The company had developed a strong reputation for high quality architectural woodwork for use in banks, corporate offices, high end restaurants, and high end hotels. The business grew along with that reputation until it experienced near-terminal growing pains. The company was 6 weeks late on its delivery commitments and was losing ground at the rate of 2 days for each additional day it scheduled. Additionally, customers were stating that they would soon start cancelling their orders if things did not improve.
An analysis of the production schedule showed that 800 hours of work had been scheduled in a plant that had only 100 hours of capacity. A visible scheduling mechanism was developed and displayed in the plant that showed the load on each department and showed orders in due date order. All employees could immediately determine priorities for their work areas. Bottlenecks were identified and then addressed. New orders were released into production only when there was capacity to fill them.
Accurate delivery dates could now be forecast with a high degree of confidence. While customers weren’t always happy with the revised forecast, the business was able to deliver on the new dates every time. The plant was back on schedule within 3 months. As a result, orders increased to the point an additional shift was added to handle the demand.
Overall capacity was tripled without tripling head count. Earnings were up 10 times year over year. The owner sold the business soon thereafter at a very healthy multiple.