“On-the-fly Orders Take Flight on the Web”

Customers log on to your Web site, design their own products and click to order. Electronic gears set the manufacturing process in motion, and the item is custom-made, inspected, packed, shipped and delivered to the customer within a few days.

That scenario may sound futuristic; however, Dell Computer Corp. and some other major players are pulling it off. But can smaller companies engage and benefit from this kind of just-in-time custom manufacturing?

Slow flow to full throttle

Some smaller manufacturers, such as Advanced Circuits Inc. (see sidebar) are getting their feet wet in e-manufacturing by installing Web sites for a front-end version of "make to order." Customers get instant quotes, configure their own designs, track the product as it’s assembled and, in some cases, take delivery within 48 hours.

When those orders are processed manually, the paperwork can take a couple of weeks, which holds up production. Web orders, on the other hand, stream directly to the database, and production can begin within 24 hours — translating into faster deliveries and a competitive edge.

Yet order placement is only the first step in the custom-manufacturing chain. Companies that more closely follow the Dell model of custom production have adopted flow manufacturing (also known as demand-pull or lean manufacturing). In a flow system, production is scheduled as orders are received.

Flow manufacturing offers some enticing benefits:

  1. It enables companies to build defect-free custom products with little or no lead time.
  2. It allows companies to operate with little or no inventories. According to Computerworld magazine, companies using flow strategies save at least 50% on inventory costs, compared to those who don’t.

Yet manufacturers haven’t rushed to embrace the idea. Experts estimate about 15% are trying to, but fewer than 5% are practicing full flow manufacturing. In fact, some experts say that the number of manufacturers following a full demand-based flow strategy may be closer to 2%.

Low adoption can be chalked up to several factors. For one thing, flow production is expensive to implement and usually involves a company-wide makeover: Assembly lines often must be able to build multiple products and switch quickly back and forth. Workers must be retrained. Manufacturers may have to redesign product. Another barrier: Until recently the manufacturing software industry has provided few tools.

But that’s starting to change. Manufacturing-software vendors and enterprise resource planning (ERP) companies have been adding flow-specific features to their systems. Vendors now playing in the arena include J.D. Edwards, American Software, PeopleSoft, Oracle, Cincom Systems and Factory Logic Software.

Among manufacturers taking advantage of these new tools is Boathouse Sports Ltd., a Philadelphia-based apparel manufacturer with annual revenues exceeding $18 million.

Boathouse Sports switched to flow production in 1997, but the resulting 300% increase in sales volume quickly proved too much for the company’s manual flow system to handle. In 1999 CEO John Strotbeck leased Streamline, Factory Logic’s e-manufacturing software. Streamline integrates the factory floor into a real-time system that creates a direct link between suppliers, customers and production. The system has three basic components:

  1. A Web site that allows customers to order and configure a product exactly the way they want it — and then go online at any time to check each step of production.
  2. Integration of the Web site into the factory, scheduling work when orders are placed, which keeps costly inventories to a minimum, and running day-to-day operations to get product to the customer most efficiently.
  3. Integration of the Web site with the supply side. The factory and suppliers communicate in real time via the Internet, ensuring that companies have what they need to produce each order.

Impressive results

"The software has enhanced our ability to handle flow," Strotbeck says. Boathouse, which produces custom corporate outerwear and team apparel, has several processes to contend with: spreading fabric, cutting, embroidery and screen printing. When scheduling was done manually, "we wouldn’t know what the demand was on individual work centers, so we’d have tremendous bottlenecks," explains Strotbeck. "We’d have a big order for the NFL, for instance, that required lots of embroidery. So there’d be a bottleneck with embroidery while the sewing floor would run out of work to do and people sat idle."

But the new software schedules the work so that production is never down; it handles the scheduling and balances the utilization of each center.

Streamline has increased Boathouse Sports’ overall efficiency by 20% to 25%, Strotbeck says. Other benefits include:

  • Improved delivery times. Before implementing Streamline, Boathouse averaged eight to 12 weeks delivery time, while the industry average was eight weeks. Now Boathouse delivers in less than three weeks — and its new goal is 10 days or less.
  • Minimal inventory. Work in process has dropped to about 3.5 days, down from 30 days. Inventory management has virtually been eliminated.

Writer: Kathleen Conroy