Challenge

A leading Australian frozen meals business was looking to strengthen their competitive position through optimising their manufacturing network.

Key challenges included:

  • Multiple manufacturing sites with medium to low asset utilisation
  • Stable volumes with slow organic growth and sales strongly competing on price
  • Aged technology, high labour intensity

The business engaged us to develop a strategic plan for a manufacturing footprint with a highly productive cost and asset base. Investments for each transformation steps needed evaluation against attractiveness of payback.

Approach

We built a manufacturing network model, evaluating existing assets, factory overheads, operating cost and supply chain costs covering multiple scenarios, combining similar products in the same location. In parallel, we developed ahigh-level capex estimate for each scenario and were able to overlay implementation investments per scenario to assess attractiveness.

Key elements were:

1. Opportunity evaluation

Cost and value drivers modelled:

  • Factory and line throughput, productivity and automation for each location, but also for new assets
  • Overhead reduction through running fewer facilities and benefitting from scale at larger sites
  • Operating philosophy of the new network, down to line level. SKU allocation per line, balancing speed and scale with complexity and changeover requirements
  • OEE performance: addressing low performing equipment and current bottlenecks through new technology as well as accounting for planned losses (cleaning and changeovers) to evaluate realistic line performance
  • Other scale benefits including central overheads, procurement and R&D benefits

2. Consolidated site masterplan – factory design

  • Designed consolidation site scope leveraging existing assets and quantifying investments
  • Evaluated phased execution for a multi-stage consolidation plan, each with an attractive payback
  • Designed for future expansion beyond current plans

3. Capex scope development & roll-out plan

  • Capex scope was developed, including value engineering scope to manage risks and variations in execution

4. Outcome – phase 1 kick off

  • The client decided to kick off the detailed scoping work and capex request to the board, with the first phase delivering a $25M annual cost benefit for their business.

Team members involved: Evert Westerhof

This engagement was delivered prior to the team member joining Cinc. The experience and results described reflect work personally delivered by the team member(s) identified above.

‍