MANUFACTURING DESIGN ENGINEERING
QUALITY TOOL
Lean Manufacturing Principle and
Case Study
QUALITY TOOLS MISSION
and LEAN OBJECTIVES
PROVIDE ON-TIME DELIVERY
REDUCE LEADTIME
MINIMIZE INVENTORY
REDUCE CUSTOMER PRICES
Quality Tool Production Philosophy
KANBAN/CONWIP
(Minimizes Inventory / Minimizes Lead Time)
KANBAN/CONWIP Batch Build
Increasing Cost
Small lot size, Large lot size,
low inventory high inventory
Total Costs
Optimal Range
Inventory
Set up costs
costs
Increasing Lot Size
Batch Build with No Inventory
Typical demand: 1000 units per month
Typical order: 1000 units with a 4 week lead time
1000
unit
order
placed
Process time
Work Center A Work Center C
Work Center B
Week 1 Week 2 Week 3 Week 4
1000
units
ship
Batch Build with No Inventory
1000
unit
order
placed
Work Center A Work Center C
Work Center B
Week 1 Week 2 Week 3 Week 4 1000
units
ship
Problem:
The present demand is met but the
lead time is too long. I want shorter
lead times for 1000 units.
Batch Build with Simple Stocking
Solution: Add Inventory / Kanban
1000
unit 1000 Units
order Inventory
placed Replenished
Inventory Work Center A Work Center C
Level
Work Center B
=1000
Week 1 Week 2 Week 3 Week 4
1000
units
inventory Near zero lead time
ship 1000 unit inventory
Batch Build with Simple Stocking
Inventory costs money
Interest
Warehouse
Insurance
Obsolescence
Damage
Opportunity Cost
It is widely accepted that inventory costs
for one year are approximately 25% of the
total cost of the product.
Problem:
I want to reduce the amount of
inventory in the system.
Batch Build with Simple Stocking
Solution: Step 1. Reduce cycle time by
reducing lot sizes.
Order
Placed
Work Center A Work Center C
for 1000
units Work Center B
Week 1 Week 2 Week 3 Week 4 1000
units
ship
Less time spent in
Order each work center
Placed
for 500
units
A C The smaller the order size,
B the less time a job spends at
each work center and the
Week 1 Week 2 500 less time it takes to move
units through the plant.
ship
Batch Build with Simple Stocking
Step 2. Deliver smaller quantities, more frequently.
500 500
unit unit 500 Units
order order Inventory
placed placed Replenished
A C A C
B B
Inv. = 500
Week 1 Week 2 Week 3 Week 4
500 500
units units
inventory ship
ship
Near zero lead time
Inventory cut to 500 units
Twice as many orders placed
Batch Build with Simple Stocking
Problem:
There is still too much
inventory. I want even less.
Batch Build with Simple Stocking
Solution:
Step 1. Reduce cycle time by reducing lot sizes
Step 2. Reduce inventory
250 250 250 250
unit unit unit unit 250 Units
order order order order Inventory
placed placed placed placed Replenished
A C A C A C A C
B B B B
Inv. = 250
Week 1 Week 2 Week 3 Week 4
250 250 250 250
units units units units
inventory ship ship ship
ship
Inventory cut to 250 units
Near zero lead time
Four times as many orders placed
Batch Build with Simple Stocking
Theoretically, we can infinitely increase the
number of orders, reduce cycle times and
push all of the inventory out of the system.
Lower
Shorter Turns = Inventory
order
order
order
order
order
order
order
order
order
order
order
order
Week 1 Week 2 Week 3 Week 4
ship
ship
ship
ship
ship
ship
ship
ship
ship
ship
ship
ship
With no stock in the system our stocking program
turns into a CONTINUOUS FLOW system.
OBSTACLES TO DOING THIS
ON A PART BY PART BASIS, CUSTOMERS
ACTUAL DEMAND IS VERY SPORADIC - HOW
CAN WE CONTINUOUSLY MAKE THAT PART
WHEN DEMAND ISNT CONTINUOUS?
FOR MAJORITY OF PARTS WE RUN, SETUPS
CAN CONSUME AS MUCH TIME (OR MORE)
THAN ACTUAL RUN-TIME - HOW CAN WE MAKE
SMALL QUANTITIES ECONOMICALLY?
WE MANUFACTURE OVER 5000 PART NUMBERS
FOR OVER 175 CUSTOMERS - I.E. HIGH MIX,
AND A RANGE OF VOLUMES...
A Case Study at QUALITY TOOL of a
CONTINUOUS IMPROVEMENT /
LEAN
program that overcomes these
obstacles.
Case Study: The Situation
QUALITY TOOL has a customer that:
Has over 800 part numbers in production at QT.
Part volumes range from 1/year to 1000s/year.
Lead times are less than our cycle time.
FG inventory at QT is approximately $500k.
Packaging is number one cause of rejects.
Forecast is available.
QUALITY TOOL has the following challenges:
Meeting & reducing lead times.
Reducing inventory.
Packaging the product - preventing damage.
Cutting costs.
The Solution - Step 1
OBJECTIVE: IMPLEMENT QUICK FIX TO MEET LEAD TIMES
METHOD: USE FORECAST TO ANTICIPATE DEMAND
Forecast in paper form - too tough to manage
Develop software to receive forecast
electronically
Merge forecast with our own MRP data
Generate reports that show us what to build -
eliminate process of manual discovery
The Solution - Step 1
RESULT: DATABASE CREATED LINKING FORECAST TO MRP
The Solution - Step 2
OBJECTIVE: DETERMINE IF A CONTINUOUS FLOW
MODEL CAN BE ADAPTED TO THIS CUSTOMER
METHOD: ANALYZE ACTUAL PART DEMAND
RESULT:
TYPICAL PART DEMAND OVER TIME PROCESS DEMAND OVER TIME
Process Demand
Part Demand
Time Time
The Solution - Step 3
OBJECTIVE: REDUCE TIME IN THE PROCESS
METHOD: ANALYZE AVERAGE CYCLE TIME FOR ALL PARTS
RESULT:
2 Days 8 Days 4 Days 4 Days 6 Days 2 Days
SHEAR PUNCHING FORMING PAINT
Engineering Review Queue 3+days Queue 3+days Queue at
Order material/pre-sheared Turret = 1.5hr Brake = 3.7hr painter,
blanks (3 to 7 days) 4+days
Queued at shear Return to
Shear < 1hr warehouse,
1day
Non Value Add Time
DATA ENTRY SHIP
Queue order Re-pack parts
Value Add Time
Put order in system Load truck
Stuff shop router packet
The Solution - Step 4
OBJECTIVE: REDUCE THE NON-VALUE ADD TIME
METHOD: USE LEAN MANUFACTURING TECHNIQUES,
KAIZEN PRINCIPLES (5S, ETC.).
START AT THE END OF THE PROCESS
The Solution - Step 4
RESULT: STANDARD PACKAGING DEVELOPED
The Solution - Step 4
RESULT: COMMON TURRET TOOL LOAD CREATED
Percentage of Set-Ups vs. Tool
Inventory
120%
% of Set-Ups
100%
80%
60%
40%
20%
0%
1
52
103
154
205
256
307
358
409
460
511
562
# of Tools
The Solution - Step 4
ADDITIONAL RESULTS:
Developed press brake tooling identification scheme.
Tools documented by their I.D. on setup sheets.
Standardized blank sizes from >100 unique blanks to
20. Our supplier agreed to maintain these sizes for us
on their floor - reducing raw material lead time down
to 1 day.
Cross trained (2) additional people to perform order
entry function.
The Score
CYCLE TIME:
1 Day 2 Days 2 Days 2 Days 4 Days 1 Day
DATA ENTRY SHEAR PUNCHING FORMING PAINT SHIP
-1 day - 6 days -2 days - 2 days - 2 days - 1 day
CYCLE TIME REDUCED 54% FROM 26 DAYS TO 12 DAYS (so far)
DELIVERY: DELIVERY PERFORMANCE INCREASED FROM 74%
TO 92% (AT SAME TIME CUSTOMER HAS CUT LEAD TIME
REQUIREMENTS FROM 20 DAYS TO 10 DAYS.)
QUALITY: REJECTS DUE TO PACKAGING REDUCED 100%
(11,200 DPPM TO 100 DPPM)
INVENTORY: REDUCED 78% FROM $500K TO $110K
PRICE: REDUCED 21% TO CUSTOMER
Continuous Improvement...
REDUCE CYCLE TIME FURTHER:
1 1 1 2
DATA ENTRY & SHEAR
PUNCH
FORM
GOAL: 5 DAY CYCLE TIME
PAINT
& SHIP
DELIVERY: 100%
QUALITY: 0 REJECTS
INVENTORY: REDUCE TO $0. ELIMINATE BUILDING TO
FORECAST - BUILD TO ORDER.
PRICE: ONGOING REVIEW AND PRICE REDUCTIONS
AS JOINT LEAN INITIATIVES PROGRESS.
QUALITY TOOL IS THE
LOWEST COST MANUFACTURER TO OUR
CUSTOMERS, because
WE UNDERSTAND THE THEORETICAL
RELATIONSHIP BETWEEN LEAD-TIME, CYCLE TIME,
INVENTORY, AND COST.
WE RECOGNIZE THE PRACTICAL OBSTACLES TO
OPTIMIZING ALL 4 FACTORS IN A MFG.
ENVIRONMENT.
OUR SYSTEM AND METHODS ARE PROVEN WITH
REAL-WORLD EXAMPLES. WE HAVE MINIMIZED THE
OBSTACLES TO BECOME THE LOWEST COST
MANUFACTURER.
With our success in Lean, we commit to do
the following for our customers:
PROVIDE ON-TIME DELIVERY
REDUCE YOUR LEADTIME
REDUCE YOUR INVENTORY
REDUCE YOUR COST
We will distinguish ourselves as your premier
supplier of metal products.
MANUFACTURING DESIGN ENGINEERING
