Electrolux Case Study
Frank Wagner was the SVP of Global Manufacturing Operations, Electrolux, with global responsibility for manufacturing, supply chain and quality. Below he discusses how in this role he worked with IfM Education and Consultancy Services to conduct a major global network reconfiguration.
- Achieved a 25% reduction in variable cost per unit globally through product modularity, automation, and plant consolidation defined by this work.
- Annual savings of 1 billion Swedish Krona (SEK) from 3.9 billion SEK restructuring investment.
- Leadership teams embedded Institute for Manufacturing (IfM) tools as part of the annual strategy review process.
"it was important that any approach would challenge our thinking, enable frank discussions to take place and used data and evidence to ensure clarity over any resulting decisions.”
Frank Wagner, former SVP of Global Manufacturing Operations,
Electrolux – Now IfM ECS Industrial Associate
Electrolux was facing increasing pressure from competitors who were gaining
an advantage from operating more effectively on a global scale. At the time
Electrolux had a decentralised structure, split into four operational regions,
North America, South America, Asia and Europe. Each of these regions worked
relatively autonomously with leaders of manufacturing, supply chain and quality
for each area.
“We had started implementing lean practices globally, but there was no global
structure to optimise processes, equipment purchases and our footprint prior to
the project with IfM ECS. The drive to change the structure came from the CEO
and the executive team. The core aim was to create efficiencies and economies
of scale by reconfiguring our global network of plants.”
“We needed an approach that would support the company in achieving its vision; it was important that any approach would challenge our thinking, enable frank discussions to take place and used data and evidence to ensure clarity over any resulting decisions. We started looking for organisations that can support global manufacturing footprint optimisation, and we couldn’t find any organisations with more experience than the Institute for Manufacturing for the particular skill set we were after.”
To kick-off the project, Frank worked with IfM ECS to introduce the tools and techniques to a range of stakeholders across Electrolux including the CEO, regional business heads and corporate function heads. One of the main outputs of this stage was a strategic landscape that outlined the reasons for the business to change. Created through roadmapping sessions and stakeholder interviews, the landscape accounted for the business context, competition, market drivers, technology trends and internal capabilities. and stakeholder interviews, the landscape accounted for the business context, competition, market drivers, technology trends and internal capabilities.
“The roadmapping workshops really helped us to draw out the reasons we needed to change whilst also identifying roles the operations function could play in contributing to the company’s vision.”
The next steps were to look at the ‘what to change’, ‘where to change’ and ‘how to change’ questions. In the following months the team conducted a range of focused analyses and intensive cross-functional workshops in regional centres across the world including Sweden, Brazil and the USA. These workshops, involving tools including Make vs Buy, Global Network Design and Strategy into Action, facilitated discussions on all Electrolux’s main global product families including fridges, dishwashers, washing machines and cookers.
“We were doing significant work in parallel with the IfM ECS project focussing on the enablers of radical footprint transformation – for example work on standardising production processes between plants, standardising products between regions and modularising products. IfM ECS delivered the workshops in a way that we learnt how to use and tailor the tools and approaches for our business context – accounting for and informing work that was going on across the organisation. Because of this collaborative approach, there was greater confidence in the decisions being taken and leadership and functional teams were open to owning the outcomes and driving the change we needed.”
The four outputs were then aggregated into a global view of the organisation and its operations, from which decisions about investments in network reconfiguration could be made at the enterprise level.
The work defined as a result of the product modularity, automation and the footprint evolution led to a 25% reduction in variable cost per unit globally. This meant Electrolux was achieving annual savings of over 1 billion SEK from a 3.9 billion SEK restructuring investment.
“The approaches used by IfM ECS before and during the workshops were ideal in helping us to get the data we needed and then having structured conversations around how we could optimise our global network of resources. For example, work covering optimal plant size helped us identify that globally, 29 out of 34 plants were operating outside the optimum range when considering fixed cost utilisation and volume of units they were producing each year. We were able to use this information to review what our optimal footprint could be, making decisions on consolidating our network of plants to ensure we were operating in the right locations.”
The work has also had a lasting impact on operations strategy development at Electrolux.
“Because of the way IfM ECS guided the application of their tools, the leadership teams developed these capabilities and are able to use the tools independently of external help. The tools were firmly embedded as part of Electrolux’s annual strategy review.”
Since this project, Frank has joined IfM ECS as an Industrial Associate, working to transfer IfM tools and approaches to organisations based in the United States of America.