I've a good friend who has many years of experience in manufacturing management and leadership. He asked me if I had any "dollarized success stories".

It's an interesting question.  When I get working with clients, they almost never push the issue of "impact of lean on top level metrics"...in fact, they sometimes push back when I suggest that we work to establish the link more strongly. I think there is the feeling that their existing data won't support such an analysis. Or if it does, they're just not interested in the labor it would take to do the analysis. (In other words, they take on faith, I guess, that reducing setup times is a good thing for their business but don't want to get into the hassle of figuring out how much impact a 50% reduction in setup time of their highest volume product or on their highest capacity production line would have on EBIT. When I was working with a box company, they had a machine on which they carried out over 1000 changes a year. In many cases, they changeovers were twice as long as the run. It wasn't hard for me to figure out how much money each minute of changeover reduction was worth based on 1.) sales of the boxes that could be run in the saved time (which is important only if the machine is at full capacity, which it was) and 2.) charge rate of the machine. As you might imagine, both figures were reasonably large and senior management's response was, "Yep, that's some interesting information alright." And the subject never came up again. The point being, even when I showed them, using their own data, how much money they were making/saving, they were only mildly interested. )

While working with another company, I constantly had to push the whole issue of performance metrics. Early on, there was one metric that they were interested in....budget. Period. If you were under budget, you were OK. If you were over budget, your ass was grass. You could be the biggest dumbass in the company running a plant that looked like a Bankok brothel but, so long as you were under budget (or somewhere close), nobody bothered you. So, when we came in preaching teamwork, employee involvement, and world class performance, they looked at us like we were from another planet.

I went to the plant managers once to suggest that a good project might be working to make the metrics standard across similar plants . That idea went nowhere.

My point in all the rambling above is to say that, manufacturing managers, in my experience have been very hard to work with vis a vis pulling info together and figuring out the impact improvement initiatives have on their bottom lines.

      

Now we get to a tricky part...implementing pull systems.

By the way, that's what we're going to call it...Pull Systems.  NOT kanban.

Nobody actually knows what the hell a kanban is.  Your associates and operators won't know what it is even after you've explained it.  All the talk you'll do of kanban cards and kanban bins will just confuse them.  Kanban is just jargon used by folks who want to make all this lean stuff seem mysterious.

Why is implementing pull tricky?  Well, you can't just do pull like you can (for the most part) just do 5S, Quick Change, or VSM.  Mind you, just doing any of these doesn't mean you'll be effective or successful, but it is possible to do a one-shot, one-time,
short-on-results effort at any of them.  That's not possible with pull systems.  It takes a good bit of time and study to implement even limited pull.

It's not every manufacturer that badly needs to implement pull.  I've worked in several settings in which raw material went into one end of the machine, a finished product came out the other end.  It was packaged, taken to shipping, and put on a truck.  And that's before we got started on our lean implementation. 

In other cases, the finished product was packaged and taken to a warehouse.  Our "pull implementation" consisted of a leadership directive to have only a certain amount of inventory on hand, e.g. one month rather than six months.  Not much else needed to be done.

Pull systems are most useful (and most challenging to implement) where products have lots of parts and pieces coming from lots of different places.  Each part and piece has its own lead time.  Parts and pieces get made into sub-assemblies that get made into other sub-assemblies that get put together into a finished product.  Every one of those parts and pieces and sub-assemblies needs to get where it's needed in the right quantity, at the right time, with near perfect quality or the whole system comes crashing down and gets tossed aside for the old way of doing things.  All of which is to say...if you haven't done a good job on 5S, Quick Change, Work Standardization, preventive maintenance, and scrap reduction, don't even THINK of trying to implement pull systems.

      

I'm one who believes that much, maybe most (but not all), outsourcing is a mistake.  I'm one who believes that outsourcing only to reduce labor costs is probably mostly a mistake.  And so, I'm always on the lookout for stories, anecdotes, and data in support of that view.

I found a great article at one of my favorite blogs, Evolving Excellence, that covers all the bases of a specific example of outsourcing gone wrong.  (Check out Evolving Excellence at your leisure, but go directly to the article here so that the source gets credit for a hit.  More hits means more advertising means they can keep bringing us more articles.)

The basic idea here is that outsourcing is directly counter to the lean and agile approach.  That doesn't mean that companies should never outsource.  It does mean that outsourcing should be done only after careful deliberation as to its contribution to the overall company strategy.  If it's only (supposed) contribution is to cost reduction...it's probably the wrong thing to do.

      

Total Productive Maintenance has gotten a lot of attention and for good reason.  Six Sigma has been (at least until recently) all the rage but most companies would be better served if they fully implemented TPM before they attended to Six Sigma.

There's certainly no shortage of info about how to implement TPM, so I won't go into lots of detail here.  (I just did a search on "total productive maintenance over at amazon.com and got 780 hits.)

In my own view, TPM is essentially making sure that maintenance checks are integrated with standard work practices.  Another important aspect is collaboration and partnership between production and maintenance.

Should TPM be a part of any agile or lean implementation?  Without question.  I worked at one steel mill that made TPM the primary focus of it's lean initiative.

Don't make it too complicated, though.  Write the work instructions, making sure that they include maintenance checks.  Implement the work instructions via training and "re-certification".  Follow up to make sure the work instructions are being adhered to.  That will be challenging enough without adding too many bells and whistles.

      

Wait a minute...

A business mag that publishes a piece against free trade?  Now there's something you won't see every day.

But here it is.

By the way, I agree with the author's point of view.

      

I read an article in yesterday's Cleveland Plain Dealer about a small metal stamping firm hereabouts and the steps it was taking to deal with this recession.

(The story can be found here.)

If you read the story, you'll come to this:

The tiny metal switch covers his plant was making for customers weren't going into MRI machines in hospitals. Fist-sized metal brackets weren't going into garage-door openers in his neighbors' houses. They were sitting in warehouses.

"[Our customers] were blindly thinking that this was just a dip," Reid said.

When his customers realized that they had built up months, even years, of parts in inventory, they canceled future orders.

Now, for me, this is a real "WTF?" moment. What on earth would cause these customers to order YEARS worth of a part before they were needed? My own view is that the only thing that could cause such a thing is rank, abject stupidity on the part of the managers of said customers.

Is there another explanation? Is there something I'm missing or a market dynamic of which I'm ignorant under which the scenario of having YEARS of inventory make sense? Or, am I right....that the company was selling to dumbasses who didn't know their own business?

      

The whole issue of exactly how to set up a preventive maintenance program is a bit outside my range of expertise.   On the other hand, like most lean tools, preventive maintenance isn't rocket science.  The basic approach is to develop a PM checklist for each machine or piece of equipment and a schedule for carrying out each list.  It's all just a larger version of changing your car oil every 10,000 miles (in my case...maybe I should revisit my schedule).  In fact, your operation may already have a pretty sophisticated approach to PM.  I've worked at plants where all the PM checklists were entered into the IT system and comprehensive checklists were "spit out" by the computer as per the pre-determined schedule.

I've found that effective PM is another of those approaches that depends more on discipline than on method.  I know I'm supposed to change my oil every 5000 miles (I know the car and oil companies say every 3000, but I think that's bogus) but I just don't get it done.  I've never gone into a plant that said, "Preventive maintenance?  What's that?"  (Actually, I've been into lots of plants where the operators said exactly that but I've never heard top leadership say it.)  Everybody knows they're supposed to be carrying out preventive maintenance but they've gotten better at coming up with excuses for not doing it than they have for approaches for getting it done.

I'm not going to go on too long about the benefits of actually doing PM in a disciplined way...I'd be very much preaching to the choir.  I'll just say that you really only need:

1. A PM checklist for each machine,
2. A schedule for carrying out the checklist,
3. Discipline to actually get it done.

      

I've never been a plant manager or production superintendent but I've often thought about how I'd start if I ever did acquire such a position (not that I'm trying). What would I do first?  Even reasonably well-run plants generally have lots of areas for improvement...where to start?

I've pretty much decided that the first thing I'd tackle would be getting all the machinery and equipment in top shape.  When I first enter most of the plants I work with, there machinery and equipment is running...for the most part...but not very well.  C-clamps, duct tape, and binding twine abound.  Loose electrical connections, exposed wires, and open electric panels are common.  Oil, air and water leaks are so prevalent that they aren't attended to any longer; the oil and water on the floor and the constant hiss of air has become part of the "manufacturing scenery". 

I worked with a company that owned several plants that extruded PVC conduit and pipe. Several of the plants were having scrap problems.  A quick effort at pareto analysis by an employee team that I facilitated showed that there seemed to be no consistently occurring type of scrap.  It was if one studied loss of gas mileage and found that, during one week, there were lots of miles driven in the mountains, but the next week, the front end needed alignment, and the week after that, the engine timing was off.

So, I took the team out onto the plant floor and told them that we were going to walk down each extrusion line and make a list of everything that was wrong with each line, no matter how small.  (We weren't, in this case, going to look at potential improvements or enhancements to the lines, just corrections of faults.)  Every place we saw rust, duct tape, C-clamps, binding twine, missing parts, oil, grease, something broken, or a "make do", we made a note of it.  We focused on the lines that had the worst scrap histories.

In the short run, we got resentment and resistance from the maintenance manager.  In the longer run, things worked out and scrap finally started trending down.

(A quick note:  This was a plant that I had not helped with 5S.  For a variety of reasons, none of them very good ones, we had never conducted 5S workshops at that particular plant.  If you're thinking that 5S might have addressed this issue before it became a problem...you're right.)

      

A few weeks ago, I posted about a 5S workshop I recently conducted.  I cross-posted the same article on a LinkedIn discussion group.  I got several responses, but this one was especially interesting.  It's long but you'll like reading it.

I had mentioned the value of 5S in reducing raw material inventories.  Here's the response. 

Having several years of wire and cable experience, it is amazing the batch mentality that still exists in this business. SMED has not been necessarily embraced and therefore long runs are still encouraged. I wonder how everyone felt about two years ago when copper prices went through the roof about these practices.

I am also a former procurement officer with a military/defense contractor. Our shop, which manufactured highly one off, custom equipment ran extremely lean with regards to raw material inventory.Based on COGS our active raw material turns were typically above 20Xper year while our total turns were in the low teens. The reasons for this discrepancy were caused by engineering changes to BOM's that were never communicated back to procurement such that custom equipment that was procured never to be used could either be returned, repurposed or otherwise reserved and written off. Over a period of several years prior to my arrival, this stockpiling blossomed into an inventory valued at over $1 Million dollars (50% of all inventory). Ever tried to unload an unused C-band satellite dish that's 6 years old when the current technology is now HD. Oh, there may also be ITAR rules that apply that prevent you from selling it anywhere outside the country as well. How about a custom ordered truck chassis with an international,non-emission compliant engine package that was purchased based on a pending contract that never actually materialized (a $100,000 dollar paper weight). Who is on the hook for that one because the contract negotiators couldn't live with the original lead times and therefore bet that by promising a shorter lead time (and ordering the truck) they would win the bid. WRONG.

I agonized over this truly broken process and begged the engineering and contracts department to sit with procurement to improve the BOM process to reduce and/or eliminate these unnecessary spends but senior management couldn't develop the disciplines (didn't want to) and wanted to remain flexible (lazy) in their design choices. That's fine,but realize that there is a cost to doing that, especially when your dealing with one of a kind custom ordered equipment. Their attitude was, just push it back to the vendor, if they want our business,they'll eat it. Problem was, this vendor was a sole source for this technology. Not too many options at this point.

Its easy for people that are in the chain to just make edicts, but until they understand the whole process and landscape and ask the question WHY, things like this will continue to happen. Keeping ones head in the sand hoping problems will go away isn't an effective way to manage. It takes teamwork and understanding by all involved to arrive at a best balanced solution. But then again, what do I know.

      

In my last post, I promised to attach some examples of standard work instruction documentation.  Assuming I did the file upload correctly, here it is.

As you look at this, keep a few things in mind:

1. I don't present this as a perfect example.  I'm betting many of you have seen examples that are more comprehensive, not to say, better looking, than this one is.  I just present it as an example that's pretty good.  It has fairly detailed instructions, pictures, and those neat annotations.  (I did it all myself!)
2. Anything like this is subject to ongoing improvement.  Strive to get it good and reasonably user friendly but don't strive for perfection before you "go live" with it.
3. I hope the format makes it clear that the primary use for these materials is training.  If they also work for ISO and that sort of thing, wonderful.  If not...well, I've seen many organizations that were ISO registered but didn't actually do squat when it came to training.  If you're going to go to the trouble of putting all this together but then NOT do training...you should save yourself the trouble.
4. The format is one that's worked well for me.  You might like a different format better.
5. What about quality standards, safety standards, TPM steps, and so forth?  I agree...that would be good stuff to add, if you're so inclined.