Advancing lean beyond the Toyota way
ISE Magazine Volume : 50 Number: 3
By Shahrukh A. Irani
High-mix, low-volume manufacturers need more flexible production systems
For years, businesses have used the revolutionary Toyota Production System (TPS) as a benchmark for reducing delivery times and cutting operating costs by eliminating waste without eliminating employees. The seven types of waste (transportation, inventory, operator motion, waiting, overproduction, overprocessing, scrap/rework) all add delays to how long customers must wait to receive their order. The wastes also add costs to the price that customers must pay. Just like an original equipment manufacturer like Toyota, machine shops have the goal of reducing the total time that customers must wait, from the time that they place an order to the time that they receive an order free of defects.
The easy and hard of lean
The lean principles that come out of the Toyota Production System are easy to remember but hard to do. In 1996, the book Lean Thinking: Banish Waste and Create Wealth in Your Corporation, was published. In their book, authors James P. Womack and Daniel T. Jones presented the lean principles, which constitute a five-step thought process for guiding the implementation of lean:
- Lean principle No. 1: Specify value from the standpoint of the end customer by product family.
- Lean principle No. 2: Identify all the steps in the value stream for each product family, eliminating whenever those steps do not create value.
- Lean principle No. 3: Make the value-creating steps occur in a tight sequence so the product will flow smoothly toward the customer.
- Lean principle No. 4: As flow is introduced, let customers pull value from the next upstream activity.
- Lean principle No. 5: As value is specified, value streams are identified, wasted steps are removed and flow and pull are introduced, begin the process again and continue it until a state of perfection is reached in which perfect value is created with no waste.
Lean principle No. 1 is hard to implement in a machine shop for various reasons. For example, in order to buffer against recession, a machine shop might choose to serve customers in several sectors, say, mining, defense, aerospace, medical, etc. Sadly, that does not guarantee customer loyalty nor stability of order intake. In particular, automotive OEMs have a reputation for shopping around and nickel and diming one supplier against another to get a better price.
The value stream issue makes lean principle No. 2 hard to implement in a machine shop. After all, a value stream is a product family. Unfortunately, the product families in every machine shop are not obvious.
Flow makes lean principle No. 3 hard to implement in a machine shop. The flow of a product is smooth if and only all the steps in its routing are performed in sequence on consecutive work stations located in close proximity to each other. This is possible only in an assembly facility with one or more assembly lines where each line produces a limited range of highly similar products.
Another lean principle, pull scheduling, makes lean principle No. 4 hard to implement in a machine shop. Pull scheduling, which is feasible in any repetitive assembly facility, will not work in a make-to-order machine shop where due dates are set by its customers and the daily mix of products produced is subject to change. Production schedules in a machine shop are driven by due dates, which are subject to change. It is hard to negotiate due dates with customers. Sometimes, the due dates for orders from different customers can fall on the same day.
Personality makes lean principle No. 5 hard to implement in a machine shop. Management and culture in many small- and medium-sized manufacturing organizations are almost completely driven by the personality of the president or owner. Also, unlike Toyota and other OEMs, a machine shop has limited resources for workforce training. In fact, machine shops have to compete against OEMs when they try to recruit and retain talented employees with a strong work ethic, a desire to learn on the job and interest in being cross-trained to operate different machines.
Many lean tools are unsuitable for machine shops
It will be difficult for today’s high-mix, low-volume manufacturers to improve their performance by leaps and bounds if their implementation of lean is limited to copycatting the Toyota Production System. The typical machine shop operates more like a job shop rather than an assembly plant. Therefore, every operational aspect of the machine shop, such as receiving and shipping, vendor management, human resource development, management, supplier control, inventory control, equipment selection, factory layout, production planning, operations scheduling and engineering design must be designed for the variety of products that they wish to produce for their customers and the variability in demand volumes and due dates that their customers impose.
Although machine shops have embraced the philosophy and principles of lean, they recognize that they must figure out the right way to implement the tools, practices and systems of the Toyota Production System.
Playing your best lean hand
Machine shops need to be lean and flexible. The right “playbook” of lean tools can pay off big for machine shops, job shops and other make-to-order manufacturers.
I was personally involved in designing and implementing a multiple-product machining cell at Hoerbiger Corporation of America in Houston. The overarching objective for redesigning the cell was to make it self-contained and capable of operating autonomously.
In addition to the layout changes, the cell employees were taught the fundamentals of lean (seven types of waste, batch vs. one-piece flow, quality at source, 5S, etc.) and encouraged to organize their work centers to eliminate waste. Each employee in the cell got rid of decades-old junk that was cluttering the racks, tabletops and floor.
In particular, two cell employees demonstrated that lean can inspire workers to take charge of their own destiny.
Luong Dam, who had been with the company for nearly three decades, ran the three Cincinnati Mills in the cell. He worked tirelessly with us over a period of two weeks to raze his work center to fit in less than half the area that it originally occupied.
Phillip Nguyen, one of our shop supervisors, had fabricated a tool storage fixture for the LeBlond lathes in the quick response cell. We requested that he design and fabricate a similar fixture for the tools used on the Le Blonde lathes in our cell. He built the fixture over one weekend – without even asking for overtime pay!
Some of the key improvements that we recorded after the new cell layout was implemented were:
- Order flow times were reduced from 16 days to less than or equal to five days. This reduction in delivery time increased the cash earning velocity of the cell.
- The standard lead-time quoted to customers was reduced from more than 20 days to 10 days. This gave the cell the ability to accept and complete more orders without investing in extra capacity.
- The cell’s floor space requirement was reduced from 2,816 square feet to 1,410 square feet. The floor area that was freed up became available to either accommodate a new cell, which would bring in new business for the company, or locate the receiving department adjacent to the shipping department.
- The estimated labor time wasted every year in material transport for all orders processed in the cell was reduced by 51 hours. Previously, with different operations being spread all over the shop, the interoperation transportation and queuing delays for the orders produced in the cell were significant. Now, the external flows of any order processed by the cell were reduced to the delivery of raw materials to the cell from the receiving department and the removal of finished product from the cell to the shipping department.
- The line of sight efficiency improved from 0.286 to 0.714. This improvement means that machine operators don’t have to walk far to communicate quality issues or tooling problems to another operator. Or, if machine operators want to take a break, they simply inform the operator/s of the “supplier” machine/s to not overproduce beyond a certain number of units during the time that the operator was away from his or her machine.
- The U-layout of the cell allowed two pairs of machines in the cell to each be attended by a single operator. Thereby, each operator could quickly transport parts from one machine to the next machine that he or she operated.
- The distance traveled by any order processed in the cell was reduced from 618 feet to 368 feet. This reduced transportation delays and allowed for smaller batches of parts to be moved between consecutive machines.