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How MRP II revitalized Raymond Corp.

How MRP II revitalized Raymond Corp

Preparing to implement a manufacturing system has provided over 75 percent of the desired benefits.

If you've had even minimal exposure to material handling technologies and products, you're probably familiar with the brand-name Raymond. Headquartered in Greene, NY, The Raymond Corp has been building material-handling equipment and systems since 1920.

Currently the company's product lines include forklift trucks, order-picking trucks, powered carousels, addressable conveyors, automatic guided vehicle systems (AGVS), and associated software. Employing some 1500 people worldwide, Raymond has annual sales around $175 million.

In late 1987, the company found itself facing a peculiar set of problems. Sales were at record levels, and Raymond was gaining share of market, but the company was consuming much cash to support large production volumes.

Further, competition was forcing prices down, but production costs--driven by growing volume and greater product diversification--were on the rise. On top of that, delivery performance was slipping, and the company shareholders weren't getting the returns they expected.

For a while, Raymond responded by applying band-aid solutions. Suppliers, forced to put in overtime, were being paid premiums for on-time deliveries. And, as in previous years, the company continued adding labor to compensate for systemic weaknesses.

Enter RAMP

Coming to grips with their problems, Raymond called in David W Buker Inc & Associates, a manufacturing management education and consulting company headquartered in Antioch, IL. Buker put Raymond managers and executives, including the CEO, through an intensive education and training program. This covered the principles and application of manufacturing resource planning (MRP II) and just-in-time (JIT) manufacturing.

Buker's program covers MRP II, management processes, just-in-time (JIT) manufacturing, and total quality control (TQC). The program uses live, on-site education and consulting, as well as Videoplus, a videotape-based educational series for diverse audiences in manufacturing.

Raymond had been using a computer-aided material requirements planning (MRP) system since 1972. As the company points out in its 1988 annual report, this was "a home-grown program that worked well in its day. When business picked up considerably after the recession of the early 1980s, however, it became a program that could not keep up with demands of increased sales and shipments."

In January, 1988, the company launched its Raymond Advanced Manufacturing Program, known internally as RAMP, in the Greene, NY, facility. With guidance from the Buker organization, Raymond formed a 12-person project team. This was comprised of managers from all major disciplines. Functions represented include engineering, production management, marketing, sales, master scheduling, finance, materials management, and human resources.

Preparation first

Importantly, Raymond did not start their RAMP effort by rushing out and buying an MRP II computer system. Instead, they began by involving all company employees in an education and training program using the Buker process. This provided the structure, guidelines, and discipline needed for better management of the manufacturing enterprise.

"Discipline is critical to RAMP's success," says Don Sheldon, Raymond's production manager and MRP II project leader. "One of our first implementations was to establish a firm fence for master scheduling. We never cross that fence."

Also in preparation for MRP II, Raymond strove for greater accuracy in the stockroom, and in reporting of labor data. "Accuracy of our labor-data collection is now up to 95 percent," says Sheldon. "We have 26 direct-labor employees doubling as monitors. They help ensure full, accurate reporting."

Raymond's RAMP effort also has included emphasis on information feedback in a closed-loop system, accuracy of quality data, and continuous measurement and publication of performance. "Results are posted on cafeteria and departmental bulletin boards," says Sheldon. "Everybody knows how everybody else is doing.

"To stay on top of our performance, we have weekly meetings for reporting and review. Often our vice-president of operations attends these. Responsibility in each department and each function is fixed and known to everybody. There's no ducking out."

To keep track of performance, RAMP's team members measure accuracy and completeness of data collection against hundreds of parameters. Chief headings for these are listed on a form provided by Buker (see illustration).

"Continuous measurement and posting of performance are important," Sheldon says. "They quickly tell us whether or not we're making the right decisions, and if those decisions are producing the desired results."

An example of how one RAMP team looked for better performance and measurement: With prior knowledge of production workers, an entire workday was spent videotaping a department's fabrication operation. The object was to find ways to make workers' jobs easier and more productive.

Later, the team reviewed the tape and determined too much time was being consumed in making trips for tools and workpieces. As a result, tool-storage equipment was moved closer to workbenches, and machine setup times were substantially reduced.

Software last

As one of the final steps in RAMP, Raymond invested $300,000 in a computer-aided MRP II business system. Called BPCS, it is supplied by System Software Associates Inc (SSA), Chicago, IL. Raymond runs BPCS on an IBM AS/400 minicomputer.

"Installing software is one of the last things you want to do," Sheldon comments. "An MRP II business system is relatively technical and complex. To have it work well, you need to prepare thoroughly, clean up procedures, and make sure you're getting full, accurate data in all important areas.

"We find, in fact, that MRP II is not really a software implementation; rather, it's a discipline implementation. MRP II gives you 75 to 90 percent of the results you want, even before the software is implemented. The last 10 to 25 percent comes from the software--if it's used properly."

And what are the results at Raymond to date? For one thing, delivery performance is up from 12 percent on-time in 1987 to 97 percent today. Inventory accuracy has gone from pre-RAMP 60 percent to 94 percent.

In addition, overtime is almost zero, versus the 10 percent of 1987. Market share continues to rise, and a new vendor certification program has boosted on-time vendor deliveries from 70 to 91 percent.

"We expect good things from our MRP II business system," Sheldon concludes, "but implementing the philosophy and methods of MRP II pays the big dividends."

PHOTO : Flame-cutting parts for Raymond material-handling equipment.

PHOTO : Applying final touches to Raymond orderpicking trucks before shipment.

Joseph C Quinlan Senior Editor, Advanced Technologies
COPYRIGHT 1989 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1989 Gale, Cengage Learning. All rights reserved.

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Title Annotation:manufacturing resource planning; includes related article
Author:Quinlan, Joseph C.
Publication:Tooling & Production
Date:Oct 1, 1989
Words:1040
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