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Near the end of 1998, AR Metalcrafters, a precision sheet metal fabricator in Kulpsville, Pennsylvania, was experiencing serious delivery problems, and key customers were demanding improvement. AR produces customized electronic parts used by high tech manufacturers of equipment for power testing, mail handling, hospitals and dental offices and specialized applications such as color matching and railway safety equipment. "Between 1992 and 1998, our company experienced such a rapid growth rate that we were in danger of spinning out of control," says president Alan Schiff.
AR had implemented a Realtrac shopfloor control system from Realtrac Division (Irvine, California) in 1988 in order to assure customers it could control its operations. Mr. Schiff wanted a true realtime system that would always tell employees where they were with a job, give them timely and accurate costing information and allow them to eliminate manual entry of employee time tickets. He also needed a system that would help manage machine loads and identify possible bottlenecks on the shop floor. Realtrac, with its realtime shopfloor data collection, was the only system he found that could meet all key requirements. However, by 1998, key customers were implementing just in time inventory procedures and were starting to require AR to stock minimum quantities and schedule multiple delivery dates for orders. Controlling finished goods inventory and shipments and improving on time delivery performance had become urgent concerns. In September 1998, AR decided to upgrade the Realtrac system to the new Windows-based version and install it on the company's Windows NT server network. The company soon discovered it had available several new tools to help solve delivery problems.
A new Ship Orders feature allows AR to organize scheduled shipments in every way needed to identify possible delivery problems. According to Mr. Schiff, "Realtrac allows everyone in the company to focus on delivery performance. Personnel in production, customer service, purchasing and shipping all have the same up to date information to set priorities and ensure on time delivery." Whenever possible, shipments are now targeted to be made by the earliest date customers will accept delivery. This has resulted in quicker customer payments and an improvement in cash flow. Realtrac also provides detailed information concerning past shipments by customer and part, allowing AR to analyze past consumption of a part in order to forecast future requirements.
AR has found Realtrac's new Inventory Control capability helpful in maintaining minimum stock levels of finished customer parts and graphically seeing when stock needs to be replenished. Without Realtrac, Mr. Schiff feels he could not have entered into an attractive Kanban agreement with a key customer that provides financial incentives for maintaining required stock levels. Mr. Schiff indicates that the improved controls offered by Realtrac allowed AR to reduce work in process inventory by 40 percent during the first half of 1999.
Another important factor in improving delivery performance was a decision to rearrange AR's shopfloor layout for more efficient workflow and increased employee productivity. With 20,000 square feet of floor space, parts were usually being moved mechanically from operation to operation. By placing machines closer together, employees are now able to hand pass many jobs to adjacent workstations. Smaller machines are placed on wheels and easily rolled to where they are needed. For example, hardware insertion and press brake had always been two separate departments. Insertion equipment now is placed adjacent to the press brake whenever needed, so one worker can perform both operations simultaneously. By compressing machine locations, AR has gained between 30 percent and 40 percent of additional floor space.
Mr. Schiff is a firm believer that "if you can't measure it, you can't manage it." Therefore, AR has designed several customized reports within Realtrac as well as taking full advantage of Realtrac's built-in interface with Microsoft Office. All Realtrac job and shipment data is available for detailed analysis and reporting in Access and Excel. Several queries, reports and graphs have been designed to regularly compare scheduled shipments and quantities with actual results and to track the rate of on time deliveries. Each instance of a late shipment is analyzed to determine the reason.
The changes AR made allowed it to boost its on time delivery rate from 56 percent in January 1999 to nearly 96 percent in August, while also growing and increasing customer satisfaction. Without the new management tools offered by Realtrac and the improved workflow on the shop floor, Mr. Schiff feels AR would today instead be dealing with problems associated with lost customers and declining revenue.