Lean Manufacturing Solving Demand Management Term Paper

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The lack of manufacturing integration to this process was responsible for $60 of the $200 per order processing cost.

Figure 1: Typical order Workflow

Solution

Business Process Management analysis showed that there were several iterations of documents at the initial customer design sessions, and each iteration had slightly different input for the manufacturing orders. The analysis of this area through lean manufacturing BPM techniques also showed that by using more of a knowledge management system than just a simple Microsoft Excel database to capture customer requests, the expertise in the company could be better applied to the unique orders. Six Sigma analysis of these initial phases of an order showed that the company was not using any of the accumulated expertise or knowledge it had gained over decades of work in the product area they specialized in, which is heating and cooling equipment.

Using BPM-based workflow tools and techniques the company also was able to coordinate the order review and completion and steps and reduce several steps from order acceptance to production. One of the major factors in this solution was the fact that manufacturing, not engineering, needed to be the center of the final phase of order capture. With Six Sigma DMAIC-based approaches to analyzing these workflows, this point was discovered. A revised workflow is shown in Figure 2, Revised Ordering Process Workflow. This workflow shows the combination of streamlined processes and the use of Six Sigma DMAIC modeling to bring manufacturing into the final phase of order capture, removing Engineering from this role.

Figure 2: Revised ordering Process Workflow

Results

Using these lean manufacturing techniques of BPOM and Six Sigma, the company was able to trim down its cost to process an order from $200 to first $160 and then less than $100 per order.

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Second, there are now three or fewer iterations per input order and manufacturing is defining standard costing and time estimates on all orders before they are approved. This has also led to less overtime having to be paid to the production staff and the use of key performance indicators (KPIs) to manage the overall ordering and manufacturing process. These metrics of performance include inventory turns, number of orders delivered on time, gross margin per order, and percentage reduction in order errors by product line.

Most importantly, the combination of BPM and Six Sigma DMAIC techniques has led to greater levels of customer satisfaction for this HVAC manufacturer as order are arriving in the right build or configuration. Lean manufacturing techniques also made it possible for the company to capitalize on the knowledge it had in manufacturing as well. The use of these lean manufacturing techniques has also automated this entire process of accepting or rejecting an order and resolving order errors down to a day or less. For make-to-stock products or those that are continually produced to forecast, this process is now down to an hour,….....

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