Posts Tagged ‘Lean manufacturing’

Forbes magazine recently published an article titled  “What’s wrong with Toyota?” where the author describes that critics are wringing their hands that capacity was built too fast to capture the truck market in the US.

The article describes how even Toyota is not immune to the troubles facing the automotive industry and that, in spite of the short term impact this economy is having on Auto/Truck sales, critical questions are being raised.  Should Toyota continue its aggressive pursuit of market share in the US truck market, or retrench and go back to basics with smaller cars?

Could Toyota, known for its long sightedness in a near sighted marketplace, have anticipated this recent economic downturn, which put a halt on consumer spending from electronics to automobiles? One could argue that if Toyota, with its Toyota Production System (TPS) which is known as the leanest and best manufacturing system in the world, if they cannot adequately detect and respond to sudden changes in the economic climate, what hope is there for any of us in manufacturing?

There are some clues in the TPS that tell us why Toyota can and will respond to these market changes and will continue to grow and dominate the automotive market.  It has to do with the embedded culture of the Toyota Way.  The first two principles of the Toyota Way :

• Base your management decisions on a long term philosophy, even at the expense of short term goals.
• The Right Process Will Produce the Right Results: Create a continuous process flow to bring problems to the surface.
   

One of the key elements of the TPS is Jidoka. Jidoka is the ability for anyone involved in the manufacturing process to see what’s going on and if necessary, stop the production line, bringing problems to the surface. Basic empowerment at all levels to ensure that errors that can cause defects (in materials, equipment, process) are monitored and detected right away in order to ensure they get passed on to the next operation.

In order for all employees to see what’s going on with the process, it seems like the traditional tools of management need to be shared with a larger audience.  What manufacturing process wouldn’t benefit from having more eyes on it?

Not even Toyota has a crystal ball and can predict the future. But they do understand that by monitoring the critical process inputs and outputs, performed with the right tools in place, and coupled with the Jidoka mindset, the organization can learn, respond and re-engage.

In summary, Toyota can and will make mistakes like the rest of us, but the key differentiator is they have the tools to learn faster, and they take advantage of institutional knowledge, and empower all employees to think from a management and customer’s perspective. This strategic advantage will ensure Toyota remains in leadership of any market it enters.

The good news is that these principles and visibility tools to see what’s going on in the process are available for all manufacturers to leverage.

Kinaxis has just published its latest white paper, Making the case for Lean process lead-times: are your information process flows giving you a competitive edge?

Here is an abstract for the paper:

Regardless of the markets served, most producers have a common need: to respond and adapt to changes in the marketplace faster than their competition does.  By adopting Lean order management and fulfillment processes, a business gains superior operations performance and flexibility; thus increasing their competitive edge. Since actual manufacturing and material lead-times are typically a small portion of total cycle time, reducing non-production administrative processes that have long cycle times can provide the most immediate impact.

In the spring of 2006 my husband, who was a fit guy on the cusp of hitting 40 (but who also smoked a half a pack of DuMaurier Lights a day), announced at a backyard gathering that he was going to complete a triathlon. When a buddy of his chuckled and said jokingly ‘You can’t do a triathlon!’ the bet was on!  He began researching races and distances and finally settled in on the Graham Beasley Sprint Triathlon in Carleton Place, Ontario set to take place that July.  For those not familiar with Tri lingo, the Sprint distance consists of a 500 meter swim, a 20 kilometre bike, and a 5 kilometre run. Well, he signed up and completed his first race on a very hot Sunday in July that year with a time of 01:25:08 hours. With little training before hand, he almost drowned in the swim even though he considered himself to be a strong swimmer, but did respectably well in the bike and run for a first timer; and later that afternoon was tiredly snoring away in his lazy boy.

Since that day, he has completed 10 Sprint Triathlon races, winning two bronze, a silver, and two gold medals in his age category, and his first Marathon (in under 4 hours!). His new goal is to complete the Iron Man Triathlon distance at the end of this summer and to one day compete in the Iron Man world championships in Kona, Hawaii.

How has he come so far so fast?

Simple–by applying the Lean principles that anyone who’s worked in manufacturing has heard about and/or applied themselves, he included. He started by creating a ‘Value Stream Map’ of his race process and looked for ways to ‘continuously improve’ his finish time. He quit smoking, increased his training regime by more than 15-20 hours per week, subscribed to online blogs and chat sessions with other triathletes in training for tips and tricks of the trade and acquired the necessary equipment to eliminate as much ‘Waste’ (in this case time, wind resistance, etc.) as possible.

Last fall he began training with a Garmin GPS watch that monitors his speed, cadence, pace and heart rate each time he trains so he can see what areas need work. This spring he invested in a brand new Cervelo P2 tri racing bike and now owns one of those funny looking bike helmets that makes him look like the Great Gazoo off the Flinstones! He re-examined his ‘Point of Use’ inventory in the transition zone, strategically placing his bike helmet, running shoes, sunglasses, etc, such that they were available when and where he needed them to be.

He finished his first race of this season with a time of 01:15:41 hours averaging upwards of 40km/h on his bike and setting new personal bests in his swim and run times; and he continues to look for ways to get those times even a second faster.

The moral of the story is that every business or individual has processes/areas where waste exists and opportunities for improvement are there for the taking. There needs to be a commitment to regularly review one’s processes in order to identify those opportunities and take advantage of them, in turn eliminating the waste, and in the end continuously becoming a leaner organization.

How many times have we heard that we can’t implement Lean manufacturing, specifically kanbans, because our demand is not constant and kanbans work best with steady, stable demand.  That is truly unfortunate because steady, stable demand is exceedingly rare in today’s environment.  But before we give up on managing inventory using kanban, let’s look a bit deeper.

A kanban is a device that limits inventory.  It can be a card, a space on the floor, a tote able to carry a fixed amount of parts or even an electronic signal that authorizes movement.  In order for inventory to exist, it must have a kanban to authorize it.

When setting up a lean system, you will at some point need to calculate the number of kanbans, or in other words, the inventory authorized in the system.  In its simplest form, this level of inventory can calculated based on replenishment cycle times and demand levels for the parts in the system. The number of cards is based on the inventory level and the container size.  Other items that need to be considered include supply variability, demand variability, resupply costs and available space.

Let’s think about how demand variations impact your lean system.  To do this, its easiest to picture yours supply chain as a hose.  The diameter of the hose is the allowable level of inventory.  The allowable level of inventory is based on the number of kanbans in the system as described above.  When the allowable level of inventory is greater than needed to satisfy demand and buffer against supply and demand variation, we tend to end up with excess inventory.  Drive the inventory too low to account for normal variation and you’ll end up with stock outs.

The water in the hose is the inventory moving through your supply chain.  When I have lots of inventory, (picture a fire hose) with normal demand, water (inventory) trickles through the hose.   If my demand increases, the volume of water in the hose increases and the trickle becomes a stream.  No problem.   The diameter of the hose (inventory) is hiding many of the problems in my supply chain such as quality problems however this extra inventory adds inventory costs.  Now let’s imagine that we’ve been actively eliminating waste and lowering the levels of inventory in our supply chain and reducing our cycle times.  Now, instead of a fire hose, picture a garden hose.  The authorized level of inventory (the hose diameter) has been reduced and inventory moves through the system much faster.

Now let’s assume that demand being satisfied by the garden hose has increased.  The volume of inventory moving through your garden hose sized supply chain will increase – to a point.  At some point your supply chain (the hose) can’t keep up with the demand and the system fails.   This failure occurs because we can’t move the inventory fast enough and stock outs occur.  To prevent stock outs from occurring, we need to authorize more inventory.  For short term demand spikes, some companies use special kanbans to authorize short term inventory to cover the spike.  If your demand change is longer term, and you can’t accommodate the higher levels of demand through process improvements in your supply chain, you will need to recalculate your kanban levels (make the hose larger).  In other words, re-apply the kanban calculation formula.

For companies that manually manage kanbans, this can be a big job (not impossible, but challenging).  Best in class companies, however, are letting their systems manage the kanban calculations automatically.  Because we want some stability in our kanban levels, we don’t want the kanban level to vary continuously as demand changes from month to month. Instead, we want the system to only authorize a change in kanban levels when we’ve exceeded a certain tolerance over time.   This can raise problems of course when we have a short term spike.   We don’t want to change our current kanban level, but we need to manage this spike.  For this purpose, an automated system must recognize that the current kanban levels will result in a stock out as a result of this spike and recommend a temporary special use kanban (I’ve heard them called Single Use Kanban, Silver Bullets, etc).   This special kanban temporarily allows extra inventory to cover the spike.  In most cases, these special kanbans must be authorized, but that depends on the processes in your company.

There are still going to be some situations where kanban will be difficult to manage normally, like parts with sporadic demand for example.  However, for most companies, the majority of their products can be managed automated kanban calculations.  So why haven’t you started to implement lean?

Just the other day I became interested in what had evolved regarding kanban tools and I did a quick search of the internet.   A couple of hours later, I was more than a bit surprised by the number of point solutions that were targeted at helping companies identify where kanban might be utilized to drive significant savings in inventory.   Some companies even offered 30 day trials and promoted easy integration approaches for acquiring the data required to deliver value.   Given my past experience in implementing Lean, I was intrigued by the sales pitch to implement a point solution rather than leverage kanban as part of a much larger initiative to create a Lean value chain.   I’m not at all convinced that the uninitiated will recognize the very importance difference and potential limitations or pitfalls of a purely point solution.

What these companies are offering is a tool that will essentially do the math to recommend kanban parameters (total kanban inventory and re-order point quantities) and incorporate logic to address demand variation as a safety factor.   Based on the results, the suggested level of inventory is compared to the actual levels and inventory savings is calculated.   Seems simple, and to a large degree it is, but the decision is completely removed from the value chain perspective.    At this point you are probably thinking that I am offering some kind of zen based perspective driven by a Lean ideology.   The truth is much simpler, the source of data for these solutions is historical stock issues (for demand variation) and MRP calculated demand for the future requirements.   This information can be the equivalent of a mile distant from the actual customer demand associated with those parts.   Between the customer demand for the end item and the component demand can be a wide of variety of “Just-in-Case and Efficiency Based” planning strategies at various subassembly levels including lot sizing, minimum and multiple order quantities, and various safety stock strategies.  Each of these strategies contributes to lumpy demand patterns at the component levels and a correspondingly erroneous picture of true demand requirements and variation.   While implementing a kanban system at the component level alone without consideration for the larger value stream “might” yield some inventory savings, it is little like putting in a 10 watt bulb in your clothes closet.    The light isn’t bright enough to dress by and the result will likely have some undesirable and comical side effects. 

Taking the value stream approach means that you look at all of the supply chain connections from the customer down to the shipping dock and the rules which govern the execution process.   It is holistic in nature and links how the decisions at each stage influence later stages.   Demand at all levels is linked to the customer expectations and the goal is to eliminate unnecessary waste at every stage.   Inventory buffers are strategically determined based on manufacturing cycle times and customer responsiveness expectations.   For example, rather than maintaining inventory to support demand variation at the component level, this inventory maybe maintained at a higher assembly level to support a responsiveness expectation that cannot be met otherwise.   In addition, the Lean efforts would seek to minimize setups and the need for batch sizes with the ultimate goal of single piece production   (not always practical or possible where investments to achieve this are unrealistic).   The bottom line is that the holistic view makes sure that the investment in kanban systems is maximized and true aligned with ultimate goals for minimizing waste while maximizing the value delivered to the customer.  Therefore, beware that investing in the implementation of a kanban system without evaluating the connection to the rest of the value stream may not yield the benefits expected.  In fact, the kanban inventory levels that are calculated may be significantly more than is really necessary and the desired level of flexibility may still not be adequate to meet customer expectations based on the cycle time distance between the component inventory and the end product.

The North American Indians commonly communicated via smoke signal. Each tribe had their own signaling system and understanding. A signaler started a fire on an elevation typically using damp grass, which would cause a column of smoke to rise. The grass would be taken off as it dried and another bundle would be placed on the fire. Reputedly the location of the smoke along the incline conveyed a meaning. If it came from half way up the hill, this would signify all was well, but from the top of the hill it would signify danger.

Native Americans on a painting by Frederic Remington

In our supply chains today (although we don’t use Smoke) we do use visual signals to identify demand\stock outs, in Lean Manufacturing and Just In Time Inventory Systems these signals have come in many ways; the flashing of a light, the reaching of a mark on a bin, an empty inbox on your desk, and countless other methods. More commonly today thanks to the creation of automated alerts and the world wide web, it is within seconds that a supplier can be notified of a new demand requirement. Not only that but sophisticated systems check stock and availability and also automatically respond with the expected delivery date of a demand request.  It’s a far cry to think that manufacturing systems are based on smoke signals but never the less one of the most important things in the supply chain world today is the speed at which these age old visual signals can be sent, addressed and resolved to meet or exceed the one thing we all like to hear …….”Customer Satisfaction.”  Keep the home fires burning as the fuel of our fire is still merely a signal. Don’t forget it is not as easy as lighting a fire but the supply chain today needs to be linked with the use of today’s technology and the most important resource our people. Many tools are available which allow quick response to changes but the people are still the key.

My son-in-law Lawrence and I were half way up the 1,000 foot rock face and while the climbing had been difficult, we’d been moving pretty quickly and expected to reach to the summit of Tahquitz before 3:00 pm.   Lawrence was going to lead this next section and while he organized the gear on his harness, I double checked the rigging and prepared to perform my belay duties.    I noticed another pair of climbers on a different route off to our left and it appeared that the lead climber was struggling with his gear placements.    In traditional climbing, you place gear called cams and stoppers in cracks, and these serve to save you from serious injury or death in the event of a fall.   Selecting the right piece of gear and placing it properly can literally be the difference between life and death.   Often you may climb 10 or more feet before finding an appropriate location for gear, and then you need to hang on with one hand while you select and place that gear.    If you fatigue and fall before the gear is placed you will fall twice the distance from your last placement, 20 feet or more.  As I watched the lead climber struggle I couldn’t help but compare his effort to ours and wondered if I was going to witness a serious injury.

Through the years of climbing I’ve learned that the principles of lean manufacturing are as applicable to this sport as they are to any business enterprise.  I believe that good climbers intuitively understand this even though they may not be familiar with the term.   Focus on the value chain and eliminate waste.   Waste in this sport is any unneeded expenditure of energy that doesn’t contribute to getting you to the top while still maximizing your safety.   A good climber will study a potential climb, often for hours, before setting foot on the rock.   If there is a guide book, the route descriptions including suggestions for the right gear will be included in the preparations.  Decisions on what gear to bring and how to organize it on your harness for each section of the climb helps to eliminate wasted motion and energy.     In addition, there are special tasks that need to be performed in an efficient and consistent manner to eliminate unnecessary variables that add risk to the climb.   These can be seemingly simple tasks like managing the surplus rope as you belay the climber, but when 200 feet of rope is involved, it can easily get caught in cracks or tangled if not managed properly.     Lean manufacturing embraces the concept of “Standard Work” where the activity of a particular set of tasks is choreographed to eliminate wasted motion and ensure repeatable (high quality) results.  Climbers religiously apply this concept to most aspects of climbing because it helps to ensure that at the end of your day you’re drinking a beer and not driving to the hospital.

It many ways I believe climbers do a better job of applying the lean manufacturing principles than businesses do.   Heck, it’s your life that’s on the line.   While many companies have made serious inroads to building a lean culture, I’m still surprised at how much room is still left for improvement.   Within the global market place, companies that have successfully embraced lean manufacturing have a distinct advantage, and for those that haven’t, I believe they need to start thinking like a climber (it could be the life of your business that is at stake).

Attending a fund raising event recently for the Colbeth Clinic in Chicago I had no idea my thoughts would turn to lean manufacturing and supply chain management. The Colbeth Clinic applies cutting edge research to the treatment of biological brain diseases. Discussion about bipolar disorder, depression, autism, and schizophrenia was another world from global supply chains. However it did not take long after hearing the successes of the clinic, the stories of the people who worked at the clinic and the people who were rescued by the clinic to realize there was much here to learn. The best lessons are the lessons that are “transferable” and there are many to be found at the Colbeth Clinic that you can take and apply to the world of lean manufacturing and supply chain management.

Get passionate.  It was obvious that the people involved with the Colbeth Clinic are passionate about their mission. Anything that is world class is lead by people overflowing with passion. Whether it be a world-class research and treatment center for mental health disorders, a world class athlete or a world class supply chain, being number one starts with passion. If you want your Lean, Six Sigma and Supply Chain initiatives to be the best in the world, seek out and engage individuals who are passionate about the subject.

Know your customer. Talk of customers at a fund raising event for a clinic that deals with adolescent mental health issues? You might be thinking I drifted into the wrong ballroom. One of the most compelling stories of the evening was about what goes on in the clinic. Articulately described was the experience a child has when visiting the clinic. Those at the event will know this is no “IRS” building. The staff at the Colbeth Clinic intimately knows what it is like to be a child and the family of a child in the middle of their own hell having to go to yet another facility to try and find some hope. The Colbeth Clinic is designed with the child and family in mind. One mother I talked with said it was like going home and that she did not want to leave. The children are the “customers” of the Colbeth Clinic and that is their focus. Any Lean practitioner will tell you at all starts with the customer but this is a lesson we always need to be reminded of, whether the customer is the next work center or the person that signs your purchase orders. Never stop thinking about what will wildly exceed your customer’s expectations.

Celebrate success. As you can imagine there is nothing worse for a parent than to watch their son or daughter suffer through a terrible disease, especially a mental disease that can be very difficult to diagnose and treat. As my own daughter was suffering from bi-polar disorder it was explained to me that it was like being in a tunnel with no light at the end.  When she received her ‘light’ by getting a proper diagnosis and treatment, there was certainly cause for celebration and we acknowledge the efforts she made to improve even though there were times she didn’t have any hope . She now had a point of reference to what it was like to feel good. Many times people will be involved in Lean manufacturing improvement activities that are skeptical of the approach and believe it can’t get any better. It is this group of people that need to taste success to see and understand the possibilities. This can drive passion in those who have not experienced success in the field and motivate them in future continuous improvement activities. Shed light on your successes by celebrating them.

Good is never good enough. The doctors that spoke at the event are the best in the world. And when they spoke it did not take long for them to talk about all the work that still needs to be done to improve the field of treating mental health disorders. As most of us sat in awe of the inspiring success stories, even at a Gala event, improvement was on the minds of these world class doctors. Moving the yard sticks is a way of life for these people and many of their words were about improving. The Colbeth Clinic treats around 18,000 children a year which on its own is an impressive stat. Even more impressive though is the quality of the treatment. Many of these kids had no hope before but they are now celebrating their own milestones and successes. However all staff and doctors quickly get back to doing better by improving the quality of their research, their treatments and figuring how they can serve more children. Again, the term Continuous Improvement is on the first page of the Lean dictionary but how can you make it a way of life for all employees, not just the change agents in your organization. Do you have suggestion programs that make it easy for people to submit ideas and act on the ones that drive the most value? Does today seem like yesterday and the day before? Did you move the yard sticks? Make continuous improvement a way of life for all so that good is never good enough.

Share your story. When is a disease not a disease? When it is a mental disease. I was told this as I started to learn more about bi-polar and other mental diseases. There is a stigma about mental disease for some reason and generally people don’t want to talk about it. I don’t know why. Maybe it is because of the uncomfortable symptoms of these diseases, suicidal thoughts, self-harm, paranoia, and depression? Understandably even people that have conquered their battles are uncomfortable or embarrassed talking about it. But when people talk, things happen. You soon find there are other people suffering and you find you are not alone. People also start to ask for help or to give help. I’ve now been on both sides of these conversations and only good things happen when people talk. People get better when people talk and share their stories, experiences and successes. This is no different in Lean Manufacturing and Supply Chain Management. In most cases people take the experiences and lessons from others and improve on them. An improvement you make can be rewarded by somebody else taking it to another level and in turn, enabling you to also improve further. Share your stories so that people and processes can continue to get better.

The latest edition of the IndustryWeek Manufacturing Business Challenge is out.  It is entitled “Poor inventory management angers customers and suppliers.”  The challenge profiles a manufacturer trying to implement lean manufacturing processes but struggling to get their inventory levels right.  Too much inventory has cost implications that negatively impact operations performance and too little inventory undermines customer service and puts revenue and market share at risk.

Solutions are proposed by Kinaxis and Nari Viswanathan, vice president and principal analyst, Aberdeen Group.

Many manufacturers have embraced lean manufacturing practices.  Yet, staying lean during a recession can prove very difficult.  Manufacturing Business Technology has just published a case study article on Kinaxis customer Hubbell.  You can see the article here: Staying lean during a recession.

According to the article:

To keep the supply chain lean for its Hubbell Lighting division based in Greenville, S.C., says Jeffcoat, Hubbell is using supply chain decision-support and event-management software from Kinaxis to adjust short-term supply execution to current demand.

The Kinaxis RapidResponse package, says Jeffcoat, takes longer-term supply and material plans generated by the company’s ERP system and analyzes them against current requirements, taking into account the cross-dependencies among parts, multiple suppliers for parts, and the latest demand requirements. The system also has an event-management component that allows Hubbell Lighting to alert suppliers to necessary changes in the supply plan.