SSA partnered with ABC Pty, an Indonesian FMCG subsidiary of an Indian company, to improve profitability. ABC was facing rising costs from increased minimum wages and a devalued local currency. SSA conducted a diagnosis across ABC's operations to identify profit leaks and opportunities for process optimization. They then deployed a three-pronged approach using Lean Manufacturing, DMAIC problem solving, and Total Productive Maintenance techniques to reduce costs through eliminating waste, improving resource utilization, reducing cycle times, and decreasing work-in-process. The goal was to help ABC compensate for increased costs through operational cost reductions.

1. Profitability Improvement in FMCG Manufacturing Operations
SSA embarked its journey to expand and serve, to international markets and Indian
MNCs abroad, in the year 2011. During this course, SSA came across varied
industries like FMCG, Machine Manufacturing and other service industries, across
Africa and Asia, who in specific had requirements to improve their operational
profitability. This was because industries around the world were challenged with
increase in labour, material cost and other operating costs. ABC Pty (a subsidiary in
Indonesia of an Indian MNC giant) is one such FMCG who was facing these
challenges. The following article describes how SSA had handheld and supported ABC
to deploy ‘Profitability Improvement & Cost reduction drive’ using process
improvement tools and techniques.
Business Challenge
ABC Pty is an FMCG serving Indonesia and nearby Southeast Asian markets with Home
Care and Body Care products, with a turnover of approx. INR 1500 Cr. ABC recently
came across two major challenges in their business, which was eating away their
available operating gross margins. One of them was, rise of about 55% in minimum
wages as enforced by the local government; and the other major challenge was
devalue of local currency which increased their cost of material that was imported
from different parts of world. This led to an immediate need for a Cost reduction drive
across the plant operations, which can help themcompensate against the current
challenges raised.
Itisnotthesrongestofthespecesthatsurvves,Orthemostintelgentthatsurvves.iiliit
Itistheonethatisthemostadaptabletochange.
- Charles Darwin SSA partnered with ABC Pty to initially diagnose and identify the focus
areas for Cost reduction
and define a time bound approach to achieve the desired financial savings,
which delivers a
perpetual result for the Organization.
Diagnosis
SSA has a unique approach to diagnose and prescribe roadmap for profitability
improvement. This diagnosis is carried out across all the organization’s elements like
Sales & Marketing, NPD cell, Product Design, Production Planning, Procurement,
Production, Supply chain and Warehouse. The focus of Diagnosis is to identify profit
leakages, identify opportunity for process optimization, calculate Cost of Poor

2. Approach to Improvement
Based on the diagnosis and identified focus areas in product manufacturing lines, SSA
took a three pronged approach to deploy Operational cost reduction initiative at ABC.
The basic focus was to deploy process improvement techniques to achieve the
financial goals using these three methodologies – Lean Manufacturing, DMAIC
problem solving and Total Productive Maintenance (TPM).
Project Deployment
ABC has about 25 to 30 products and each product category has a separate
manufacturing line setup. At ABC Pty plant almost 13 production lines had an
opportunity to improve productivity by deploying Lean. The focus of deployment was to
eliminate wastage in material movement caused due to convoluted layout, eliminate
over-processing, improve resource utilization through capacity balancing, reduce
process cycle time of manual operations through Kaizens and reduce WIP
through flow balancing.
Following Rapid Lean approach was deployed to achieve necessary productivity and
financial goals:
Lean Consulting