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North Eastern Company (NE Company)* strives to provide accurate lead-times and costs for its customers. They also strive to make it clear to their customers that the lead times they provide are realistic and that orders should be placed with more than enough time to allow for the highest quality and best on-time performance. Despite their efforts, many of their customers still place orders with shortened lead times while expecting the same quality and pricing.
Over the last six months, NE Company's on-time delivery performance averaged about 82%. Within a week after the due date, they were able to complete over 97% of their orders. Given the reduced lead times, and on-time deliveries for most of the order, many of the customers are ok with the performance and have not complained too loudly or too often. But an 82% on-time history doesn't look good, and it is difficult to maintain the breakneck pace required to achieve even that level of performance.
Currently, NE Company sets their schedule based on the WO Due Date. When production loads are reduced and customers place the order in plenty of time, this method is simple and very effective. However, as the load increases and lead times decrease, it becomes more of a challenge and often fails to deliver the full order on-time. Additionally, the extra work often reduces profitability and increases the opportunities for defects and errors.
Production blames the customers for lack of foresight and sales for overbooking the schedule. Sales blames production for asking for more orders yet failing to deliver as promised. Top management just wants to remain profitable and keep the good reputation they have worked so hard to develop.
Management has reviewed their capacity and load and is convinced that they should be able to increase throughput with existing loads and capacity and improve on-time performance to well over 97%. They believe the scheduling and prioritization methods are partly to blame, but haven’t yet figured out how to make it work.
What other methods can they use to schedule production and increase throughput without adding capacity or reducing load? How can they most effectively communicate priority changes to production? How often do they meet their commitments, but fail to meet the customer's expectations?
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