Episode 585. Matt Sobieski, How to Analyze a Manufacturing Company

Unleashed - How to Thrive as an Independent Professional

Matt Sobieski discusses the process of helping a manufacturing plant improve its performance by understanding the problem statement and 47 different analyzes. He suggests talking to the plant manager or head of operations to understand the biggest challenges, cost buckets, operational constraints, and capacity constraints.

Diving into One of 47 Analyzes

Matt explains more about the 47 analyzes, one of which is the cost of goods sold, breakdown, and margin analysis, which helps in understanding the cost structure of the plant. This includes examining production, backlogs, inventory levels, and other factors. In the case of an agricultural manufacturing company during the pandemic, the focus was on streamlining their ordering process to increase productivity. Matt also discusses the importance of understanding the big cost buckets, such as labor, materials, waste, and inventory management. He shares a case where a client had issues with their cost per unit, where they could not get their arms around their cost per unit. The data provided by the client was not high-quality, and it was difficult to differentiate between different lines. Matt shares a few ways to address this issue.

Dealing with an Inflationary Environment

In the current inflationary environment in the US, costs have been increasing, particularly labor costs. Consultants can help plants by asking questions and providing a fresh perspective to understand why material costs and overtime costs are high. This can lead to better scheduling and equipment utilization, which can help reduce costs and improve productivity. One example of this is an agricultural manufacturing plant where the plant manager was unaware of the importance of morning production meetings. By asking open-ended questions and being curious about how things run, consultants can identify areas for improvement.

Overall Equipment Effectiveness

Operations professionals should always have a plan for the day and recover from deviations when necessary. Asking open-ended questions and understanding the fundamentals of operations can help identify areas for improvement. One analysis that consultants like to use is the overall equipment effectiveness (OEE), which is a measure of overall equipment effectiveness. OEE is calculated by comparing the performance of different pieces of equipment and identifying areas for improvement. Matt goes on to explain how the analysis of OEE is defined and quality calculated. He stresses that it is crucial to calculate the correct OEE and quality first time, as not all units are produced correctly. It is important to ensure that the correct approach is taken when analyzing OEE data.

Identifying Waste in Manufacturing Plants

Matt discusses the concept of identifying waste in manufacturing plants, including the classic seven or eight types of waste. They highlight the importance of removing waste to improve efficiency and productivity. One such type is intellect, which involves people using their brain power inefficiently. To identify waste, they suggest using GEMBA (Go where the work is happening) to observe people and their actions. One example is an automotive plant that had a production cell with two operators, causing a lot of motion. To address this, they moved parts from one end of the line to the middle, reorganizing the path for forklift drivers. This resulted in faster unloading times for parts coming in and out of the area. Matt emphasizes the impact of simple things like moving parts to central locations and reducing the time spent on unloading parts and shares an example that helped eliminate waste and improve efficiency and productivity.

The Importance of Fresh Perspectives when Addressing Issues in Supply Chains

Matt shares an example of a company that had to print labels for products and then wait for them to be printed. To address this, they developed a Kanban system where labels were printed ahead of time for all SKUs, eliminating the need for waiting for labels. This solution was cost-effective and efficient, as it saved labor costs. He also discusses the importance of managing risk in supply chains, particularly during the pandemic. He highlights the importance of understanding the risk associated with individual suppliers, which can help in making informed decisions about ordering buffer stock, onboarding another supplier, or building capability in-house. Matt explains the importance of eliminating single sources of failure in manufacturing. He cites examples of poor performing plants and underinvestment in automation and offers suggestions on factors that need to be analyzed and used to understand what drives failures.

Asset Management Analyzes

The discussion moves on to asset management analyzes, such as make versus buy, capex, effectiveness, equipment and technology, and life cycle management, which are crucial for businesses to understand their costs and make the right capital investments. Capex is important in determining the cost of repairing a machine versus replacing it, especially in a constrained environment like manufacturing. Assessment utilization is also important, as it helps businesses optimize their equipment usage and preventive maintenance. For example, an aluminum manufacturing plant faced a bottleneck in its cold mill, which was fixed by running longer strands of the same material. This allowed the plant to maintain a lower OEE while maximizing asset utilization.

About Matt Sobiesky

As an independent consultant at McKinsey, Matt focuses on operations and capability building. He has experience working with clients struggling with cost reduction, capacity increase, or growth readiness. He has worked with a colleague who is known for his expertise in Lean methodology and has a network of manufacturing professionals eager to help them solve their biggest problems. Matt's passion for operations stems from his background in operations and his passion for helping clients improve their operations. He has worked with clients who are aspirational and want to be the best of the best, and he is eager to help them achieve their goals.

Timestamps:

02:00: Understanding Cost Structures and Early Analysis

05:25: Challenges in Cost Bucket Analysis

07:05: Insights from Cost Bucket Analysis

10:06: Overall Equipment Effectiveness (OEE) Analysis

16:35: Identifying and Eliminating Waste

18:55: Supply Chain and Procurement Analyzes

25:34: Technology and Automation in Manufacturing

29:08: Asset Management and Capex Effectiveness

33:12: Matt Sobieski's Current Practice and Contact Information

Links:

LinkedIn: https://www.linkedin.com/in/matthewsobieski/

https://umbrex.com/resources/how-to-analyze-a-manufacturing-company/

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