Global OEM Machinery Manufacturer: Facility-Wide Kanban & Supply Chain Transformation

The Challenge

A global OEM machinery manufacturer managing $88M+ in annual procurement spend across 43,000 component SKUs and 442 suppliers was experiencing systemic supply chain failure. Assembly lines were regularly shutting down due to component shortages while excess inventory simultaneously occupied valuable floor space. Purchase orders were issued late, ERP inventory data was unreliable due to incorrect backflushing, supplier on-time delivery metrics did not exist, and quality was accepted regardless of condition simply because parts arrived late. The shortage list exceeded 200+ components daily. Materials were received but could not be located — there were no barcoded locations, no Plan For Every Part, and no standard work for the materials team. Sourced materials came from 9 countries including France, Italy, China, Taiwan, Indonesia, and Japan, adding lead-time complexity. Each unit required between 8,000–12,000 components, making visibility and control essential.

Our Approach

Within the first 30 days, a war room was established with whiteboards on every wall to visually track late deliveries and expected arrival dates. Metrics were developed from scratch to track supplier OTD and quality. A comprehensive Plan For Every Part (PFEP) was created across all 43,000 SKUs — documenting where each component came from, who supplied it, and the required quantity per unit. Cycle counts were launched for all components. Every item was assigned a barcoded location, and suppliers were required to barcode their labels for inbound receiving. Critical parts were routed directly to point-of-use locations on the production floor. Kanban pull systems were implemented across all assembly and fabrication lines with RFID-enabled purchasing — when a kanban card was scanned, a discrete purchase order was electronically generated and sent to the supplier. Suppliers were managed under a strict Partner / Maintain / Develop / Exit strategy. VMI programs were established for high-frequency components with multiple daily deliveries. Supplier boundaries were enforced at 0 days late and 2 days early, with contracted kanban quantities calculated against demand. Distribution points were negotiated with suppliers located within proximity to the plant for long-lead and strategic items, reducing in-plant inventory requirements.

Measurable Results

• $1.7M annual savings through inventory reduction via Kanban and material flow improvements
• Inventory turns improved from 9 to 25 — a 178% improvement
• Supply base consolidated from 442 to 127 strategic suppliers — a 26% reduction
• $1.25M annual savings from local strategic sourcing across 4 commodity groups (Plastics, Steel, Electrical, Hydraulics)
• Component shortage list reduced from 200+ daily to under 10 (remaining items were new product introductions)
• $125/unit cost reduction on a critical generator component produced at 35 units/day — achieved within a 2-month crisis window by identifying an alternative supplier and coordinating engineering redesign of the trailer assembly
• Facility-wide 5S, visual controls, shadow boards, PFEP, and standard work implemented across 175,000 sq ft