QRM center gives Wisconsin company a bright future

In the early 2000s, Milwaukee-based Phoenix Products was facing a host of challenges, including increasingly slow deliveries to customers, out-of-control inventory and high employee turnover.

“We were constantly expediting projects,” recalls Scott Fredrick, the company’s chief executive officer. “Everything was an emergency, and we weren’t getting anywhere.”

By 2004, the issues had reached a crescendo for the special-purpose-lighting equipment manufacturer. “We had been running overtime every Saturday for a year and a half,” Fredrick says. “We had to do something.”

An article in the Business Journal of Milwaukee by Rajan Suri, a UW–Madison professor emeritus of industrial and systems engineering, introduced Fredrick to what that something would be. Fredrick attended a seminar hosted by the UW–Madison Center for Quick Response Manufacturing (QRM), founded by Suri and currently directed by Ananth Krishnamurthy, an associate professor of industrial and systems engineering.

Five years and a series of joint projects later, Phoenix and the QRM center have established an ongoing partnership with significant results. Phoenix has cut the time needed to produce one particular lighting system from as many as 14 days to three days, and the sales lead time for industrial floodlights has been cut by 50 percent. Overall, the company has cut overtime costs by 75 percent, and has witnessed a 46 percent increase in inventory turns and a 27 percent increase in revenue-per-plant hours.

The partnership began in 2005, when graduate students from the QRM center worked with Phoenix to evaluate the company’s fabrication processes. Conventional strategies call for producing parts in big batches because an operator only has to set up a machine once to produce thousands of parts.

“But if you only need 200 parts, the extras have to be stored, and can be lost or damaged,” says Fredrick. “Further, the time spent on the extra 800 parts should rather be spent on parts customers actually want now.”

QRM principles advise producing only the 200 needed parts and then sending the parts to assembly, shaving significant calendar time off the total time needed to manufacture the product. “The direct cost, which is easily measured, definitely goes up by only producing the number of parts you need, but the indirect benefits come by making timely deliveries and winning more business because of it,” says Fredrick.

After the successful fabrication project, Phoenix and the QRM center partnered again in 2006 to study assembly processes, resulting in major workforce rearrangements. With QRM, Phoenix grouped employees into larger, more stable cells that oversaw a product through the entire assembly process.

“People became a team with a sense of ownership over the product, and this was a huge change in psychology,” says Fredrick. “Absenteeism decreased, and we have much less turnover.”

Phoenix and the QRM center continued to work together, studying the company’s material-handling and storage strategies in 2007. In 2010, the partnership began a new project to eliminate work stoppages in all areas of the company. QRM students have recommended workflow solutions that could reduce almost 90 percent of all stoppages, saving Phoenix as much as four to five hours of lost labor every day.

“QRM was counterintuitive in a lot of ways,” says Fredrick, “but traditional approaches were making things worse because those approaches didn’t address the root causes of what was out of balance.”

The successful student projects have turned Fredrick into a strong advocate for QRM. He is a member of the QRM Center Industry Executive Committee and presented Phoenix’s experiences at the 2009 International Conference on QRM.

“If I can help promote QRM in any way, I will. This is great for UW–Madison, and great for Wisconsin,” he says.

Overall, Krishnamurthy says the partnership is a win-win. “Our industry partners help us understand important issues faced by Wisconsin manufacturers in today’s competitive market, and together we work toward finding new solutions to these tough problems and implementing them,” he says. “We are proud that our research has helped Wisconsin manufacturers become more competitive and profitable.”