Situation With 65 locations throughout North America that had been integrated due to mergers and acquisitions, this major building products distributor faced serious problems. - Facility managers were spending too much time on material handling and not enough on their core competency of "building and selling the highest quality windows and doors."
- Material handling expenses were spiraling out of control and there were no plans in place for equipment replacement and expense control.
- Managers were complaining about the difficulty of maintenance and the lack of information.
Audit Client engaged Wiese to perform an audit of their 65 facilities to identify the costs associated with operating, managing, and maintaining its material handling equipment fleet. The findings were as follows: - Operating costs for material handling equipment averaged $4.54 per hour.
- 60,000 operating hours per quarter.
- Expenses exceeded $1,000,000.
- Equipment utilization was poor.
- There was excess and underutilized equipment.
Action - Developed a fleet management plan and initially tested in a few locations.
- Fitted equipment with hour meters and serial number tags to monitor performance.
- Installed a utilization matrix to identify underutilized or high cost units for analysis.
Results - Lowered fleet cost per hour from $4.54 to $2.19 (a 52% decrease)
- Reduced fleet size by 120 units.
- Re-marketed excess equipment and generated $120,000.
- Reduced accounting expenses by consolidating invoices.
- Improved maintenance program to enhance productivity.
- Provided real-time data to all managers to increase productivity.
- Saved company over $500,000 in year one!
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