Defense Armor Manufacturer: Supply Chain Ethics Overhaul & 97% OTD Recovery

The Challenge

A defense armor manufacturer operating across 4 facilities (two 300,000 sq ft fabrication plants, a 75,000 sq ft paint facility, and a 200,000 sq ft kitting/packaging center) with $28M in annual procurement spend was in crisis. On-time delivery to military customers was below 50%, and three DCMA (Defense Contract Management Agency) government quality representatives were stationed full-time at the facility due to chronic late deliveries. The root cause ran deeper than scheduling: the inherited buyer was receiving trips and financial incentives from 4 favored suppliers — all personal friends of the company owner — who received the bulk of purchase orders. These suppliers were capacity-constrained and batch-producing 300-400 identical parts when the BOM called for only 16, creating constant shortages. Indirect material spending in the tool room was $65,800/month with no controls — no min/max, no Kanban, no cycle counts. Operators simply requested what they wanted with zero accountability.

Our Approach

After building the case and presenting findings to the owner, the compromised buyer was terminated for cause. The supply base was expanded from 6 machining suppliers to 12, and requirements were split across the broader base to eliminate capacity bottlenecks. Purchase orders were restructured to require delivery in complete kits matching BOM quantities — no more individual part shipments that created shortages. Pull systems were established for raw materials, components, and indirect supplies with SWIP methods across all facilities. Formalized processes were developed for purchasing, strategic sourcing, planning, and shipping/receiving — none of which existed previously. Scorecard metrics were created for OTD, cycle counts, supplier performance, and inventory turns across all 4 sites. For the tool room, Kanban was implemented with weekly spend review meetings, immediately reducing monthly expenditure from $65,800 to $21,700. A multi-facility ERP integration was led to improve procurement, logistics, and planning across all sites.

Measurable Results

• $425K in strategic sourcing savings across $28M spend through competitive bidding
• On-time delivery recovered to 97% — from below 50% at baseline
• Indirect material costs reduced by 67% ($44K/month savings) through Kanban implementation
• Delivered 97 units to clear the entire military backlog to zero
• All 3 DCMA government quality representatives voluntarily departed the facility after observing the transformation
• Scorecard metrics established across 4 sites for the first time in company history
• Formalized purchasing, sourcing, planning, and logistics processes implemented where none existed