Client Story: American Standard
In 2007 American Standard Companies, Inc. divested itself of its air-conditioning systems and services, bath and kitchen products, and, its vehicle control systems. Sun Capital bought the kitchen and bath division and in 2008 formed American Standard Brands from the merger of 3 companies: American Standard Americas, Crane Plumbing, and Eljer.
From 2007 to 2008, the company closed manufacturing facilities and distribution centers in Brazil and in the Untied States and shifted the production lines to the Mexican business unit without an increase in headcount or in resources.
The plants did not have the technology, or the immediate experience, in manufacturing these product lines. Some of these products were critical to the American Standard Brands product portfolio.
As a result, by the end of 2007, the Mexican business was experiencing serious issues with their retail and wholesalers with an increasing amount of customer complaints.
Reddin Consultants tailored the series of intervention workshops beginning with Top Team Performance Management programs and then worked with managers in Management for Results workshops.
The immediate effect was seen in Sales growth figures.
- In 2007 American Standard in Mexico was losing $2M annually out of sales of $32M.
- In 2008 sales grew to 2%.
- In 2009 to 4%.
- In 2010 sales increased 12% to $38M, with an EBITDA close to $2.1M.
By 2009 Operations had achieved significant positive improvement
- On-Time-Delivery increased from 84% to 94%
- Schedule compliance increased from 92% to 96%
- Safety improved more than 50%
- Operation expenses reduced by 20%
- Lean transformation produced labor productivity of 30%
- Lean Six Sigma savings increased from $4M to $20M per year
Effect on Engineering Innovation
- Engineering accelerated the pace of innovation, and differentiation
- Reducing reliance on low cost product lines
- Offering three distinct product lines: economy, mid-level and luxury brands
- Creating 80 new SKUs (stock keeping units) and,
- 6 new families on faucet side with 50 new SKUs.