QRM: A Companywide Strategy to Reduce Lead Times, Particularly for Low-Volume, High-Variety and Custom-Engineered Products

While everyone knows that "time is money", for manufacturing enterprises Time is a Lot More Money than most managers realize!

To take advantage of this fact, I developed Quick Response Manufacturing, a companywide strategy for reducing lead times. QRM reduces both external and internal lead times throughout an organization. Reducing external lead times means rapidly designing and manufacturing products for specific customer needs. The internal aspect focuses on reducing lead times for all tasks within the enterprise, such as the time to approve an engineering change or the time to issue a purchase order to a supplier. Reducing these lead times results not only in quick response, but also in improved quality and lower cost. Using QRM, companies with high-variety and custom products have reduced their lead times by 80-90%.

The lead time and cost reductions from QRM have also enabled companies to compete effectively against low-wage countries. (See Business Journal article.)

What about Lean?

Although Lean Manufacturing techniques are popular today, the key Lean tools are derived from the Toyota Production System and work best for higher-volume production. In fact, core techniques in Lean such as Takt Time, Standard Work, Level Scheduling and Kanban are designed to eliminate variability, and these techniques break down in the face of high variability, low-volume or custom production.

QRM is designed from the ground up for companies making low-volume and custom-engineered products. In QRM you still eliminate dysfunctional variability (caused by errors and poor systems -- e.g. rework, machine breakdowns, or constantly changing priorities). However, you do not eliminate strategic variability (introduced by a company to maintain its competitive edge -- e.g.offering numerous product options or individually customized products). Instead, in QRM you exploit strategic variability to gain competitive advantage. QRM enables you to do this through four core concepts (see sidebar on the right).

Want more details?
Here are Ten Points on how QRM goes beyond Lean...

QRM is your company's future!
In today's world we are seeing growing demand for more product options and individually customized products. Thus QRM strategy is going to be increasingly important for competitiveness in the future.

Four Core Concepts

QRM strategy is based on four core concepts:

1. Realizing the Power of Time. Lead time is much more important than most managers realize. Long lead times create many organizational costs -- much more than just WIP and Finished Goods! Such costs are four to five times labor costs. Shrinking these costs is a much bigger opportunity than reducing labor.
2. Rethinking Organization Structure. QRM transforms traditional functional departments into an organization consisting of "QRM Cells." Although the cell concept has been known for some time, QRM Cells are more flexible, more holistic, and apply outside the shop floor too.
3. Exploiting System Dynamics. By getting managers to understand how capacity, batch sizes and other factors impact lead times, QRM enables them to make improved decisions that result in shorter lead times.
4. Implementing a Unified Strategy Enterprise-wide. QRM is not just a shop floor approach, it is applied throughout the enterprise. This includes material planning and control, purchasing and supply chain, quoting, order processing and new product development. QRM provides a single, unifying approach for the entire enterprise.

A key building block of QRM is a precise way of defining lead time. This QRM metric is called Manufacturing Critical-path Time or MCT.

For more details on all these points, see my latest book on QRM.