As featured in Shop Metalworking Technology Magazine- September 2013 Issue
Where’s Your Hammer
Using Lean and Six Sigma to pick more than low-hanging fruit
Maybe you want to implement a quality system. You buy a book or talk to a consultant but immediately run into a mountain of strange terminology. Kaizen Events and Six Sigma. DMAIC Methods and 5S. You thought Value Stream Mapping was a cheaper way to drive somewhere, and the closest you’ve come to Lean is in the hamburger case at the grocery store. Forget it, you’re thinking, we have parts to ship.
Still, competition is fierce, and it’s only going to get worse. Price, delivery, and quality—manufacturers could once get away with saying, “Pick two, Mr. Customer.” But in today’s world, customers expect all three, while also demanding shorter lead times, smaller lot sizes and quality levels only dreamed of twenty years ago. Shops that wish to survive must embark on a journey of continuous improvement, shaving every ounce of fat they can from their production processes. Back to the book.
Who the heck is TIM WOOD?
Take a walk around the shop. Chances are you’ll see plenty of things that could be made to run faster, more accurately, and with less wasted motion. These opportunities generally fall into one of the seven types of waste, or Muda, defined by Lean manufacturing: Transport, Inventory, Motion, Waiting, Over-processing, Overproduction, Defects. Lean consultants use the acronym TIMWOOD.
But Larry Coté, president and founder of Lean Advisors Inc., Ottawa, ON., says it takes more than memorizing a few acronyms to implement Lean. “First of all, you need commitment from management. It doesn’t have to be the entire leadership team but you do need someone at a decision-making level who can say this is where we’re going and why we need to change. That’s where you start.”
Secondly, you need knowledge. Removing waste is a wonderful thing, but Coté stresses the importance of a detailed implementation plan and a “future state” vision before kicking off any Lean initiatives. “Without a plan, all you create is exciting chaos. You might double productivity in one area but jam up another. You’ll end up fighting more fires than you had to begin with.”
Unfortunately, you can read all the Lean books in the world and still not have the tools needed to be successful. Many companies turn to consultants for help, yet Coté says you should be careful whom you partner with. “The word really started to get out on Lean during the mid-nineties. Since then, a lot of people have jumped on the consulting bandwagon, but not everyone is qualified. If you managed a quality system and lost your job, you became a consultant. Or if you’ve implemented 5S, now you’re an expert on Lean.”
Many of these self-made consultants end up confusing or distracting leadership from gaining the right knowledge and the right methodology, Coté says. One red flag here is the price tag—if a consultant comes in and quotes hundreds of thousands for a Lean implementation, they’re probably leading you down the rabbit hole. That’s because a consultant’s primary mission should be knowledge transfer, something that should be a relatively quick objective to achieve. “The methodology should be to go in and train internal experts so the customer can do it themselves. For an outside expert to come in and charge enormous rates and generate prolonged activity within a company is simply wrong. The biggest outcome here is that the consultant gets rich off the back of the customer.”
So what should a customer expect to pay? That’s tough to determine without a detailed assessment, but Coté estimates that a medium-sized company might spend $30K and 50K for a project lasting 3-4 months. Even then, many companies and consultants focus on the low hanging fruit, but a good implementation goes much farther than that. The deliverable should be nothing less than a complete business transformation both culturally and technically. “Lean is not a tool,” Coté says. “Lean is about changing the culture and the thinking within the organization . The goal being to have all the activities focused on providing value to the client, from the time the request for quote comes in until product ships out the door. Lean helps companies to improve that process over the long haul. It becomes a thinking habit.”
Learning what you don’t know
A big part of any improvement initiative is measurement: there’s no way to know how far you’ve come without establishing an “as-is” baseline and measuring progress against it with clear metrics such as process efficiency, profitability, and on-time delivery. According to Andrew Milivojevich, president of the Toronto-based Knowledge Group Inc., the best solution here is Six Sigma, a quality management tool designed specifically for analyses such as this. “The thing that I find novel about Six Sigma is that, when you look at the way you conduct your business, there’s always something to measure yourself against.”
Milivojevich points to a typical widget made in any manufacturing company, where the customer passes dimensional or feature-related expectations to their suppliers. The problem comes when you’re not meeting those expectations because of process errors, knowledge deficits, material flaws, or a host of other reasons. Six Sigma gives manufacturers the tools to analyze potential problems before they occur, and helps them to then identify a solution and get it implemented. “One of the biggest problems with Canadian manufacturing companies is they don’t have a process of discovery,” says Milivojevich. “This means they struggle to solve problems in those situations where they don’t already possess the requisite knowledge.”
That’s where Six Sigma comes in. Its structure provides a path to define the problem, measure the current state, analyze the root cause, implement a solution, and then control the new process. This is the DMAIC method, or Define, Measure, Analyze, Implement, and Control, a clearly defined problem solving tool and a tenet of Six Sigma. “When you standardize the way you approach problems, it provides several benefits. It gives you the chance to manage your troubleshooting efforts in an organized fashion. This helps you facilitate a solution while also increasing knowledge throughout the company, thus achieving sustainable improvements.”
Milivojevich points to a simple example, but one that is typical of many manufacturing companies. His client, a paper plate manufacturer, was seeing regular stoppages of their production line, leading to a 30% deficit in production quantities. They lived with the situation for years, using overtime as a means to catch up. Acceptance of the problem became part of their culture. Eventually, however, market forces drove profit margins to the point where the company had to make a change or lose the business. They called Milivojevich. “It turned out to be an availability issue. They were having minor stoppages, but didn’t know where, when, or how it was happening. Nobody ever spent the time to do a root cause analysis.” By using Six Sigma, the company was able to quantify the magnitude of the problem and establish a benchmark whereby they could measure the effectiveness of process improvements.
Another example Milivojevich cites is the worker who wastes time looking for his tools. “Put pedometers on your employees. You’ll find some of them walk far less than others to do the same job. Now, as you investigate the reasons why, you’ll find that the workers who walk less are either more experienced or better organized. They know where their hammer is, and the best way to use it.” The lesson here, again, is to Define, Measure, and Analyze (i.e. why is Joe faster than Bob), and then Implement and Control (get Joe to teach Bob). Milivojevich calls this the organized effort of common sense. “That’s what standardization is all about.”
It’s clear there’s room for improvement in even the best run businesses, from five-employee job shops to Fortune 500 manufacturers. Whether you accomplish Milivojevich’s “organized effort of common sense” through Lean, Six Sigma, or some combination of the two, you’re sure to see happier customers and an improvement to the bottom line as a result. It’s time to think Lean, and get measuring.
Do it Yourself Lean
Some think that Lean is just common sense. Saverio Pota, president of Custom Components Mfg. Co., Toronto, ON., argues that common sense can get you into trouble. Consider those shops who avoid costly setups by building large work orders. “It’s only logical, right? ‘Build some extras for next time, the customer is sure to take them.” Never mind that someone has to keep track of those parts, or that the revision level may change, or that you’ve just created a negative impact on cash flow by investing in product you might not sell until next year, if ever. Pota says the same logic holds true for raw material. “Sure, you can get a better price if you buy more than you need and stick it on the shelf, but the savings could be very short-term if you consider storage costs and potential obsolescence.”
Pota says this old-school way of business should be replaced with Lean thinking. Custom Components only builds what the customer has actually ordered, preserving cash flow. And they work with their suppliers, negotiating on shipping costs and minimum order size. This allows this job shop to bring in small quantities of material several times each week and keep inventory levels low. They’ve also reorganized their manufacturing area, improving product flow. “For example, we moved the Timesaver from the back of the shop and put it close to the stamping press. Now the operator can run both. It’s a simple thing, but it let’s us utilize our labor a little bit better.”
No high-priced consultants here: Custom Components did this on their own. With a background in engineering and an interest in Lean going back to the mid-nineties, Pota was well-equipped to implement a homegrown Lean solution. “Basically, it’s all about embracing the principals of Lean and communicating to your employees what you’re trying to accomplish. You have to keep things simple.” Going Lean has done more than improve the bottom line. It’s also made them more flexible, able to respond to customer requests quickly without disrupting the shop floor. “We’re a small company. We can’t afford any major capital investments or big improvement initiatives such as quick-change tooling. But that’s the beauty of Lean. You don’t have to be a high-tech shop with a bunch of industrial engineers to implement it. All you need is involvement from everyone and a good understanding of the concepts.”
The Knowledge Group Inc.
Custom Components Mfg. Co.