In
traditional manufacturing plants, different pieces of the production
process are done in separate departments, which each try to maximize
their own output. Subassemblies and finished goods get built and
then sit in inventory while companies wait for orders to
materialize.
Demand-based flow manufacturing, on the other hand, takes
companies in a very different direction. It does away with
stand-alone departments and reduces or even eliminates costly
product inventories.
The flow approach is a form of build-to-order manufacturing -- a
wider category in which production is typically scheduled only as
orders are received from customers.
Flow isn't new, having evolved in the 1980s out of so-called
"flexible manufacturing" concepts such as just-in-time delivery of
components and materials.
But it's starting to attract more attention from manufacturers,
in part because software vendors such as Oracle Corp. and
Pleasanton, Calif.-based PeopleSoft Inc. have started releasing
packaged applications for managing flow systems.
A Fluid Process
In plants using flow techniques, products are built from start to
finish on an integrated manufacturing line. Work is carefully
sequenced so the products "flow" steadily down the line, with each
step taking the same amount of time.
Materials and parts are stocked where they're needed along the
line, and plant-floor workers are trained to handle several assembly
jobs so they can move around to help out where bottlenecks occur --
sometimes even on a different line. Products are inspected at each
workstation, in an attempt to catch defects as they happen.
The result, users and analysts say, can be sharp reductions in
inventory costs, faster manufacturing turnaround times, fewer faulty
products and less floor space for production.
David Monroe, an analyst at Plant-Wide Research Group in North
Billerica, Mass., says inventory savings of 50% or more are typical
on flow lines compared with traditional manufacturing methods. And
savings in the range of 80% aren't unheard of, he adds.
To the uninitiated, ''it sounds like voodoo,'' acknowledges
Garret Wyckoff, manager of manufacturing engineering at a Florham
Park, N.J., unit of Siemens AG that makes fire-detection systems.
For example, he says, switching to flow manufacturing techniques
helped the plant improve its percentage of orders filled with a
single shipment, from 70% to 98%.
But implementing a flow manufacturing setup isn't a simple
matter.
Jeff Pecon, vice president of the controls and systems product
group at Cleveland Motion Controls Inc., says the manufacturer is
"basically retooling the entire business" as part of a switch to
flow production techniques.
The company's products -- devices that control industrial motors
-- are being redesigned to use more common components that can be
quickly assembled as orders come in. Plant layouts have been
completely rearranged to set up the integrated flow lines, and it's
outsourcing manufacture of printed circuit boards in an attempt to
eliminate a potential production bottleneck.
Much time has also been spent working with suppliers to make sure
they can meet the daily need for raw materials. Even the sales force
is being counted on to provide a more accurate picture of what
customers are likely to buy so the company can be ready to react
quickly to changes in demand.
"Flow is a whole business strategy," Pecon says. "It's not just a
shop-floor project." But all the setup work can pay big dividends: A
pilot project at Cleveland Motion Controls helped cut manufacturing
time for one product from 29 days to two and lowered the percentage
of defective items from 21% to 2%.
At the heart of flow manufacturing is a belief that inventory "is
the root of all evil," says Bill Swanton, an analyst at AMR Research
Inc. in Boston. "The mind-set you're trying to get to here is that
products just come straight off the line and go onto the loading
dock."
Swanton says flow techniques work best with products that give
buyers a wide choice of configuration options, such as appliances
and industrial equipment.
But it can take a year or more to do a flow manufacturing
makeover at a plant, from designing the new lines to retraining
plant workers. Converting the Siemens plant in New Jersey to 21 flow
lines took two years of planning and three years of implementation
work, Wyckoff says.
American Saw & Manufacturing Co., a maker of saw blades and
hand tools, plans to move more than 300 pieces of production
equipment around its headquarters plant in East Longmeadow, Mass.,
as part of a flow manufacturing project that started last September
and isn't due to be completed for another 16 to 18 months.
Plant-Wide Research estimates that fewer than 5% of manufacturers
are currently doing some form of flow manufacturing. And many of the
companies with flow lines in place still use more conventional
manufacturing approaches to build up inventories of specialized
components and subassemblies, according to Monroe.
Eaton Corp., a $6.6 billion conglomerate with more than 100
manufacturing plants, began using flow manufacturing techniques six
years ago. Tom Varacky, a senior business systems consultant at the
Cleveland-based company's information technology department, talked
with Computerworld about the business benefits and challenges of the
flow approach.
Q. How widely has Eaton adopted flow manufacturing?
A. It's really the preferred method of manufacturing at a
corporate level. As a methodology, it's probably implemented in at
least 50% of our plants.
Q. What kind of benefits are you getting by using flow
techniques?
A. The biggest one is that it eliminates waste, which really
translates into lower inventories and less movement of [production]
materials. There are some plants that have reduced their inventory
costs by as much as 80%. It also lets you catch [product defects]
right away. You don't build a whole batch of things and then realize
that they're all defective.
Q. How much do you have to redesign plants that are switching
to flow-based production lines?
A. That really varies. Our goal is to not move any more
equipment than we have to, and we also don't want to buy new
[production machines]. But if we have a plant that's doing extremely
traditional manufacturing, there's quite a bit of equipment
relocation that has to take place.
Q. How big of a change is it for workers in the plants?
A. You only make parts when you need parts, and that makes
people a little nervous. They've come into a plant and always been
told to build parts, build parts, build parts. In some cases,
measurements [of manufacturing effectiveness] have to be changed. We
find that the people [working] on a line see the improvements and
tend to accept it more quickly than the plant managers
do.
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