Category Archives: Lean

All things “Lean” within the world of manufacturing

Beyond Lean Manufacturing: Value-Driven Business

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For many manufacturers – particularly those well advanced on their Lean Manufacturing journey – the burning question now is: “So what do we do next?”

Manufacturers have been applying “Lean” techniques across their production operations for many years now. Most of them have reduced their costs, most of them have increased their productivity, many of them have engaged their employees and some of them have sustained a culture of Continuous Improvement (CI). So far, so good. But what do you do next?

You’ve streamlined your manufacturing operations, you’ve created a good CI system, most employees are actively engaged, Lean has become part of the day job, and you’re confident that improvement activities will be sustained.

You know that Lean Thinking works, you know that it’s a journey not a destination, and you’re wise enough to steer clear of the latest “management initiative” (fad).

So what do you do next?

To answer that question, let me offer you three “next steps” to consider:

  1. Apply Lean Thinking across all areas of the organisation, not just in Production or Operations. Train all employees (and I do mean all!) to understand the basic concept of “Lean” and how to apply it in their areas of the business. They’ll need a different approach – and some different tools and techniques – from “Lean Manufacturing” but the tools are there if you know where to find them. And the opportunities for improvement are usually much greater than in Production or Operations. Have a good look – you’ll be amazed at what you find! Some of our “World Class” clients have found rework levels of more than 90% in their “back office” and support functions – it’s not uncommon.
  2. Work on the entire Value Stream / Demand Chain. Extend beyond Operations to cover all stages of the order fulfilment process (from “Quote to Cash”). Once you’ve done that inside your own business, extend outwards to include your suppliers, customers, agents, distributors, and end-users. If you can create your own unique Value Chain (even if none of the components are unique) then you can create a very valuable business. Some of our clients have created a unique competitive advantage for themselves by doing exactly that.
  3. Focus on the “Value-Add” side of Lean – the part that most people ignore! Look for opportunities to add more value for your customers. See where you can “in-source” or “back-shore” your operations, and find out if you can do some of the things that your suppliers and customers currently do. Some of our clients have increased their turnover by more than 50% in less than a year by doing exactly that.

The three steps that I’ve just outlined are part of a much broader approach to business improvement, called Value-Driven Business. When it’s applied to manufacturing businesses – which is mainly what this blog is about – it’s called Value-Driven Manufacturing. You can find other blog posts about Value-Driven Manufacturing here on the Manufacturing Times blog (helpfully categorised under “Value-Driven Manufacturing”!), and you can find out more about Value-Driven Business at www.ValueDrivenBusiness. co.uk. There’s enough there to take you well beyond Lean Manufacturing!

Leading the Value-Driven Business: Character

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People trust Leaders who demonstrate Competence and Character. In a previous post I talked about some of the fascinating Leadership research outlined in a recent series of HBR blogs. The most recent explains why Character is so important, and how effective Leaders should demonstrate this. I’d like to pick up on the main points here because they’re incredibly relevant to every owner-managed business, to every Continous Improvement approach, to every major change programme, and of course to every Value-Driven Business. Personally, I believe they’re so important to our day to day interactions that they’re intuitive – it’s how we behave, even without realising it. As you’ll see, they’re so common that they’re repeated and commented upon to the point of becoming cliches…

1. People need to know what you’re trying to achieve and why.

Whenever we first encounter a stranger we want to know: what is this person’s intent or motivation? Hence the cliched challenge: “Halt stranger! Friend or foe?” It’s why the first words of the alien in the 1950’s sci-fi movie, as it steps from its flying saucer, are: “I come in peace”.  It’s probably why so many novels and films feature encounters between strangers – we become immediately engrossed and our natural instincts are instantly engaged.

It’s why the method actor asks his/her director : “What’s my motivation?” It’s why the question:”Who are your heroes?” tells us so much about a person. It’s why the best situation comedies are so funny – great actors develop well-defined characters, and we enjoy and come to anticipate how the different characters will interact, each seeing the world from their own perspective.

In a business context, many owner-managers vastly over-rate the mind-reading abilities of their employees. It’s important that you explain what it is that you’re trying to achieve, and why you do what you do. We all know how important it is for a business to have a clearly stated purpose, but it’s also important when it comes to the day-to-day decisions and actions of the leaders in the business. And talking of actions…

2. People hear what you say but they believe what you do.

Words are important but actions are what counts. It’s about leading by example and doing what we expect others to do. We cannot always understand a person’s motivation so we judge people by their actions and behaviours. Again, this is so well understood it’s part of our everyday language. We have phrases like “Walk the talk”. We understand the emptiness of “Do as I say, not as I do”. It’s one reason why stories and fables are so compelling. It’s why we tell “war stories” and we recount tales of key moments in people’s lives, and how they behaved.

3. Consistency is everything.

We act in accordance with our values and beliefs so one way that we can judge the extent to which others are sincere or genuine is by observing how consistent is their behaviour. If a person acts inconsistently or in a way that does not match their stated values and beliefs, we take that as a sign of falseness. To quote Marx (Groucho not Karl): “These are my principles. And if you don’t like these, I have others…”

To read more, the original HBR Blog is http://blogs.hbr.org/hill-lineback/2012/04/for-people-to-trust-you-reveal.html

You can find other blog posts about Value-Driven Manufacturing here on the Manufacturing Times blog (helpfully categorised under “Value-Driven Manufacturing”!), and you can find out more about Value-Driven Business at www.ValueDrivenBusiness. co.uk.

Value-Driven Manufacturing and Value-Driven Business

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Value-Driven Manufacturing is an application of Value-Driven Business, in the same way that the Toyota Production System is part of the Toyota Management System. For an outline of the  main points there’s a free PDF download: What every Owner-Manager needs to know about Growing a Great Business

Increase factory output: Part 5 – Working Overtime

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OK – let me say up-front where I stand on this: I’m not a big fan of overtime working, as it’s often practised. In my experience it’s often the wrong solution to the wrong problem. I’ve seen too much regular institutionalised overtime and it’s something that I’ve always tried to eliminate in every factory I’ve ever managed. When it comes to individuals’ pay I’d far rather that production operators  were far more productive and far better paid. In my view, low pay and low productivity go hand in hand and are not consistent with Value-Driven Manufacturing.

It’s a very complex issue, touching as it does on so many areas:

  • work-life balance
  • the written and unwritten contract of employment
  • power and politics
  • industrial relations

For these reasons, overtime working relates closely to the third principle of Value-Driven Manufacturing: Effective Leadership, based on strong values and beliefs. How and why overtime working is used (or not used) says a great deal about the culture of the organisation, its values and its leadership.

Don’t get me wrong – overtime working has its place. So when and how might overtime working make sense? Here are some thoughts –

1. When it’s a short term fix to provide valuable additional labour capacity. In other words, where it satisfies the basic principles of Value-Driven Manufacturing – it increases the value of the business and / or it delivers additional value to the customer.

2. When it makes more sense than the many alternatives, for example:

  • applying Lean principles to create additional capacity by reducing labour hours required
  • rescheduling / prioritising delivery dates
  • re-deploying staff from other areas (including Management and Admin)
  • employing additional staff (perhaps temporary, agency or subcontract labour)
  • flexible demand-based hours (eg annualised hours – but not “zero hours” please!)
  • automation

3. When it’s seen as part of a concerted effort to achieve an usually diificult / important / one-off challenge.

As always, this is my personal view – I’d be interested to hear of  other people’s experiences and opinons on this, so please feel free to log on and comment…

Value-Driven Manufacturing

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I had the pleasure earlier this week of meeting with a highly impressive Operations Director, as we toured his plant in preparation for hosting a best practice visit next week. As always, we got to talking about what makes an excellent manufacturing business, and it turns  out that we share many common beliefs about this. Not surprisingly, they all revolve around concepts of value. I firmly believe that value is the key to business success, even more so in the current economic downturn. For manufacturers this translates into Value-Driven Manufacturing, which is based on three simple beliefs:

  1. The Goal is to maximise the value of the business
  2. This can only be achieved by delivering maximum value to the customer
  3. Success requires effective leadership, based on strong values and beliefs

Those are pretty strong statements so if you’re still reading at this point, I’ll assume that you don’t entirely disagree! Let’s look at what this all means in practice:

1. The Goal is to maximise the value of the business

Anything else is either subsidiary, irrelevant or “nice but useless”. Maximising value requires an excellent operating / management system. We’ve all heard of Lean and the Toyota Production System but many manufacturers don’t realise that this is only one part of the Toyota Management System. Here’s a challenge for you – put yourself in the position of a potential purchaser of your business, and walk the plant, trying to see everything through their eyes. Of everything that they see, what would genuinely cause them to pay more for the business?

2. This can only be achieved by delivering maximum value to the customer

Let’s be controversial – too many manufacturers are still internally focused and cost-driven, led by accountants who “understand the cost of everything and the value of nothing”. They use Lean and Six Sigma primarily as cost-reduction techniques. Do you understand your customer’s business / market / industry as well as they do? Do you understand how they add value for their own customers? Do you fully understand their needs and wants and are all employees engaged in delivering value? Do you regularly undertake “value-add” visits to your customers, and do you take your engineers and operators with you?

3. Success requires effective leadership, based on strong values and beliefs

Great leaders are believers – they passionately believe in what they’re doing and they inspire others with their values and beliefs. They’re humble, keen to learn and they expect excellence where it matters. Great leaders are rare but they exist in all walks of life and in all areas of business, at all levels. They need to be encouraged, developed and trusted to excel.

You can find other blog posts about Value-Driven Manufacturing here on the Manufacturing Times blog (helpfully categorised under “Value-Driven Manufacturing”!), and you can find out more about Value-Driven Business at www.ValueDrivenBusiness. co.uk.

Increase factory output: Part 3 – targets, feedback, recognition and reward

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In previous posts we’ve looked at the “technical” side of increasing output – the tools and techniques. Now let’s look at the “people” side of things – how to get more from employees.

 

Most of us want to know what’s expected of us, we like to have something to aim for and we like to feel we’re making progress towards a worthy goal.

 

Usually, it’s not difficult to provide all of those things in the workplace. But too many of us don’t. Here’s how:

 

  1. Agree on two or three important objectives that are relevant to the work team – probably based around quality, productivity and service.
  2. Find some simple ways to measure them.
  3. Agree on regular targets – monthly, weekly, per shift, per hour.
  4. Make sure they’re visible to everyone in the work area.
  5. Display actual performance regularly and visually (electronic display or hand-written whiteboard).
  6. Recognise good results immediately.
  7. Train, help and encourage the team to solve any performance problems.
  8. Find ways to recognise and reward those who contribute the most. Be creative!
  9. Actively manage the performance of those who don’t contribute.
  10. Lock in the improvements
  11. Celebrate success
  12. Keep at it!

The power of SMED – probably the best payback you’ll ever see

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I attended a great workshop session last week by EEF about the need to ensure that training is designed to produce measurable business benefits. Like all good learning activities it got me to thinking. Despite the economic downturn one question I’m rarely asked by clients is: “What tool is going to save me the most money most quickly?”

If you spend a significant amount of time on set-up’s and change-over’s the answer is very simple: SMED.

In my view SMED is one of the best Lean tools available, bar none!

 I had yet another perfect example of this a couple of weeks back, with an engineering client. They make small batches of tubular steel frames for OEM’s of chair and bath products. Inevitably, batch sizes are getting smaller, lead times are getting shorter and they’re needing to develop – and prototype – more and more new products. So set-up’s and changeover’s are becoming more and more of a problem. They knew they had to improve and they were keen to learn how. The answer proved very simple: SMED!

I spent some time with the production manager and team leader planning a half-day  SMED session.  

Two weeks later we got together the team who worked in the production cell and they spent about 40 minutes learning about SMED in a practical workshop session. As always, I told them: “If you haven’t yet applied SMED then typically you can halve change-over times fairly easily”.

Then we had half an hour or so of prep. time to make sure we each knew exactly what we were going to do. We spent about half an hour video-recording an actual change-over then back to the training room. There we spent a further hour and a half analysing the video using a SMED spreadsheet, and brainstorming improvement ideas.

Result: the team immediately identified a series of low-cost / no-cost improvements. Some could be implemented immediately and others will take 3-4 weeks to complete fully. Reduction in change-over time: 52%.  

Much as I’d love to, I can’t run these on-site SMED sessions for everyone who needs them. So a while back we took all of our training materials and put them together into a simple trainng package. It’s got the analysis spreadsheet, a 2-page “how-to” guide and a short video animation with voice-over showing you step-by-step exactly how to do the analysis. And you can download the whole package from our website for only £16.95 (USD 29.50): SMED Training Package. And if you don’t find that that’s the best payback you’ve ever had for a training product I’ll give you a full refund!

Whether you use our help or not I urge all of you with significant set-up and change-over times to start using SMED as soon as you possibly can. It’s quick, simple and the payback is tremendous!

Increase factory output: Part 2 – 5 money-saving tips for tackling machine bottlenecks

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It’s easy to assume that a machine is a bottleneck simply because work stacks up behind it. It seems obvious – the machine cannot keep up with the required pace of production. So the Capital Expenditure request gets written or the owner gets his or her chequebook out, the new machine arrives and everyone’s happy. Everyone that is except all of the folk who had better things to spend the money on.

No-one wants to be the party pooper but here’s the Painful Truth: sometimes you don’t really need to spend all that money. In reality, the machine can often produce enough to keep up with customer demand.

In previous posts we’ve talked about Overall Equipment Effeciveness (OEE) as a great way to measure how much good quality output you’re getting from a particular machine or process. In fact we recommend that you consider measuring OEE regularly on all critical / bottleneck machines / processes.  But for the moment let’s just keep it simple and jump straight to some practical money-saving tips…

At this point if you’re well advanced with Lean and you’re regularly hitting OEE levels above 80% then you can stop reading now and instead go away and review progress against your policy deployment  goals. For the rest of us, read on for some practical money-saving tips…

Money-saving tip #1: measure how much of the available time the machine actually performs value-added work, i.e. producing output that the customer will pay for. You’ll be amazed! You spent all of that money and the **** machine is only working half of the time! Measure all of that lost time and what it’s spent on. Things like break-times, set-up’s and changeover’s, break-down’s, scrap and defects, running at lower speeds, not producing right first time, etc, etc, etc. Sounds familiar? Pick the biggest ones and get the team looking at ways of reducing them. Here are some examples…

Money-saving tip#2: look at staggered break-times, improved production scheduling, effective materials supply. In other words, make sure that you always keep the machine running and you always keep it fed with work. If this is a problem area for you, it’s time to learn about Drum-Buffer-Rope: aim to maintain a buffer of materials to feed the machine and feed it at the rate required to keep up with customer demoand (the “drum beat”).

Money-saving tip #3: if the machine needs a warm-up / start-up period, where possible make sure this happens before the start of the working shift. For example – if employees are on site and raring to go (*cough*) at 7.00 am, arrange for someone to come in earlier to warm up the machine. Same applies at the end of shift.

Money-saving tip #4: if you’re losing too much time on set-up’s and changeover’s, you need to apply SMED. In my humble opinion SMED (“Single Minute Exchange of Dies”) gives the biggest, quickest payback of all of the Lean tools and techniques. It’s easy to learn, easy to do and often gives dramatic savings. The first time you apply SMED it’s common to halve the time taken, usually with little or no cost. Excuse the shameless plug here but you can download our SMED training package and learn how to do it in less than 20 minutes for less that £20 (less than $30).

Money-saving tip #5: crank it up! You’ll often hear lots of “reasons” why the machine can’t run at its full rated speed. “It keeps breaking down”, “Quality deteriorates”, “We can’t keep up”, etc, etc. Try it! Measure it! Often the anticipated problems are far less serious than expected. If you do get problems, you’ll then know exactly where you need to focus some improvement effort.

If you’ve already bought that new machine when you didn’t really need to, well at least you’ll know better next time. If you’re just about to buy it, then before you do have a look at these tips. They might just save you a fortune.

If you’ve any examples of your own please submit them here and I’ll post the best one’s (sorry about the delay for moderation but I’m afraid it’s the only way we can avoid being hijacked by spam).

In future posts we’ll be looking at yet more ways to increase factory output so watch this space – or better still, sign up to receive new posts automatically by email. Until next time – keep it Lean…….

Increase factory output: Part 1 – tackle the true bottlenecks

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Recent surveys of manufacturers confirm what we’re seeing at the moment – many are struggling to meet increasing orders. We’re being called in by more and more clients who simply can’t keep up! Sounds like a great problem to have you might say, but if you don’t take the right actions immediately to increase your manufacturing output you can find that you quickly run out of your customers, your cash and your sanity!

Time for some home truths.

Many manufacturers throw money and resources at the problem and end up killing their profits and running out of cash. We run a great factory simulation exercise – Factory of the Future – that illustrates this perfectly. Everyone’s working flat out but costs go up, quality goes down and delivery performance goes out of the window. Sounds crazy but those of you who’ve taken part will smile as you remember seeing it with your own eyes.

So how do you get it right?

Well, let’s not get into the finer points of Theory of Constraints at this point – let’s just keep it simple.

First of all we need to look at what’s holding us back. We need to identify our true bottlenecks. We all know that a bottleneck is that part of the process where the capacity / throughput is lower than anywhere else. But we often jump to conclusions about where the bottlenecks are, usually because we see lots of work building up behind them.

I’ve seen six-figure sums spent on increasing the capacity of “bottlenecks” that aren’t really bottlenecks at all so if you want to save your money – and perhaps your job – please read on…

I can’t emphasise this next point enough – WE MUST MEASURE THE TRUE THROUGHPUT at the activity / operation. Many times we find that we do in fact have sufficient capacity and that the problem is not one of capacity.

The next step is to look at how much time is available at the activity / operation and how much of this time is given to useful productive work. Then we can look in detail at the non-productive time, find the root causes and tackle them. Often we find that these revolve around poor planning of labour or poor production scheduling.

In a future post we’ll look in more detail at next steps. In the meantime if you’d like to read up on bottleneck management you might enjoy the classic book “The Goal” by Goldratt, written in the form of a story rather than a textbook. If you’re a UK manufacturer and would like our help have a look at our website page on how to  increase factory output.