The Situation

Rising Costs in Shanghai were forcing Sorrelli to consider relocating to a lower cost location

  • Sorrelli Jewelry is a family-owned manufacturer of heirloom jewelry based in Kutztown, Pennsylvania, USA.
  • In 1999 they moved the manufacturing of their hand-made costume jewelry from the US to China to take advantage of the lower labor and production costs.
  • By 2012, their 170 person facility located in the Pudong area of Shanghai had started to experience significant cost pressure from rising labor rates, skilled labor shortages, high turnover, strikes and the elimination of VAT drawbacks on exports of its finished jewelry.
  • Costs were rising, quality was declining and the company was being forced to find a new plant manager every two years with limited success and persistently declining profitability.
  • Tractus was retained to provide manufacturing management support, improve productivity and reduce employee turnover until production could be relocated to a lower-cost manufacturing location in Asia.

The Project

Applying lean production techniques to a handcrafted manufacturing process yielded superior results

  • Tractus took over operations management responsibility for 24-months and began a full technical and production resource audit, reviewing procedures, process charts and material flow.
  • The Tractus team conducted plant inspections and undertook deviation visualization exercises, reviewed management procedures and undertook document inspections.
  • An operations optimization analysis was also done on purchasing and inventory management procedures, supply chain inspection and analysis and planned production levels and requirements.
  • The engagement team also reviewed production and capacity limits for equipment and HR and mapped improvements for production process efficiencies.
  • Based on the initial manufacturing operations analysis, Tractus lead the implementation of operational process and other efficiency enhancing improvements.

The Solution

Productivity increased 35%; headcount was reduced 14% by attrition and profitability improved by an estimated 10%

  • Within the first three months of the engagement, productivity increased by 35% allowing the company to reduce headcount by 14% through attrition.
  • With the new levels of productivity achieved, Sorrelli was able to boost profitability, eliminate managerial turnover and temporarily postpone plans to relocate manufacturing operations outside of China.
  • Sorrelli has been able to successfully institutionalize these operational improvements and reduce Tractus’ operations management role.

The Evidence

“Performance and output improvements in our company, largely lead by the Tractus Team, have exceeded expectations and have been a resounding success. On the topics of manufacturing process and manufacturing efficiency (attributable to improved management quality) we are extremely appreciative and helpful”.

“Tractus has an intimate, hands-on approach to manufacturing and the manufacturing management process. The gains we have experienced while working closely with their seasoned team members have exceeded our expectations and proven there is no limit to how far we could push efficiency improvements; even in a labor intensive manufacturing process”. Colin Oswald, Production Director, Sorrelli Jewelry