fOS

Can OEE be Used to Reduce Operating Cost?

OEE or Overall Equipment Effectiveness measures manufacturing performance against perfection. It is regarded as the global benchmark for managing and improving 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, we can get you up in going on fOS in less than a month. 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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Is the Factory Operating System the Death of Lean Manufacturing?

Manuficient - Death

With over 70% of Lean initiatives failing across the United States and the world over, is Lean dying? Is the Factory Operating System (fOS) only helping to kill Lean off? Both Lean and the fOS are designed to serve the same purpose: the systematic elimination of waste. However, there are some very distinct differences between Lean as we have come to understand it and the fOS.

Those differences include:

Lean is tools and theory-focused, which often causes conflict and debate
The fOS is singularly focused on getting better, which everyone agrees is, well… better

Lean is pushed onto the organization from the top down
The fOS is pulled into the organization from the shop-floor up

Lean is levered on fear and crisis
The fOS is levered on desire and success as people are recognized for achieving increasingly greater efficiency

Lean requires a high level of expertise to educate / coach / facilitate the effective use of prescriptive tools
The fOS encourages and rewards ingenuity from all levels in the organization – sort of like crowd-sourcing for improvement methods and ideas

Lean takes years to implement effectively
The fOS is implemented virtually instantly

Lean concentrates on waste and process failures
The fOS concentrates on outstanding performance

Lean improvements can be difficult to quantify and sustain
The fOS visualizes performance levels so that the impact of process changes are easily quantifiable and addressable

…and many more.

Lean manufacturing is one the most prominent Continuous Improvement programs of the past century. Despite the many flaws in the way companies attempt to implement and approach Lean, it’s principle of a never-ending pursuit of perfection is the true value to be extracted from the rubble of failed initiatives. The fOS, especially in combination with the Percent Perfect Methodology®, beautifully extracts this precious element and makes it readily available to all manufacturers in it’s purest form. This positions the fOS as a powerful tool that results in companies becoming more Lean without all the bloodshed involved in implementing an organizational transformation to the scale of a traditional Lean implementation. In other words, the fOS does kill the “old Lean”, and gives life to the “new Lean” that approaches Continuous Improvement more like professional sports than military boot camp. Except in this sport, the field is the factory, the opponent is inefficiency, the season never ends, and there are winners everyday.

The fOS is a system designed to create a culture of performance improvement leveraged around OEE, which is regarded as the global benchmark for managing manufacturing productivity.

Visit http://manuficient.com or click here to learn more about how the fOS might help you save MILLIONS over the next 12 months.

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2016]. 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 Compounding Benefits of Prioritizing in Continuous Improvement

Manuficient - Compounding

Albert Einstein once said that the most powerful force in the universe is compounding. Just as in finance, this is true for managing a manufacturing operation. New problems, big and small, arise everyday. When a problem goes unresolved, it behaves like a disease on your productivity. Additionally, new problems are added to old ones, which creates a snowball effect, and thus the compounding dynamic takes effect. At some point in the life cycle of a manufacturing operating, it takes what Grant Cardone calls “massive action” to reverse this momentum and get into a position where compounding is working in your favor. To do this, you must develop a thorough understanding of what specific wastes are driving inefficiency and pick them apart with well orchestrated and massive action. The 85/15 rule (a variation of the 80/20 rule) definitely applies here. In other words, 85% of your inefficiency is probably being driven by 15% of the issues. The key is to systematically identify the 15% of issues and prioritize the fewest number of initiatives needed to eliminate 85% of inefficiency, which will result in substantial profitability increases.

Manuficient Methodology1.1 PrioritizePrioritizing is the act of deliberately ranking needed activities, then allocating time and other resources in the order of greatest to least significance. Prioritize is the 3rd Phase in the Percent Perfect Methodology® (PPM), which identifies the 3 – 5 tools and initiatives needed to capture the greatest gains toward achieving your operating potential. In Phase 1 of the PPM, we looked at how to define perfection for a manufacturing operation. In Phase 2, we reviewed how to Assess where you are in your journey to Operational Perfection (OP). In this phase, we look at how to determine which specific initiatives will have the greatest impact on closing the gap between current state and perfection.

There are hundreds and perhaps thousands of Lean Six Sigma and other Continuous Improvement tools out there to be applied depending on the specific application. In fact, any repeatable activity that makes a process more efficient can be classified as a tool, which makes the list virtually limitless. The challenge is knowing a) which tool(s) should be applied and b) how to most effectively apply the tool(s) selected. Just like a mechanic needs to have the right tools for a given job and know how to use them without completely mucking up the project, so do manufacturing leaders. This takes resourcefulness, knowledge, and skills – which are all a function of having the right quantity and quality of experiences.

You can identify the appropriate tool to apply based on the type of waste that is occurring. The 8 lean wastes are: defects; overproduction; waiting; non-utilized talent & ideas; transporting; inventory; motion; and excessive processing.

There is a 6 Step Process for determining which tools will have the greatest impact on closing the gap to OP for your manufacturing operation:

Step 1: Determine what perfection would be for your manufacturing operation. Use the Factory Operating System (fOS) to achieve this. It’s a free tool and provides the best way to set and establish your theoretical maximum productivity levels.

Step 2: Analyze where you are in your journey to Operational Perfection. The fOS will also help you complete this step. It provides a user-friendly interface to track, aggregate, and report production performance. It also helps to cultivate employee motivation around CI by disseminating success stories such as personal records and breakthrough performances across your manufacturing network.

Step 3: For each of the three significant types of loss (availability, throughput, and yield), further categorize each type into the 8 wastes.

Step 4: Quantify the total losses being driven by each type of the 8 wastes and perform a Pareto Analysis grouped by type of waste and total annualized losses (in dollars or other currency).

Step 5: Select the set of tools or processes that are best fit for eliminating or reducing the types of wastes that are resulting in the greatest losses. The objective here is to identify the fewest number of tools that will cut waste to within 15% of Operational Perfection, which is widely considered to be World-Class execution. For example, motion waste is best address through time and motion studies; and transporting waste is minimized through process layout re-design and a technique called Point of Use Supply (POUS) among others.

Step 6: Develop the specific initiatives needed to best leverage the selected tools for maximum effect. This may mean customizing or combining tools to refine an ideal set for your specific needs.

Once you’ve gotten this far, you’ve won more than half of the battle. Abraham Lincoln once said that “If you give me 6 hours to cut down a tree, I’ll spend the first 4 sharpening my ax.” After Phase 3 of the PPM, the axe is razor sharp and you’re just about ready to deliver a swift blow to your manufacturing operation’s inefficiency. Unfortunately, many companies skip this phase and consequently, this is where they go wrong with their CI program implementations. Instead, they often mistakenly approach it as either a beautification or fire-fighting program. They start with something like 5S because it’s very visual and friendly or they go with problem-solving / kaizen events just so they can pull their CI resources into the weeds of daily operations with them. This isn’t necessarily a bad thing, it’s just not the most effective use of time and resources. They rarely take the time (and it usually doesn’t take much time) to assess exactly where the greatest gains can be achieved, then prioritize effort and resources. As a result of this and other factors, 70% of improvement programs fail in their first couple of years according to a study completed by the McKinsey & Company consulting firm. Furthermore, having the prioritized list of initiatives on hand helps to recruit / promote the ideal talent for manufacturing leadership roles. For example, if your greatest opportunity for improvement is to reduce changeover times, the optimal talent for a director or plant manager role would have a tremendous track record for implementing the SMED tool (Single-Minute Exchange of a Die) for minimizing changeover times. You can see how having a rock solid CI playbook changes your entire approach to how you play the game. Can you imagine how many major decisions are made everyday without taking any of these factors into account?

MIC_World Class Mfg

I can assure you that the powerful dynamics of compounding are either working for or against you. If you’re not taking deliberate action to leverage this phenomena to your advantage, then it’s most likely working against you. The key to changing the trajectory of your manufacturing operation’s performance is to prioritize the small set of CI initiatives that will produce the greatest impact on closing the gap to Operational Perfection. Defining perfection provides the North Star for manufacturing leaders to navigate the complex maze of day to day manufacturing operations. Assessing the current state helps you to gauge exactly where you are in your journey. The fOS tool at http://factoryoperatingsystem.com is the best tool available to define and assess where you are against operational perfection on an ongoing basis. Finally, prioritizing provides a clear and executable roadmap to World-Class execution. From here, you have laid the groundwork to capture rapid gains in productivity and profitability.

A manufacturing efficiency expert such as those at Manuficient can help you to prioritize your CI initiatives and gain immediate results in performance.

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Assessing Your True Opportunity for Improvement – And Closing the Gap

Manuficient - Skills Gap

An inherent requirement of Continuous Improvement is to set a goal that cannot be feasibly achieved – then pursue it with reckless abandon. Okay maybe not completely reckless but it’s important to at least take it seriously. The phrase “shoot for the moon and even if you miss, you’ll land among the stars” by Norman Vincent Paele applies here in full effect. Approaching your Lean initiative with this attitude sets the stage for creating a culture of perpetual improvement. In the last post, we covered how to define perfection for a manufacturing operation. This provides the North Star that we shoot for when we decide that we’re going to do Continuous Improvement. Perfection, in this regard, is essentially to operate in a state of zero efficiency losses. This post dives into how to measure losses and determine exactly what type of waste is occurring in your manufacturing process.

Manuficient Methodology1.1 AssessThe second phase in the Percent Perfect Methodology® (PPM) is to Assess your efficiency losses against perfection and categorize them accordingly. The reason this is done is to categorize your losses in terms of availability, throughput, and yield, as is how Overall Equipment Effectiveness (OEE) is typically determined. This is also done to gain a deep understanding of which and how much of the 8 Lean Wastes are occurring. The PPM is a methodology designed to determine and systematize the few critical operational disciplines needed make dramatic progress toward perfection.

Understanding your efficiency losses by category is critical for a few good reasons:

  1. Areas for greatest efficiency losses highlight gaps in competency in the workforce and management that will need to be strengthened
  2. Opportunities to make dramatic improvements in equipment and plant layout become apparent as well as the cost savings opportunity associated
  3. Quantifying efficiency losses by category enables the ability to prioritize which management disciplines to incorporate into your operating model, which is spelled out in more detail in the third and fourth phase of the PPM

The challenge to this approach is that sometimes learning how efficient you’re not can be a bit difficult to swallow. Especially if you have a culture of using vanity metrics, or metrics that are designed to make the team look good as opposed to exposing real opportunities for improvement. I was approached by one supervisor as we were executing this part of the engagement who, in a state of desperation, asked that we not show their OEE number. Instead, let’s use a number that doesn’t count losses like start-ups, changeovers, waiting on product, shutdowns and others because he believed he didn’t have any direct control over those factors. As I listened to him speak, it became clear that he wanted to show efficiencies at or above 100% so he and his team could feel good about their performance everyday. It seems that he was under the misconception that this would help make his team “more” engaged. Perhaps he was right that they would be more engaged, but what exactly was he trying to engage them in? It certainly wasn’t Lean or Continuous Improvement. My comment to this Supervisor was to “look at Lean like a journey that starts now. The last Supervisor left off at 53% to perfection; your mission is to take this team and this plant to 83%. That’s what you should engage your team to do”; and thus the buy-in process began for him. FYI…this Supervisor went on to lead his team to 78% after a few short months (and his team continued to improve after he was promoted).

Having a consistent and reliable way to measure performance on an ongoing basis has the same effect of pro athletes having the statisticians on ESPN to track and report their performance numbers. By establishing a fair and objective way to measure progress, you level the playing field so that people can clearly see if they are getting better or not; and by how much. This also enables you to conduct a side-by-side comparision to see who’s getting better, who’s consistently doing well, and who needs help. You can also easily determine the true impact of process changes by assessing progress against your new definition of perfection. This is the part that makes manufacturing more like a sport than day-to-day drudgery. In comes the sport of: Continuous Improvement, where the winners are those getting better and executing at a high level. This includes setting personal records, breaking production records, raising the bar (outperforming the standard), and much more. From there, you can establish your own system of rewards and recognition including but not limited to: most consistent, most improved, top performers, broken records, and so on. You could even do your own version of the Heisman or MVP awards. How fun would that be?

MIC_Continuous Improvement Culture

Finally, this step helps to uncover opportunities to benchmark the things that are going well and share them across the board to help underperforming teams, products, and production lines to achieve breakthroughs in performance. For instance, this analysis will reveal why underperformers are incurring greater costs than top performers, then help to close the gap.

Fortunately, by using the Factory Operating System (fOS), Phase 2 (Assess) of the Percent Perfect Methodology® is completed automatically. As production runs are entered into the system, the calculation to categorize losses by downtime, rate loss, and yield loss is done automatically. It takes less than a minute to enter a production run and the system which allows you to group results by line, shift, team, individual, product, and several other options. This helps you to quickly see where efficiency losses are occurring and areas where process waste is being held to a minimal. It also shares success stories such as personal records, record breaking week, raising the bar (outperforming the standard), and others with people across your manufacturing network to drive a culture around getting better everyday. Additionally, the fOS is free for anyone in your organization to jump on and start using to measure themselves against and strive toward perfection.

Once you’ve identified your North Star, which can also be viewed as Operational Perfection (OP) and provides the “compass” for your Continuous Improvement initiative, it’s important to determine exactly where you are in the journey. The goal is to reach 100%, which is theoretically impossible but will keep you and your team striving to get better everyday. In fact, World-Class execution is widely considered to be 85% OEE. This means keeping total process waste to within 15% including start-ups, changeovers, shutdowns, unplanned downtime, rate losses, and yield losses. Remember to celebrate progress at every step of the way. As milestones are reached and records are broken, a culture will emerge that abandoning the status quo and getting better is the way to go; and there will be no doubt in anyone’s mind about what Continuous Improvement is all about.

A manufacturing efficiency expert such as those at Manuficient can help implement a low-burden system of measuring efficiency such as the fOS to initiate your journey to Operational Excellence.

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2016]. 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 8 Lean Wastes and Their Potentially Disastrous Effects – Non-utilized Talent & Ideas

Final Launch of Challenger

The Space Shuttle Challenger lifts off Pad 39B at Kennedy Space Center, Florida, at 11:38 a.m., EST, January 28, 1986. The entire crew of seven was lost in the explosion 73 seconds into the launch. (AP Photo/NASA)

Non-utilized Talent & Ideas – all talent, ideas, and capabilities that are not effectively applied to facilitate execution. In this series titled “The 8 Lean Wastes and Their Potentially Disastrous Effects”, we examine case studies for when companies, government organizations, or entire industries have allowed a specific type of waste to escalate to a disastrous effect. In this post, we review the waste of Non-utilized Talent & Ideas to better understand what causes it, how to see it, and how to eliminate it. Goleansixsigma.com defines Non-utilized Talent & Ideas as “the concept that employees are not being utilized to their full capability or, conversely that they are engaged in tasks that would be more efficiently done by someone else. Non-Utilized Talent is one of the 8 Wastes which is also known as the waste of intellectual capital.”

Jump to:

The 8 Wastes and Their Potentially Disastrous Effects:

Defects | Overproduction | Waiting | Non-utilized Talent & Ideas | Transportation | Inventory | MotionExcessive Processing

Case Study:

On a particularly cool day in Cape Canaveral, FL in 1986, the Space Shuttle Challenger was scheduled to launch. A few days before the launch, the team of the engineers who were working on the mission had advised the program’s management team that launching at 30 degrees would be very risky. The data that they had collected on the wax-based O-ring performance showed that significant integrity was lost under lower temperatures. The management team decided to launch anyway despite the warning of their engineers and the result was catastrophic. 73 seconds into the space shuttle’s flight, the O-rings failed and it exploded in mid-air. The price tag on this disastrous decision was 7 lives (one of which was supposed to be the first teacher in space) and about $1.5B including the flight mission, search and recovery, and the investigation.

NPR recently did a great story on Bob Ebeling, the engineer who came forward (risking his career) and tried to warn NASA of the danger associated with this launch. You can find the podcast at the link below:

NPR Story on Bob Ebeling

Corrective Action:

In response to this tragic incident, NASA re-designed the O-ring joints and implement an astronaut bail-out system in later space shuttle models. Evidence reveals that some of the passengers may have survived the explosion, until the shuttle crashed with the ocean after descent. Thus, lives may have been spared by allowing the astronauts to “bail out” prior to coming in contact with the earth.

Interesting Fact:

After the Challenger explosion, there were several changes put in place to prevent this type of issue from reoccurring. Unfortunately, many of these changes did not sustain in operation. In 2003, the Space Shuttle Columbia also exploded soon after launch, ending the lives of 7 more astronauts. The Columbia explosion occurred for reasons that would have been prevented by the changes that were put in place after the Challenger mission. This highlights the importance of operational discipline and ensuring that improvements are sustained.

For more details on this case study, check out the Wikipedia article at the following link:

https://en.wikipedia.org/wiki/Space_Shuttle_Challenger_disaster

Non-utilized Talent & Ideas is possibly the most abundant type of waste. It is the only one of the 8 wastes that is not directly a process waste but one of managment or intellectual capital. It is often caused by destructive internal politics and a general lack of respect for people. This type of waste is greatly reduced by practicing a true meritocracy; promoting highly competent people and systematically vetting improvement ideas, regardless of their source. I’ve created and used several great Idea Management and Execution Systems, all of which include regular idea review schedules, rigorous idea vetting, excellent feedback and communication loops, and incentives for submitting or executing improvement projects.

The Factory Operating System (fOS) at factoryoperatingsystem.com also helps you see waste from non-utilized talent & ideas in the form of lost efficiency. In the fOS, this type of waste could either show up as downtime, rate, or yield losses. The great thing about the fOS is that it promotes a culture of getting better everyday by highlighting personal bests, record breaking weeks, raising the bar (outperforming the standard) and other great achievements. This motivates your team to most effectively apply their talent and ideas to drive manufacturing execution.

A manufacturing efficiency expert such as those at Manuficient can help you to improve the detection and elimination of non-utilized talent & ideas waste, resulting in significant cost savings, lead time reduction, and quality improvements for 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.

The 8 Lean Wastes and Their Potentially Disastrous Effects – Overproduction

Manuficient - Overproduction (PEPCON)

Overproduction – the act of making more of something than is immediately required. In this series titled “The 8 Lean Wastes and Their Potentially Disastrous Effects”, we examine a case study for when companies, government organizations, or entire industries have allowed a specific type of waste to escalate to a disastrous effect. In this post, we review the waste of Overproduction to understand what causes it, how to see it, and how to eliminate it. Wikipedia defines overproduction as “excess of supply over demand of products being offered to the market. This leads to lower prices and/or unsold goods along with the possibility of unemployment.”

Jump to:

The 8 Wastes and Their Potentially Disastrous Effects:

Defects | Overproduction | Waiting | Non-utilized Talent & Ideas | Transportation | Inventory | MotionExcessive Processing

Case Study:

In 1988, chemical manufacturing company PEPCON, located in Hersonson, NV experienced a massive explosion of 4,500 metric tons of Ammonium Perchlorate (AP). The facility was producing AP, which is used as an oxidizer in rocket fuel, for the Challenger Space Program. In 1986 the Challenger Program was suspended after the space craft exploded in mid-air only 72 seconds after launch. PEPCON decided to continue production of AP even though there was no longer a demand for it as a way to sustain production capability without inflating costs. The company assumed that they might be able to sell the excess AP to other government programs or to the Challenger Program if it were to ever come back online. They stored the excess product in containers in a parking lot near the production facility. Finally, one of the containers containing the AP ignited and the entire highly-combustive lot went up in smoke. The explosion cause catastrophic damage, destroying the PEPCON factory and other nearby factories and residential property.

The explosion resulted in 2 deaths and and 372 injuries. It also created about $100M in related damages.

Corrective Action:

In response to this incident, the Nevada legislature passed the Chemical Catastrophe Prevention Act in 1991, and later the Chemical Accident Prevention Program.

Interesting Fact:

4,500 metric tons of this product and others were being stored on site at the time of the explosion in aluminum, HDPE, and steel drums. The blast range of the explosion was a 10 mile radius. The actual cause of the fire was never officially determined.

For more details on this case study, check out the Wikipedia article at the following link:

https://en.wikipedia.org/wiki/PEPCON_disaster

 

Overproduction is one of the most dangerous types of lean waste because it enables all other forms of waste to occur. When factories overproduce, they create buffers that allow the manufacturing process to become disjointed from the subsequent elements of the supply chain. This enables process waste to fester in the manufacturing stage because problems in the production process have little to no effect in the company’s ability to satisfy customer demand. This buffer removes the “pain” of poor production execution and the factory loses the discipline required for true operational excellence.

There are management tools that can help to minimize the detrimental effects of overproduction and provide the foundation for increasing operational discipline. OEE is one great example for how to measure productivity so that overproduction can be eliminated and the factory can transition to more of an on-demand operation with minimal finished inventory. The Factory Operating System (fOS) at www.factoryoperatingsystem.com is a fantastic tool for implementing OEE that also drives a grassroots culture of getting better everday.

 

A manufacturing efficiency expert such as those at Manuficient can help you to improve the detection and elimination of overproduction waste, resulting in potential cost savings for 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.

How to Do a Stress Free Lean Implementation

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 1Implement 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 2Start 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 3Provide 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 it really great!

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.

fOS Lead Capture2PPM Lead Capture2

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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.