Our goals were to improve on-time delivery and customer service – and to increase sales.  We also wanted to reduce our production cycle time to a level our competitors could not match. I knew TOC and VISIAL Lean would take us there and help position us well ahead of our competitors,” says King. 

ThermoFab went ‘live’ with the software in September 2003, only 39 days after licensing its use – taking advantage of ‘Fast Track’ implementation support from Synergy Resources, its value-added reseller partner.   With Synergy Resources guidance, ThermoFab more than halved its projected implementation schedule.  “They really had their act together.  It took less than 40 days to transform ThermoFab into a company that can manufacture at warp speed – at a speed much faster than any of our competitors,” reports King. “We exceeded all of our plans and expectations.”

The Results

ThermoFab completely changed the way it manages work through the plant.  Using TOC concepts, it focuses on throughput by concentrating on managing the Critical Constrained Resources (CCR).  Though the CCR has shifted occasionally, it primarily remains the paint preparation area.  “We have to prep the surfaces to make sure they’re perfect.  That task is what really determines what we can ship – so it’s what we focus on,” King says. 

King says making the change – letting go of detailed lot tracking of all work – wasn’t easy.  But the proof of the power of focusing fundamentally on the CCR was made quickly apparent: work-in-process (WIP) scattered across the plant rapidly began to disappear.  “We started eating through WIP.”  As a result, on-time performance began to climb. 

“It’s a different method of managing production.  It forces you to focus on what you’re supposed to be working on, not what you like to,” King says.  Consequently, the company stopped detailed cost accounting on all steps other than the CCR.  “Everything that cost accounting of production lots traditionally brings to the table – you end up not having to worry about.  Focusing on the critical constrained resources made everything else fall into place.”

The key metrics that ThermoFab tracks for the CCR include:
· Throughput dollars per hour
· Sales dollars per hour
· Sales per employee.

As a result of tracking just these three KPIs:
· On-time shipments jumped from below 50% to 99.6%
· WIP inventory fell 40%
· Cycle times fell 50%

“We also stopped expediting shipments.  But if we do, it’s because a customer has asked us to.  And we charge them for it,” King states.  “And we’ve stopped fire fighting because customers have stopped calling to complain about orders being late.”

ThermoFab realized in time that the company’s fundamental constraint to growth was sales.  Sales people had grown comfortable seeing a shop floor loaded with WIP – it gave them a false sense of confidence that business was good.  They’ve since had to shift their perspective to understand they need to sell more to keep jobs flowing steadily through the plant.  Today, the company can offer customers better deals at lower margins.  And it can offer guarantees to provide 100% on-time delivery if need be to get the business.  Yet business continues to expand and profits climb – because these are offers customers can’t refuse.  More strategically, they’re offers the competition can’t match.  As the economy has tightened, this capability has given ThermoFab a powerful tool for continuing to bring in new business.

“All the disruption on the plant floor from orders being late has disappeared,” King says.  “If there’s a problem now, you can spot it immediately because things aren’t flowing.
“Synergy Resources and Infor are selling a solution – where software is a tool,” King states.  “The solution for us was Infor VISUAL Lean.  It’s a different method of managing production – one that makes everything much simpler.  From a manufacturing point of view, it’s made ThermoFab a much better company.”