Supplier Efficiency Study and Implementation Support for Global Sauna Manufacturer
The client, a leading global manufacturer of Sauna solutions for the high-end market, has had a successful collaboration with a Chinese supplier for many years, which mainly has been supplying the client in the US.
During 2020, the US market has seen a rapid growth, while the supplier claims to have limited physical space and skilled workers to improve their capacity. ARC Consulting was approached to support the client evaluate the supplier’s real capacity and build an efficiency plan to assist the supplier improving their capacity.
With growing market demands, the Chinese supplier faced three months of backorders. The client brought in ARC Consulting as an independent third-party to help the supplier identify their current real capacity and the maximum capacity of the factory, and then help the supplier develop an action plan to solve the capacity challenge.
ARC Consulting finished the project through three steps:
1. On-site supplier evaluation
ARC Consulting’s consultants spent four weeks on-site in the supplier’s factory to get a comprehensive understanding of the product’s processing flow and real capacity for each production step. ARC Consulting conducted three key steps on-site:
- Face-to-face interviews with key persons from the production line, such as the production manager, team leader of each production step
- Analyze past months’ production plan
- Evaluating each machine and employee production efficiency, as well as the factory’s space measurement
After the sufficient data collection, ARC Consulting helped the supplier calculate their daily, weekly, and monthly capacity. Further, a simulation to reflect the capacity changes based on the numbers of employees and machines were conducted. ARC Consulting delivered a mid-term report to the client, including a capacity improvement plan for short and long term as well as a factory re-layout. The final action plan was discussed and determined with the supplier and the client.
3. Action plan implementation
ARC Consulting’s consultants worked together with the supplier to implement the designed action plan during a one-month pilot production period. Weekly factory visits were conducted during the pilot period to ensure an efficient workflow.
The project helped the client clearly understand their Chinese supplier capacity situation, both current and future maximum capacity.
After the one-month pilot period, designed by ARC Consulting, the suppliers production capacity increased 15%. Over time, the supplier’s capacity continues to increase and is estimated to reach maximum capacity during Q1 2021.
Additionally, the supplier took ARC Consulting’s advice to make a long-term investment plan for a new factory to match with rising demand in the future.