Can Lean Match Your Structure?
One of the first comments we get from most companies is that they are unique. And they are right. They are not Toyota. They are unique.
By: James C. Myers
Senior Advisor - Lean Advisors Inc.
(As published in Woodworking Canada)
As consultants specializing in lean manufacturing, we have had the opportunity to work with all types of industries that want to transform their companies using lean. We work with healthcare, mining, aerospace, job shops, food processing, medical equipment, hi-tech, textiles, service, logistics, shipbuilding, construction products, and many others.
One of the first comments we get from most companies is that they are unique. And they are right. They are not Toyota. They are unique. But they can take comfort in the fact that even thought they are unique, lean still works if the concepts are applied properly. When lean is applied properly they will get the dramatic impacts that Toyota type organizations get.
Lean is a way of thinking about how you run your business - any business. It is applicable and effective anywhere there are activities that are used to provide a product or service. The goal is simply to provide that product or service as quick as possible, at the highest quality and lowest cost, while maintaining the needed margin. The first step is to acknowledge that you and your organization are unique, but as much as that is true, you also share a number of similarities with industries. Lean operates on two main principles, flow and pull, and it is the adaptation of these principles to your situation that will influence your ability to transform your company. The following is a brief insight into the general starting points for your thought process as you decide to move forward with lean.
Discrete, repetitive high to mid-volume businesses is where lean is most easily applied. These are basic machining and bench top assembly operations making parts, subassemblies, or final product assemblies one piece at a time. Even if you are currently doing it in batches, and you are running processes at a high rate of speed, you are still only making one piece at a time. It is easy to see the product flowing, or sitting, in these types of operations.
With these companies it is fairly straightforward to rearrange machines and workstations into one-piece cells to achieve continuous "flow." Where flow cannot be can set up, Kanbans and supermarkets can be set up to enable "pull" in the value stream. It tends to be easier to visualize the benefits of lean with this type of processing. It is the closest business type to what was initially explored when lean became popular a decade or more ago.
In continuous processing, high and mid-volume businesses, we see monuments, or large fixed assets (capital equipment) that can be difficult and expensive to change. The product or material is often contained in large vessels or pipelines and delivered directly to the base machines without being touched or seen by operators. And it's often impossible to see one piece at a time being made.
Here it may not be an easy task to convert these monuments to enable one-piece flows. It can even be difficult to determine what a one-piece flow size would be. One large consumer products company we worked with determined that their one-piece flow was going to be a case-size quantity of product. The monuments on the manufacturing end were all designed to run "flat out" at the rate of 168 hours per week. So was the packaging end.
They were all high-speed lines. Overall equipment effectiveness (OEE) and cost per case were the two primary metrics the plants were measured on. The result was a whole string of highly efficient manufacturing plants - and mountains of inventory.
So while the production plants were efficient, they weren't flexible at all. The efficiencies at the plant level were swallowed up by the huge inventory costs. This wasn't apparent until the company looked at its macro value streams and the cost of doing business this way.
It quickly became clear that the monuments were barriers to going lean, and would need to be changed. The costs were significant, but so too was the cost of not changing them. The answer, in this case, was smaller batch-sized equipment on the making end, and smaller packaging equipment on the finishing end of these value streams. The avoided and/or reduced inventory costs justified this investment.
In continuous processing businesses, the focus on investing capital wisely is one of the keys to success. This type of thinking focuses on sizing equipment to better match actual customer demand, and to make it flexible, should customer demand change.
Very low and low to mid-volume businesses, or job shops, are characterized by custom orders of very low quantities of product, often by a customer who doesn't want to wait a long time for delivery.
Does lean apply here? You bet.
You can use lean in a job shop just as effectively as in high-volume repetitive discrete businesses. The difference is flexibility. In a job shop environment 10x more flexibility is required. In many job shops, a number of products are repetitive. If they are repetitive, dedicated cells, pull systems and short lead times can be set up to respond to these customers. This will cover about 80% of volume, but only about 20% of customers.
The remaining 80% of customers, and 20% of volume, are probably true job shop demand and require a highly flexible value stream with rapid changeover. Small-scale flexible equipment, a lower level of automation, a high degree of crosstraining, and flexible people who will instantly move from cell-to-cell or line-to-line when required. Another difference between job shop and repetitive business structures is that cells are not staffed anywhere near 100% of the time in job shops. "Staffing to the interval" is the key for job shops.
On the surface, job shops just appear to be totally unique and very difficult to adapt to lean, but once applied properly, the opportunities become very clear. Applying lean in this environment is a perfect way to reduce lead-time to customers while driving bottom-line margin improvements.