductgroups•Completedetailedmappingofmaterialandinformationflow•Defineclearvisionoftargetleanstate(includingperformancelevels)•AssessareasonableestimateoftargetoperationalmetricsandtheirfinancialimpactApproach•InitialmeetingMcKinsey/client•Understandcurrentstate*–Mapmaterialflow–Mapinformationflow–Understandcurrentperformancelevels•DefinevisionofLeanTargetState*–Targetmaterialflow–Targetinformationflow–Targetperformancelevels•Reportout4/194/204/214/224/264/274/284/294/30WeekendPIT_ZXG779_medproducts2_deepdivedx_na-2-10-02.ppt5DEMANDPATTERNS–PRODUCTA*Month-to-monthchangeinpercentSource:clientsourcedsalesdatabase;S&OPbuildplanspreadsheetUnitsThousands0153045607590105120135OctNovDecJanFebMar199819991Q996%salesvolatility*34%schedulevariability•Actualdemandisrelativelystable•DemandappearstobevolatiletoshopfloorSalesworldwideSchedule(clientsite)Warning!PagenotoriginallycreatedbyProduction.Fakedatachart!!!PIT_ZXG779_medproducts2_deepdivedx_na-2-10-02.ppt6SOURCESOFSCHEDULEVARIABILITYResultin•Supplierinventory–excessivesub-assemblyinventory•DCsetting"high"safetystocksoffinishedgoodsinventory•Shopfloorinefficiencies–Manpower–Equipment–WIP–Floorspace–ExcessrawmaterialSchedulevariability34%Totalvaria-bilitySalesvolatilityNewproductlaunchesProductyieldsfluctua-tionSchedule:marketdemanddiscon-nectPartshortages(primarilyhigh-valuecomponent)Source:TeaminterviewsESTIMATEPIT_ZXG779_medproducts2_deepdivedx_na-2-10-02.ppt7CURRENTSTATEINFORMATIONFLOWSKeypoints•Startschedulecanbedifferentfromproductionstarts•Multiplesourcesofinformation•SAPsmoothingalgorithmscorruptproductionrequirements•SAP"over-corrections"exaggeratefluctuations•PrioritizationwithinplancorruptstheschedulefurtherManufacturingcheckstoverifyfollowingproductplans•Financeverifiesforecast•Meetsfinancialgoa...
