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Securing and Sustaining a Successful Turnaround in Italy

Lean transformation program helps Italian manufacturer avoid bankruptcy, increase productivity, and improve performance.

A large Italian rolling-stock manufacturer had been experiencing significant losses over an extended period of time. A complete turnaround effort was required to avoid bankruptcy and bring performance back on track.

A BCG team was engaged to help restructure operations with the goal of reducing the total cost of error and failure—extra costs related to, for example, rework, scrap, excessive controls, and warranties, as well as delays and liabilities—by rebuilding the company’s foundation: new management, a new business-driven organization, and new processes and systems. The objective was to save tens of millions of euros by improving efficiency through the implementation of lean in manufacturing, procurement, support functions, and engineering over a three-year period.

An 18-month lean-manufacturing transformation started with a pilot program that would demonstrate the application of lean methods, deliver quick impact, and gain momentum within the organization. The lean approach was then rolled out in six other lines across four plants and successively implemented in nearly all programs, including new developments.

The most tangible effects of the transformation included the implementation of flow production, improved layout and material flows, balanced work content, production leveling using takt time, material management using pull method, and transparent performance indicators. Within the first four months of the project, productivity inceased by 30%, and lead times decreased by as much as 70%.

In order to sustain these improvements and ensure the successful rollout of the lean program, the BCG team partnered with the client to build lean skills and put in place next-level platforms that would support the lean transformation.

On the platforms side, a continuous-improvement organization of lean champions was created to support the rollout of the program. The new organization included ten dedicated lean champions who reported directly to the chief operating officer and the lean manufacturing committee (CEO, COO, CFO, and HR director).

In parallel, the BCG team developed and delivered a tailored skill-building program for the lean champions and the broader organization. The program included simulations, interactive workshops in classroom settings and on the shop floor, and one-on-one on-the-job coaching focused on applying lean tools and techniques. The topics covered included introduction to lean, kaizen philosophy, performance management, line balancing, and change management.

By the end of the program, the BCG team had developed a complete handbook—including lean principles, deployment guidelines, implementation plans, lean methods and tools, application examples, standard forms, and training materials—for the client’s lean team.

In addition, a tracking system was put in place to monitor the progress of the lean program implementation. The system included three levels—"bronze wrench," "silver wrench," and "gold wrench"—to signify the different stages of implementation of the lean program. The goal of the system was to track the progress of every single plant to the level of operational excellence: the gold wrench. A clear governance process involving the head of continuous improvement, the lean manufacturing committee, and the cross-functional lean team, was established to track and verify the status of the lean implementation.

The overall transformation led to the reestablishment of competitiveness at the pilot factories. In less than a year, over-budget manufacturing hours were brought down to zero, and three new programs (high-speed train, regional train, and metro) had been successfully launched and ramped up. Reduced lead times and increased productivity laid the foundation for meeting ambitious delivery dates and tight budget constraints.

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