Lehigh Valley, Pa.-based Air Products and Chemicals Inc., a supplier of industrial gases and specialty and intermediate chemicals, wanted to increase labor efficiency and reduce processing and other costs at its Pensacola, Fla., plant, one of its largest processing facilities. The company needed to keep up with Far East competitors who have access to cheaper natural gases. Air Products called on Lexington, Mass.-based Celerant Consulting, a provider of operational strategy and implementation services, to identify cost savings and other improvements.
After conducting a five-week assessment of the plant's operations, which involved surveying and interviewing employees, analyzing financial statements and observing daily workflow activities, Celerant consultants compared operational data on paper with the actual activities and job roles on the plant floor.
"This led to a strategy to cut through the disparities, and the consultants not only stayed on to implement their recommendations, but also until their plan was proved," stated Tom Tarwater, manufacturing director of the Pensacola plant.
Some of the cost-saving measures identified by Celerant included centralizing the maintenance and distribution departments of four separate production lines ," syngas, nitric acid, higher amines and methylamines. According to Celerant, centralizing the two departments facilitated better planning and use of available resources, a reduction in overtime costs, and a reduction in the use of contract labor. It also promoted the use of the best practices across different work shifts.
The other measures included designing and installing a management control and reporting system that identifies the cause behind missed performance targets.
Now, short interval controls are conducted four times a day for all critical control parameters. Production shortfalls are reviewed daily, and quality action plans are in force.
Overall savings for the Air Products plant include $5.2 million in labor, $4 million in increased product output, $9.3 million in annualized savings, $34.8 million in cost savings over 10 years and a 20 percent improvement in overall maintenance.