Problems:
Pressure from their customers for shorter lead times and improved on-time delivery performance was causing this privately held company severe difficulty. They faced a very real risk of losing some critical accounts. Key customers were demanding “next day” shipment. They expected to be able to place an order today and pick up or have their order shipped first thing the next day. The company had spent many months attempted to make the transition to lean on their own, with minimal success. Lead times were still too long, and delivery performance was unacceptable.
Lean Solutions:
In addition to the more traditional lean techniques such as instituting kanban controls and improving change-over times, this client required some more fundamental disciplines. Step one was to immediately change the attitude in regard to schedule attainment. Brief all-employee meetings were held on all shifts. The need for absolute schedule adherence was explained and personalized: “A commitment date to a customer is a “promise”. How do you feel when someone breaks their promise?” We instituted a simple policy: The day ends when the schedule is complete, … NOT the other way around. Overtime was authorized and basically automatic if needed to attain the daily schedule. The next step was to “stagger” the shifts so that each shift could be held accountable for schedule attainment. Improvement curves (Goals) were set by the employees, and monitored daily. The next problem was in creating flexible capacity (the “rubber” factory). Like most companies, the majority of their work force was on the first shift. This posed a problem: Many orders were received late in the day, for next day shipment. We obviously needed to change the balance of our shifts. Goals were set to gradually move toward a 50/50 balance of the day and night shifts. This was accomplished through volunteers, replacements for attrition, advancement opportunities, and rate adjustments.
Impact/Results:
Within weeks, on-time delivery was at or near 100%! Average lead times were cut from two weeks to three days. Set-up times and Lot sizes were cut by 75%. Total inventory was reduced by 50%, and one entire building was freed up for new product introduction.
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