Quick Response Manufacturing : ‘ When Kanban is Not the Solution ’

20 In the summer of 2002 two articles [1,2] written by Lindsay Harding appeared in Control magazine. They described the Quick Response Manufacturing (QRM) approach developed by Rajan Suri at the University of Wisconsin in the USA. At the time, Trevor Turner was working on a Knowledge Transfer Partnership (KTP) in an SME, located near to Glasgow, making metal valves. The company, which manufactures custom engineered products, was finding that to stay competitive it needed to reduce the delivery lead-time to customer requests whilst at the same time reducing operating costs. It seemed to Trevor that the QRM approach described in the articles could offer solutions to both of these problems. The QRM philosophy is very simple. It requires a company to focus purely on reducing lead times and forget about traditional cost-related performance measures used to monitor productivity. A lot of the underlying philosophy comes from the just-in-time (JIT) Toyota production system that has evolved into lean manufacturing in recent times. Cells are the basis of the shop floor layout and market-focused product groups are dedicated to these cells. The concept of under-utilisation of capacity is also used so that spare capacity is available at critical operations to take account of variability in processing times caused by product mix and demand fluctuations. The lean manufacturing approach works best when a ‘pull’ system using kanbans with regularised schedules can be applied. This allows the operations in the cells to be ‘balanced’ so that the duration of each operation is less than the ‘takt’ time (value stream cycle time) for the forecast demand. The kanban approach usually requires a predetermined in-process stock to be available at defined points along the value stream so that a customer order can be ‘pulled’ along the internal value stream of the company and out to suppliers. This approach cannot be used when the demand for a particular product is erratic, and it is not sensible to keep either end-product or in-process stocks, or where the product is customised to such an extent that in-process stock cannot be specified in advance of customer orders. An MRP approach is usually used in these situations and Bills of Materials (BOMS) and Routings are configured prior to launching a manufacturing order. The complexity and approximations built into Routings, BOMS, Move Times, Queuing Times, Minimum Safety Stocks etc, to allow an MRP system to function effectively is not suitable for most small to medium sized organisations. Vast resources are needed to keep the data relevant enough to be able to handle demand and product mix fluctuations associated with high product variety. These resources are not readily available in SMEs and so delivery reliability to customers often suffers as a consequence. This was exactly the situation facing the SME manufacturing metal valves. Although they had a well-disciplined MRP system with a competent management team, the market conditions that were demanding increased product variety at reduced prices with shorter delivery lead times. Manufacturing batch sizes of components were getting smaller and smaller and the minimum safety stocking requirements in MRP were getting more and more difficult to manage. This had led to a rise in the holding costs of in-process stock, making it unsustainable if the business was to survive. The diagram in Figure 1 (overleaf) was adapted from a diagram in one of Suri’s papers [3]. It shows the time taken for an order to flow along a value stream for a valve manufacturer who uses a MRP driven planning system. The ‘touch time’ shown in black, is the time the order is being worked on, involving a sequence of operations that takes an overall elapsed time of 17 days. The QRM philosophy of focusing on reducing lead-time instead of the traditional cost based approach of reducing ‘touch time’ was used to improve the business performance. The lead-time of 4 days allowed in the system to allocate components from the stores to assembly of orders was necessary to allow shortfalls in available component stocks to be manufactured. The QRM solution to the stock shortfall problem was very different Quick Response Manufacturing: ‘When Kanban is Not the Solution’