Improving Customer Deliveries
By
I
recently meet with a Director of Operations from a large aerospace firm that
was considering implementing lean manufacturing. He was still struggling with traditional
MRP manufacturing practices and was concerned because customer deliveries were
always late, the team members were working long hours of overtime near the end
of the quarter, purchasing was paying premium prices to get needed parts and
managers were jumping through hoops in order to make quarterly revenue targets.
It was a discouraging and stressful situation for everyone.
I
recalled comparable circumstances while I was Director of Materials at an
electronics-manufacturing firm. Other companies face similar challenges and may
be able to benefit from my experiences to improve customer satisfaction and
reduce sleepless nights.
Background:
We
had recently acquired a small company producing a variety of power supplies.
The production line (machines, workers and technology) was physically moved
into the same facility but continued to "march to the tune of a different
drummer". We wouldn't even
consider integrating their production processes into our system until their
ability to meet customer delivery requirements improved. There was virtually no
predictability and no way to tell when a product would ship. Product delivery
was late 60% of the time and too early the remainder, but rarely on time!
Moreover, the production line was a typical job shop operation requiring work
orders and kits and had not yet been "leaned out".
The
Problem:
A
fact-finding team was formed to investigate and some interesting themes emerged
immediately. The first clue was significant amounts of "works in progress" inventory
waiting for part shortages.
After
speaking directly with the production team, I had a better understanding of the
scope and nature of the problems. They indicated their frustration with
purchasing which never seemed to be able to get the parts they needed when they
needed them. The purchasing team presented a somewhat different slant to the
problem. Purchasing explained that the planners were constantly putting
material requirements inside lead times. Planners said they did this in order
to keep the production floor busy and claimed that if part shortages came in
based on lead- times they should be able to meet customer delivery dates. They
said parts got lost in receiving or put in stock rather than being immediately
delivered to the floor and this caused late deliveries. The receiving
department complained they had no way of knowing if parts were short on the
floor.
This
was not a people problem, but a very broken system! Everyone was doing their
best under difficult circumstances.
The
Solution:
With
representatives from each area we discussed what we had uncovered as a team. It
was clear the system itself needed to be changed and we needed some quick
fixes. The manufacturing people who had products partially finished everywhere
were experiencing the most significant problems and waste. This meant wasted
time restarting (often more than once) the same product or similar products and
resulted in quality issues. The solution was simple but drastic! No kit would be delivered to production
until all the part shortages were filled.
Furthermore, we agreed that no work orders would be issued to kit
materials until the system showed all parts were available so partially filled
kits would not interfere with normal warehouse activities.
The
Results:
We
started the change at the beginning of a fiscal quarter to have minimal affect
on quarterly revenues. The results were dramatic. On- time deliveries increased
to better than 90% by the end of the quarter. Workers weren't continually
re-starting products or chasing shortages so production efficiency and quality
rose. We had not yet addressed the planning problem so we still used the MRP
"push" system. Things only continued to improve. Team members from
each department were very pleased and embraced the changes because they felt
part of the process. These small steps gave us the short-term improvements we
needed to allow us to take the next step in "leaning out" the supply
system.
Please
visit our website, www.imaginesms.com, for more tips and information.