MEDICAL EQUIPMENT MANUFACTURER
DESCRIPTION:
A recognized worldwide manufacturer of superior medical products was unhappy with the handling of special orders. Before making a move, the company wanted to confirm that revenue from special-order customers was great enough to justify the effort. Forty-three different locations were involved in filling such orders, therefore any new initiative would involve analyzing multiple processes and systems.
PROBLEM STATEMENT:
Special orders are creating headaches for production, and delivery delays are rampant. Is turning away special orders the best recourse?
PROJECT SYNOPSIS:
Of the 700 special orders annually processed by the company, most were generated by a small number of customers for a small number of products. Eliminating special orders was ruled out as an option. Too many of them came from major customers and the revenue was substantial. Moreover, during a two-month study, every special order was delivered late. Special orders were stuttering through a 12-step process from order to delivery, a process that slowed production considerably. Special orders could be delivered faster if they were placed in the computerized production and inventory control system. In this case, it was more practical and cost-effective to integrate a new process into existing procedures rather than to create a whole new system.
PROJECT GOAL:
Analysis determined that converting frequent special-order products to standard inventory products would eliminate many of the problems.
PROJECT SAVINGS:
On this project, the number of steps in the special order process was reduced from 12 to 3. Thanks to the integration of special orders in the standard order-entry process, the number of special orders have been reduced from 700 annually, to 200. Interrupted production runs have been reduced by a factor of 500 per year. Special orders that used to take six months are now being filled 85 percent of the time within two days. In a two-year period, the company’s overall quality effort supported 86 teams, which collectively saved more than $5 million.
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