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. Sourced materials came from 9 countries including France, Italy, China, Taiwan, Indonesia, and Japan, adding lead-time complexity. Each unit required between 8,000 and 12,000 components, making visibility and control essential.

Our Approach

Within the first 30 days, a war room was established to visually track late deliveries and expected arrival dates, and supplier OTD and quality metrics were built from scratch.

A Plan For Every Part was created across all 43,000 SKUs, every item was given a barcoded location, and critical parts were routed directly to point-of-use on the production floor.

Kanban pull systems with RFID-enabled purchasing were implemented across all assembly and fabrication lines. Suppliers were managed under a Partner / Maintain / Develop / Exit strategy, VMI was established for high-frequency components, and distribution points were negotiated near the plant for long-lead and strategic items.

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
• $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
• Facility-wide 5S, visual controls, shadow boards, PFEP, and standard work across 175,000 sq ft