Compressing lead times in a plant laboratory

The Australian manufacturing group of a global lubricants company produces high volume lubricant products, conforming to strict ISO, SAE and API guidelines, in a 24 x 5 manufacturing environment. Distribution is to customers across Australia and South-East Asia. The local operation experienced significant growth in demand volume due to aggressive promotional marketing in niche market segments.

As a result, business processes, testing equipment, infrastructure and staffing resources across the laboratory division were placed under significant pressure. The situation was compounded by an organizational shift to lean manufacturing, causing production lot sizes to decrease, and testing frequency requirements to increase, thus further straining existing business processes and resources. Other stressors included increasing complexity of export customs compliance requirements and the need to transfer additional product testing functions into the laboratory unit. Customer satisfaction and business results were also impacted.

Conduct an independent review of the testing processes within the Laboratory Unit and the cross-functional linkages between the manufacturing and laboratory divisions, to:

• Identify actions to compress laboratory testing lead time, and ensure order-to-delivery lead time improvement in a highly competitive market
• Identify laboratory resourcing and skills requirements to ensure acceptable and sustainable staff workload levels

1. Identification of 'compliance critical' laboratory testing processes.
2. Information gathering and KPI analysis to understand 'current state performance
3. Verification of 'current-state' laboratory processes to reveal 'hot spots', bottlenecks/constraints, KPI gaps and assess opportunities for improvement.
4. Identification of non-value adding demand coming into the Laboratory Unit, diverting resources from 'compliance critical' Laboratory activities
5. Use Smartmapping© to map 'current state' laboratory testing processes, and cross functional 'touch points' with the manufacturing unit.
6. Identification of non-value laboratory process steps
7. Root-cause identification of major causes of Lab delays, rework and expediting.
8. Development of tangible action steps to address sub-optimal processes.
9. Analysis of current jobs to assess elements contributing to satisfaction and elements that contribute stress and dissatisfaction.
10. Redesign organisation structure and identify required skills set.
11. 90 day (post implementation) follow-up to evaluate impact on order-to-delivery performance in relation to forecasting, order management, capacity planning, information visibility and accuracy.

• Development of new laboratory testing procedures, whereby batch samples were taken at different points in the manufacturing process, in order to:

• Smooth out peak demand spikes in the Laboratory Unit
• Reduce workload levels on limited laboratory resources
• Reduce testing error rate
• Contribute to reduction in testing cycle time (turnaround time).

• Integration of Laboratory Unit into the Manufacturing ERP system, in order to provide visibility of upcoming manufacturing requirements and provide automated notice to Manufacturing of sample results, further compressing testing cycle time.
• Project findings used in a business case to support a cost/benefit analysis for the purchase of updated laboratory testing equipment, in order to automate highly labour intensive testing procedures performed multiple times per day. This enabled laboratory resources to be redeployed to focus on the development of test procedures for other business requirements such as recent business acquisitions.

• Testing cycle time (turnaround time) reduced by 67%.
• First-Time Right (FTR) test result increased by 47%.
• Overall time to market (order-to-delivery) for make-to-order products reduced from 4 weeks to 1½ weeks.
• Overall time to market for make-to-stock products reduced from 1½ weeks to 2 days.
• Releasing 'tied up' resources from within the Laboratory Unit enabled the identification of incoming raw material defects in 'real time' at the point of receipt, thereby resulting in US$270,000 cost-of-goods returned to suppliers (in a 6 month period), ensuring defect raw materials did not enter the manufacturing process.