TIME IS MONEY: A Madison company saves both with help from QRM
In the fall of 2002, Chuck Gates, president of RenewAire Inc., was facing some tough choices as orders were increasing for the company's residential and commercial lines. "We had grown by 37 percent that year, and we weren't sure how we were going to take the next step," says Gates.
Gates' Madison-based company, which manufactures energy-recovery ventilation systems that solve indoor air quality problems while also saving energy, had received increased orders for both its residential and commercial lines. But this welcome "problem" of growth also presented some tough choices.
One option was to expand the plant, purchase more equipment and hire more staff to meet future growth. But there wasn't time for that, and besides, this would have been costly and potentially risky. If RenewAire's growth spurt ended up being short-lived, pursuing a major plant and staff expansion would have been a grave error.
Another option was to continue operating at current capacity, yet avoid taking on new business — in essence, saying "no" to further growth. But for most companies, turning down business is simply unthinkable.
Fortunately for Gates, he found an alternative that allowed him to say "yes" to more growth while using his existing staff and manufacturing facilities. With help from the faculty and students of the UW-Madison's Center for Quick Response Manufacturing (QRM), RenewAire's operations were revolutionized by the principles of quick response manufacturing.
"We dramatically increased our production capacity, yet we did it all within the same footprint, without having to expand our facilities or make additional investments," Gates notes.
Since 1993, QRM has provided a forum for learning about the concepts of quick response manufacturing, enabling companies to bridge the gap from the theoretical to the practical, from the classroom to the enterprise. "In a sense, factories and businesses are our 'laboratories' for testing and proving the theories of QRM," says Frank Rath, QRM associate director.
Through student team projects involving the analysis of businesses’ real-life challenges and problems, as well as seminars, conferences, case studies and publications, the Center for QRM is dramatically changing the face of manufacturing at large and small companies around the world.
"There are many continuous improvement systems out there that focus on reducing waste and non-value-added overhead, but this system is unique in that it focuses on relentlessly reducing lead times in all aspects of a company's operations. This in turn results in the elimination of waste, improved quality and reduced costs," explains Professor Rajan Suri, director of the QRM Center and author of the book "Quick Response Manufacturing: A Companywide Approach to Reducing Lead Times."
Central to the theory and practice of quick response manufacturing is manufacturing critical-path time, or MCT, which is the typical amount of calendar time from when an order is created, through the critical path of designing, engineering, fabricating, assembling, packing and shipping, until the first product is delivered to the customer.
The longer the MCT, the greater the amount of waste. The key to cutting waste is to measure each step of the manufacturing critical-path time to determine when people are actually working on the product and when it is laying idle, awaiting the next phase of production.
In the case of RenewAire, students from the Center for QRM carried out time-based studies of the company's operations to pinpoint different types of idle time.
"The students conducted 'job tagging,' in which they attached tagging sheets to individual jobs, in order to determine the manufacturing lead times and individual processing times associated with each operation," Gates says. "For example, we found the average manufacturing lead time for high-volume units was over two days."
The QRM student teams also conducted "multi-observational studies" of what RenewAire workers were doing at any given time to identify non-value-added activities, such as walking around looking for tools or parts or waiting for them to be delivered. As these activities mount, they can lower productivity and stretch lead times. In turn, longer lead times cause companies to stockpile larger inventories, adding warehousing costs to the mix. Longer lead times also increase cancellations, order changes or obsolescence due to warranty changes. All of these scenarios can be costly to companies.
When RenewAire received the results of the student teams' studies, it found that much wasteful idle time occurred when technicians were looking for and gathering parts and tools. The biggest room for improvement was in RenewAire's commercial business. To remedy the problem, RenewAire decentralized its production flow into production cells, in which technicians have parts and tools at their fingertips. By organizing tools and materials into a more efficient production configuration, idle time spent retrieving them from different plant areas was eliminated.
However, these improvements were just the tip of the iceberg. RenewAire has implemented more sophisticated QRM techniques, such as better planning methods for their workload, as well as POLCA (Paired-cell Overlapping Loops of Cards with Authorization), a method to manage capacity and space on the shop floor. As Gates points out, the results have dramatically improved RenewAire’s operations.
"The university students' studies and recommendations, and the overall conceptual structure of QRM that we learned from the center — these were the tools we needed to build a more efficient, flexible business," Gates reflects. "The Center for QRM gave us a focus, a starting point to improve upon."
(Courtesy UW Business News Wire)
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