Custom solutions keep manufacturers competitive
Every weeknight when the lights came up on the set of “The Tonight Show with Conan O’Brien,” the staff at Electronic Theatre Controls (ETC) could point to the television screen and say, “We did that.”
As a global company, ETC produces lighting fixtures for many countries, each with different voltage and connector standards. To find a way to efficiently produce a variety of fixtures, the company turned to the UW-Madison Center for Quick Response Manufacturing (QRM). The center is a partnership between UW-Madison and more than 50 member companies dedicated to researching and implementing quick-response manufacturing (QRM) principles, methods and tools.
The QRM philosophy was originally developed by Industrial and Systems Engineering (ISyE) Professor Emeritus Rajan Suri. QRM focuses on reducing lead time (the amount of time needed to develop and deliver a product) by evaluating the entire manufacturing process. This includes order processing, purchasing, design, the shop floor, shipping and after-market service. Faculty and students at the center work with manufacturers to develop new principles to create tailored solutions for businesses that help them dramatically reduce lead times.
Industrial and Systems Engineering Professor Ananth Krishnamurthy took over as director of the QRM center in January 2008 when Suri retired.
Krishnamurthy completed his PhD in industrial engineering under Suri’s mentorship and has been affiliated with the center for more than a decade. He supervised industry projects, led research activities and spoke at numerous QRM workshops and conferences. Krishnamurthy is also the director of the UW-Madison Manufacturing Systems Engineering (MSE) program, an interdisciplinary master’s program that combines engineering and business courses. The QRM center provides extensive support to the MSE program.
“ QRM methodology makes it possible to offer a wide variety of products delivered in a short amount of time — in effect giving the customer what they want, when they want it. This gives U.S. companies an advantage. ”
The center conducts cutting-edge research on strategies to improve manufacturing competitiveness and works in partnership with several businesses operating in low-volume, high-mix manufacturing environments. Through graduate student-led projects, conferences and employee training sessions,the center helps transfer university research to industry, resulting in tangible benefits to their bottom lines. In the 16 years since its founding, the center has completed more than 400 projects with more than 200 company partners, most of which are based in the Midwest and range from small, local manufacturers to large, national corporations.
An example is P&H Mining of Milwaukee, which manufactures custom mining equipment, including shovels, draglines and drilling products. The company designs and engineers each product to meet its customers’ specific needs. As a result, each P&H customer order varies in quantity and manufacturing complexity; QRM offers specific principles to address this complexity.
“We were visiting lean manufacturing factories, but the philosophy wasn’t the best match,” says P&H plant manager Bob Mueller. Lean manufacturing is a traditional approach that establishes production flow in high-volume, low-variety environments. Mueller and project manager Kathy Pelto led the efforts to implement QRM principles at P&H Mining, while QRM center faculty conducted employee-training sessions. When the company purchased new shop equipment, the P&H team ensured the equipment was set up according to a QRM workflow, which groups employees working on a particular product into a cluster, or cell.
QRM principles helped reduce P&H Mining lead times by 66 percent, resulting in significant cost savings. According to Mueller and Pelto, key to this success is how well P&H Mining employees embraced QRM.
“Workers plan their own work, which leads to more fulfillment after a day on the job,” Mueller says. Pelto adds that the shop workers, who are unionized, feel a sense of ownership for the products since they are part of the process almost from start to finish, rather than seeing a product only at one point in the production process.
QRM principles also are making a difference for Madison-based RenewAire, a leading producer of energy-efficient ventilation systems. RenewAire became a QRM partner in 2002, when the company was experiencing rapid growth. Like P&H Mining, RenewAire didn’t find lean manufacturing to be a good fit for its variable environment.
“We struggled mightily with variable customer demand, and it was a huge relief to find a central methodology we could build plans around,” says RenewAire president Chuck Gates. “QRM allowed us to move from bunker mentality to a mindset of empowerment.”
With help from the QRM center, RenewAire established two focused target markets: residential and commercial customers. The company then created teams to directly serve both customer groups from order to delivery, so instead of specializing in one production task, employees specialized on their particular customer.
The results were tremendous. “Between 2003 and 2008, revenue has increased 130 percent,” says Gates. “Lead time for residential products has been reduced from 10 days to one. Lead time for commercial sector products was 25 days and now is 10 days.”
Such results challenge the misconception that manufacturing is too expensive in the United States and must be outsourced to other countries. According to Krishnamurthy, labor costs generally make up only 10 to 20 percent of total manufacturing costs, so reducing labor costs by outsourcing overseas may save only 5 or 6 percent of total costs. These meager savings also come at a price: time.
“When you ship from overseas, the products sit on a boat for three to four months, so you have to machine months worth of inventory ahead of time, which may be obsolete by the time it gets here,” says Krishnamurthy. “Sourcing from overseas also limits your ability to adapt to demand changes and introduce the latest designs into your product. This could lead to loss of potential business opportunities.”
These are valuable openings for manufacturers that would like to compete based on their ability to manufacture custom products quickly — the QRM center is helping companies take advantage of these opportunities.
“The strength of American manufacturing is in small- and medium-sized manufacturers. That’s where the innovation really takes place, and by supporting these companies we provide a valuable service,” says Krishnamurthy.
Gates appreciates the help. “Small to medium manufacturers make up the majority of manufacturing output in the United States,” He says. “So this sector is absolutely vital to our economic health as a nation. QRM methodology makes it possible to offer a wide variety of products delivered in a short amount of time — in effect giving the customer what they want, when they want it. This gives U.S. companies an advantage.”
The partnerships between manufacturers and the QRM center are mutually beneficial. Several partners have hired QRM students, including P&H Mining, which has hired two graduates full time and others as interns to continue their academic-year projects into the summer. “Every year the students are really high caliber,” says Mueller.
ETC hired Alex Stoltz 11 years ago after he graduated from the MSE program and worked on a QRM center student project.
“I really understood the philosophy of lead time reduction, and ETC was just getting into it when I started here,” he says. “We’ve hired another engineer from the program and another is currently enrolled. It’s really been a win-win relationship for ETC, MSE and the QRM center.”
ETC regularly participates in student projects. After each one, the company implements some of the project recommendations. Overall, ETC has reduced lead times by more than 30 percent and has seen cost savings by reducing scrap, handling and rework.
In addition to the student projects, the QRM center hosts international conferences and seminars to introduce a wide range of businesses to the benefits and possibilities of QRM.
Krishnamurthy is looking forward to expanding the center’s national presence as he and his team continue to help businesses embrace QRM. “We recognize that in the future, more and more manufacturers will be required to offer a high variety of customized products at short lead times,” Krishnamurthy says.
“At the QRM center, we are at the forefront of identifying theories that would define manufacturing competitiveness in the future and helping businesses implement these theories. As we pull out of these tough economic times, companies that are well equipped to meet these challenges will succeed and the QRM center is proud to help them chart their success.”