Production and Operations Management
Critical Success Factors of QRM
Andrew Leslie 201147587
15th February 2013
Why the need for QRM (Quick Response Manufacturing)?
Chuck Gates. President of Renew Aire, a US based company and market leader, reduced lead times using QRM by 80% in 2010; which increased their market share overall by 42%. QRM workshop release. Going Beyond Lean: IMEC Partners with Founder of QRM Strategy to Assist Manufacturers of Low-Volume and Customized Products. Pp. 1.
Many companies around the world use lean manufacturing strategies such as Takt Time and Six Sigma, in order to reduce waste and provide good customer satisfaction. However these methods are designed for high volume production and stable demand, with little variety in order to compete with overseas production.
In the case of companies looking to meet variable demand and provide a large product variety, QRM is a solution to meet these needs efficiently.
What is QRM?
QRM has an overall main focus of reducing the lead-time over reducing costs, not just on the shop floor but also throughout the entire company; from the office to the full supply chain.
Critical success factors
Successful use of the QRM strategy is built upon 4 core principles:
1. Focus on the reduction of overall lead times.
Traditional approaches based solely on cost thinking almost always look to reduce labour costs. However “touch time only accounts for 5% of the overall lead time” Suri, Rajan (2010a), It's About Time. The Competitive Advantage of Quick Response Manufacturing, Productivity Press. Pp. 9.
Where as costs from other work in progress, forecasting, planning, rescheduling and warehousing etc. account for up to 50% of the overall time to produce a product.
Long lead times lead to high organizational costs, which usually account for up to 5 times labour costs. Substantially decreasing these costs thus provides a company with much greater opportunity than reducing labour costs.
Figure [ i ]: Typical total lead-time chart with breakdown. Figure [ i ]: Typical total lead-time chart with breakdown.
Referring to Figure i; previous strategies would focus on reducing the largest costing area, which in this case is fabrication. However, even a 25% reduction in this time only leads to a 3hr decrease overall, which when compared to the complete 34-day lead-time is very minimal. To successfully use QRM, one must focus on the white space above.
“Running machines flat out does not translate into making money; shipping more quality products in less time does.” Tim Heston (2011) The fabricator, official publication of the fabricators and manufacturers association intl. pp. 1
QRM uses a measure known as MCT (measure in calendar time), which is the time it takes from a product being ordered to it arriving at the customer’s door. Key to a successful QRM strategy is to “make MCT reduction the main performance measure” Suri, Rajan (2010a), It's About Time. The Competitive Advantage of Quick Response Manufacturing, Productivity Press. Pp. 33.
2. Create the right organizational structure.
To successfully reduce lead times, the company must next focus on organizing staff into cross-trained holistic QRM cells, who can self manage.
By creating cross-trained teams or cells, a greater variety of jobs can be completed with the same group of staff. The teams must be reminded constantly of the need to reduce MCT over cost and rewarded for doing so.
“The power of ownership is frequently underestimated by management” Suri, Rajan (2010a), It's About Time. The Competitive Advantage of Quick Response Manufacturing, Productivity Press. Pp. 56.
Figure [ ii ]: Structural changes to an organization for successful QRM. Figure [ ii ]: Structural changes to an organization for successful QRM.
Figure ii. Shows the structural changes throughout an organization to successfully initiate QRM.
In 2011, Phoenix Products, a...
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