Competitiveness and performance are crucial for any organization. The quest for improving these factors is a never ending journey, and one of the key enablers is –the ability to do more with less. In this series of posts, I will share my experience about how to do more with less, in different parts of the organization, this second post deals with production.
Industrial organizations competitiveness and business performance are strongly linked to their operational performance. The ability to outperform competition in terms of speed, productivity and punctuality opens the door for many benefits. Some of these benefits are direct; Reduced cost, Improved ROI, reduced inventories, improved customer satisfaction and even improved rate of winning new orders. Other benefits become possible when realizing the effects of the improved performance on customers’ operational and/or business performance and exploiting this realization for enhancing competitiveness, resulting with meaningful increase in sales and revenues.
Although, almost every industrial organization is endlessly seeking to reduce its lead-time and improve on-time performance and productivity, it seems that the improvement potential is almost fully exploited and the realized improvements turn smaller and smaller.
The surprising fact is that nevertheless there is still a very large room for improvement, in most cases. Are you one of these cases? To evaluate the improvement potential of your production ask yourself the following questions:
- How much is touch-time (the time manpower/machines are actually “touching” the product) out of total lead-time?
- When sometimes, important customers, are asking for faster delivery, are you able to deliver in shorter time than the “standard” one?
- Do you see “piles” of inventory in different places on your shop floor?
- Do you have large amounts of finished goods inventories in your warehouse?
If the answers to questions 2 – 4 is “YES”, and to one is less than 40%, you can cut your lead-time to be consistently and reliably at least half of what it is while improving productivity by at least 30%.
You can do that by applying flow control rules that minimize the waiting time (given the answer to question 1, the rest of the time an order spends on the shop floor it is actually waiting). These rules define the appropriate time to release an order to the floor and the priority should it reach a resource while other work is waiting for the same resource. These rules are based on the combination of three methodologies – Theory Of Constraints (TOC), Lean and Six-sigma (jointly called TLS).
TOC provides some new and simple rules that are aimed at streamlining and optimizing the flow of goods on the production shop floor. The first rule is quite straightforward and simple – the amount of work that can be processed at any given time on the production floor must not over flood the system. When too much work is available for work on the shop-floor, the queues are longer and thus the overall time an order spends on the floor is longer. A new rule for setting the pace of the inflow is required, restricting the pace of the release of work to the shop floor.
The second rule recognizes that no matter how much control is placed to monitor the release of work, Murphy exists and disruptions to flow will occur. Thus, a protective mechanism to absorb these fluctuations, is required. The mechanism for that purpose is called the BUFFER. Fortunately, the BUFFER has other extremely important attributes; it enables a clear priority setting system and it provides clarity for guiding a powerful process of ongoing improvement.
Lean and Six Sigma than provide the mechanisms to ensure that the continuous improvement process is effective and results with the ability not only to sustain the results achieved but also to continue improving them. As a result, not only is it possible to do much more with less, but also faster and meaningfully more reliable. Now, you should ask yourself how to convert the new levels of performance for improving your competitiveness.