Five Reasons Why QRM is Going to Change Dutch Industry
by David Kemps, Banker - Industry Sector, ABN-AMRO Bank, the Netherlands.
English translation of the “Insights” column, May 2015, on the ABN-AMRO Bank website.
Nearly 20 years ago Prof. Dr. Rajan Suri published his first book on Quick Response Manufacturing (QRM). In 2015, this process improvement method is in the limelight through its resounding results. Now that foreign competition is getting stronger and pressure on costs remains high, many industrialists are trying to adapt their organizations to the “low-volume, high-mix” customer requirements. However, production processes are currently tuned for optimum efficiency, while the customer requires customization and flexibility. These goals appear to conflict with each other, but in fact, QRM can increase the effectiveness of production in this low-volume high-mix environment, and thus improve customer satisfaction.
These are my five reasons why QRM will change Dutch industry:
1. QRM Provides Competitive Advantage
In his books, Quick Response Manufacturing (1998) and It’s About Time (2010), Professor Suri describes how companies can reduce their lead times. His theory is that reducing the total lead time from ordering to delivery results in a lower cost structure and thus makes companies more competitive. QRM companies have reduced their lead times by an average of 80 percent. Because of this they have reduced their costs by an average of 25 percent. The improvements also lower the working capital needs and provide a financial buffer (and thus future-proofing) of the entrepreneur. QRM makes the relocation of production to low-wage countries unnecessary – indeed, it even ensures that companies can bring their production back to the Netherlands.
2. QRM is Designed for Customized Products
The well-known process improvement methodology of “Lean Manufacturing” is derived from the Toyota Production System. This method was designed by the Japanese to streamline high-volume and repetitive manufacturing. However, consumers want more choice and customization. Industrial entrepreneurs see declining order sizes and increasing variety. They must respond with more flexibility and customized production while still maintaining low cost. Therefore, low-volume, high-mix production is the mantra for the coming years. QRM uses some elements of Lean, but is further tailored especially for customized production. Not all of the processes, for example, should be standardized, such as in Lean. QRM’s ability to allow for variability in the processes provides the much needed speed and adaptability. Also, in QRM the goal of reducing lead times provides the exclusive focus. Insights, ABN‐AMRO Bank, Article on QRM
3. QRM Makes for Satisfied Customers and Employees
It is expensive for enterprises to hold stocks – for customized products this is even impossible. This creates a gap between the customer desire and ability of the manufacturer. The result is an unsatisfied customer and a frustrated production process. This is exactly the “burning platform” that Professor Suri writes about in his latest book. You need to have this drama in order to successfully drive QRM implementation. Smart factories, intelligent robots and 3D printing will eventually provide customization and rapid local production. For now QRM will ensure customer satisfaction through fast delivery and high flexibility, but also by improving coordination. QRM calls for more interplay between manufacturer and customer. This requires increased attention and communication with the customer, but also leads to higher customer satisfaction. QRM also makes for happy employees. Cross-training and flexible personnel are a prerequisite for implementing QRM successfully. Additional training and collaboration with employees in customer teams provides an above average commitment and responsibility. QRM therefore contributes to sustainable employability and higher job satisfaction of employees.
4. QRM Looks Beyond the Factory Floor
The ultimate goal of QRM is the entire chain – from order to delivery – thus making “fast” possible. In the factory, but also at the office. A slow quotation process – or a long production time – both have the same result for customers, namely waiting. Fireplace manufacturer Interfocos found that 85 percent of the errors in the plant were caused by misinformation from the office. Also, cooperation is increasing within industry. The supplier takes care of the customer more and more, but this also creates a growing interdependence. Lead time reduction and successful QRM implementation is only possible by involving the entire supply chain. It is precisely this cooperation that makes for higher loyalty and new opportunities.
5. QRM has Proven Successful in Small Manufacturing Enterprises (SMEs)
Shorter lead time is important not only for multinationals but even more so for SMEs. Enthusiastic advocates for QRM in the Netherlands include, from SMEs, Fried Kaanen – owner of Bosch Hinges and president of the Royal Metal Union – and Thomas Luiten, director of operations at Interfocos and partner at the QRM Management Center. They both make a lot of public presentations on the practice of QRM. Luiten states that it is precisely at small and medium businesses with small batches and a wide product variety, that the potential for improvement with QRM is great.* In addition to Bosch Hinges and Interfocos, SMEs that have embraced QRM include the BOZ Group, Hardi, Altop Kunststoftechniek, Hapert Wagenbouw, De Vries Staircases, Heurkens & Van Veluw, Friday Premium Printing and De Haan Special Equipment.
* See the interview with Thomas Luiten in ABN-AMRO Vision for Industry, April 2015
(in Dutch): https://insights.abnamro.nl/het-vergde-moed-om-anders-te-gaan-werken/