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Transformation Tools
August 8, 2013/in Tools and Methods /by Kaufman Global
Question: How often do organizations make such bold and radical choices and stay the
course?
Answer: Rarely.
Years ago, I worked for an automotive tier 1 supplier that was facing all kinds of
operational problems. Many of their challenges stemmed from an increasing
number of additional products that required new machines and equipment, posing
the question, “Where do we place them now?” Other challenges included long,
complex delivery routes with WIP in every process step, conveyor belts creeping all
over the place and inventory build-up. The list was endless. In the midst of it all, the
manager had been trying to create efficiency to the best of his abilities but was
failing ― slowly but surely.
Drastic change was needed. As a result, the plant shut down for a week, during
which all machines were removed, and within that week everything was re-installed
but in a complete new configuration based on one overarching principle: Flow!
Such drastic change is surely not always needed ― nor does it happen in many cases
― because most organizations do not have the collective courage to make such a
decision. So, often a choice is made for gradual, incremental changes, but
incremental to what? In order to build a house you do start with the foundation
don’t you?
2. Make a Plan
The plan has to be simple enough to understand, but detailed enough to answer the
basic questions that everyone will have: Who, What, When, Where, How, and How
Much? This seems like basic information, but once you start to think about this in
the context of a complex system (i.e., the operation), you realize that it really does
take some thoughtful consideration. The better you do upfront on these important
questions, the less time you will spend re-directing later on. Yet, there will be
unknowns, so don’t over-analyze. Make enough of a plan to answer the questions
and get started.
3. Apply Resources
Resources to drive transformation fall into two areas:
The resources necessary to push the organization off center and force the
initial change. This takes significant energy and can’t be overlooked. Everyone
already has a full-time job. Don’t expect the line organization to have the extra
time necessary to effect a dramatic change. The bottom line is that some form of
external support is most often required. It can be staff from other locations or
external resources who make the initial push, but realize that they won’t be the
ones to sustain or ultimately own the change.
The line organization who must ultimately own the initiative. The skills
needed to push the organization in a new direction are not necessarily the skills
required to sustain the change. But, once the initial rapid change is
accomplished, it will take a lot of energy to hold into place. Don’t worry, this isn’t
extra energy; it’s actually less energy than the old, waste-ridden practices prior
to the transformation. Even so, the organization will attempt to do both the old
and new ways. For this reason, you will need to apply internal resources to keep
the new good practices in place, and to add even better ones as time goes on.
4. Over-Communicate
Make sure that everyone is clear about the objectives and plan to accomplish the
objectives. A well-defined communications plan is an essential ingredient of success.
Keep everyone informed about progress, challenges, accomplishments and, most of
all, results — even the small ones. Near-term wins along the way will keep people
energized and provide powerful ammunition for those who resist the change in
favor of the tried and true ways of the status quo.
Lean is about waste elimination right? But to what end? The Toyota Production
System (TPS) promotes eliminating waste in the pursuit of higher quality, lower
costs and improved delivery with empowered employees. Yet, what is the ultimate
objective? If you have “all of the above”, these are several things you don’t need to
worry about as you pursue new customers and new markets. In our view, Lean is
the ultimate strategy for growth.
Knowledge and expertise stem from both good and bad past experiences. As much
as we admire the entrepreneurial spirit of those who seem to be charging ahead at
the speed of light, the truth is that successful innovators occupy a significant amount
of their time studying the “lessons learned” of their predecessors. Unfortunately, it’s
far too common for organizations to follow a well-trodden path and then stop
abruptly when other priorities arise. Experiences are often lost, and errors are later
repeated. In the end, past efforts are often wasted as the creative ideas from former
teams are constantly reinvented.
When it comes to continuous improvement, it’s imperative that time be dedicated to
holding standard, prescriptive, and quantitative reviews that evaluate the
effectiveness of CI efforts. A concentrated effort should be made to discuss and
formally document successes and failures of any significant flow of tasks and
activities. If one thinks about it, every workflow should be a continuous loop of tasks
from which the concept of CI can grow and flourish. This is equally applicable to
such innovative functions as new product development or to the more mundane
activities associated with financial month-end closing. CI effectiveness reviews are a
critical success factor for any initiative in order to continually build on prior efforts.
As identified in the 20 Keys Cycle illustration above, the method drives a continuous
cycle of improvement and builds on prior efforts. Typically repeated four times per
year, location leadership or a designated representative works with the workgroup
to assess their score for each of the 20 keys. This is an honest, direct exchange in
which the they score each key against known criteria. Once the assessment is done,
this same workgroup decides on which key(s) they should focus on improving. The
objective is for them to increase their overall score by 10 points per year.
It’s time to make a fully documented review procedure (that includes targeted
metrics) part of your organization’s way of life — no matter what industry or
business function you happen to be working in. Think about it. What did you learn
from your recent improvement efforts, what was measured to evaluate results, and
how can those results be improved?
Over the years, businesses have used numerous tools and techniques to achieve
rapid change (i.e., Kaizen events). These techniques have typically focused on
resolving specific manufacturing or business issues and last (often) for five days.
However, in today’s fast-paced world, shutting down for an entire week to find and
implement solutions to known problems is most often considered out of the
question. Businesses now expect immediate gratification, often aiming at big
changes in a just one day.
With a “need for speed,” more and more organizations are adopting the idea of
holding what are best known as Stand Down Days ― one-day problem solving
events. These intense initiatives can be focused on a broad range of improvement
activities, but are most often leveraged to jump start 5S programs. Far removed
from “business as usual,” a Stand Down Day is not something that can be undertaken
by the faint-hearted. Only organizations with true diligence will succeed.
For Lean aficionados, the execution of a Stand Down Day should not be that
daunting, as it falls squarely within the typical framework of Plan-Do-Check-Act
(PDCA) ― with a significant emphasis on the P. The primary objective of any Stand
Down is to orchestrate a series of tasks in a day that could typically extend over
weeks of uncoordinated activities. Such orchestration needs more than a maestro; it
requires music sheets and the combined skills of an entire orchestra.
To learn more about how to most effectively plan and execute a Stand Down
event, click here to download Kaufman Global’s white paper, “Stand Down Events
for 5S: The Thirst for Rapid Improvement.”
Prioritize Manufacturing Fixes For Better
Results
August 20, 2012/in Tools and Methods /by Kaufman Global
There are times when a manufacturing operation needs to get better (a lot better)
— fast. This can be the result of many things. Often it’s in response to an external
stimulus, such as competitive pressure, a quality “event,” or a troubled product
launch. Sometimes it happens when customer demand increases without warning,
where the “without warning” comes by way of truly new information and / or
orders from the customer. Perhaps it’s because of a failure of internal sales and
operations planning (S&OP) process — which happens more than anyone would
like to admit. Or, it could simply be that the manufacturing operation has fallen into
complacency and someone new comes in to disrupt the status quo. Whatever the
reason, there are fundamental Lean manufacturing steps that should be taken to
increase production. These types of changes are often inevitable and are often easier
to achieve when thrust upon us.
The top three waste targets for improving manufacturing most quickly are: Waiting,
Inventory and Defects. Everyplace IS different, but overall, these are the areas that
get you furthest fastest. Most other forms of waste, and the methods to address
them, fall in line under these.
Waiting Waste
Whether its machine capacity or human capital, there is no greater sin than waiting
for product to move through the system. The question to ask is simple, “Why aren’t
things moving?” The reasons are fairly standard: machines are down, there are
missing people, parts and materials, etc. Many paths can be taken to fix these
problems. It could be maintenance and machine downtime, or it could be
organizational / skill versatility or shift-loading. Missing parts are often supply
chain issues, such as forecasting and supplier management. In the end, the simplest
question has many opportunities for discovery.
Inventory Waste
Inventory (e.g., raw, WIP, finished goods) is visible and extremely costly. It’s bad
enough when you think about inventory in terms of the cash it represents. It’s even
more frightening when you add the costs of moving it to the location where it sits,
sorting it from time-to-time, and throwing it away when it becomes obsolete or a
quality defect is detected. Only then do you begin to understand how despicable
inventory really is. But that’s only part of the picture. There are other reasons why
inventory is a logical first-strike target.
Inventory not only disrupts throughput by physically getting in the way, but
it also clouds throughput issues by masking problems. When inventory builds
up, it disguises real issues that affect throughput and delivery. WIP covers up
overall equipment effectiveness (OEE) and quality issues. Raw materials disguise
supplier delivery and quality problems, and finished goods inventory mask gaps
in on-time delivery.
Inventory is the most visible attribute of a Lean versus a non-Lean operation.
Not only does it show up throughout the operation, but it also shows up at
headquarters where the people who measure results automatically assign
dollars to inventory. A comprehensive reduction in inventory (i.e., an
improvement in inventory turns) is a sign to the entire organization — from top-
to-bottom — that something is improving. This is important to build enthusiasm
for the dramatic changes taking place throughout the operation.
Defects Waste
Building bad product wastes time, energy and money because it’s already loaded
with labor and material costs. On top of that, we add cost to detect, sort and fix
defects. Quality is in the top three most important initial targets because it cannot
suffer at the hands of the throughput objective. And, nothing will undermine an
initiative to increase throughput faster than a quality problem delivered to the
customer. In the automotive industry, recalls result in billions of dollars of lost value
every year. In the Oil and Gas industry, a single quality problem leads to non-
productive time (NPT) that can cost a million dollars per day. And, it’s not just the
cost of fixing the problem that impacts businesses the most, it’s also the damage it
causes to the supplier and customer relationship. The cost of the Macondo oil spill
disaster(which was more a process quality issue than a material problem) is
incalculable ― both in terms of tangible and intangible losses.
Everything Is Connected
Because the entire system is connected, addressing any one of these three wastes
automatically impacts all the others described by Ohno. Ask good questions at the
start and develop a plan of attack that always keeps your focus on the objective:
“How do we incrementally get more top quality product out the door with the same
or fewer resources?” Start with the few critical places where small improvements
will have the greatest effect, and then develop an implementation plan that includes
the broader organization in a holistic approach. When you’ve made it this far, you
can then apply waste elimination tools, methods and techniques to your heart’s
content.
To Learn more about Kaufman Global’s view on Lean manufacturing, download our
White Paper: Implementing Lean Manufacturing: A Holistic Approach.
One of the most common and most difficult to eradicate beliefs is that “Lean” is just
a bunch of analytical tools and methods. By knowing and applying them,
organizations often believe they will automatically — and forever more — increase
their profitability. If this were the case, why are so many companies, institutions and
agencies that have applied Lean tools not experiencing sustainable differences? Why
is it that in many instances organizations, once started down the road of Continuous
Improvement (with varying degrees of success for sure), break away and refocus on
other initiatives the moment a new CEO or plant supervisor comes onboard? Are the
tools not working? Is it just another consultant’s ruse, where the theory sounds
great but doesn’t work in real life? Or, are the means and methods not being used
properly?
Computers, the Internet and mobile phones are all great inventions from the last
century. However, given this definition, they are basically just tools — they are a
means to an end and should be used as such. Nevertheless, in today’s times it is easy
to find examples of where tools are being treated as an end more often than not. For
instance, in manufacturing environments production schedules are created by ERP
or MRP systems. Yet, these systems depend entirely on accurate data input such as
correct inventory levels, material locations, scrap levels, (reported vs. actual), etc.
And, as we all know, production cycle times never vary (ha!). All these elements are
heavily influenced by people’s behavior where work discipline is translated into the
accuracy or inaccuracy of the ERP / MRP tool. But in real life, we seldom follow the
exact schedule generated by the computer. Why is this? The computer rarely makes
mistakes. It’s because we — people — do not use the tool properly and consistently.
We don’t give the tool what it needs which is accurate data and inputs. We
automatically assume the computer has considered all the variables.
Be Consistent
In another assembly plant, a need was identified to increase the quality output of a
specific cell. Boundary samples, error proofing sensors and devices were installed,
along with standard work methods and detailed visual job instructions, all with
great success. However, several months later, the focus of management changed.
They believed quality was now a given because all the “tools” were in place. They
chose to revert back to the old, well-proven method of shouting to demonstrate the
new priority and increase output of the production line “any way you can.” The
operators responded as predicted, and the output numbers from the cell increased.
Over time, the focus on quality checks in the cell became more relaxed. Soon enough,
scrap numbers began going through the roof. As it turned out, the operators had
found a way to circumvent the sensors and boundary samples because they felt a
higher productivity goal was being served.
It’s important to remember the definition of a tool: any physical item that can be
used (by someone) to achieve a goal. Success comes from selecting the right tool
and determining how someone must use it. It is a means and never an end!
Lean tools are logical, easy to understand, widely applicable and, in most cases,
simple common sense. The important thing to remember is that if we do not use
them diligently, in a structured manner and adjust our own behavior, the tools alone
will never achieve sustainable improvements.