02 Oct Making a Case for Manufacturing Time
Today’s “Factories of the Future” are shifting to Time-Based Thinking Based on Powerful Strategies Developed at the Center for Quick Response Manufacturing (QRM), University of Wisconsin-Madison.
Even if you have a small family-owned business or your company is a division of a large multi-national organization, it may be time to incorporate Quick Response Manufacturing (QRM) methods to reduce product lead time and improve the flow of money.
These practical strategies are reshaping traditional thinking of manufacturing of the past 100 years as well as the future of manufacturing.
Think of it this way …a manufacturing company is a big empty space filled with opportunity. It is the flow of new ideas, strategies and technology, when embraced companywide, that makes it come alive.
“Time is worth a lot more than most manufacturing executives realize,” said Rajan Suri, Ph.D., Emeritus Professor of Industrial Engineering at the University of Wisconsin-Madison and founder of the Center for Quick Response Manufacturing. “Direct labor costs account for less than 7 percent of the sale price to the customer and yet companies spend a lot of time trying to reduce labor costs. Reducing lead times allows companies to reduce the other 93 percent and compete with factories around the world.”
Move over stagnant business models. QRM is giving manufacturing a makeover with a paradigm shift in thinking about how time flows through every corner of a company.
QRM helped RenewAire LLC, an energy recovery ventilation system manufacturer (renewaire.com) located in Madison, Wisconsin, solve an urgent problem. They were jam-packed with inventory and didn’t think they could stay in their facility any longer. QRM allowed them to stay three more years while the business grew by 50 percent.
Chuck Gates, president of RenewAirie, said, “Our QRM journey has been characterized by successful outcomes like these. For example, in 2009, when the economy was at a 50-year low, QRM helped us grow in the same time frame by 13 percent.” Over 12 years of a QRM focus between 2002 and 2014, the company has dramatic results using QRM. “For example, we have increased our market share by 130 percent (doubled), increased revenue growth by 254 percent and increased the total number of employees by 108 percent,” said Gates.
QRM was developed at the University of Wisconsin to go beyond strategies associated with Lean Manufacturing that originated in the Toyota Production System designed 40 years ago for high-volume production. Suri explained, “It became clear to us at the QRM Center that our industry partners were struggling to offer product options and custom-engineered products using the traditional Lean methods, and so we forged new ground.”
Over the past 20 years the QRM Center (qrmcenter.org) has helped over 220 companies in various industries reduce lead times by over 90 percent, costs by over 30 percent, improve on-time deliveries to 99 percent, reduce overhead by 20 percent, and increase capacity and productivity by over 50 percent. The Center has partnerships in Europe including the Netherlands, Belgium, Denmark, Poland, France, Germany and Spain.
“QRM was created to help manufacturers solve lead time-related problems,” said Professor Ananth Krishnamurthy, Ph.D., Director of the QRM Center, USA. “It allows manufacturers to respond quickly, bring new products to market on time and compete in an ever-changing manufacturing environment.”
Phoenix Products Company Inc., (phoenixlighting.com), founded in 1944 and located in Milwaukee, Wisconsin, makes specialized lighting for the U.S. Navy and numerous other operations. Scott Fredrick, the company’s CEO, said, “With QRM strategies we reduced our lead time to about one-half to two-thirds across all product lines with the result being we gained market share.”
In May, Provan, a Belgian supplier that focuses on laser and sheet metal working, welding and assembly, was recognized as a “Factory of the Future” as part of that country’s “Made Different” campaign. For the past 5 years Provan has used QRM’s innovative techniques to replace complex planning systems with simpler procedures managed completely by self-directed work teams, enabling them to reduce lead times from about 4 weeks to three days.
Suri, who authored, It’s About Time, The Competitive Advantage of Quick Response Manufacturing, used by manufacturers world-wide, pointed out QRM methods have a huge impact on a company’s ability to grow, cut costs and gain market share.
Explaining how QRM helps manufacturers stay ahead of the competition, he said, “QRM motivates you to think differently. You don’t have to have inventory at each step of the manufacturing process. The old adage that time is money is not just applicable, it’s crucial. Reducing lead times can have a huge impact on cash flow and flexibility to go after new business opportunities.”
Differentiators –Say Goodbye to Spaghetti
“What if you could reduce rush jobs and overtime costs, sales calls, written reports, office meetings, and frustrating design changes? What if you could do all this and increase your revenue? Sounds like a miracle, right?” said Suri.
It may sound like it, but it’s better defined as different way to improve business by better understanding the flow of time. “With QRM the sky is the limit for increased revenue and market share,” said Suri. “Say goodbye to an unfocused spaghetti-like operation. Instead of stockpiling goods in warehouses, QRM-focused manufacturers invest in people and machines.
Several differentiators characterize a QRM manufacturing environment starting with recognizing the power of time and the implementation of QRM strategies companywide. The organization’s structure which includes cross-functional cellular teams in both the shop floor and in the office, play a strong role in the flow of a customer order. Every single person in the company is essential and that recognition typically creates an “ownership” energy that is impossible to match. Whatever the job function, with QRM, it’s important that tasks for a customer order get finished in the cell.
In June, global manufacturers and executives gathered at the International QRM conference in Madison, Wisconsin to hear how organizations around the world have reinvented their operations using QRM.
The 2015 conference drew experts and executives from North America and Europe to hear case studies and panelists describe how QRM has impacted their manufacturing process.
Harry C. Moser, president of Reshoring Initiative (reshorenow.org), has been a manufacturing leader for numerous years. He encourages U.S. companies to rethink the concept that “offshoring is cheaper.” When you consider the total cost of doing business with companies with long lead times, producing offshore might not be that attractive. Several companies that are leveraging the principles of QRM have been able to re-shore operations back to the U.S.
Like any system-wide change, implementation of QRM takes commitment– to learn new strategies and then transition from theory to practice.
In 2009, Nicolet Plastics (nicoletplastics.com), a custom-injection-molded parts operation founded in 1986, located in Mountain, Wisconsin, saw sales drop by 36 percent. It forced them to change direction. “We began to realize that in order to remain competitive in that environment we’d have to exploit our strengths,” said CEO, Bob MacIntosh.
“We should have been paying closer attention to our customer base,” he said. “It hadn’t occurred to us that maybe we shouldn’t try to be all things to all people. We needed to be more selective, deciding on our ideal market and working hard to better serve a smaller number of customers.”
While other injection molding companies lamented the loss of their high volume business to overseas competition, Nicolet used QRM techniques to be more competitive in the complex, high-mix custom engineered business that was not suitable for overseas production.
With these principles and practices in place, the company has seen continuous, significant improvement system-wide. Their companywide mantra for employee engagement is –“See it, own it, solve it, do it.”
Today, Nicolet Plastics is committed to continuous improvement by using QRM. “At the start of our journey with QRM, we were at 21 days lead time, in 2014 we were at seven-day lead times; that’s a 67 percent reduction,” said MacIntosh. Another big change –in 2009 the company had 74 customers. By 2013, that number shrank to 60 but the profits were higher keeping with QRM”s tenet that fewer customers makes for stronger profits.
In summing up the company’s sea change since introducing QRM, MacIntosh said, “Today, we are fast, fluid and flexible. We don’t just manufacture injection molded products, we manufacture time.”