Business Turnaround: Global HVAC Manufacturer

The Problem: A global HVAC manufacturer was dealing with a 20% increase in conversion costs and a new management staff that struggled to get costs under control.

The Strategic Pivot: The Company engaged us, to reduce conversion costs across 2 facilities in different states and develop the management teams capability.

Best Practice #1: Convert C-Suite Financial Goals into Actionable Shop Floor Metrics.
We worked with the finance team to categorize and rank conversion cost by spend. We then set a reduction target in each category. We also developed a Floor Management System and implemented daily stand up meetings.

Best Practice #2: No Plan Survives First Contact – Prioritize Real-Time Execution Over Theoretical Strategy.
Through weekly kaizen events we worked with the production floor to run trials and implement changes. We also trained the shop floor and management team in lean principles.

Best Practice #3: Lead Time is the Ultimate Metric – The Hidden Driver of Profitability
By focusing on WIP and machine cycle time reduction we were able to reduce the time required to produce and ship units to customers.

Best Practice #4: Standardize to Sustain
We taught the entire management team how to develop and manage Standardized Work. This enabled the team to sustain improvements.

The Outcome:

$8M in conversion cost savings in 3 months.
$Revenue increased from $90M / month from $75M / month.
Recovered $17M in lost sales due to improved supplier performance