SPX experimented with several process improvement tools for ten years. The implementation of Lean manufacturing gained considerable attention after the take-over by SPX Process Equipment (USA) in 2007. The organization started to implement Kanban to reduce lead time and inventory. Due to the high-mix, low volume environment in which the organization operates, the implementation resulted in a disappointing outcome. All pumps, approximately 15000 each year, are produced based on a customer order. Due to the endless variation, the managers of location Assen were challenged to find an appropriate solution for the logistic situation.
All products can be divided into different categories, type A, B, C and D. Type A en B are relatively simple pumps, which are produced based on assemble-to-order. The lead time of these types is approximately two to three weeks. Type C and D are pumps with specific requirements, around 40% of the orders. These pumps are produced based on design-to-order. Type C pumps only have some customization (30%). Type D pumps have multiple customer dependent requirements (10%). These projects could last for months.
Customer specific parts are produced in Assen. Approximately 100 employees work at this location. The focus within this location is on speed and flexibility. Generally, all standard and simple parts are ordered and produced in India. In India their focus is mainly on efficiency.
Consequently,
SPX FT has to deal with a high mix, low volume production and a long lead time
for standard parts produced in India. The goal was to organize an organization
which has reliable and repetitive lead times.
The case study was a longitudinal study, which started in 2010 and is not finished yet, since projects are distributed among the entire organization. The first solution found was to recall the production of standard parts to Assen, to reduce the overall lead time. However, the managers decided to stick to the original production division. They argued good inventory management was enough to realize short lead times for the customer.
The organization started to focus on the administrative processes first. Several MCT maps showed long and varying waiting times in these processes. They started to concentrate on type A and B, to get successful results more easily, to create enthusiasm and support among the employees.
The processes contained four steps, performed in different departments:
1. Sales and customer service
2. Finance
3. Planning
4. Purchasing
The process (1-2-3-4-1) took at least three days, due to several waiting times between the process steps. According to Quick Response Manufacturing, a common solution for this is to organize a Quick Response Office Cell (QROC) for a specific market segment. A QROC is a dedicated, multifunctional team, in which members are closely located to each other. However, the capacity requirements were too low to create a separate QROC for these Type A and B pumps. Therefore they found their own new solution: the QROC light.
A QROC light is similar to a lean production line, in which a small batch of quotes moves between the different departments with a takt time of one hour. The next morning, there is a team meeting, consisting of two people from each department. They discuss divergent topics, such as the priority of orders, a change within the safety stocks or the need for an increase in production capacity. Directly after this meeting, all quotes could be send to the customers.
The QROC light resulted in a lead time of only one day. The overall MCT changed from 18 to 16 days (a difference of two days in the administrative processes). The companies delivery reliability increased from 76% to 93%.
After this first project, the organization started to focus on Type C and D pumps. There is enough capacity available for these types to create a real QROC, in which people from different disciplines work closely together.