China Manufacturing
Cellular Manufacturing and Takt-Time Production
Cellular Manufacturing
Cellular manufacturing contrasts with the traditional batch-and-queue approach. Under batch production, similar machines are grouped together in departments. One department produces a batch of output which is then passed to the next department.
Cellular manufacturing uses U-shaped cells with all equipment arranged in production sequence. Raw materials enter at one end and quality-checked finished products come out the other end. Movement of operators and materials are minimized.
Cellular Manufacturing: An Illustration
Scenario 1: Batch and Queue
A factory processes an order for 1,000 plastic-and-steel desktop organizers.
The plastic molding department runs all 1,000 bases in a single shift, stacking them on heavy wooden pallets.
The pallets sit idle in a transit aisle for two days before being forklifted to the steel bending department to process the brackets.
By the time the final parts are aggregated, assembled, packed, and staged for dispatch, 12 days have elapsed.
The P&L shows heavy material-handling costs, massive floor footprint consumption, and completely frozen working capital.
Scenario 2: Cellular Approach
A Chinese facility integrates a compact injection-molding machine, a small automated wire bender, a manual assembly station, and an ultrasonic welder into a continuous, tight U-shaped cell occupying a fraction of the space.
Operator A molds a plastic base and passes it instantly to Operator B.
Operator B fastens the bent wire bracket, wraps it, and hands it directly to Operator C for final welding and boxing.
The throughput time for an individual unit drops from 12 days to under 4 minutes.
The factory requires zero sprawling warehouses, staging tracks, or expediting clerks because the material has no physical space to hide.
Cellular manufacturing allows adjusting the speed of production. Instead of operators A, B and C, one single operator (trained to do all the work) will attend to all the tasks. Production speed and volume drops as a result.
Takt-Time Production Runs
Takt-Time production supplements cellular manufacturing to eliminate inventory accumulation at all stages.
Traditionally, production capacities were planned using forecasts based on past history. The focus then shifted to utilizing the installed capacity in full, with each machine sought to be run at 100% capacity. Work-in-process accumulates at each stage, blocking capital and incurring costs for storage and handling.
As outlined in the following case study, the Chinese manufacturer, Haier, transformed this scenario. Production plans were based on real-time market demand; you produced in one shift what you can sell in one shift.
Takt-Time Production: The Haier Case Study
Haier turned itself into an online platform that managed orders for a chain of independent manufacturers. Some of them produced components like motors or control panels while others assembled the components into finished refrigerators or washing machines.
Product assemblers. component manufacturers and their suppliers were organized into specific clusters so that input items could be procured just in time by all. This eliminated the need to hold raw material inventories
As orders came in, Haier calculated the volume of production needed to meet these. Takt-Time was computed thus:
Takt-Time = Available Production Time per Shift ÷ Customer Orders Required per Shift
Each manufacturer received its own takt-time so that the whole operation resulted in producing just what the market demanded. The cellular manufacturers of each component adjusted the pace of production to their takt-times.
As a result, components were used within minutes of being produced with no work-in-process inventories.
The finished products move along a conveyor belt to waiting containers or trucks that deliver them to Haier's distributors or retail chain customers. No warehouse is needed to store them and wait for orders.
Raw material, work-in-process and finished goods inventories were eliminated by pacing production. Cellular manufacturing that focuses on producing single products can do that by changing the number of operators per shift. And manufacturing clusters make it possible to procure inputs in just the right quantities and time.
Haier, which was a Chinese state enterprise near-bankruptcy in 1984, was able to achieve record revenues and profits, and global market leadership.
Conclusion
Cellular manufacturing is a flexible option that reduces costs by minimizing movement of materials and machine operators, and permits adjusting the speed of production to match market demand. This minimizes work-in-process inventory.
Takt-Time production involves matching production runs with the orders in hand by tapping the flexibility of cellular manufacturing. Finished goods inventory can be minimized as a result.
Manufacturing clusters bring input suppliers and final assemblers into a closely-knit ecosystem so that inputs can be procured just in time. This allows raw material inventories to be minimized.
The Haier case study shows how these options used together can produce dramatic results.