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How to cut lead times in job shops

Fabricators should focus on the process, from quotes to cash, and identify delays

Lead time

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It’s no secret that the ability to deliver faster than your competitors is a substantial competitive advantage in the job shop world. Our research shows that 50% of the time customers value a shorter lead time more than price. The ability to deliver quickly not only wins more requests for quote (RFQs) but also enables premium pricing. It’s like overnight mail: Faster is more expensive.

Although it’s no secret that short lead times are good for business, how to achieve those shorter lead times isn’t so well-known. So, how can you cut customer wait time in your shop?

Cutting lead time means reducing the time it takes to process orders from start to finish through your shop, from when you identify demand all the way to when your final shipments arrive at the customer’s loading dock. Your goal is to shorten this entire process, and to accomplish that, you need to reduce and eliminate unnecessary delays.

Measure Your Lead Time

One way to measure lead time is simply to count the days between order entry and order ship dates. Count date to date, not working days. You want a comparative measure, not an absolute metric. Measure in hours or days as appropriate.

Also graph your quote win rate as well as revenues and margins to assess the financial impact of reducing lead time. If you have a weekly performance report, be sure to include these metrics. (For more on this, search for “How to track success in the job shop” on thefabricator.com).

Your Business Is a Process

Say you implement a variety of process improvement projects that require a detailed investigation of various subsystems in the organization. You map and analyze the steps to find opportunities for improvement, such as eliminating or reducing those unnecessary delays.

Training and retraining should be integral to all process improvement, so everyone understands and can follow a new practice or procedure. On-the-job training is best here. It’s also important for the person to know why the new method is being introduced.

Such process improvement is an excellent way to set an overall goal of reducing lead time and becoming more competitive. But “processes” don’t just occur in a machine workcell; they span the entire business. In fact, the entire job shop business is, essentially, a process.

Start by viewing your business as a process across organizational functions. In other words, look at the series of major steps every order goes through, from winning in the marketplace to delivering a custom item to a customer and getting paid. Looking at the organization as a process brings time into the foreground. Every job shop follows the same process pattern (see Figure 1).

Once you begin to appreciate that your business is a process of converting market demand into cash, you can begin to think about the best way to organize and manage this process. A new paradigm will give you an entirely different perspective on your shop, one that will enable you to manage it more efficiently and effectively.

The issue lies in the job shop org chart, usually reflecting a functional hierarchy with roots in mass production, with manufacturing, quality, engineering, and sales departments all reporting to an executive team. Problem is, the functional hierarchy (see Figure 2) doesn’t align with the job shop business process in Figure 1. In that figure, you’ll see one term that isn’t widely used in the job shop world, at least not yet: preproduction.

Job shop business process

Figure 1 These steps occur in a cyclical fashion. That is, shipped products (on the far right) help build your business strategy, marketing, and sales efforts (on the far left). Looking at the process chain horizontally helps you see more clearly the time it takes to process orders.

Preproduction encompasses all the activities that occur between booking an order and releasing that order to the shop floor for production. The problem is that these activities are scattered around the organization among various departments and are not coordinated or managed. A typical job shop has no “preproduction department” that would bring these activities under the aegis of a single manager. (For more on this, search for “Job shop management: Are scheduling problems really symptoms?” on thefabricator.com.)

But what if a job shop restructured into something that resembles the org chart in Figure 3? In this new structure, the shop would be organized into three groups: the front end, preproduction, and production. Preproduction would include not just engineering, production planning, materials purchasing, and scheduling, but also a dedicated first-article team that would try out and develop setups for new or challenging work.

Aligning the org chart with the job shop business process (see Figure 4) helps everyone turn their focus away from department-specific goals, like how many orders or tasks are completed over a certain period. They instead focus on the velocity of an order throughout the entire organization. This includes reducing or eliminating the delays that slow order velocity (For more on this, search for “A new look at the job shop organization chart,” archived on thefabricator.com).

Focusing on order velocity helps everyone understand the difference between task time and chronological time. The focus in business has traditionally been on reducing task time because it is paid for by the hour, and productivity (more output per hour) has a direct bearing on profitability. Chronological time, on the other hand, refers to the process time (or clock time) required to convert a customer’s order into a shipment.

The costs of chronological delays in your business are hidden and difficult to measure. Everyone knows what happens to company profitability when you reduce labor costs, but how many orders do you lose over a year because a competitor could deliver faster? The answer isn’t so obvious. You’ll never see those lost sales and lost profit dollars; they will never show up on your income statement.

Identifying Delays

Delays are a type of waste. They lengthen the process time from order entry to shipment. Delays create waiting, lost time, missed ship dates, and other costly disruptions. Waiting is one of the seven sources of waste in lean manufacturing—but waiting is a result, not a cause. Every instance of waiting is caused by a delay. When you see someone standing around and waiting, find out what delay lies behind it, then focus on eliminating or minimizing the delay.

Because delays are tangible and measurable, you can identify and address them. How, exactly? One way is for the owner or president to send an email to everyone in the company and ask them to fill in the blank: “Why does it take so long to_____________?” This will yield some very specific areas for investigation, often a great number of them.

By sending just one email, one job shop owner found his employees were asking why it took so long to:

  • Receive purchased components.
  • Finish quotes.
  • Estimate and design.
  • Check bills of material and prints from mechanical design.
  • Receive financial statements.
  • Get all the customer information needed to start a job.
  • Complete the mechanical design process.
  • Get things done in general.

Sure, not every employee insight will give you specifics (“getting things done in general” is, well, pretty general). But the vast majority of answers will likely help uncover numerous, specific delays that could be shortened or eliminated.

One of the mistakes many companies make when seeking to reduce lead time is to focus almost entirely on the shop floor and ignore the rest of the organization. But any manufacturing manager will tell you that orders that are late coming to the shop contribute to missed ship dates. In other words, the delays come not from an inefficient shop floor but from order processing in the office, where jobs can sit in someone’s inbox.

functional hierarchy

FIGURE 2 The traditional functional hierarchy doesn’t align with the job shop business process and, hence, can create the need for numerous handoffs between departments, which in turn creates more delays.

Incomplete shop orders (such as inaccurate, illegible, missing critical information, lacking materials, or not reflecting the latest engineering changes) also contribute to missed ship dates. When seeking to cut lead time, take the entire organization into account.

This includes the engineering department. It’s no secret that engineering often is seen as a problem area when it comes to meeting schedules and shipping on time. I know at least one job shop manager who calls the engineering department “the black hole,” where work goes in but never comes out.

Many mistakenly believe you can’t schedule engineering work, considering the job’s creative nature. Deadlines may be missed with impunity. Of course, if you hire an outside engineering firm, engineers there would certainly give you a completion date and price for the project. Obviously, engineering work can be estimated and scheduled. Needless to say, an unreliable (and sometimes egotistical) engineering department is detrimental to your business and must come under management’s control.

Partner With Customers

You might tolerate delays in a customer’s realm because, of course, you don’t want to annoy the customer. This will come back to bite you, because customers will still expect the original promised ship date even though they delayed providing needed information and crunched your processing time.

Be firm. Explain the consequences to the customer in terms of a later ship date. The same goes for in-process inspections. Customers are also your partners, and after they award you a job, they’re responsible for providing the specifications and any special instructions without delay if they expect the delivery date to hold.

The term “customer” implies an arm’s length transaction with no interaction between the buyer and seller. This is not the case in custom manufacturing where significant interactions occur between all parties. Achieving the objective—delivering on time and staying within the estimated costs—is a joint venture. You may want to make that clear in your response to the customer’s RFQ, then reinforce it during conversation. It’s an educational process.

Look Between and Within Departments

The handoff between departments is sometimes called “white space.” Bring everyone involved with those handoffs together with the aim of discovering delays and instituting better methods. You can use a brainstorming format.

Within departments, delays usually occur at the task level. Look for unnecessary paperwork, cumbersome and time-consuming procedures, counting and filing, lack of proper prioritization, lost time, the need for training or retraining, communications breakdowns, and time spent waiting for authorizations. Someone might not be available to make a decision. Someone might have forgotten to order materials, so the order reached the floor late. Perhaps a customer sent in a last-minute change, which halts production.

You might have excessive or unnecessarily complicated practices and procedures in the office. How many meetings do you attend? Excessive meetings, which tend to be used to compensate for a fragmented organization, can slow an order’s progress.

Streamline Changeovers Everywhere

Looking between and within departments for delays is similar to the idea behind the single-minute exchange of dies (SMED) concept in lean manufacturing that aims to shorten changeover times. First, look at everything outside the changeover that could be performed while the machine is running. Are tools staged for the next job? Are materials available? Are knowledgeable and able setup personnel available to perform the changeover when needed? In other words, do you have everything at hand to perform the changeover?

new job shop org chart

FIGURE 3 Reorganizing the org chart in this way aligns the shop’s structure with the job shop business process.

Next, shift your focus to the actual tasks required to perform the changeover (tasks “internal” to the changeover, to use lean parlance). Which tasks could be reduced or eliminated entirely? Of the remaining tasks, which could be performed ahead of time (external to the changeover) while the machine is running another job?

SMED has a life outside of just changing dies. It’s a conceptual tool that can help you save time, so don’t hesitate to use it in other areas. In the office, for instance, every handoff between departments is essentially a form of SMED. Instead of exchanging dies, you’re exchanging information.

Instill a Sense of Urgency

Procrastination, seemingly common in all areas of life, causes delays as well. That’s obvious. But why do people procrastinate? It can have a lot to do with a shop’s lack of urgency: Everything is reactive, not proactive, and no one seems to engage unless there’s a fire to put out. You can instill a sense of urgency by talking it up in meetings and individual conversations, as well as by example.

When giving an assignment, don’t forget to ask when you can expect to see some results. Set a time and date for a progress report. Employees should know that a sense of urgency is directly related to shortening lead time, and this in turn makes the company stronger, more competitive, and more profitable, which benefits everyone.

You Can’t Eliminate All Problems

Don’t fall into the trap of thinking you can eliminate all problems that cause delays. That’s a recipe for failure. In our culture, problem solving is seen as problem elimination. However, some problems cannot be eliminated, only ameliorated. Rework is a prime example. Yes, rework is the worst kind of waste in a job shop and can cause serious delays. You need to tackle rework continually before it spirals out of control. But you also live in the real world. No matter how polished a job shop’s processes are, mistakes happen. It comes with the territory.

Trying to eliminate a problem that cannot be eliminated is frustrating, ineffective, and doomed to failure. Ask yourself if the problem can be eliminated entirely before you attempt to solve it. That will determine your solution strategy.

A Never-ending Quest

Recognize that the task of cutting lead time is never done. No matter how many years you’ve worked to shorten your lead times, you will always uncover opportunities to reduce them further. If your shop stresses continuous improvement, your operation will outperform those who take only a half-hearted approach.

The ability to deliver faster than the next guy makes your shop more competitive and profitable. Cutting lead time increases sales, reduces costs, accelerates cash flow, and increases effective capacity all at the same time. Cut your lead time, and watch your business grow and prosper.

Job shop org chart and business process

FIGURE 4 Reorganizing job shop into three groups—the front end, preproduction, and production—helps align the company structure to the job shop business process.