The document discusses how SSA partnered with ABC Pty, an Indonesian subsidiary of an Indian FMCG company, to implement a profitability improvement and cost reduction initiative. ABC Pty was facing rising costs from increased minimum wages and currency devaluation. SSA conducted a diagnosis across ABC Pty's operations to identify areas for process optimization and cost savings. They then deployed a three-pronged approach using Lean Manufacturing, DMAIC problem solving, and Total Productive Maintenance on 13 of ABC Pty's production lines to eliminate waste and improve productivity in order to achieve the financial goals.

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.

2. 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 Quality & financial losses
and finally estimate the potential savings opportunity across the
organization.

3. 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).
P

4. 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 Manufacturing
Lean Consulting