Page 278 - How To Implement Lean Manufacturing

Using the Pr escription—Thr ee Case Studies 255

• Low on-time delivery, only 76 percent
• 14 percent scrap rate
• Seven days production lead time.

The new Mexican facility had not demonstrated sufficient capacity or sufficient sta-
bility to allow the plant in California to shut down. In addition, at this facility, they had
serious management turnover. Since starting up, they were now on their third plant
manager, second quality manager, and second purchasing manager.
QED had embarked on a corporate-wide Lean initiative about five years earlier. The
effort was being directed from the home office in Minneapolis. It was obvious they had
a number of Lean tools in place since Hoshin planning matrices were posted and radar
charts of all kinds decorated their bulletin boards. But the most encouraging thing was
that some of the training had been very effective because most employees understood
the basics of Lean.
Nevertheless, this facility was anything but Lean. Due to all of the inventory and
recycling on the line, it was impossible to follow the flow even though all work stations
were labeled and 5S had obviously been attempted. Scrap was high (with over 100 motors
in-process at the rework station), pallets of inventory were all over the place, the CNC
lathe had huge inventories in three different locations, and flow was virtually nonexis-
tent. In addition, the process flow path was unnecessarily convoluted, material segrega-
tion was a disaster, and rejected parts were mixed with normal production. Their basic
design was to produce motors to inventory and have a small stock of motors on hand
to account for demand and production variations. Their current inventory was zero.
They currently shipped what they could make. This created frequent and disruptive
daily changes in the production plan.
We were asked to assist them to further implement their Lean system, which they
called the QED Production System (QPS). Luis, the QPS manager, had been there since
the startup, he was our contact person. He reported directly to the home office and his job
was to guide the plant into QPS maturity. Once that was achieved, he was to take over as
plant manager and the plant manager would be promoted to a job in Minneapolis.
Luis was very knowledgeable in both the motors manufacturing business and Lean
manufacturing, but he had not been dynamic enough to provide the necessary leader-
ship to force this situation.
Specifically, we were asked to:

• Improve line capacity so the plant could provide demand on a five-day basis.
• Make a 50 percent reduction in lead time.
• Implement a make-to-stock, pull system, operating at takt.
• Reduce line rejects by 50 percent.
• Increase on-time delivery to over 95 percent.

We were given some specific restrictions. First, no large capital outlays were available.
Second, we had 60 days to achieve our gains. Third, and most restrictive, we could not
shut down any facilities at all if it caused weekly production to fall below current levels.

The Process Description
The process description is as follows (see Fig. 16-6).