Kathy Pelto, CPIM, CPM, and Bob Mueller | May/June 2012 | 22 | 3
Using POLCA signals for better material flow
Editor’s note: The March/April 2012 issue of APICS magazine featured the article “Send the Right Signals” by Rajan Suri, which described the methodology of POLCA (paired-call overlapping loops of cards), an alternative to kanban, for improving material flow. Here, authors Kathy Pelto and Bob Mueller detail how they applied POLCA at P&H Mining Equipment, the challenges, the results, and the lessons they learned along the way.
P&H Mining in Milwaukee, Wisconsin, is a leading manufacturer of hard-rock mining equipment. Any part ever sold at P&H is manufactured by the company. The P&H machine shop is an incredible place. In sprawling 100-year-old buildings, you will find modern equipment turning 20-foot-long shafts, machines cutting gears from forged steel blanks 15 feet in diameter, and 3,000-pound rollers spun in pots of molten salt at 1600 degrees Fahrenheit.
With bills of material containing more than 10,000 lines and a business with a 125-year history, employees face huge planning and manufacturing challenges. P&H leaders embrace lean philosophies and believe in the benefits of visual systems, but the organization was still having trouble managing
- the need to manufacture low-volume parts or parts with high variability
- a complex manufacturing process that requires multiple cells or facilities to produce different parts
- bottlenecks or capacity constraints that change with product mix.
In short, it is an incredibly difficult factory to schedule. In any given year, P&H manufactures 5,700 different stockkeeping units (SKUs), more than 34 percent of which were not made in the previous year. This, coupled with the fact that its customers require ever-shorter lead times, makes it quite easy to understand why P&H needed a company-wide strategy for lead time reduction that would be suited to low-volume and custom production.
Kaizen events, five-whys analysis, and the five Ss are common activities at P&H. While there is no question that the P&H operations team supports these lean philosophies, this seasoned group of operations professionals realized that some techniques, such as kanban, were better designed to work in highly repetitive conditions. With the type of product demand at P&H, traditional kanban would significantly increase work in process (WIP) and would not be practical with such low demand and lot sizes (typically between one and four).
In addition, demand for certain parts is erratic. It can be months or sometimes years between orders for specific parts. Kanban is simply not feasible for parts that weigh thousands of pounds, cost tens of thousands of dollars, and have raw material lead times that can extend to more than six months. Kanban storage requirements alone would tie up tremendous amounts of critical manufacturing space, and that’s waste.
Advancing the system
The P&H operations team chose to implement quick-response manufacturing (QRM) in 2005 as an enterprise-wide philosophy to help the company meet the rapidly increasing demand for its electric mining shovels. Working with the University of Wisconsin’s Center for QRM, P&H went from operations that were almost exclusively traditional (functional areas for turning, milling, drilling, and gear cutting) to QRM cells. These cells use the QRM philosophies of reduced lead times and flexible manufacturing to improve processes.
The first cells were implemented in manufacturing to produce the heavy-duty gears and shafts needed for the mining shovels. P&H organized the parts into families and established groupings of machine tools to manufacture the parts efficiently. As the specialized manufacturing equipment is very expensive, it was impractical to purchase all that was required to complete the parts in each cell. So the operations team set up flexible manufacturing cells following QRM principles with names such as “small shafting,” “medium shafting,” “small-gear roughing,” and “gear finishing.”
Most parts follow a basic manufacturing process that is much like this: rough the part, heat-treat the part, finish the part. Typically they go through three or four cells (and sometimes other stand-alone processes). The QRM cells normally are comprised of three-to-four machines that are run by two operators each shift.
In 2007, the QRM cells were up and running. The next challenge was to increase flow and reduce inventory, all while supporting reduced lead times. The P&H team decided to implement POLCA, a visual card system used to signal when a downstream cell has capacity and can take on work. Unlike kanban, POLCA is not part-specific. Any part being made in one cell and requiring capacity from the next cell needs a signal card to indicate that capacity is available. The downstream cell retains the POLCA cards until it completes the order, at which point it sends the card back to the originating cell, indicating it has capacity available. If the originating cell does not have POLCA cards available for the downstream cell, the downstream cell has no capacity available to take on more work, and no more work should be sent there until the capacity is freed up. This would be signaled by cards returning to the originating cell. Instead, the originating cell should work on parts that are destined for other downstream cells that have capacity available (indicated by POLCA cards being available for those cells).
There is a significant difference between kanban and POLCA. Kanban is an inventory signal. When a quantity of parts is used up, it tells the previous operation to restock that inventory. On the other hand, POLCA is a capacity signal. Returning POLCA cards signify that capacity is available at downstream cells. (At P&H, SAP’s material requirements planning system is used to plan at the high level, while POLCA is used for execution on the manufacturing floor.)
Once the P&H operations team decided to use POLCA, they worked with professors Rajan Suri and Ananth Krishnamurthy and their students at the Center for QRM to determine the number of POLCA loops and cards. The P&H POLCA implementation was big one, with 44 loops and 845 cards. It took the team almost a week to get all of the cards added to the shop floor packets. In addition, because P&H had never used a visual card signal system before, the team was concerned that some of the cards would not make it through the production process without getting lost. To plan for this possibility, P&H assigned POLCA champions who helped direct the implementation and monitor the system.
Cultural change was a barrier that P&H had to overcome. The shop floor people were not eagerly awaiting the POLCA implementation. P&H had a classic manufacturing environment of “keep the spindles turning.” It made no sense to the workforce to alter production plans in one department based on problems in downstream departments. Most of the workforce thought management was “losing its mind” when they found out that, if they did not have cards, they could not run their machines. They had difficulty seeing the logic of not running a part in their department if they had material and capacity.
Slowly, the P&H mind-set changed and people began to understand what was happening at downstream cells and throughout the whole manufacturing process. The focus became the strategic use of capacity. Now, when P&H cells run out of cards for specific loops, the workers only need to choose a different part in the production schedule to run—a part that has POLCA cards for a different destination cell. In this way, the originating cell can stay productive. They simply have to change to another part that is going to a cell that has capacity.
Paul Diedrick, POLCA co-champion, says his largest “aha moment” with POLCA was how it connected the cells to keep parts moving, thus reducing WIP and lead times. This was true, for example, with parts from the roller cell that were traveling to the heat-treat cell. POLCA cards kept the workers connected to one another and helped them understand the need to get the cards back before they could run more parts. “The POLCA visual signal identified deficiencies in processes immediately, so that we didn’t lose time in the manufacturing process,” Diedrick explains. “We found several process improvement ideas to make in our heat-treat building that became visible because of the lack of POLCA cards returning to the machine shop cells. The reduction in WIP was nothing short of amazing. With POLCA, once we started parts, we knew that we had the capacity to complete them and that we were working on the correct parts.”
It’s important to know how to react to low or about-to-run-out POLCA cards. The first instinct is to ask the POLCA champion for more cards. However, the better course of action is to investigate why the shortage exists. Inevitably, the real problem is at a downstream cell that needs attention. Working to solve issues at downstream cells is most beneficial.
Margret Koshere, CPIM, POLCA co-champion, says, “POLCA highlights our ever-changing capacity constraints and identifies down equipment, workers not available, and process changes. As bottlenecks in the business change, POLCA helps us to respond very quickly on the execution and decision side.”
Since the initiative began, P&H has implemented 11 cells. Today, operations performance is significantly improved and lead times for cell parts are down 75 to 80 percent. The company also saw WIP decrease by more than $3 million and output of critical gearing components increase by 253 percent.
One of the key success factors has been the ongoing system audits. “Audit, audit, audit,” is Diedrick’s advice. “Control your POLCA cards and monitor them, so, as business conditions change, the factory responds accordingly.”
Low-volume and high-variability businesses such as P&H provide one of the most challenging environments for production scheduling and planning. POLCA has proven to be a successful tool in helping to manage these challenges. The lead time improvements that P&H achieved after employing QRM cells continue to advance at a fast pace. Other factory metrics such as on-time delivery, WIP, and quality also improved—as did communication among cells. P&H credits using QRM philosophies and POLCA as major drivers in achieving these results.
Kathy Pelto, CPIM, CPM, is project manager at P&H Mining Equipment. She may be contacted at email@example.com.
Bob Mueller is factory manager at P&H Mining Equipment. He may be contacted at firstname.lastname@example.org.