Issue/Needs
In order to remain competitive, the management team identified a
48 hour order entry goal to ship lead time – a reduction from 5 days
– as a critical strategic operational improvement. The team wanted
to implement this action without impacting inventory turns. At the
same time, management targeted rising energy costs as a serious
business issue.
Implementation Highlights
In October of 2005, CMTC utilized the VeSM™ (Value energy
Stream Mapping) approach to examine information and material
flow and identify constraints that contributed to excessive lead
times, costs and a reduction in the efficient use of energy.
CMTC facilitated a 5-day VSM (Value Stream Mapping) activity
with key personnel from several functional areas. The objective
was to identify opportunities to shorten lead times and save energy.
A Current State Production Map was drawn to capture baseline
data and then Lean Manufacturing techniques were employed to
streamline the operations to meet stated objectives. A Future State
VSM Production Map was then completed to serve as a road map
for implementing the improvement opportunities.
The team decided to conduct two improvement events (Kaizens).
The first Kaizen sought to acheive a 48 hour turnaround from
receipt of order to shipping the product. It was determined that
most of the lead time issues were from stock variations and
incorrect pricing. Warehouse delays were caused by inventory
being in the wrong location or having incorrect quantities.
The second Kaizen focused on improving throughput from
compression molding machines. A line comprised of 5 machines
was selected for this activity. Opportunities were immediately
identified in machine idle time, communication, changeover times
and crew assignments.
Improvement Description
The first Kaizen led to the reduction in order-to-ship lead time
from 5 days to less than 24 hours. Improvements allowed orders to
be available to sales people in real time and alerted the order entry
person about the peculiarities of the order (if required). Further,
pricing criterion was programmed into the Information System
which flagged the order entry person if the price on the order didn’t
match the criterion. Orders are now directly printed in the Shipping
Department in real time.
The second Kaizen resulted in a 20% improvement in productivity
of the compression molding machines. The shop is now better
organized and the scheduling board is used to ensure orders are
worked in the right priority.
Financial and Investment Impact
Throughput sales are projected to increase by $3 million as a result
of increased productivity and improved competitiveness due to
shorter order-to-ship lead time. Cost savings are projected at
$400,000 per year from increased productivity in the compression
molding department and the associated energy savings from better
utilization of molding machines. Productivity has improved from
140,000 units to 168,000 units per year. Management at Mission
Rubber estimates 8 employees will be retained as a result of this
project. Energy savings are estimated at 473,076 annual kWh, or
approximately $40,000.
|
