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How to Fill Customer Orders Cheaper, Faster With Lean Continuous Improvement Model

To succeed with lean manufacturing, a company should be reorganized by value stream. This structure means the company is split up into smaller companies, with each “company” focused on specific markets and customers.

Mnet 140642 Curt Schmidgall Lead

The lean continuous manufacturing model has surged in popularity over the last 20 years because of its ability to eliminate waste of all kinds: excess inventory, over-transportation, and unnecessary movement and motion. However, the most significant results from implementing this model come not from discrete changes to certain products or processes, but from incorporating the entire company into the lean continuous model journey.

In traditionally structured companies, the engineering, manufacturing, and sales departments work in their own silos, in different groups and often in different buildings. As a result, these departments communicate little with each other, and each group makes the decisions that support their own self-interest.

For example, when engineers make a purchase decision for a motor, they want to do it at the cheapest cost. They search the world for options and end up choosing a supplier in China. To hit their cost target, the engineers commit to buying four months of inventory with a 14-week lead time. Engineering is satisfied, but manufacturing must now build a giant warehouse to store the motors, and create a complicated MRP system to figure out when motors need to be reordered. Reordering is dependent upon an accurate sales forecast, which though often close, sometimes results in expedited parts because orders are heavier than expected.

To succeed with lean manufacturing, a company should be reorganized by value stream. This structure means the company is split up into smaller companies, with each “company” focused on specific markets and customers. Each company consists of engineers, manufacturers and salespeople sitting together and working in close proximity on how to design, order and sell a product that best serves the customer.  

Focus for the lean manufacturing model

The lean manufacturing model has two key objectives: eliminating waste and shortening lead time. Eliminating waste in a product is the only way to stay competitive, especially for U.S.-based manufacturing companies who already face tremendous cost pressures. The lean manufacturing model cuts waste without slashing a product’s quality by determining which processes add value and which do not. If something adds value to a product, it should be left alone, as this input is something a customer is willing to pay for. Non-value added processes are things that a customer won’t pay for, such as transportation, management and logistics. Lean manufacturing means constantly squeezing out non-value added costs, so that a high quality product can be delivered to market at a lower cost.

Winegard offers an excellent example. Historically, we had been unable to manufacture enough of our flagship recreational vehicle antennas during the peak sales months of January and February. Without being able to match market demand, we would lose out on potential revenue year after year. In response, we looked at lean manufacturing processes to try and increase our capacity. We discovered substantial non-value added testing on the product that was creating a bottleneck in the manufacturing process. We changed production to build the test process into the assembly of the product rather than have a test process at the end of the build cycle. As a result, we more than doubled output and are now able to meet market demand.   

Shortening lead time is also a key part of lean manufacturing, and decision-making should be driven by this goal. The ideal manufacturing process sees materials come off a truck, flow to the manufacturing cell, and then flow out to the truck waiting to ship it to the customer. Storing material or ordering extra material adds cost to the product and harms the customer with additional lead time.

In traditional manufacturing, the press department presses out a month’s worth of a part because that’s the most efficient and cost effective way to run the press. The result is a cheap part, but at the expense of having to deal with the handling of the part. In addition, while the press is running part A, the manufacturer can’t also fulfill the customer’s request for part B.  

Shorter lead times come from ending traditional batch manufacturing and moving to single piece flow. To create a single piece flow, and to build only what the customer needs, operations must be set up to switch over from part A to part B very easily. A half-day conversion process is not a realistic solution.

The Single-Minute Exchange of Die product method addresses this issue. Manufacturers can start the SMED process by getting the right folks together, studying how the machine works, and figuring out how to reduce the time it takes to change over a mold from one hour to 30 seconds.

Once a manufacturer learns how to achieve this kind of speed, the entire process is one step closer to being able to produce a single piece flow, and to serving the customer better.

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