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How to Implement OEE in One Day


Posted on October 15, 2016 at 11:29am

Manuficient - Excellence Compass

OEE (or Overall Equipment Effectiveness) is the ultimate tool for measuring and eliminating process waste. Wikipedia defines it as "a hierarchy of metrics developed by Seiichi Nakajima[1] in the 1960s to evaluate how effectively a manufacturing operation is utilized." OEE combined with rigorous process improvement efforts can drive significant cost savings, reduce stress of daily operations, and increase manufacturing capacity. Simply put, you're not doing Continuous Improvement or Lean if you're not using OEE. The metric itself is taken by multiplying Availability (%) x Rate Attainment (%) x Yield Attainment (%). To implement OEE effectively, you need to track each of these indicators on a continuous basis and perform the OEE calculation for a line, shift, factory, or entire manufacturing network on the interval that you see fit. Here are a few steps to implement OEE:

  1. Capture the % Availability. This is the efficiency lost while the line is not in operation (but the labor force is on the clock). Create a spreadsheet that allows line operators to input the time it takes to start up the line (from clock-in to steady state). Also capture other planned downtimes such as changeovers and shutdown times. Finally, capture each unplanned downtime loss as well.
  2. Capture the % Yield Attainment. This is a measure of the efficiency lost due to producing sub-par quality product. This calculation is done simply by taking the total good units produced divided by the total units produced.
  3. Capture % Rate Attainment. This is essentially the efficiency lost while running less than the maximum possible run rate. To capture this this, develop maximum theoretical run rates for each product on each production line. This should be done by an Industrial Engineer or trained professional. If you don't have one on staff, you can contract someone to do it or use what I call the maximum empirically demonstrated rate, which is the fastest rate the line has demonstrated in it's history for the given product. From there, track your total throughput and divide by your theoretical max rate to get your % total losses. Then subtract out % Availability and % Yield Losses. The remaining losses are rate losses.

Then multiply the three indicators across and the result is your OEE, which is a measure of perfection. 100% OEE represents zero efficiency losses. Once you have began tracking these metrics on an ongoing basis, you can aggregate this data to calculate your OEE anytime you want. The more frequently you can report this information, the more actionable the metric is for you. You certainly don't want to wait weeks or months to find out there is a serious problem; but daily reporting is usually sufficient. Reporting by shift is even better. With all of that said, the best way I've seen to implement OEE is a tool called the Factory Operating System at www.factoryoperatingsystem.com. It's the best free tool out there and it calculates and reports OEE for you by product, line, shift, and even team or individual team members. You could simply have your operators enter each production run into the system and the tool does the rest. It takes less than a minute to enter a production run. It even sets your theoretical max rates for you based on your best demonstrated rate. Then it updates the standard automatically when a run is entered that exceeds the previously established rate. In other words, you don't have to set or update production standards - the tool does it all for you. It's great!  

 

OEE is the benchmark for measuring factory performance and can be used across all industries to highlight areas that can be made more efficient. It's a metric that can be used to drive substantial cost savings along with targeted process improvements. A manufacturing efficiency expert such as those at Manuficient can help you to quickly implement OEE and determine your theoretical maximum run rates. They can also help to drive process improvements to  ensure that you capture the gains from your OEE implementation.

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


CAN OEE BE USED TO REDUCE OPERATING COST?


Posted on August 10, 2016 at 5:48am

OEE to Reduce Costs

OEE or Overall Equipment Effectiveness measures manufacturing performance against perfection. It is regarded as the global benchmark for measuring manufacturing efficiency. Any deviation from perfection drives up operating cost. OEE looks at three different losses and multiplies them across to assess total losses. Those losses are:

Availability – This is a measure of downtime (both planned and unplanned)

Throughput – This measures rate loss against the theoretical maximum run rate

Yield – This measures the amount of efficiency lost due to quality issues

Each of these factors has a cost impact. There are measurable financial and other costs associated with having people at work, the lights on, and machines operating. Anytime these things are happening and you aren’t producing at theoretical maximum levels, you are suffering efficiency and financial losses. Most factories are operating at or below 60% OEE but have no idea. Additionally, most factories do not measure productivity, and many who do, use methods that exclude significant losses such as changeover times, start-ups, throughput loss and many others. Again, anytime you have people on the clock and product yet to be made, anything less than the theoretical max output is a loss…for whatever reason – controllable or uncontrollable. At the end of the day, all aspects of running your business are controllable; the only real question is: are you willing to do what it takes to “fix” something that is perceived as “uncontrollable”. I’ve worked with manufacturers who, for years, wrote off “bad raw material” as uncontrollable but have never talked with the supplier about fixing the problem or investigated sourcing with other suppliers. In almost all cases, uncontrollable is synonymous for “we don’t want to deal with it”.

The Logic

For a factory with a direct operating cost of $10M annually and an OEE of 60%, the total efficiency losses are 40%. Therefore 40% of the direct operating costs are also losses, or $4M in this case. At 100% efficiency, the operating cost would be $6M.

World-class execution is 85% OEE, which equates to a direct operating cost of $8.5M in the example above. For the same factory, there is a $2.5M savings opportunity for improving from 60% to 85% OEE. What would you do with an extra $2.5M dollars per year? Expand production? Pay bonuses? Acquire a new business? Buy a small yacht and sail around the world?

Achieving 85% OEE is challenging but attainable for the vast majority of manufacturers. Click the link below to receive a free report on how much savings opportunity you might have based on your direct operating costs and efficiency performance:

My Total Savings Opportunity

If you don’t know your OEE, create a free fOS account at factoryoperatingsystem.com and start inputting your production run data (takes less than a minute per run). It will help you track OEE by product, line, shift, team, and even individual. It’s a great tool for highlighting exactly where to focus improvement efforts. For the sake of the tool mentioned in the above link, input 60% as a reference point and see what you get for a savings opportunity if you’re unsure of your current OEE.

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Are Your Metrics Causing You to Lose Money?


Posted on May 2, 2016 at 12:49am

Manuficient - Metrics

As Peter Drucker, one of the founders of the study of modern management, once said, "if you can't measure it, you can't manage it." Rather you agree with this statement or not, the practice of measurement, or expressing things, events, and ideas numerically, is only increasing in the way we run our businesses. Metrics are critical to Continuous Performance Improvement since they provide the frame of what exactly we're working to improve. They also provide us a perspective on things that can be imperceivable through everyday experiences. Lets look at professional basketball for example. Witnessing every game in an NBA season is not only impractical, it's not even possible for most of the people on earth. However, with a few good metrics, you can get a quick snapshot of an entire season in just a few minutes. This is no different if you're an executive or manager of a manufacturing company with several areas of responsibility. Without good metrics, your ability to effectively prioritize and allocate resources is severely diminished, if not completely lost. In other words, metrics can tremendously improve management effectiveness. With that said, metrics can also completely ruin your life if ineffectively applied. As technology continues to make it easier to capture data, more and more metrics appear. But all metrics are not created equal. It takes some skills to design metrics that actually drive performance and provide you with mission-critical information in a timely manner. In the realm of Continuous Improvement, metrics should serve one primary function: provide the timely process feedback needed to drive performance improvement. I often see companies heavily invested in metrics that don't even come close to doing this. Consequently, these metrics quickly reach a point of diminishing returns and long outlive their usefulness; resulting in dysfunctional organizational behaviors. The following are a few traits of dysfunctional metrics:

  1. Metrics that systematically exclude improvement opportunities - The way you measure productivity is crucial to how productive you will likely become. I've seen cases where efficiencies over 100% were being reported on a daily basis; yet operating costs and lead times were increasing for no good reason. This is a sign that key areas for improvement opportunity are being ignored by the efficiency metric. For example, many companies measure adherence to schedule to gauge their efficiency, which is usually based on the average historical production rates. This metric inherently drives a mentality of "let's just try not to get worse." This measure of efficiency fails to reveal opportunities to reduce process waste that could be resulting from planned and unplanned downtime, rate loss, yield losses or others. The gold standard for measuring manufacturing productivity is Overall Equipment Effectiveness (OEE). World class execution is considered 85%, which very few factories on earth have been able to achieve. Your metrics should show you how much better you could be and give you some insight into what to do to get better. If a factory is not using OEE, there's a good chance they could make dramatic reductions in their operating costs and lead times. The best way to implement OEE is to use the fOS at http://factoryoperatingsystem.com. It's free and does a great job of creating shop floor enthusiasm and excitement around your lean implementation and a culture of getting better every day.
  2. Vanity Metrics - These metrics only highlight how well the organization (or the reporting manager) is performing. They are very common and even seductive but have no place in a continuous improvement culture. Their whole purpose is to make people feel good but do not drive any real action or desire to make things better. One example of a vanity metric that I see everywhere is "Days Since a Recordable Incident". While it's vitally important to maintain a safe working environment, reporting this metric provides no insight to what specific opportunities exist to make the workplace more safe. As long as the number is "high enough", everyone gets a pat on the back for not killing themselves today and go on without addressing any of the behaviors or conditions that will inevitably result in someone getting hurt. It also contributes to a culture of hiding injuries to protect the metric. A better metric would measure safe behaviors and conditions against perfection. For example, I've used safety audits that evaluate behaviors and working environments for any potential risk, then scores the results against well-defined criteria for a safe workplace. If someone does get hurt, the auditing criteria is modified to safeguard against the conditions that led up to the injury. This is an example of how metrics can incorporate organizational learning. The fOS has artificial intelligence that learns from you as you go. Standard run rates are updated automatically when you exceed the previously established rate for a product on a line. This continuously raises the bar and makes opportunities for improvement more easily identified.
  3. Long Reporting Intervals - Metrics designed for management should help you get better. If you are receiving a report weeks or even months apart, then you may go months before you even realize there's a serious problem. Sure you can rely on people to be communicative and escalate issues informally, but we all know that this isn't a reliable way to run a business. As a leader, ask yourself how long is too long before you are alerted of an issue. That should give you some insight to how frequently performance should be reported. The best systems are real-time with alerts for min-max performance thresholds. Other good systems report hour-to-hour at the line level, and day-to-day at the factory level. This allows for quick and resolute action on performance issues as they arise. The fOS automates these processes to ensure that you are the first to know when performance reaches unsatisfactory levels.
  4. Burden of Metrics - High-burden metrics create stress for the entire organization. Burden is considered the amount of time and effort required to acquire data, complete calculations, and report performance. Burden is suffered by the Line Operator who is incurring significant downtime to collect data, the Supervisor who has to constantly double-check and provide feedback to the Operator, and the Plant Manager who is constantly questioning the integrity of the metrics and requiring revisions / explanations. I've worked with factories that had Industrial Engineers spending over 20 hours per week collecting data and generating reports. This is a massive waste of time and talent; and very few people on the planet enjoy doing this. High-burden metrics don't stick. As soon as the pressure lets off to keep producing the data or reports, they will gradually go away. The fOS employs a great data input design that only requires less than one minute per production run input. This not only  engages the line operator with the Continuous Improvement system, it also performs all calculation and reporting functions automatically. The data goes straight from the shop floor to all internal stakeholders instantaneously.

 

The right metrics make all the difference in running a successful operation. The wrong metrics can send us down a path of dysfunction and actually make us more disconnected with what's important. Your metrics should help you get better and instill a culture of Continuous Improvement. So to answer the question in the title: no, your metrics aren't causing you to lose money. Being inefficient causes you to lose money but your metrics aren't doing you any service if they aren't giving you complete, real-time, and actionable information. A manufacturing efficiency expert such as those at Manuficient can help you develop or improve the quality of your metrics to ensure the right information is getting to the right people at the right time to reveal opportunities in your operation.

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Why Your Manufacturing Execution System Isn't Getting Results


Posted on April 27, 2016 at 8:56pm

Manuficient - Small Wins

So, you've spent a ton of money and who knows how much time implementing and getting people to use your Manufacturing Execution System (MES). Performance got a little better in the beginning but now it seems that things have gone right back to the old ways just with more data (a lot of which is incomplete and unreliable) and more meetings. The only change that really happened is that people got better at explaining why they're doing so poorly but still no real tangible results. Well that early bump you got in performance is called the Hawthorne effect. According to Wikipedia, "the Hawthorne effect (also referred to as the observer effect is a type of reactivity in which individuals modify or improve an aspect of their behavior in response to their awareness of being observed." You can pretty much expect that bump in any area where there is increased focus such as implementing a new tracking system or taking Leadership Walks. However it does prove that improvement is possible and needs to be realized and sustained. The reason your system isn't getting results is because most of them are designed to do the opposite of what they are intended to do. They disengage and demotivate your people. And guess whose job it becomes to cover this motivation gap...exactly; you! These systems do a few things wrong that actually drive people away from the culture of operational excellence that you so desire. Here are a few:

  1. Some require too much input from the operator and not the right stuff. Developers often don't understand shop floor life. No one wants to spent time putting stuff into the computer...no one! Except developers of course because that's what they get paid to do. A shop floor operator, supervisor, or anyone else should not have to spend any more than a few minutes per day entering stuff into the computer. And this should be mission critical knowledge that could only otherwise be passed from person to person. Solution: The Factory Operating System (fOS) is designed to minimize the input required from the operator. Each production run is captured in less than one minute.
  2. Some require too little input from the operator. These systems have successfully automated the data input part of the MES. This is very good... but very bad. The problem is that people completely tune the system out altogether and happily go through their days ignoring it (or worse, completely forgetting about it). This is bad because critical information such as key learnings about issues, best practices, and other vital knowledge get lost forever. This is not far from recreating the wheel every day. Solution: The fOS requires a manual input for each production run that takes less than a minute. This engages the operator in the system and requires shift notes to be shared so that a repository of issues, best-practices, and solutions can be created. It also calls the operator's attention to their own performance trend, which is displayed by default on the interactive reporting page when the user logs in.
  3. There's nothing in it for the operator to input the data. These MES systems tend to leave out a critical social element needed for driving true performance. People like to shine. They are motivated by looking good and being good at what they do. Nearly all MES systems completely ignore this reality and simply compile and show the data in a matter-of-fact way. This further disengages people because it's not personal and it's not for them; it's more for the company bosses to squeeze more out of them. Solution: The fOS leverages people's inherent need to shine by highlighting personal records, record breaking weeks, outperforming the standard, and other great successes. It sets everyone on the same playing field and encourages people and teams to win by eliminating waste and being more efficient. This makes so that the motivation to perform comes from the shop floor-up instead of the top-down.
  4. Some are only designed to encourage a top-down command and control culture; which gets short-term results but long-term demise (and possibly leads to a union forming in your factory). The way most of these things work is that the operator puts the data in and management shows up a while later with a big stick to punish the operator for either not doing it right or for being too inefficient. There is a gap in understanding that the people have the real power. They can make the company a huge success or a complete failure. For example, if one of them slips the wrong thing into the product, it could lead to a catastrophic PR nightmare in an instant and potentially bring your carefully crafted brainchild of a business to an instant death. Solution: The fOS employs the brilliant engagement techniques of Social Networks to help motivate people to do better. The better they do, the more it raises their social profile within the company. This is an incentive that money can't buy, and subsequently won't cost you a thing.
  5. They charge for installation, use, upgrades, and maintenance. The companies that make these systems are in business to make money, just like any other. They did a calculation that said you would pay for their software, then pay them to install it, then pay them to maintain it, then pay again to upgrade it, and also pay your own IT people to make it useful. And they tell you that you have to do all this in the name of data security or some other tactic. And so far you've done it. I don't blame you; you didn't know better. Unfortunately, this handsome cost of service keeps their solutions out of reach for many many manufacturers because as you know, it's almost impossible to justify implementing an MES financially. Thus, they have disengaged people simply by being inaccessible. Solution: The fOS is free. It's a social network that makes your factory more productive. We don't sell software; we give it away and consider it a marketing cost. We also don't sell ads on the site. No one will be calling you to ask if they could help you be more efficient or for any other reason if you use the fOS. However, if you would like to hire someone from the outside to help you with an issue, the site makes it very easy to do so. This is how we make money; by brokering projects. You have the option to post an improvement project and efficiency experts can bid and make the case for why you should hire them. This process is initiated by you when you're ready to take this action. The theory is that when you understand how much better you can be, you will take the action you need to take to close the gap. That's it. It's a win-win. Then you can take all the money you're putting into your current MES and use it to hire people to do the work needed to drive improvements.

So, to summarize, your MES system isn't very effective because it is disengaging the very people who have the power to make or break your business' success. Sure you can continue to live in fear of a data breach or some other thing and keep paying hundreds of thousands or perhaps millions on a big box MES, or you can choose to be in business to make money. Disclaimer, data security is extremely important and is why the fOS has implement beyond-bank level security protocols (we'll go through that in detail in another post). An manufacturing efficiency expert such as those at Manuficient can help you get the best out of any MES that you may be using or help you convert seamlessly to the fOS. Either way, we're just happy to see you doing better.

 

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear cr


How to Do a Stress-Free Lean Implementation


Posted on April 27, 2016 at 9:56am

Manuficient - Top Performers

Lean is said to be the "Machine that Changed the World," which a fantastic book written by Jim Womack, Dan Jones and Daniel Roos. According to Wikipedia, "Lean manufacturing or lean production, often simply "lean", is a systematic method for the elimination of waste ("Muda") within a manufacturing system." We are now learning that Lean has applicability across far more industries than just manufacturing such as healthcare, finance, education, and many others. However, implementing lean has been a major challenge for business leaders across all sectors, including manufacturing. A study released by McKinsey stated that "70% of Continuous Improvement initiatives fail". This is a striking statistic considering how popular Lean and other Continuous Improvement initiatives are. If you go into any of those factories where Lean has failed (and even some where it has succeeded), you'll quickly find that it generally leaves a bad taste in people's mouths. Be it because some companies have gutted workforces and administrative jobs under the guise of Lean or that people had to give up things that they held sacred in the name of cutting waste...many people harbor a disdain for Lean. How did an initiative designed to improve product and process quality turn into such a reviled and despised creature? In conducting and studying many examples of Lean implementations I've determined that three key ingredients are needed for success. Those ingredients are:

  1. Technical Expertise. Lean isn't that hard to learn but somebody needs to know what they're doing in the beginning at least. This could be an inside or outside person or group. Eventually, everyone needs a strong lean competency and it needs to become a requirement for staying with the company or getting promoted
  2. Commitment. Leaders need to visibly show their commitment and make decision consistent with a Lean culture.
  3. Motivation. If the people at the top or bottom don't want to do it - it won't happen. A Lean implementation requires substantial changes in behaviors, the slaughter of sacred cows, and debilitating power struggles. It's not easy for anybody.

In all reality, the last item trumps the previous two. Let's face it, people will eventually do what they're motivated to do as long as management gets the heck out of the way. Do you really need an engineering degree to do 5S or make a few changes to reduce waste and inefficiency? The answer is no. So ...the easy way to implement Lean is by pairing the implementation with things people are motivated to do such as:

  • Look good in front of their bosses and peers
  • Get recognized for a job well done
  • Compete and win
  • Have input on the way things are done
  • Prove themselves by getting results
  • Be judged fairly
  • Help others
  • Be a valued contributor to the business
  • Remain gainfully employed
  • ...the list goes on and on.

So, to implement Lean, you need to motivate people to eliminate waste and be more efficienct; then give them the tools and support to do what they will be super-motivated to do. To do this, follow these steps:

Step 1 - Implement OEE. This will tell you and everyone else exactly how much efficiency loss you have, what types of losses you have, and where the biggest opportunities for improvement exist, etc. OEE will serve as your scoreboard for how good everybody actually and undoubtably is. It also puts everyone on the same playing field in terms of measuring productivity. [Week 1 - 8 but continue tracking perpetually]

Step 2 - Start highlighting success stories for people doing things better. Share Personal Records, Record Breaking Weeks for the team, Best-Practices, Top Performers for the Day or Week, and so on. This will create a culture that feels like winning...and send a message that winning means getting better, which means...increasing efficiencies. All of a sudden, getting better is starting to feel "good" and perhaps even "fun and exciting". [Week 6 - 15 but continue into perpetuity]

Step 3 - Provide a continuous stream of tools and techniques for getting better. Teach people root cause analysis, value stream mapping, SMED, kaizen events and anything else they are clamoring to know by this point in the process. You should also consider taking engineers, managers, and key personnel to other factories who have a really good Lean program so they can benchmark ideas. These factories love to show off the great work they've done to implement what a vast majority of companies struggle with. [Week 10 on]

That's it. Pretty easy right? Well there are always varying levels of depth and complexity of tools that can be applied but you can cross those bridges when you get to them. It's important to follow these three steps in sequence and allow time for each step to take hold in the organization. Most companies try to implement lean by doing step 3 and then step 1 or they just start of with a massive cutting of headcount. Implementing OEE is not as easy as this article makes it sound and neither are the other 2 steps.

Fortunately there's a tool that virtually automates the first 2 (and most difficult) steps called the Factory Operating System (fOS) at www.factoryoperatingsystem.com. This is the best tool out there for implementing Lean or any other Continuous Improvement initiative. In this system, calculating and tracking OEE requires less than a minute per production run to input data and it spits out OEE by line, shift, person, team, product, timeframe, or any other way you want to slice it. It also highlights top performers, record breaking weeks, personal records, and other success stories across your operations chain of command. It's super-powerful and it's free, which makes itreally great!

I

Implementing Lean can be a great step toward reducing operating costs, increasing capacity, reducing lead time, improving product quality among many other wonderful things. Don't make the mistakes most companies make by failing to motivate your people before slamming them with tools, jargon, and complex ideas that will just scare them away. Let the motivation come first, then they will be a) creating their own tools and b) asking you for more tools and techniques to get their systems to operate more efficiently. This way you create a demand for Lean instead of pushing it on people and creating a painful experience for everyone that probably won't even sustain results. A manufacturing efficiency expert such as those at Manuficient can help you to implement Lean in a non-abrasive way that systematically encourages your people to do better everyday.

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Why Downtime is so Deadly in Manufacturing


Posted on January 22, 2016 at 12:40pm

 

Downtime is the ultimate disruption in productivity. It not only limits how much can be produced in a day, it also drains the energy and morale of your production teams. When you look at downtime, you have to consider the time that the machine spent down - and the loss in rate while approaching shutdown and starting back up. You can calculate your total labor cost per hour and easily add up what it cost your business for every hour of accumulated downtime. These are the more apparent costs of downtime. However, there are more destructive and insidious factors of downtime that are not as apparent. These are more around the subconscious and reactionary measures that are taken as a result of poor machine uptime and reliability.  
The ultimate cost of poor reliability is poor customer service and high operating costs. There are several visible indicators of "out of control" downtime and poor reliability: Finished Inventory, Dis-jointed Processes, and Production Capacity Imbalance.
 
 
Finished goods inventory build-up
In a perfect world, factories would not carry finished goods inventory. In this case, when a customer places an order, the factory would quickly produce what is needed from start to finish and then ship within the customer's expected delivery window. This would lead to a significant cost savings in itself in the form of reduced finished goods obsolescence, reduced administrative costs for forecasting, reduced finished goods damage, reduced finished goods management or handling costs, reduced finished goods storage space and many others. The reason that companies build finished goods inventory is because they don't trust that their production systems can deliver "on-demand". This is largely due to unpredictable downtime. 
Dis-jointed processes and a lack of continuous flow
Manufacturers often try to "shield" a reliable process from an unreliable process by disconnecting process steps. By doing this, the reliable process can continue to produce while the unreliable process struggles to sustain flow. Subsequently, work-in-progress (WIP) inventory begins to build up after the reliable process as it waits for the unreliable one to get its act together. This WIP is essentially what I like to call "cash sitting on the floor." It's almost like a savings account that accrues no interest - only depreciation, and sometimes to the point of complete obsolescence. The value of the WIP is money that the business can't use for more productive purposes, such as equipment upgrades, product marketing, or even employee bonuses. It also reduces the lead time, or the time required for an order to be processed from start to finish. Finally, it increases operating costs caused by additional material handling, staging, and storage. This is primarily caused by unplanned and unexpected downtime. 
Un-level process capacities
When one process experiences more downtime, we tend to seek ways to increase the maximum speed, or line rate, through those processes through engineering efforts. This allows us to consume the huge stockpile of WIP that tends to accumulate whenever we can get these unreliable processes to run. When we increase the capacity through a process step, we incur extra labor, technology, and engineering cost; all this instead of fixing the real problem, which is to eliminate the downtime. Often times, we run these processes at unstainable rates trying to get "caught up" and end up doing further damage - resulting in more unreliability.
Why not take the time to understand the areas that are experiencing the most downtime and attack them head on. It may be best to start with the bottleneck process and then spread up and downstream from there. In the end, you want highly reliable and balanced capacities across all processes. At that point, your true lead time becomes predictable. This allows you to re-connect your production processes, establish true continuous flow, and start cutting back on your finished goods inventories.
A manufacturing efficiency expert such as those at Manuficient can help you to drive process reliability, improve service levels, and reduce your operating cost.
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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.

Manuficient - Machine Repair

Downtime is the ultimate disruption in productivity. It not only limits how much can be produced in a day, it also drains the energy and morale of your production teams. When you look at downtime, you have to consider the time that the machine spent down - and the loss in rate while approaching shutdown and starting back up. You can calculate your total labor cost per hour and easily add up what it cost your business for every hour of accumulated downtime. These are the more apparent costs of downtime. However, there are more destructive and insidious factors of downtime that are not as apparent. These are more around the subconscious and reactionary measures that are taken as a result of poor machine uptime and reliability.  

 

The ultimate cost of poor reliability is poor customer service and high operating costs. There are several visible indicators of "out of control" downtime and poor reliability: Finished Inventory, Dis-jointed Processes, and Production Capacity Imbalance.

 

 

 

 

Finished goods inventory build-up

 

In a perfect world, factories would not carry finished goods inventory. In this case, when a customer places an order, the factory would quickly produce what is needed from start to finish and then ship within the customer's expected delivery window. This would lead to a significant cost savings in itself in the form of reduced finished goods obsolescence, reduced administrative costs for forecasting, reduced finished goods damage, reduced finished goods management or handling costs, reduced finished goods storage space and many others. The reason that companies build finished goods inventory is because they don't trust that their production systems can deliver "on-demand". This is largely due to unpredictable downtime. 

 

Dis-jointed processes and a lack of continuous flow

 

Manufacturers often try to "shield" a reliable process from an unreliable process by disconnecting process steps. By doing this, the reliable process can continue to produce while the unreliable process struggles to sustain flow. Subsequently, work-in-progress (WIP) inventory begins to build up after the reliable process as it waits for the unreliable one to get its act together. This WIP is essentially what I like to call "cash sitting on the floor." It's almost like a savings account that accrues no interest - only depreciation, and sometimes to the point of complete obsolescence. The value of the WIP is money that the business can't use for more productive purposes, such as equipment upgrades, product marketing, or even employee bonuses. It also reduces the lead time, or the time required for an order to be processed from start to finish. Finally, it increases operating costs caused by additional material handling, staging, and storage. This is primarily caused by unplanned and unexpected downtime. 

 

Un-level process capacities

 

When one process experiences more downtime, we tend to seek ways to increase the maximum speed, or line rate, through those processes through engineering efforts. This allows us to consume the huge stockpile of WIP that tends to accumulate whenever we can get these unreliable processes to run. When we increase the capacity through a process step, we incur extra labor, technology, and engineering cost; all this instead of fixing the real problem, which is to eliminate the downtime. Often times, we run these processes at unstainable rates trying to get "caught up" and end up doing further damage - resulting in more unreliability.

 

Why not take the time to understand the areas that are experiencing the most downtime and attack them head on. It may be best to start with the bottleneck process and then spread up and downstream from there. In the end, you want highly reliable and balanced capacities across all processes. At that point, your true lead time becomes predictable. This allows you to re-connect your production processes, establish true continuous flow, and start cutting back on your finished goods inventories.

 

A manufacturing efficiency expert such as those at Manuficient can help you to drive process reliability, improve service levels, and reduce your operating cost.

 

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.

 


Why Lean Can't Succeed Without Operational Discipline


Posted on July 1, 2015 at 8:27am

Managing people and building the perfect manufacturing system are works of art. There are an unlimited amount ways to effectively get the desired result – being the perfect system and its flawless execution. However, manufacturing itself is an exact science; it is not an art. There exists one-right-way (ORW) of doing every single thing needed to execute the core functions of a factory. There is no need to re-engineer and execute a new process for each individual unit of production. This is immensely inefficient. In the absence of performance standards, you are likely doing some version of this. The ORW minimizes cost and safety risk while maximizing service, quality, and morale. The essential job function of a front line supervisor or manager is to a) determine the ORW for all required actions needed for executing operations and b) ensure that everyone is doing it every time. This is why the world needs front line supervisors / managers. The supervisor’s effectiveness can be measured in terms of the number of deviations from the ORW of their direct employees. In other words, the manager’s performance can be primarily measured in terms of operational discipline, or the consistency of actions in which operations are executed. In an ideal state, one would possess the capability to evaluate the exact actions of every person / machine in the production process to ensure strict compliance to standard procedures. Since this is not practical in today’s world, we usually only evaluate compliance to standards after there has been a significant failure; sometimes resulting in some poor soul’s chastising or even worse, public shaming and/or termination. Many companies have turned to (or are turning to) Lean manufacturing to develop the operational discipline needed for operational excellence.

If you break down Lean Manufacturing into it’s two base components, what you are left with is:

1) Industrial Engineering – This is the process of designing and implementing the perfect manufacturing system. It requires understanding the expected outputs of the system and making the changes needed to minimize cost and safety risk while maximizing service, quality, and morale. The key aspect here is making changes to the system. Lean manufacturing applies many IE techniques that happened to be developed in Japan, such as kaizen, poke-a-yoke, 5S and others. Although IE techniques vary in degree of complexity, just about all of them can be taught to a person of average intelligence within a few days or so. The creators of TPS and Lean have done an amazing job of simplifying the discipline of IE for the common factory worker to understand and employ. Significant improvements in manufacturing efficiency can be gained with just a base level competency in IE. The more involved tools and methods are typically highly specialized for a given situation and result in marginal additional improvement. (This excludes the equipment / plant design aspects of IE, which can be highly technical as well).

2) Operational Discipline – This is the systematic and consistent execution of necessary actions. As stated above, this responsibility falls within the core job function of a front-line supervisor / manager. This does not require an Industrial Engineer, Lean expert, consultant, or other specialized technical background. This just requires good managers; being those who are highly disciplined and consistent as well. Managers are typically empowered with all the tools and resources needed to control their employees’ behaviors such as performance reviews (for career advancement), incentive programs including bonuses and pay increases, and others. Many companies launch Lean initiatives believing that Lean will automatically create operational discipline. This is not exactly true. Although Lean can help design and implement systems that help drive operational discipline, Lean itself cannot make the administrators of the Lean system more disciplined. Only effective leadership can ensure or increase discipline. Lean is not a substitute for leadership.

This brings me to the main point of my post. Your Lean initiative cannot succeed without sufficient operational discipline. Lean is a system; but all systems need competent and disciplined administrators. As a manufacturing leader, you don’t need Lean to develop competent and disciplined managers, supervisors, or shop-floor employees. You don’t need a Lean practitioner or Industrial Engineer to establish Standard Operating Procedures and ensure everyone is following those procedures without deviation. These are manufacturing fundamentals that help you get the most out of a Lean expert or IE should you choose to consult / employ them. It’s like saying that your basketball team of 6-year-old’s is struggling because they need more advanced plays. In actuality, they would dominate just by boxing out on rebounds, minimizing turnovers, moving their feet on defense, and making their layups (This was also true for my adult men’s league team so it’s something I’m quite passionate about). With that said, your Lean / IE / Consultant can help to accelerate your CI journey by applying industry best-practices and proven techniques for improving performance. However, if you find that your Lean initiatives aren’t sustaining, then maybe you’re not ready for Lean. You may want to take a step back and figure out how to increase operational discipline.

manufacturing efficiency expert such as those at Manuficient can help you to assess your readiness for a Lean or other Continuous Improvement implementation by assessing/developing customized systems such as the fOS to help you build operational discipline.

Get the audio for this post here:

Download Your FREE Whitepaper Today!:  Why Most American Continuous Improvement Initiatives Fail

Regards,

Calvin

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Exclusive Interview with Norman Bodek, Pioneer in American Lean Manufacturing Movement


Posted on June 22, 2015 at 5:42pm
Norman Bodek

In this exclusive interview with Manuficient Consulting, Norman Bodek shares some of the extraordinary details of his career as a one of the pioneers in the American Lean Manufacturing movement. Norman is a publisher, professor, and author who has published hundreds of Japanese management books in English and other languages. Most recently, Norman co-authored the Harada Method, a step-by-step process for setting and achieving personal and corporate goals. Listen to Norman’s fascinating story and powerful insights into how American companies can overcome the challenges to achieving world-class execution.

Download Your FREE Whitepaper Today!:  Why Most American Continuous Improvement Initiatives Fail

Regards,

Calvin

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20 Reasons You're Paying Too Much for Raw Materials - And How to Reduce Costs


Posted on June 14, 2015 at 7:58pm

Manuficient Consulting - Wasting Money

Raw material is often the single greatest expense for any manufacturing operation. It could range anywhere from 35 – 75% of total cost of goods sold depending on industry and the nature of the supply chain. Unfortunately, many manufacturing companies simply accept this as a “cost of doing business” and are reluctant to explore some of the many opportunities to reduce raw material costs. Some of these opportunities could be captured relatively easily and some require the execution of a longer-term Continuous Improvement strategy.

There are fundamentally three segments of your supply chain where there are opportunities to reduce raw material costs. Those segments are in sourcing, manufacturing, and post-manufacturing. The following are 20 reasons you’re paying too much for raw material:

Sourcing

  • Accepting higher prices instead of taking advantage or supplier market competition. Why not conduct a periodic sourcing analysis to determine the pricing and reliability of competing suppliers? This would give you the information you need to either negotiate prices or source new suppliers.
  • Paying higher prices by ordering smaller quantities from too many suppliers forgoing bulk discounts. The alternative would be to use a smaller number of suppliers to provide more of your materials, resulting in greater purchase volumes and lower prices.
  • Accepting higher prices due to not leveraging payment terms that would be favored by suppliers. Instead, offer to pay suppliers sooner in exchange for lower prices.
  • Accepting higher prices instead of utilizing points of leverage in supplier contracts to negotiate lower prices. The idea would be to assess your relationship with the supplier (including their past performance) to see if there is room for re-negotiating prices.
  • Accepting higher prices due to unwillingness to collaborate with your competitors to get bulk discounts.
  • Utilizing materials that are more expensive than what is needed for the product’s function.
  • Accepting higher prices due to unwillingness to commit to long-term purchasing contracts.
  • Purchasing materials at full rate instead of leveraging bargains. Conversely, monitor your supplier’s business cycles to identify when they would have excess inventory that they would be interested in selling at bargain prices. However, you will, in turn, need to maintain raw inventories and incur any shrinkage, obsolescence, and handling costs. This method is not typically recommended by could be effective in some cases.
  • Purchasing based on your manufacturing schedule instead of supplier’s production schedule. Suppliers are willing to offer discounts if you purchase on their schedule so they don’t need to maintain finished goods inventories. Again, you will, in turn, need to maintain raw inventories and incur any shrinkage, obsolescence, and handling costs. This method is not typically recommended by could be effective in some cases.

Manufacturing

  • High variation in filling or packing processes resulting in high fill targets and over-fill / over-pack. Instead, apply Six Sigma approaches of reducing variation so that overall target weights and over-fill can be reduced.
  • Scheduling using a “push” production model resulting in excess and obsolete inventories. The alternative would be to establish a “pull” production model using kanbans and safety stocks, resulting in controlled inventory levels and less excessive / obsolete materials
  • Scrap and material yield loss created by “leaks” in the system. The approach would be to identify and quantify the impact of leaks. Then implement process changes to close leaks and convert more wasted material into sale-able finished goods.
  • Too many low-consumption raw materials caused by high SKU complexity. Conversely, SKU’s could be rationalized so that smaller orders of raw materials could be reduced.
  • Over-application of material that customers do not find valuable due to over-designing products. Instead, work with customers to better understand the product’s function and remove materials or functions that are not useful to the customer.
  • Over-application of material that customers do not find valuable due to inefficient design. Again, work with customers to better understand the product’s function and explore design options that sufficiently address the need using less material.

Post-Manufacturing

  • Material lost in the supply chain process being scrapped or sent to the landfill instead of being recycled or reclaimed
  • High production costs for suppliers, which can be reduced by providing process improvement or project management services. An approach would be to provide Continuous Improvement services to help reduce the supplier’s operating costs in exchanged for reduced prices. This could be lucrative for suppliers since it helps them increase profit margins with other customers.
  • High supply chain costs for suppliers, which can be reduced by providing warehousing and distribution services. This allows your suppliers easier access to your local markets by utilizing your warehouse and distribution services. Then, you can negotiate lower prices and services fees per activity.
  • Accepting higher prices due to not leveraging buyers to take advantage of bulk discounts. Instead, work with your buyers to have them procure your raw materials. They can often get bulk discounts from your suppliers that you may not have access to. You can also offer your buyers lower prices since this will often result in significantly lower raw material costs on your end.
  • Too much shrinkage, or goods being lost, damaged, or stolen in the supply chain process.

The key to driving substantial improvement in raw materials is to use big data to quantify the opportunity for improvement in each of these areas and develop your plan of attack. The areas that have a combination of high impact, quick results, and low cost of implementation would receive higher priority. The items that do not provide a high short-term impact but contribute to an overall more efficient supply chain would require a more strategic approach to implementation. Most of these items have a place in your Continuous Improvement Strategy and if executed effectively, would set your supply chain up for significant cost reductions in raw material. A manufacturing efficiency expert such as those at Manuficient can provide the strategy, analytics, and implementation expertise needed to reduce raw material costs and help put your supply chain on a path to world-class execution.

Download Your FREE Whitepaper Today!:  Why Most American Continuous Improvement Initiatives Fail

Regards,

Calvin

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


How to Increase Manufacturing Agility in Consumer Packaged Goods


Posted on June 11, 2015 at 7:11am

Manuficient Consulting - CPG Agility

Agility is paramount in the CPG industry. This is driven by rapidly changing consumer tastes and preferences, competition – which drives the need for greater differentiation, varying degrees of automation and manual labor forces, constantly changing packaging technology and platforms, and several other factors. Agility is simply defined as the efficiency of change. In other words, how efficiently can you go from your current state to your desired future state? In the CPG industry especially, the future state is a constantly moving target. If your supply chain can’t keep up with the rate of change, then it has no alternative than to become obsolete. This explains the significance of increasing Manufacturing or Operational Agility.

There are several benefits to increasing Manufacturing Agility (this list is not completely exhaustive):

  1. Satisfy a more diverse SKU portfolio with fewer production lines, requiring a smaller manufacturing footprint
  2. Drastically reduce the product development cycle from ideation to commercialization
  3. Scale production capacity to fit fluctuating demand without inflating costs
  4. Significantly reduce the time frame from improvement idea to gainful implementation
  5. Create opportunities to increase asset utilization by picking up orders from competitors and store-branded products

In the CPG industry, the more agile factories or operations win in the long run. Agility helps to keep costs low while making the changes needed to stay competitive. It also brings down the risk of changes significantly since they are less cost prohibitive. There are three main areas where CPG companies need to focus on increasing Agility; people, processes, technology. And there are several approaches to increasing Agility in each of these areas.

PEOPLE

People Agility is referred to as scaling the labor force up or down to meet immediate production needs without inflating costs. This can only effectively be done without compromising critical process knowledge and skill sets. Many CPG companies experience significant peaks and valleys in demand throughout the year. In many cases, manufacturers build inventory or find some way to avoid needing to scale man-power, maintaining a flat workforce with “normal” work hours for each employee. What ends up happening is that they end up eating labor costs during valleys because productivity slows and people are idle; then they eat labor costs during peaks due to excessive overtime. When you maintain a full workforce when productivity slows, the workforce loses its operational discipline, which is needed for when production demand is high. This creates frustration for both management and the labor force. Its also an expensive way to manage a factory. Below are a few ways to increase the scale-ability of the labor force:

  • Use a fixed crew and fixed production rates but vary production hours based on demand. This would make for inconsistent work hours for employees but help maintain the operational discipline needed for peak volume times. During valleys in demand, production could be scheduled at standard rates; when the crew finishes the work, they could be deployed to other productive work or process improvement projects.
  • Have a fixed full-time crew (based on business case analysis) and use temps to support surges in volume
  • Run with a fixed crew (again, based on business case analysis) and outsource surge volumes to contract manufacturers

PROCESSES

Process Agility refers to the efficiency of changing processes and procedures to meet business needs. In CPG, as well as many other industries, processes need to change constantly to increase competitiveness, reduce costs, increase quality, improve safety, increase moral, improve service levels ,and many other important reasons. Processes in this sense include the specific steps taken by people or technology to get something done. The more Agile a factory or operation, the easier it is to change processes to suit the needs of the business. For a factory that lacks Process Agility, it requires at least 5 years to implement a Continuous Improvement program such as Lean Manufacturing. Contrarily for a factory with great Process Agility, Lean could be implemented and self-sustaining in as few as 2 years. Below are some techniques to be employed to increase Process Agility:

  • Implement systematic management systems that drive operational discipline such as the fOS (factory Operating System). The fOS sets standards for the management function and is designed to drive the discipline needed for Continuous Improvement. Click this link for more information on the fOS.
  • Develop and execute a world-class training program. This helps to significantly reduce the learning curve for on-boarding new employees and implementing process changes with current employees. Click this link for more details how a world-class training function works.
  • Employ Lean practices such as Standard Work to develop efficient processes and reduce learning curves. Also use tools such as Kaizen and Root Cause Analysis to drive rapid process improvement.

TECHNOLOGY

Technological Agility refers to the ease of changing the technological capabilities used for the efficient making of a product. This could mean changing packaging ability from a canning to a pouch filling; or from vacuum sealing to over-wrap; or from a carton to a sleeve…I think you get the idea. In the CPG industry, formats change frequently. By now, every marketer in CPG has identified the impact that an attractive new packaging format has on product sales. Those same marketers can tell you how frustrating it is when they get push-back from the manufacturing folks that “there’s no way we can do that”. Well the truth is that it can be done – it can always be done. The only factor is what it’s going to cost, which is a function of Technological Agility. A factory with high Tech Agility can run multiple packaging formats on the same production line. On the other hand, a factory with low Tech Agility needs a separate line per format at best; and at worst, simply doesn’t have the capability to efficiently process different formats. Below are a few ways to improve Tech Agility:

  • Use of sensors and servo motors to automatically adjust for changes in package sizes. This also helps for automating product changeovers.
  • Design line layouts that allow processing equipment to be swapped in and out based on production needs. This creates modularity and makes better use of the factory footprint.
  • Outsource smaller runs to contract manufacturers to test market results instead of investing in new equipment
  • Employ 3D printing for late-stage-customization to increase SKU variety without making significant changes in other production areas
  • Engage plant technology and process experts in the product development and design processes. This reduces the time wasted on designs that are not feasible and cannot be manufactured.
  • Leverage data sharing systems so that information from across the supply chain can be used in the product development process. This allows people to understand performance data, capabilities, capacities, costs and other key information across the supply chain.

As new generations usher in new ways of experiencing life, manufacturers in the CPG industry need to have the Agility to keep up with changes without inflating costs. Agility not only enables market leadership, it also removes a significant amount of risk from experimentation – bringing the fun back into the factory. An Agile factory or supply chain creates business opportunities for itself and its customers, who may also need contracted work for store-branded products in new and exciting formats. A manufacturing efficiency expert such as those at Manuficient can help you increase the Agility of your supply chain and match your production capabilities to current and emerging market trends.

Download Your FREE Whitepaper Today!:  Why Most American Continuous Improvement Initiatives Fail

Regards,

Calvin

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Inventory Reduction: Bringing Your Working Capital Cash Back to Life


Posted on June 9, 2015 at 4:05pm

Manuficient Consulting - Pulse

Inventory is a fact of manufacturing life. It is accumulated and maintained for raw materials, work in-progress (or WIP), and finished goods. We like inventory when it means we can be highly responsive when the customer needs us to be. We don't like inventory when we start to realize that it a) ties up a substantial amount of working capital, b) can be expensive to store and maintain, and last but not least, c) it weakens operational discipline - meaning is cultivates manufacturing and supply chain inefficiency. Thus creating a double-edged sword where you could get burned quickly for not having enough inventory and you get burned in the long run for having too much inventory. The Ideal state would be to not need inventory at all, but this would require you to have a supply chain that can deliver orders on-demand. This means having the right products at the right place in the right quantities and so on. This means immaculate execution on the part of your supply chain in terms of speed, quality, and reliability. Although this is an ideal state and not within short-term reach for most (if any) companies, it should be the ultimate goal of any company's Continuous Improvement path to world-class execution.

Inventory accumulates for a few main reasons, including but not limited to: unpredictable demand, over-purchasing, over production, unreliable manufacturing / supply chain processes, insufficient manufacturing capabilities, insufficient manufacturing capacities, lack of agility, and a whole host of other reasons. The main thing to understanding is that all of these reasons are driven by addressable gaps in performance; which are ultimately resulting in a "push" manufacturing model. If a company is maintaining any level of inventory, you can be assured that they are suffering from at least one of the items on this list if not multiple. The system-level key to reducing or eliminating the need for inventory is to close performance gaps in these and other related areas.

With that said, some of the root causes that result in the need for increased inventory levels cannot be resolved in the immediate future. You may find yourself with a need to reduce inventory levels drastically within 6 months to a year. It is not realistic, for example, to expect drastic changes in manufacturing capabilities or capacities in such a short time frame, especially if you don't have the capital readily available to make significant engineering changes. For this reason, I typically recommend a time-phased approach to reducing inventory levels that drives both immediate gains and sets the supply chain on a path to world-class execution. The phases are as follows:

Phase 1 - Crisis Mode - Fire Sale: The goal here is to minimize the damage of further obsolescence which is what happens when excess inventory expires or is no longer demanded. The best case is to aggressively seek new customers who will absorb the excess (and/or obsolete) at full rate. The next best case is to offer the overages to the highest bidder. Another approach would be to donate excess or obsolete product (if applicable) and write-off losses.

Phase 2 - Short Term - Safety Stock Implementation: Apply appropriate safety stocks and tie inventory levels to demand. In Lean terms, this is an intermediate step to creating an actual pull system called a supermarket. Once the initial wave of excess / obsolete inventory has been reduced, the next step is to determine and implement the appropriate safety stocks. Safety stocks are determined through an algorithm of past sales (considering seasonality), expected future sales, and plant production capability among other variables. In this model, the production schedule should be driven by replenishing safety stock levels.

Phase 3 - Medium Term - Safety Stock Optimization: Match inventory to demand by SKU and apply additional reduction based on your factory / supply chain's delivery capability. In order to execute this phase, you need to understand your factory and supply chain's capability by SKU. It also requires categorization of product SKU's into active (A), slow-moving (B), and excess / obsolete (C). A thorough analysis can help to determine the optimal levels of SKU's in each category considering manufacturing performance and capability. Again, the production schedule is driven by safety stock replenishment requirements. The next step in the process is to provide suppliers with safety stock status information so that their production schedules can be driven by your needs for stock replenishment. This along with synchronizing with your customers effectively establishes a pull system, which the ultimate method for controlling inventory levels.

Phase 4 - Long Term - Inventory Quality Ratio Implementation: Implement the Inventory Quality Ratio (IQR) model that strives to minimize slow moving and obsolete items and maintain active items - measured as a percentage. IQR = Active Inventory Dollars / Total Inventory Dollars; in other words, the IQR would be 100% if all inventory were active. The definition and speed of turns of "active inventory" varies by industry but is generally the fewest number of SKU's that makes up 80% of units sold. The IQR is a metric that can be implemented immediately or at any of the prior phases; however, the phases leading up to this one provide the foundation and information needed to implement IQR, which then lends itself to eliminating excess or obsolete inventory altogether. For slow moving SKU's, the supply chain needs to be made reliable enough to execute effectively.

Ideal State - Ultimate Supply Chain / Demand Alignment: Match manufacturing and supply chain capabilities with demand to the point where orders could be filled on-demand with no inventories required. This is the classic model of "don't even make it until after it's been ordered by the customer", which constitutes a pull production system in the purest form. This requires developing your manufacturing and supply chain processes to levels of world-class execution, or 85% OEE. This requires tremendous Operation Discipline and should be the ultimate aspiration of any Continuous Improvement program. Ease of implementation of this model depend heavily on the predictability of demand, but with the right science and analytics, any manufacturer can reach heightened levels of success.

Manufacturers need to establish an effective balance between supply chain reliability, safety stocks, and market demands. Inventory builds as a reaction to supply chain processes being incapable of meeting orders on-demand and the use of a push manufacturing model. In an ideal state, the customer could place an order, the factory could make the product and fill the order shortly afterward, and deliver it on time and in-full to the right location; this defines the supply chain's level of execution. However, what actually happens is that manufacturers build inventory so they don't have to rely on their supply chains to deliver within such a short window of time, risking failure to meet customer service expectations. Over time, this practice encourages greater and greater inventory levels, which only serves to hide the very inefficiencies that result in needing the inventory in the first place. Without effective inventory management systems, there is no check and balance to continuously drive down inventories, freeing up working capital (cash) that can be used for more productive purposes. A manufacturing efficiency expert such as those at Manuficient can help you strike the right balance between supply chain reliability, safety stocks, and market demands to drive significant reductions in inventory costs. Also, Manuficient can work with you to increase supply chain reliability, resulting in additional working capital availability.

Download Your FREE Whitepaper Today!:  Why Most American Continuous Improvement Initiatives Fail

Regards,

Calvin

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New Booklet: The fOS - A Guide to World-Class Execution for American Manufacturers


Posted on June 3, 2015 at 8:38pm

Manuficient Consulting - The fOS

As any manufacturing leader who has attempted to implement Lean, Six Sigma, Agile Manufacturing or any other Continuous Improvement initiative can tell you, it's not quite as "plug and play" as it seems in all the books and websites. It's now being estimated that as many as 70% of American Continuous Improvement initiatives fail. This video provides some insight to this phenomena and sheds some light on some of the prevailing reasons:

The new booklet from Manuficient Consulting titled: The fOS, provides the solution for American manufacturers to cultivate the Operational Discipline needed for successful CI implementations. The goal of the fOS is world-class execution, which is widely regarded as 85% Operational Equipment Effectiveness (or OEE). I wanted you to be among the first to get a copy and get a head start on implementing some of the best-practices used by America's most successful manufacturers to drive Operational Discipline and a culture of CI. You can access the booklet from:

The fOS - A Guide to World-Class Execution for American Manufacturers

The booklet is also available at Smashword and other select retailers.

Regards,

Calvin

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Whitepaper: Why Most American Continuous Improvement Initiatives Fail


Posted on May 22, 2015 at 6:59am

Why American CI Fails 1

It has been estimated that 70% of Continuous Improvement efforts such as Lean, Six Sigma, Agile Manufacturing and others fail to meet expectations. This happens for two primary reasons:

1) The Factory’s Operating Systems lack sufficient structure and are not conducive for Continuous Improvement. The Operating System is the array of policies, processes, people, and technology that are used to execute operations.

2) CI requires a high degree of Operational Discipline that, in the absence of a well-structured Operating System, is nearly impossible to cultivate.

Through an in-depth assessment, a set of conditions have emerged that hinder progress toward creating a culture of Continuous Improvement. These conditions are the result of human nature in the manufacturing environment and thus require an Operating System that provides the controls necessary for performance breakthroughs. Some of these conditions include:

  • Competing interests and misaligned agendas
  • Issues that could have easily been resolved evolving into expensive problems
  • Uncertainty about how much time systems are down and why
  • Lack of issue resolution and insufficient accountability systems
  • Changes leading to expensive problems caused by a lack of preparedness
  • Implementations that don’t sufficiently capture the opportunity
  • …and many more!

Download the whitepaper titled Why Most American Continuous Improvement Initiatives Fail from Excelville.com to get the full list of conditions including descriptions that create and perpetuate a lack of operational discipline. Also discover what manufacturing leaders can do to cultivate discipline and lay the foundation for successful CI implementations.

Feel free to share this link with colleagues, friends, or anyone else interested in understanding how to improve factory performance.

Regards,

Calvin

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Is Your Company Inadvertantly Putting the Breaks on its Own Continuous Improvement?


Posted on May 17, 2015 at 7:02am

Manuficient - Brake Light

Getting better at something can take a lot of work. As any change agent can tell you, change is difficult, especially when there are people involved. Change requires shifts in the power structure, disrupting old habits, and pushing people out of their comfort zone. The reason that’s a problem is because you simply cannot get better if you cannot change. The two are inseparable. In many cases, there are just as many forces at play to prevent change than there are to create change. Sometimes those forces are created by the way the company works, or its business system. The business system is the array of its policies, people, processes, suppliers, customers, culture, and technology. Sometimes, the business system is designed in a way that inadvertently discourages continuous improvement. But don’t fret. In this post, I will uncover a few of the culprits that are putting the brakes continuous improvement in your company.

At any point in time, a manufacturer can capture its current state situation. Although the current state is just a snapshot in time, it can reveal some very interesting information. This information could include throughput levels, process efficiencies, conversion costs and so on. It could also reveal recent trends that provide some indication of what can be expected for the future. Those trends provide some insight to how “primed” your organization is for a continuous improvement initiative such as Lean, Six Sigma, Agile manufacturing or anything else you’re trying to do. A positive trend over time indicates that the organization is more likely to embrace change or continuous improvement. A flat trend over a long time indicates that the organization may be stagnated with some degree of resistance to change or improvement. These are the most difficult ones because there may be gatekeepers who won’t see a need to change. Making the case for continuous improvement will take quite a bit more effort in this instance. If the trend is negative over a long time period…well there’s bad news and good news. The bad news is that if you don’t improve, you won’t stay in business. The good news is that if you don’t improve you won’t stay in business. Making the case for continuous improvement in this case is a piece of cake.

With that said, there are some arrangements where business systems have embraced their inefficiency. These systems have decided to implement practices that allow some inside the business to profit from their inefficiency instead of eliminating it. I’ll give you a few examples: the contractor who is paid by the hour has an incentive to consume more hours to complete a job. Another is the airline that allows passengers to pay for priority boarding and seating. Their incentive is to keep the “normal” process so cumbersome that people will pay to cut in line and circumvent their terribly inefficient process. In this case, the airline has created a nice new revenue stream from their own inefficiency. You see where I’m going with this. These would be examples of policies killing the culture of continuous improvement. Over time, the people of an organization grow to accept inefficiencies as “the way it is” and they learn to capitalize on them as well. Inefficiency leaves room for corruption, which only breeds more inefficiency. This is what leads to a culture of poor performance and resistance to continuous improvement.

As part of your continuous improvement initiative, it will serve you well to take a close look at the policies, people, processes, suppliers, customers, culture, and technologies that might be hindering your growth. You will need to identify who in the organization is profiting from inefficiency and create conditions where the only way to profit is by ever increasing efficiency (with outstanding safety and quality of course). An expert with a trained eye such as those at Manuficient can help to quickly identify and remove these systemic speed bumps for your continuous improvement initiative.

Visit the Manuficient website for more information on this topic.

Visit my Excelville Profile for tools and resources to support your continuous improvement implementation.

Regards,

Calvin

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   � Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog�s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


How is Your Bottom-Up Lean Implementation Going? - The Discipline Factor


Posted on May 15, 2015 at 8:28am

Manuficient - Discipline

A recent poll conducted by Manuficient Consulting suggested that a “Lack of Leadership Buy-in and Commitment” was the #1 reason (38%) why Lean Implementations Struggle in America followed by an “Underdeveloped Workforce” at 28% and “Lack of Lean Expertise” at 11%. Click here for details on the poll’s results. What does this say about the state of manufacturing in America – or even American culture at large?

Lean Manufacturing grew up in Japan, where there are significant cultural differences that makes Japanese manufacturers more susceptible to a successful Lean implementation. In fact, at Toyota, its not even considered an implementation, but the way business is done. It is a very deliberate and systematic way of doing business. There is one predominant characteristic that any company (or person/entity) must possess in order to do anything deliberately and systematically. That quality is discipline. Discipline, as explained by Jim Collins and Morten Hansen is one of the three traits of 10X’ers in the book, “Great by Choice“. The other two traits being empirical creativity and productive paranoia according to the book.

A Lean Implementation, just like any other Continuous Improvement initiative, requires a tremendous degree of discipline. This is the trait that is more ingrained in Japanese culture than in American. In Japan, its common for a child to select or be designated a career path at a very young age and never stray throughout life. Its normal for people to work for one company for their entire professional career. In contrast, these patterns are typically not a part of the American experience. Consequently, many American people and companies don’t develop the amount of discipline needed for a sustainable Lean or CI implementation.

Okay, so the title – “How is Your Bottom-Up Lean Implementation Going?”. Sometimes leaders expect Lean to “catch on” among the people at the lowest levels in the organization. They say they’ll engage once they see the people on the plant floor buying into it.  Lean is a system that works from a base of strong discipline. As any effective business leader knows, discipline most often forms from the top down. It’s unwise to expect the people on the lower rungs of the organization to discipline themselves, especially in America. As mentioned in the book “Great by Choice”, discipline is not just action taken to correct bad behaviors, it is unwavering consistency of behavior, usually founded in a solid set of values and fundamentals. Any company that finds itself in a position where they feel they need to implement Lean should first seek to increase organizational discipline. Once this discipline is established, Lean or any other CI initiative becomes a lot easier to implement and sustain.

This is the premise of the fOS Methodology, which is designed to drive organizational discipline. It provides a systematic approach to monitoring and managing manufacturing performance in such a way to achieve World-Class Execution. You can click here get a copy of the fOS booklet from my Excelville Profile.

manufacturing efficiency expert such as those at Manuficient can help you identify opportunities within your manufacturing organization to increase organizational discipline and help drive sustainable improvements.

Visit my Excelville Profile for tools and resources for your operations excellence initiative.

Regards,

Calvin

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


HOW TRAINING ENRICHES THE SOIL FOR A CULTURE OF OPERATIONAL EXCELLENCE


Posted on May 8, 2015 at 6:13pm

Training - Freeway Exit Sign

In business, we make guarantees. We guarantee excellent quality, world-class service, and competitive prices. We need to make guarantees because are customers need to know that we will deliver, and they deserve that peace of mind. This allows our customers to place their focus on other important things.

The ability to deliver to those guarantees is a matter of integrity. However, businesses are made up of a system of imperfect people, machines, and processes. How can a business make guarantees to their customers on one end, and on the other end be riddled with so much imperfection? The answer is in the the design of the business system. If you were to read a company’s mission statement, and it says, for example, that they will make products of unparalleled quality, then you should be able to audit their business system to determine if it is truly capable of delivering to that standard. Although the goal of any business system should be to eliminate the opportunity of failure of delivering what is guaranteed to the customer, the execution of the business system is often heavily reliant on people. That’s right – imperfect people.

This is where training enters the stage. Training is defined (by Google of coarse) as: “the action of teaching a person or animal a particular skill or type of behavior.” In this case, the desired behavior would be to effectively execute the business system or designated process within the system. Training helps imperfect people to become more perfect; at least at a specific thing. An effective training program ensures that people have the capability to execute the business system according to what the business has guaranteed the customer.

There are four primary categories to an effective training program:

  1. Standard Operating Procedure Development and Management
    1. Entails documenting critical system and procedural knowledge and making sure that they remain current and complete
    2. Ensures that all Standard Procedures are readily accessible to relevant personnel
  2. Training Execution & Records
    1. Ensures that trainees know and understand what is needed for effective system execution
    2. Tracks who has been trained on what content
    3. Helps to ensure that gaps in training are closed in a timely manner
  3. Validation of Learning
    1. Provides immediate verification that sufficient learning has been achieved
    2. Validates that learning has been retained an has been put into operational practice
  4. Change Management
    1. Ensures cross-functional buy-in to pending process changes
    2. Supports the entertainment of good practices and desired behaviors

Business systems (especially in manufacturing) are constantly evolving creatures. In a culture of continuous improvement and operational excellence, the manufacturing process, procedures, and knowledge requirements change almost daily. A training program that is capable of delivering the right knowledge to the right people; than ensures that the capability is acquired and is put into action; is essential to drive out operating costs and sustain strong performance. Often times businesses start their continuous improvement initiatives without having a solid foundation such as an excellent training program in place. They quickly learn how frustrating it can be to make brilliant process changes only to have them undermined by poor training and people development.

How robust is your training program? How is it impacting your ability to sustain or improve business performance? Reach out to us to assess what can be done to improvement the integrity of your training systems.

Visit the Manuficient website for more ideas on how to drive Operational Excellence.

Regards,

Calvin

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   � Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog�s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Manufacturing Change Management: Leveraging Forces of Change to Grow


Posted on May 8, 2015 at 10:40am

Manufivient - Threat - Opportunity

In manufacturing, change happens – rather you’re ready for it or not. Sometimes these changes are expected and sometimes not so much. There are many forces acting on the manufacturing system (or any business system for that matter). These forces create pockets of pressure and vacuums that ultimately result in disruptions to the manufacturing system if not handled effectively. There are many sources that these forces can emerge such as: corporate mandates, governmental mandates, personnel changes, competition activity, technological advancement, customer taste changes, new market pursuits, improvement events, etc. This list barely chips the iceburg. When the forces of change becomes strong enough in any direction, the manufacturing system has to have the agility to quickly adapt and sustain acceptable productivity levels. Change is risky but absolutely necessary; it is also unavoidable. With that said, how can a manufacturing system be in pursuit of perfection, when the system is in a constant state a flux? While I’m a huge proponent of Lean Manufacturing, the reality that the manufacturing system is in a constant state of flux highlights a limitation of Lean, which sometimes assumes that processes remain generally the same. It also exposes the urgency of Agile Manufacturing.

An effective Change Management System is essential in our pursuit of the perfect manufacturing system. This is based on the definition of a perfect manufacturing system being one that can sustain above 85% OEE, even under changes of any frequency and magnitude. This being a manufacturing system that is both Lean and Agile – or Leagile as some are now calling it. A Change Management System can help prime the organization for upcoming changes as to minimize disruption and avoid compromising any element of manufacturing execution. There are several critical components of any effective Change Management System:

1 – Change Tracking Log – This provides a database of past and future changes and allows effective prioritization. The log allows for changes to be spread out on the factory’s calendar so that non-critical changes can be scheduled around critical ones. The Tracking Log also helps to predict how upcoming changes will affect one another. Finally, the Tracking Log helps to identify which key stakeholders have signed-off on the change and which buy-offs are still pending.

2 – Change Management Communication – CM Communication provides the critical change information to the right people on a regular basis so that all stakeholders remain aware of what changes are coming down the pipeline. This helps leaders to predict how upcoming changes will impact their areas of accountability and allows them time to take steps to prepare. The CM Communication could occur in the format of a weekly meeting, emails, publishing printed documents or whatever works best within the context of your manufacturing environment.

3 – Risk Assessment – This is a process that provides a safe format for all key stakeholders to assess risks and voice their concerns about an upcoming change. The Risk Assessment also provides a platform to collaborate on any mitigating actions needed to sustain acceptable business performance.

4 – Key Stakeholder Buy-offs – Stakeholder Buy-offs allow key stakeholders the opportunity to approve or dis-approve on the quality of execution of the agreed-upon mitigating actions from the Risk Assessment. Depending on how your CM System is designed, the owner of the change will likely have the obligation to provide as much evidence as needed to validate effective execution of mitigation actions. This could include test results, photos, training sign-off sheets, or any other form of proof.

5 – Change Management Review Process – The CM Review Process is a step to ensure the integrity and Continuous Improvement of the CM process itself. Its possible to develop CM metrics to measure the team on the effective execution of the CM process. For example, one metric could measure if the change owner obtained 100% of required sign-offs before the change actually took place. Another could measure the delta in OEE% for a process following the implementation of a change.

Implementing an effective Change Management System is an initiative in itself. Just like any initiative, its success or failure depends primarily on the discipline of its leaders to see it through even when others have not bought in. An effective Change Management System can be a tremendous asset for people on all levels in the factory and the company at large. It provides a systematic way to drive the changes that need to be made. So if you’re an operator on the plant floor, you can use the CM System to initiate a change for much-needed improvements in your production area. Likewise, the Plant Manager can use the CM System to ensure team engagement and support before engagement. Additionally, in the most Agile organizations, CM Systems are used company-wide to affect changes initiated across different business units such as Marketing, Sales, Distribution, Finance, or other.

manufacturing efficiency expert such as those at Manuficient can help create a Change Management System tailored to the nuances of your organization that helps sustain and driveContinuous Improvement.

Visit my Excelville Profile for tools and resources for your operations excellence initiative.

Regards,

Calvin

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


fOS Part IV - Accelerating to World-Class Execution


Posted on May 5, 2015 at 12:29am

fOS Part V: Improvement Systems - Manuficient Consulting

 

Since this is the last and final installment of the fOS Methodology’s approach to World Class Manufacturing Execution series, I’d like to start this post off in a special way – by listing my top five most favorite quotes about Improvement:

5) “We make our discoveries through our mistakes: we watch one another’s success: and where there is freedom to experiment there is hope to improve.” ― Arthur Quiller-Couch

4) “No matter how good you get you can always get better, and that’s the exciting part.” ― Tiger Woods

3) “Without continual growth and progress, such words as improvement, achievement, and success have no meaning.” – Benjamin Franklin

2) “Improvement begins with I.” – Arnold H. Glasow

1) “I have a great respect for incremental improvement, and I’ve done that sort of thing in my life, but I’ve always been attracted to the more revolutionary changes. I don’t know why. Because they’re harder. They’re much more stressful emotionally. And you usually go through a period where everybody tells you that you’ve completely failed.” – Steve Jobs

In business, improvement is non-negotiable. This is especially true in manufacturing. In most companies that make stuff, anywhere between 55% to 85% of total expenses goes into manufacturing (including salaries, materials, labor, equipment, shipping, etc). One of the general objectives in business is to minimize operating costs. Since manufacturing is the single greatest business expense, it makes perfect sense that manufacturing has lead the way in the business world in the area of continuous improvement. Nowadays, all areas of business from healthcare to finance to education are adopting some of the improvement practices that were developed in manufacturing.

One of the most important lessons I’ve learned as a change agent, even in some of the most successful companies in the world, is that driving change is difficult. It is often welcome initially but there is always a percentage of the workforce (and leadership team) that quickly grows weary of change and will begin to lead the charge against change. All people seek comfort, and change (even improvement) disrupts order and pushes people out of their comfort zone. I’ve always looked at continuous improvement like pushing a boulder up a mountainside. It requires everyone to be working together against the boulder. Once it reaches the tipping point, gravity takes over, but the challenge is overcoming the initial push where gravity is working against you. It takes strong and steady leadership. And it takes a few people who really know what the hell they’re doing. Building a strong and steady leadership team is a continuous improvement process in itself…but knowing what the hell you’re doing is something I can certainly help with.

In Part IV of the fOS Methodology, we discussed the function of Management Systems being to process business performance and effectively allocate resources to address issues or capitalize on opportunities. Now we move on to Improvement Systems, which looks at taking action against opportunities. There are four main components to any improvement effort:

1) Improvement Team Structure

fOS Improvement - Manuficient Consulting

Once an opportunity for improvement has been identified, an individual or team needs to become the point of accountability for leading the improvement. With any accountability, one should also be granted authority to make the changes that are needed. With any authority, one should also receive the training and experience needed to effectively make decisions. So to re-order of that sequence chronologically, improvement is made possible through: proper training > authority > accountability. Strangely, in my experience, most actual continuous improvement efforts start with someone being held accountable for a process’ success or failure without having proper training or authority to make necessary changes. This is a recipe for failure for the poor soul who has been dealt this fate and the process that requires improvement.

2) Solutions Development

fOS - Improvement - Manuficient Consulting

Solutions should not be developed in a vacuum. The days of cowboy management are over where the one who runs into a crisis situation and rescues all the hostages is the hero. The world has become so competitive that companies cannot afford to significantly compromise on quality or safety or cost or morale in order to solve a problem. Solutions developed in a vacuum tend are developed with “skewed” interests and the cost of the problem is often passed on to some other area of the business (ie quality, safety, cost, etc…). Effective solutions development requires the input and expertise of a cross-functional organization. For very small issues, this may not be feasible and individuals need the cross-functional training required for effective daily decision-making. For larger-scale opportunities, ideas need to be properly vetted and a higher degree of expertise should be deployed. Also, a broader range of interests need to be addressed.

3) Resource Acquisition

fOS - Improvement - Resources

After acquiring the appropriate buy-offs on an implementation plan and resource requirements are determined, managers need to support improvement leaders in acquiring the needed resources. This can be as easy as checking inventory to see if supplies are in stock or as complex as expending political capital needed to obtain resources that are not cost justified. This is where the project Champion makes all the difference in the world. I’ve worked with Champions who have done nothing more than sabotage the project and those that have quickly broken down barriers and helped to smoothly execute projects. The best Champions are well-trained in the ways of Continuous Improvement and have a strong personal interest in the success of the project. Improvement leaders also to need to recognize how to use their Champions in considering how solutions will be shaped.

4) Improvement Implementation

fOS - Improvement - Manuficient Consulting

After solutions are developed and resources are acquired, now its time for the rubber to hit the road. If the improvement leader has effectively executed the Improvement System thus far, she should be met with minimal resistance to making the necessary changes. The critical step here to secure full buy-in is to execute Change Management by performing a cross-functional risk assessment then completing any of the resulting mitigating actions. This will clear the way for changes to be made with the support of key leadership and subject matter experts. Skipping this step could lead to sabotage and erosion of credibility for the improvement leader. It could also lead to issues undermining really good work. After implementation and the process has reached steady state – at rate, the other critical step is the handoff of process ownership. This should be a formal procedure for transitioning the process’ ownership to the production managers. This includes future training, data collection / analysis, and everything else required to properly execute normal operations.

It’s easy to think that continuous improvement is a one-man-job. I’ve seen companies plug an IE or Lean Tech into a factory and say Continuous Improvement is his job. I hope that this post has conveyed that everyone in the organization has a role in a continuously improving manufacturing environment. Yes, CI requires at least one lead person…that person would ideally be the single leader of the entire organization. Again, in business, improvement is non-negotiable, and is a critical part of the manufacturing leader’s scope of responsibility.

Once improvements are made, standards should be revised to reflect the modified process. This is the piece that brings the fOS Methodology full-circle. The manufacturing Planning will need to incorporate the revised standards. This takes us back to the first quadrant of the fOS Methodology, and thus moves us one step closer to World Class Execution.

Please visit Manuficient Website for more information on this topic.

Also, visit my Excelville Profile for tools to help you along the way on your Continuous Improvement Journey.

Best Regards,

Calvin L. Williams, MBA, BSIE, LSS

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© Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Hiring, Promoting, and Firing for Transformation in Manufacturing


Posted on April 28, 2015 at 3:51am

Manuficient - Hiring

What is the mix of attitudes toward change within your organization? Is your factory's mix of attitudes optimized for transformation?

One of the most critical factors of a successful Continuous Improvement implementation is having the right people on the bus. When undergoing this type of change, the organization is going from a steady state to a transformative state of operation. To optimize the speed and strength of an implementation, it helps to have the right mix of personalities, talents, competencies, and attitudes in place. For instance, the greater manufacturing competency (such as experience with LeanSix Sigma, or other), the easier the implementation. In regard to personalities, it helps to have a diverse team that can bring a variety of perspectives to the table. Also, talent brings magnitude to the direction that is set for the change. However, the predominant factor in the organization's Agility is people's attitudes toward change at the onset of the initiative. Organizational Agility is the speed at which it can effectively change and return to steady state. Granted, people can change and judgement needs to be applied as to how much a person can change and by when, the amount of time required for people to change adds time to the implementation. As you may have gathered at this point, a CI implementation needs to happen in the attitudes and behaviors of people, just as much as it happens with other manufacturing assets on the production floor. Depending on the specific current and future needs of your business, your approach to getting the right people on the bus will vary.

One of the most profound publications on people's attitudes toward change is "Who Moved My Cheese" by Spencer Johnson, MD. According to Spencer, there are four types of attitudes towards change which I'll summarize below:

Sniff (or the Change Agent) identified change early. He kept things simple and adopted the change. He would represent those in the organization who advocate change for the others.

Scurry (The Supporting Agent) was eager and quick. He was flexible, aware and accepted the change that was taking place.

Haw (the Adapter) dealt with change in a different way. He was able to relinquish old behaviors and learn from past mistakes.

Hem (the Stabilizer) preferred to stay in his comfort zone and ignore the reality of the situation. He felt entitled and just trusted his needs would be met if he took the easiest path.

One of the keys to optimizing a CI implementation is finding or cultivating the right mix of attitudes. Based on personal experience, the typical organization at steady state might contain the following mix:

Change Agents (2%) | Supporting Agents (15%) | Adapters (50%) | Stabilizers (33%)

For a more effective Continuous Improvement implementation, a more appropriate model might look as follows (depending on the organization's goals):

Change Agents (10%) | Supporting Agents (35%) | Adapters (40%) | Stabilizers (15%)

The point is to show a significant shift from people on the Stabilizer end of the spectrum toward the Change Agent end. This is especially true within the Leadership group of the organization. This may also require either helping people to change their attitudes or hiring/promoting/firing people to optimize the mix required to strengthen a transformation. Notice that even in a state of transformation, some population of Stabilizers is still required to support implementation. This is because Stabilizers are best suited for driving adherence to standards, which is critical for continuous improvement.

To effectively apply this model, an inventory of attitudes toward change should be taken to get a snapshot of the organization's current state. An expert can help you determine the attitude mix required to achieve the desired future state. After the implementation has reached maturity, there should be a shift in attitudes away from Change Agents and toward Stabilizers in efforts to sustain desired changes. At any state of operation, there is an optimal mix which should be evaluated and decided upon based on the current and future needs of the business.

manufacturing efficiency expert such as those at Manuficient can help to assess your organization's current state and help develop the optimal mix based on business needs.

Visit my Excelville Profile for tools and resources for your operations excellence initiative.

Regards,

Calvin

Engage with us:

Subscribe | Request Material | Schedule a Call | Request a Proposal

 Connect with us:

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


5 THINGS YOU SHOULD DO IMMEDIATELY TO IMPROVE PLANT PERFORMANCE


Posted on April 27, 2015 at 3:40pm

Manuficient - Declining Performance Chart

Well it turns out, there’s quite a bit of science to the art of plant management. There are hard ways to drive performance and there are easy ways. I’m not going to dig into the hard ways because I’m sure we all know what those are. I will however touch on how the great ones do it. In every factory, there is an abundance of the 8th and often forgotten waste, which is non-utilized talent and ideas. In this post I expose how to harness this abundant resource to drive plant performance. Below are five things you could do within the next month to significantly improve plant performance:

1) Make sure your performance KPI’s are aligned with your plant’s priorities. Wrether it be to reduce costs, increase throughput, increase overall customer service levels, or anything else. Create a consensus on what are the ranked priorities of the plant for the next year, 5 years, and longer term. Then develop a set of KPI’s that immediately reflect your factory’s level of execution around those priorities. KPI’s should be something that can be tracked and managed on at least a daily basis but the more real-time, the better. This increases the actionability of the metrics being tracked. Its a lot more difficult to engage people in a metric that is only updated once a month or less frequently. In manufacturing especially, its wishful thinking to expect people to have an attention span longer than one day.

2) Set daily, weekly, and monthly performance targets for the KPI’s mentioned in step 1. Tie plant bonuses, performance reviews, and other systems that are in place to motivate people to the delivery of performance targets for those KPI’s. For example, a target could be to increase OEE% by 2% each month for an entire year. This would be even more powerful if you were tracking OEE by individual line area so you can easily see what areas need more TLC.

3) Publish the KPI’s in a highly visible location and update as frequently as possible. With today’s performance tracking technology, you can sometimes use monitors that display performance by area in real time. It works great when you can aggregate and summarize performance by area and publish it in an area that’s both highly visible and great for meetings. This sets you up for performance review meetings and makes the areas with greatest opportunities for continuous improvement more evident.

4) Establish escalation protocols for issues. There are 2 types of escalation processes needed. The first is for issues that pose an imminent threat to service levels. Make it clear how long a line should be down before maintenance, supervisors, and managers should be notified and need to get involved. There should be a set of standard actions for the support personnel to follow if they are called upon for help.  Ideally the line operator would initiate the root cause analysis process before calling for help. The help should be equipped with the appropriate training to continue and coach the line operator on the next steps in the RCA process. This should continue up the chain until the issue is fully resolved.

The second type of escalation process is for chronic issues that may hurt efficiency but are often worked around to hit daily targets. However the same rules generally apply. Set standards for how long an issue should persist before it needs to be escalated. Make sure to give your operators enough time to exercise their problem-solving skills before escalating. Also ensure that each level of escalation has a higher capability for problem-solving.

5) Train, train, train, and then execute, execute, execute. Make sure everyone in the organization knows their role and are well prepared to solve the problems that are typical for their area of work. As a leader, all you need to do is make sure everyone is following the protocols and engineer the protocols as needed to get the results you want. The effectiveness of your training and execution will be apparent in the trending of your KPIs, which at this point should mirror your priorities. All you need to do at that point is sit back and watch all your production waste melt away. Then celebrate, celebrate, celebrate.

Wash, rinse, and repeat.

Just by publicizing performance and establishing daily management protocols, you will see a significant jump in performance. This is called the Hawthorne effect. Celebrate early success but continue to push for stronger performance over time. From here, you will see a grassroots effort to take initiative on opportunities for further improvement. This usually takes a few months but this is exactly where you want to be.

Good luck in your performance improvement efforts. Feel free to reach out to me if you need assistance with developing a continuous improvement roadmap, training, help with a chronic performance issue, or just need someone to bounce ideas off of.

Visit the Manuficient website for more ideas to drive plant performance.

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   � Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog�s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


THE MANUFACTURING AGILITY INDEX: MEASURING THE EFFICIENCY OF CHANGE


Posted on April 21, 2015 at 4:43am

Manuficient - Manufacturing Agility

How well does your organization handle change? Is it managed deliberately or do you use a shoot first, ask questions last approach to changes? What is the level or resistance that you face for easy process changes? What about the difficult ones?

Change is inevitable. The only choice we have is to proactively work to change for the better. And if you’re not actively getting better, then you only have one other way to go. Staying the same is just not a realistic expectation. This is the driving force behind the concept of Continuous Improvement.

In this post, I want to introduce the concept of the Agility Index, which is a measure of your organization or factory’s ability to process change. The lower the number, the more difficult change is; likewise the higher the number, the more agile the organization or process. The term Agile in business is much more popular in the world of software development and project management but the concept of Agile Manufacturing is increasing in popularity driven by the realization that markets are demanding greater variety and Agility can absolutely help drive down manufacturing costs. Agile Manufacturing is a relatively underdeveloped discipline that many believe is the next step in productivity to Lean Manufacturing. However, in my view, Lean and Agile are uniquely independent disciplines. Each is more applicable to some manufacturers than others. The goal of each is ultimately improved customer service and retention. Although Agile attempts to help manufacturers break into new markets sooner than competitors to gain advantage.

Agility can be described as the cost of change. Cost can be measured in time, energy, dollars, or even psychological displacement. And since change is inevitable, its in every manufacturer’s best interest to reduce the cost of change – or increase its Agility.

To measure a manufacturer’s agility, you first need to create a scale that measures magnitude of change. There are three factors that are used to quantify the magnitude of a change: Degree of Change, Scale of Change, and Complexity of Change.

Degree of Change: To get the full grasp of agility, you have to first see the business system as a process (or array of processes). All processes have three core elements – Inputs, Process, Outputs (with Suppliers and Customers being conditional factors as in the SIPOC model). Based on these three core elements, there are 4 degrees of change that I’ll go into detail about in a future blog post. The  greater the degree of change, the more difficult it is to implement. At the simplest level, a product changeover would represent a change from the current state to a future state process.  On the other end of the spectrum, a full implementation of a new product line or production plant would be a change in the fourth degree.

Scale of Change: Scale of change measures how many people or assets are affected either directly or indirectly. Some people will have an immediate need to change their behaviors and some will just need to be aware of the change that has taken place. For obvious reasons, the more people affected by the change, the more difficult the change is to implement.

Complexity of Change: This is a measure of how much of a learning curve is needed for the people affected by the change. A future state process that requires one new process step is much easier to implement than a future state process that requires 100 new steps for example. The greater the complexity of change, the more difficult it would be for an organization to implement and return to steady state.

Each of these factors are measured on a scale of 0 and 100% and multiplied across to measure the magnitude of change.

So here’s where all of this matters. One can fairly easily determine how much a change should cost. For example, if all of the waste was moved from a changeover process, it would require XX minutes. However, the actually process it taking YY minutes historically. The Agility score for that type (or magnitude) of change can be calculated as XX / YY. From there, you can actually calculate a savings potential for increasing Agility to 100% for that process.

Based on this information, you can use what is called the Agility Index to determine what the true cost of changes of greater magnitude such as implementing a new production plant would cost due to poor agility and how much could be saved by increasing Agility. Organizations with great agility will have a much lower “cost of change” than an organization with poor agility. Therefore, increasing Agility in the manufacturing environment would be substantially lucrative in many cases.

Good luck with your efforts to increase your organization’s Agility. Feel free to reach out to us if you would like a 50+ point analysis of your manufacturing Agility with recommendations for what could be done to drive improvement.

Visit the Manuficient website for more information on this topic.

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   � Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog�s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Continuous Improvement in HR Part 3 - The Value-Creator Ownership Model


Posted on April 17, 2015 at 9:53am

Manuficient - Business Owner

Have you ever heard of an economic model where everyone makes about the same amount of money regardless of what actual value they contribute to society? Of coarse you have…just pick an American factory at random and that’s pretty much what you’ll find. The norm for US factories is to have minimal or marginal income diversity, especially among blue collar workers. Let’s look at this model in a slightly different context. Take entrepreneurship for example. Entrepreneurship usually takes a substantial degree of risk but can be tremendously rewarding if it works. Just about every entrepreneur would tell you flat out that the potential for rewards out-weighs the risk, and that’s why so many people go for it. This is one of the most powerful engines in business and for any economy. In fact, some brave soul(s) made this calculation prior to the birth of every company in existence. If you told an aspiring entrepreneur that no matter how much risk they take on with their dream venture, they would never make much more than $18/hr, do you think they would still go for it? Do you think they would bother with all the brainstorm sessions, raising capital, breakthroughs in innovation and all the exciting and sometimes dreadful aspects of entrepreneurship? Probably not so much.

This model of marginal income diversity contradicts some of the values that America is founded on. Some of those being freedom, prosperity, equality, competition, individualism, progress and change, etc. The compensation system currently used by most American companies is designed to make life easy and predictable for the accounting function. It was designed and deployed before we had computers to do the vast majority of our bean counting. The downside of the current low-income diversity model is that it gradually disengages employees and is counter-productive to the most predominant American values. In other words, it shuts the growth engine off at the shop floor level. This leaves managers scrambling to find the next motivation and performance management tactic to deploy in efforts to maintain or increase productivity levels.

So the question becomes – How can we leverage the values that have made America the most powerful economy in the world to make your company more successful? The answer lies in providing those who create value for your customer with the freedom to create wealth for themselves. Not by working slower and racking up overtime hours; but by working smarter with the time they have available. Not by asking them to claw their way up the corporate ladder in hopes for a higher salary; but by tying their value contribution to their income on a daily basis. The answer lies in converting employees into business owners that operate within the framework of the larger company.

The Value Creator Ownership Model

This is an example of a model where employees are given a tremendous degree of ownership of their work. Every employee has internal suppliers and customers, just like every business has. In this model (in the manufacturing environment), there are those who make stuff and those who provide services. Anyone not a part of the immediate value chain is a Service Provider. The compensation of those on the value chain is linked to the value they contribute on a daily basis. Those on the value chain (aka Value Creators) would be allocated a production budget. Internally (or externally) contracted services would be paid for out of that Value Creator’s budget. The Value Creator is allowed to take home whatever portion of their budget that they don’t use. Value Creators who want to increase their take-home pay might invest more in training and continuous improvement to reduce their operating costs. See my post on Value-Based Compensation for more details on how this works.

Service Providers are compensated based on being “hired” by Value Creators internally to provide a service at rates that they control. In this model, a service provider, such as a maintenance technician or trainer, could potentially price themselves out of the internal market. This provides an incentive for service providers to strive for quality and perfect their craft to keep steady business. Since Value Creators have a choice in who provides their services, Service Providers who are poor performers will struggle to find work in the factory. A Service Provider who wants to increase their pay might invest more in training so they can charge higher rates or they can foster strong relationships with Value Creators to maximize billable time.

The major benefit to this model is that the production floor becomes virtually self-managed. Poor performance anywhere results in lower pay everywhere on the value chain. If a supplier struggles to get parts made, it reduces the value that can be created downstream – resulting in reduced pay for all those affected. This makes the pain of poor performance hit home across the board and puts tremendous pressure on everyone to work together to achieve more.

This model self-corrects many of the issues that plague American manufacturers today such as resistance to change or improvement, managing individual performance, eliminating waste in activities both on and off of the value stream, and others. One of the potential drawbacks to this model is that some people may end up making less than minimum wage. Minimum wages can be instituted as well since manufacturing typically pays well over the legal minimum wage. This works out because those who don’t perform well and end up making just the minimum wage can (and probably will) easily find manufacturing work elsewhere for substantially more money. This automatically free’s up opportunities to on-board higher performers. In the end, your factory becomes a sub-economy that is driven by people’s own desires for freedom and prosperity instead of top-down command and controlling. A manufacturing efficiency expert such as those at Manuficient can help you develop an employee compensation model that leverages American values to create an internal growth engine.

Visit my Excelville Profile for tools and resources for your operations excellence initiative.

Regards,

Calvin

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Is Your Performance Review Process Contributing to Poor Manufacturing Performance?


Posted on April 14, 2015 at 6:43am

Manuficient - Performance Review Process

One of the most dreaded processes in business is the annual performance review. Rather you sit in the giving or receiving seat of the review, its usually a pretty uncomfortable process regardless of how well or poorly the employee has performed. The problem lies in the fact that most organizations (and subsequently managers) have very poor methods for gauging an employee’s performance. The review is often skewed toward two factors 1) how the employee has made the manager feel since the manager has become more conscious about the upcoming review (usually a few weeks) and 2) how the manager’s circle of work friends feel about the employee. In other words, performance reviews are often driven more by internal politics than by actual performance. This only contributes to diminishing the overall organization’s effectiveness where actual results have less and less internal value over time.

There is often a clear a mis-alignment between what the customer pays for and what employees are evaluated on during the performance review process. Most companies are very good at measuring what the customer pays for. For example, just about every company has metrics in place to manage quality, cost, and service levels. Other metrics may be used to drive business initiatives such as aLean or Continuous Improvement implementation. These metrics might get tossed around during management meetings throughout the year but too often don’t weigh in to an individual’s actual performance review. In a perfect world, each individual would be measured based on the amount of value they contributed to the customer and no more. An individual’s political prowess should be evident in that person’s ability to drive sustained quantifiable business results. And fortunately, with a little creativity, all business results are quantifiable to some extent.

The politics-based performance review process is the by-product of they way employees are compensated. Employees generally don’t have much control over how much money they make on a day-to-day or week-to-week basis. Employee compensation is basically fixed aside from overtime, bonuses, or annual pay increases. These long-interval compensation management tactics are designed to convenience accountants and not to leverage human psychology, which would call for immediate and real-time feedback (including compensation). Long-interval compensation management creates a comfort-seeking and risk-averse culture that is counter to what really drives business growth and high performance. An employee would be paid the same if they came in to work and created tremendous value as they would if they showed up, put up mediocre numbers, and just avoided any conflict. This environment makes it too easy to be a prosperous – at par – performer.

Contrarily, leading organizations have developed more systematic approaches to performance reviews that do a better job at quantifying the expected value contribution of each employee in the organization. Its proven that real-time feedback is the most effective method for managing people. Managers simply can’t provide real-time feedback at the level needed to develop world-class talent. The most effective performance review comes directly from the customer (or the understood understood measure of value for the customer). If you follow the links in the value chain through the factory, you realize that an employee’s manager is not their true customer, yet the manager is usually providing the performance review.  In an ideal state, employees would get frequent feedback automatically from the business system, which should be designed based on understood value for the customer. They would be able to quickly assess how much value they have created against the expected value created for the amount of time they have worked. In this type of system, it is impossible to hide poor performance or for someone to get credit for another person’s contributions. This works best when the supply chain is broken down to clearly defined suppliers and customers at each step in the process. Then value contribution and performance management can be set up in a pull system where each employee is measured in real-time using quantitative factors with input from their immediate downstream customer. This would replace the broken and wasteful push system where unfounded opinions, gross assumptions, and biased perceptions are used to gauge a person’s performance. The next step is to evolve to a real-time compensation model that matches value creation on short intervals, which will be covered in greater detail in a future blog post. This significantly reduces the need for artificial motivation and performance management tactics that are typically used in modern business. A manufacturing efficiency expert such as those at Manuficient can help develop data-driven performance evaluation systems to put your organization on the path to World-Class performance.

Visit my Excelville Profile for tools and resources for your operations excellence initiative.

Regards,
Calvin

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


What is Manufacturing Strategy and Implementation?


Posted on April 13, 2015 at 6:40am

Manuficient - Strategy & Implementation

What is Manufacturing Strategy and Implementation?

Manufacturing Strategy

Manufacturing strategy consists of bringing the three primary pillars of manufacturing effectiveness into perfect alignment. The three pillars include organizational leadership, customers (or consumers), and operations execution. Let's dive into each of these pillars to better assess the role of each in manufacturing strategy:

Organizational Leadership - The role of Organizational Leadership is to first decide who the company will serve and how. There is an art to choosing your customer, which is an optimization of two primary criteria: easy (for the company) to please and happy to pay what the company needs them to pay. Granted your company may not have a tremendous degree of control over either of these levers but getting this as right as possible at the onset primes the company for growth and success. A less than optimal arrangement sets the company up for some painful realities of doing business. Leadership needs to decide if its worth the trouble / effort to keep a segment of customers happy or if it makes sense to simply choose another customer to serve. This has to be weighed along with the company's mission, financial goals, and other business obligations.

The Customer - The customer's role in manufacturing strategy is to define when to deliver it, how many to make, what variant to make, and where to put it. Since no one customer can explicitly provide this information for you (unless you only have one customer, ie Walmart), excellent data needs to be collected and used as a guide to understanding these expectations. Customers speak to the manufacturing process in two ways:

1) By pulling their wallets out and making the purchase. This is the single most powerful way that customers communicate. Here is where the data is extremely useful. Ideally, you would be able to capture the entire body of purchasing data within your industry or sector for analysis. This would include not only your own company but your competitors' data as well. Again, the answers you want to glean from the data are when, how many, what variant, who buys it and where to put it in order to meet or exceed business goals.

2) The other way customers communicate is through feedback. In today's world, feedback is readily shared through both formal and informal channels. In the information age that we live, there is no excuse for companies to not know, with intimate detail, what their customers are experiencing with the company's products. This is vital information that needs to be systematically aggregated and used as a critical input to the company-wide continuous improvement processes. The sooner the company can identify patterns in feedback (including feedback for competitors' products) and get positive changes incorporated into the manufacturing process, the stronger case that company makes to win and keep business.

Operations Execution - Once the customer is chosen and you know how they like it, its the job of Operations to execute to perfection. This means optimal quality, cost, and service levels with perfectly healthy and happy employees on the shop floor doing the work. This means having a robust culture of innovation to not only meet customer expectations but to be able to continuously delight above and beyond the competition. This also means having the agility to change capabilities on a dime to keep pace with changing customer tastes and preferences. And finally, this means leading the way on technological advancement to continuously drive greater agility and perfection in execution.

Implementation

Implementation is the ability to establish absolute alignment between all three pillars mentioned above and taking the steps needed to create perfect synchronization between the three. This is evident when the vision in the C-Suite can be witnessed in action on the plant floor. This is only achievable by establishing and cultivating a culture of problem-solving, and the problems being solved can be tied directly to the results from the aggregated feedback analysis from customers. If the business requires V quantities of W product at X price to be delivered to Y customer by Z time, then perfection means achieving this standard without fail and with outstanding quality. Implementation is engineering the business system to deliver perfection. The implementation process includes three primary steps: assess, design, and test. These steps should be repeated until the business system verifiably delivers to your standard of perfection. Once this is done, you have achieved optimal manufacruring efficiency.

Visit my Excelville Profile for tools and resources for your continuous improvement initiative.

Regards,
Calvin

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Continuous Improvement in HR Part 1 - Training; the Key to Sustainment


Posted on April 3, 2015 at 5:16am

Manuficient - Knowledge Key

Training and People Development – The linchpin that holds any Continuous Improvement initiative together. People development is at the heart of factory performance. In fact, survey after survey has shown that a lack of workforce development is one of the greatest impediments to driving a CI culture. You can get a pretty clear picture of an organization’s agility by taking a close look at their training and knowledge management systems. When a company decides to undergo a transformation such as implementing Lean or other form of CI, they are committing to a period of substantial change in the way business is being done. This impacts individuals on all levels in the organization. Many companies believe that implementing CI is as simple as hiring a Lean expert or doing a few improvement events per year. What they don’t realize is that a CI implementation demands that everyone adopt a new set of behaviors – meaning letting go of old habits and picking up some new ones. Sometimes KPI’s, performance reviews, and coaching alone aren’t enough to get people to relinquish deeply entrenched habits. Those old habits are what kill sustainment of any initiative. If you probe deep enough, you’ll find that one of the biggest reasons for resistance to change is that people don’t believe that they, their peers, or their managers have the discipline to change. The role of the training and people development function is to close this gap, especially during a CI implementation.

In many organizations, training is simply having someone sit through a presentation and sign-off that they’ve been trained. Some go as far as to give a test or quiz at the end of the presentation to validate that learning actually did take place. Modern adult learning techniques encourage incorporating activities to engage learners, mainly to keep them from completely tuning out. But a vast majority of training programs stop there. What happens when the employee goes out on the plant floor and gets back to work? What happens when that employee gets stressed or is under pressure to hit production numbers for the day? How much of the material learned in the classroom is retained after 6 months or a year. Training, and even further, workforce development goes far beyond a classroom activity. If an employee is not performing the new / desired behavior on the job as if it is second nature, they have not been trained. Similar to a boxer or basketball player who trains for months on end before the big fight or game. The training includes learning the sport but also conditioning the mind and body to execute the desired behaviors unconsciously. Best in class training programs do provide classroom time but include auditing,continuous coaching, and corrective action until the desired behavior is ingrained. Only when the employee executes the desired behavior on a consistent basis without deviation have they been trained.

The speed at which an organization can truly “train” their human assets, the more agile the organization is. Agility is a measure of how efficiently an organization can change from one state to another. Agility is critical for a transformation at the magnitude of CI implementation. An effective training program needs to incorporate 1) Standards Development, 2) Knowledge Transfer, 3) Validation of Learning, and 4) Change Management. Items 1 – 3 are fairly common but the 4th is actually pretty rare. Change Management is the piece that requires ensuring that employees have incorporated the new behavior after they’ve returned to their work area. In many organizations, the first question people ask when someone makes a mistake is – “have they been trained?” And even though the sign-off sheet confirms that they sat through the class, they were often never really trained. In other words, the desired behaviors were never fully ingrained into their work patterns. As a change agent, you owe it to the workforce to ensure that they are actually trained, which can be verified by sampling work patterns from time to time and verifying that they match the documented standard procedure. This should be a shared responsibility with the immediate supervisor. Even better if you can foster an environment where all employees provide coaching or other corrective action to all other employees whenever deviations occur. This is trademark of how a high performance team truly works. This creates a foundation for true leaders to emerge – being those who can not only help to engineer a more perfect production system, but also lead the way on developing a more agile workforce. A manufacturing efficiency expert such as those at Manuficient can help develop a training program tailored to your specific needs that drives agility and workforce development.

Visit my Excelville Profile for tools and resources for your operations excellence initiative.

Regards,
Calvin

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Intro to Continuous Improvement in Human Resources - Organizing for Wealth Creation


Posted on March 24, 2015 at 4:34am

Butterfly metamorphosis

Is your Human Resources function geared up to tackle the challenges of a Continuous Improvement implementation such as Lean Six Sigma or other? Is your company leveraging it’s training, recruiting, compensation, and performance review processes to instill a culture of CI or one of stagnation and status quo? The ultimate function of the Human Resources system in acquiring, developing, and retaining the optimal mix of people needed to deliver the goals of the business. If your business is serious about driving out waste and optimizing the customer experience, shouldn’t your HR function be able to demonstrate how it systematically delivers to these expectations? In many businesses, Lean concepts have begun to infiltrate administrative and non-value stream functions. However, the approach has been to streamline administrative processes to reduce lead time for given tasks. This series of posts looks at re-designing the critical functions of HR such as recruiting, training, performance evaluation, and compensation to embed the incentives that help generate the momentum needed for a CI implementation, especially in American manufacturing. The four areas of focus are as follows:

1) Training Future CI Leaders at All Levels – When the business sets the ambitious goal of implementing Lean, Six Sigma, or other improvement initiative, the company has committed to a full throttle operational transformation. The biggest change happens with the behaviors and attitudes of the people doing the work. It is no long enough to just go to work and do your job. Just hiring one or two CI Leaders is a recipe for failure if everyone else is given the option to buy-in or opt-out. This type of transformation requires all hands on deck. The training function needs to re-tool itself in a way that employs every set of eyes in the organization on eliminating waste.

2) Data vs Non-Data Based Performance Reviews – One of the most dreaded processes in business is the Performance Review process. If you get to the root of why this process is so painful and damn near impossible to do right, its because the feedback is coming from the wrong direction. The people most closely connected with the actual customer are the ones doing the work that the customer is paying for. Yet, often detached managers are providing feedback to those who are closer to the customer. This opens the door for managers to carry out their personal agenda for or against lower level employees and erodes the credibility of the process. It also erodes the capability of the organization. Ideally, the “noise” of the performance review process needs to be removed and made real-time and data-driven so those doing the work can readily see when there is a problem and can simply take corrective/preventative action on the fly. Then systematize the process of escalating production system issues as needed in effort to create a perfect system.

3) Merit-based Compensation – As any Lean practitioner can tell you, the most efficient way to organize a supply chain is to link the elements together so that production can be pulled from downstream (as opposed to pushing from upstream). This concept also applies to compensation where pay can be linked to value created for the customer, which from the factory’s view is income created for the company. In other words, its possible to tie individual employee income directly to company income. In this model, the employee makes money based on the amount of value they contribute. This gives the operator more freedom to create greater wealth for themselves by making a stronger contribution to the company’s bottom line. It also creates a dynamic where those who make wasteful decisions struggle to make a competitive wage.

4) Hiring, Firing, and Promoting for Growth – During a CI implementation, every job description should come with a disclaimer. WARNING: Transformation in Progress – Yield to Change Agents. There are two types of people in manufacturing and in business. One seeks to make themselves comfortable and the other to make things better. In a non-CI culture, comfort seekers rule. When the company decides to undergo a transformation, the scales need to be tipped toward the change agents by hiring and promoting based on people’s track records for successfully driving change. Even better, driving change without leaving a trail of bloody victims in the wake. Comfort seekers in critical leadership roles need to be moved to positions of lesser consequence, then have their talents re-deployed when stabilization (or conformance to standards) is needed as the next phase in improvement.

The HR function plays a critical roll in implementation of any CI initiative. Gaining alignment between HR practices and the goals of the organization are critical for growth and wealth creation in a manufacturing environment. A poorly structured HR system can stagnate growth and add to the stresses inherent in driving change. A well structured system can accelerate growth by embedding the incentives needed to turn the corner. A manufacturing efficiency expert such as those at Manuficient can help you structure your HR systems for transformation and wealth creation.

Visit my Excelville Profile for tools and resources for your operations excellence initiative.

Regards,
Calvin

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


10 Signs that Your Factory has Swagger


Posted on March 15, 2015 at 4:20am

Manuficient - Woman Warrior

There are many cultural aspects that affects a factory’s performance and reliability. Some of the cultural elements support operational excellence and some hinder growth. Ultimately it is the role of the company’s leadership to shape a culture that propels the company toward it’s vision. This helps to instill a confidence that the business is on the right track, even if it has a long way to go. This is what is meant by Swagger. Below are 10 signs that your factory or network of factories has swagger and the type of culture it needs to foster manufacturing success:

1) The employees know that they are the best at what they do. But they also know that they need to get much better

2) There is little to no tolerance for sub-par performance. The strong thrive and the weak quickly learn that their talents are better applied elsewhere

3) People don’t try to hide deficiencies in the production system. They quickly bring them to the surface and lead the charge on getting them dealt with effectively

4) People at the shop floor level gladly step up to lead Continuous Improvement activities in the factory. They can also show documented results of how their process has gotten better and how much better it can get

5) Managers put most of their  time and effort toward taking the plant to the next level and little to no effort into hand-holding or micro-managing employees

6) Other factories in the network look to your factory as the benchmark for operations excellence; yet your factory actively seeks opportunities to incorporate best-practices from other factories

7) Each and every individual on the shop floor has an honest shot at becoming Plant Manager

8) Each and every manager has an honest shot at becoming Vice President of Operations

9) Promotions are based more on merit and demonstrated leadership than anything else

10) If you ask anyone who works there who they work for, they all give the same answer – The Customer

Next time you walk into a factory, ask questions to get a feel for what type of performance culture is in place. And if the signs outlined above don’t sound anything like your workplace, remember that you don’t have to accept that as a way of life. Its up to you to take action to make a difference; that’s what separates the leaders from the followers. A manufacturing efficiency expert such as those at Manuficient can help you develop and implement steps needed to optimize your factory’s performance.

Visit my Excelville Profile for tools and resources for your operations excellence initiative.

Regards,
Calvin

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


The Detrimental Impact of Cutting Costs at All Costs: A Case of the Goose and the Golden Eggs


Posted on March 13, 2015 at 9:48am

Manuficient - Golden Eggs

A factory and all its glory is a business asset. Within a factory, you have many things at play: people, processes, technology, culture, waste, organizations and sub-organizations, hierarchy, opportunities, dreams, breakthroughs, failures, successes, entitlements, disenfranchisement, rewards, consequences – this list can go on forever. Its possible (and no doubt has happened) for a person to live a majority of their life inside the four walls of a factory. The job of a factory is to make stuff at the highest possible quality and lowest possible cost. From a purely economic viewpoint, you pump money into a factory and it pumps valuable product out. The intent is to pump out more value that you are pumping in because this is what generates wealth. This creates a dynamic where wealth can be maximized in two ways: one is to maximize the value being pumped out; the other is to minimize the money being pumped in. Let’s look at the merits of each approach separately:

Maximum Value Creation: Most manufacturing businesses are built on this principle. This is what gets sold and what customers come to know and love about the company. When you see the product on the shelf at Walmart, it says “look at all these fantastic features” and “new and improved”. Entire companies are built on the value that they bring to their customers’ lives. The factory is an asset that creates value for both the company and it’s customers. When a manufacturing company creates a valuable product, it can grow until the market becomes saturated. Up until that point, the company is presumably profitable, products are selling faster than you can make them – let the good times roll. Many people don’t realize that Lean Manufacturing was created as an approach to maximize value creation and strengthen the company’s viability. At some point, the market does become saturated and the company’s growth becomes flat – or even worse, starts trending the other way as many companies saw between 2008 and 2011. People come to miss those good ol’ times when the financial statements always had great news to share. With increasing pressures from all angles to turn those numbers from red back to black, many companies start looking at alternative ways to grow wealth.

Minimum Cost Operations: Cutting costs is another way for a company to grow wealth. A company should not carry costs that are not needed. In fact every company has an obligation to its stakeholders, especially its shareholders and customers to remove unnecessary costs from its business processes. The challenge is removing costs without compromising the value that it has brought to its customers’ lives. Cost cutting should be a careful, continuous, and deliberate process as to continue nurturing and protecting the asset that is the factory. Factories thrive on happy employees, innovation, and streamlined processes. When cost cutting impedes on any one of these critical factors, the factory as an asset becomes malnourished and productivity suffers. When the manufacturing base becomes malnourished, the company overall may soon find itself in trouble. Many companies have gone as far as divesting completely in their in-house manufacturing base and instead opted for outsourcing to China and other countries to take advantage of lower labor costs. This is done at many expenses, including destroying the innovation pipeline, losing core capabilities, shipping jobs abroad, and funneling American dollars to other countries. Unfortunately, its difficult to capture these costs in a financial statement. This approach essentially delegates the company’s most important job, to maximize value creation – in other words, compromising their core capability to create value for their customers.

Growth for a manufacturing business is achieved by maximizing the amount of value being created in its processes. As such, value creation should never be de-prioritized to cutting costs. However, every company has the obligation to continuously reduce operating costs while maximizing value. This is the true and original intent of Lean, Six Sigma, Agile Manufacturing and other continuous improvement initiatives. As the definition of value changes for customers, so should the manufacturing processes. This requires agility and continuous innovation, which every healthy factory needs. A manufacturing efficiency expert such as those at Manuficient can help you assess your manufacturing business’ value proposition and identify areas to reduce costs effectively.

Visit my Excelville Profile for tools and resources for your operations excellence initiative.

Regards,
Calvin

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


The Genius of the Fishbone Diagram: A Staple in Any Lean Implementation


Posted on March 12, 2015 at 4:21am

Manuficient - Fishbone Diagram

The Fishbone Diagram. One of the most versatile tools in the Lean toolbox. It can be summed up as a tool for facilitating a root-cause brainstorming session. Effectively facilitated, a problem-solving session using a Fishbone Diagram (also called the Ishikawa Diagram), can uncover unimaginable realities about your business or production process. It can be argued that this tool (along with other Root Cause Analysis tools such as 5-Why) is the cornerstone of any Lean Manufacturing implementation. What makes this tool so powerful though? And why is its use so widespread? Below I’ve outlined some of the ingredients in the secret sauce of the Fishbone Diagram’s power. If you’re not already applying this tool in your business, you’re already falling behind!

1) Simplicity. Simply stated: simplicity is genius. The learning curve for a Fishbone Diagram itself is literally 5 minutes. It may take a lot more time to learn to be an effective facilitator; but given a strong background in facilitation, this is an easy plug-and-play tool. The key components are: a list of potential sources of problems (usually 4 to 6 items), a well defined problem statement, space to write ideas where everyone in the group can see, and a follow up action list. You’ll also need some process for prioritizing which “potential causes” will be investigated and in what order. The process itself doesn’t fully “solve” the problem; it just gives you a list of likely suspects which is a great place to start. The problem is only truly solved through rigorous trial, observation, adjusting -> wash, rinse, and repeat until you get the result you want. The beauty of simplicity is versatility. I’m convinced that this process can be applied to any problem big or small from machine downtime to world hunger (which, depending on what industry you’re in, could be very related problems).

2) Team Calibration. One of the most impressive things I always get out of Fisbhone sessions is the multitude of issues that different people believe are causing the problem. It seems that the root of the problem in people’s minds depends highly upon your personal perspective, which is shaped by your position in the organization. Furthermore, people often believe the problem is being created by something outside of their immediate control. During these sessions, what is usually discovered is that everyone has some role in what I call “feeding the monster”. Everyone has some behavior/action that is immediately causing or could have taken to fix or avoid the problem. One of the keys to a great Fishbone session is having a cross-functional group of people who are close to the process attend and engage in the session. This might be line operators, mechanics, QA technicians, supervisors, training and admin personnel, and others who support the business system. You also need to create an environment where people are free to contribute ideas without judgement or fear of retribution. Then you need to prioritize, as a team, the most likely root causes that will be acted upon, in which order, by who, and by when. This makes the action list manageable and helps to capture the biggest bangs in improvement up front. This also helps everyone involved to see the problem the same way and decide collectively what exactly will be done about it. The key is to understand that in almost all cases, there are several contributing conditions and triggers that result in a problem. The goal is to eliminate the possibility for that specific problem to reoccur. Then jump to the next problem and eliminate it as well. This is the process of continuous improvement.

3) Unintended overall process improvement. As you fix issues identified during one Fishbone session, you’ll start to see symptoms all over the plant go away, leading to organization-wide process improvement. Case in point: One of the issues that repeatedly showed up in Fishbone sessions with a prior client was that the operator was not fully certified before being released to work independently on the line. Under further investigation, several gaps were identified in the organization’s training execution. We were able to close several gaps in the training program, which contributed to a significant increase in plant-wide efficiency in just one quarter of the year. In essence, just doing the Fishbone analysis on one small part of the manufacturing process led to significant improvement in overall process efficiency and employee morale. This is the beauty of getting to the root of an issue – that same root is usually responsible for multiple weeds. Finally, a well documented Fishbone session can be used for similar issues that occur elsewhere in the plant or in the manufacturing network at large. Its easy to share the document with sister facilities to use as a starting point for their problem-solving process.

The Fishbone Diagram is one of my personal favorite Lean tools because anyone can learn and apply it effectively. If you can manage to get your floor operators walking through an informal Fishbone process as issues occur on the production floor, you have a very solid foundation for aLean implementation and problem-solving culture. Just make sure your manufacturing support teams, including management, have the capability to support the floor operators as needed in their problem-solving efforts. A manufacturing efficiency expert such as those at Manuficient can provide the support needed to implement a full Issue Identification and Resolution System in your facility complete with problem-solving process triggers and issue escalation protocols.

Visit my Excelville Profile for tools and resources for your continuous improvement initiative.

Regards,
Calvin

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How to Get Undeniable Buy-in for Driving Change in Manufacturing


Posted on March 10, 2015 at 4:36am

Manuficient - Thumbs Up / Change Management

Have you ever had the feeling that someone was telling you they were on-board with a change but they didn't even fully understand or think through the change you were proposing? Or maybe they were just saying yes because they like you but not taking your idea very seriously? Or perhaps you've done all the groundwork for a change and one or two people are just dead set against it for no rational reason. And then you go ahead and make the change as promised and two things happen: 1) those same people who said they were all for it are now visibly uncomfortable with what you've done and 2) those who were against it before have now declared you public enemy number 1.

If you're already in this situation, this blog post won't be very helpful for you. Good luck and stay tuned for the post on How to Dig Yourself Out of Whatever it is That You've Stepped in. Fortunately, this post may help keep you from stepping in it again in the future. I'm going to share with you a process for garnering stakeholder support for a the changes needed to drive manufacturing efficiency in your organization.

There are many reasons people hold out from making the changes that are needed for progress. The change could pose a legitimate threat to safety, quality, productivity, morale, or some other important aspect of the business. It could also be that the change threatens someone's personal position of authority. However, no matter the reason, the bottom line is that people are going to be uncomfortable with change. And the bigger the change, the more resistance you will face. The key is to take the burden of change upon yourself to make sure all risks are identified and satisfactorily mitigated to address and minimize the discomfort of your stakeholders. The way to do this is as follows:

1) Organize a risk-assessment. Invite all relevant stakeholders to participate in identifying the risks involved in making the proposed change. If the stakeholders themselves cannot be present, have them substitute a representative that they can trust to effectively express their interests. Make sure everyone understands that the proposed change is just for discussion at this point and you want help understanding some of the risks involved. Try to keep this session to under an hour because that's about as long as you can reasonably hold people's attention; especially in a manufacturing environment. Make sure to capture all identifiable risks. This means giving your participants free-reign to add risks to the list at will. The last thing you want is for someone to come out in the 11th hour before implementation with the objection that you did not capture during the risk-assessment. Also ensure the group's leader is present  to keep some of the risks grounded within the realm of reality. Even better, get the boss' general buy-in before going into the risk-assessment.

2) For each risk identified, work with the stakeholders to develop a course of action that would satisfactorily mitigate the risk. Its important that the person who raised the risk agrees that if the mitigating action was completed satisfactorily, they would have no further objections. Here is where artful facilitation is needed. If you're not a skilled facilitator, you will need help to get good ideas out and keep the meeting on coarse. Ideally you can get the concerned party to propose the solution themselves; second best, you or another attendee propose something that they can publicly agree to. This may mean slightly changing the scope of your initiative, completing more testing to verify the cost / benefit, including additional training or documentation, or expediting planet's revolution around the sun by 6 or 7 days. Whatever it is, you as the change agent need to build consensus around what specific actions are needed before you can earn the stakeholders' buy-in. In a group setting, people's personal intentions are a little more difficult to hide and they tend to engage with the idea that their concerns can potentially be addressed, especially if everyone else is playing along.

3) Take your mitigating action items list and get to work. Complete every single item to the best of your ability. It doesn't matter if you complete these items yourself or delegate. In this case, you cannot afford to deny or delay any of the items. Gather proof that demonstrate the completion and quality of workmanship of each item. Use pictures, standard work documents, data or test results, sign-off sheets, or whatever else it takes to provide a paper trail of thoroughly completed action items. Neatly package the artifacts and preparation to get sign-offs. Then create or use a sign-off sheet and have all the key stakeholders sign the sheet saying they are satisfied with the mitigating actions taken and that they are ready to proceed with the change. Then you are clear to proceed in changing the world - your world at least however small it may be.

Going through this level of rigor to get people's buy-in has a psychological effect that the change is worth it and it shows that you value the authority and professional integrity of the key stakeholders. I've seen cases where people have forgotten that they ever were opposed to the change by the time the mitigating actions are taken and its time to sign-off. In this case, they just sign-off so they can hurry up and jump back into rescuing the plant from today's crisis. Either way, this process covers your bases and lays out a path for continuous improvement both in the manufacturing and leadership buy-in process. Keep a record of the sign-off sheet, risk-assessment, and proof of completion artifacts in case you need them for future reference. A manufacturing efficiency expert such as those at Manuficient can help you develop an effective risk-mitigation process  and effectively drive change in your organization.

Visit my Excelville Profile for tools and resources for your continuous improvement initiative.

Regards,
Calvin

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


How to Salvage a Continuous Improvement Implementation in a Unionized Plant


Posted on March 4, 2015 at 11:58pm

Manuficient - Angry_mob_of_four

Any manager who has worked in a unionized environment can tell you that it presents its own entirely unique set of challenges; aside from running the day to day business. A union, in its very nature, promotes stability and thwarts the types of changes that are sometimes essential for a continuous improvement implementation such as Lean Six Sigma or other. In a typical non-union environment, a comprehensive CI implementation takes anywhere from 2.5 – 5 years. In a union environment, you can expect this duration to be a bit longer; ranging from 3.5 to 7 years. Also the chances of failure are significantly greater in a unionized environment because of the duration and perceived conflict of interest for the union. However, there are a few strategic approaches that should be artfully employed in any improvement initiative; each of which is designed to leverage the very nature of the environment:

1) Focus initially on non-direct labor waste reduction. This includes material, energy, overhead or other. Any talk of direct labor or hours reduction will raise immediate red flags in a union and the most vocal members will quickly poison the well on your initiative. Focus instead on reducing material or energy waste in the onset and engage union authoritative figures in leading / executing the projects. Most employees generally want to see the company save money but not at their personal expense. Engaging the union leaders will send an early signal that this initiative is “safe” and will reduce resistance levels. Use these early wins to generate momentum behind the initiative.

2) Make the goal of the initiative to drive up efficiency. This could be positioned as “we are expecting business from several new customers and need to increase our capacity / throughput without significantly changing our asset footprint”. Set up your KPI’s to show productivity levels during scheduled time and not total time. This means if the line was scheduled for 6 hours and employees were on the clock for 8 hours, show productivity against the scheduled 6 hours. Keep a backlog of additional value-added work for the additional hours created. This way, you can use your continuous improvement initiative to drive for greater efficiency within the scheduled time. If you don’t actually have a burning platform, you may need to create an artificial sense of urgency to get better. Without this pressure to get better, it will be difficult to make the case for becoming more lean. People will make every excuse for why you should not try something different, which will only stagnate your growth. If you will be purchasing new equipment, leverage these acquisitions to show your own commitment to becoming more efficient. Just about everyone loves new toys in the factory. Over time, attrition will occur and openings can be evaluated for necessity to right-size the workforce over time. This may also mean that you won’t see some of the financial benefits from efficiency gains right away. You need to have a little faith that the gains will come as long as you stick with it.

3) People in the union are no different from everyone else in two regards: they want more time and more money to use to their liking. A lesson from Freakonomics, people’s behavior tends toward the most favorable incentives and away from disincentives. A huge part of any improvement initiative will require significant behavior changes so any effective change agent will need to be psychologically savvy to get people to break old habits. If people smell that engaging in CI will mean less money in their pockets, they will resist. If you set up your CI incentives to put more money in people’s pockets and / or allow them more free time (without losing pay), the critical mass toward CI activity will be leveraged in your favor as the change agent. Read my earlier blog post on Value-based compensation for some great ideas on how daily compensation could be set up to reflect actual value contribution instead of hours on the clock.

Implementing continuous improvement in a union environment is a challenging job but can certainly be done. The fundamental benchmarks are the same but the pace can be reduced significantly. Union plants are a lot less agile in many ways because many practices are regulated by stringent contracts, which can definitely slow the rate of change. However, by recognizing the leverage points (such as very high expertise) and pitfalls, you can craft a powerful strategy for a bullet-proof continuous improvement implementation. The manufacturing efficiency experts at Manuficient can help you develop and implement this strategy and put your factory on the road to success.

Visit my Excelville Profile for tools and resources to drive your continuous improvement implementation.

Regards,
Calvin

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


How to Leverage Opinion Leaders to Implement Change in Manufacturing


Posted on February 28, 2015 at 2:50am

Manuficient Opinion Leader

In every organization, there are people who have formal and informal authority. The folks with formal authority are fairly easy to spot. They usually have the biggest office, fanciest clothes, and sit at the head of the table. Spotting the ones with informal authority can be a little trickier. Sometimes they are more vocal and aggressive. Other times they are silently controlling the tides from behind the scenes in your organization. Either way, it’s one of your key responsibilities as a change agent to identify these people and leverage their influence to drive change. Here are a few techniques you could use to make this happen:

1) Build a solid business case for the change you wish to ensue. You can do this with your internal resources or leverage outside help such as the experts at Manuficient. Make sure you cover all the most important bases, especially those that closely align with your core business values. Also, your business case needs to be data-driven including identified risks, costs, benefits, and key milestones to implementation. Also, your business case needs to be formatted in an easily palatable story so that anyone can quickly understand what you have in mind.

2) Identify the opinion leaders in your organization. This includes the boss in the corner office, the tenured machine operator whom everyone highly respects, the aggressive manager, or the Admin Support whom everyone loves. Pay attention to who everyone waits to speak in meetings and then tend to just go along with. Also identify the more vocal employees who put off the vibe that they’re not playing the same game as everyone else.

3) Get the opinion leaders on board with your idea before anyone else even hears about it. Opinion leaders value their position (of either formal or informal authority) over almost all other things, and you should too. The last thing they want is to have someone else (the change agent in this case) encroaching on their territory. By befriending and giving the opinion leaders a stake in the change you are pursuing, you gain powerful allies in the initiative. By not acknowledging them, you gain powerful enemies.

4) Deliver on your part of the deal. Opinion leaders usually expect something from you in return for their support for your initiative. They might want you to speed up the process for getting a nagging maintenance issue fixed or help resolve some other ongoing conflict they’ve been having. They may just want assurance that their place in the new kingdom is safe. Either way, you’re going to have to help them with that issue in exchange for their full cooperation. And they’ll probably want their issue resolved in short order.

Once you’ve successfully executed on these steps, then you’ve paved the way for smooth implementation. Miss any of these critical steps and you’ll be swimming upstream for a long time before any relief arrives.

Visit my Excelville Profile for tools and resources for your continuous improvement implementation.

Regards,

Calvin

© Calvin L Williams blog [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blogs author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Manufacturing Execution Strategy: Technique vs Speed


Posted on February 18, 2015 at 6:53am

Manuficient - Swimmer

In manufacturing, there is an optimal point where you have achieved the ideal balance between technique and speed for a process. The trick is knowing when you have struck that balance; and the answer may not be what you think.

I have a son and a daughter who are just shy of two years apart in age. They have a completely different approach to learning a new thing. Swimming, for example, is one of the things they are learning to do together. My son’s approach is to go as fast as possible. He doesn’t care if how much energy gets wasted in the process or if he has nailed down the proper stroke or anything like that. He just wants to go fast. In the manufacturing setting, he would be like the supervisor who speeds up the production line to the point where it begins to take a toll on quality, morale, and even machine lifespan; all for the sake of getting the most units produced for that day. For my son, the budding swimmer, the consequences are not so severe. His agility and strength will quickly improve, especially while he is young. He will achieve a pretty good speed early but potentially peak out before he reaches his potential, especially if he remains in the same sport. He will then either need to unlearn all his bad habits and improve his technique in order to get better or he’ll pick up something else where he can win. In the manufacturing environment, speed can be a little more dangerous. For one, running the line faster than its ready for reduced machine uptime, quality, and morale. These things cause the production crew to create work-arounds to sustain the increased speed that over time turn into bad habits. You may be able to get some pretty strong results early on but cannot be sustained over the long run due to the amount of wear that it places on the system. Also the higher-ups get “drunk” off of the increased rates (even if they are short lived) and that supervisor finds himself in a position where he is expected to produce ever-increasing throughputs with a declining production system. This approach is best suited for an environment where sheer strength and agility are the predominant requirements such as places with frequent changeovers, constantly evolving product offering, and shorter production runs. However a much higher investment in production system maintenance, and training is required.

I have a daughter who is also learning to swim. She makes little to no effort to go fast, but her inclination is to master the technique of swimming. She will swim laps across the same stretch of pool for the entire time. If you give her a tip to improve her technique, she will incorporate immediately and continue her laps. As such, she is constantly evolving her method and developing good habits. She is also gradually increasing speed as she becomes physically stronger. In the manufacturing environment, her approach would be akin to the craftsman or master artisan, patiently working to perfect the craft. This approach is perfect for environments that experience infrequent change and mastery of delivery is the predominant requirement. Fewer changeovers, longer production runs, and longer SKU lifespan would be the ideal state characteristics. This approach is great for long-term growth but less than ideal for short order production runs.

In manufacturing, you will find both approaches winning the day depending on the needs of the business. However there is a fundamental approach that applies across all types of manufacturing environments. The key is to analyse the perimeters of the specific manufacturing environment and identify those elements of the business that will probably not change for a long time and those elements that change rapidly. For those elements that are long-lived, the slow and steady approach to management should be applied. For those elements that are constantly changing, techniques of speed and agility should be mastered. There are four core elements to every business: people, processes, products (or services), and technology. All of these elements evolve at different rates within the company, therefore the management strategy should be selected to fit the rate of evolution for the given element. A manufacturing efficiency expert such as those at Manuficient can help you identify the rate of evolution among these four axis and help develop the most effective management strategy to optimize performance in each area.

Visit my Excelville Profile for tools and resources to help implement you continuous improvementinitiative.

Regards,

Calvin

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blogs author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Value-based Compensation for Continuous Improvement in Manufacturing


Posted on February 17, 2015 at 6:31am

Manuficient - Idea Light Bulb

This is a great post. You’re gonna love this. It will challenge the very paradigm of how we run our factories from a standpoint of performance management and improvement. The concepts presented here are, by design, controversial, breakthrough, and disruptive. The ideas presented here define where the rubber hits the road for the Put Your Money Where Your Machine Is series of posts.

In Part 1 of this series titled Measuring Plant Performance by the Common Denominator in Business, we discussed measuring factory performance by cash gains and losses even at the individual shop floor operator level. Then feeding this information in real time to that operator so that he/she is always aware of how his/her decisions are impacting the bottom line.

In Part 2 of this series titled Plant Profits: The Whole that is Greater than the Sum of Its Parts, we discussed how to define value created during manufacturing and gauge value-in versus value-out as a measure of profitability for the manufacturing operation.

In this post, we break the paradigm that was created at the beginning of the mass production era for managing and compensating employees and introduce a concept that is strikingly new, yet not new at all. It is the very engine that drives the most powerful economy in the world – the American economy. It is based on the principle that people can grow their personal wealth by working smarter and bringing greater value to the people they serve. It is based on the principle that the individual is in control of their destiny and they have the power to change their circumstances if they have the will to work for it and make it work for them.

The current compensation model:

The plant floor operator goes to work, punches the clock, puts in their hours, and goes home. They make the same amount of money regardless of what value they have created for the day. If they want to make more money, they can work a little slower (but still within the range of acceptable pace) and hope that they can snag a few overtime hours for some extra pay (at the expense of their personal time of course). Otherwise they can organize, negotiate, pray, and hope the company is kind enough to give them a pay increase or bonus for all of their trouble after an entire year. In other words, compensation has little to do with the value created by the employee, but how much of their life (time) gets sacrificed on behalf of the all mighty and powerful company. Even if they create no value at all, they still get paid the same; its not sustainable but believe me, it happens on various degrees every day. This creates a dynamic where there are just as many incentives to be inefficient as there are to be efficient. This also creates an environment that breeds complacency and inadvertently slows any efforts to drive process improvements that require behavior changes.

The Value Creation Model:

In the Value Creation Model (VCM), the operator would run their production line as if it were their independent business. It would adopt a model very similar to a franchise with opportunity to control your own earnings, but with a little more income security. After establishing and quantifying value in terms of cash, the company would establish a base pay (probably below what the employee would be compensated in the current model and below market rates) and they could earn a commission relative to the amount of value they created that day. For example, base pay might normally be $12/hr. In the VCM, base pay might be reduced to $9/hr but the employee could earn as much as $15/hr depending on the amount of value they created for the company that day. This ties compensation for the employee to compensation for the company as a whole. You don’t have to worry about the performance appraisal process because performance will be appraised daily by the system and compensation for the day will mirror contribution.

To take this concept of independent ownership further, a daily operating budged would be developed per production line. The operator would be responsible for delivering production targets within budget. Within this budget, there would be allowances for direct labor (the operator), maintenance or technical support, training, quality control, and any other support functions required to sustainably operate a production line. If the operator has a downtime issue, the incentive would be to quickly get to the root of the issue and repair it themselves to keep costs down. Otherwise, they have to “hire” a mechanic (internally) to help them with the issue, which comes out of their operating budget. Mechanics in the VCM would be compensated based on how many hours they spent “on hire” by an operator – in addition to their adjusted base pay. All other support personnel would operate in a similar fashion. At the end of the day, the operator would earn their base pay plus some portion of the unused operating budget. This model re-organizes the plant hierarchy with the operator on top and all other support resources to support the operator in providing as much value as possible to the customer. All quality and safety requirements would remain in place.

In the VCM, the incentives go from “work more hours” to “create more value“. At this point, continuous improvement becomes a path for the operator to increase their personal wealth, instead of a path for losing wealth or losing their job altogether. It shifts wealth from those who create little value, to those who create great value for the organization. This is the way the free market works and what makes the American economy the strongest in the world. This is a pivotal shift for implementing continuous improvement initiatives such as Lean and Six Sigma in American companies. In this model, the drive for individual prosperity would drive greater operating efficiency, bringing overall production costs down over time. Winners would stay and losers would leave for a higher base pay elsewhere. The idea is to create a self-correcting market where those who do not create value cannot thrive. This model also automatically right-sizes administrative overhead costs over time.

To implement such a system, a manufacturing efficiency expert such as those at Manuficient would help to develop the Business Case and create a compensation model that works within the company’s existing financial structure that incorporates incentives for daily continuous improvement. This would include employing the right mix of people, processes, and technology to make the VCM possible in your company.

I hope you find this post as fun as I did. Visit my Excelville Profile for tools and resources to support your continuous improvement efforts.

Regards,

Calvin

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blogs author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Plant Profits: The Whole that is Greater than the Sum of Its Parts


Posted on February 16, 2015 at 6:25am

Manuficient - Man Drawing Bar Chart

In a healthy product-driven business environment, value is created in the manufacturing process. In fact, the entire value chain lives within the manufacturing (and supply chain) process. Case in point, if you take the of raw materials, conversion (labor utilities, maintenance, etc.), and overhead and total that all up for one unit; then compare that value to the market price for one unit, the difference is the amount of value created. Now some of that value is real and some of it is perceived which is created by dynamics in the market such as scarcity and other factors. For the focus of this post, lets focus on the concept of real value.

For many people (depending on the product), its just more practical to go purchase something than it is to try to produce it themselves. Lets look at a car for example. If everyone had to build their own car from scratch, the road would be a much scarier place. Not everyone has the time, talent, resources, or desire to build their own car – and there’s nothing wrong with that. By having auto-makers that we can trust to deliver a quality vehicle at an affordable price gives us all the freedom to focus on the things that we are great at or love to do. In other words, having skilled mechanics / technicians, robust quality assurance, and reliable and scalable manufacturing processes to build our cars for us, they are creating value for our lives. And because of this, we are happily willing to pay them more than the combined cost of raw materials, conversion, and overhead for our car. This is the real value that is created by the manufacturing process.

By creating real value for the end user, the manufacturing process is also creating wealth for the company. One of the most important roles of marketing and sales and some of the other demand-side business functions are to transform the value created in manufacturing into cash.

In the previous post titled: Measuring Plant Performance by the Common Denominator in Business, we discussed the importance of measuring plant performance in terms of cash and then having the tools in place to communicate performance as frequently as possible, if not in real-time, down to the value creators themselves, the shop floor operator. In order to do this, you have to understand the value of finished working capital on a unit by unit basis (or series of value-added steps). This allows you to identify the amount of value created in real time, which can be measured against conversion costs in real time. The difference can be viewed as manufacturing profits. This creates the possibility of allowing the manufacturing executors to understand and share in the success of playing their role in driving wealth into the company. This also lays some of the ground work for a culture of continuous improvement since it enables greater financial incentives for increasing plant profitability, which we’ll dive into for our next post. A manufacturing efficiency expert such as those at Manuficient can help you identify the real value being created by your manufacturing processes and help increase plant profitability.

Visit my Excelville Profile to find tools and resources to help drive your continuous improvementinitiative.

Regards,

Calvin

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blogs author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Measuring Plant Performance by the Common Denominator in Business


Posted on February 15, 2015 at 6:57am

Manuficient - Money on Mind

For the sake of its own survival, a business must make money. And it must make more money than it spends. A business that spends more money than it makes is cannibalizing itself – and if not corrected will eventually fail. This is not controversial; it is a fact of reality for all commercial entities. Because of this fact, the default “language” of any business is cash. Sure there are many aspects that all make up the DNA of a business such as company culture, employee safety, product quality, and so forth. However, you can look at cash flow as the end-all-be-all indicator of the company’s health. Granted every company experiences periods of heavy investment where cash out may be greater than cash in. This is not necessarily a bad thing, especially when you can draw a logical and justifiable link to how the cash being invested will result in greater cash flow in the future. On the other hand, if cash out is greater than cash in but there is no clear link between investment and greater future returns, some serious questions need to be asked about what is happening and what needs to be done about it.

With that said, people know cash. Everyone on earth has some relationship with and some degree of understanding of it. Good or bad, its a fixed part of the human existence and has been since the beginning of documented human life. Cash is also the life blood of any manufacturing process. At the highest levels in just about all manufacturing organizations, cash out is managed to varying degrees of granularity. At the lowest levels in the org chart, the focus of the manufacturing operation is simply to hit schedule for the day. It doesn’t matter if hitting schedule means producing way more or less than anyone will buy; it just matters that we hit schedule. The point is that there is a disconnect between what happens in the boardroom (where the priority is increasing cash flow) and the shop floor (where hitting schedule among a host of other things is the priority). Somewhere along the chain of command, the focus on cash gets lost in the mix as you progress to the shop floor level. At some point, performance is no longer measured in gains and losses in cash and it gets measured by all these other things that just create room for misalignment to breed. At the end of the day, the shop floor operator or mechanic has the power. On a day to day operational level, they make the decisions that will greatly influence rather the factory will gain or lose cash (or equivalent value) for that day. Unfortunately, since the typical manufacturer doesn’t measure the performance of the shop floor operator in terms of cash (or value), it becomes very difficult if not impossible for that operator to understand how their minute by minute actions are helping or hurting the company.

In an ideal arrangement, a line operator would know in real time how much value they are bringing to the business in terms of cash. This might mean quantifying the value of one finished unit (or set of value added actions) and subtracting material, conversion, and overhead cost, and presenting the result in real time. It would be made clear what specific area of the overall cost that operator has complete control over so they can quickly and easily test the financial result of one action versus another. The overall cash impact of quality failures would also be factored in to keep the system honest. This puts the shop floor operator in a position of true ownership for their process and lays the foundation for continuous improvement at a daily / micro level.

Such a system might require a respectable investment and may not be feasible for many manufacturers. However, all manufacturers should seek to increasingly improve the frequency at which value could be quantified and reported at the shop floor operator level. Monthly financial reports just aren’t sufficient for leveraging the financial function as a driver of a continuous improvement culture. At least once or twice a day, an operator or mechanic needs to be able to quantify exactly how much value they have brought to the business given the amount of time they have been on the clock. This also lets the operator know if they have more or less contributed their fair share for the day. This makes the job of the operator, their managers, on up to the CEO that much easier. Experienced professionals such as those at Manuficient can help develop the most appropriate operating systems for your specific situation using the finance function as a lever for continuous improvement.

Visit my Excelville Profile for tools and resources for implementing your continuous improvement initiative.

Regards,

Calvin

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blogs author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Put Your Money Where Your Machine Is: Intro to Continuous Improvement Finance Strategy


Posted on February 9, 2015 at 2:22am

Manuficient - Golden Gears

Go into the factory and pick an operator at random. Then ask them how profitable the factory was last year, last month, last week, or even yesterday. You are likely to get a blank stare and possibly some raised eyebrows followed by: “what the hell are you talking about?” In most American manufacturing companies the typical operator has no concept of plant financials and how what he or she does on a daily basis impacts the company’s financial position. Yet every operator deals with money on a daily basis (at least their own money). I can only speculate why all companies don’t communicate in terms of money on all levels within the organization. I mean, if you break it down to the dollars and cents, it’s really not all that complicated. Could it be that business leaders think the floor operators don’t understand money and how their actions impact the bottom line? Is it because the business leaders themselves don’t understand how money is affected by their daily decisions? We are comfortable talking in terms of downtime, efficiency, and units produced – but not in terms of financial gains and losses on the shop floor. I mean, at the end of the day, isn’t it all about the money? Sure quality, safety, and customer service are critical…but if the company runs out of money, then what’s the point.

Here’s the process used by most plant finance functions. All of the plant’s costs roll up into these beautiful financial statements that get reported up to the plant leadership team and the corporate office. Unless there is something terribly uncomfortable about those numbers, no one ever hears or sees or cares about what those financial reports say. The line managers are happy as long as they hit schedule for the day, and so are the line operators. They go through their weeks, months, and years relatively oblivious to the financial impact their work has on the company. Why not integrate the finance / accounting function into daily factory operations? With today’s technology, plants can relatively easily have the capability of tracking conversion costs real time and feeding that information directly to the shop floor operator. This information empowers the operator to make educated decisions on how to and why its so important to effectively execute daily operations on a micro level. Again, dollars and cents are something that every operator can understand because its the language that his or her entire world speaks (outside of their own place of business of course). Its the job of plant leadership and the finance function to get this knowledge into the hands that will make the difference: the factory floor operator. At that point, you are ready to truly leverage the finance function to drive continuous improvement.

In this series of posts, I will lay out three key aspects of Continuous Improvement Finance strategy and how the finance function can be used as a lever against waste not only at the macro level, but also at the micro level within the factory.

Part 1) Measuring Plant Performance: The Common Denominator in Business – Establishing metrics and communication that ties daily execution to the life-blood of the business.

Part 2) The Factory as a Profit Center – Changing the attitude toward manufacturing and operations from cost control to wealth creation.

Part 3) Profit-based Performance Appraisal & Compensation – How to instill a culture that getting better means getting ahead all the way down to the shop floor operator level.

All waste can be measured in dollars. People may not be able to relate to waste the way Lean looks at it…but they can definitely relate to the dollars.

I look forward to sharing with you in future posts.

Visit the Manuficient website for more information on this topic.

Visit my Excelville Profile for tools and resources to support your continuous improvement initiative.

Regards,

Calvin

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blogs author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


fOS Part IV - Management Systems: Exactly How Good Are you? And What Are You Going to Do About It?


Posted on February 4, 2015 at 4:22am
Manuficient Consulting fOS Part IV - Management Systems

Manuficient Consulting
fOS Part IV – Management Systems

You may not be at all surprised by this, but I’d like to begin this post with my top five quotes about management:

5) “The secret to winning is constant, consistent management.” – Tom Landry

4) “The show doesn’t go on because it’s ready; it goes on because it’s 11:30.” – Lorne Michaels

3) “Unfortunately it’s also true to say that good management is a bit like oxygen – it’s invisible and you don’t notice its presence until it’s gone, and then you’re sorry.” – Charles Stross

2) “What’s measured improves.” – Peter Drucker

1) “All organizations are perfectly designed to get the results they are now getting. If we want different results, we must change the way we do things.”  ― Tom Northup

To throw in a bonus, I’ll include a quote that I’ve heard often, especially in the later years of undergrad and graduate school: “Managers do things right: leaders do the right thing.” – Unknown. From that I’ve always put more energy into developing leadership skills. However, in the decade or so since college, I’ve come to appreciate the value and importance of effective management. Lets face it, the most brilliant ideas and strategies are just that – ideas, until you can manage them into fruition.

I’ve been very fortunate to work for and with some of the most talented managers and most successful companies in the world. I’ve also worked for and with some managers who I would definitely not classify as great. As a disclaimer, the common thread among great managers is the same with great leaders…its their ability to get people to work hard and like it. Unfortunately, that is a skill that is extremely difficult if not impossible to teach. However there are some teachable skills that can help a manufacturing manager achieve World Class Execution, which is the goal of the fOS Methodology.

There are three main components of fOS Management Systems:

1) Performance Analysis & Reporting

fOS - Management Systems - Performance Communication

In the Planning quadrant of the fOS Methodology, we talked about the importance of setting goals, which are transcribed into performance standards. In this quadrant, we look at measuring actual performance against those standards and establishing a systematic communication structure to make sure that performance information is effectively communicated. This could be a combination of electronically, one-on-one, one-to-many, focus groups, 10-minute touch points, or whatever mix works best within the structure of your specific operation. The communication structure needs to ensure that the performance information is communicated in an actionable manner. This means that not only the right metrics should be used, but the timing of delivery should give the information recipient sufficient time to take the action necessary, ideally to prevent an issue from becoming a problem.

2) Corrective Management

fOS - Management Systems - Corrective Management

Not many things erode a culture of performance like insufficient response to issues. I look at two categories of issues: one is chronic issues, which can be worked around but still nag people and process performance; and the other is imminent issues that pose a immediate threat to schedule adherence. Both of these types of issues need to have a systematic escalation process which involves all levels in the factory at the appropriate interval. Operators are your first line of defense and should be equipped with the training and skills to permanently resolve every issue if possible. Support and management should be capable of providing deeper levels of analysis and resources needed to completely and permanently resolve issues as well. Notice the word choice…the goal is to resolve the issue permanently, even if not immediately. This is always a tough call for a manager who is dealing with immense pressure to hit schedule for the day or control costs for the current cycle. This is where someone has to stick their neck out to do the “right thing”, even if it means making higher-ups or a customer feel a little uncomfortable. As a manager, you may feel you’re getting ahead in the short run by putting a band-aid on an issue..but that issue plus tomorrows issue plus the next day’s issue create a snowball effect that eventually sets you into crisis mode and life quickly becomes quite miserable. Better to fix issues permanently as they arise and make that not only the expectation, but part of the culture.

3) Predictive Management

fOS - Management Systems - Predictive Management

A vast majority of “future issues” come as no surprise to the managers of a manufacturing organization. Most often, these future issues, or changes are known long in advance but mostly ignored because managers become overwhelmed with the crisis of the day or some other distraction. One of the most common reasons this occurs is that a surprisingly high percentage of managers work at one or two levels lower than their job title. One example would be a Supervisor spending a good deal of each day performing tasks that should be done by a Lead or Machine Operator. In these cases, that Supervisor is taking his “eye off the ball”. This happens for many reasons, ie. the manager was really good at his previous role and hasn’t grown out of it, the manager doesn’t trust that her team will perform their work effectively, the manager just doesn’t have the skills needed to be a manager and needs to score points in other ways, etc… Either way, effective management requires not getting too deep into the weeds of manufacturing and applying resources to address changes coming down the road in a way that sustains or improves current performance levels. This also helps to develop your people to build skills and take on more responsibility.

In summary, the objective of the Management Systems quadrant is to outline and assess the role of management in World Class Manufacturing Execution. Effective management not only quickly identifies current issues and takes the appropriate corrective action, but also takes appropriate preventative action for known future events that may impact performance. This is the step that not only helps the manufacturing process to achieve World Class Execution, but ensure that excellent performance is sustained.

Visit the Manuficient site for more details on this topic.

Also, visit my Excelville.com Profile for tools to help you along the way in your continuous improvement journey.

 

Best Regards,

Calvin L. Williams, MBA, BSIE, LSS

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blogs author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


fOS Part III - Just Do It? The Framework of Manufacturing Execution


Posted on February 3, 2015 at 5:24am
Manuficient Consulting fOS Part III: Manufacturing Execution
Manuficient Consulting - fOS Part III: Manufacturing Execution

 

Before we begin, my top five quotes about execution:

5) "It is no use saying, We are doing our best. You have got to succeed in doing what is necessary." - Winston Churchill

4) "Ideas are easy. It's the execution of ideas that really separates the sheep from the goats." - Sue Grafton

3) “A really great talent finds its happiness in execution.” - Johann Wolfgang von Goethe

2) "A culture of discipline is not a principle of business; it is a principle of greatness." — Jim Collins

1) "Knowledge is a treasure but practice is the key to it." - Lao Tzu

 

Definition: The carrying out or putting into effect of a plan, order, or course of action.

In this third installment of dissecting the fOS Methodology, we dive in Manufacturing Execution, which is the most exciting aspect of manufacturing. This is the part where things get done - and stuff gets made. It is an indescribable feeling to watch pallet after pallet roll off of the production line and get loaded onto trucks and shipped off to the customer; especially when you played an intimate role in "making it happen". This is the part where you are turning nothing into something. This is the part where you are adding value. This is the part where you are doing precisely what the customer is paying you to do. This is the part that pays the bills - the rest is just administrative. I can go on and on with this but I think you get the gist of it.

In fOS Part II, we laid out a framework and approach for assessing and improving the Planning and Procurement function; in this section, we look at the framework work for effectively executing the plan. Again the overall objective of the fOS methodology is to support a manufacturing process in reaching or exceeding  85% OEE, or World Class Execution. There are four key components to the framework for Manufacturing Execution:

1: Assessment of Design Capacity - Determine the engineered design capacity of the production system

fOS - Execution - Capacity

Machines should run at or better than their engineered/designed performance levels. If they don't, something is wrong - and needs to be fixed. Many managers purchase and install equipment in their factories without even bothering to read the instruction manuals on proper maintenance. Then they find themselves in the counterproductive practices of cutting maintenance support (often due to budget constraints), which then leads to a culture of fire fighting, finger-pointing, and rampant CYA. You can quickly see how overlooking the small step of planning maintenance to the equipment's design can erode a facility's culture.

Additionally, each machine in a series is only capable of the output of the slowest machine or process in the series. There are steps that can be taken to balance the workload across machines, eliminating inventory and streamlining production.

 

2: Determination of Uptime Losses - Understanding the impact of process downtimefOS - Execution - Uptime Losses

Machine or process breakdown is a fact of life in the world of manufacturing. A machine breaks down for a few primary reasons..1) Its not being maintained properly, 2) Its not being operated properly or 3) Its the wrong machine for the job..in no specific order. As a factory leader, being able to decipher which is the root of the problem (or which combination of issues) is critical to driving out uptime efficiency losses. A trained eye can both identify what is driving the inefficiencies, and quickly diagnose from a database of industry best practices and personal experiences.

3: Estimation of Throughput (or Rate) Losses - Assess the true cost of running below the designed rate

fOS - Execution - Throughput Loss

Throughput losses are the "silent killers" of a manufacturing process. They are the most difficult to see but can have a profound impact on the overall performance of a production system. For every moment a process performs below the design speed, it is suffering from a throughput loss (as long as it is still running). I've worked with manufacturers that have no performance standards and thus have no idea how fast production lines should be running. Consequently, they also have no idea if the line is being operated in a sustainable way.

My wife has me watching old episodes of House on the computer. I'm always amazed at how Dr House can look at the patient for about 5 seconds and then diagnose the illness based on a few visible characteristics and prescribe a solution in less than a minute. This an over-dramatized role of a manufacturing expert as well. A professional can walk through a factory and see waste (including rate loss) in action and check off the environmental cues that facilitate a wasteful manufacturing culture. In the case of throughput loss, the first question is one of visibility. How do you know when you are experiencing throughput or rate loss? Are you notified at the moment the rate falls below designed speed or do you find out when its too late to do anything about it?

4: Summation of Yield Losses - Determine the loss of productivity related to poor quality and other yield losses

fOS - Execution - Yield Loss

Yield loss is mainly driven by quality failures throughout the system. This is the crucial crossroad between quality and productivity. When I worked for Mars, Inc at their Petcare factory in Sparks, NV, there was a very strong culture of quality, which many viewed as conflicting with the effort to drive productivity improvement. As the Continuous improvement Manager at this facility, my first and biggest hurdle to initiating the Lean implementation was to convince the QA Manager of the benefits of Lean and how it supports quality. To do this, I led several Root Cause Analysis events to address quality failures in the manufacturing process. The next thing I did was to perform the analysis to show the financial and production losses that we were incurring due to poor quality and rework. This highlighted the "Cost of Non-Quality" and positioned the Lean initiative as it was designed to be - a quality improvement initiative. In doing this, the QA Manager became my strongest ally and stood behind all of Continuous Improvement efforts for my tenure with the facility.

We look at rework like its "not a big deal" because it allows us to reclaim all or part of the material being lost. What we don't consider is the fact that that bad unit took up line space from a potentially good unit; and costed double the labor and utilities to "get it right". First Pass Right is the only way to go.

Also, a frequent mistake is to only measure rework or First Pass Right in the final steps in the process. It needs to be measured at every single step in the process. All of the waste needs to be captures and bared before all. Again, visibility is the key to making sure stuff gets resolved.

fOS - Execution - Waterfall

The system design capacity and execution losses roll up to estimate the manufacturing system's overall level of execution. In order to perform at World Class levels, the total execution losses cannot exceed 15% from the designed capacity. In other words, uptime x throughput x yield must meet or exceed 85%. Most established factories begin their journey at anywhere from 45% to 65%, which leaves tremendous opportunity for improvement. An expert can help identify losses and quickly determine what steps can be taken to capture gains.

Visit Manuficient Consulting website for more details on this topic.

Also, visit my Excelville Profile for tools and resources to help you along the way in your continuous improvement journey.

Best Regards,

Calvin

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blogs author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


Breaking Out of the Death Spiral of Manufacturing Inefficiency


Posted on February 1, 2015 at 8:46pm

Manuficient - Plant Downward Spiral

Ready…Fire…Aim.

No Wait that’s not right, Aim…Fire…Ready.

Wait wait, one more time. Fire…Ready…Aim. Why is this so difficult?

THE PROBLEM

It’s natural to want an issue resolved as quickly as possible. Issues are painful – sometimes all we want is for the pain to go away, immediately. It’s been proven time and time again through experiment, people are more likely to take $100 today than $150 in two weeks. It takes both discipline and patience to avoid capturing the short-term gain at the expense of long-term success. This is especially true when customers, managers, supervisors, and line operators are all under immense pressure to meet daily production schedules all while cutting production costs. In this environment, the band-aid approach becomes the expected course of action over the sometimes slow “permanent fix” approach. Over time, this creates a culture where the goal of the day, is to survive the day. If we can just hit schedule, we can all go have steak dinners, even if we know we’re going to have to deal with many of the exact same issues tomorrow. Many manufacturing operations go on for years if not decades this way, especially prevalent in high-speed manufacturing environments. In discrete manufacturing environments, the pressure to high daily schedules is less, which creates an environment that cultivates process inefficiencies. The erosion of performance still occurs, just at a slower pace.

THE EFFECT

In this environment, there is a snowball effect that erodes manufacturing efficiency. Over time, just like anything else, the manufacturing system and its performance declines. Machines get old and just don’t do it with same vigor and vitality that they once did. When a band-aid is place on an issue, it provides a “weak bridge” to be crossed to meet the daily production target. The problem is that it gives somewhat of an illusion that the problem is gone. However, that weak bridge needs to be crossed every day to hit daily targets. Meanwhile, other weak bridges are being built every day to deal with other issues in the factory. The underlying fact is that the very root level issues and conditions are not being identified, understood, or eliminated. Unfortunately, those root level issues are allows to fester and create one issue after another that erode manufacturing efficiency. Before you know it, there are dozens if not hundreds of weaknesses in your manufacturing system that produce failures at an increasing frequency. One day you wake up and realize that you are quickly descending into the death spiral of manufacturing performance.

THE REMEDY

This is easier to avoid than it is to fix, especially if your customers or bosses aren’t going to give you the time or space you need to make sustainable improvements. Making improvements means deliberately stopping production and getting to the root of the issues. In many facilities, the cultural view around consciously stopping production for any amount of time is unheard of, especially to pull people together for a meeting to do Root Cause Analysis – it’s just bad optics. This is a dire situation but it can and needs to get better. The key is to find ways to buy yourself time to research, collaborate, experiment, and resolve issues – permanently. If you are part of a network of factories, it’s reasonable to have a sister site support production demands while you schedule more downtime to get issues permanently resolved. A skilled professional can help you build the business case for this type of arrangement considering the total financial impact including incremental labor and logistics cost to have a sister facility provide service support. Often the savings from permanently resolving an issue, by far, outweighs the incremental production support cost. This behavior needs to become part of the manufacturing operating model so that issues could be resolved permanently as they arise. If you don’t have the luxury of a network, or just would rather not take that route, another route is to use your planned downtime wisely. It may not be a bad idea to schedule extra raw materials to use for equipment / process testing during scheduled downtime. This is the time to perform a manufacturing efficiency blitz and tackle the issues that pose the greatest threat to performance. Once you’ve brought your manufacturing system “back to base”, implement preventative measures and find a way to incorporate continuous improvement into your daily operating model. An expert such as those on the Manuficient team can help you with all of this.

Visit my Excelville Profile to get tools and resources to help accelerate your continuous improvement initiative.

 

Regards,

Calvin

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blogs author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


When Its Smarter to Hire Consultants in Manufacturing


Posted on January 31, 2015 at 3:05pm

Manuficient - Man Thinking

Its time to change, either because you need to, or you just want to. You need to reduce operating costs to free up working capital to invest in marketing. Your leading competitor just went out of business and you need to increase throughput levels to meet a rapidly expanding customer base. You're starting up a new product line and need to know the optimal manufacturing model. Your raw material costs are inflating and you need to get costs back in control to increase your profit margin. You need to know what something "should-cost" to make or buy...the list of possibilities are endless. In business, there are always problems that need to be solved. These problems come in all degrees of scale and complexity. Some of them can be handled by your internal team and some not so much. There are mainly three situations when its smarter to hire consultants to help you get something done:

1) You don't have time to do it yourself. Your internal team is stretched thin with their current responsibilities. Business systems like to operate in a steady and predictable environment. Unfortunately, the world outside of the 4-walls (and sometimes inside) of a manufacturing facility is very unpredictable. When problems arise, management level work demands surge. As a manufacturing leader, you need to determine how you're going to deal with the surge in demand. You can tax your current team, which works to an extent but can disrupt your business system, especially if you're already running with a lean organization. You can just ignore the problems and hope they go away. Or you can bring in consultants to help capture the opportunities at hand.  You can expect a consultant to work at least 1.5x the speed of your employees, and be happy to do it. Aside from a few meetings and data requests, you can also expect the consultant to work fairly autonomously to get a full understanding of the problem, potential solutions, and sometimes not-so-obvious opportunities abound. Additionally, hiring consultants for some services alleviates you from the management burden of hiring and maintaining an employee.

2) You don't have the expertise in-house. Its just not realistic to expect to have 100% of the expertise needed to effectively run a manufacturing operation. Some knowledge or skill sets will only be needed less than 3% of the time; and sometimes just once ever. Other times, your internal team may have a good grasp on the subject but not to the extent needed to produce the quality of results you need at that time. For instance, if you want to implement a world-class continuous improvement process, chances are that your internal team has not seen very many world-class operations (if any) in practice. Consultants are in the unique position to have served many clients and often have an array of best-in-class techniques and methods for you to incorporate.

3) You need an objective perspective. Within any organization, there exists varying degrees of internal politics. Underneath the surface, everyone is competing for a larger share of the company's spoils. This comes in the form of bonuses, pay raises, stock, promotions, or just having more say over what gets served at the company picnic. Because of this, everyone operating within the confines of the organization has a personal agenda. As such, all employees look at the situation from their own perspective, which is influenced by alliances, past hurts, and personal ambition. All of these things cloud your employees' judgement and blind them to opportunities that would otherwise be very obvious. A consultant who has seen many manufacturing operations and who is not embedded in to the internal politics can help develop unbiased solutions and see opportunities that everyone else is conditioned not to see.

Combining the objective perspective with a high degree of expertise and a high workload capacity, a consultant can often provide you with very high quality solutions in a much shorter time-frame placing minimal strain on the existing business system. Some consultants such as Manuficient can even carry the load of seeing those solutions through to full implementation as well.

Visit my Excelville Profile for tools and resources for driving manufacturing efficiency.

Regards,

Calvin

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blogs author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


FOS PART II – WHATS PLANNING GOT TO DO WITH IT? THE MANUFACTURER’S PARADOX


Posted on January 29, 2015 at 5:28am
fOS Graphic - Planning

fOS Part II: Planning & Procurement Analysis

I’ll begin this post by sharing my top 5 quotes about planning:

5. “If you don’t know where you’re going, you’ll end up someplace else” – Yogi Berra

4. “Someone is sitting in the shade today because someone else planted a tree a long time ago” – Warren Buffet

3. “The time to repair the roof is when the sun is shining” – John F. Kennedy

2. “By failing to prepare, you are preparing to fail” – Benjamin Franklin

1. “Give me six hours to chop down a tree, and I’ll spend the first hour sharpening the axe” – Abraham Lincoln

 

In my experience working with manufacturers, planning is often the most overlooked, yet is an immensely crucial aspect to execution. Planning is not just what happens before the factory starts making stuff, its happening constantly throughout the life of the process. When I started working for Nestle Prepared Foods in the Jonesboro, Arkansas factory where we made Lean Cuisine and Stouffers frozen dinners, the management team sent a group of us on a 4-day team-building trip facilitated by an organization called Team Trek in the Ozarks of North Central Arkansas. It was a fantastic experience for myself as a young Industrial Performance Engineer and the five others who attended with me. As with most other team building exercises, we were tasked with overcoming some challenges that none of us could have done alone and forced us into an environment that required us to work together to succeed. There were about 6 or 7 challenges over the four days in which we progressed from complete chaos and disorganization in the initial challenges to a well-oiled unit by the end of the four days. The one key thing that made the difference between chaos and near-perfect harmony was planning.  Since every challenge was done under time pressure, which is often the same as in business, we initially just jumped in and tried to solve the problem as individuals. By the end, we took our time to develop a solid and well facilitated plan, then executed that plan. The challenges became more challenging and we became more organized, with planning and facilitation becoming the predominant skill-set for increasing effectiveness. The same rule applies in business…especially in manufacturing.

There are four key elements of an effective planning process for a manufacturing organization:

1: Establishing Goals – Determine what key objectives must be met for World-Class Execution

Manuficient Consulting - Goal Setting

 

You don’t become a business leader without being goal-oriented. Yet, I frequently find that the goals of the manufacturing organization are mis-aligned with or fall terribly short of the goals and expectations of customers and other stakeholders. In the case of the fOS Methothology, the performance goal for a manufacturing facility is 85% OEE. This goal should permeate throughout the organization to the point where every employee can tell any visitor what the goal is, the current performance to goal, and the gameplan for closing the gap in their respective area.  There should also be supporting targets set for each production area that roll-up to the overall goal of World-Class execution.

2: Procurement and Securing Required Resources – Predict resource requirements and perform sourcing analysis to maximize reliability while minimizing cost. Procure or schedule all required resources as needed for production.

Secure Resource Snapshot

In order to make stuff, you need stuff. To take that a step further, you need the right stuff at the right time, right quantity, right quality,  right price, etc, etc,…because that’s exactly what your customers expect from you. Unreliable suppliers make you an unreliable manufacturer. Likewise, expensive suppliers make you an expensive manufacturer. Thus the goal of an effective sourcing / procurement system is to maximize reliability while minimizing cost. This includes procurement of raw materials, supplies, and services (including labor, management, and contracted services). In order for you to perform at World-Class levels, your suppliers need to be marching to the same drum beat. There are two ways to achieve this…you can either work with your suppliers to improve their performance or re-source with suppliers who can get it done. This is a tedious process of vetting, qualifying, and negotiating, but can produce dramatic results for you and your customers if executed well.

 

3: Allocate Resources & Responsibilities – Assign mutually exclusive and completely exhaustive functions to all human and capital assetsAllocate Resources Snapshot

In the manufacturing environment, life happens every day…often several times a day. A leader who expects everything to go exactly as planned is sure to be disappointed. Not having a Single-Point of Accountability assigned for every aspect of the business can quickly become a very frustrating environment, especially for frequently occurring issues. An SPA is the person who is ultimately accountable for the performance of an asset, process, or entire system. While its not difficult to assign an SPA for any gaps in the management system, there should also be a process for granting that SPA the authority to make the decisions or access resources needed to be successful in their accountability. Careful steps should be taken to ensure that all bases are covered and that the authority is fairly distributed. As you can imagine, this can be a delicate process and can create a politically charged environment if not handled with an experienced hand.

4: Establish Controls – Conduct risk analysis to determine likely failure points and implement protocols to monitor and effectively respond to process deviations

Process Controls Snapshot

Last but definitely not least, process controls need to be established to prevent failures, monitor key processes, and respond effectively in the event of a failure. Through risk assessments, you can identify potential problem areas and take preventative action or establish process controls to enhance process reliability. Process Controls and reaction protocols are discussed in depth during the Part IV: Health-check phase so I won’t go into great detail in this section. The fundamental concept is that a robust health-check system can quickly alert you when a process is either out of compliance or out of control…at which time there needs to be systematic responses built into your fOS that your plant personnel (who should be well-trained), is expected to execute according to pre-established failure protocols.  These protocols should be designed to not only resolve the issue at the remedial level, but take action to prevent future occurrence of this process failure.

Manuficient Consulting can help reduce your manufacturing costs by conducting a thorough, data-driven analysis of your planning and procurement practices and working collaboratively to develop an executable roadmap to improvement.

Visit the Manuficient Consulting website for more details on this subject.

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blogs author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


NOW YOU SEE IT – NOW YOU DON’T: CONFRONTING MATERIAL YIELD LOSS


Posted on January 29, 2015 at 5:16am

Manuficient - Yield Loss Graphic

In a factory, you see it every day. Its on the floor next to the machines, in the trash can, in the recycling bin, and in a huge compactor out back. It’s so commonplace that everyone just steps right over it and carries on as if they don’t even see it anymore. It becomes “the way it is around here”. And every time you see it, you silently think to yourself, “I wonder how much it costs us to throw away that much material.”

Material Yield loss is a measure of how much of the raw material you purchase actually gets converted into sale-able finished goods. Granted some water-based materials may lose some weight during processing due to evaporation, it is possible to account for every single ounce or inch of raw material that is purchased. An approach called a mass balance can provide some idea for how much of that valuable raw material is lost in some black hole in the production process. A mass balance simply takes the quantity shipped (as finished product) divided by the quantity procured. This provides a yield value measured as a percentage. The remaining amount is yield loss, which is a by-product of the production system. Since material yield can range anywhere from 40 – 80% of the cost of goods sold (COGS), it can quickly become a significant amount of money. For example, a factory with a $25MM operating budget, a 75% Materials COGS, and a 5% yield loss would be throwing away almost $1MM per year in yield loss.

There are ways to recapture some of that yield loss such as setting up recycling programs or selling scraps to the local fabricator. These are work-arounds that tend to mask the problem that your system is oozing valuable product. And when problems get masked, they get worse over time. Besides, why convert good raw material into waste that sells for pennies on the dollar (or even worse, ends up in a landfill), when you can take steps to convert that same lost material into profitable finished product. Now perhaps its not a good time to deal with that now or you don’t have the expertise to get to the root of the issue and implement an effective solution. In those cases, it may make more sense to bring in outside help to get the issue addressed sooner than later. Remember, the longer an issue lives, the strong it becomes and more expensive to resolve. An expert can help cut through the trial and error to get you to the right answer a lot sooner.

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blogs author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.


fOS Part I - A Roadmap to World Class Manufacturing Execution


Posted on December 8, 2014 at 4:00am

Manuficient Consulting fOS LogoManuficient Consulting's fOS Methodology

This is Part I of a five part series of posts meant to shape the framework of the fOS Methodology and philosophy. fOS is an acronym for Facility Operating System and is proprietary methodology developed by myself for Manuficient Consulting. The goal of the fOS Methodology is to provide a factory with a roadmap to World Class Execution, which I regard as at least 85% OEE. OEE, or Operational Equipment Effectiveness, is a well-known measure of factory or process efficiency that considers three primary factors: Uptime, Throughput (or rate loss), and Yield. I go into much more detail about OEE in other posts so I’ll spare you the time here. It is the ultimate measure of productivity because it is simple, yet comprehensive and can be consistently applies across one or a whole series of processes. Its simplicity makes it a great measure to use to benchmark across factories, networks, or entire supply chains.

 

The fOS methodology is a derivative of Demming’s PDCA (or Plan, Do, Check, Act) Continuous Improvement model. The PDCA model was designed for localized improvement of a process or production area. fOS places a broader focus on the end-to-end manufacturing execution process and places Management Systems at the core of plant performance results (or lack thereof). The scope of Management Systems includes the combination of metrics, meetings, meeting structure, issue escalation process, reaction criteria, continuous improvement systems, and other components that will be discussed in detail in subsequent parts of this series.

 

fOS Methodology is a four part cycle that makes up the manufacturing Continuous Improvement Cycle:

fOS Graphic - Planning fOS Part II: Planning / Procurement – An analysis of supplier and planning effectiveness

A deep analysis of planning and procurement processes used to predict plant lead times,  resources required (including parts, materials, raw materials, and manning), and support required to meet or exceed 85% OEE levels

fOS Graphic - ExecutionfOS Part III: Execution – An analysis of the current state of operations

At this phase, the factory undergoes an assessment of current manufacturing processes, sources of losses, bottleneck analysis (or production constraint analysis), capacity analysis, process reliability and other methods to develop an intimate mastery of the current manufacturing process. The factory’s current OEE performance is also determined at this phase of analysis

fOS Graphic - Health CheckfOS Part IV: Management – A determination of “How Healthy is Your Factory?”

In this phase an in-depth review of factory management systems is reviewed such as metrics, reporting mechanisms, escalation protocols, reaction criteria, continuous improvement culture, and many other aspects to determine what is driving the gap between current state and World Class performance.

fOS Graphic - ImprovementfOS Part V: Improvement – The path to World Class Execution

Here is where current manufacturing practices are benchmarked against best-practices across industries to determine initial areas for improvement. Also, a comparison of the factory’s current practices is made against the fundamental principals of Continuous Improvement considering Lean, Six Sigma, Agile, RMS, and a host of other proven models for improving manufacturing performance. This is the final phase where a detailed roadmap to World Class Execution is developed (and possibly implemented) prioritized by the greatest areas for improvement. This roadmap might include a series of improvement events, engineered process changes, organizational changes, capital improvements or any other recourse determined to close the gap between current state and World Class Execution. All improvement ideas and savings estimates are developed in collaboration with production and financial management personnel within the organization.

In conclusion of this assessment, the factory or manufacturing network will have a clear and executable step-by-step plan for closing the gap between current state and World Class Execution. In some cases, further assistance can be provided by Manuficient Consulting to support in the plan’s implementation. Stay tuned for more detailed information on each part of the fOS manufacturing improvement methodology.

Review my Excelville.com profile for tools and resources to help you along the way in your continuous improvement journey.

Visit the Manuficient website for more information on this topic.


Calvin Williams Introduction


Posted on October 6, 2014 at 1:20am

Hello and welcome to the Calvin Williams blog on Excelville.com.

Thanks for taking the time to read as I share my experiences, learning, and thought process as I work to positively impact the world. My personal mission is to drive economic growth and prosperity to those I serve by applying leading edge practices for efficiency and productivity.

I am a Husband, Father, Entrepreneur, and Management Consultant with a specialization in Manufacturing Efficiency & Performance. This blog is intended as a channel of communication for current and future clients and anyone else interested in following me throughout my journey as a man working to make a difference in people\\\'s lives.

I am a natural born change agent who thrives on solving problems of any complexity. It is my personal and professional philosophy that any challenge can be overcome by engaging the right stakeholders, driving to the root of the issue, and developing winning solutions...then taking careful but deliberate action.

I also make it a principle to stay abreast of industry trends and emerging patterns, latest developments in technology, and best-practices for driving performance. Additionally, in practice of what I preach, I strive to continuously improve my own methodologies and approaches for getting results.

Feel free to subscribe, comment, or contact me if we should talk. I look forward to engaging with you.

Best Regards,

Calvin Williams, MBA, BSIE, LSS

Manuficient Consulting

404.480.2307

calvin.williams@manuficient.com

Engage with us: Subscribe | Request Material | Schedule a Call | Request a Proposal Network with us: Facebook | Twitter | Linkedin | Google+   Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blogs author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.




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