Some time ago I was involved with a component supplier to a major industrial company (neither of which I can publicly name). They needed assistance with their design and manufacturing processes to produce better quality for lower cost.
After meeting with key management personnel of a complex component, the executive office realized a number of significant changes were needed. Then a small group of key leaders began to learn more about quality principles and become advocates for change.
The change leaders studied the principles of quality experts like Drs. W. Edwards Deming and Joseph M. Juran. After this, they saw the value of using continuous improvement techniques as the overall approach to optimizing the system.
With guidance from this team, the senior leadership established a new company vision which included better integration of all parts of the production system. The end goal was to identify waste and improve quality. This led to breakthrough results.
A cross-functional kaizen team was chartered to discover the exact quality level of their primary product and its cost-price-value. Though this specific component was one of its highest-priced products, the company was losing money on each manufactured and sold to its primary customer.
One of the team’s first steps was to construct a flowchart and layout diagram showing the entire process of redesigning the component, ordering and handling parts and materials, and manufacturing. The flowchart revealed the process, and the layout diagram displayed the physical layout of the facility and tracked the travel of paperwork, materials, and people.
The team monitored several components over a period of time. The average lead time for an individual component was 4.3 weeks, and the average manufacturing process time was 132 hours, but actual value-added time was only 6.8 hours!
Next, the team consulted with an expert on production and operations management for product design optimization. The team learned that a significant proportion of quality goes into a product at the design phase, and because design is so far upstream in the process, it affects everything downstream. Improvement in the design helps improve everything else in the process.
The team also discovered that design engineers paid little attention to a parts reduction scheme. The design had become, over time, increasingly complex which required more parts.
It was also discovered the designers did not relate the design of this component to two other similar components. Each of the three components was designed as separate products, not as a family of similar products with which a modular concept could be used to reduce complexity and cost to manufacture.
Senior leaders challenged the team to redesign the component using a more detailed concept of the customer’s needs and manufacturing’s needs. A senior design engineer and a forward-thinking production engineer were selected to visit the customer to learn how the component was used and to gain insight from actual users.
This information launched the next phase of the team’s work to improve integration. Redesigning the three similar components was done concurrently to redesign the processes, with the goal of having more common parts and less manufacturing steps. This would increase flexibility in responding to customer demands of more choices at less cost.
The result was a redesigned production process which took 4.4 hours, and lead time was reduced to 2.5 days. Inventory for the new family of components was reduced by 67% because the components now shared 62% of their parts. Not only was the company now able to make a profit on the complex component, it was also able to reduce the price!
The customer had become increasingly concerned their single component supplier might discontinue production, so when they were informed shipments would continue at a reduced price, the customer was delighted.
The team developed a keen sense of how the design of a product related to the entire value chain. Improving design led to significant improvements in lead time, purchasing, production planning and control, materials management, inventory, manufacturing, quality and costs.
Consequently, the component manufacturer successfully applied those lessons learned to improvements to many of its other product designs and processes. This win-win combination enabled them to take on additional business as it gained the flexibility to do so profitably.
The company’s leadership team learned firsthand the results of learning from the quality giants. Dr. Deming referred to continuous improvement as an opportunity to optimize an entire system. A systems perspective stresses a manufacturing company must be viewed as a whole made up of parts with interdependent relationships.
Complexity in the system is reduced as processes are systematically improved and better integrated. This helps throughput so plant capacity increases, often with little or no capital investment.
Truly a great story of perseverance and dedication to achieving performance excellence to excel in the marketplace.
