8 June 2016

QRM Gives Your Production Firm the Ultimate Advantage!

QRM Gives Your Production Firm the Ultimate Advantage!

Cost is not the main sanctifying factor anymore.

Nowadays it is … time, which will give your production firm the competitive advantage and the market share. Moreover, this might just save the Western industrial sector!

Times are changing fast! It is a cliché that you have probably heard already dozens of times, but it is spot-on. We have just left behind an era where cost reduction was the keyword. Production was outsourced to cheap-labor countries, and shipped in bulk to save a few bucks. It was all about mass production and standardization. This resulted in a decrease of the share of industrial production in the European GDP to a mere 15%.

Nowadays e-commerce, improved CRM tools and other developments have resulted in a shift towards customer-centricity. This is valid in both B2C and B2B markets. Customers demand more individualized products and more importantly, they want those products fast! Mass customization marks delivery lead-time and time-to-market as the ultimate differentiators. A rapid time-to-market gives local manufacturers a valuable benefit over their competitors situated in low-cost countries.

In the B2C market we already notice this tendency. Companies like Coolblue and Bol.com started to dominate the e-commerce market with their “same-day delivery” approach. Moreover, Adidas recently completed construction of its brand new “SPEEDFACTORY” in Ansbach, Germany.

Having production close to the customer to bring local customization to manufacturing is the strategic incentive.
“The speed factory challenges the idea of centralized production and makes products close to where the consumer is. It opens doors to creation of products completely unique to the fit and functional needs of consumers.”
Herbert Hainer, CEO of the Adidas Group

Changing from a cost-reduction to a time-saving production model will be the challenge for the Western world. Not only production itself, but also other departments such as accounting and sourcing are shaped in a function of cost-reduction. Quick Response Manufacturing (QRM) is the solution! It offers the right toolbox and mindset to face the time paradigm. The goal of QRM is to decrease the total lead-time of a product in order to make manufacturing flexible and cost-efficient. Thorough analysis has revealed that 90–95% of the total lead-time of an order consists of waiting time. Where classic production models focus on the 5–10% touch time, QRM has led to a decrease in lead-time of up to 80%.

Instead of a value-stream map, QRM starts its analysis with the drawing up of a Manufacturing Critical Path Time. It identifies where the waiting times, and hence bottlenecks and issues, are situated in the production process. By shifting from a process layout to a cellular layout based on product families, it is easy to finish all process steps of a product in one smooth flow. With a POLCA system (Paired cell Overlapping Loops of Card with Authorization), different workstations in a cell can signal their available capacity. This will result in a waiting time of close to zero, which makes production fast and flexible.

QRM is a theory designed for low-volume/high-variation companies. Due to the increasing customer centricity and individualization, the number of these companies will rise like never before. Does this mean Lean is dead? The answer is no. Lean will still be the way to go for mass-production manufacturers (e.g. the automotive industry) and some of its tools are useful during a QRM implementation. The lean toolbox and the QRM toolbox will increasingly walk hand in hand. Just always remember, time is money!