Use case: TJiTLE


Total Just-in-Time: Lean in ETO companies

Note: ETO = Engineering To Order

Organizations involved

University of Parma + 3 different manufacturing companies

Objectives obtained

The main objective of the project is to use lean principles to redesign the production planning approach (from order receiving to order delivering) and to boost operating performance, with the goal to:

  • reduce total throughput time
  • reduce durations’ variability
  • make quotations (both in terms of costs and time) more reliable
  • synchronizes the activities of the shop floor with that of the design department

The challenge

The three organizations that will benefit from the services offered by the HUB can be classified as Engineering To Order (ETO) Indeed, they are complex pull-type manufacturing systems in which:

  • products are made on customer specifications,
  • the quantity to produce per product specification is one or only a few,
  • the total throughput time is long (months if not even years) and
  • variability is high.

More specifically, due to the lack of repeatability, to customers made products and to the need of insightful product know-how all these companies suffer of a very low degree of standardization, high variability and low performance predictability.

So, all three companies are experiencing severe difficulties in making reliable quotations for new orders, both in terms of cost of times. Not only estimating new orders profitability is hard, but also planning work avoiding delays and respecting due dates is challenging. In this scenario, an appropriate management of both materials and information, coupled with an effective synchronization of all scheduled activities, are vital issues of operational excellence.

To tackle these problems, the application of lean principles may be a promising solution. As known, relatively to the Make-To-Stock (MTS) sector, lean benefits are unquestionable, as lean has proven to be a powerful weapon to get rid of waste and to boost productive performance.  Although not trivial, implementing lean in MTS companies cannot be said to be challenging, since lean principle are well known, many “off the shelf” operative tools have been developed and many Consulting Societies can be easily found on the market place.

Conversely, the situation is totally subverted in case of ETO companies, because the distinctive features of these companies are poorly aligned with standard lean requirements, which require stable volumes, repetitive products, short flow shop throughput times, linear routings and limited variability. Lean methodologies and tools dedicated to this kind of manufacturing systems are rare, and technical competencies for this niche segments are hard to be found.

This does not mean that lean principles cannot be fruitfully applied in the ETO contexts too. At a high level, lean principles remain valid, but the lean toolkit (i.e., a set of tools and techniques needed to deploy lean at the shop-floor level) must be rethought. Indeed, standard lean techniques have a common structural limit when applied to ETO contexts: they have a positive impact only at the departmental level, but they cannot improve the performance of the whole system. This is because the greatest losses of ETO systems are due to a lack of visibility and of synchronization among the different departments that are involved in order processing.  Evidently, this effect is even stronger in long-cycle ETO companies where WIP control techniques, as far as feasible, are to be considered of secondary importance.

The solution

Owing to what mentioned above, the main objective of the project is to use lean principles to redesign the production planning approach (from order receiving to order delivering) and to boost operating performance, with the goal to:

  • Reduce total throughput time
  • Reduce durations’ variability
  • Make quotations (both in terms of costs and time) more reliable
  • Synchronizes the activities of the shop floor with that of the design department

To this aim, the aim of the project is to develop a holistic theory for the implementation of lean principles in ETO companies and, next, to build all the necessary tools for its deployment at the industrial level. It is important to note that, at present, all the tools for lean implementation are based, mainly, on paper/manual-based approaches or, rarely, on “ad-hoc in-house made” IT solutions that are non-integrated and, generally, non-global. Hence, as a secondary objective, we will strive to make lean a paperless paradigm by taking advantage of all IT solutions and Auto-ID technologies that are currently available. In this regard, the project will lay the foundations for the development of a novel – conceptually new – information system, widespread and pervasive, based on all the theory and all the implementation tolls designed during the project.

The main issues that will be covered are listed below:

  1. Create a new – lean based – framework for a detailed synchronization of both physical and information flows, which encourages the decentralization of management/control of production activities. We will call this methodological framework as Total Just In Time (TJIA);
  2. Identify, through tests performed in labs and/or in real environments, the smart technologies that could enable the development of an information system based on the TJIA theory;
  3. Use the identified smart technologies to convert the JIA theory in an IT based (i.e., paperless) lean-oriented toolkit, purposely designed to allow employees to reactively and proactively manage both production planning and control. Solutions belonging to the toolkit should be able to collect (e.g. adopting Auto-Id technologies), process and manage all significant events that can occur on the shop floor (both expected, as productive or logistic task completion – and unexpected, as a machine failure). To this aim, they will be based on an event-driven approach, so as to communicate, in real time and to all the stakeholders, the information on the status of Work In Process (at every department), as well as all other data needed to anticipate/solve potential problems. Lastly, to further increase processes’ visibility, the tools should also generate key performance indicators and other specific information, conceivably in the form of a centralized control dashboard for the Project Manager, and in the form of a visual planning dashboard for the Supervisor;
  4. Integrate the above-mentioned toolkit with the information systems of the companies (i.e., Enterprise Resource Planning, Manufacturing Executing systems and Product Data Management). This will make it possible to transform lean in a paperless approach.

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