Business Case Study 1 Turn-Around In Operations Saves Customer and Improves Profit

“From Warts To Winner!- Supplying To the US Government Department of Defense & the Defense Logistics Agency”

SUMMARY: This case study illustrates the real-life transformation from operational challenges to sustained success through strategic planning, process optimization, and a commitment to quality and accountability. By addressing root causes, embracing change, and prioritizing customer satisfaction, the company not only recovered from setbacks but also strengthened its position as a reliable supplier to the US Government (Dept. of Defense via the Defense Logistics Agency, DLA).

Situation: The company faced significant challenges in supplying US government-specified military blankets to the US Department of Defense (DoD) through its contracting agency, the Defense Logistics Agency. Issues included being 8+ months behind schedule, resulting in upset military officials and shortages for incoming military cadets. Furthermore, three years earlier, a bid error on a 5-year contract led to significant financial losses on ~200,000+ units, endangering a nearly century-old relationship with the military.

Challenge: The primary challenge was to improve production output through 1) improved process yields, 2) improved scheduling & staffing, and 3) re-build communications with the customer so collectively the business could mitigate losses and recover from the backlog while repairing credibility with the US Department of Defense and the DLA, the contract administrating group of the DoD.

Actions:

1. Data-Driven Decision Making: Prioritized and guided the Chemical Engineer towards data-based decisions and root cause analysis both internally and with external testing & specification validation suppliers.

2. Dedicated Production Lines: Allocated two pieces of equipment exclusively for 24/7 military production implementing a second shift with 100% focus on military orders.

3. Enhanced Visibility: Implemented daily production output reviews to foster accountability and visibility, shifting focus towards solutions rather than blame. Production output & quality monitoring was intensified, moving from a monthly to daily cadence.

4. Extended Planning and Outsourcing: Extended raw wool planning to 6+ months and augmented yarn supplies from external suppliers contributing to cost reduction.  Outsourced the final 4 process steps to a local partner for increased output and enhanced quality assurance.

5. Investment in Training: Overcame resistance to change and fear of cross-training within departments through targeted training programs.

Obstacles:

1. Resistance to Change: Employees were initially uncomfortable with increased visibility of metrics and root cause analysis.

2. Budget Constraints: Required increased spending on external laboratory testing & specification validation.

3. Employee Resistance: Production personnel were apprehensive about cross-training, even within the same department.

Results:

1. Operational Excellence: Eliminated the backlog & achieved 100% On-Time Delivery (OTD) to the DoD for over 14 consecutive quarters with 0% defects.

2. Financial Growth: Realized a 15-point increase in net margin, achieving profitability through cost reduction on the final two years of the contract.

3. Reputation Enhancement: Recognized as a Preferred Supplier by the DoD, leading to increased trust and future opportunities.

4. Contract Wins: Successfully negotiated and secured a new 3-year contract with the DoD, from a position of strength through quality & performance excellence. Additionally, secured an exclusive 18-month contract worth several million dollars, showcasing the DLA’s continued confidence in the company's capabilities.