July 12, 2013
If an organization is looking to streamline its turnaround time—the moment an order is received to the time it is shipped to the customers—it requires healthy communication among employees and, not least, the destruction of silos and fiefdoms.
Every year the Fabricators & Manufacturers Association hosts at least one workshop on lean manufacturing. Called LeanFab Workshop & Tours, these don’t cover cookie-cutter lean, but instead improvement methodologies that work for high-mix, low-volume operations—in other words, most of U.S. manufacturing.
This year’s conference, led by our Improvement Insights columnist Dick Kallage and held in Columbus, Ohio, June 4-5, included tours of Ohio Laser, a fabricator in Plain City, Ohio, northwest of town; and of Emerson Network Power’s Columbus fabrication plant, which makes Liebert-brand cooling units for corporate data center facilities.
The conference revealed a telling reality of modern metal fabrication. New technology is essential to stay in the game, but it really just gets a fabricator to the table. Customers now simply expect good quality from new punches, lasers, and brakes able to hold tight tolerances.
What sets a fabricator apart is stellar on-time delivery. For many customers, a cheap part delivered late is way more expensive than a costly part delivered on time. In FMA’s 2012 Financial Ratios & Operational Benchmarking Survey, almost a third of respondents said their on-time delivery rate was 85 percent or less.
To be sure, the on-time metric hides some subtle realities. A shop may deliver a day late on multiple orders—each of which causes few if any disruptions in the supply chain—though that fabricator still can have an 80 percent on-time delivery rate. Meanwhile, a shop with 98 percent on-time delivery may be a week late with several extremely time-sensitive orders and cause havoc for customers and customers of customers. The on-time delivery metric may look good, but it doesn’t reflect how successful the shop truly is.
Rajan Suri, who developed an improvement method called quick-response manufacturing (QRM), described in his book, It’s About Time, how on-time delivery is a great outcome for customers—vital, in fact—but it has some shortcomings as an internal improvement metric. “While on-time performance is desirable as an outcome, the emphasis on it as a performance measure is dysfunctional,” he said.
A department or shop may have 100 percent on-time delivery, but if it pads the schedule, it isn’t competitive. Internally, the padded schedule may lead to a cash drain as material moves slowly from raw stock to work-in-process and, finally, finished goods. Externally, customers may value their ability to pull from a fabricator’s finished goods inventory at a moment’s notice. But when it comes to orders for new or different products, they may look to another shop that can respond faster.
Regardless, no one can argue that on-time delivery matters to customers. In June LeanFab workshop attendees concurred that on-time delivery is a problem for many. So what causes these late deliveries, exactly? Is it a matter of customer mix and concentration? In FMA’s 2012 benchmarking survey, a quarter of respondents said that five or fewer customers made up 80 percent of sales. Lose one of those huge accounts, and a shop can get into trouble fast. So it’s understandable why a fabricator gives those big customers priority.
Does it come from subcontracting? A few years ago I visited a job shop where managers put together a Gantt chart showing how long each operation took and (most important for lean) the material handling and queue time between operations. The longest bar on the chart didn’t represent inefficient material handling or a welding or bending bottleneck; it was for the outsourced plating operations. Some shop owners have told me they avoid subcontracting whenever possible, because they want to appear to be a reliable partner for their customers, and they don’t want a late subcontractor hurting their reputation.
Does it come from overproduction? Workcell efficiency doesn’t mean much if it’s producing parts that aren’t needed immediately. Moreover, customers don’t care about a machine’s green-light-on time. They care about quality products delivered on time. Machines punching, cutting, or bending don’t make money; good parts and products shipped to customers do.
Steve Scott, a product line manager at Emerson, told a similar story of overproduction. He and other Emerson manufacturing managers—including Curtiss Keaton, lean manufacturing coordinator, and Jack Somerville, manager, LNA process improvement—described how the plant has undergone a cultural shift. Their goal is to move away from years of traditional thinking about “workcenter efficiency” and toward “overall manufacturing efficiency.”
Scott summed it up like this: “I would rather you inefficiently produce something I need than efficiently produce something I don’t.”
Overproduction, subcontracting, customer mix and scheduling—these and others certainly factor into the late-delivery conundrum, but are they really root causes? At the conference, Dave Lechleitner, a Bloomington, Minn.-based principal at Exact Software North America, spoke of developing well-defined and detailed work instructions that can be changed and adapted to meet changing customer demands.
Kallage, conference leader and principal at Barrington, Ill.-based KDC & Associates, spoke of the two-minute rule, which states that everything in the shop should be labeled, arranged, and documented in such a way that anyone off the street with basic metal fabrication knowledge should have a good idea how parts flow and machines are set up. Sure, the punch operator with decades of experience may know where every tool is, but what if that operator isn’t around? What about new hires?
Lechleitner and Kallage spoke on a common theme, as did many attendees during roundtable discussions, and it all had to do with communication. An operator may cut the wrong material because it isn’t labeled properly. A job may have the wrong part revision attached to it. The engineer and salesperson might fail to communicate on certain job specifics, and so go back and forth with the customer to clarify an order. Often a part spends more time in the virtual world, being discussed in e-mail after e-mail, than it does on the shop floor. In fact, thanks to modern machine tools, once a job hits the shop floor, it’s usually smooth sailing. As some attendees opined, the problems often occur at every stage before a job is released to the floor.
Because job shops now receive so many small orders, ineffective processing of information has become a major root cause of so many problems downstream. This becomes even more of a challenge when departments become silos or fiefdoms, concerned only with how efficiently they can do their jobs, and not thinking much about how their work affects other departments.
To overcome them, managers are breaking down departmental barriers; cross training; documenting procedures; and, most important, communicating everything clearly, concisely, and completely. It’s great that an estimator can quote so many jobs in a day, but if a lot of won orders get hung up in engineering or, even worse, are released to the shop floor in an incorrect form, all that quoting activity doesn’t mean much.
As Kallage explained at this year’s LeanFab (and at previous seminars), it’s about looking at the entire process, from the front office to the shipping dock. Conveying that process to everyone in the organization requires healthy communication and, not least, the destruction of silos and fiefdoms.
The FABRICATOR® is North America's leading magazine for the metal forming and fabricating industry. The magazine delivers the news, technical articles, and case histories that enable fabricators to do their jobs more efficiently. The FABRICATOR has served the industry since 1971. Print subscriptions are free to qualified persons in North America involved in metal forming and fabricating.