Category: Industry Forum Blog

In the 90’s I worked in an amazing old 4 story mill where we made replica football kits. Half of the bottom floor was dedicated to incoming rolls of material and outgoing finished shirts and shorts. While some problems were instantly apparent, like transporting all the material to the top floor to be cut, others were less so.

Our business was expanding and in 1 year alone we doubled the order book. I had to increase the workforce and invest in more equipment. The biggest increase in staff was for material handlers, we barely kept material flowing round the plant. We bought extra cages, opened up an old warehouse across the road and tried to breathe life into an old conveyor system.

Then one day the cutters on the top floor ground to a halt. “What’s the problem?” I asked. The young material movers took me downstairs to the warehouse. Every shelf was full of rolls of material – so why nothing to cut?

If you’re a long suffering football fan you’ll know there is a new kit available at least once every season. I found every shelf was full of obsolete stock. There was no room left to bring in any new material!

The person ultimately in charge of the business was an accountant by trade. As inventory is traditionally reported as a current asset on the balance sheet, he couldn’t bear to write it off.

Instead of getting rid, or moving it to a more remote location, we had to hire containers for the new rolls.

Fortunately since then, I have learned that excess inventory is one of the 7 Wastes. Excess means anything more than is required to maintain the process flow.

Now I’m in a better position to question an accountant’s logic.

Have a look at the problems that are associated with excess inventory.

Hidden costs

1. Physical storage for any inventory not being worked on – off site warehousing, shelving. And in non-manufacturing businesses – computer memory storage, archives and in trays.
2. Upkeep of storage space – rents, rates and power bills.
3. Cash is tied up in inventory, it is something you have bought but have not yet sold. Too much inventory can result in cash flow problems.
4. Transporting inventory to and from storage – people, equipment such as FLTs, conveyors and trolleys. Add on the running costs and maintenance of that equipment.
5. Cost of stock taking – people and equipment.
6. Potential damage during handling and transport. Not just to the product but to infrastructure and injuries to people.
7. Cost of protecting the material during storage – special lighting, temperature control, coatings and preservatives.
8. Insurance for items in storage.
9. Costs associated with stock rotation – people and equipment.

Other problems

1. Money and storage tied up in slow moving and obsolete stock prevents purchase and incoming deliveries of material required now. This can result in late deliveries to the customer.
2. Holding high levels of inventory masks other problems:
   • Raw materials hide supplier delivery problems.
   • WIP hides bottlenecks, unplanned downtime, idle time and excessive operator motion.
   • Finished goods hides quality problems which can lie undiscovered until the customer finds them.
3. High levels of finished goods are a risk. They can become obsolete due to cancelled orders or a specification change.

 

Ask yourself “Do I incur any of these costs and problems?” and “What else could I do with the space, time and money tied up in excess inventory?”

As we enter the Fourth Industrial Revolution the various asset management and Computerised Maintenance Management Systems (CMMS) offer bigger, better and more affordable solutions than ever before.

Instead of using your own computer network you can buy into cloud based systems. In the world of interconnected devices every user can access the system using tablets or smart phones.

Even the machines can connect direct to the hub, feeding information back for analysis and receiving instructions to optimise running conditions. Old equipment? No problem, there are plenty of low cost retro fit devices for monitoring key parameters.

And of course all these systems are scalable, you can start small and add as you go along.

But before you rush out to buy the latest sensing technology and cloud based multi-screen service there are some important things to do to ensure you get the best out of your investment.

1. Decide on your maintenance strategy – how much are you willing to spend and for what expected benefit?

What is the overall goal of your maintenance strategy? Are you planning to maintain the same level of effectiveness and reduce maintenance costs or, continue to spend the same on maintenance and increase effectiveness?

Figures from Dupont’s 1991 benchmarking study showed that:

• Minimising maintenance costs while maintaining plant efficiency at the current level of 83.5%, would save them $1.2m per year.
• Maintaining the current level of maintenance spend and improving efficiency to 93.3% would increase profit by $9m per year.

The choice here was described to me as a “no brainer!”

2. Select the most important pieces of equipment

With the lure of relatively cheap devices, say £100-£150 per sensor, it may be tempting to connect all your equipment.

But is this the best use for your money? What value will you get? Will the mass of information cause you to spread your maintenance resources too thinly?

Most of us do not have the luxury of unlimited maintenance crews. You can focus the allocation of spend and labour by identifying your most critical items of equipment.

Simple tools like Value Stream Mapping and structured equipment ranking systems will help you do this.

 

              3. Maintain that equipment well

From a lean manufacturing viewpoint your assets generate value by being available to run when they are required, at the optimum speed and produce the right quality.

This is opposed to the traditional view of creating maximum value by running the equipment at all times.

Key to maintaining equipment availability is being proactive and looking after the equipment itself. Not just monitoring it and reacting to break downs.

And a final thought. When selecting CMMS features, which is more important – equipment efficiency or maintenance efficiency?

Concentrate on improving equipment efficiency before tackling maintenance efficiency. Having to repair items less frequently is better than being able to repair them quickly.

Now you are in a position to invest in technology to further improve both equipment and maintenance efficiency.

• You know what budget you have and what you want to do with it in terms of plant efficiency.
• You can prioritise which equipment you want to spend it on.
• You have a solid starting base of well-maintained equipment. This prevents you wasting money on reactively monitoring equipment that is prone to failure.

You can now pick the technological interfaces which will benefit your human resource the best – eliminating wasteful tasks and enhancing the team’s problem solving and diagnostic capabilities.

 

Related article

10 top tips for choosing the right CMMS software for your planned maintenance needs. Read more here: http://bit.ly/1RVdABY

We are living in a time of blindingly rapid technological change. Every day we read about a new material or method of manufacture that will not only improve our productivity but help us to improve health and raise living standards across the world. We are on the brink of the fourth industrial revolution.

But….

In the UK, the Royal Academy of Engineering predict that by 2022 we will have a shortage of around 550,000 advanced technicians and professional engineers.

In the States, Deloitte and the Manufacturing Institute estimate that due to a talent shortage, around 60% of the 3.4 million manufacturing jobs needed in the next decade are likely to be unfilled.

Although around 50,000 engineers graduate from UK universities every year, it is still 37,000 short of our predicted need. And despite the number of technical and engineering apprenticeships being on the increase, only half of the entrants finish their training.

How do we ensure the right skills for the future?

You might be tempted to think; Ok let’s list the skills we need and then design relevant, interesting and practical courses to be delivered in our universities, colleges and schools.

But this is extremely challenging. It’s estimated that 65% of today’s primary school children will go into jobs that don’t even exist yet! (US Department of Labor, 2013)

Also, our initial skill set is unlikely to see us through a lifetime of work.

Most industrialists and educators agree that sparking interest in science, technology, engineering and maths (STEM) subjects from primary school upwards is a great start.

So as well as involving students in exciting STEM based activities, we need to equip them with the ability and desire to constantly learn, not just memorise facts.

Phew – we seem to have solved that then! “Someone” can revamp our education system and “the employers” can look after continual skills development.

It’s not enough!

I think each of us in industry has a vital role to play. Right now!

It’s our responsibility to inspire the next generation to continue designing and building the world around us.

Whether we are in manufacturing, engineering or as a parent, we can influence and support their choices.

I’m going to end this blog with a list of just a few of the ways we can do this. And a challenge for you.

• Encourage youngsters to experiment with the latest technology. As representatives of Siemens explained it to me, they are looking for the gamers of today to be the designers of tomorrow.

Our iPad and smart phone savvy children are at home with the intuitive, visual drag-and-drop interfaces that will be increasingly used in the workplace alongside the VR and AR technology.

• Inform them about the myriad of possibilities open to them by choosing STEM subjects.

While some are excited by images showing amazing feats of construction, plenty more are impressed by YouTube videos of AR gaming.

• Share your exciting industry experiences, talk at school careers events. My job was described as “sick” by a year 8 student. What a compliment!
• Volunteer your skills at clubs (some links below). Especially ones in emerging technologies. 82% of young people say they are interested in digital making. But only half get the chance to do this once a week or more. Could you help year 7s with these BBC micro:bits?

My challenge to you – what will you do to build a better manufacturing future?

Interesting clubs and schemes

https://makerclub.org/ ‘The Maker Movement’ was the top toy trend of 2015!

http://www.stemnet.org.uk/ambassadors/ Encourage young people to enjoy STEM subjects.

http://www.ogdentrust.com/ Inspiring primary children with a love of science, especially physics. Providing continued professional development for teachers.

http://www.mykindafuture.com/ Schemes to get large business creating challenges for school leavers.

Creating UK engineers of the future – http://www.theengineer.co.uk/all-hands-on-deck-to-create-uk-engineers-of-the-future/

Business terminology – it’s a bit like Marmite.

You either love it or hate it!

Some people can’t wait to try out the latest Japanese sounding technique. Others are put off by foreign names, or associate them with a particular industry.

I find it always helps to use an analogy. This takes the focus off the terminology and shows the principles in a different context, separating them from one sector or style of business.

This is how I explain Hoshin Kanri, or Policy Deployment, to people in any sector.

Set the scene:

We are going on a group hike. We have a map and we are starting at position X.

I actually mark “X” on a real map in front of us.

 

Ask the team: “Do we just set off and hope for a nice ramble? Would we have a satisfying day out?”

Hopefully they answer along the lines of no. And they may elaborate, if not you can.

It’s not an ideal situation, some of the group may want to head off in a different direction, we may lose a few and most will probably lose interest as we wander aimlessly. At the end of the day we might well be tired but not very satisfied.

Now challenge the team: “Would it be better if we decided where we wanted to go and what time we wanted to reach our destination?” It’s especially useful if there is an incentive like refreshments to aim for.

So now on your map, mark a large “F” for the finish point and even write the finish time if you want.

Now ask the team: “Do we set off in a straight line and just hope for the best? Or what else might we give them?”

Encourage answers like:

• Give them a map and compass so they can check they are on course.
• Plot a safe route to follow across the terrain. A straight line isn’t always possible.
• Make sure the route gets them to the end on time.
• Give them a map and compass so they can plot a new course if unexpected obstacles arise, like a shut footpath or flooded river.

Ask your team: “Would this be a better day out?”

Everyone makes it to the end point, still tired but on time for the promised refreshments. Result – everybody is more satisfied!

How did the team achieve this?  They provided a clear end point and gave everybody the tools to move in the desired direction.

Now is the time to draw the analogy with Hoshin Kanri.

The start point “X” is equivalent to our current performance results. Where we are now.

The end point “F” is the results we want to have, at a set point in the future. Where we want to be.

The map is our view of the current and future business environment, the terrain we have to navigate from X to F.

When hiking we follow a specific direction on our compass. In business our vision statement is our direction.

The detailed instructions are created by turning your vital few policies into specific plans and objectives for each layer of your business.

Checking you are on course and have not been deviated by an obstacle, is like reviewing your progress and actual performance against target.

So by using an everyday analogy we aim to demystify the business terminology and help people to see the potential benefits of applying the principles. Then you can go on and design a Policy Deployment framework that works for your own business.

To make your system lean you need to introduce pull and flow.

A pull system is one that is designed to make only what the customer requires, when they want it and in the exact amount.

Flow means producing or processing one piece at a time. Each item is passed on immediately without waiting or being stored.

This makes sense, you think. No work in progress, no inventory of finished goods, no waste.

Last week you read that to introduce pull and flow you had to level the demand internally, even if your customer didn’t send the orders in a level format. Let’s try it…

Let’s level the quantity

Your customer orders 100 parts each week; 25 red, 15 orange and 20 each of purple, green and blue. They usually pull off 20 items a day for delivery.

It seems simple. You make a level plan for 20 parts each day; starting with red and working your way down the order.

 

 

 

The only minor problem is that each colour takes a slightly different time to make.

So did we create a level demand? No!

Although the quantity is level each day, the time to make each days’ work is different.

This results in ‘feast or famine’. One day you have more work than you can make in normal hours and on others you finish early.

To make matters worse, the customer asks for a mix of colours to be delivered each day. So we have to keep some finished stock to meet demand; about 4.5 days’ worth!

Let’s level the quantity and the mix each day

The ideal level demand is where the same quantity of product and the same mix of variants is required in each time period.

So let’s make the same number of each colour each day; 5 red, 3 orange, 4 each of purple, green and blue.

Is this level demand?

Sadly the answer is still no. Although the quantity and the variant mix are level each day, we still have batches.

It’s better than the first scenario, but not ideal. The work content still varies throughout the day and we still have to hold some stock, albeit only 1 days’ worth, to ensure we can meet the daily order.

Let’s eliminate the batches

If we make 1 of each colour at a time, we not only have the same quantity and variant mix each day, but the work content is levelled as closely as possible as well.

The more level the work the less inventory needs to be held in the system to meet demand.

As the lead time to produce all of the colours at least once is reduced, you can respond to changes in demand from the customer much more quickly.

We call this the “making Smarties” approach. It is the ultimate aim when demand levelling.

Caution!

While this looks good on paper, in practise there are other consequences.

If changing the variant involves a change in set up on the machine, you will increase the total amount of downtime and reduce your capacity.

For the “making Smarties” approach to work you will need to use SMED, or Set Up Improvement techniques, to reduce the amount of time it takes for each individual changeover.

So – how level is your plan? Are you making batches or Smarties?

If you need advice on any of these techniques the Industry Forum team will be pleased to help.

There are several different perspectives on how lean is best achieved. But the one I am used to deploying centres on changing from push to pull systems and the reduction of batch sizes.

The key is to ensure that you, as the supplier, never overproduce. Remember overproduction is one of the 7 Wastes! It means making or providing more than the customer wants at that point in time. This applies if you are a manufacturing company or a service provider.

If you are starting to plan your lean system, or doing future state Value Stream Mapping I would recommend you use these 7 principles as a start point.

You don’t have to incorporate each one in your solution. Some will be more relevant than others for your circumstances. Consider each one and design what works best for you.

1. Make (or provide) what product the customer wants, when they want it, in the quantity required

This is about introducing a pull system instead of running a push system.

Ideally you need to be able to make (or supply the service) to order. To do this you need to:

• Ensure your capacity equals demand.
• Work at exactly the same rate as the customer wants to consume the product (takt time).

If you cannot do this then you will make to stock instead

2. If the downstream customer demand varies, then level the demand internally to allow you to introduce pull and flow within your process

Customers do not always send in their orders in a level format, however you must level it across all your own functions to eliminate waste.

Flow means producing or processing one piece or unit at a time, with each item passed immediately from one process to the next without being stored or waiting.

 

In later blogs we will look at some of the methods you can use to do this.

3. Minimise the amount of inventory throughout the system

Inventory between processes, departments and different organisations represents a lack of flow, costs you money and extends the lead time of the process.

All of this is bad for your cash flow cycle!

As a guideline only allow inventory where the supplying process cannot keep pace with the next downstream customer.

Ensure the quantity of inventory is standardised and controlled.

4. Minimise the amount of transport required

Exactly the same issues apply where you have excessive transportation as they do for inventory.

Try to eliminate the distance items are transported, rather than substituting a faster form of transport.

5. Minimise the amount of information processing in the information flow

Excessive processing of information in a system is a waste. The less the information is processed, the less chance there is of order corruption occurring.

Ideally you should design and deploy formal communication systems that are visual, are located in the area where the process is carried out and can be viewed and used by everybody.

6. Minimise and standardise the lead time

The shorter the lead time, the quicker the response to meet the customer order.

It also means you can complete the cash flow cycle more quickly.

 7. Visually manage the process

All the elements of the pull systems, working to takt (or other target) and information flows you have set up, need to be maintained for your lean system to work.

Visual Management is the tool for this.

 

If you would like to find out more about the principles, let me know, or contact the Industry Forum team who will be pleased to help.

 

The sight of Standard Operation Procedures (SOPs) being used in the workplace is a familiar one in best practise companies. But will these paper based documents become relics in the digital factory?

Why do we have them?                                                

SOPs capture the best current method for doing each job.

They detail how to use manpower, materials and machines in a safe way, to ensure we get the right output performance every time.

Having eliminated variation from the process we expect it to run in a predictable way. To maintain this standard, and prevent abnormalities form occurring, we encourage the sheets to be used at the place of work.

Initially we use them to train employees in the best method. Then they are used at set periods to check that employees are following the correct sequence of tasks and the associated quality, ease and safety points.

As in the pictures, they are often displayed as close as possible to the place of work, for reference. Or used to investigate when an abnormality has occurred.

The sheets are also used to check that the process is operating as it should in terms of time and layout.

Is this the best we can do?

Paper based procedures are a vast improvement on having no agreed standards.

• They capture the knowledge accumulated by individuals over the years.
• Training becomes more comprehensive, allowing people to reach a higher level of skill more quickly.
• They improve communication of the best methods, not just to immediate colleagues but those in other departments or on other sites.

However in today’s world, the use of physical documents is a slow process and feels out-dated. And using them to conduct spot checks on an operation is never going to prevent abnormalities from occurring.

What can emerging technologies offer us?

The automotive and aerospace sectors are already experimenting with virtual and augmented reality (VR and AR) technologies. Here are a few examples showing how well designed digital products may well replace the physical piece of paper, but keep the benefits of standardisation.

1. Training operators in an immersive environment can happen off line before full scale production starts. Tests show that errors and time to assemble are reduced, even for first time users.
2. An immersive environment allows a person to interact with 3D virtual items.Assembly tasks, or checking the running condition of equipment, is enhanced by having an AR overlay of information and instructions on top of actual physical items. The information can be anything from physical position to temperature, speed and flow rates.

Have a look at this video of the Daqri Smart Helmet. This device projects the information in front of your eyes and also doubles as a hard hat with safety goggles.

Now imagine the possibilities of AR technology linked to SMART products and tooling.

• Prevention of abnormalities caused by following the incorrect procedure.
• Live tracking of actual versus target performance with instant alert.
• Ability to very quickly update procedures and communicate them.
• Faster problem recognition.
• Ability to instantly capture issues and share world-wide.
• Ability for the user to request more information through the system and receive answers from archives almost instantly.

So while the introduction of paper SOPs has improved the repeatability of tasks, the introduction of technology will further improve the prevention of abnormalities and speed up the detection and resolution of other issues.

Let me know what you think about the future of our paper SOPs.