Issue link: http://www.insightdigital.biz/i/385615
24 | /INSIGHT ON MANUFACTURING • September 2014 w w w.in s i g h t o n m f g . c o m Making time How quick-response manufacturing can cut your lead time By Nikki Kallio R E P R I N T E D F R O M T H E S E P T E M B E R 2 0 1 4 I S S U E O F I N S I G H T M A G A Z I N E t the 4th annual Manufacturing First Conference & Expo in Green Bay, Rajan Suri of UW-Madison and Nicolet Plastics president Bob MacIntosh will present a case for quick-response manufacturing. Suri, emeritus professor of industrial engineering and founding director of the Center for Quick-Response Manufacturing, or QRM, discussed ways that manufacturers can benefit by reducing lead time in production, the main issue solved by QRM, with Insight Associate Editor Nikki Kallio. Suri is the author of "It's About Time – e Competitive Advantage of Quick Response Manufacturing." Manufacturing First will be Wednesday, Oct. 22 at the KI Convention Center in Green Bay. layer of costs that companies start to incur because of their long lead times. Phoenix Products in Milwaukee used to have production meetings several times a week because of all the things that needed to be changed. Aer implementing QRM, they were able to eliminate these meetings. If you think of a meeting with 15 to 20 people for an hour in the room, that's 2.5 days of time. If you meet three or four times a week, you raise it to 10 days of meeting time. at's all costs that you can apply more productively elsewhere. Q. Why haven't companies recognized the impact of lead time? A. Because a lot of this is not easy to quantify. How do you quantify the amount of time people spend in meetings and expediting and so on? With the current cost-based system, a lot of those costs go into overhead. We track labor costs, and we track material costs. Our current metrics don't do a good job of tracking costs back to the root cause of lead time. People are so worried about labor costs, but if you look at the lead time for a typical product, it's only being worked on 1 to 5 percent of the time. We are so worried about labor costs and its impact and so on, and we are really missing the big picture. Q. Are QRM principles the same for small and large manufacturers, and companies that make, for instance, Q. What are some of the ways manufacturers waste production lead time? A. We're dealing with 100 years of cost-based thinking, which came from the age of Henry Ford, who had his first moving assembly line in 1913. Many of the other pioneers of the Industrial Revolution showed us how to make a lot of products cheaper and cheaper. In today's world, we're really looking at individualized products, high mix, a lot of variety, and a lot of custom options. Cost-based thinking makes you want to minimize your resources, so all your machines and people are running at 100 percent capacity. But when you have that, you have long queues building up everywhere. If you invest in extra capacity, even though it costs you money, you get a lot more back from the reduction in all the other things that you have to do. For example, a company called Alexandria Industries (Alexandria, Minn.) actually plans for 25 percent excess capacity, and most people would say, 'at's crazy, how can you make money if you've got a $10 million machine that's idle 25 percent of the time?' In fact, they're making more money now because of their fast response and their ability to take a lot of costs out of their entire business. Q. What are some of those other costs that companies incur? A. When you have long lead times, you need to do a lot of planning and scheduling and forecasting. And then you re-plan and reschedule and reforecast because you're planning out three to six months. You have warehouses full of inventory, and then you have products that become obsolete, customers that change their minds, and you have to make engineering changes. So you have layer upon A Rajan Suri