Demand/Capacity Curve | John Dyer | IndustryWeek

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“True company growth can be achieved when the maximum capacity is increased by breaking bottlenecks and the sales team makes promises to the customers that the business process can support.”


Michel Baudin‘s insight:

John Dyer presents the capacity of a business as a constraint set by the slowest operation in its process, also known as its bottleneck. In manufacturing, at least, it is more realistics to think of it as fuzzy.

If a solid line exists, we don’t usually know exactly where it is. Even an operations manager who claims to know it won’t share that information with colleagues.  Right after claiming in a meeting that production is running full blast, he or she miraculously finds a way to squeeze 15% more out of it.

If  a perceived bottleneck is a purely human process requiring no unusual skills, it can eliminated by rebalancing the work. Dyer’s discussion is centered on where it is a machine and its capacity can be increased by process improvement.

But does this mean that continuous improvement should be focused exclusively on the bottleneck? In many cases, the bottleneck is the most sophisticated machine on the floor, and increasing its capacity  requires engineering knowledge that is not present in the factory’s work force, and can only be done by bringing in outside experts.

On the other hand, the work force has the skills needed to improve the performance of other operations. This can ensure that the bottleneck has the materials it needs at all times, and free human resources that can be trained to operate and maintain the bottleneck, and eventually to improve it.

This article has a “Part 2” about  why it is so difficult to work with in-house suppliers . Dyer’s term for in-house suppliers is “intercompany suppliers,” which confused me, because I took “intercompany” to mean “between companies,” the way “international” means “between countries.”

His point is that in-house customers may be bad for a supplier because transfer prices calculated on a cost-plus basis can be below market prices. This causes in-house suppliers to give preferential treatment to their external customers.

A remedy that Dyer does not seem to consider is to make transfer prices between divisions match market prices. This works as long as the supplier division has external customers — or the customer division external suppliers —  through which market prices can be known.

In many cases, in-house suppliers make parts based on the company’s unique technology, that have no outside market, and for which there is no market price. Transfer prices then have to be negotiated in a way that is “fair” to both sides. Figuring out what that means is a conflictual process, that is avoided by treating the supplying division as a cost center rather than a profit-and-loss center.

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Lean Manufacturing at Thomson Reuters Eagan Manufacturing, Distribution & Engineering Plant

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Michel Baudin‘s insight:

Employees talk about “Lean Manufacturing,” and what it means to them. They talk about continuous improvement, and participating in events, but what do they have to show in terms of changes made to operations? What they discuss most is 5S, and second to that is standard work. The say nothing of setup time reductions, improvements in flow, pull systems, mistake-proofing, or equipment modifications.

No numbers are given about achievements. The customers find the plant appealing, which is good marketing, They say they have reduced costs and improved quality, but they don’t say how much for either. The only number quoted is that an employee was able to cut his lawn mowing time at home from 3 hours to 2 by better planning his mowing route, using what he had learned at work.

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After viewing the video, please tell me what you think

And elaborate in further comments below

Following the Muri Mura Strategy | Jon Miller

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In the Seattle Times article Boeing Dreamliner on track, but rework may stretch to 2015, aerospace executives reported to Wall Street analysts the company’s historic scientific milestone of bending the fabric of time and space, as Dreamliner production achieved a state of being both on track and notably behind at once.



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A Lean Journey: Meet-up: Michel Baudin

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Interview on Tim McMahon’s A Lean Journey.
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It’s Time to Rethink Continuous Improvement – (blog)

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Who else is shocked by a phrase like “Six Sigma, Kaizen, Lean, and other variations on continuous improvement…”?

Since when is Lean a variation on continuous improvement? Instead, continuous improvement is a component of Lean, which includes many features that are not continuous improvement.

Kaizen does not belong in a list in parallel with Lean. It literally means “improvement” and is used in Japan to mean continuous improvement. In other words, this entry in the list refers to the list itself.

Six Sigma is a method developed at Motorola in the US to solve process capability issues and is not continuous improvement.

Is it one more list patterned after Borges’s classification of animals?

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Kaizen events versus Continuous Improvement

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I don’t agree with everything this blogger says, particularly when he describes the establishment of the Roman empire as a “short term” fix. In my book, 400 years of peace and prosperity is beyond the short term…

On the other hand, I think he is right when he says that “Kaizen events” are not performing continuous improvement. As an oxymoron, “Kaizen Blitz” is even better: it mixes Japanese and German in a concoction that literally means “lightning strike of continuous improvement.”

The so-called “Kaizen event” is a good tool when applied to the right opportunities, but there are two problems with it:

  1. Its promise of instant gratification has made it so popular in the US that all other means of implementing change are forgotten. It is a problem because it leads organizations to ignore opportunities that are too small or too large. Wrapping the feet of a welding fixture with aluminum foil to make it easier to clean is too small; redesigning the layout of a machine shop, too large.
  2. It has misled particularly Americans about the meaning of Kaizen, on which there is an abundant Japanese literature that makes no reference to anything resembling Kaizen Events. In fact, the improvements that are called Kaizen are too small for Kaizen events and the two implementation methods for them are individual suggestions and small-group/circle activity. As a consequence, there is no actual Kaizen activity going on even in plants that run dozens of “Kaizen events” every year, and it is a lost opportunity.

The French did even worse by calling the same method “Hoshin Events,” literally meaning “compass needle event.” The equally unfortunate consequence is that it makes it impossible to discuss Hoshin Planning with them.

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IndustryWeek survey on Continuous Improvement

Via Scoop.itCellular manufacturing
According to this article, the survey shows that continuous improvement separates the winners from the losers and drives financial gains.  The body of the article, however, contains no information about the survey method. We know neither how many companies responded nor the positions of the people who responded. I assume that survey questionnaires were sent to a selected group of executives, and that some among the recipients opted to answer. I am not sure what such a sample is supposed to represent.

The article says that more respondents with continuous improvement programs expect revenue and income growth >3% in 2012 than respondents without such programs. So it is about what this self-selected sample believes will happen next year. The only statement about actual results is a similar one about cash flow for this year. Based on the article, I fail to see how the survey supports the claims in the title and subtitle.

Quality circles live on in India

Via Scoop.itlean manufacturing

Quality Circles were a short-lived fad in the US in the early 1980s. But they still exist in Japan, and thrive in India, where SteelGuru reports that 988 teams and 6200 delegates just participated in their 25th national conference in Hyderabad, India.

Problem-solving: Dr. House versus the Shop Floor

Dr. House‘s fictional team of doctors may be the most famous problem-solving group on the planet. Week after week, they solve daunting medical mysteries under an abrasive, unfeeling leader, working in their differential diagnosis sessions with nothing more than a tiny white board to write lists of symptoms.

In real life, Steve Jobs, a man with character flaws on  a par with Dr. House, was able to lead teams in the development of products from the Apple II to the iPad. In light of this, you may wonder why, when faced with problems like an occasionally warped plastic part or wrong gasket, we need to have a team go through brainstorming sessions in which no idea is called stupid, draw fishbone diagrams and formally ask five times why the defect was produced and why it escaped.

House’s team, Apple engineers and Pixar animators are in professions they chose and for which a thick skin is required. They are the product of an education, training and experience in which abuse is used to filter the uncommitted. By contrast, assemblers and machinists are there not to realize childhood dreams but because these are the best jobs they could get. In addition, if they have even a few years of experience in a non-Lean plant, they have been trained to do as they are told. Outside of work, they can be artists,  do-it-yourselfers, or community leaders, but they have not been expected to use the corresponding skills at work.

Over the past decades, many manufacturers have realized that this is a mistake, and that there are emergency response situations that are resolved faster with the participation of the people who do the work than without it, and many small improvement opportunities that are never taken unless operators take them on. But welcoming and soliciting their help is not enough. Historically, the first attempt was the suggestion system, dating back to 1880. It is still in use at many companies, including Toyota, but, while it is part of continuous improvement, it is not an approach to problem-solving. Employees make suggestions about whatever they have ideas about; problem-solving, instead, requires a focus on a subject identified by management or by customers, and usually needs a team rather than an individual.

Kaoru Ishikawa’s concept of the Quality Circle in 1962 was a breakthrough, not only in organizing participants in small groups but also in teaching them the 7 tools of QC to solve quality problems, as well as brainstorming, PDCA, and presentation techniques. The key idea was that pulling a group of shop floor people together was not enough. Quality Circles still exist, primarily in Japan, but the ideas  of providing technical tools and a structure to organize small-group activities around projects have propagated many other areas. Setup time reduction projects for example, can be run effectively like Quality Circles but with the SMED methodology taught instead of QC tools. Conversely, if working on quality issues, a Kaizen Event team may use the same technical tools as Quality Circles, but is managed differently.

To an uninvolved engineer, a scientist or a medical doctor, “problem-solving” as practiced by shop floor teams may appear crude and simplistic. He or she may, for example, view a fishbone diagram as a poor excuse for a fault-tree because it makes no distinction between “OR,” “XOR” or “AND” combination of causes. In the fishbone diagram, these details are not omitted for lack of sophistication but instead by due consideration of the purpose. You can fill out a useful fishbone diagram in a brainstorming session with a problem-solving team, but you would get bogged down in details if you tried to generate a full-blown fault-tree. There are many simple techniques that could potentially be applied. The value of a problem-solving method is that, for a given range of problems, it has shown itself both sophisticated enough to work and simple enough to be applied by the teams at hand.

In this as in every other aspect of Lean, it makes a difference whether an approach is adopted for internal reasons or to comply with an external mandate. A customer that has developed a problem-solving methodology may require suppliers to adopt it when responding to quality problem reports. The suppliers then formally comply, but it may or may not be effective in their circumstances. For example, a car company that buys chips from a semiconductor manufacturing may mandate failure analysis on all defective chips, but this analysis will provide information on process conditions as they were six months before, when the chip was made. Since then, the process that caused the defect has gone through three engineering changes that make the results irrelevant. These results would have been relevant for mechanical parts with shorter processes and less frequent engineering changes, but the car company doesn’t differentiate between suppliers.

Total: All Encompassing or Involving Everybody?

“Total” is used in the names of improvement programs like  Total Quality Control (TQC), Total Productive Maintenance (TPM), Total Quality Management (TQM), or Total Flow Management (TFM), but the meaning is different on both sides of the Pacific. In the US, a Total program addresses all the issues related to its object; in Japan, it involves everybody.

When Armand V. Feigenbaum coined the term Total Quality Control in 1951, he meant that Quality Control should start with product development and end with customer support. When Kaoru Ishikawa took the concept to Japan, the acronym TQC was retained, but “Total” translated as “Zensha teki” (全社的), meaning “Company-Wide,” implying the involvement of every department in the organization. A more precise translation “Zenyin sanka” (全員参加) was later introduced, which means “with participation by every employee” and shifts the emphasis even further. Back in the US, the notion of involving everybody arrived in the 1980s when TQC morphed into TQM, but elsewhere, as in Euclides Coimbra’s TFM, it means encompassing an entire supply chain.

Programs that “involve everybody” are programs that every employee is the company must participate in. They are not volunteers but draftees. Understandably, such programs are difficult to implement, and often result in individuals just going through  motions to humor their bosses and wait out the  program. When joining a company, employees accept rules pertaining to working hours, compensation, expense reports, and interpersonal relations, but these general rules at the corporate level do not specify, for example,  which tools are to be used in each job. Individuals don’t necessarily get to choose, particularly in production, but the standards they follow are set at a lower level than top management.

Starting a program that is “Total”  in the Japanese sense means extending the reach of corporate mandates. It is easier to do in organizations to which employees have a career commitment than where employees are recruited for specific skills that they have acquired and can re-market elsewhere. Be it easy or hard, you have to consider whether it is wise. A company-wide program is a centralization effort and reduces the autonomy of lower-level business units. As most companies are trying to go in the opposite direction, you really don’t want to start such a program unless (1) its benefits are obvious, and (2) there is no other way.

A TQM program may mandate that the Plan-Do-Check-Adjust (PDCA) process be used when implementing any change throughout the company. Since everybody must participate, the PhD-level scientists at R&D will be required to undergo PDCA training and to formally use it to organize all their activities. As a group, they will be offended and some may quit. Elsewhere in the company, project leaders will dutifully reports their action items as being in a state of P, D, C or A. The organization can claim to be on board with the program but truly is not.

5S, on the other hand, is a program that can only be successful if everybody participates. The benefits of 5S are not easy to quantify, but everybody likes the outcome: given the choice of working on a shop floor with or without 5S in place, few would choose without. The problem is that even fewer show any enthusiasm for doing the work necessary to achieve and sustain this outcome, and this resistance can only be overcome if everybody from top management on down gets physically involved. When touring Japanese plants, you so often see the plant manager pick up a stray scrap of paper off the floor and put it in a dustbin that you feel the incident has been staged, but the message is clear: everyone should behave as if the tidiness of the whole plant depends on the individual behavior of each.

A more modern and successful program involving all employees is Hoshin Planning, a strategy deployment approach that is well described in Pascal Dennis’s Getting the Right Things Done. It results in employees  having  small, actionable sets of strategic directions, determined with their input and consistent across levels. It is much more sophisticated than the target numbers game that management-by-objectives has degenerated into in many companies, and the vertical and horizontal interactivity of the process makes it impossible for any segment of the organization to opt-out.

A company-wide program is implemented top-down, starting with top management and cascading to the shop floor, with appropriate training at each level. It is different from Robert Schaffer’s Breakthrough Strategy, which starts with a pilot projects effecting a deep transformation of a small segment of the organization, whose success makes it go viral. By providing rapid  improvements and building the skills base, the breakthrough strategy bootstraps the Lean transformation of a plant but can take it only so far. Once the leaders of local projects start wondering what their successes add up to and where they are leading, they are ready to pull together and take on the challenge of involving all employees in the parts of Lean for which it is necessary. It is top management’s role to sense when an organization is ready for this transition.