Sunday, April 4, 2010

Just In Time Manufacturing Case Study 2|JIT

The following case study regarding Just in Time and lean manufacturing is not as “sad” as the last as it was eventually a successful implementation. But I will give you some history regarding how the company “played” with lean manufacturing over a period of a few years before entering into a crisis situation which forced them to change.

The company in question made luxury office furniture, they offered a vast range of products in a number of different colors and finishes. They had been in operation for around 20 years and were reasonably successful, owning probably the biggest factory in the town in which they were located.

I became involved with the company when they contacted the local university for help in downsizing their company due to turndown in demand. They needed to reduce the space taken up by their operation as they had another company that was offering to take over half their factory space for a substantial rental fee.

They had lost a significant portion of their business to local (UK) competitors over the previous year or two, much of the business going to three separate companies that had been set up by previous directors of the company in direct competition. The perception being that these ex-directors had stolen the customer base. This led to a number of redundancies and to the obvious conclusion that the factory was now far too large for the size of their operation and they should either move to smaller premises or rent out a portion of their current location which was owned by the company rather than rented.

They had used consultants in the past to implement lean manufacturing to improve their business with some success. They were happy with what they had done in the past as it had generated some savings but they had never really realized the gains that they felt they should have been able to achieve and as such had ceased to actively pursue lean.

On visiting the company the real reasons for the down turn in business became evident, the competition was offering lead times of two to three weeks, whereas the company that we were in was struggling to meet six weeks. The customers were mainly asking for “next week” delivery, so they were far from this requirement.

The company knew that lead time was a major issue but had not managed to successfully tackle it over previous lean implementations. They were also hiding behind the “previous directors stole our customers” banner rather than accepting the real issues.

The first lean implementation was factory wide, they implemented 5s with some success, the factory was on the whole tidy and well organized. Shadow boards and tool racks were evident at each machine and so on. They also tried to tackle waste within the factory, at the time the biggest issue was the movement of inventory, which was also a health and safety issue due to a serious accident with a fork truck.

As you can imagine, office furniture is made up of various cut wooden panels and other components, these when produced in batches create some significant amounts of cut, heavy material, which at the time had to be moved from process to process using fork trucks. This was “resolved” by the company installing a network of what can only be described as rail tracks and trolleys that could be maneuvered through the factory from process to process. They managed to make the biggest waste in the factory more efficient rather than trying to eliminate it! This actually produced some savings to the company and was felt by those involved to have helped reduce waiting times as people were in control of their own material rather than waiting for the now no longer required fork trucks.

Their second foray into lean was to re-hire the same consultants with an aim to reducing the overall lead time, this was achieved in part by re-organizing and laying out the final assembly line. This was actually quite nice and was felt to have shaved about a week off of the lead time. The line was a well designed flow line with materials entering from sides where they were required and 2 bin Kanban systems for the smaller items used on the line.

But none of this achieved the lead times being asked for by the customers, it also did not satisfy the overall aims of Just In Time (JIT) or of Lean Manufacturing. They were still making larges batches of products that were then pushed through the factory rather than making what the customer wanted when the customer wanted it!

Investigating the planning and flow through the factory we found that the companies ERP system was also set up to build in a weeks long delay between each process to allow for any problems with delivery, quality or machine availability. They were actually planning a long lead time!

This is a common problem with ERP, MRP and even some “manual” planning systems that they are set up with these delays between processes to make the planner’s job easier as there is stock and flexibility within the system for the shop floor to continue easily without making too many adjustments to the plan when problems occur. The outcome however is that the lead times through the factory are made even longer!

The machinery was all modern and computer controlled within the factory, setups were a matter of pushing a button and a few minor material changes when required. They were not a barrier to reducing batch sizes as they are in some factories.

The main saw could cut each and every panel for any product at the same time rather than cutting all table tops then all drawers etc. This was actually a very simple implementation!

We designed the layout with the operators and supervision, a very simple highly compressed layout. We then planned the moves over a number of weeks before the main shut down so that we could move equipment piece by piece. We had several weeks of inventory to run through the system, so we were able to move the first few processes closer together whilst the later processes were still running.

The planning was drastically simplified, customer orders modified for only board cutting efficiency were given to the saw to cut – this meant that at the most we ended up with only 2 or 3 additional products for stock rather than the usual 30 to 40. (Plans were in place to review available board sizes to prevent even this.)

The saw then cut in the order they received the paperwork, these customer orders were then placed in one of the only 4 possible locations between the saw and the next process with a numerical flag sat on top so that the next process took the oldest order.

The next process took the oldest order, did the work they were required to do then placed the order into the limited spaces between it and the next process and so on. If there was no space, no work was done, the operators were instructed to go and help in other areas, normally the next process.

In this way the order flowed through the factory in less than 2 days! Yes 2 days from the initial 6 weeks that they were quoting and not meeting! Business increased due to customers no longer trying to go elsewhere to get a shorter lead time. This is Just in Time, this is lean manufacturing in action!

The space in the factory was a fraction of before, even with an additional assembly line installed to cope with additional demand. The finished goods stores slowly began to reduce to a mere shadow of its former “glory” as the remaining slow moving stock was shifted. Half the building was rented out as per our original request for help!

This took around 6 months to implement fully from the initial visit to a fully working system led by 3 experienced consultants. I don’t have the monetary savings that were made by this project as the company never released them to us but they were considerable.

Just in time is a major part of implementing lean manufacturing, focusing on giving the customer what they wanted, when they wanted it rather than looking for individual wastes to eliminate gave the company the revolutionary change that they required.

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