QRM is a strategy for reducing lead-times across all functions of an organisation, the resulting improvement in speed and responsiveness providing the organisation with a competitive advantage.
Many well-known Lean Manufacturing tools have been developed for high volume/low variety, or ‘mass production’ environments. Think of techniques such a Pull Systems, Kanban, Line Balancing and Heijunka for instance, often applied to fast moving production lines. However, these tools often do not translate well to low volume/high variety environments, which require short batch runs, higher levels of customisation and fast response to changes in customer demand.
For businesses facing the challenge of meeting increased customisation and speed, QRM is a strategy which relentlessly focuses on reducing lead-time both on the shop floor and in the office operations.
The first of the 4 major QRM concepts is the Power of Time.
Many hidden costs within a business are driven by long lead-times. Typical symptoms include excess inventories, planning difficulties, expediting costs, overtime, quality issues and so on. The result is often dissatisfied customers and a stressed workforce.
In his book ‘It’s About Time’, Professor Rajan Suri – the author of QRM, talks about “Response Time Spirals”. See if you recognise your own business in the following description!
Apterix Inc. make drive shafts which have an 8 week manufacturing lead-time. However their customers only gives them a 2 week fixed delivery schedule. Apterix can therefore only respond if it makes some drive shafts ahead of time. This requires a Sales Forecast to decide what and how much to build. Having been caught out in the past, Apterix planners build in additional safety stocks to ensure supply, the result is a build-up of both finished goods and work in progress. To compound matters a customer introduces a new product that sells far better than predicted. Apetrix’s forecast for this product was far too low, and it now cannot meet the demand within the customer lead-time. The result is “hot jobs” being expedited through the manufacturing process to meet requirements. Heroic effort is put in by Apterix to meet this demand, with the result that “regular jobs” are pushed aside or put to the back of the queue. Apterix planners realise they will let other customers down as a result, with jobs that were planned to take 8 weeks now taking 10-11 weeks to complete. In order to keep everyone satisfied the planners decide to extend their planning lead-time to 11 weeks in order to better meet their customer demands.
However, we all know that the longer the forecast horizon is – the less accurate the forecast will be. A longer planning window gives more opportunities for future “hot jobs” to interrupt the flow. In a couple years’ time the 11 week jobs are not regularly getting through on time. Then a planner has an idea to extend the planning lead-time to 14 weeks……
And so the Response Time Spiral propagates.
By visualising the lead-time clearly and using one overriding measure to drive it down, the organisation will have clarity on its strategic goal and avoid confusion around conflicting objectives.
The overriding measure within QRM is MCT – Manufacturing Critical path Time; ‘the typical amount of calendar time from when a customer creates an order, through the critical path, until the first pieces of that order is delivered to the customer.’
MCT is a core metric within QRM. If you are interested in finding out more about the Power of Time and the other 3 concepts core to QRM click here.