Case Studies

A Tier 1 automotive supplier, once beset by financial losses and at risk of losing its largest OEM client, faced mounting pressure to improve quality, reduce costs, and deliver faster.

The company’s on-time delivery was poor, defect rates were high, and it struggled to meet the demanding requirements of a major OEM, which threatened to move its business elsewhere.

To reverse its fortunes and regain competitiveness, the supplier partnered with Lean Six Sigma experts to launch a comprehensive transformation.

Key Results Achieved

• Manufacturing lead time dropped from 11 days to 3 days.
• On-time delivery improved from 80% to over 99.7%.
• Defect rates on CTQ parameters reached Six Sigma levels (3.4 defects per million opportunities), regaining the coveted Q1 quality rating from the OEM.
• Manufacturing overhead and quality costs were reduced by 22%.
• Gross profit margin increased from 12% to 19.6%; operating margin more than doubled from 5.4% to 13.8%.
• Most notably, the supplier began winning 100% of RFP bids from the major OEM, securing its position as a preferred partner and driving substantial revenue growth.

Challenges Identified

The initial diagnostic phase uncovered several critical issues:

• Frequent defects in key components, leading to costly containment and rework
• Long and inconsistent manufacturing lead times, often exceeding 11 days
• High levels of work-in-process (WIP) inventory and manufacturing overhead
• Inability to meet the OEM’s demand for rapid, flexible delivery across a wide product range

These problems not only eroded the company’s profitability but also jeopardized its reputation and future business opportunities.

Lean Six Sigma Implementation

The transformation was guided by the DMAIC (Define, Measure, Analyze, Improve, Control) framework, blending Lean’s focus on speed and waste reduction with Six Sigma’s emphasis on quality and process stability.

• Define: The team prioritized the OEM’s critical-to-quality (CTQ) requirements, targeting zero defects in brake hose fittings and rapid, reliable delivery.
• Measure: Data was collected on defect rates, delivery performance, lead times, and inventory turnover. Time traps and process bottlenecks were mapped out in detail.
• Analyze: Root cause analysis identified sources of variation and waste. Key findings included inefficient setups, lack of mistake-proofing in testing, and excessive waiting times between process steps.
• Improve: Lean tools such as setup reduction and Kanban were implemented to streamline flow, while Six Sigma methods like mistake-proofing and design of experiments (DOE) tackled quality issues. The company reduced lead times from 11 days to just 3, and increased inventory turns from 23 to 67 per year.
• Control: New standard operating procedures, statistical process control (SPC), and real-time dashboards were introduced to sustain improvements and ensure ongoing compliance with OEM requirements.

Results

Within two years, the supplier’s transformation delivered dramatic, measurable results:

• Manufacturing lead time dropped from 11 days to 3 days.
• On-time delivery improved from 80% to over 99.7%.
• Defect rates on CTQ parameters reached Six Sigma levels (3.4 defects per million opportunities), regaining the coveted Q1 quality rating from the OEM.
• Manufacturing overhead and quality costs were reduced by 22%.
• Gross profit margin increased from 12% to 19.6%; operating margin more than doubled from 5.4% to 13.8%.
• Most notably, the supplier began winning 100% of RFP bids from the major OEM, securing its position as a preferred partner and driving substantial revenue growth.

This case demonstrates how a disciplined Lean Six Sigma transformation can rapidly reverse financial losses, elevate quality and delivery performance, and position a Tier 1 automotive supplier as a top-choice partner for major OEMs. By attacking both process speed and quality, the company not only restored profitability but also achieved a sustainable competitive advantage in a fiercely demanding industry