How IBK Engineering increased the OEE of a Tier 1 supplier by over 25% in 12 weeks, reduced logistics costs by 20% and at the same time increased on-time delivery to 100%.
At the beginning of the collaboration with the medium-sized Tier 1 supplier in the sheet metal forming sector, the Overall Equipment Effectiveness (OEE) fell to around 60%, which is well below the industry average. At the same time, adherence to delivery dates was only around 80%. The customer was on the verge of being hit with delivery stops by OEM customers and was struggling with high inventories, long lead times and a reject rate of 8%.
IBK Engineering implemented a structured approach: After a three-day store floor check, we identified the biggest bottlenecks and sources of waste, installed a digital OEE dashboard and introduced lean and six sigma methods. Together with the customer, we implemented a predictive maintenance program, automated data collection and optimized the material flow through e-kanban systems and a redesign of the supply chain network. In addition, the ERP was expanded to include functions for real-time planning and control and close collaboration with the most important suppliers was established.
Before and after comparison of key figures
| Key figure | Before the project | After the project |
|---|---|---|
| Overall Equipment Effectiveness (OEE) | ≈ 60 % | ≈ 85 % |
| On-time delivery | ≈ 80 % | 100 % |
| Reject rate | 8 % | 2 % |
| Throughput time (average) | 10 days | 5 days |
| Logistics costs | – | -20 % |
Customer testimonial
“Thanks to IBK’s structured approach, we were able to avert our impending delivery stop. The transparency about our OEE and bottlenecks was an eye-opener for us. After twelve weeks, we had not only significantly increased plant availability, but also halved throughput times and made our deliveries 100% on time again. In addition, our logistics costs and inventories were noticeably reduced.”
– Production manager of the Tier 1 supplier
Problem definition
The supplier had been experiencing rising complaint rates from OEMs for years. The OEE was only around 60% – according to industry studies, average manufacturers only achieve around 60%, while market leaders achieve 85%. On-time delivery fell to around 80%. The reasons for this were unplanned downtimes, high reject rates, cumbersome information flows and an unoptimized supply network. In addition, growing inventories and long lead times of 10 days led to high capital commitment costs and the risk of delivery stoppages.
Solution presentation
- On-site analysis
In a three-day store floor check, the main bottlenecks were identified through observations, interviews and data analysis. This included measuring the availability, performance and quality of the systems as well as analyzing material flows and inventories. - OEE and key figures dashboard
Introduction of a digital dashboard for the real-time recording of OEE, reject rate and adherence to delivery dates. On this basis, deviations could be recognized immediately and causes eliminated. - Lean & Six Sigma methods
Implementation of 4S standards, SMED workshops to reduce set-up times, Kaizen ornaments and value stream mapping to eliminate waste. - Predictive Maintenance & IIoT
Introduction of a predictive maintenance program and networking of machines using industrial IoT sensors. This reduced unscheduled downtime and increased plant availability. - Supply chain redesign
Optimization of the supply network through e-kanban systems, consignment warehouses at the most important suppliers and just-in-time delivery. A redesign of routes and cross-docking stations halved the lead time from 10 to 5 days and reduced transportation costs by around 5%. - Training and change management
Employee training in lean methods, introduction of a store floor management system and weekly review meetings with clear responsibilities. - Continuous improvement
At the end of the 12-week implementation phase, further improvement projects were initiated in order to maintain and build on the level achieved.
Result and benefit
After twelve weeks, all defined targets were achieved and in some cases exceeded: The OEE rose from around 60% to around 85%. Plant availability improved significantly, increasing capacity without additional investment. The reject rate fell from 8% to 2%. The redesign of the supply chain reduced the lead time from ten to five days, based on the experience of the Deere & Company case, in which a network adjustment halved the delivery time and reduced inventory by billions. Similar to the Avalign example, the consistent focus on data and digital tools led to an OEE increase of more than 25% and optimal utilization of the workforce. In addition, logistics costs fell by 20%, as other companies have also achieved through digital optimization, and adherence to delivery dates rose to 100%. This averted the threat of a delivery stop and sustainably increased competitiveness.
Your project in the best hands
At IBK Engineering, we combine technical expertise with state-of-the-art production technology. We offer our customers the best of both worlds: Innovation and reliability.
Do you have a project that we can support you with? Contact us, we will be happy to advise you!