Quick-response manufacturing pays dividends

As a result of business strategy changes, Trans-Coil has reduced product lead times by 90%.

When Trans-Coil told customers it would take a couple of weeks to fill an order, the process sometimes dragged on much longer.

The Milwaukee company that makes equipment supporting variable-speed electric drives had to improve its record for production time and meeting deadlines, or risk losing business.

"We would tell customers that orders would ship in two or three weeks, but the actual performance was closer to six weeks", said company owner Kerry Shoemaker.

"That was not acceptable".

To solve the problem, Trans-Coil could have built large numbers of components in advance and kept them on shelves, ready for fast shipping.

"We could have tried to build the right things, and enough of them, out of places like Mexico", Shoemaker said.

But it would have meant spending lots of money on raw materials, production and handling, with no assurances of selling the warehoused products.

"We felt that we needed to carry $1 million in inventory to do that", Shoemaker said, which was burdensome for a company with 68 employees and about $12 million in annual sales.

Worse yet, the company would have been stuck with unused, obsolete components when customers made even slight changes to their product specifications.

"We would have been forced to write off a high percentage of that inventory, possibly 20%, simply because we accumulated the wrong things", Shoemaker said.

Instead, Trans-Coil turned to quick-response manufacturing methods aimed at reducing product lead times from weeks to days.

In some cases, the company's products are now built and shipped in a 24-hour period.

With quick-response manufacturing, companies minimise the time it takes for products to flow through their operations.

It can make companies more nimble, responsive, and lower costs, according to the strategy's advocates.

In changing its operations, Trans-Coil started with the factory.

Production workers were cross-trained to do almost every job in the plant, and now they can switch jobs on a moment's notice depending on what's needed.

"It's a very fluid process, where we move people from one side of the business to the other", said C Paul Martens, Operations Manager.

That was a huge change from the old days when employees rarely stepped out of their designated work areas.

"I think that operators on the floor can change pretty easily, but traditional American manufacturing has beaten them down to the point where they are afraid to try new things", Martens said.

Trans-Coil employees are now divided into work cells focused on smaller order sizes, including custom work, with teams of people responsible for getting products out the door as fast as possible.

"One of our first steps was to be sure that product designs fit this process well", Martens said.

"Then we started stripping out everything that added to the time, getting rid of time-wasting operations".

"We made one simple change, for example, that took 25% of the time out of our scheduling process".

Under the new methods, employees are much more involved with the entire manufacturing process, including office operations.

Customer service representatives can schedule work orders as they talk with customers and suppliers.

In some cases, suppliers are involved with product design changes.

But extending the new methods to the company office has been more challenging than the factory floor, Martens said.

"I can't expect people to cross-train and become engineers", he said.

"On the plant floor, frankly, I expect everybody to be able to do every operation".

Some of the changes were a stretch in logic for company managers, said Steve Copp, President and Chief Operating Officer.

Traditional managers might worry when they don't see backlogs in orders, and when factory machines aren't running day and night to stockpile parts.

That mind-set won't work with quick-response manufacturing, according to Copp.

"One of the things we discovered early on was our managers' attitudes and efforts had to match what we were asking our shop employees to do, or this process would not work", he said.

"It really required a lot of prodding, initially, and it requires constant attention to keep people from falling back into old habits".

The company's customers have been asked to change their ordering habits.

Previously, some customers ordered parts in large quantities with long lead times, so they wouldn't be caught with empty shelves.

Now they order just what they need, with short lead times, which lowers their inventory costs.

"That's a huge thing for them now", Copp said.

"They are competing in a global industry that's pressured to reduce costs".

As a result of the business strategy changes, Trans-Coil has reduced product lead times by 90%.

The company has lowered its operating and inventory costs, while at the same time taking on more orders and increasing productivity and profits.

"This is an example of where you can do things right, and it costs you less", Shoemaker said.

It's a never-ending exercise, Copp added about the company's 10 years of experience with quick-response manufacturing.

"We don't feel as if we have even scratched the surface yet" of the full potential, he said.

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