Now is a Good Time to Consider Quick Response Manufacturing

Sep 20, 2018

By: Meaghan Ziemba, Content Marketing Manager, AME

Business is thriving in U.S. manufacturing, and as a result, time has become the ultimate competitive advantage. Many companies are investing in different technologies and innovations to address the challenges that stem from high-mix, custom-engineered manufacturing environments, but some are missing the mark in terms of lead times. To reduce both internal and external lead times, now is a good time for U.S. manufacturers to consider Quick Response Manufacturing (QRM).

 

Quick Response Manufacturing Shortens Lead Times, Increase Competitiveness

In today’s digital world, consumers are conducting a lot more research on available goods and services—goods and services that they want as fast as possible with minimal effort. Lead times play a significant role in customer satisfaction and can be the deciding factor for a buyer to select one company over another.

 

Longer lead times not only create frustration among consumers, but they also present the following challenges for manufacturers:

 

  • The risk of running out of inventory or stocking up on more to compensate for unreliable suppliers.

  • Less time to react to quality control issues that may arise after the product is shipped and delivered.

  • Decreased response-time to market changes and inability to introduce new products.

  • Decreased accuracy in sales forecasts.

  • The risk of your product not being what the customer wants anymore once it finally gets delivered.

QRM is a company-wide approach first developed in the late 1980s by Rajan Suri, an Industrial and Systems Engineering professor at the University of Wisconsin-Madison. This approach educates businesses on how to cut both internal and external lead times in all phases of their manufacturing and office operations. QRM primarily focuses on time and is ideally suited for high-mix, low-volume, and custom-engineered products while easily being integrated into existing Lean, Six Sigma, and other improvement efforts.   

 

At the Core of Quick Response Manufacturing

According to the Center of Quick Response Manufacturing, the strategy comprises four core concepts:

The Power of Time

Firms that focus on scale and cost management strategies (mainly Lean) require a high degree of labor specialization and hierarchical structures that can have negative effects on lead times and generate hidden costs. Some of these costs include waste that doesn’t get calculated including:

  • Overhead

  • The amount of time it takes to process an order

  • The steps needed to finish a single process

Between each step there is a waiting period before you can move onto the next step. QRM evaluates each process and analyzes the wait time (white space) versus actual work time (gray space) so strategies can be developed to eliminate the white space. Less white space means quicker response time for your customers.

Organization Structure

The principles and tools of QRM are designed around a Focused Target Market Segment (FTMS) where shorter lead times provide the company maximum benefits; for example, separate processes versus combined departments when answering customer questions.

Placing engineering, quoting, and inside sales in one room reduces the wait time for the customer who is interested in purchasing a specific motor for a certain application. Traditionally, email communication could be exchanged between the inside sales representative, to the manufacturing engineer, to the head engineer, back to the sales representative, and finally back to the customer.

Each exchange potentially has a wait time on it versus an environment where all individuals are sitting next to each other and can communicate face-to-face as the customer is on the phone. A two-day turnaround time for the answer turns into a 15-minute conversation that ends in a sale over the phone.

System Dynamics

QRM’s cellular structure applies common system dynamics principles that lead to improved capacity planning and optimized batch sizes to achieve short lead times.

Most companies assume they want to be close to 100% utilization in terms of their processes, but ideally it is better to target 80%. When you set yourself at 80%, you have a buffer to be flexible for all the fluctuations of incoming business and customer demand.

You would not turn down the opportunity to purchase a machine that you only use 40% of the time if it significantly increases your throughput throughout the process. That would be similar to making the argument that landing gear on an airplane is no longer needed because it is only used part of the time when flying. It is more efficient to place something in a QRM cell and measure the time it takes to get the part out of the office, through manufacturing, and finally to shipping then to remain focus on individual machine utilizations.

Enterprise-Wide Application

Time-based management principles are applied to all parts of the organization including office operations, material planning, production control, supply chain, and new product introduction.

Some companies are surprised to find that 50% of their lead times stem from their office processes. Customers are not interested in how their lead times get broken up. They just want their products as fast as they can get it from the time they order them. Applying QRM to your office processes and your supply chain can significantly cut costs in areas such as inventory.

It all comes down to speed. Speed is the differentiator that separates you from your competitors, because it places focus on the overall offer that you provide to your customers. QRM also allows manufacturers to compete as domestic suppliers against low-cost, oversea companies, because it allows them to react faster to any market changes that may occur.  

To learn more about Quick Response Manufacturing and how to implement it into your company processes visit the QRM institute at https://qrm.engr.wisc.edu/.

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