Q: What actions were taken to improve output from the plant?
A: We provide physical security solutions (such as safes, lockers, strong room doors) for banks, institutions and retail. These products require assembly of more than 50 components. Some of these are made in-house, the rest are sourced from suppliers. We used to have significant desynchronization of these components at assembly leading to loss of capacity.
In 2010, we started the implementation of Theory of Constraints processes by partnering with Vector Consulting Group. After deploying the flow concepts of TOC, synchronization of these components at assembly improved dramatically. We started achieving the record output almost every day of the month.
Moreover, fire-fighting reduced significantly. This released the bandwidth of management to focus on improvements in the manufacturing line set-ups and working on capacity release projects that further increased output.
Q: What were the major paradigm shifts for you and your managers?
A: Earlier we always thought higher WIP leads to higher output. We realized that this is not correct. One of the biggest paradigm changes we implemented is the system of pull, where inventory was pulled into the system based on the daily gap in a pre-defined WIP level, which was set at half of the previous levels. The lower WIP ensured focus on fewer orders, thus increasing flow.
Q: What challenges did you face in implementation? How did you align the various stakeholders to the new change?
A: The biggest challenge was to change the established mindset of managers to the new way of working – moving from monthly to daily planning, aligning production to working on sales orders rather than focusing on local output. When people saw dramatic improvements in inventory and output in a very short-time, the initial scepticism gave way to infectious enthusiasm.
Q: What kind of cultural change was required to implement the new paradigms?
A: Cultural change was an effect of the implementation. For example, desynchronization of parts and massive month-end skew was a source of stress and constant fights between various departments. When flow became uniform with increased output, the team work improved significantly.
“WITH THREE TIMES MORE OUTPUT FROM THE SAME CAPACITY AND REDUCED WORKING CAPITAL REQUIREMENT, WE WERE ABLE TO IMPROVE OUR ROCE BY THREE TIMES”