Manufacturing companies increasingly face two challenges. On the one hand, there is pressure to reduce costs because of competition from low-wage countries. And on the other hand, customers are reducing order sizes and increasing the variety of the parts that they order, even including more custom (non-repeating) parts. So how do you deal with low-volume, high-variety production while at the same time reducing your costs? The answer is a strategy called Quick Response Manufacturing, or QRM.
QRM strategy is the brainchild of Dr. Rajan Suri, Emeritus Professor at the University of Wisconsin-Madison. Suri founded the Center for Quick Response Manufacturing, where he developed and proved out the effectiveness of QRM along with over 200 partner companies during the past 18 years. QRM is a companywide strategy for reducing lead times throughout your enterprise and supply chain. Partner companies have reduced lead times for their low-volume and custom products by over 80% and at the same time have realized cost reductions of 15-25%, outweighing the labor cost advantage of low-wage countries.
Although the industry partners that helped demonstrate the effectiveness of QRM include well known companies like Danfoss, Harley-Davidson, John Deere, National Oilwell Varco, P&H Mining and Rockwell Automation, QRM strategy has been particularly effective for numerous small manufacturing enterprises that make low-volume and custom products. RenewAire, a Madison (Wis.) based manufacturer of customized Energy Recovery Ventilation Systems, reduced its lead times from ten weeks to two, and increased its profitability while gobbling up market share; this tiny company competing with industry giants increased its market share by 42% in just a few years!
A key aspect of QRM is that the strategy is not just for the shop floor, it is applied across the whole enterprise, including office operations such as quoting and order processing, material planning and control, purchasing and supply chain management, and new product development. Based in Alexandria, Minn., Alexandria Extrusion Company (AEC) is a medium-sized business with about 300 employees and it specializes in providing custom aluminum extrusions with quick response times. AEC has implemented QRM throughout its office operations, shop floor and supply chain, and lead times in both the office and shop floor have been reduced 70-80%. “QRM gives us a definite edge over our competition,” says Tom Schabel, President and owner of AEC. “With the economic downturn in 2008 and 2009, the overall market for AEC’s products shrank by 50% and yet AEC was able to grow and expand during these two years. Without a doubt QRM was the significant driver behind our success.”
Recognizing that the trend towards smaller volumes and higher variety represents the future of manufacturing, IMEC, or the Illinois Manufacturing Extension Center, is partnering with Dr. Suri to bring QRM strategy to manufacturers in Illinois, particularly to small manufacturing enterprises which form a significant part of the state’s manufacturing base. As described in Dr. Suri’s latest book on QRM, It’s About Time: The Competitive Advantage of Quick Response Manufacturing (Productivity Press, 2010), the biggest challenge to implementing QRM is getting executives to shift from traditional “cost-based” thinking to QRM’s “time-based” thinking. This requires completely rethinking many company policies and operating norms. Thus, as the first step to helping spread QRM strategy, IMEC is hosting a workshop on QRM, targeted at senior managers. The workshop will be held this fall in Bloomington, Ill., on September 13, 2012.
Managers that attend the workshops and express an interest in pursuing QRM can also approach IMEC for assistance in implementing the strategy. IMEC’s manufacturing experts have already begun investing in training on QRM techniques and tools, in order to effectively support Illinois manufacturers in implementing this powerful competitive strategy.
For more information about the upcoming workshop, visit www.imec.org/events.cfm. Or for additional information on QRM and Dr. Suri’s latest book you can visit his website at www.rajansuri.com. Dr. Suri’s web site also has a short video with presidents of three Midwest companies describing the amazing results they have achieved through QRM.