Sorrelli Jewelry – Improving Productivity to Offset Rising Costs and Avoid Relocation

The Assignment

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, PA USA
  • In 1999 they moved the manufacture of their hand-made costume jewelry from the US to China to take advantage of the lower labor and production costs
  • By 2012, their 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.

Tractus’ Solution

Applying lean production techniques to a handcrafting 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 deviations visualization exercises, reviewed management procedures and undertook document inspections.
  • Operations optimization analysis was also done on purchasing and inventory management procedures, supply chain inspection and analysis, planned production levels and requirements.
  • The engagement team also reviewed production and capacity limits for equipment and HR and mapped improvement for production process efficiencies.
  • With a direct labor force of 170 employees, Tractus identified productivity stagnation and was retained to lead the implementation of operations improvements.

Result

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

  • Within the first three months of implementation productivity increased by 35% allowing the company to reduce headcount by 14% through attrition.
  • With the new levels of productivity achievement, the client 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 the operational improvements and reduce Tractus’ operations management role.

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