On-Time Delivery

A manufacturer's first step in both getting close to the customer and in increasing its ability to react to change is simplification. Complexity in organization and procedures tends to isolate a company from its customers. Staff members cannot help but focus inward, diverting valuable resources and energy from focusing on the customer. Complexity also inhibits the ability to change quickly. Changes must go through organizational layers and must conform to procedures, slowing the change process down consid­erably. While organizations can simplify in a number of different areas, simplifications on the shop floor and in manufacturing systems, described below, can have the greatest impact on cost effective, on time delivery.

Traditionally, shop floors have been organized and laid out functionally. Equipment that performs similar tasks is grouped together, in a manner shown in Figure 1.

There are a number of well known problems with this functional layout. Typically, companies employing these layouts have not yet implemented many of the programs, such as set up reduction and total quality management, that are advocated by the JIT philosophy. Also, this layout typically means that product must travel long distances around the shop floor. Long set up and move times, as well as potential quality problems, often require manufacturers to produce in large lot sizes. These big lot sizes force manufacturers to build up large planned inventory buffers between functional departments. Functional layouts can also result in high levels of obsolescence, convoluted product flow, long lead times, poor quality, and high costs. An alternative to the functional organization and layout can be seen in Figure 2.

In Figure 2, all the equipment that produces like families of parts is organized into cells. When coupled with necessary set up reduction, quality and shop floor staff training programs, this layout results in simplified, streamlined operations. Manufacturing lot sizes can be decreased. Instead of sitting in buffer locations or being pushed around the shop floor, product flows through the cells. Work in process inventory can be maintained at the minimal levels required to keep production synchronized and parts moving.

Since it allows manufacturing staff to focus on the ultimate purchaser of the company's products, not the department to which the product is going next, the layout in Figure 2 has been called customer focused. Customer focused cells are an integral part of the JIT philosophy. They have led to decreased work in process inventory, better quality, and reduced lead times.

Although an important first step, customer focused cells are not

a cure-all. When cells are implemented, manufacturers often see a dilution of capacity as equipment and shop floor skills are split into smaller units. Also, often customers demand product in shorter lead times than can be achieved even through cells. Finally, no matter how well organized and managed the shop floor is, customers will still change their minds. With reduced buffer inventory and possibly lessened capacity, customer changes can result in significantly worse, not better, delivery. Manufacturers must strive to get better use out of their cells or resort to adding costly additional capacity or finished goods inventory.

Customer focused cells make possible simplified and streamlined systems that match the improvements on the shop floor. These simplified systems make even greater closeness to the customer a reality.

Once customer focused cells are in place, manufacturers can simplify both routings and bills of materials. Since product flows are more standardized, focused cells mean that fewer material handling and alternate routing steps are required. Since there are fewer in process inventory locations, receipts to stock likewise can be eliminated from routings.

With fewer components held in stock, it is possible to eliminate levels from bills of materials. Fewer levels in bills of materials mean components and parents can be produced on the same simplified routing. If components and parents can follow the same routing, ultimately a single production requirement can express demand for an item start to finish.

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