Shrinking Months to Hours
Here's a glimpse inside $50-million (estimated revenue) industrial hose-maker Titeflex, circa 1988: A new order would be entered into the MRP (Materials Requirements Planning) computer wonder-system. "It" (MRP) would "create" paperwork for purchasing, production schedulers, the storeroom, and quality assurance. Engineering and cost reviews—more paper jumbles—would also be initiated.
According to Jon Simpson, president of the Springfield, Mass., firm, all this generated umpteen meetings—"morning meetings," "afternoon meetings" and "engineering review meetings." Not to mention "make/buy meetings," "quality review meetings," and "purchasing meetings." Typical time elapsed for order entry alone: three to five weeks.
On to the factory floor, where the convolutions would begin afresh. Part of the order went to the basic hose-manufacturing area, along with the paperwork ginned up by the various review processes; that department would, in turn, "start" by creating more paperwork. Another part of the order went to another factory group responsible for fittings for the basic hose. (Five different departments handled such fittings.) After the hoses and associated components were built, they went on to another department to be cleaned; then through at least three more departments for final assembly; then to the 50-person Quality Assurance Department; and, finally, on to the Shipping Department.
Beyond all the paper floating about, factory floor "management" was overseen by a Production Control Planning unit. Its plate was always full, since products snaked through the stockroom, labeled "Spaghetti Junction" on the master flowchart, six times.
To add to this tangle, production controllers also invented six manual lists to override the formal systems: the Hot List (angry customers), the Luke-hot List (moderately angry customers), the End-of-the-Month List (to help get lost orders out the door, so they could be recorded for accounting purposes) and so on.
All together, manufacturing absorbed at least six weeks, on top of the three to five weeks for order entry—for a grand total of nine to eleven weeks, if Simpson underscores, everything went smoothly.
Things have changed! Bureaucracy's been blasted away. Layer upon layer of management demolished. Processes completely rewired. Old computer systems disconnected.
Now new orders feed into an "administrative cell" (called a Genesis Team), consisting of six people with their desks in a circle. Players include a contracts administrator (the voice of Titeflex to the outside customer, discussing price, delivery dates, etc., and setting up "master contracts" with in-house "small businesses"); applications engineers, who immediately review each order from an engineering standpoint; a design engineer, determining manufacturing requirements; and a draftsman to draw up new designs if necessary.
In place of those endless preliminary meetings, the Genesis Team members handle the details themselves, supported only marginally by the old MRP system (now merely a "calculator"). Little paperwork is created, and the whole order-entry process can consume as few as ten minutes for something routine, no more than two to five days for a novel and intricate request.
The rest of the operation (the factory) has been organized into de facto "small businesses" (manufacturing cells), of five to 15 people each. For example, Business Development Teams (BDTs) are in-house units in several flavors that "sell" hoses and fittings to the Genesis Team. Final Assembly Teams handle ultimate construction.
Before an order is released to the factory floor, the Genesis Team communicates directly with the BDTs. Immediately after order release, the BDTs begin manufacture, now performing their own quality control. When the components builders finish, their output goes to the stockroom (the only trip through the stockroom), and from there to final assembly.
Total manufacturing time now varies from two days to one week. Crash orders go to a lightning-fast Rapid Deployment Team, which can handle the whole works—from order entry to the shipping dock—in as little as three or four hours.
The entire Production Control Planning operation disappeared. So did the Pricing Department. A tiny Finance Department still exists to do end-of-the-month consolidation and perform overview analyses, but most finance people are now on Business Development Teams. Of course, the manual lists expediting orders vanished, since virtually all work is out the door within a few days.
The "before" story at Titeflex was nightmarish, but, Simpson hastens to point out, "nothing special" in manufacturing America. (Titeflex was hardly a dead duck before Simpson; it was just another beleaguered, old-line firm.)
The "after" story is one of a small number redefining American manufacturing. The bottom line: burgeoning margins, profits, growth, and customer satisfaction, with typical response times shrunk from three months to five days. In the end, this eye-opening tale exposes the 95 percent waste time that exists in most of our business processes.
(C) 1991 TPG Communications.
All rights reserved.