Best Practice Discussion

Transcription

1 Best Practice Discussion By Tom Buck, Owner of 2Thynk LLC. Over the course of my experience in operating companies and consulting I have visited many (very many) manufacturing operations. My service has been in three particular areas: a consulting resource to improve business operations, as a funding resource to bring new equipment to the floor, and as a coach for company owners. I am also a partner in a machine tool shop in southeast Michigan. To be the best resource possible, I have studied hundreds more manufacturing operations. This series on best practices is distilled from those studies and experiences. A Best Practice is a proven methodology, which generates results at a level of maximum output, while demanding minimum inputs, in a manner consistent with customer requirements. Typically the practices are consistently performed, managed well and part of a continuous improvement regimen. Best practices are not easy to implement, largely because implementing them requires change, change in existing process, changes in the way people do things, changes in arrangements, protocols and attention. They require process design effort, communications and active management. They require replacing poor or unsatisfactory habits with good ones. None of that is easy. So why should you care to put energy into implementing best practices if they are so difficult to get in place? Because the shops that implement, follow and improve them WIN! They win the more talented employees. They win the better contracts. They earn more profit. They have the opportunity to invest more in tooling and better equipment. They are often the stronger competitors in the marketplace. If that is not enough, they also happen to be admired businesses. Before we start into the five practices, let me describe the successful manufacturing shops which guide themselves into best practices.... First, the owner and executive team have a pretty clear vision for where they want to go as a business, what their product is, how it is sold, who it is sold to and their full intention and focus is on providing a quality product in a safe and profitable manner. Further they manage in a way that engages a talented and complete employee team with the right tools in an environment which invites participation around how to get better at the business of serving the customer every day.

2 More often than not, successful shops have an annual business plan, and possibly a five year vision. They possess a learning attitude and constantly look for ways to improve the business and every process in it. Technology is a key component in their success and best practices. For example, according to various studies, 94% of manufacturing organizations over $50M in sales use enterprise resource planning software in their operations. We often find that Realtrac, for smaller manufacturing operations, enables and prepares them for growth as it smooths out operations allows for greater visibility of manufacturing processes and creates organization in the way work flows and is measured. In fact, in a recent conversation with an editor of one of the leading manufacturing publications, Bob Sakuta asked the editor if he was aware of any high performing shops that did not have an ERP system in place. The editor thought for a moment and replied that in fact he could not recall any shops that he had met with, who were considered high performing, that were not using an ERP system. And to expand on this point, a barrier to growth for businesses under $10M in revenues, is often the establishment of consistent business processes and the reinforcement of their use and improvement. When the right processes and systems are established, staffed with the right people and then followed consistently, a major obstacle to growth is removed and the organization can grow to the next level. As we proceed into this discussion of best practices, contemplate your own shop and what you do well and not so well. Every business has bright spots and some dark spots. I hope you will find the discussion offers you some ideas for improvement, which will create greater success in your business. In the next entry, I will describe practice number one, the practice of establishing a complete production planning effort. Best Practice 1: A Complete Production Planning Effort Most certainly, this practice begins with the vision of the owner and executive managers of the business. To attain best practice performance does not happen by chance. As stated in the previous blog entry, leaders have a vision for the application of their unique knowledge to producing a product or service, the ability to sell what they offer to customers in a safe and profitable manner, create customer satisfaction, build and motivate a team of talented people and support them with the right tools. The results of these many factors in a great shop are often a satisfying work environment for team members and a return on equity for the owners. To begin moving in the direction of best practice implementation, this last statement on continuous improvement is a key element. The commitment to improve, to study is the beginning. Establishing an open mind in the organization, recognizing that getting better will require change and that existing methods can be improved is the beginning. The effort will take a hard look at where you are, on how things work in your business, through your eyes. Also through your customer s eyes. Your business will be on a constant search to become more effective.

3 For the purpose of this discussion on Production Planning I will focus on one job going through your system, as an example of what the Production System must support. I will introduce initial and basic elements that would make the work on that job consistent with best practices. Most simply, three things must occur for that job: 1) a job leader is assigned to own the job and represent the customer s interest as the work flows through the shop, 2) the operations for the part or service (the job) are unambiguously defined so that they can be shared clearly with team members completing those operations and 3) a Start of Work meeting is held to launch the job as it is won or started. Realtrac s shop control system, provides a key tool for job definition: shop routers which define operation times, sequence and instructions. Shop Routers, also called travelers in some shops, are the guidance the production floor will use to build the part or perform the service, to do the job. In Realtrac, the shop can build an estimate or quote based on previous experience with the part, or based on the knowledge of management. There is a lot to job planning including: determining the right operations, establishing an operational sequence, optimizing timing, considering the human talent needed on operations, selecting suppliers, managing constraints with machine availability, efficient job setup, gauging and measuring parts, tracking/documenting process performance and managing materials. This is a partial list of course. Ultimately it represents elements under the category of people, process, supplier and machine management. Measurement (for parts and processes) deserves more of a note here: truly knowing your part production performance compared to specifications and understanding your process capability is vital knowledge for all jobs in shops working to be the best. We will get more into this in the second best practice. While numerous barriers can exist to putting these management practices together for a job, one of the big ones is for the quote or estimate to honestly be an excellent educated guess. This would not be unusual in many shops. Not to say it is wrong, however to say the planning effort must validate and expand on the estimate when the job is won. Obviously, if you could build your quote with perfect knowledge that you will win it and you have all the time needed to create it, your business would put more effort into defining the job and taking all risk out of being wrong on an estimate. However, the time pressure on quoting (you don t just have one to write, you have ten due today), combined with the reality that there is a bit of a lottery on winning them (perhaps you will win three of the bids), means the effort, at the quote stage, will (and probably should) be limited. So, when the job is won, finish the effort. Jobs hitting the floor without a job leader are headed for problems. Assigning a job leader to watch over the job will help reconcile priority conflicts, represent the customer s interest and prevent quality, cost and delivery issues. Put these actions in place not just for the one example job I referenced and not just for key jobs. The best shops will let these be the starting point for driving your entire production system. The next practice for discussion is Measuring Floor Operations.

4 Best Practice 2: Measuring Floor Operations As we begin a view of the practice of measuring floor operations let s look at the headaches these best practices should resolve. Often we hear the big headaches at many manufacturing shops are: Missing customer due dates Job rework Absence of visibility on job progress Unprofitable jobs (which were thought to be profitable) Doing easy jobs first and delaying the important jobs Poor purchasing practices We hope you don t have these headaches, however we also feel that Realtrac solves them, Realtrac is the aspirin. When you begin measuring your floor operations it opens the window on how well your shop performs from estimating to purchasing to production to shipping. Often the problems in a shop show up on the production floor, but these problems can be symptoms. For instance: If a machinist can t keep up with the cycle time quoted on a job, is it the machinist or the estimator? If a job runs late on the floor is it the production managers scheduling skills or purchasing of outside material that held the job up? If rework is growing is it operator error or poor tooling? Be careful about automatically thinking that it is always a cause in production. Look at the data, review the job, study the process. Tracking floor operations can seem easy, yet trips up some shops. In order to do it correctly, operators must log into and out of each operation of any kind on a job, measuring time, quantity, quality and observations. The crucial knowledge of knowing how long it takes for specific operations by particular operators, by particular machines, with specific materials and capturing unique observations, is vital to improving shop performance. Absence of this data for specific jobs makes performance analysis impossible. Without these measures, a shop has little visibility on its jobs, it is operating from intuition, not from real information. There are challenges to implementing shop floor measurement. Often we find there is a perception (not always an accurate one) that there is a lack of computer knowledge among your machine operators. At Realtrac whether operators are computers experts or not, our shop floor login process is very easy on the shop floor PCs. Even so, training on how to do the simple reporting necessary for operational data collection is very important. Learn who can be mentors on the floor. Have training sessions where mentors show how it is done (so other operators can see a peer entering data) and have each operator practice until proficient. Realtrac has created short support videos for operators, to help in this education. These videos are only a few minutes long.

5 Another issue can be the feeling among operators that Big Brother will be watching them and that entering data is a hassle. Importantly, operators must see data input as part of the job, not extra duty, an absolute requirement. You can also make it easy for them by locating shop floor PCs so that data entry is convenient. This will help overcome the hassle factor challenge. For even more convenience, Realtrac has also created an ios based mobile app which could be used right at the work station. The purpose of the data collection must be shared with operators, in the most constructive sense, so they understand it is a key part of managing cost, quality and continuous improvement. Ultimately, this focus on using the information constructively will make the biggest difference. Collect the data, compare what it tells you to your production plan, and celebrate successes, correct issues. This will make your business stronger. Best Practice 3 Planning and Reviewing Performance Regularly is number 3. A huge part of this is setting the drumbeat for the organization Making business performance better often involves comparing expectations to reality and constantly exploring how to do better. So getting this practice in place requires establishing a structured process for planning and review of all jobs. Whether that meeting is monthly or weekly it should be a regular meeting date on the calendar. And rarely changed from that date so that it is predictable and consistent. As for the agenda, look for what went well, and not so well. Identify actions to replicate success, to solve problems and to prepare for future jobs. Make sure any lessons learned are documented in the jobs so they are reviewed as the new jobs are planned. Realtrac allows for documentation of learning in job notes. The documentation should be as specifically as possible, in ways which will be noticed when similar jobs are launched in the future. Set a regular time to review jobs coming up and completed: daily, weekly, monthly, quarterly. Establish a drumbeat for these meetings: for example daily for the queue review, weekly for deliveries and problems; monthly for all jobs and financial performance, quarterly for customer reviews. Too Flexible The drumbeat of the organization s job review process relies on consistency and will degrade if the regularity is not maintained. Keep the schedule even if some people miss. While no one likes meetings, they are an important tool for gaining group wisdom. Establish the drumbeat for planning and review meetings. Be consistent and forceful about attendance. Make them meaningful and engaging and as short as possible. Have a strong leaders who engages the job owners and all functions.

6 Just Air Too many meetings become air time to complain, to blame without constructive results. Then the process loses its effectiveness Have an agenda for each type of meeting (they are different). Keep minutes on key lessons learned, on actions and assignments determined. Review the assignments at the next meeting. Keep the meetings on track. Minimize the emotional baggage. The Point is to constructively learn how to do better, not to place blame. Best Practice 4 Establishing a Commitment to Quality and Building a Corrective Action Process is number 4. These are vital and significant to creating an organization focused on meeting customer requirements and constantly improving. For many organizations, this is a journey involving creating a learning environment focused on understanding those requirements and how to build processes to attain them. Achieving stable and capable manufacturing processes, delivery management, performance management, continuous improvement and measurement-based systems are key elements in the success of the best performing manufacturing organizations. This journey is long, but will be very productive. Realtrac supports the journey by providing visibility into the many operations involved in production sequences. Reports allowing analysis of machining centers and operators, estimated times versus actual and many other production factors are provided in the Realtrac system. A Corrective Action System is also vital in this overall process. Containing bad product, establishing corrective actions and understanding contributing and root causes enables improved performance. Realtrac supports corrective action and non-conformance reporting with specific reporting and tracking forms and reports. Corrective Action includes implementing short-term and systemic actions to prevent the cause in the future. The best organizations attain highest levels of quality performance with the full engagement of their team, an atmosphere of accountability and reward, and an absence of blame. Some customers require active participation and achievement of Quality certifications in today s business environment. These can take the full attention of the organization. Implementing a Quality System can be intimidating for process participants. There is much to learn and do. The leaders of the organization must be actively engaged, understanding the process, the commitment and model the behaviors which support the Quality process. Ultimately the efforts put into the Quality process provide great value, immense payback. The focus on meeting customer requirements, process development, measurement and learning, facilitate success and improvement in organizations and the people in them.

7 Best Practice 5 Annual Planning and Making Constant Progress in the organization is Best Practice 5. The most successful organizations set a direction, define goals, resource the goals and engage the entire organization to achieve them. Part of the planning process each year must be an analysis of where you are and what you have achieved in the current year to build on going forward. Tools like SWOT analysis can be very helpful in gathering perceptions on the current state. Goals should include: addressing growth, quality, financial performance and company capabilities. Getting and keeping the goals out in front of you is very important. In an earlier practice, the drumbeat of the organization was mentioned, and that drumbeat needs to include progress reviews toward goals. When goals are measureable, it becomes easier to chart progress and therefore, know when you are winning. Without a planning process, or goals established with commitment of the entire team, the organization can find itself mudling about in the day-to-day pressure of operational demands. Growth and focus get sidetracked. Build your next year plan with your team in the 4th quarter of the current year (like now!). Put the review meetings on the calendar. Make reviewing where you are part of your agenda. Many resources exist to help define company vision, mission statements and strategic plans. If you need help with finding a needed resource, send me a note and I will help. Keep your vision, your mission, your goals and supporting actions visible, on your desk, on your to do list, on your calendar and in your meetings, for the best results. Those organizations who keep it alive will win, those who fail to plan may be planning to fail. Tom Buck tom@realtrac.com The Next Step on Best Practices for Manufacturing Shops The discussion in this series of blog entries for REALTRAC has been how to take your shop to the next level. The discussion has focused on implementing practices which will make the shop a stronger business, more organized, using data to drive decisions, creating quality in the business processes which the shop deploys and building annual plans to take the business to better results. The 5 Best Practices presented are: Best Practice 1: A Complete Production Planning Effort This means planning the work to meet customer requirements, establishing a job/project leader for each job moving through the shop and constantly monitoring performance on the job.

8 Best Practice 2: Measuring Floor Operations In support of Practice 1 and in order to have measurements on manufacturing floor operations, it is vital to measure many levels of performance: time put into each phase of each job, scrap levels on each operation, cost of each operation and ultimately, the performance of machines and people operating them. Best Practice 3: Planning and Reviewing Performance Regularly Once we have the measures, a system of review must be established. This system must compare expected performance and actual performance, estimated costs to actual costs, forecasted job time to actual time; materials consumption, scrap levels, job schedule/delivery attainment, all to expectations. This practice also looks at the drumbeat for those meetings, so they are a regular part of the business dialogue. Best Practice 4: Establishing a Commitment to Quality Building a Corrective Action Process and an ongoing commitment to Quality, an improvement philosophy and the consistent focus on meeting customer requirements is an absolute necessity for all manufacturing organizations in today s markets. Best Practice 5: Annual Planning The annual planning process, the creation of your strategic plan, is an important tool in driving the practices above and in taking your business to the next level in your market. Consistent effort building an annual plan, engaging your team in accomplishing it and making it part of your ongoing business agenda will drive significant gains throughout your business. REALTRAC supports the Best Practices above in many ways. Now that you have reviewed the 5 Best Practices, expanding or beginning your implementation of REALTRAC is an excellent next step toward moving your business to the next level. Consider how your shop could be more organized, more consistently meeting customer requirements, meet customer due dates more predictably, know your costs and help your team and business grow. REALTRAC solutions help companies to improve financial health, increase operational efficiency and maximize profitability. The REALTRAC system is designed specifically for companies just like YOURS! Call for a demonstration today or sales@realtrac.com About REALTRAC Based in Livonia, Michigan, REALTRAC Performance ERP is a software company specializing in manufacturing software for machine shops, job shops and make-toorder metal working manufacturers. The company was founded in the heart of a machine shop and has served the manufacturing industry for over three decades. The program is used by thousands of users across North America. REALTRAC 10 was released in March For More Information, contact Jeremy Klosowski at (734) or jeremy@realtrac.com