Amoco Fibers
ICI helps Amoco Fibers realign operations with service, inventory and production requirements
Results in double-digit profit improvement
The Client:
Amoco Fibers is the leading manufacturer of woven and non-woven polypropylene carpet backing and industrial fabrics. Under severe pricing pressure from its smaller competitors, the company searched for ways to increase profit without decreasing share.
Challenges:
Amoco Fibers had built its success on customer service. Large and small customers alike were promised quick delivery of a complex product line. The reality was lagging service, excessive inventory and inefficient production processes. How could this situation be turned around?
Solutions:
ICI began by defining the Customer Service policy. The “ABC” rule - 20% of customers represent 80% of sales - revealed that less than one half of one percent (<0.05%) of customer-product combinations represented 64% of sales. ICI shifted the manufacturing burden so that products for these customers were produced on the fastest, most efficient looms. Service lead-time for other customers was adjusted to allow more efficient processing as well. Econometric forecasting of inventory was implemented to level production throughout the year, resulting in more efficient production and reduced stock-outs.
Results:
- Amoco Fibers gained a double-digit percentage profit increase with no capital investment, and with improved production efficiency.
- Customers, both large and small, were happier because service improved and became more predictable.
- Inventory was reduced by more than 50%, greatly increasing the company's critical return-on-assets performance.
