Chapter 10 Produce Efficiently

Transcription

1 Chapter 10 Produce Efficiently By Evan Keller Definition Production is how your company adds value to raw materials to create what customers want. Whether you manufacture a product or deliver a service, you can benefit from lean principles which originated at Toyota and have quickly been accepted worldwide as best practices to efficiently deliver what customers want, on time, and right the first time. Expert Quote In highly simplified terms, efficiency concerns the cost of input for the output produced in other words, the best use of resources and the least waste of time and effort (Christopher Hann, The Art of Efficiency, Entrepreneur Magazine, July 2013, p.68). Assessment Questions 1. What steps in your production add no value to the final product from the customer s perspective?

2 112 PRODUCTION 2. Which type of waste (time, materials, space, etc) represents your biggest opportunity to improve? 3. Do you have a culture of continuous improvement? Benefits Less waste. Efficient production systems waste fewer raw materials and cause less unwanted by-products (such as pollution). Employee involvement. Refining these processes require employees to engage in regular problem-solving. Customer satisfaction. They like getting what they want when they want it. Profit. If you can do more with less, there s more fruit for your labor. Barriers Resistance to change. Older companies have a harder time accepting new ways of doing things. A culture of constant learning and growing requires cultivation. Lack of margin. When you re scrambling to get everything done within your inefficient system, it s hard to find the time to improve the system. That vicious cycle perpetuates.

3 PRODUCE EFFICIENTLY 113 Lean manufacturing is counter-intuitive. Having extra stock on hand, minimizing the number of setups, and starting jobs as early as possible seem like good practices and are done with the best of intentions, but they are deadly harmful to your overall efficiency. Underlying Values Efficiency. If you don t add value in a cost-effective way, you ll be out of business soon. Constant learning. Ongoing training of employees and ongoing improvement of processes are central to lean manufacturing. Orderliness. Safety, sanity, and stewardship require an orderly workplace. Steps to Implement Document your current work flow. Understanding your production process and its individual steps will lead to identifying waste and continually refining your process. That s efficient production in a nutshell. It often helps to draw a process map with

4 114 PRODUCTION boxes and arrows to picture how your production process works. (See more on process mapping at: In your flow chart, include: 1. Task flow steps taken by both personnel and machines. 2. Material flow where raw materials enter, exit, and stop along the way. 3. Information flow operating instructions and key indicators. 4. Traffic flow movement in, around, and between workstations. Identify waste in your production system. Lean manufacturing looks for seven types of waste: 1. Waste of overproducing producing components that are neither intended for stock nor planned for sale immediately. 2. Waste of waiting refers to the idle time between operations. 3. Waste of transport moving material more than necessary. 4. Waste of processing doing more to the product than necessary and more than the customer is willing to pay for. 5. Waste of inventory excess of stock from raw materials to finished goods. 6. Waste of motion any motion that is not necessary to the completion of an operation. 7. Waste of defects and spoilage defective parts that are produced and need to be reworked.

5 PRODUCE EFFICIENTLY 115 Practice continuous improvement. This lean concept is a translation of the Japanese Kaizen, meaning change (kai) for the good (zen). This mindset of persistently pursuing perfection is important to implementing lasting change. It can keep your employees challenged and keep your company competitive. Below are a few aspects of production to keep improving. Find the best suppliers. Since raw materials are likely among your highest costs, it s important to find and build strong relationships with the best suppliers. Ask yourself: 1. Can the vendor supply the needed quantity of materials at a reasonable price? 2. Is the quality good? 3. Is the vendor reliable (will materials be delivered on time)? 4. Does the vendor have a favorable reputation? 5. Is the vendor easy to work with? ( Practice just-in in-time inventory management. Acquire only as much raw materials as you need. This reduces your costs significantly and reduces chaos in your work flow. This usually requires using a type of software called MRP. Wikipedia explains: Material requirements planning (MRP) is a production planning, scheduling, and inventory control system used to manage manufacturing processes. As you become proficient with MRP, waiting on parts doesn t delay your production, nor do you need lots of warehouse space to store raw materials. Just-in-time inventorying leaves less margin for error. This underscores the importance of great relationships with responsive suppliers who can

6 116 PRODUCTION provide what you need when you need it, in the right quantity and quality. It requires more precision on your part as well: There are two major control factors that will be helpful for optimizing your purchasing plan and minimizing your cost of purchasing and storing inventories of raw materials. First, determine the order quantity the size and frequency of your orders. Second, determine the reorder point the minimum level of inventory onhand when you need to order new inventory. Practice just-in in-time production. The same MRP software can help you produce only as much product as the customer needs. A key concept in just-in-time production is to pull (by demand) rather than push (by supply) the jobs through your shop. Instead of making as much as you can and increasing excess inventory of end product you only produce as much as your customers order. This dramatically reduces excess work in process, which clogs up space and requires extra material handling. This leads us to the most counter-intuitive advice in lean manufacturing: reduce run sizes. Reduce your job quantities to the smallest run sizes possible, even if doing so requires many more setups. Small run sizes are easier to schedule, require less material handling, improve product quality, and shorten production times. The efficiency gains far outweigh the extra setup time. Re-organize your workplace using 5S. This is a fundamental lean tool for improving a production process:

7 PRODUCE EFFICIENTLY Sort. Keep only necessary items in the workplace. 2. Set-in-order. Arrange items (such as tools, equipment, work stations) to promote efficient work flow. 3. Shine. Clean the work area so it is neat and tidy. 4. Standardize. Set standards for a consistently organized workplace. 5. Systematize. Maintain and review standards. Empower employees to make improvements. Give power to the people. Toyota develops self-directed work teams of highly trained and skilled employees who are empowered to offer ideas, make improvements and decisions, and even stop production to make corrections. This leads to everyone s creativity being engaged rather than just perpetuating inefficient processes, which were probably designed by managers who are further from the action. Actively harvesting and implementing the best ideas from employees is key to reducing product defects and manufacturing costs. Address bottlenecks. The least efficient step in your production process slows down the entire process, just as the slowest hiker in a group slows the group as a whole. Like a river dam, water backs up behind it but only trickles out ahead of it. In production, work in progress piles up while awaiting the slow bottleneck step, whereas workstations after the bottleneck are stalled waiting for the work to flow through. Improving efficiencies of other steps without addressing the bottleneck will not speed up overall production because bottlenecks determine the throughput of a supply chain. It only takes a little bit of intentionality to identify your current bottleneck as it is likely painfully obvious. The harder part is managing bottlenecks effectively. Appropriate staffing and task leveling can help with personnel bottlenecks. Preventative

8 118 PRODUCTION maintenance, customization, or replacements are common fixes for equipment bottlenecks. These solutions are rarely as speedy as you d like, so you may have to creatively manage the production schedule to minimize the bottleneck s squeeze. Once you ve resolved your bottleneck, a new bottleneck will arise. Hopefully, each bottleneck is less severe than the one before it, moving you steadily towards greater efficiency and profitability. Assess what customers value. Eliminate processes that don t add value to the end product, and for which the customer is unwilling to pay. It s easy to assume that each step in your process is necessary and adds value, but companies that go lean are amazed and how many non-value-added components they find in their processes and products. The key to this is the customer s perspective. If customers knew each step, which of those steps would they not be willing to pay for? Remove these steps and components. Track costs. Track your cost per unit and other key indicators you find important to efficiency and profitability which should both increase as you follow these steps. Count not only number of products produced (per period and per batch), but by-products (wanted and unwanted), and waste. Also track intangibles such as safety, quality, and customer feedback. Case Study Saving time has been the biggest improvement in efficiency at Inspired Bronze in recent years. Jackie and Matt Ramieri improved their tracking of employee time per production batch by using Harvest, an online time tracking software. After being customized for their handmade bronze and pewter awards business, this software

9 PRODUCE EFFICIENTLY 119 makes it easy for them to track process times for each of the following steps in making a pewter award: molding, casting, welding, chasing, patina, and mounting. Employees simply click on their ipads when they move their batch into the next stage of production. Jackie and Matt keep a close eye on whether employees are meeting or exceeding the time budgeted for each step. This helps them supervise employees and keep customers apprised of the progress of their order. They discuss progress and obstacles with employees in their weekly production meeting. Using this software has helped them catch employees who were intentionally wasting time, and has helped their good workers get better. They catch lagging projects midstream and troubleshoot solutions to get them back on schedule. In addition to helping with employee supervision, this automated tracking of process times has given them good data on the number of employee hours it takes to produce each one of their various products. With this continual refinement, they are able to give more accurate quotes for future jobs. See lean case studies from your own industry: Leading Self, Employees, Systems SELF - Since surviving and thriving as a company is so dependent on efficiency, you need to pay close attention to it. If you raise up strong production leaders as we advise in chapter 13, through them you can keep tabs on various key indicators of the processes we ve just described. EMPLOYEES - Given natural resistance to change, it would be wise to build ownership carefully with influential employees before

10 120 PRODUCTION launching these changes. Training and continuous learning are necessary for your employees to operate these production systems effectively. While production relies heavily on systems, unengaged employees can quickly derail any good system - so remember to treat them right. See chapter 14. Recognizing and rewarding continuous improvement will show that the production your employees do every day is important to you. SYSTEMS - Develop a production manual for each product to aid in quality control, standardization, training, and continuous improvement. ISO (International Organization for Standardization) certification assures customers that your processes and products meet specific quality standards. It certifies that you can accurately and consistently build the same product week after week, year after year (TK Donle of Complete Parachute Solutions, in conversation with the author). You ll also want to ensure there is a good system of communication between those who make, sell, deliver, and follow up on the product. Software can streamline the process, but these different folks need person-to-person communication as well to ensure that the customer is having a good, consistent experience from start to finish. Summary Nimble use of inventory and work flow allows you to do more with less, pleasing customers better and faster. A commitment to lean

11 PRODUCE EFFICIENTLY 121 practices of waste elimination, workplace organization, employee empowerment, and continuous improvement will increase efficiency and profitability. Application Questions 1. How efficient is your work flow? What did you learn from your production flow chart? 2. Which of the seven categories of waste do you plan to address? 3. How can you nurture a culture of continuous improvement amongst your employees? 4. How can you move toward just-in-time inventory management and production? 5. Which of the 5S components need the most shoring up? 6. What real-time production decisions can you empower employees to make? 7. How can you harvest more ideas for improvement from employees? 8. What is your current bottleneck and what will you do about it? 9. Which production steps or product components do your customers not value enough to pay for? Recommended Reading The Lean Six Sigma Pocket Toolbook by Michael George