1.1 The importance of production productivity in the competitive environment

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1 Competitive advantage through high-performance productivity: how production companies achieve high performance through an innovative production optimisation method Andreas Ginger and Uwe Büchner 1 Production productivity: an important aspect of performance management It is a well-known fact that every company's success is influenced by many different factors. Does the company have the correct strategy? Does the company have the right products for the right markets? Is it in the right place at the right time? One key factor is simply that the revenues exceed the costs and the company makes a profit. Today, many companies aim to achieve this through performance management, through which they successfully develop and control the performance within the company. However, the means and methods which the company management intends to utilise for performance management are critical for the success which the company aims to achieve. Currently, approaches aimed at continuously increasing performance are proven to have the greatest and most sustainable success. These approaches aim to optimise processes while consistently involving the employees in the optimisation itself. Continuously optimising the production processes is of paramount importance in manufacturing companies. As such, production productivity becomes a key element of performance management. 1.1 The importance of production productivity in the competitive environment Managers like to focus on reducing costs within their company as a means of increasing competitiveness. This is an understandable approach. It appears easier to reduce the easily measurable costs than to increase output, which seems difficult to influence. In view of this, managers at production companies consistently focus on the manufacturing costs. By relocating production to sites in low-wage countries, automating the production, utilizing new technologies and wage models, etc. they attempt to reduce the production costs and increase the company's competitiveness as a result. These are all measures which, as recent years have shown, can appear to be successful, yet do not have to be. There are too many detail factors within the individual activities to consider in these often result in contradictory effects. Companies have greater success by utilizing the specific methods to increase production productivity and thus improve their competitiveness as part of their performance management. 1

2 2 Methods to increase production productivity There are numerous methods to increase production productivity. In the following we will list the most important methods, according to our experience. Time-related optimisation approaches are widespread, such as those offered by REFA (Association for Work Organisation, Company Organisation and Company Development) and the MTM Association (method-time measurement). The aim of the REFA time studies with a stopwatch is to measure work processes and determine that they form the basis for the employee's payment. The objective is to save as much working time as possible by modifying the work steps in order to make the manufacturing process more productive. Using the MTM method work procedures are analysed and optimised in accordance with a system of predefined times. The work motions carried out by people are reduced to specific basic movements for which the required time is known. As a result, the manufacturing processes can be optimised on the basis of proven standards and is already possible during the planning phase. The "5S" method originating from Japan is utilised to design and organise the working environment for the day-to-day work. "5S" stands for the Japanese terms: Seiri: Seiton: Seiso: Seiketsu: Shitsuke: sorting out faulty parts which occurred during the work create order in the workplace constantly keep the working environment clean standardise the order in the workplace maintain discipline during work and train such behaviour The basis for improving production through the "5S" methods is the consistent and sustainable compliance with and implementation of these five specifications into all employees' work procedures. The "Six Sigma" method (6σ) originates from the USA and is applied to the entire company. This method describes, measures, analyses and approves processes using statistical tools drawn from quality management. The DMAIC method (Define Measure Analyse Improve Control) is frequently used as part of the implementation. The goals of the process optimisation are oriented on the company's financially important key performance indicators and the customer requirements. Companies frequently utilise methods for continuously improving processes which involve the employees such as CIP and Kaizen workshops. The "continuous improvement process" (CIP) as a mentality and an approach which aims to strengthen the productivity and, thus, the competitiveness of the company through constant improvements in small steps. CIP is implemented as teamwork (workshops) in which the employees contribute their insights from their day-to-day work in order to improve the manufacturing processes. CIP is comparable with the Japanese Kaizen. Employees have utilised Kaizen methods highly successfully at Toyota, in particular. Both methods employ the PDCA cycle (Plan Do Check Act) as teamwork in order to develop the optimisations. In recent years the SMED method (Single Minute of Exchange Die) has been utilised for machines. The aim here is to minimise the machine downtimes when changing jobs or tools. As a rule, this is achieved by modifying work sequences and avoiding supply paths. 2

3 Whenever these or similar methods employed to increase the productivity and the company, there is one critical question with regard to the implementation: How much can the productivity actually be increased? Our experience in recent years has shown that, in most cases, productivity only improves in small, single-digit percentage steps. Given that such improvements are generally insufficient for managers, we have worked to find approaches and procedures which provide companies with clear and sustainable production cost reductions and productivity increases in the two-digit percentage range while involving little or no investment costs with no ifs and no buts. We succeeded in making the breakthrough to achieve this goal when we applied our media findings from the new social networks to companies. In the age of Facebook and YouTube, using visual media, in particular video technology, has become normal and not just for the younger generation. The development and use of our video analysis through the use of AviX provides managers and employees at production companies with an innovative method of increasing productivity within the required percentage range, in order to achieve the intended competitive advantage. AviX stands for Analysis, visualisation, implementation and X (10) times faster than any other method. 3 Planning optimum production processes Optimum production processes are the goal of every producing company and the basis for high productivity. In this regard, the production planning itself works to achieve this goal. The planning draws on proven processes and common procedures and integrates new findings into the planning of the production processes. But as always, the devil is in the details. Are the parts, containers, tools, switches, etc. all planned in the right place? Are the movement sequences of the employees, the machines and the robots optimally defined? And other similar factors? These issues do not become visible until the production has been set up and runs as planned. However, "become visible" is a relative term in this regard. Generally, the production workers do not optimally accept the regulations and specifications the production process relaxes. The "defects" are only rarely "seen" generally only by the employees who carry out the tasks. And they often remain silent. Even if the production processes have been optimally planned and set up, they still remain subject to enormous change dynamics, especially today. The products are modified or new products are added, the number of variants increases, the order and production batches change, the machines and tools are replaced. Yet the processes are often not adapted accordingly. 3.1 The prerequisite: capable and motivated production employees That is why capable and motivated production employees, who do not remain silent, are a major benefit for every producing company in a competitive environment. These employees guarantee high productivity. 3

4 Good basic training for the employees in the required skills is just as essential as the accompanying training for the specific production tasks to be carried out. It is also important for the managers to motivate the employees to work independently. This only succeeds if the employee is feel as though they are taken seriously, are involved in the decision-making process and their insights taken into consideration. One differentiating factor among the competition is to provide employees with procedures and methods which integrate all of these elements. In the course of our projects we have made an important discovery: employees react positively to the use of our video methods and provide committed support. 3.2 Involving the managers, the employees and the works council in the production process optimisation via video analysis The use of video analysis often creates misgivings within the company. Due to negative examples in the past video is associated with surveillance and monitoring. That is why it is absolutely essential to closely involve the managers, the employees and the company's works council in the video-based optimisation activities at an early stage and obtain the permission of the employee being filmed. The aim is not to work "faster", but to consistently avoid unnecessary processes and activities and also to improve the ergonomics and handling in the workplace. This is the only means of enabling employees to regularly provide optimum performance with the best quality. In this regard it is important to not only avoid unnecessary activities but also non-ergonomic, stressful and fatiguing activities. Video technology plays a helpful role: a video recording not only makes it possible to view the process repeatedly and in detail (even in slow motion) but also makes it possible to discuss the process procedure in detail together with the producing employees and the production experts (production planner, industrial engineers, supervises, foremen) in order to discover waste and potential improvements and develop possible solutions. The discussion is not a matter of evaluating the performance of the individual employee who is currently carrying out a specific procedure in the video recording. Ultimately, different employees will repeatedly work at the same workstation due to rotation, shift work or other circumstances. The sole objective is to ensure that the workstations and the production processes are optimally organised for the employees. Our experience shows that the production employees have the best knowledge of where and how improvements can be found due to the insights drawn from their daily work. That is why good mediation of the video discussions needs to optimally combine the insights of the employees and the production experts. The accompanying process analysis is carried out by an employee trained in the system. It is helpful to explain the method to the works councillor at an early stage an invite him to the video analysis discussion. This ensures that he rapidly realises that the video-based process optimisation is not about evaluating the employees' performance but rather about improving the production processes. In addition, he also sees that the employees' workload is reduced by the optimisations and the work procedures become more economic for the employees. We also recommend concluding a labour-management agreement regarding the video recordings in the company, at least in Germany. 4

5 4 Increase the productivity by means of video-based production process analysis Given the widespread use of video in today's media world, ranging from innumerable reality shows to smartphone videos, it is actually surprising that video has not yet become a common tool in industrial optimisation. Visual observation, writing down and discussing production activities away from where the activities take place still remains the state-of-the-art. However, it has long been possible to achieve and permanently implement significant production increases supported by the progressive miniaturisation of video cameras and the increasingly compact video formats through the intelligent use of video analysis together with the employees. Our method of video-based process optimisation AviX generally takes place in three steps (in four steps in cyclic production) until the improved production results are achieved in step five. Fig. 1 illustrates this sequence: 1. Record a video of the production process 2. Analysis of the production procedure based on the video 3. Develop measures to improve the production procedure 4. Balance the cycles in the case of cyclic production 5. Results of the improvement: an optimised production process Fig.1 Working with the video-based process optimisation method AviX. (Source: PQ Unternehmensberatung GmbH) 4.1 Step 1: Video The basis for the entire system is the video recording of the production process made in the first step. The details of the processes become visible and can be repeatedly observed together with the employees. This creates greater transparency and objectivity then any production tour and observation of the process with individual eyes. 5

6 It is important to note that the production procedures can be recorded on video by anyone with a video camera available today or with a suitable smartphone (Fig. 2). This does not disrupt the production and is restricted to two or three production cycles. The video must clearly display the production steps and their required environment. Fig. 2 The use of simple video technology. (Source: PQ Unternehmensberatung GmbH) Once the video recording has been transferred to a computer it can be played back at any time using common video player software and viewed on a large screen. Fig. 3 shows this using the final assembly of a separator as an example. Fig. 3 Playing back a video recording using the AviX Media Player, for example. (Source: PQ Unternehmensberatung GmbH) 6

7 4.2 Step 2: Analysis The production process is analysed in the second step and the video is repeatedly viewed by the employees involved in the process. This procedure is supported by the use of intelligent software which enables the integration of the video image and industrial engineering for the process optimisation. With the help of the system, complex processes can be rapidly broken down into individual work packages (operations/sequences) and then (Fig. 4) broken down further into activities (e.g. "assembly", "getting", "positioning", "aligning"). This takes into account all of the motions, for example, (shown in Fig. 4 as A, B, C, D: short and long movements with and without difficulties), extensions, bends, terns, steps and also exertions (KA in Fig. 4) of the employees and also the resources used (such as tools). This enables every production process to be visually analysed along with the tool changes, maintenance or other supporting activities and even automated processes: Experience shows that machines and robots are programmed more with a view toward comfort or simplicity than with a view toward productivity. Fig. 4 Illustration of the analysis of a production process. (Source: PQ Unternehmensberatung GmbH) 7

8 The individual production activities are evaluated and colour-coded in the supporting system as shown in Fig. 5 in accordance with the lean criteria of value creation (green/grey), necessary supporting work (yellow/light grey) and waste/loss/waiting (red/orange/dark grey). Naturally, the goal of every production is to have the greatest possible value creation, only the necessary supporting work and the least possible waste in its processes. However, in real production the supporting work forms the largest block of the production processes and this represents the greatest optimisation potential. Fig. 5 Evaluating the activities of a production process. (Source: PQ Unternehmensberatung GmbH) The overall view achieved by the analysis of the production process to be optimised as illustrated in Fig. 6: Top left: Bottom left: Top right: Bottom right: the video the production process the basic process data the results of the process analysis It is the starting point for all further activities. Fig. 6 Overview of the process analysed. (Source: PQ Unternehmensberatung GmbH) 8

9 4.3 Step 3: Develop measures In the third step improvements for the production process are developed together with the employees and experts. Typical measures for optimising the employees' work procedures include: - improved arrangement of tools/better tools - improved parts supply and placement - use of lifting gear, holders or other equipment which also prevents long-term bodily injury - changed arrangement of machines where multiple machines are operated - optimised sequence of process steps Improvement potentials are also frequently identified in automated procedures. For example, only slow motion observation is capable of revealing that automatic grippers can extend into the processing machine earlier than the naked eye can perceive. 4.4 Step 4: Balancing (optional) One further improvement option consists of optimising cyclic production processes. The detailed observation makes it possible to specifically relocate work items between the workstations in order to achieve a more even and fairer workload for the employees on the line (through a better balanced process). In the production example in Fig. 7 this would be the case if the work sequences from station 2 were relocated to work station 1 or 4 so that the "bars" for the stations were approximately the same size. As a result, the cycle time (e.g. up to the grey line in Fig. 7) can be reduced, enabling a larger quantity of products to be produced in the same amount of time. Fig. 7 Poorly balanced production process. (Source: PQ Unternehmensberatung GmbH) 9

10 Ergonomics represent and additional, but highly important, aspect of improving production processes by means of AviX. Corresponding physical demands on the employees (e.g. strain on the shoulder, the neck, the back and hands as illustrated on the model of the human body in Fig. 8) are colour-coded according to their severity in this ergonomic analysis in the same way as waste (red/dark grey: heavy strain or yellow/light grey: low strain, green/grey: no strain) as part of the production process analysis. The findings from the ergonomic analysis form the basis for the discussion of the ergonomic process improvements with the affected employees. Fig. 8 Illustration of physical stresses. (Source: PQ Unternehmensberatung GmbH) Given that the average age of a company's employees is constantly increasing, focusing on ergonomics is an important part of the optimisation work. The workplace design can better take into account the employees' economic considerations during the planning itself. Our experience shows that almost every ergonomic improvement of a work procedure results in an increase in productivity. 4.5 Step 5: Result As such, the use of our video-based production process analysis results in significantly improved production results overall. In addition to increasing productivity, this gives rise to higher production quality and more stable processes. It is important that the increased productivity does not occur as a result of increased performance or greater work density but rather as a result of optimised work procedures and the better capacity usage at the workstations on a production line. 10

11 5 Example of assembly optimisation In this example the optimisation of the final assembly of a separator (centrifuge) is shown during an initial project phase over a period of five months. Fig. 9 summarises the key facts and the results of this project: Top left: Bottom left: Top right: Bottom right: the schedule of the optimisation project the optimisation measures carried out the results of the optimisation the results of the current situation analysis compared to the target process A separator primarily consists of high-precision mechanical components which are specially manufactured in the same plant. Some of the components rotate at a speed of more than 10,000 rpm. This requires the greatest precision with regard to both the manufacturing and the assembly. The goal of the project was to reduce the assembly time by a minimum of 10% and standardise the final assembly across all of the shifts. First of all, the current assembly process was recorded on video. The subsequent analysis and optimisation in AviX was simultaneously used to train the employees in video analysis. This serves to create expertise for further optimisations within the company. Fig. 9 Example of final assembly optimisation. (Source: PQ Unternehmensberatung GmbH) During the subsequent implementation of the agreed optimisation measures the improvement of the assembly process was stabilised and standardised. The standard was introduced in all of the shifts. This also eliminated any further cost recording fluctuations for the financial controlling. The result of the numerous individual optimisation measures implemented, as listed in Fig. 9, was a reduction of the assembly time by 20% from 60 to 50 minutes entirely without any investment. The corresponding annual cost savings amounted to approximately 100,000 euros for the company. 11

12 One key improvement was the reorganisation of the storage shelving and spaces in a line into a process-controlled Kanban warehouse (Fig. 10). Here one can see how the material to be assembled was colour-coded to identify the correct assembly sequence. This not only significantly improved the production flow but also resulted in a considerable improvement of the work ergonomics. As such, the unnecessary bends, turns and extensions were eliminated from the employees' handling paths for the assembly parts. One secondary result were the working instructions automatically generated and illustrated in AviX. These were used both for training new employees and also for the certification of the quality assurance system. Fig. 10 Example of an optimised final assembly workplace. (Source: PQ Unternehmensberatung GmbH) 6 Example of a changeover process optimisation Changing over machines during the production process is generally carried out highly inefficiently at most companies because it is often regarded as an unimportant, secondary process. However, in production processes in which the machines have to be frequently refitted due to low quantities of varying products it is important to minimise the machine downtimes in order to increase the productivity. This can almost always be achieved through the better organisation and design of the changeover process. Furthermore, all producing companies report that the customer orders involving smaller production batch sizes and higher frequency result in increasingly frequent changeovers and that the trend is developing toward a batch size of 1. 12

13 In this example, the changeover process of a machine for manufacturing drums (rapidly spinning hollow rotating bodies) is examined. The machine is embedded in the production of the separators mentioned in the first example. The goal was to achieve an extreme increase in the effectiveness of the machines to prevent the relocation of the manufacturing process to a lowwage country due to financial reasons. Fig. 11 summarises the key results of this project: Top left: Bottom left: Top right: Bottom right: the schedule of the optimisation project the optimisation potentials the results of the optimisation the machine setup for better changeovers The video recorded at the beginning of the project very clearly showed why the changeover process took 230 minutes. For example, the tools required for the changeover were far too far away from the machine this resulted in long paths for the employee carrying out the changeover. In addition, the new tools could have been prepared during production (transform the internal setup processes into external processes). As such, the optimisations summarised in Fig. 11 as part of this project served to reduce the duration of the change of a process to 190 minutes in the first optimisation phase and to only 120 minutes in the second optimisation phase. As a result, the machine had almost 50% more production time available during this part of the production process an immense increase in productivity. Subsequently, the changeover processes of the other machines in this production were also optimised to a similar degree Fig. 11 Example of a changeover process optimisation. (Source: PQ Unternehmensberatung GmbH) 13

14 7 The results: Competitive advantage through highperformance productivity The examples from our projects shown here reflect the typical results of the use of our videobased production process optimisation: - Productivity +15% +45% - Changeover times 50% 70% - Lead times 5% 30% - Space requirements 25% 60% These impressive increases in productivity are supplemented by the positive effects of the training and familiarisation the new employees through the consistently current, visual documentation of the processes. In addition, the commitment and motivation of the employees are increased through their involvement in the video recording, analysis and joint development of measures and agreements. The improved ergonomics and the higher quality of the products achieved by creating optimised and more robust standard procedures round out the positive results. The overall result helps the company, which consistently implements this approach, to achieve significant competitive advantages. In this regard, high-performance productivity results in job security, satisfied customers and successful companies. 7.1 Safeguarding the results achieved Naturally, due to human nature there is always a risk that the employees will revert to old behaviours and past work sequences. That is why the competitive advantages described here can only be maintained over the long term if all of the employees consistently and sustainably work in accordance with the optimised processes and are audited on a regular basis. This not only requires every employee to work in a disciplined manner but also attentive and encouraging behaviour from the managers toward the employees. Furthermore, the emergence of new insights and developments in reduction and technology along with the changing general conditions over the course of time mean that the video analyses and optimisations will have to be repeated from time to time. In view of this, it makes sense for companies which utilise the methods to train selected employees in these methods. The training takes place over the course of three days and is based on the company's specific production processes. As a result, the methods can be repeated at any time as required, ensuring that the results achieved are safeguarded over the long term. 14