60 seconds with... Bob Meigs

Bob Meigs on the importance of lean manufacturing.

By Staff -- Modern Materials Handling, 3/1/2005

It's all about freeing up as much capital as possible while simultaneously increasing value to the customer. Materials account for about 60% of sales at QSC. That means anything we can do to limit how much inventory we have on hand—basic components as well as finished goods—frees up more capital to invest in the business and improve overall profit and growth objectives.

The centerpiece of our lean manufacturing operations is our build-to-order line in California. We build about 120 SKUs (stock keeping units) on it with an economic build quantity of one. Sure, we can handle an order for 100 but we assume every product coming down the line is unique on any given day. In fact, no one on the line knows what's next.

The total time from release of an order to the line until finished product is packaged and ready for shipment is only two hours. In fact, we can ship same day all orders received by 1 p.m. And we don't keep any finished goods stock of these products.

We get daily deliveries of components from suppliers. Because of lean manufacturing, QSC pays its suppliers with the revenue from what we've already built and shipped instead of debt.

In addition, all of our materials handling is automated. This would be a very difficult task if we had to rely on manual systems. Labor is truly only doing value- added work. Received components are put in carousels that feed the workstations. Conveyors move all work-in-process. And everything is handled on a first-in/first-out basis. That, combined with the automation, helps both our flexibility and the economics of lean manufacturing.