CI implementation helps chemical company reduce raw material working capital by 30%

Executive summary

The implementation of TRACC Best Practices helped a chemicals producer reduce raw material working capital by 30%.

RESULTS
  • 30% reduction in raw material working capital
  • Over US$4.8 million in savings
  • Substantial savings in outside warehouse storage
  • The facility continues to operate 10% below raw material working capital goals
Challenge
  • Raw material working capital at the company‚Äôs manufacturing facility was the highest in the network
  • Outside warehouse space was being used for raw material storage
  • A 50% reduction in a specific raw material would enable the company to negotiate better rates for warehouse storage space and bring the material back on site
Solution
  • Focused improvement tools were used to determine why the raw material working capital was so high. Careful analysis revealed the following: incorrect settings in the ordering systems; unplanned production schedule changes due to changing business demands; and process limitations
  • Processes were standardised and documented, and resources were trained to address ordering system issues and to better match order frequency to demand
  • A visual management inventory tool was created to enable better decision-making with regard to inventory levels and order quantities
  • The tools were integrated in line with continuous improvement principles, and a purchasing plan was created to be implemented into the ordering system