Solutia Inc.'s Laminated Glazing Interlayers (LGI) Business: Improving Customer Service through Capital Improvements

More than three years ago, Solutia Inc.'s (Pink Sheets: SOLUQ) Laminated Glazing Interlayers (LGI) business began the arduous task of improving its operating processes through the well-known Manufacturing Resource Planning (MRP II) or Operational Excellence "Class A" certification program.

With counseling from the global management consulting firm Oliver Wight, Solutia's LGI business has realized significant gains in terms of sustainable process improvements, customer service, and business results since the 2000 MRP II kickoff.

Improvements realized from implementing the Oliver Wight MRP II processes are exemplified by the following results:

* On time delivery against first promise is now consistently above 95% versus 90% in 2000.

* Restructured inventory approach, ensuring our inventory is more effective, allowing for the right product at the right place at the right time.

* Increased stability of manufacturing operations due to greater visibility of demand.

* Effective sales and operations planning monthly process, which has helped to deliver the strategy.

* Increased business strategy awareness at all levels of the organization.

* Cost reductions / cost avoidance of millions of dollars directly related to newly implemented MRP II processes.

* Most importantly, an overall increase in customer satisfaction of nearly 2.5 points on a 1-10 scale and the best ratings in the marketplace.

"The successful implementation of MRP II and the attainment of Class A certification from Oliver Wight for our North American, European and Asian operations have allowed us to realize our strategy," said Solutia division supply chain manager Michael Lichtwardt. "In the past, despite our successes, our business strategy lacked integration. Now, we are in lockstep at all levels within the business with visible metrics. MRP II has allowed us to bring about changes that benefit our customers. And that's the bottom line," he added.

Oliver Wight's "Proven Path to true Operational Excellence" has also provided other benefits to Solutia, including:

* The ability to collectively work with "one set of numbers" -- from demand management and forecasting to supply planning to financial management -- all linked together.

* Real-time inventory control

* Confidence in operations data

"Class A Certification requires a significant amount of effort by a company," said Brant Slade, Principal and Member of The Board of Directors of Oliver Wight Americas, Inc. "Of the many thousands of companies that implement MRP II, only a very small number actually accomplish Class A status.

"An important trademark of Class A companies is the attainment of enhanced business results. Solutia's LGI business has not fallen short in this area. Since the beginning of this project, customer service levels have improved substantially, costs have been reduced and the business is healthier. These results indicate that the LGI team has worked hard to fully leverage this effort into the achievement of meaningful objectives," added Slade.

"MRP II is the way we are running our business," said Mitch Pulwer, Global Business Director, LGI. "We have received tremendous value from MRP II. Successful MRP II implementation was the first step in our effort to improve customer service through capital improvement. We have cleaned up our processes and taken our business to the next level. Solutia is confident that all our current and planned capital deployment will be very effectively used, because we have MRP II skills and practices. The LGI team is making a long- term commitment to our customers and us."

600450 Solutia Inc.'s Laminated Glazing Interlayers (LGI) Business: Improving Customer Service through Capital Improvements
Date: 11 March 2004
Source: Solutia

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