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Interpoint Incorporated, a CRANE
Company. 1999-2000
10201
Willows Road, Redmond, Washington
Mr. Tom
Ripp, President
Mr. Doug
Ralphs, Vice President of Finance
Mr. George Stewart, Director of Operations
Mrs.
Laurie Green, Production Control Manager
Ren Roderick, Information Systems Manager
Grace
Lin, Demand and Forecasting Manager
Joe Hoffman, Purchasing Manager
Interpoint is a Electronic Hybrid manufacturer serving the aerospace,
military, and commercial applications. To keep the client’s expense at a
minimum, we trained and used several of their employees as part of the
consulting team. This also helped assure the transfer of our
technology to the company for sustained results.
Supply Chain Management was aligned from the “Demand
Management” (newly created by us), changing of the MRP templates and
Inventory / Yield / Capacity sets, to the Purchasing and Supplier Contracts,
ending with the “LEAN Manufacturing Principles” applied throughout the
production process.
We implemented our proprietary Forecasting Process, resulting in an
improvement in Forecasting from 25% (with the old system) to 95% within a
six month period. We identified and initiated the building
of selected Service Stock inventory items that have a high potential of
“off-the-shelf” demand in a normal “Make-To-Order” sales environment.
This was designed to create a “Competitive Advantage” over competition for
faster delivery. It was anticipated that the Service Stock would
increase gross sales by at least ten percent. The actual results
exceeded expectations.
Developed Labor and Machine Standards for total Redmond Operations (two
plants). Developed Manufacturing Routings and shop floor travelers to
match. The shop floor routing/travelers were designed to be used
with a bar-code scanning process. This was working extremely well.
The data entry errors were much less than the manual entries. This
action helped increase the Inventory Record Accuracy to over 97%. Assisted
with the installation of these items into the ManMan MRP System.
The failure rate at first test for these “hybrid” electronic items was high.
The ManMan MRP software was not configured to accommodate the common
“rework” needed to manufacture these unique products. The team
developed the Rework Routing procedure allowing the integration of ManMan
software with the needs of the manufacturing groups. This saved the
company over an anticipated $1.2 Million for a new MRP system
implementation.
The project team developed Capacity Planning and Capacity Management
process. Worked with the Master Production Schedulers to improve
the Master Scheduling system in place. The reliability of
“On-Time Delivery” to the customer due date was improved from 12% to over
93%.
Trained sixty employees in the APICS’ “Basics of Supply Chain Management”
and forty-five employees in APICS’ “Materials and Capacity Requirements’
Planning”. The entire Production Control group also completed
the APICS’ “Master Scheduling” course, customized for their company’s needs.
One of the results reported by Accounting was a decrease in raw material,
sub-assembly, and work in process inventories of over 10% ($820,000) in the
first three months. Total inventories were reduced an additional 16% during
the second three months. This resulted in an inventory reduction of about
26% over a six month period. Finished Goods Inventory also decreased.
This was partially due to reducing the manufacturing cycle time and aligning
production goals to the new Demand Management and Forecasting Process.
Raw material and WIP shortages were almost eliminated.
SELECTED CLIENT PROJECTS
Eldec Corporatrion,
1998, 1999 a CRANE Company
Mr. Arlan VanKoevering, President
Mr. Roy Robinson, Vice President of
Operations,
Mr. Russell Fleetwood, Vice President of Finance,
Mr. Blaine Hafen Operation Planning
Team Leader Mrs. Kari Harmon, Director of Supply Chain
Mgmnt
Mr. Ed Mudge, Production & Materials
Control Manager
16700 – 13th Avenue W. ,
P.O. Box 97027, Lynnwood, Washington 98046
Eldec is the primary supplier of electronic control systems for aircraft
produced around the world. Their varied product applications include
such items as the “Flight Control Systems” for the Boeing 777, 747, 737,
757, and 767. They also provide similar equipment for the AirBus and
Bombardier aircraft. They produce complete “control switch systems”
and “fuel flow metering” equipment.
Overall
business activities are best described in the
Eldec Mission Statement
“ELDEC provides electronic
and electromechanical products for aerospace, defense, and industrial
markets worldwide. Our mission is to create customer value through
superior processes implemented by motivated people.”
The
company had implemented “ORACLE” ERP (Enterprise Resource Planning) system
over a year earlier. The implementation consulting team had failed to
train the employees in the “Who”, “What”, “When”, “Where”, and “Why” of the
ERP logic. The company was a great group of well intentioned people
but they had not been shown the differences between operating their old
“BAPS” MRP system and the new Oracle ERP system logic.
This is symptomatic of most ERP implementations, according to APICS’
President, Carol Ptak. Employees were attempting to use the new system
within the constraints of the old system. Operating and use
failures are normal. “Work-around” spreadsheets were the rule,
not the exception. System use and feedback were not happening as
needed for ERP integrity. In short, a multi-million dollar
implementation had left this client in worse shape than they were in prior
to the changeover.
Some of these symptoms
experienced included difficulties in delivering product on-time to the
customers, shortages of needed materials, and excessive growth in raw
material and work in process inventories.
We
instructed and worked with 97 members of the management and operations teams
in the art of increasing “On Time Delivery” to customers. Measurements
of On Time Delivery are a standard evaluation used at Eldec, and by most
corporations. Comparing the historical monthly On-Time Delivery
with results after training showed an improvement of over 260% in just six
months (from 33% to 87%)! Over the following year, after
our project time had ended, they increased the On-Time Delivery to 96%!!
We are very proud of their continued efforts and accomplishments.
We trained and consulted with 175 members of management and operations in
using the Enterprise Resource Planning system (ERPs) as an operating tool.
A survey to determine the group’s knowledge was administered prior to the
training and again after. The group increased their score by
over 170%. Success was not only monitored by the change in the
survey scores, but also by the improvements they were implementing through
out the company, and the positive results.
“Sales and
Operations’ Planning” was initiated to smooth the exchange and needs between
the customers (represented by the sales team) and the manufacturing
operations. This group was also trained to work as a team and to use
the ERP system to resolve issues. Results were as expected with
Forecasting improvements, increased customer satisfaction, and faster
deliveries on sales orders.
Follow up services included conducting APICS’ “Material and Capacity
Requirements Planning” and “Inventory Management” certification training for
the Production & Material Control group, and for the Supply Chain Management
group. A basic plan for Forecasting service parts was also
initiated.
Inventory was systematically reduced by over 40% within 18 months of the
start of our services!
SELECTED CLIENT PROJECTS
Abitibi-Price Corporation, Building Products Group
1989-91
Hiawatha
Industrial Park, Hiawatha, Kansas
Mr. C.
Bruce Sherman, General Manager
Mr. Ron Fee, Jr. Manager of Manufacturing
Ms.
Carol Middendorf, I.T. Department
Abitibi-Price’s Building Products Group was one of the leading manufacturers
of interior doors and window shutters in North-America. They provided
products to the home repair retailers.
A complete Re-Engineering of the division from a
“top-down” dictatorial ran organization with severe problems into a
“Employee Empowered” smoothly ran and profitable corporation was
accomplished. This included several key changes:
A)
A new MRP System from “J.D.Edwards” was installed
on a new IBM AS400 computer. The old system was not large
enough for the current offering of products. The company had recently
been acquired and the new owners desired conversion to an
“MRP-2” logic driven organization. These changes required a
complete reworking of the Bills of Material, capacity analysis, routings,
Supply Chain Management practices and inventory management.
B)
“Just-In-Time” “Pull” manufacturing was integrated
with the MRP system driven “Push” logic, similar in theory to “Make-To-Stock
/ Assemble-To-Order”. This resulted in both reductions of
overall inventory dollar investment and parts shortages.
Manufacturing Cycle Time was reduced from 12 weeks to less than 6 weeks.
Inventory “Turns” went from 2 to 12. The Annual “Inventory
Carrying Costs” were reduced from $8,064,000 to $1,344,000. Resulting
in a bottom line improvement of $6,720,000 per year.
C)
A separate project addressed the “Shrink” (loss)
of raw material through the manufacturing operations. Set-Up
practices for production changeovers, the ability to convert a long piece to
a shorter one, off-line repairs, and several other approaches allowed the
REDUCTION in WASTE, SCRAP, and SHRINK by over $3,000,000 the first year.
This improvement continued as a “bottom line improvement” in addition
to the Inventory Carrying Cost reductions. There were also
associated labor savings, by just not having to replace the formerly
scrapped components. This was indicated by the increase in the
quantity of units produced versus the labor used.
D)
The evolution to “Employee Empowerment” forced the
resolution of problems quickly at the “shop floor level”, rather than the
deferral to upper management, which had been taking several weeks. The
“pride of ownership” by the shop floor employees made a huge change where
they would use peer pressure to force fellow employees to conform to the
desired improvements..
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