LEAN MANUFACTURING
By Mark Oakes
Introduction to Lean
Lean is a hot topic in manufacturing. Lean, in general, is hot in service industries, distribution centers and government agencies. Every manufacturing or quality related magazine has a myriad of articles, training activities, and book reviews on the topic. But what is “lean?”
The Virginia Philpott Manufacturing Extension Partnership (VPMEP) provides NIST-approved Lean training (National Institute of Standards and Technology). The company also assists in the implementation of Lean. We define Lean as “a systematic approach to identifying and eliminating waste (non-value-added activities) through continuous improvement.” Benefits of Lean include reduced cycle times, inventory, work-in-process, and costs, as well as increased capacity and productivity.
For the most part, Lean is common Industrial Engineering sense. The Dilbert Cartoon serves as a continuous reminder that many companies have lost focus on the basics: keeping cost, quality, and schedule on the right track. Lean brings us back to these basics.
Lean focuses on reducing or eliminating the 95% non-value added activities that interfere with the 5% of time actually required to add value. The 95% usually includes one of eight Lean wastes:
These eight wastes contribute to high costs, inefficiency, poor service and poor utilization of space and resources. Overproduction is usually the greatest culprit in the line-up. Making too much of an item or making a product too soon are the telltale signs of overproduction. Some may argue that having product on hand allows flexibility and greater customer service potential. It is easy to forget the cost of this luxury. The space consumed by the product, as well as the cost of making it, insuring it, counting it, protecting it, and moving it are just a few disadvantages of Overproduction.
Waste - Overproduction & Excess Inventory
Closely tied to Overproduction is Excess Inventory. Whether you build it or buy it, too much inventory can be a tremendous drain on a company. Besides consuming valuable floor space, it can hide operating performance problems that would otherwise be evident. Due to these and other issues associated with Excess Inventory, many companies have experienced a negative cash flow. Well-run companies keep a close eye on inventory levels and try to increase inventory turnover as a means to maximize space utilization, maintain fresh product, and reduce costs. We will examine the other wastes in upcoming newsletters.
Waste - Transportation and Excess Motion
People commonly associate these two wastes and use them interchangeably. From a “lean” perspective, these wastes are not the same.
Transportation waste involves the unnecessary movement of material, usually caused by poor plant layout or poor process alignment. The “waste” is constituted by the time lost during the move, the equipment cost to make the move, and the space required to allow equipment access to the subject material. Material handling equipment can introduce many other issues and costs, such as training, maintenance, record retention, equipment operating costs, and the procurement of associated goods and services.
Excess Motion involves the steps required to perform a task. For example, while a worker may appear to be busy, he or she may accomplish very little in the end. In manufacturing operations, detailed work instructions are used to reduce this waste, ensuring certain levels of performance and quality. Samples, pictures, jigs and templates may strengthen the goal of these standardized procedures. What about an office environment? How many work instructions have you seen posted for using a computer software package or using the fewest keystrokes to process a document? As you may guess, “lean” in the office will be a new frontier.
Waste - Waiting and Non-value Added Processing
How long have you ever waited for something? Sometimes the wait may be seconds or on really bad systems the wait could be months. There are many reasons we wait. Among the most common are signatures for approval, waiting for assistance from a knowledge help perspective and waiting for service due to a poorly balanced system. How many beneficial or value adding elements could be accomplished if wait time could be turned into work time? We all know that waiting is bad or at least annoying, but how many companies capture wait time and the associated cost? I can tell you from experience there are not many. You may know someone that can look busy, as they appear to be working. This is even worse than waiting. They are hiding an opportunity to do something constructive or may be producing a product that is not required.
Non-value added processing deals with going well beyond what is required to do the job. In school, you may remember an assignment to write a one-page paper on a topic and someone turns in a bound volume. In the workplace, this type of extravagance may be costing you money or customers. Every consumer wants good products at a fair price. Many products have far too many options that inflate cost. Some products have been engineered too extreme and some workforce practices are also beyond reason. Understanding customer requirements is a large part of understanding this type of waste. Typical examples include tight tolerances on edges that fit air or defining a micro finish on something that bolts to a rough surface. In an office environment, you have people that write some type of report just in case the boss needs it. It is a good exercise to really review all processes from time to time just to see what is really needed and what can be eliminated.
Defects are an obvious waste. Damaged product and incorrect paperwork are defects. Many people underestimate the cost of a defect. In a manufacturing setting, a defect at least triples cost. The original cost has to be absorbed and then the repair or replacement cost must be captured. Also, the opportunity cost for redoing a job and not working on another product must be recognized. In my experience, defects are tracked much more closely on the shop floor than in an office or paperwork system. Many companies have no system to track paperwork defects and have no idea how significantly these defects impact the business. Imagine a situation where partial or incorrect data is used to quote a new job. How many times will this process have to stop and restart after correct data is obtained? Many things are tracked in a manufacturing operation, making defects stand out. However, the office environment is different; though the confusion around a defect may still exist, when was the last time you saw a non-conformance tag on a PO or a quote being held in the “office defect” area?
What do we mean when we say Underutilized People? From a lean perspective, we are talking about improper utilization of people’s knowledge, skills, and abilities (KSA). All companies have talented people within their ranks. Some people are very creative, some perform better with visuals, some are very shy, and some are very domineering. There are many other personality types and individual strengths and weaknesses that are part of our social fabric. Most people have worked on teams that are comprised of many different personalities. How can you be sure your team will succeed at its task? Can one person on the team affect all the others and the outcome? Are great ideas left out of a discussion? As you might guess, it is a difficult task to create a great team. In our daily work environments, the same is true. Are individuals’ KSA “left on the table”? Are hundreds of great ideas and continuous improvement initiatives passed over? You never know where great ideas are hiding. Advanced education is not a foolproof solution. How many PhDs work for that college dropout, Bill Gates?