Operations Management

Quick Response Manufacturing/Management

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Prof. Raza Khan Operations Management Lecture 4

What is Quick Response Manufacturing?

Recently popularized strategy of Time Based Competition (TBC)

Using speed to gain competitive advantage Can be applied to any business (banking, insurance, hospitals, )

Our focus is on Manufacturing companies

This specific application of TBC is called Quick Response Manufacturing (QRM)

Prof. Raza Khan Operations Management Lecture 4

What is Quick Response Manufacturing (contd)

Quick Response Manufacturing implies

Rapid development and introduction of new products Rapid delivery of existing products

Potential for Reduction of Lead Times for all activities

50%, 75% or even 90% reduction!

Opportunitiesand Challenges!
Prof. Raza Khan Operations Management Lecture 4

Benefits of Quick Response Innovation

Shorter lead times to bring new products to market has many advantages: Beating the competition to market
Competition

Concept

Market

QRM Company

Concept

Market

2010

Hitting the market at the same time but with newer technology
Concept Concept Market
Competition

2011

2012

Market QRM Company

2010

Plus doing it in less time with fewer resources!

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Prof. Raza Khan Operations Management Lecture 4

2011

2012

Benefits of Quick Response Production

Aim is to shorten Lead Times to manufacture existing products. Why is shortening lead times key to competitiveness? Obvious reasons:

Fast response when customers have urgent need Happy customers mean more business

Less obvious, but Fundamental Reason:

Group Workshop What are all the types of Waste in the system (whole system) due to (because) of long lead times?
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Prof. Raza Khan Operations Management Lecture 4

Benefits of Quick Response Production (contd)

The QRM Detective

Learning one question to ask Results of asking the question

Hence, less obvious but fundamental reason for implementing QRM

Higher quality, lower WIP, more productivity Elimination of all forms of waste Improved integration of processes, and better work environment Lower total operating cost

Key Idea: Searching for ways of squeezing out time leads to all the improvements
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Prof. Raza Khan Operations Management Lecture 4

Results of QRM Strategy

Companies become formidable competitors! Typical Sales Pitch:

Well deliver the product that you want (customized) Well deliver it faster than anyone else Well beat or match anyone elses price Our quality will be second to none

There is no room for competition to get in!

Typical Financial Results:

Growth Rate: three times the average for that industry Profitability: twice the average for that industry
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Prof. Raza Khan Operations Management Lecture 4

QRM Principle
QRM Principle: Find whole new ways of completing a job, with a primary focus on minimizing lead time

Requires major organizational restructuring Why? Need to understand how most companies are organized today
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Prof. Raza Khan Operations Management Lecture 4

The Response Time Spiral in Office Operations

Long Lead Times Depts. Need to Plan Ahead Regular Jobs Delayed Additional Loss of Focus Hot Job Expediting Safety Time Inserted Inaccuracy in Planning Past Performance Problems

Unacceptable Lead Times, or Planning Errors

Large No. of Active Projects

Loss of Focus

Prof. Raza Khan Operations Management Lecture 4

Eliminating the Spiral

Cant be controlled: must be killed! Focus on reducing the consumption of time throughout the system
QRM Principle: Find whole new ways of completing a job, with a primary focus on minimizing lead time

Requires major paradigm shift in management thinking

Cost-Based Time-Based
Prof. Raza Khan Operations Management Lecture 4

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Cost Based Thinking

Minimize Cost Break into simple (specialized) steps Low Skills, Low Wages

Minimize Resources, Maximize Efficiency, Maximize Utilization

Managers Minimize Cost Long Feedback Loops, Backtracking, Expediting

Functional Departments Poor Quality, Long Lead Times! High Cost

Ensure Backlog, Batching

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Prof. Raza Khan Operations Management Lecture 4

Seven Key Principles for Restructuring Your Company for Quick Response
1. Organization
Functional ProductOriented
Locate all resources needed to complete a given product together: Work cells

2. Structure

Hierarchical, Multi-Level

Flat, MultiTeam

Many Cell-based teams

3. Team Members

Narrow, Specialized

CrossTrained

Skills needed to perform multiple tasks in their cell

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Prof. Raza Khan Operations Management Lecture 4

Key Principles (contd)

4. Management 5. Scheduling 6. Flow 7. Improvement
Top down Control Complex, Centralized Goal is Efficiency Localized Effects Team Ownership Simpler, Local Keep jobs moving Systemwide Effects
Ownership of entire delivery process by cellbased teams

Teams take responsibility for planning and scheduling their resources and jobs Move jobs to next operation as soon as completed Teams now discover ways to reduce lead time, improve quality and productivity

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Prof. Raza Khan Operations Management Lecture 4

QRM Principle

Organize around main sequence of processing steps needed to serve the FTMS (Focused Target Market Sub-segment) Create a Quick Response Office Cell (Q-ROC)

warning: do not re-organize entire company at once.

Q-ROC: A closed loop, co-located, multi-functional, crosstrained team that can complete all the processes needed for the product. This is office version of a cell

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Prof. Raza Khan Operations Management Lecture 4