Measure & Reward Lead Time Reduction

The traditional belief is that great importance must be placed on "on-time" delivery performance by every department in a company along with its suppliers.

QRM Principle #4

Stick to measuring and rewarding reduction of lead times.

Although on-time performance is desirable as an outcome, emphasizing it as a performance measure is not the best way to do so. Internal departments and external suppliers have a tendency to pad quoted lead times and, consequently, their on-time deliveries look good. As a result, the Response Time Spiral (RTS) encompasses the organization. For example, if a customer order for 1,000 parts needs to be machined before it is sent for painting or anodizing, the machining department must have sufficient capacity to perform the machining for the 1,000 pieces.

This is done by specifying a lead time that allows for the order to "get into the queue" in the machining department. When all the parts arrive, time will need to be allotted for machine set up and machining time. Typically, a given order goes through a number of departments, each with its own need for sufficient lead time, with a resulting long total lead time for the order. QRM implementation along with organizational changes and new performance measures promotes shorter lead times. Shorter lead times eradicate the response time spiral, delivery problems disappear and on-time performance is achieved.

QRM-Not Just Another Buzzword, But A Way Of Life.

AEC reduced value added lead times by 41%

Response Time Spiral (RTS) Promoters

Provided are five examples of traditional policies that promote the Response Time Spiral:

1. Always manufacture a minimum quantity for each order
2. Build ahead to save on future setups
3. Making components to forecast
4. Building ahead to keep machines and people busy
5. Making to customer's forecast

Each of these examples exhaust critical resources in anticipation of future needs, instead of quickly responding to a customer's immediate production requirement.