Why a Top-Down Approach Works Best Print E-mail
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Written by Michael Ford   
Monday, 31 October 2011 15:11

Outlining the scope first avoids pushing waste from one area to another.

Say an SMT pick-and-place machine is mismounting components. Quite often, this is addressed by damage control: counting the components, calculating the spoilage and correcting the inventory in MRP. This process helps avoid, to some extent, the need for major excess inventory in the warehouse.

But what if the “fix” actually introduces more waste?

That’s exactly the case here: waste in the form of the time and effort to count material, update inventory and rerun the MRP engine, taking account of the new quantities. In our example, one waste is exchanged for another. Reducing one waste in favor of another lesser waste may qualify as a “kaizen” style improvement, but Lean it is not. Lean aims toward removal of all waste. If the target is to make a manufacturing operation as a whole Lean, the process must be defined as the entire manufacturing operation, including all supporting functions. If the scope is not set in this way, a part of the process might be optimized at the expense of other parts – and the operation as a whole. The smart solution: Start by considering the whole process and work top-down.

Waste can be defined as anything consumed that did not need to be consumed. It can be materials, money, time, effort, movement, space – any resource, in fact, that has a tangible value or cost.

An added-value operation, however, cannot be waste, as it is a requirement of the operation itself. An SMT machine adds value by gathering process data for compliance and visibility (as a control system), materials traceability data, management of material usage such as MSD control, material exhaust warning, and even providing guidance and documentation to the operator (Figure 1).

Definitions of what can or cannot be regarded as “added value” may differ. An extreme view holds that only operations that actually make the product provide direct added value. A more practical stance is to include actions required for the process to run.

Under the latter definition, a certain operation that uses data gathered automatically from the machine – e.g., automated counting and accounting of spoilage, verification of materials setup, etc. – but processes in slightly different ways using the same manufacturing systems is Lean, because it eliminates wastes without introducing more.

The Lean Manufacturing concept can be expanded. For example, the material exhaust warning can be used as a signal to automatically “pull” materials from the warehouse only as and when they are needed – a kind of “just in time” operation. This can save waste associated with either machines stopping for unexpected lack of materials, or the excess material being kept near the machine, just in case the materials should exhaust prematurely.
The “Pull” philosophy is a key part of Lean. It can be summarized as “do not commit to do anything until absolutely necessary.” Any unnecessary action could potentially need to be reversed, which would be a waste.

Consider a planning change. Without Lean, a lot of material is likely to be prepared and allocated to existing and future work orders. Implementing a planning change, perhaps due to changed order requirements, an equipment breakdown, or even a genuine lack of material to fulfill an order, would mean that all the materials prepared and allocated for the old production plan have to be collected, checked and restocked. New materials will then need to be selected and sent to the shop floor to support the new production plan. All this time the production line or lines are stopped.

Such disruption could be avoided by making a constraint to the planning team that nothing already committed to the shop floor should change. Without Lean Manufacturing, however, there may be days of commitment already in place; the constraint ends up making the operation lose its agility.

Compare this to a Lean pull-based system, where only materials currently in place and being consumed on the machines, plus those required as replenishments in the next few minutes, are on the shop floor. Any change of plan can be handled almost as a routine material replenishment exercise, reflecting a huge reduction in the time and effort to make the planning change. This Lean activity brings a new degree of flexibility and agility to the entire operation. Work orders can be changed with a much shorter lead time. The operation can be more responsive to changing requirements without loss, without waste.

Applying Lean properly creates agility. This is in contrast to what is often attributed to Lean, the perception that it optimizes a single process such that it is suitable only to run in one configuration for one type of product, and so it destroys flexibility. By implementing Lean correctly, this is just not true. It is important to remember once again the scope of what is being made Lean.

Expanding beyond manufacturing. Indeed, it can be argued that the manufacturing operation itself is only one part of the larger product creation, supply, and distribution chain, so perhaps Lean cannot be applied completely without considering the scope beyond the manufacturing organization itself. This is a very good point when considering advanced Lean operations.

Going upstream from manufacturing operations, we enter the supply chain. For locally available materials, either from local vendors or local distributors, the pull signal idea that works inside a manufacturing operation can be extended all the way back to suppliers. This empowers suppliers to optimize delivery cycles based on the actual needs of manufacturing, which removes waste of transportation and stock. 

Not all suppliers see this as an opportunity to improve operations and may not be prepared to take responsibility for just-in-time delivery. The improvement would come for the suppliers that their stock holding can be aggregated for many Lean customers, so the cost is less as compared to holding individual stocks. There are also possible cost reductions associated with material transportation, which is now flexible in terms of timing and quantities. Potential “Lean Supplier” candidates have to be carefully checked out.

More of an issue is the reality that many key materials are not locally available. For these, specific lead times and shipping times cannot be practically avoided. Existing MRP logic manages this process very well. In this respect then, most operations have to manage the pull of the Lean operation vs. the push of MRP-driven incoming materials, with the warehouse as the buffer. This is the limit to Lean implementation for most manufacturing operations, though historically we can see that Toyota made a valiant attempt to “localize” all of its suppliers. It is not a huge issue; since the warehouse was there already, nothing additional is added due to the Lean initiative, and actually the MRP operation itself is still greatly enhanced by the materials accuracy and performance visibility from the shop-floor operation.

Downstream from the manufacturing operation, we see demand for product from the customer. By the time the demand pattern data, in the form of sales orders forecast for manufacturing, are calculated based on expected sales, aggregated stock levels and movements, etc., they often become distorted, especially for new products and those nearing end-of-life. The logic of creation of sales order forecasting results in stable-looking long-term demand order, which is good for the MRP systems that need the lead time to order the materials. The sales order forecast is often not as stable as it seems. Running the forecast again a very short time later, looking at the changing demand patterns of the end-customer, results in significant actions to prevent overstock conditions or product shortages. The long-term sales forecast is always necessary for the MRP materials procurement process to work; however, a Lean system would additionally have a more direct demand pattern feedback to manufacturing from as near to the point of sale as possible.

Manufacturing then has the opportunity to plan operations more efficiently, controlling the flow rate of production of different products according to changing demand. Stock levels in the distribution chain can be smoothed and lowered. Not all stock deviations can be removed, as there is still lead time in the system, so there is still some waste, but much less than before. With this Lean signal, then, manufacturing can avoid the worst shocks of suddenly changed requirements.
Lean manufacturing sounds like a paradigm change to most operations. Perhaps this is the reason that significant Lean projects are challenged and relegated to specific projects in specific areas, which end up not being Lean at all, since once again, the wrong scope causes the waste to simply move from one area to another. Lean manufacturing has to start with the application of Lean thinking toward the correct scope, working out the best steps to take to smoothly introduce Lean tools and systems required to make Lean happen. Designing in Lean from the start means each successive step complements the previous one, adding opportunity to benefit without disruption to the operation. It should be easy enough for any operation working top-down to consider the desired scope and the most significant wastes, and so define the steps to achieve Lean.

For those who get a chance to tour a Lean manufacturing operation, ignore the detail from the engineer explaining about how clever they have been to remove unnecessary hand movements at assembly stations and how they have saved so many product movements by the re-layout of the new factory. Look instead at the bigger picture. Are all the machines working right now? Are there large amounts of materials on the shop floor? Are there large stocks of product between processes? Are people standing around looking bewildered and confused? If the answer is “no,” then the operation may be truly Lean. If the answer to any of these questions is “yes,” then the whole operation is not as Lean as they would like to think.

Michael Ford is senior marketing development manager at Mentor Graphics’ Valor division (mentor.com); This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Last Updated on Tuesday, 01 November 2011 12:59


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