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Home > Our Clients > Case Studies > Designing a Cellular Manufacturing Plant


By David R. Dixon and David W. Scott
(Article reprinted with permission from the June 1995 issue of The Fabricator)

Case Study
Cellular Manufacturing

In many industries, U.S. manufacturers are being driven to offer rapid delivery of a growing variety of products in relatively small quantities. Customers expect to be able to order any style and any color at any time — and at lower prices. This is true whether the customer is an end user, retailer, distributor, or original equipment manufacturer (OEM).

To meet these challenges, manufacturers are turning to Just-In-Time (JIT) and cellular manufacturing. JIT technologies provide the capability to make frequent, small lot deliveries of high-quality products. These same capabilities can result in higher productivity for all of the assets in the business — people, space, equipment, inventory, and cash.

JIT is defined as 10 key technologies working together to improve performance.

Case Study
Equipto, headquartered in Aurora, Illinois, manufactures storage and material handling equipment. In 1992, manufacturing was housed in 3 facilities in Pennsylvania, Texas, and Aurora. Historically, pallet rack and shelving in standard sizes and colors comprised the majority of products shipped. Replenishment orders from distributors were filled from finished goods inventory.

In 1992, the company's manufacturing process was suited to meeting the historical demands mentioned previously. Manufacturing facilities were arranged in process functional layouts. Process technologies in use were primarily hard-tooled stamping, punching, and forming operations that produced long runs of standard products.

Large finished goods inventories smoothed customer demand and ensured timely response to customer orders. Typical lead times in the shop averaged 6 to 8 weeks.

Throughout the 1980s and early l990s, the market had completely changed. In addition to very high quality, customers demanded quick delivery and a proliferation of products and colors — all at lower prices. Customers were requiring shipment of standard product in 5 days or less.

The company's marketing department recognized the changes in the market and was responding to them. Customers were being offered delivery within 5 days of order. Expanded color selections and an array of product variations were made available.

Unfortunately, manufacturing was not configured to respond to the new demands. By the end of 1992, the company held more than 5 months of Work-In-Process (WIP) and finished goods inventories. 70% of its 700,000 square feet of manufacturing space was devoted to inventory. Despite these inventories, the company still experienced stock-outs and occasional rush orders to meet customer demands.

The company recognized that manufacturing had to adapt to the new circumstances. With the goal of creating a manufacturing resource able to build short-run, high-variety products to order, a set of design criteria was established. These criteria were organized around the following elements of cellular manufacturing strategy:

• Process technology
• Facilities
• Systems
• Human resources

The thrust of the redesign program was to configure these elements for rapid throughput of the company's varied product line while minimizing inventory and maintaining high quality.

Cellular Manufacturing
The key concept in cellular manufacturing is to create focused subsets of the factory. The focus of the cells should be on part or product families. Cells must be designed so that all activity within the cell is visible and manageable from the standpoint of scheduling, capacity planning, and work assignment. A helpful guideline is that there should be between 5 and 10 people in a cell.

Process Technology. The primary equipment considerations in cellular manufacturing are to provide:

• The capability to complete a part from start to finish within the cell.
• Sufficient capacity to handle the projected load.
• Technology that provides for quick setups.
• Capability to consistently meet required tolerances and specifications.

Processes developed for a functional, hard-tooled factory often are not effective in a cellular environment. Setup time is the major obstacle to integrating traditional hard-tooled technologies into cellular manufacturing. Long setups, if done frequently to accommodate small lots, greatly increase the amount of equipment required to handle a given load, driving up space requirements and costs. Fast setups and small lots go hand in hand.

For those reasons, most manufacturers are opting for technologies that employ general-purpose equipment and tooling that facilitate fast setups. However, there is no doubt that, given sufficient volume, creative hard-tooled applications have their place in cellular manufacturing. Hard tooling that can be set up quickly or permanently can offer cost and performance benefits in certain circumstances.

Facilities. In a cell, the distance that a part travels is greatly reduced. However, the number of moves increases with smaller lot sizes. The challenge in developing facilities plans for cellular manufacturing is to create a detailed layout and material handling and storage methods that minimize the cost of moving and storing material.

Within a cell, the layout can have a direct impact on its effectiveness. Long "assembly line" cells look organized on a layout. However, large distances between workstations destroy the ability of cell work groups to communicate and to balance the load within the cell by moving from station to station.
U-shaped cells or other similar configurations are often the most effective arrangements for manufacturing.

Systems. In cellular manufacturing, systems or procedures have 5 main functions:

1. Communicating a requirement for production (orders) to the cell
2. Communicating a cell's need for material to other cells or functional areas
3. Managing and balancing the work load within the cell
4. Evaluating the capacity available within the cell to produce to a given schedule
5. Tracking completion of work by the cell

Of these functions, capacity planning and tracking are best done by using the computer. The first two functions are often addressed with visible signals such as Kanbans (pull systems). Balancing of the load within the cell is addressed through analysis of workstation capacities, strategic grouping and sequencing of work, operator cross training, and close coupling of operations within the cell.

Human Resources. In implementing cellular manufacturing, as with any of the 10 technologies of JIT, training is vital.

Employee training must include cross training to enable each employee to at least help with any job in the cell, team building and communications training, and development and implementation of clear operating procedures and guidelines within the cell.

In addition, training is needed both for the direct labor work force and for management.

In October 1992, the company hired TCA to help design and manage the transition to JIT and cellular manufacturing. The company's process for planning a transition to JIT and cellular manufacturing included 6 steps.

Step 1 — Determine Product Volume and Mix
These categories represent marketing's definition of product groupings and correspond roughly to divisions in the company's product catalog.

Within each product category, representative parts are identified. For example, the shelving product category includes shelving units that vary by depth, width, height, number of shelves, back panel configuration, and end panel configuration. A single shelf unit — 18 inches deep, 36 inches wide, and 7 feet high with six shelves and no back or side panel — was selected to represent all shelf units.

Then, the complete bill of materials was exploded for each product, and process data was gathered for each part.

Step 2 — Chart Process Times of Representative Parts
Process times (run time and setup time) for each part are identified.

Step 3 — Identify Product / Part Families
The purpose of Step 3 is to group the product categories identified in Step 1 so that a manufacturing cell can be created for each part or product family.

After extensive analysis, the company decided that product-focused (rather than part-family-focused) cells were appropriate. The deciding factor was process technology.

With the soft-tooled technologies, there were no clear differences in the types of equipment required to produce different parts or products. However, almost all of the hard-tooled applications were product oriented. For example, separate roll forming equipment and tooling had been established for the uprights associated with each type of pallet rack and shelving. The decision to retain certain hard-tooled processes in the cells drove the product focus.

In other applications, it may not be most appropriate to create product-focused cells. Other bases for grouping parts or products into families include factors such as material type and thickness; common routings; and part size, configuration, and geometry.

At this stage, the company also decided to create a punching cell that would deliver punched parts in the flat to each of the product specific cells. Although 2 product cells contained dedicated CNC turret punches, none of the other cells had enough volume to fully load a turret punch.

Because this punching technology represented a significant investment for the company, it sacrificed a little on the ideal of producing a product from start to finish within the cell in favor of some practical economic considerations.

Step 4 — Identify Alternative Process Technologies
The left column lists the hard-tooled process technologies it employed in the past. The right column lists the new, more flexible process technologies integrated into the cellular operations.

Note that hard-tooled technologies were retained in several instances. Over time, the company had engineered some creative and effective tooling approaches.

With these approaches, certain high-volume products (standard shelf sizes, for example) could be produced effectively on a hard-tooled line retained in the cell.

To truly integrate these operations into a cellular manufacturing environment, later setup reduction efforts (encompassing both hard- and soft-tooled processes) were added to the overall implementation plan.

Step 5 — Develop Conceptual Manufacturing Cells
This cell is typical of most other cells created by the company.

Parts enter the cell either directly from raw materials or from the punching cell. They are punched, formed, and welded within the cell. They exit the cell for paint and then return to the same cell for final assembly.

To determine the equipment requirements in each cell, overall process time was calculated from projected volumes and expected lot sizes. This step required considerable application of engineering experience to determine setup and run times for operations transferred from the hard-tooled to the CNC equipment.

The conceptual cells roughly approximate the physical size of the cell and equipment items in it to facilitate the plant layout process in Step 6. The intent of creating a conceptual cell layout is to test the feasibility of the cell concept and to take a quick cut at the space and configuration requirements of the cell.

Step 6 — Create Layout for Manufacturing Cells and Plant
A layout is created in 2 steps. First, a macro layout planning process optimizes the location of each cell with respect to the other functional activity areas in the plant. This is done by carefully considering all material flow and other nonflow relationships between the different areas.

A similar layout was created for the Texas facility. The Aurora plant was closed in anticipation of the productivity improvements associated with cellular manufacturing.

Using the macro layout as a guide, a detailed layout for the plant located each specific piece of equipment.

(This article has focused in detail on the process of identifying and creating manufacturing cells. In truth, the process of creating a plant layout based on those cells could fill an article larger than this one. Therefore, this layout effort has been simplified here as Step 6.)

October 15, 1993 became the project launch date. Over the next 60 days, all of the machinery that had been housed in the 3 manufacturing facilities, along with new CNC turret punch presses and press brakes, was reconfigured into the cellular layouts in the Pennsylvania and Texas facilities. By early January 1994, the physical modifications and moves were complete.

While the company had built inventory for several months before the move, it still needed to continue some operations to satisfy customer demands. After some early struggles to maintain deliveries, the focused cells began to perform as planned. Today, product-driven cells are able to shift quickly from product to product in response to specific customer orders.

In addition, the company learned some lessons about how to implement far-reaching organization changes:

• Understand the magnitude of the effort required to plan and implement major changes. It takes time to create a plan supported by all.
• Pay attention to the demands placed on people affected by the reorganization. Up-front training for the entire management team and for those directly involved in planning and implementing the changes can make the process easier.
• Be prepared to deal with special human resource problems. From the shop floor to the executive offices, there will be some who are unwilling or unable to adapt to the new environment.
• Continuous improvement is the core of World Class manufacturing. The company is continuing its search for ways to improve customer response. A cross-functional team is studying the information technology needs of the changing manufacturing organization. Another team is working to streamline the order entry process, and cell team leaders are learning how to schedule and manage their product-focused cells.

Total square footage of the facilities has been reduced from 700,000 to 260,000 square feet. Overall capacity is believed to be much greater. Inventories have been reduced by 40%, including a 45% reduction in WIP.

90% of all products are being shipped on time, with some product cells at higher levels, while sales have increased 20%. Manufacturing lead times on all products are being reduced. Many products are now manufactured to order with less than 5-day lead times.

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