Cases

Reducing the Cost and Improving Operations for a Crane Manufacturing Company

Challenge

The client was a leading crane manufacturer and was facing some of the following issues:

  • Lack of a clearly documented business strategy
  • The crane division had made losses of Rs 1.3 crores in 1995-96
  • High order backlog (equivalent to 2 years of production) in the crane division
  • Reducing market share in construction machinery division
  • Lack of a formal production planning process
  • High crane manufacturing cycle time of 22 weeks
  • High inventory levels of Rs 4.8 crores in Aug 96 (Cranes Division) and Rs 2.6 crores in Mar 97 (Construction Machinery Division)
  • Unclear job responsibilities across the company
  • Low morale of employees across the company
  • Lack of information systems

Our Approach

UC assisted the client in rectifying the above problems, taking the following steps:

  • Identified new markets for existing products of the crane division
  • Recommended outsourcing of less profitable products and focus on more profitable products of construction machinery division
  • Implemented a crane expediting program to clear the backlog. Sales turnover increased from Rs 11.6 crores (1995-96) to Rs 13.8 crores (1996-97), an increase of 20%
  • Reduced inventory to Rs 2.4 crores in cranes division and Rs 2.1 crores in construction machinery division
  • Implemented a Microsoft project-based planning system
  • Reduced crane manufacturing cycle time to 14 weeks (down 36%)
  • Defined organisation structure, job responsibilities and performance evaluation systems
  • Staffed appropriate personnel, identified vacancies and interviewed candidates for vacant positions
  • Helped in initiating implementation of MRP II systems

Impact

The average sales of the client rose. The total inventory in crane division declined and the total inventory in construction machine division declined.