Reducing Lead Times for a Power Gen Industry Supplier

Reducing Lead Times for a Power Gen Industry Supplier

Daniel Penn Associates recently helped a leading supplier to the power generation industry reduce lead times for their inspection and procurement processes.

While the company is respected for its repair of heavy equipment to the power generation industry, its leadership knew that to compete on quality, cost and delivery measures with all customers, they had to continue to reduce lead times.

The company needed to cut in half the time it took to dismantle the equipment, inspect and disposition parts, and send high-value parts out for repair or reconditioning. It also needed to reduce by 50% the time it took to receive the reconditioned parts and return them to clients’ equipment for installation.

DPA worked with the company and its internal kaizen team to identify and improve the dispositioning, procurement and shipping/receiving functions of the value stream. While cycle times were not excessive, the team discovered wasted activities and unnecessary queues at each workstation. New ways of standardizing workflow were required to reduce waste and ease the company’s transition to a new enterprise resource planning (ERP) system.

Kaizen meeting to reduce lead timesThe cross-functional kaizen team trained and worked with included inspectors, buyers, a customer support representative, and a shipping supervisor. They used a value stream mapping (VSM) technique to identify the tasks used in getting parts out to service vendors. The VSM helped identify backlogs of inspection reports, purchase orders and packing slips. Ideas were generated through brainstorming to tackle the mounds of paperwork and computer-based queues. The team divided up to measure how parts traveled to and from the facility and how paperwork was managed. They met informally throughout the facility to discuss their progress.

It became clear that the physical space required for parts and separation of the process owners across the plant also affected communication and effective workflow. To yield significant results, the team proposed changes in paperwork flow practices, a relocation of receiving inspection, a formal arrangement of parts and paperwork queues, and the co-location of inspection supervision with purchasing. The team also examined the process at a task level, taking a ‘first pass’ at the current workflow and identifying anticipated improvements in the new ERP.

The team re-arranged parts in the inspection areas so that a clearer view of part status was available. Other business practices will be evaluated for impact on the procurement process. It is expected some of these practices will no longer be necessary and will further reduce lead time.

The improvements recommended by DPA and the kaizen team will enable the company to realize a 50% reduction in procurement lead time and a 25% increase in purchase orders processing. Other improvements will benefit the customer support function by improving communication with customers. The reports will be generated as part of the system function in the new ERP.

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