Reducing Time-To-Market through Quick Response Manufacturing

How an international high-tech company achieved an 80% reduction of lead time and discovered unexpected benefits throughout the organization

By QRM Denmark – 22nd of January 2018

Company profile

In 2014, OJ Electronics celebrated their 50-year anniversary as one of the worlds leading manufacturers of electronic control modules for under-floor heating and HVAC modules. The corporate headquarters is located in Sønderborg, Denmark, with R&D, Production and Customer Service in close proximity. OJ Electronics is also represented on the global market with sales and support offices located across the globe.

A new corporate strategy

While celebrating their 50-year anniversary, the company announced a new record, having exceeded 30 million USD in revenue. To promote even further growth, the corporate strategy was modified to encompass the requirements of operating successfully on the modern global market. A stronger position was required and focus was put on further development of already established markets, in order to cement the position as industry leader. As a result, the existing product portfolio was to be expanded through the quicker launch of new products and quicker revisions and updates to already existing products, thereby gaining crucial competitive advantages on the market. (Figure 1)

Odoo image and text block

Figure 1: Not only does a reduction in time-to-market allow faster new product launch, it also allows faster product updates. 

Goals and ambitions

R&D envisioned a one-stop-shop within Production to which they could turn for all prototype needs. This meant Operations had to alter their perspective, from one of a departmentalized view, into one focused on end-to-end processes. 

The choice fell on adopting a Quick Response Manufacturing approach, since QRM focuses on reducing lead time in a high mix / low volume environment and is designed to manage a high level of variation. 

This corresponds perfectly with the conditions surrounding the manufacturing of prototypes. 

This is done through the implementation of independent production cells with designated resources and a high degree of cross-trained employees, as opposed to the high degrees of specialization often seen when operating within a lean context. 

The main tenet of QRM is the reduction of lead time through elimination of time throughout the processes (Figure 2). In this case from product kick-off to delivery of prototype products. 

The initial target was set at a lead time reduction from 15 days to 3 days, requiring a reduction of 80%.

Figure 2  : Traditional optimization techniques such as SMED and 5S focus on touch time. QRM has focus on the total elapsed time from product kick-off to delivery of the prototype. It is this total length of time that was targeted for an 80% reduction.


“Now that the tools are present, I wonder if we can find the courage to use them to a higher degree. To us being too set  in our ways of thought, or imagine a lead time reduction of more than 50%?”

- Allan Ohlsen, Logistics Director, OJ Electronics -

Benefits of QRM

Quick turnaround on prototype production to R&D would enable rapid detection of quality issues, which in turn would reduce the required time and costs associated with New Product Introduction (NPI). 

To achieve this, the QRM strategy defined the Targeted Market Segment (TMS) as prototype manufacturing, with dedicated resources and employees. The cell was to be responsible for every step of the process. From order receipt and project kick-off to prototype delivery, including all administrative processes: shop floor planning, production and testing. Thus, achieving the goal of the one-stop-shop envisioned. 

To drive this mentality home, QRM relies on a single, focused metric for evaluation of the performance in the QRM cell, from which there is positive correlation with traditional metrics such as quality, cost and delivery. 

This metric is known as Manufacturing Critical-path Time (MCT) and represents the total calendar time from order receipt to first delivery. QRM constantly strives to reduce this number to increase operational agility. 

As an added bonus, this single metric is easily understood by employees and eliminates the risk of sub-optimization. This is often encountered when using traditional KPI’s for performance evaluation.

QRM road map

The first step in developing a QRM-cell is to define the Targeted Market Segment (TMS). To ensure the cell will produce items where the lead time is a crucial factor, to enable the cell to make a big business impact. 

Once the TMS is defined, it is further refined into the Focused TMS (FTMS) which is a clear definition of the responsibilities of the cell. 

The TMS was defined solely as prototype production, but analysis of the historical values correlated with the expected increase of prototypes to be developed following the corporate strategy. With the warning of high levels of variance regarding not only frequency of orders and their magnitudes, but also of the individual process times associated with the orders. 

This made sizing of the QRM cell and resource allocation a difficult task, since a large capacity would be required, although only rather seldom. 

The average demand for prototype production was calculated to require one to two team members, but due to the high variance in prototype order arrival, order size and product complexity. A total of four team members were allocated to ensure the cell would be capable of fulfilling the demands in time. 

However, this left the cell with a large and uneven surplus capacity and for that reason the TMS was expanded into the FTMS. In order to cover several items in the high mix / low volume category, which prior to the implementation of the QRM cell had been produced by the Service department and flow lines. 

This meant prioritizing the production of prototypes and filling the lulls in demand with a selected sub-part of sales orders with an adequately low volume, which would otherwise burden the Service department and lean flow lines. 

This not only enabled the cell to maintain a degree of utilization, corresponding to the expected levels of variance, but also allowed the standardized production to flow smoothly, having to adapt to far fewer interruptions from low volume orders. 

To handle this expansion into the FTMS, the cell was dimensioned to four team members at approximately 80% utilization. The 80% utilization was calculated using System Dynamics and included analysis of variance in the arrival of orders, their size and their complexity. (Figure 3


                                                                                                                                                                                                                  Figure 3: QRM argues that the norm of pushing utilization as high as possible has a drastically detrimental effect on flow time and thereby the MCT. As an effect, QRM advocates seeking a level of utilization, calculated on the basis of variance within the FTMS and lead time goals.

The team members dedicated to the cell ensures that the expected peaks in prototype demand can be handled even in the case of dysfunctional variance. 

The remaining 20% capacity is used to absorb variance in demand and dysfunctional variation. Any remaining time is used for cross training team members and constantly improving processes within the cell, driving the MCT ever further down.

“The NPD process used to be too long and was a source of some frustration. Now, with the QRM cell, we have sped up the process significantly and freed resources with major time savings as a result. The improved speed does wonders!”

- Arendt Clausen, Production Technical Manager, OJ Electronics -

Designing the QRM cell

Once the TMS had been expanded into the FTMS, calculations were made based on expected future prototypes and time studies of the flow from kick-off to delivery. Including all administrative processes. 

Brown-paper mapping was used to show which products were expected to go through which processes, in which order and for how long. From this, the required technologies and resources could be determined, along with the human competences required. 

The cell itself was equipped with adequate workstations containing soldering equipment, mounting fixtures and testing equipment. Along with the required IT to enable the cell to be 100% autonomous with regards to both administration, planning, production and test of prototypes. Thus, fulfilling the requirements for a one-stop-shop set forth by R&D and the required 3-day MCT goal. 

The only exception to this was the Circuit Mounting Device (SMD) for the printed circuit boards, which is primarily used by the lean flow lines in the standard production. This issue was solved with the utilization of Time Slicing (TS), which ensures the cell has daily access to the SMD. 

The wave-soldering machine is also external to the cell, but has a very low degree of utilization, so TS was deemed unnecessary. 

Also present in the cell are two very important whiteboards: One for visual shop-floor planning and one for managing continuous improvements and cross training plans. (Picture 1 and 2).

Picture 1: The daily work is planned and distributed among the Team Members and the daily utilization of the cell is calculated and displayed in a visual and intuitive manner.

Picture 2: The whiteboard used for cross training, continuous improvements and to show historical data of the performance of the QRM-cell.   

Practical implementation

Implementation of the cell itself was conducted in three separate phases. 

During the first phase, only three employees were allocated to the cell. 

In order to ensure highly motivated team members in the cell, who were willing to learn the multitude of highly varied tasks, hiring was conducted internally from across the company. Resulting in one employee from Service, one from the SMD and one from the warehouse. 

In this initial phase, focus was on cross training the team members, achieving stability in the production and understanding MCT calculations and their importance. To ensure this was possible, the degree of utilization was set at a low 50%, which was enough to cover production of prototypes, but only a limited number of high mix / low volume items. 

This enabled extended cross training, to allow all members of the cell to complete all processes and functions contained within the FTMS. Including administrative processes and cross departmental communication with R&D, project engineers, Purchasing, PTA, warehouses etc. 

Having such a low degree of utilization allowed all team members to be able to handle both administrative and production processes within weeks. The most difficult task to adjust to turned out to be the responsibility of shop-floor planning and ensuring proper understanding of Bill Of Materials (BOM). 

This first phase lasted approximately 4 months, at the end of which the three team members were fully cross-trained, had gained expertise in shop floor planning and the calculation and interpretation of MCT data. Thus, a steady and consistent pace of production was achieved. 

In the start of the second phase, the fourth team member was assigned and emphasis was put on reducing the MCT through constant focus on improvements. 

In the start of the second phase, the fourth team member was assigned and emphasis was put on reducing the MCT through constant focus on improvements. 

The utilization of the cell was then increased to 80% by adding a number of high mix / low volume items to the FTMS. This was possible due to the initial three members of the cell being fully cross-trained and the 80% utilization still allowed ample time to ensure adequate training of the fourth member, along with continuous improvements. 

During the second phase, the required competences of the team were expanded to also include the capability to adjust the Bill Of Material of prototypes and products as required. Further reducing the burden on other manufacturing support departments. 

The improvements intended for phase three will be selected based on their potential for further reduction of the MCT. At this point, considerations are on whether or not to purchase a small SMD dedicated to the cell, in order to move away from TS on the main SMD also used for standard production, which is the single largest white-time generator left in the process.

“Implementing the QRM cell is the major contributor to our increased performance in introducing new products. We have achieved the 80% reduction we set as goal and we now have the one-stop-shop envisioned.”

- Lone Gloy, Production Manager, OJ Electronics -

“We applied for this position because the notion of combining hands-on work with administrative duties was interesting. We are now fully cross-trained and enjoy the satisfaction of planning our own work and handling the products from A to Z.”

- The QRM Team Members, OJ Electronics -

Daily life in the cell

The cell now operates autonomously without a leader and refers directly to the Production Manager. (Picture 3). 

The members of the cell start each day spending 10 minutes planning the work to be done and discussing the proposed improvements suggested on the whiteboard (Picture 1).

Responsibility for hosting these morning meetings rotate between the team members on a weekly basis. Required preparations include conversion of sales orders to production orders using the ERP-system, making production order cards and placing them on the planning whiteboard. The team member is also responsible for checking the required materials necessary for the day’s production are present and for rough-cut capacity planning to calculate the minimum expected production time for the day. 

Once the meeting has started, the production orders for the day are distributed among the team members and activities relating to cross training and improvements are scheduled. Depending on whether the utilization of the cell is below, at or above the planned 80% utilization, a color-coded marker (green, yellow or red) is displayed to allow management to gauge the state of the cell at a glance.

“I believe many industry leaders are dissatisfied with the speed of processes in their organization. Once you start working with Quick Response Manufacturing, you will see that there finally is a way to handle this.”

- Allan Ohlsen, Logistics Director, OJ Electronics -

Results and benefits

At the time of writing, the cell is in phase two. Having allocated the fourth member, started cross training and having increased the utilization to 80%. 

As a result, the lead times of both prototype production and high mix / low volume items are stable at 3 days. Achieving the required goal of an 80% reduction in lead time even before the project has been completed. 

Likewise, quality has increased since faulty products are detected and either corrected or discarded before further resources are added. As a result, quality associated costs are expected to decrease significantly. 

It should be noted that these results, while impressive on their own, have been achieved even before the added benefit of the upcoming continuous improvements have come into effect. The lead time is therefore expected to decrease even further over time, exceeding the initial target set by management and providing ever-increasing benefits across the organization. 

It is through projects like this that OJ Electronics will continue to distance themselves from their competitors and cement their position as a strong leader on the global market, reaching their corporate growth targets. 

“We support a faster Time-To-Market by having fast and flexible prototype production facilities in Denmark. This has been achieved using Quick Response Manufacturing.”

- Allan Ohlsen, Logistics Director, OJ Electronics –

                                                                                                                                                                                                                         Picture 3: The QRM Team Members each have a dedicated workspace with full access to all required tools: ERP-access, electrical assembly tools and equipment for testing, which enables them to operate autonomously and become the one-stop-shop envisioned.

QRM Denmark assists in achieving corporate visions by designing solutions targeted at shaping the organization to fully support the strategic goals.

This has been achieved in industries such as metals, textiles, electronics and graphics. It has included administrative and manufacturing processes, including areas of high customization.

We have successfully worked with corporations ranging from 20 employees to more than 16.000 in Denmark, Northern Europe and the Baltics.

We strongly believe that any corporation in any industry can benefit significantly from our work and we invite you to challenge us on this statement.