The Secret to Getting On Time and Reducing Leadtimes

Job scheduling plays a big role in our on-time delivery performance and leadtime, which determines our competitive position within our industry. This is particularly true as competition has gotten more fierce in recent years. Only the best shops have survived. And those shops have very good quality and lead the pack in expertise. This means that scheduling is where and how you can really stand out. But there’s no question that scheduling has its challenges; and, every time we encounter a challenge our schedule is out of date and requires an update.

We spend a lot of time updating the schedule. Following are just a few of the common scheduling challenges that cause us to continually update the schedule:
•    Clients change their mind
•    Vendors aren’t always reliable
•    Mix can vary wildly and so our constraint moves
•    Employees do not always have the right skill and their discipline is lacking
•    Processes are not reliable
•    Machines and tools break
•    Quality is not near perfect
•    Data is not readily available nor accurate nor communicated
•    Communication between silos is difficult

Mold shops usually don’t have the luxury of making the same parts over and over again. The mix of work and amount of repair/emergency work a shop has can change so dramatically week to week that their bottlenecks can move, making on-time delivery a real challenge.

Most shops have tried a number of strategies to improve their on-time delivery and reduce leadtimes—e.g., updated ERP or scheduling software, used some lean techniques or hired an expeditor—but, the results are usually not substantial. And, that’s because typical solutions address the various symptoms, but don’t address the root cause. So how do you address the root cause? How can you dramatically improve your scheduling?

The Secret Solution
The secret is to stop focusing on efficiency. When you are willing to do that, and put a more effective scheduling system in place, you create a buffer to better absorb all those sources of variability listed above. If you are willing to give this strategy a try and your competitors continue to cling to efficiency, you can create an incredible competitive advantage.

So, what does it mean to be efficient? The definition from Dictionary.com is “performing or functioning in the best possible manner with the least waste of time and effort.” Money and cost should be added to that definition. One of the ways we typically apply efficiency in a shop is by keeping all our equipment and/or people busy so that we don’t waste any capacity and have the highest possible utilization.
But to keep our key resources busy they all must have a job to work on, and to increase the likelihood that all resources have work, we typically make all jobs in house available to be worked on. “Available to be worked on” means included in our work-in-process.

This max’s out your work-in-process and increases the pile of work at every work center. That way all key resources have a very high probability of having something to work on. This is particularly relevant in shops where the mix of work can change from week to week. That’s one of the things we do in the name of efficiency.

According to Little’s Law there is a direct correlation between the amount of work-in-process we have and our leadtime. The higher our work-in-process, the longer our leadtimes. Figure 1 is an illustration showing the relationship between work-in-process and leadtime.

The more jobs that wait for their turn, the longer the average queuing time, leading to longer production leadtimes. Example 1 has the most work-in-process and longest leadtime. And, conversely, Example 3 has the least work-in-process and the shortest leadtime. So, as you increase work-in-process, you are also increasing your leadtime—not to mention the amount of cash you have tied up in raw materials.
But wait, there’s more—on-time delivery decreases. The diagram does not include the effect of variability. But if it did, it would show that the variability of production leadtime is increased as the queue grows. So the effect of high work-in-process just gets more dramatic the more variability you have. This directly reduces the on-time delivery because it is more difficult to predict the exact production leadtime and to confirm orders accordingly.

High work-in-process can also have an impact on quality. Many production failures occur early in the routing, but are detected much later in the production process (usually at final inspection). If work-in-process is high, the average leadtime is also high, causing a long lag time between the production steps and the final inspection. That means the final inspection step occurs a long time after the step that caused the failure. And because so much time has passed, it can be difficult to determine and correct the root cause of the quality problem, making improvement very difficult. Thus, the higher the work-in-process, the harder it is to detect and correct quality problems.

All of this leads to why you should stop focusing on efficiency. As you stop focusing on efficiency and reduce work-in-process, here’s what happens:
Queue time reduces
Leadtime reduces
Leadtime predictability increases
On-time delivery increases
Quality increases
Cash flow increases

As a result of these improvements, your production leadtime becomes much shorter (if you do it right) than your quoted leadtime. This difference can be used in two ways. First, it creates a buffer allowing you to absorb a fair amount of variability and further enhancing your on-time delivery performance. And secondly, the difference is so big that you can also afford to reduce the quoted leadtime to customers.

Summary
The combination of a shorter quoted leadtime and 99-percent + due date performance creates a competitive advantage. Understanding that all of this is easier said than done, but it’s not physically hard to do, it is just mentally challenging because we don’t have intuition around this approach. Take some time to digest the negative effects an efficiency focus can have on your shop scheduling.

LearnMore: Check out Dr Lisa’s 47 minute webinar How to Get More Jobs Done Faster at velocitySchedulingSystem.com/webinar.

Contributor: “Dr. Lisa” Lang is one of the foremost Theory of Constraints experts in the world and a sought after manufacturing expert having appeared in the USA Today, CBSNews’ Moneywatch.com,
Wall Street Journal’s MarketWatch.com, Yahoo Finance.com, About.com, NYDailynews.com, CNBC.com, The Boston Globe.com, The Miami Herald.com, Morningstar.com, and others. She is active in the NTMA, PMA, and AMT communities having helped over 100 highly custom jobs shops to reduce their lead-times and improve due date performance. She worked with Dr Goldratt who is the father of Theory of Constraints and author of the bestselling book, The Goal. Dr Lisa is the President of the Science of Business specializing in increasing profits of highly custom manufacturers by applying Theory of Constraints, Lean and Six Sigma to operations with Velocity Scheduling System and to engineering/design with Project Velocity System and to marketing with Mafia Offers.


For More Information:
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DrLisa@ScienceofBusiness.com