Overview
London Automotive & Manufacturing Ltd. is a metal stamper and automotive parts supplier located in London, Ontario, Canada. The plant provides rear-wheel housing sections, motor mounts and brackets, quarter panels and body side pillars to the CAMI Automotive plant located in Ingersoll, ON. CAMI manufactures three vehicles in Ingersoll; Chevrolet Equinox, Pontiac Torrent and the Suzuki XL7.
When Greg Ducharme joined the London Automotive team (then Nagata Auto Parts Co. Ltd) in April 2007 he immediately identified the need for an integrated Enterprise Resource Planning (ERP) system. London Automotive was using a basic accounting package, a number of spreadsheets for both inventory control and scheduling, and also a third party software solution for EDI communication and shipping.
“A key driver was the lack of one common database to run the company on. Each department had a number of department-specific Excel spreadsheets. These spreadsheets were all independent requiring extensive cutting and pasting and there was no one place that that you could look at to find information on any specific issue,” says Ducharme, now the President and Director of Manufacturing at London Automotive.
The Challenge
Greg Ducharme identified that one of the main challenges he faced, was that of inefficient inventory tracking. Both the raw material inventory and the work in process (WIP) inventory levels required his attention.
“London Automotive needed inventory management of our raw materials. We had over $500K tied up in the wrong steel inventory, costs which was an excess that would have lasted us two years,” Ducharme says. They needed a system that would help easily identify and maintain all levels of inventory. London Automotive also needed help identifying component parts, or WIP inventory. Too much time and money was being spent on searching for inventory, and on expedited shipping costs.
London Automotive identified the requirement for a system that would provide an advanced scheduling capability to assist Greg and his team increase their Overall Equipment Efficiency (OEE).
“London Automotive was looking for an advanced shop floor scheduling system that places each piece of equipment in a ‘level load’ state, and impacts our OEE positively by decreasing equipment change over,” said Ducharme.
“Overall our inventory levels amounted to $1.3 million. Our current inventory is $250K and is expected to drop to $175K soon with all of the same sales volume out the door,” Greg Ducharme notes.
The Continuing Result
The decrease in inventory levels more than offset the investment required to implement the Shop Edge system, and the return on the investment (ROI) was measured in months, not years. Moreover, having on-hand inventory balances at their fingertips instead of tediously searching through separate spreadsheets has really improved efficiency and saved London Automotive valuable time and money.
Additionally, having this real time access to all inventory levels right across the London Automotive enterprise allowed them to improve their shipping and transportation performance. “The Shop Edge system has eliminated our expedited shipping, both inbound and outbound shipments. Previously we were expediting 4-5 trucks per week at an additional cost of $250 each or $1,000/week, which translates into $50,000/year,” Ducharme says.
And how did the Shop Edge advanced scheduling system impact their OEE?
“Improved shop floor scheduling has resulted in improved production levels since each piece of equipment is now in a “level load” state. We have the right stuff at the right time which has resulted in dramatically less equipment change over,” said Ducharme.
Conclusion
By replacing multiple systems at London Automotive Greg Ducharme was able to cut significant costs out of the business, and at the same time improve production efficiency and transportation overhead. These savings, plus the ability to have real time visibility into his operations, has meant that London Automotive now has one central repository of information or a “command and control console”, that Greg can use to run his business more profitably.