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The Skye’s the limit!
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An interview with Phillip Zylstra, Managing Director of Skye. Skye is a successful Australian apparel designer and manufacturer and produces Tyr swimwear, John and Lois Neckwear (ties), Pierre Cardin shirts and socks, and Osh Kosh kids’ clothing and footwear for the Australian market.

Summary

 
 
   
Through TOCCA’s intervention, Skye doubled its turnover whilst managing to more than halve its inventory!
Skye’s due date performance is now the best in the business
Staff retention is at record levels
   
 
 

The initial TOCCA engagement at Skye, which involved manufacturing and warehousing, was so successful that TOCCA has subsequently been invited back to work on three other unrelated areas of the business.

The Problem

In 2000, Skye was a very successful organisation. Despite this, management knew that three key business issues needed to be addressed if the company was to fully realise its potential.

The three issues that Zylstra had to address were:

 
 
   
1. How Skye could become more productive, more efficient, and increase its profitability;
2. Due date performance on orders was unacceptable and was becoming untenable - it had to improve;
3. Too much capital was tied up in inventory. The company had to balance carrying enough to satisfy stock service lines, while minimising overall inventory.
   
 
 

The TOCCA Solution

Phillip Zylstra, Managing Director of Skye, comments, “We had attempted to cut costs and improve efficiency the only way we knew how. It seemed logical that as our largest single cost was labour, we should focus on that and do more, with less.”

The company underwent a cost-cutting exercise, but to little effect. The due date performance did not improve significantly and there was little reduction in inventory.

“We were at a loss as to what to do because we believed that we had the skills and the ability within the management team to bring about the desired change. One name kept coming up, that of TOCCA, but I was personally very mistrustful of consultants.”

Skye brought TOCCA in to conduct a workshop, which was attended by executives at all levels, across all of the brands and the divisions. Although Zylstra was very sceptical at the start of the process, he soon became convinced of the value of the exercise.

“I was extremely impressed: the TOCCA consultant was an excellent facilitator, the best I have ever seen. I thought that people would simply bottle up their concerns but the TOCCA methodology really helped people to open up and provided us with a surprisingly clear view of our business.”
While the workshop gave the administration and finance functions a clean bill of health, it highlighted the need to focus on the neckwear manufacturing process first. If production could be accurately mapped and managed, it would help to solve the issue of excess inventory being held to fulfill orders.

A necktie passes through eight distinct processes during its production. When examining the manufacturing process, it was difficult to identify one discrete bottleneck or constraint in the process.

The workshop highlighted several elements of production where the constraint could exist. The Liba machine, the unit that puts the main seam in a necktie, was then nominated as the constraint. Provided the Liba was never idle, the production line would flow efficiently.

TOCCA implemented a very simple “buffer board” solution. Boards with red, amber and green lights were erected in front of the Liba machine, and at different points of the production line:

 
 
   
A green light indicated that there was sufficient work for the Liba to remain busy
An amber light signified that the buffer stock for the Liba was becoming depleted
A red light meant that production line workers needed to move to a different area of the process, to ensure that there would be enough stock coming through to keep the Liba machine busy
   
 
 

If the light changed to amber, the production line workers knew they had to move to an area of production upstream of the Liba, in order to ensure there was enough work in progress coming through the system to keep the Liba busy at all times.

This encouraged multi-skilling of the workforce. Not only did the operatives experience more variety within the system, it empowered them to plan and manage elements of the factory’s capacity, reinforcing the cycle of continuous improvement.

The introduction of this new system reduced manufacturing time drastically. This, in turn, gave the sales team confidence that their new orders could be delivered quickly and on time, and allowed management to reduce the amount of stock held in the warehouse.

The Result

The company effectively eliminated inventory from its production process. Within an 8-month period, Skye reduced work-in-progress by an average of 95%.

By eliminating the amount of stock held, Skye could effectively eliminate the stock-holding areas. As the company could now accurately predict when they could deliver an order, they were able to address the lucrative corporate market. In under a year, Skye has doubled its turnover whilst more than halving its inventory costs. The company’s inventory holding has gone down to 40% of its previous level.

The elimination of the inventory-holding areas has produced an interesting side-effect. If the plant does not have enough orders to keep the factory running, they have nowhere to store any excess inventory produced. When this happens, Skye simply closes the factory down and sends the production line workers home on full pay! The staff retention rate of multi-skilled workers is extremely high.

Phillip Zylstra said, “We are understandably delighted with the results, we have addressed our inventory and sales cycle issues. We have the best due date performance in the business and we are working with TOCCA on further projects for our design studios.”

 
 
 
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