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It’s About Time: U.S. Manufacturers CAN Compete

It’s About Time: U.S. Manufacturers CAN Compete


Everybody knows that time is money, but for
manufacturing companies, time is a lot more money than most managers realize. Companies have used my strategy of quick response
manufacturing to dramatically reduce their lead times and this has enabled them to not
only be more responsive to customers, but it also helped them reduce their costs significantly.
As a result of that, they’re able to compete effectively with companies making products
in countries like China and other low-wage countries. Phoenix is a manufacturer of specialized lighting
equipment. We make lights for the U.S. Navy, for mining equipment–any environment that
has shock, vibration or highly corrosive atmospheres. With QRM, we reduced our lead times by half
to two-thirds across almost all our product lines. That’s allowed us to increase our market
share and keep jobs here in the United States. Rajan Suri’s latest book, “It’s About Time,”
describes the competitive advantage of quick response manufacturing, or QRM. Long lead times add a lot of overhead costs
to a manufacturing enterprise–cost for activities like forecasting, planning, scheduling, rescheduling,
expediting, work in process, finished goods, warehousing, and so on. Labor actually only
accounts for less than 7 percent of a finished product’s selling price, while these overhead
activities account for 50 percent, or more. So this is a huge opportunity for companies
to target. Before QRM, Phoenix Products held weekly scheduling
meetings. After implementing QRM, the meetings aren’t needed. RenewAire is a manufacturer of energy recovery
ventilation systems, which solve indoor air quality problems in the most efficient manner.
We did not believe we could exist in the building and the infrastructure we had. We were jam-packed
full of work in process and inventory and felt we were to the limit. Quick response
manufacturing actually allowed us to stay in the same facility for three more years
while we grew 50 percent. Traditional cost-based approaches focus on
reducing the labor time, but actually, labor only accounts for 5 percent or less of the
time that a product spends in a company. QRM focuses on reducing the lead times through
the entire supply chain. QRM does this through four core principles,
explained in Suri’s new book: highlighting the power of time, creating the right organizational
structure, exploiting system dynamics for better decisions, and building an enterprise-wide
strategy. Lean manufacturing methods were designed for
higher-volume production. To compete with overseas production, we need to make a high
variety of products and offer them to customers with very short lead times, and QRM is designed
precisely for such situations. We implemented QRM as our continuous improvement
tool a number of years ago. Since our QRM journey started, we’ve seen significant reduction
in lead times, reduction in our inventory levels, and a much higher level of service
to our customers. As we look at the recent recession, 50 percent of our competitors filed
bankruptcy. During that same time, we’ve increased market share and have grown. We’ve added customers
and I believe QRM is the reason why. The worst economic year in 50 years for the
U.S. was 2009. Even our green industry shrank by 20 percent. But over that time, RenewAire
was actually able to grow 13 percent. It’s about time for you to learn how you can
compete with factories throughout the world!

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