Transforming the corporate structure of a global food brand.
Streamlining structures to make production better, faster and cheaper.
Goals
- Overhaul business processes.
- Reduce production lead times.
- Improve product quality.
Obstacles
Patchi was a global franchise chain with 92 branches in 35 countries. The overwhelming volume of sales orders coming from branches around the world was putting excessive pressures on sales processing and production scheduling.
Bottlenecks along the supply and value chains were causing extensive delays in production and deliveries.
Analysis
Sales backlogs would extend to 6 months.
These delays led to mounting dissatisfaction, loss of sales opportunities, internal friction, and finger-pointing culture. More importantly, they could have compromised the value of the franchise network and the brand’s sterling reputation.
The most serious bottlenecks originated within the printing press, and with the way the supply chain was being managed. Weaknesses, gaps, and leaks were also found at order processing, warehousing, and quality control.
Pricing issues were also identified because of transfer pricing policies that were inflating costs when one factory sold products to the other.
Actions
- Merged 5 independent factories into 1 company with 5 product lines: chocolate, ceramics and glassware, printing press, joinery, and silverware.
- Brought in an ERP system to automate the supply chain, order processing, production scheduling, warehousing, outsourcing, delivery and shipping and costing.
- Revamped all business processes from design to sales through manufacturing and delivery.
- Improved quality control over packaging design, manufacturing, and safe packing (to minimize the damages and costs resulting from poor handling, transportation, and shipping conditions).
- Researched the tastes and preferences of customers in Southeast Asia, and then triggered the design of new products that appealed to those specific markets.
- Hired new product designers who had the right qualifications and oversaw the production of prototypes before approving mass production.
Results
Reduced order-to-delivery times by 300% in 4 months by eliminating wastage in hours needed to complete any task, and by properly scheduling demand and safety stocks, as well as discontinuing the production of slow-moving items and excessive work-in-progress.
Raised production capacity in 3 divisions by an average of 35% by optimizing long and short production-runs, machinery setups, scheduling, and storage.
Reduced costs by 20% by removing transfer pricing.
Decreased costs of carrying inventories by disposing of obsolete materials, discontinuing slow-moving items, and keeping safety stocks for the best-selling items.
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