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Quick Response Manufacturing: How a Company-Wide Strategy Can Cut Lead Times for High-Mix, Low Volume, Custom-Engineered Parts
A technician at Master Spring and Wire Form sets up a CNC wire former equipped with laser positioning probes to form a spring clip out of 0.035-inch, 302-stainless steel for a heat sink that cools printed circuit boards.
Photo courtesy of Master Spring and Wire Form Co.
The QRM methodology recognizes that organizing a company's workflow around optimal batch sizes can yield greater time savings than efforts to speed up the manufacturing process.
The ability to obtain custom-engineered parts within shorter lead times is becoming more and more important to product manufacturers seeking to win the race to market with a new product. Besides the greater degree of difficulty inherent in manufacturing custom parts, the challenge is compounded by the fact that many companies making custom parts are operating in a high-mix environment, in which they may be producing a variety of different parts at any given time.
By focusing on helping companies reduce lead times across the extended enterprise, The Center for Quick Response Manufacturing (QRM) is working to make U.S. manufacturers more competitive in the global marketplace. Established in 1993 at the University of Wisconsin-Madison, the QRM Center (www.qrmcenter.org) is based on the principles espoused by Founding Director Rajan Suri in his book, Quick Response Manufacturing: A Companywide Approach to Reducing Lead Times. Today, it is a consortium of faculty, students, and about 50 member companies led by Prof. Ananth Krishnamurthy, who earned his Ph.D. in industrial engineering from the University of Wisconsin-Madison under the guidance of Prof. Suri.
The QRM Center works with a broad range of manufacturing companies competing in an environment that requires production of custom-engineered parts in low volumes, amid a high level of part variety. One of them is Master Spring and Wire Form Co. (www.masterspring.com), a small, custom contract manufacturing company in River Grove, Illinois, that has successfully shortened its lead times by implementing the principles of QRM, according to Master Spring General Manager Steve Skolozynski.
Following is the first of two interviews in which Prof. Ananth Krishnamurthy and Steve Skolozynski talk with D2P about the unique ability of QRM to solve lead time dilemmas.
D2P: Professor Krishnamurthy, can you describe in your own words what Quick Response Manufacturing (QRM) is, and why it's needed?
Ananth Krishnamurthy: Quick Response Manufacturing is a company-wide approach to reducing lead times in all aspects of a company's operations. When we talk about lead times, we're talking about the time it takes for a company to respond from when it gets a call, e-mail, or fax inquiring about a product, all the way through engineering, design, manufacturing, procurement, until it ships to the customer. We are talking about QRM making significant reductions in lead times. The beauty of it is that as you shrink those lead times, it also gives you significant cost savings, improvements in quality, and delivery performance.
D2P: Is QRM applicable to additive manufacturing processes, or is it more suited to accelerating more traditional forms of manufacturing, such as CNC machining, injection molding, or spring and wire forming?
AK: It applies to all manufacturing processes, but the key distinction is that you're not just talking about the actual act of manufacturing, but the flow of a manufacturing order through an organization. We distinguish that using the terms white space and gray space. The actual machining process, metal cutting time, welding time, or molding time, is the gray space. The rest of the time a job is waiting to get on a machine, waiting for a designer to work on it, waiting for information from the customer, is called the white space. So, if you take a total lead time for satisfying an order, let's say 12 weeks, the actual gray space machine cutting time is only about 5%, maybe three or four days, but the rest of the time is just waiting because of inefficiencies in the organization.
Steve Skolozynski: We're not asking people to work faster, which is what people immediately think. When you look at the actual touch time (gray space) in any given process, it's actually a small amount of time. If you tell everyone to work 20% faster, it's not going to get you ahead much more in that three day period. But if you look at those other 12 days, and the amount of waiting time, and you cut that in half, now you've gained six days. So it's not working faster, but how to get rid of all that waiting time.
QRM takes all of the widely accepted principles that people have been using in manufacturing for 50 years, and it says that many are false. After you start using this method, you tell yourself, "I can't believe we were doing it that way."
D2P: What methodologies and opportunities does the QRM Center offer to small- and medium-sized manufacturing companies?
AK: One of the reasons we started the Center is because we wanted to understand the real issues faced by small- and medium-sized manufacturing companies trying to compete on short lead times, working in high-mix, low-volume, custom-product manufacturing. So, we first wanted to understand the real issues and conduct research at the university, and then address those problems so vital to U.S. manufacturing, using the tools, methodologies, and strategies with our students. We wanted to help manufacturing companies implement those tools and strategies so they could be more competitive.
SS: QRM is a great system. They did all of their research and came up with ideas and principles for our company. And they have a really great quantitative model, where they put in all of our setup times, machine run times, number of jobs in the plant, lot sizes, how many machines we have, and our number of employees. They took all of this information and then modeled our company.
For example, they said "This is what your current lead times are," and then they collected data from our data gathering software. And then they interviewed people in our company, and compared all of the data. They tried to make a very accurate model of our company based on all of the data. Then we started playing with all of the variables to see what changes would shorten our lead times.
Next, they sent in students to analyze our company so they could give us recommendations. They then presented their recommendations to all of the other companies that work with the QRM Center. So we're all learning from each other, and the school is getting real world feedback on their ideas while applying them. The benefit for us is that we get real world improvements for our company. It's really a great program.
AK: It's truly a win-win situation for everyone. The company can decrease lead times and the university can do research on relevant problems, and these are not easy problems. And the students are seeing their knowledge being directly applied with immediate feedback.
The students are primarily graduate students in a variety of disciplines. They come from many engineering backgrounds: mechanical, industrial, electrical, chemical--really any engineering background. They get coached very heavily; we spend a lot of time mentoring them. We would like them to be good communicators, as well as good technical people. The program is called Manufacturing Systems Engineering. They take engineering classes and also business classes because we want engineers to understand the business end of their engineering decisions.
SS: The students are basically acting like top-level managers with their recommendations. All of the member companies say that these students are like top-level consultants with their presentation and analytical skills. There are about 40 or 50 member companies at the presentation meetings, all of the students in the class, and about three or four professors. The students have to face everyone in the audience to present their case for each project they were involved in. They're helping a lot of manufacturing companies succeed with this program.
D2P: In a general sense, how are these methodologies [Quick Response Manufacturing] able to reduce the time required for manufacturing and delivery of parts?
AK: I think Steve and I both alluded to it when we were talking about the time waiting in between processes, as opposed to the actual touch time, or gray time, so it's not about people working faster, but making sure you reduce the waiting time. One thing that can address that is having an organizational structure that allows you to compete with shorter lead times. By organizational structure I mean a functional setup, department wise, with work being handed over from department to department, including quoting, design, engineering, office, and then drilling, grinding, welding, assembly, and other production functions. This handoff, from department to department, is not really conducive to shorter lead times. What QRM recommends is an organizational structure that is product-focused cells, where all of the resources required to handle an order are co-located in one place and dedicated.
Henry Ford taught us how to make cars, and he taught us how to make the Model-T at a low cost, which was right back then. But today people not only want a low cost, but they want shorter lead times. Some people are trying to compete in a NASCAR race with a Model-T.
The other thing, which you will also hear from Steve, is about system dynamics and principles. A lot of the older principles about efficiency are actually false. With traditional utilization levels, the belief is that you just need to keep your machines busy, don't change lot sizes, and save on setup times. A lot of these ideas work against reducing lead times. So besides having a good organization structure in place, you need to have the right policies in place.
SS: I'll give you a simple example. Once you have the machine set up, say, for a total of 120,000 pieces per year, with the customer taking 10,000 pieces per month, traditionally, you want to buy wire for the whole project to get the lowest price per pound, so you buy it all at once in bulk. Then you're going to set up the machine. When you get the setup running perfectly, you want to run all of those pieces with one setup to get the lowest cost per piece when you include the setup cost. So you run the whole order, but in the meantime, several other orders are waiting to get on the machine. It might take two weeks to finish the 120,000 pieces, so the other customers are unhappy. On the first order, you will ship out the 10,000 pieces, but then you have to inventory the other 110,000 pieces for the rest of the year. This is the Just in Time way of doing it.
What QRM tells us to do is run 10,000 pieces, take that setup off, and move to the next job. Now we can run the jobs for the people that have been waiting for two weeks, and then it's time to get back to the company that needs 10,000 more parts next month. You'll be doing more setups, which incur more setup costs, but what you don't realize is that you're getting more product out the door faster and not incurring other hidden costs, like being late on other jobs. At the end of the month, you'll be keeping more customers happy, and employees are happier because you're not pressuring them.
When you first go to a QRM class, they give you a quiz with 10 true or false questions. I would say nine out of ten people answer them the wrong way because they're using the generally accepted, standard ways of thinking. But once you get into the QRM program, you tell yourself "I can't believe I was doing it that way." The thing with Just in Time and Kanban concepts is that the OEMs want you to do it, and they expect all of their suppliers to do it. The OEMs are not holding any stock, but then they call you and say "Give me what I need this week." So it all falls down on the smaller suppliers. It doesn't make sense for us to hold all of this inventory.
QRM is a way not to have to hold all of this inventory. In addition, we can't just go out and buy a lot of new machinery and hire extra employees, which also gets very costly. This is a way to add a lot of capacity to your company without a lot of new investment. To really understand QRM, it's good to go to a two-day training session that they offer. The information is not really complicated, but it's counter-intuitive to the way we have always been doing things.
D2P: Does automation, including robotics, play a significant role in the QRM process?
AK: Very often, automation is not necessary. Again, it goes back to where we get lead time solved. It's not about getting the machining process done faster. What you really need to do is examine the policy questions. The changes that Steve made were with the existing machines that he had. The savings that you will get, in 99% of the cases, are not because of automation. In fact, it could be counter-productive.
I'll give you one example where this happened. There was a company that bought a very fancy, multi-capability CNC machining center for $500,000. It replaced their traditional, manual turning, milling, and drilling machines. They were so excited about it that they re-routed all of their jobs to this one machine. Even with the savings on cycle times, they created a two week backlog.
SS: I agree with the professor. QRM focuses on the non-touch time, where automation deals with speeding up the touch time, or eliminating labor. The problem with a lot of automated systems is that when you connect a bunch of machines together and automate everything, the system becomes too rigid. If you're going to automate, it has to be flexible for short changeovers, so you can run your optimal batch sizes. Automation works if you can devote it to one product with very high volumes, but it doesn't work for companies that have to do low-volume, high-mix (high level of part variety) custom work.
D2P: For processes that require costly hard or soft tooling, how can manufacturers work toward reducing lead times?
AK: It's wrong to confuse quick response with rapid manufacturing because it is looking mainly at machining and tooling processes. The tooling process may only be a small fraction of your overall lead time during the business process. For example, in a job with a ten week lead time, you could use eight weeks for quoting, specification, and design, and then two weeks to make tooling and do machine work.
SS: This is just another process step that needs to be reviewed to reduce white space waiting time. We (Master Spring and Wire Form) make all custom parts, but we try to use a full set of standard tooling across the majority of jobs. We invested in a CNC mill, and we have an engineer who is trained in MasterCam that can design a tool quickly and then send it to be machined at the mill. Not only can he make it right the first time, but it's more precise than making the tooling by hand. We looked at the whole process to see what's slowing up our tooling area. Our first answer was to decide to stay away from custom tooling as much as possible. We also have made some blanks that can be made into tooling very quickly.
AK: I'll give you an example of another company that was outsourcing a product because they didn't want to invest in the tooling. As a result, they had four weeks of lead time with many delays. They finally realized that they should have purchased the tooling so that they could have controlled the process. When you look at the overall workflow, you have to make some decisions about the tooling.
SS: Tooling is one of those things where if you send out to get a tool made, it might take four weeks. Most companies can't wait that long to get the tooling.
D2P: Is there a point at which efforts to reduce lead times produce "diminishing returns" or begin to have an adverse impact on quality?
AK: On the contrary. In fact, by reducing lead times, there is actually an increase in quality. Once again, this is one of those things that people aren't really aware of, or don't recognize. People think if you speed up the process, you might have to compromise the quality.
When you change the workflow and the processing, the quality improvement possibilities actually stare you in the face. As you shrink the lead times, you'll actually have more time to work on quality improvements.
People will also see the quality opportunities because the workflow is much better. We've done studies across a wide spectrum of industries and companies. When the John Deere Co. looked at reducing lead times with their supply base, the defective parts per million with suppliers actually reduced significantly as their suppliers reduced lead times.
SS: This QRM system really does work. There are a lot of little things that make a big difference. When you make optimal batch sizes, as opposed to running a large order for the whole year, you just run what you need for a few deliveries. Then, if a customer wants to change or modify a part, you can do these adjustments very quickly on the next month's production run. Now, what we do is maybe produce about two months' worth of parts, so if they need a rush order of another 10,000 parts, we can send them in a few days.
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