This is a story of how an effective IT road map helped a manufacturer reduce their production inventory from 29 days to 3 and changed their cash position.
The discovery and consideration of human factors correlated to technology, such as communication and trust, significantly improved planning outcomes.
The Conventional IT Road Map Project
A CEO was managing a growing manufacturing company. Production could not keep up with demand. Customers were pushing for shorter lead times. The production people were frustrated with poor production drawings and work instructions from engineering. The engineers were frustrated with the drawings and instructions received from customers. Purchasing was caught in the middle.
The CEO tasked our company to build a plan (road map) to fix the technology. We were asked only to meet with senior managers and the head of engineering. The production staff was ‘too busy’ to get involved.
The Findings:
- The customers’ part files often were incomplete and required engineers to rework them before creating production drawings, CAM code, and work instructions. Engineers were overworked and stated that they were pressured to put out low quality work to ‘stay on time.’
- The technology infrastructure had been built for a smaller company was often failing to work.
- Most devices would only operate when an IT ‘handyman’ showed up each morning start them up.
- Engineers had multiple software systems for CAD, CAM, and work instructions.
- The ERP software was unsupported and running on unsupported hardware.
During our discovery process we uncovered several process and communication gaps, but the CEO did not think technology could help.
First Road Map Project Failed to Move the Production Needle
Money was only authorized to upgrade existing software tools, computers, and network. The ERP system was excluded. The result was mixed. The computers, network and new software worked much faster and reliably, but production times did not improve.
The Second Road Map Project
We prevailed on management to invest in a more comprehensive road map plan.
- The company hired an expert in theory of constraints to evaluate production processes and methods.
- The road map relied on this work to prioritize where technology or process changes would reduce constraints.
- Front line shop supervisors and personnel were engaged and observed to see hear and see what their issues were.
- To build trust in changes, it was made clear that technology was not going to reduce head count.
- Engineers and production were pulled together and agreed on what and how processes needed to change.
The major findings:
- More than three quarters (75%) of all engineering production drawings and work instructions had errors. The result was a mountain of delays and reworks.
- Expediting was being done in order to appease some customer project managers who hounded internal staff to push their products through ahead of others. Parts were pulled from one work to another with no change order process. Resulting in a breakdown of scheduling and trust in the systems.
- Scheduling was done assumed 100% capacity and could not calculate set up times. No time was allocated for maintenance, work force variability, etc. The production department was labeled as always late and resulted in cynical morale and loss of trust of scheduling and management staff.
The new IT Roadmap:
- Hold the engineers to a higher (90%) metric of quality of production drawing and instructions. Get them whatever technology they needed to do this (better hardware, software, automated workorder and work instructions document management systems).
- Improve communication build trust between engineering and production. Implement a ‘red card’ issue reporting system for production to communicate engineering issues in real time. Engineers will have visible deadlines to respond and mitigate. Give all production staff an email address. Build a company intranet for production staff.
- Trust the production staff to follow the schedule by eliminating expediting. Changes once production started were to be rare and tightly managed.
- Replace legacy ERP system, a major constraint to production purchasing, scheduling, and shipping.
- Quality metrics and processes to be moved into production; issues caught as early as possible to avoid reworks.
- Eliminate scheduling complexity by automating and tracking only three major milestones. Allow production to visually move items as they saw fit.
- Eliminate hand changes in work orders and instructions travelers. Replaced with engineering implementing a simple change order process, reprinting.
The Outcome
In the end, after new processes were designed, implemented and solidified into the culture, a new ERP with custom scheduling and shipping systems was built and implemented, production times dropped dramatically. WIP values dropped from 29 days to 3. Cash became available to fund the growth.