Unicorn Consulting Inc.

Cast study 2: Consolidating manufacturing at a regional window manufacturer

Situation: A regional manufacturer of double glazed window units had developed a very proliferated manufacturing facility footprint, believing that, due to the high cost of shipping window units, it needed to have a local presence in each major city it served. However, it had ended up with approximately 30 locations, each of which were small in scale and using largely manual assembly processes. Overall, the business had very high labor costs, and was finding itself disadvantaged on price, as well as quality, in the market. Management had an idea that it may be beneficial to consolidate the facilities, but had not been able to estimate the economic impact of this.

What we did: We visited many of the current facilities to understand the current manufacturing approach, and we interviewed key managers at these locations, and a sample of customers to understand their key selection criteria, especially lead time requirements. We also visited larger scale, automated plants and analyzed the capital and operating costs and throughput capacities of automated equipment. To understand the trade-off with longer transportation distances, we modelled out the cost to ship from more centralized locations, using larger trucks and regular delivery routes and showed that, even with considerably longer shipping distances, the company could substantially lower its cost per unit by centralizing production into 2 or 3 locations.

Outcomes: The company decided to close down most of the smaller locations and consolidate its production into a small number of large, automated facilities, resulting in substantial cost savings and improved product quantity.