Problems:
This large manufacturing facility produced electro-mechanical medical devices. The plant was vertically integrated, producing their own circuit board assemblies, cable assemblies, and the box-build final assembly and test. The process was driven by an ERP system with multi-level bills of material, shop order travelors, pick lists, lot sizes, and stock room transactions. Costs were too high, lead times were too long, and they had too much money tied up in inventory.
Lean Solutions:
Inventory reduction goals were set with the management team, and pushed down through the organization. The initial efforts focused on the ERP planning process. Bills of material were challenged and compressed. Lead times and lot sizes were cut. Parallel efforts were begun within the various production departments. Cellular manufacturing techniques were introduced to the cable assembly, wire harness departments, and final assembly. Natural work teams planned and participated in their area re-layouts. Flexibility was built-in so that all future layout modifications were essentially free. Kanban controls were established both within the subassembly areas, and between them and the final assembly areas. This eliminated many non-value-adding reporting steps and stock room transactions. Shifts were balanced so as to allow product to continue to flow across the entire process, and not just the “bottleneck” operations. Sequential inspection was initiated, followed by failsafe steps.
Impact/Results:
In less than six months:
- Inventory was reduced by $1.7 million
- Lead times were cut from 8 weeks to 5 days
- First pass failures were cut by 60%
- On-Time Delivery went from near zero to 100%
Simplification and streamlining resulted in the freeing up of resources (people, equipment, and space) for other growth opportunities.
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