Kreisler Manufacturing Corporation

Kreisler Manufacturing Corporation is a small, family-run company which makes metal components for airplanes. Their clients include Pratt & Whitney, General Electric, Rolls Royce and Mitsubishi. In 1996 Kreisler was UniCo (the company from The Goal). They were in their fifth straight year of losses and things looked grim. That year, the company's president read The Goal and saw the vision for what Kreisler could do to solve its production problems.

The resources were committed to send all supervisors and managers through The Goldratt Institute's TOC for Production training, which for Kreisler was held on weekends to avoid disrupting its production schedule.

Several areas were identified as constraints. Those included the Internal Machine Shop and Supplier Deliveries.

In the Internal Machine Shop, conventional wisdom would have been to add people and equipment - neither of which Kreisler could afford. Instead, they looked at their operations, identified problems and took action.

Local optima scheduling was discontinued, resulting in revealing additional capacity. Set-ups were videotaped to see exactly what went into the process. It was discovered that 60% of the time it took to complete a set-up was actually the worker looking for materials and tools. Today, Kreisler kits the necessary materials and tools for set-up, thus cutting that 60% off the set-up time.

Kreisler also created a Visual Factory. Red, yellow, and green lights were installed on every machine. If the constraint is being starved or production stops the operator turns on the red light. If there is a potential crisis or there is a risk of starving the constraint the worker turns on the yellow light. If all is running smoothly, the green light is on. Giving the machine operator control over the lights instilled a sense of ownership in the process and caught the attention and interest of all working in the factory

In the beginning there were a lot of red lights. Today they're green.

The measurable results of these actions are on-time deliveries are now at 97% - up from 65% prior to TOC. Also, 15% latent capacity was revealed. This has been key as suppliers are a constraint of Kreisler. With this additional capacity, the company can now pull an order in-house that one of their suppliers is going to be late on. This enables Kreisler to meet the deadlines of their customers.

Supplier Deliveries has been identified as Kreisler's key constraint. In fact, their suppliers were actually causing 76% of their late deliveries. In addition to using some of the new-found capacity to manufacture some of the parts that Kreisler usually gets from suppliers as a way to protect the company from unreliable vendors, Kreisler is also altering the way they behave and trying to also change the practices of their vendors as well.

The shop is now subordinated to material delivery. Jobs are no longer started that cannot be completed. Kreisler now requires their suppliers to kit the components they are shipping. Instead of a supplier producing a batch of part A and shipping to Kreisler, then producing and shipping a batch of part B, and then producing and shipping a batch of part C - all of which are needed for one job - the supplier must ship all three parts together.

The results of these actions include Kreisler creating a competitive advantage because of the better/improved management of the suppliers, WIP has been reduced by 20%, and lead time has been cut by 50% and is expected to be cut by another 50%.

Summary of Results

In 1996, sales at Kreisler were $5.6 million. In 1998 that figure was $13 million. In 1996 on-time delivery was at 65%. Since TOC was implemented it has been better than 95% - unheard of in their industry and resulting in earning business their competitors couldn't keep up with. 15% latent capacity was revealed. WIP has been reduced by 20%. Lead time has been cut by 50% and is still falling.

The Future

Kreisler plans to implement TOC in its Sheet Metal Baffle Cell, where problems include an unreliable production partner and fluctuations in the delivery schedules of Kreisler's customers.

Kreisler's goal is to reduce direct labor in this area by 50% while maintaining its throughput. That 50% of labor will then move to another area to support expansion.

The company is also facing an External Constraint. They are anticipating a slowing in customer demand based on world economic trends. In response, Kreisler is testing the water and expanding its market base. At the time they told their story (November 1998), the company had just signed a $260,000 deal to provide lighting fixtures for the film industry.

These results were presented by Michael Stern, Vice President of Kreisler Manufacturing Corporation, at the Jonah Upgrade Workshop in November 1998. The presentation is available on video (#JMT-5).