Becoming the right business for the customer
CHALLENGE: Optimize processes
SOLUTION: Quick-response manufacturing and EnterpriseIQ from IQMS
COMPANY: Nicolet Plastics
FACILITIES: Mountain, Wisconsin
OPERATION: Manufacturer of low-volume, custom parts and components
Nicolet Plastics is a manufacturer of parts and components serving a wide array of customers, from disposable packaging to high-end medical parts. The business specializes in low-to-moderate-volume, complex, custom parts in a wide variety of materials.
Recently, company leaders recognized that multinational firms were increasingly moving high-volume, minimally complex, molded business offshore to avoid rising costs at home. However, low-to-moderate-volume business was staying, as companies were unable to take advantage of the offshore workforce.
In this environment, focusing on long-run production optimization offered an opportunity. To remain ahead, leaders at Nicolet Plastics decided to exploit the company’s strengths in complex manufacturing and began looking at philosophies that supported the needs of short-run, complex-part customers.
Executives soon discovered quick-response manufacturing (QRM), developed at the University of Wisconsin by founding director Rajan Suri. It is defined as the relentless pursuit of lead time reduction in all aspects of a company’s operation.
To aid in its initiative, Nicolet Plastics turned to EnterpriseIQ from IQMS, an enterprise resources planning (ERP) software system designed for flexibility, depth, accessible user-defined fields and forms, process and workflow design, and database integrity.
Nicolet Plastics began the project by addressing its workforce and creating more flexibility by changing the way it looked at production staffing. A skills matrix helped identify gaps between the target and actual skills mixes. This led to more crossover in employee duties. A credentialing program was also established to reward workers for gaining new abilities.
Another QRM initiative was to move away from standard cost accounting practices, thinking in terms of time rather than overhead absorption. This move was enabled by the RealTime Process Monitoring module of the EnterpriseIQ ERP system, as well as detailed exception reporting.
Reducing batch sizes also was a priority. The company typically handles as many as 100 mold changes per week due to the nature of its customer base. One QRM practice is to segment time by sharing resources with competing target market segments. Long jobs are scheduled to run unattended during weekends, preventing shorter jobs from becoming backlogged or delayed. If the ERP system detects a problem with an unattended swim lane, the EnterpriseIQ’s business activity monitoring module generates an automated message to the on-call press technician.
Nicolet Plastics increased its responsiveness, giving its customers what they want when they want it—while lowering inventories and improving cash flow. In addition, the business achieved
reduction of finished-goods inventory from a high of $500,000 to an average of $200,000 while doubling total sales
- increased finished goods inventory turns from 11 to 25
- reduced lead time by seven days
- reduced scrap hours by 45 percent in the first year
- improved working capital position
- improved velocity, profit margins, cash flow, and revenue.
“Our focus on time has been a game-changer,” says Bob Macintosh, president and CEO of Nicolet Plastics. “When you deliver the results, customers respond positively.”