The Opportunity
A Midwest-based aerospace and defense OEM manufacturer, producing $31 million in annual sales, sought to optimize its operations and expand market share.
Known for its precision components, the company faced challenges in operational efficiency and struggled to keep pace with rapid technological advancements in the industry. Our firm identified an opportunity to implement Lean Six Sigma methodologies and facilitate a strategic acquisition to enhance the company's competitive position.
The Solution
The Seaside team developed a comprehensive strategy focusing on three key areas:
Lean Six Sigma Implementation:
- Conducted a thorough value stream mapping (VSM) exercise to identify waste and inefficiencies across all processes.
- Implemented DMAIC (Define, Measure, Analyze, Improve, Control) methodology:
- Define: Outlined project goals and identified critical-to-quality (CTQ) factors, focusing on product precision and compliance with aerospace standards.
- Measure: Collected baseline data on production times, defect rates, and quality control metrics.
- Analyze: Used statistical tools to identify root causes of inefficiencies and variation in product quality.
- Improve: Developed and implemented targeted solutions, including:
- Redesigned production line layout to optimize workflow and reduce non-value-added movement.
- Introduced Visual Management boards to improve communication and track key performance indicators in real-time.
- Implemented a pull system using Kanban to reduce work-in-progress inventory by 20%.
- Control: Enhanced standard operating procedures and ongoing monitoring systems.
- Trained 30% of the workforce in Lean Six Sigma principles, focusing on precision manufacturing and quality assurance.
- Results:
- 10% reduction in production cycle time
- 15% decrease in product defect rates
- $800,000 in annual cost savings
- ~25% improvement in on-time delivery performance
Technology Integration:
- Identified a smaller competitor with advanced composite materials expertise and additive manufacturing capabilities as an acquisition target.
- Performed comprehensive due diligence:
- Technical assessment of the target's manufacturing systems and their compatibility with existing production lines.
- Evaluation of the target's R&D pipeline and intellectual property portfolio.
- Analysis of potential synergies in product offerings and market reach.
- Structured and facilitated the acquisition, integrating new technologies:
- Implemented advanced composite material production techniques, expanding capabilities for lightweight component manufacturing.
- Integrated additive manufacturing systems for rapid prototyping and production of complex geometries.
- Deployed a new Manufacturing Execution System (MES) to improve production planning and quality control.
- Developed a data analytics platform to provide insights on production efficiency, quality control, and supply chain management.
Post-Merger Integration:
- Developed a phased integration plan over 18 months:
- Phase 1 (Months 1-4): Integration of critical functions (Finance, HR, IT)
- Phase 2 (Months 5-12): Gradual integration of operations and R&D
- Phase 3 (Months 13-18): Full integration and optimization
- Implemented cross-functional teams to streamline processes and share best practices:
- Created an Integration Management Office (IMO) to identify and track synergies, develop and execute integration actions and ensure alignment with strategic goals.
- Established regular knowledge-sharing sessions between engineering teams.
- Developed a unified product roadmap, focusing on next-generation aerospace and defense technologies.
- Focused on cultural integration to maintain employee engagement and stringent quality standards:
- Conducted workshops to align quality assurance practices and compliance standards.
- Implemented a change management program, including regular updates and a dedicated integration intranet site.
- Introduced a mentorship program to foster knowledge transfer between both companies.
- Harmonized operational processes:
- Standardized quality control procedures across all production facilities to meet AS9100 standards.
- Unified the supply chain management system, improving traceability and compliance with ITAR regulations.
- Integrated engineering and design functions to enhance innovation capabilities.
Key Outcomes:
- Expanded Product Portfolio: Introduced composite-based components, increasing the total addressable market by 20%.
- Operational Efficiencies: Achieved $1.5 million in annual cost savings through integrated processes and improved manufacturing techniques.
- Market Expansion: Successfully entered the unmanned aerial vehicle (UAV) component market, projecting a 15% increase in sales within 18 months.
- Innovation Boost: Integrated R&D teams, resulting in two new patented technologies within the first year post-acquisition.
- Employee Satisfaction: Post-integration employee engagement scores increased by 10%, with a 92% retention rate of key personnel.
The Conclusion
Through the implementation of Lean Six Sigma methodologies, strategic acquisition, and a carefully managed post-merger integration, the company enhanced its operations and market position in the aerospace and defense sector.
Within 24 months of project initiation, annual sales increased to $36 million, representing a 16% growth. This case demonstrates our firm's expertise in delivering comprehensive management advisory services, including Lean Six Sigma improvements, technology integration, and post-merger integration, tailored for mid-sized aerospace and defense OEM manufacturers.
For more information on how we can assist with operational excellence and strategic growth in the aerospace and defense sector, contact us at info@seasidebusinessadvisors.com.