Lean Manufacturing Solving Demand Management

Lean Manufacturing

Solving Demand Management Bottlenecks with Lean Manufacturing

The problem is that the takes seven iterations to capture an order correctly, so that manufacturing, marketing and the customer all agree on what the actual product to be produced is going to be. Using Business Process Management (BPM) techniques, which are part of the lean manufacturing strategies at our company, the order process workflows were analyzing using Six Sigma techniques to define the individual steps. Based on analysis of each step in the order entry process, it was determined that were often missing or incomplete data on the orders, and that often the order did not have the right product information on it. This was determined with Six Sigma analysis. The result was first an analysis of the business process workflows for order entry into manufacturing, and second, a streamlining of processes using the lean manufacturing principle of Six Sigma. The company produces industrial level heating and cooling equipment.

Overview

It costs the company approximately $200 to process a single order and takes on average seven times to get the order right. While these costs are being incurred and the iterations of the order are being done, up to four weeks can elapse. This puts any order seriously behind schedule and forces the production department into overtime scheduling. The cost of overtime scheduling is not factored in to the cost to process a single order of $200. Often time-and-a-half must be paid and workers also given bonuses for working overtime to catch up on these orders.

The two areas where lean manufacturing needs to be used to solve this problem is first in the order workflows to reduce the cost of processing them, and second, through the use of business process management and Six Sigma lean manufacturing techniques reduce the seven iterations its takes to complete an order.

Process Analysis and Re-Engineering

The steps of the existing process to translate purchase orders into a Bill of materials (BOM) so the finished product can be manufactured are as followed. First, the order and product definition (or configuration) is accepted by marketing and sales, second it is defined as a proposal. Third, the order entry form is defined and the order worksheet completed. Manufacturing, Sales and Marketing work on the next step that is to define a factory load plan for the manufacturing scheduling. At the same time of this step, an engineering drawing of any supporting materials and brackets are defined. These are then brought together with the Bill of Materials (BOM) in engineering. Only at this point can all the materials be brought together to define the finished product. The final step is to bring together all engineering documents to define the final Bill of Materials and then pass the entire order from Engineering to Manufacturing. Figure 1 shows the current workflow for a typical order. The fact that manufacturing is not involved at all in this process was immediately seen as a weakness from both BPM analysis of the workflows and the use of Six Sigma quality analysis. The lack of manufacturing integration to this process was responsible for $60 of the $200 per order processing cost.

Figure 1: Typical order Workflow

Solution

Business Process Management analysis showed that there were several iterations of documents at the initial customer design sessions, and each iteration had slightly different input for the manufacturing orders. The analysis of this area through lean manufacturing BPM techniques also showed that by using more of a knowledge management system than just a simple Microsoft Excel database to capture customer requests, the expertise in the company could be better applied to the unique orders. Six Sigma analysis of these initial phases of an order showed that the company was not using any of the accumulated expertise or knowledge it had gained over decades of work in the product area they specialized in, which is heating and cooling equipment.

Using BPM-based workflow tools and techniques the company also was able to coordinate the order review and completion and steps and reduce several steps from order acceptance to production. One of the major factors in this solution was the fact that manufacturing, not engineering, needed to be the center of the final phase of order capture. With Six Sigma DMAIC-based approaches to analyzing these workflows, this point was discovered. A revised workflow is shown in Figure 2, Revised Ordering Process Workflow. This workflow shows the combination of streamlined processes and the use of Six Sigma DMAIC modeling to bring manufacturing into the final phase of order capture, removing Engineering from this role.

Figure 2: Revised ordering Process Workflow

Results