How SMS freed 40% capacity and slashed throughput times

SMS Technologies is a contract manufacturer for the medical industry, specialising in “legacy products” for blue-chip medical companies. The company is based in Harlow, with an annual turnover of £3 million and a workforce of just 43. SMS are used to dealing with very small batch orders, typically between 25 and 100. These orders are for medical spares, which suppliers are legally obliged to produce 10 years after the final sale. SMS manufactures around 15,000 different items each year, and so a flexible, responsive manufacturing operation is essential in order to meet customer demands. In addition, SMS need an IT system to support this flexible manufacturing facility. Ten years ago, SMS was struggling. The company was using an MRP system from MAPICS, ‘pushing’ orders through the shopfloor in the traditional manufacturing way. This resulted in high inventory levels, work-in-progress, and generally too much ‘waste’. Orders were delivered late and customers were frequently being let down. The way SMS managed manufacturing was also a problem. The culture was one of long batch runs, keeping the machines running rather than sitting idle. As a consequence, average throughput time was 16 weeks. About four years ago, as a first step towards eliminating these manufacturing problems, SMS managing director, Steve Sandland, decided to embark on a World Class Manufacturing programme with the Cranfield School of Management. The programme was a huge success, resulting in the employment of a new manufacturing and operations manager, Wayne Brown, who was originally employed for one year on a secondment from the course. “Above all, the programme taught us that we must better exploit technology to minimise waste. Most importantly, we wanted to reduce waste in the lead time process and improve our response-to-problem time to achieve a genuine productivity increase,” says Sandland. Product costing was also a problem at SMS. Management were not getting accurate costing information from the factory floor. The costing process was a manual one, and was very time consuming. Works orders were printed for each job, including a time estimate for how long the job should take. The operator then completed the actual time it took to complete the job. This information eventually found its way back to the costing engineer, who then worked out a ‘cost’ for the job. Sounds pretty straightforward, even if time consuming. However, as Brown explains: “It was amazing how many times operators completed the card with the exact time our costing department had estimated. Furthermore, even if the time was accurate and truthful, the information might take 2 weeks to get back to the costing engineer. If a problem or discrepancy with the time estimate arose, and the relevant operator was asked why there had been a problem, they often couldn’t remember a job that far back!” So clearly things had to change so that SMS could ascertain the true cost of a particular order. Without this information SMS would never know whether they were making or losing money on a particular order. As Brown explains: “What we wanted was something that would extend the electronic collection and distribution of information to the manufacturing floor, allowing us a means of calculating the ‘true’ margin of specific orders and a way of understanding the total cost picture.” SMS developed a software specification and drew up a shortlist of possible suppliers. Procon Associates, the UK-based MAPICS affiliate, was chosen for its MAPICS Paperless Manufacturing solution, which, according to Sandland, “best met our specification…and bolted on to our existing MAPICS MRP system”. The software currently installed at the site is a Manufacturing Data Collection and Communication (MDCC) module. There are two more modules for ‘Tooling’ and ‘Quality’ which SMS will roll out in the future. The cost of the software and implementation was around £50,000, and took approximately 12 months to implement, although, as Brown explains, there were some teething problems in the early days. “We actually completed the installation in nine months, but it took another three months to iron out some ‘bugs’ in the system.” The MAPICS MDCC software is written in RPG/400 and runs on any AS/400 platform. The results from the software implementation are very encouraging. Employees, from the factory floor right up to the customer service centre, now have on-line access to current information about a particular works order. Machine operators interface with the system via touch screens installed on the factory floor. As soon as operators begin a new works order, they log the job onto the MDCC system, via the touch screen PCs, using their own personal I.D. As soon as they complete the job, they also enter this data onto the system. The system now knows exactly how long the job took to complete, who performed the work, and can also alert the customer service centre that the work is now complete. Any works order can be tracked down by any employee in a matter of minutes, giving SMS much greater visibility, and customers are also now given much more realistic lead times. If the operator is experiencing problems completing the works order, and runs over the estimated job completion time by 10 minutes, a system alarm is activated which alerts the manufacturing operations manager. Brown is very pleased with the results: “We don’t need supervisory decision-making anymore. Operators are trained to take decisions themselves – I only need to get involved when they are experiencing problems meeting a works order due date - hence the alarm system. We can then discuss the causes of the problem and ensure they don’t happen again.” The MDCC software also enables shopfloor operators to access CAD drawings and related instructions directly from a PC terminal. Even time and attendance and stock transactions can be entered through the touch-screen system. SMS is truly a lean manufacturer these days. They only have three managers out of a workforce of 43. There are no supervisors any longer. Machine operators are multi-skilled, and training is now a high priority. The new software, coupled with the new manufacturing work practices, has led to an increase in responsiveness to customer orders. As Brown says: “The results speak for themselves. Throughput times are down from 16 weeks to 6 to 8 weeks.” Works orders are now ‘pulled’ through the factory, and this enables SMS to run with lower work-in-progress (WIP) and inventory levels. Sandland estimates that “stocks are down approximately 75% on what they were last year.” Due to reduced inventory and WIP levels, and elimination of production bottlenecks, extra manufacturing capacity has been freed-up. Brown reckons that “SMS has freed-up about 40% extra capacity.” This means SMS are geared up ready to push for more sales from the market, knowing they now have the manufacturing capacity to cope with it.