Kanban

Sales Forecast Example

Jul 16 2021

Sales Forecasts – Part 1. Evaluation

When sizing a new factory or production line, or when setting work hours for the next three months, most manufacturers have no choice but to rely on sales forecasts as a basis for decisions.

But how far can you trust sales forecasts? You use a training set of data to fit a particular model and a testing set of actual data observed over a time horizon of interest following the end of the training set period. The training set may, for example, cover 5 years of data about product sales up to June 30, 2021, and the testing set the actual sales in July, 2021. 

The forecasters’ first concern is to establish how well a method works on the testing set so that the decision makers can rely on it for the future. For this, they need metrics that reflect end results and that end-users of forecasts can understand. You cannot assume that they are up to speed or interested in forecasting technology.

Forecasters also need to compare the performance of different algorithms and to monitor the progress of an algorithm as it “learns,” and only they need to understand the metrics they use for this purpose. 

 

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By • Tools • 11 • Tags: , ,

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Jul 27 2016

How Does This All Play Out?

It is a seemingly simple question, but one that is not asked as often as it should be. It challenges managers to consider the responses of other stakeholders and think beyond immediate consequences. It checks their “bias for action,” and makes them take a pause to think farther than one move ahead.

If you outsource an item, for example, will the new supplier eventually morph into a competitor? What know-how might you lose? How will it affect employee morale? Are you putting your quality reputation at risk?  The question is an invitation to work through multiple scenarios of responses by your suppliers, your work force, and your customers, reaching into the future.

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By • Management, Uncategorized • 1 • Tags: , , , , ,

Jun 18 2016

The Truth About Kanban | Bill Waddell

Bill Waddell, intellectual sparring partner for almost 20 years now, has put out this video revealing “The Truth About Kanban”:

Michel Baudin‘s comments:

This video is just Bill’s talking head against the background of a brick fireplace with a few books on top, notably “Toyota Kata.” It contains no moving pictures of Kanbans in action and all you learn from viewing is in Bill’s words, and I have a few quibbles with these words.

I usually get impatient with this kind of video, because voice is a slow medium, and you would get the same information five times faster reading the transcript. But I have never met Bill in the flesh, and I was curious to hear his voice. It’s a good radio voice, albeit curmudgeonly, reminiscent of a younger Tommy Lee Jones.

Now, about the content, Bill makes three main points:

  1. What you use for a pull signal doesn’t matter.
  2. You can use Kanbans with long lead time items.
  3. The Kanban system is a mechanism to drive improvement.

I agree with Point 3, but find Points 1 and 2 problematic.

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By • Blog clippings • 12 • Tags: , ,

Oct 3 2014

A summary of mistakes about Lean

In an invitation to the Lean Enterprise Academy ‘s Lean Summit 2014, David Brunt included the following summary of Lean since 1990:

“Early implementations focused on empowered teams and continuous improvement (kaizen) or attempts to replicate a pre-defined box of tools such as 5S, SMED, SPC and kanban. For others lean became synonymous with kaizen events – that were actually kaikaku – radically reconfiguring individual operations. For some, this led to them developing their version of Toyota’s famed Production System (TPS) including their own schematic ‘house’ or ‘temple’ of lean along with departments of continuous improvement specialists.”

It is a pretty accurate account of what happened — the only major omission being the omnipresent VSMs — and it goes a long way towards explaining why the vast majority of these efforts failed. They were limited at best to superficial details of TPS, included elements that were not part of TPS, and misjudged implementation priorities. Let’s us go through the list:

  1. “Empowered teams.”  As a manager you have a team to work with. What decisions should you allow this team to make on its own? This is best subjected to the sleep-at-night test. Knowing that you are responsible for the outcome, what can you delegate to the team and still sleep at night? It obviously depends on the team. If it is a team of production operators with 10 years of TPS practice behind it, the answer will not be the same as if they are beginners. Implementations that start with empowering teams put the cart before the horse.
  2. “Continuous improvement (kaizen).” Lean, or TPS, are often described as approaches to continuous improvement (CI), when CI is in fact only one component of the system. You cannot convert a plant from mass production to Lean manufacturing by continuous improvement, because it is not about tweaking details. For example, if you have implemented cells in machining or assembly, you can make them perform better with CI, but you have to have cells first, and that is beyond the scope of CI.
  3. “Replicate a pre-defined box of tools.” It can work, if your situation is sufficiently similar to the one you are copying, you really know what the tools are, and you master them.
    • SMED and Kanban are tools of TPS but often misunderstood. For example, you often see SMED used to try to increase equipment utilization instead of flexibility, and Kanban is often confused with the two-bin system or even reorder-point.
    • SPC is not part of TPS. This is so shocking to American and European professionals trained by the Quality establishment that they just inserted it back in, regardless of what Toyota actually did. The latest examples of SPC control charts at Toyota are from the 1950s.
    • 5S is part of TPS, but is mistakenly assumed easy to implement because its technical content is trivial. In fact, the absence of technical content is what makes it difficult to implement and certainly unfit for an initial project.
  4. “Kaizen events” are an American invention and not part of TPS. As Brunt points out, the name is misleading, because what they do is not Kaizen. The popularity of this method over the past 25 years and the confusion created by the name have in effect prevented Lean implementation from including the real Kaizen.
  5. “Departments of continuous improvement specialists.” The creation of these departments has often made Lean implementation into a function alongside Production Control, Maintenance, or Quality Assurance, with the result of making it a professional specialty instead of part of everybody’s job. It works to make a good show for outside visitors, but not for much else. This department cannot be large enough to have the capacity to do all that needs to be done. Even if it did, it does not have the authority to make the changes take root in daily operations.

These efforts failed because the approach was simplistic. Both the technical and managerial content of TPS are deeper and take a while to learn. A successful implementation, particularly is a different industry, is not based on copying tools but on understanding underlying principles and deploying them as appropriate to the new context.

By • Management • 0 • Tags: , , , , , , , , ,

Jun 28 2014

40 Years on, the Barcode Has Turned Everything Into Information | Wired

“Without the barcode, FedEx couldn’t guarantee overnight delivery. The just-in-time supply chain logistics that allow Walmart to keep prices low would not exist, and neither would big-box stores. Toyota’s revolutionary kanban manufacturing system depends on barcodes. From boarding passes to hospital patients, rental cars to nuclear waste, barcodes have reduced friction like few other technologies in the world’s slide toward globalization.”

Source: www.wired.com

 

Michel Baudin‘s comments:

While this article exaggerates a bit, the fact is that the bar code is the first successful auto-ID technology, so successful in fact that more advanced technologies, like RFID or even QR-codes, have yet to displace it. There are barcodes on Kanbans, but you really cannot say that the system depends on them, because Kanbans were used early on without barcodes more than two decades.

The 40th anniversary of the barcode is an opportunity to remember, or learn, who invented it and why. This article does not credit the actual inventors, Norman Woodland and Bernard Silver, who patented it in 1952, but only supermarket executive Alan Haberman, who made its use practical to improve inventory tracking and speed up checkout. In 1974 he led an industry committee to adopt the barcode as a vehicle to implement a Universal Product Code or UPC. It is as much the story of the emergence of a standard as a story of technology.

In Manufacturing, barcodes are used almost everywhere to identify warehouse locations and stock keeping units, to validate picks, and to track component serial numbers. While celebrating the success and the usefulness of this technology, we should, however, remain aware of its limitations. Even in supermarkets, barcode reading remains a largely manual process. A human still has to wave around small items in front of a reader, or a reading gun in front of large items, and it often takes multiple attempts before you hear the beep confirming a successful read.

Fully automatic barcode reading is occasionally found in manufacturing operations where the environment is clean, with good lighting, high contrast, and a controlled orientation. QR codes are less demanding. They can be, for example, etched on the surface of a metal workpiece, and read inside the work enclosure of a machine-tool.

RFID tags hold the promise of full automatic reading at a distance. It has made them successful in public transportation passes like the Octopus card in Hong Kong or the Navigo card in Paris, as well as in electronic toll collection in the Fastrak system in California.

Barcodes are also limited to IDs and cannot be updated. As a consequence, they have to be used in the context of an information system that contains all the data keyed on the ID, which can be “the cloud” in a supply chain, or a local manufacturing execution system in a factory. By contrast, a high-end RFID tag can locally contain the entire bill of materials of a product moving down an assembly line, its current location in the process, and any measurements that may have been made on it at earlier operations. For a finished product, it can contain the entire maintenance history of a unit.

 

By • Press clippings • 0 • Tags: , , ,

Dec 26 2013

What’s eating John Seddon?

I want you to cheatBack in 1992, Seddon published “I want you to cheat,” as a distillation of then seven years of consulting experience with service organizations in Britain. It contains some general principles, supported by examples. It is quite readable, and contains no personal attacks on anyone. While “I want you to cheat” does not reference any giant on whose shoulder the author sits, more recent publications from Seddon repeatedly acknowledge Deming and Ohno.

It was his comment that “This respect for people stuff is horseshit” at a conference in Iceland in 2012 that drew my attention to his work. While certainly aggressive, it was not a personal attack. The latest kerfuffle is about the following statements in his 11/2013 newsletter:

“Every time I have been to the jamboree they have had an American lean guru spouting nonsense and this is no exception. This time it’s the guru who claims lean fails because it is what he calls ‘fake lean’ and his lean is the way to go! His ‘real lean’ starts with ‘respect for people’. I can imagine ‘respect for people’ events and tee-shirts (he sells tee shirts) while there is no change to the system conditions that drive misery and other forms of sub-optimisation. Only in America; the home of the terrible diseases.

What would you call a profound idea in this guru’s head? A tourist!”

bob emiliani
Bob Emiliani

The target of this attack, although unnamed, recognized himself. It’s Bob Emiliani, and he posted a response on his blog, entitled Kudos to John Seddon.  Bill Waddell then chimed in with John Seddon – Where Ignorance and Arrogance Collide. To Bob, Seddon is like a student who did not understand the concept of “respect for people,” while Bill dismisses Seddon as a blowhard from a backward little country who has failed to understand the depth and the subtlety of the US version of Lean.

Bill Waddelll
Bill Waddell

There is a good reason while the etiquette of on-line discussion groups forbids personal attacks: they cause discussions to degenerate into trash talk and name calling. It may be briefly entertaining, but quickly turns off readers who don’t have a dog in these fights and just want to information. Besides insulting Bob Emiliani, Seddon has steamed up patriot Bill Waddell with derogatory comments about America. You reap what you sow.

I have, however, heard comments that were as strident as Seddon’s from other consultants, from Japan. They were equally dismissive of US Lean, of American management in general, and even the country as a whole. This was usually, but not always, in private communications rather than in publications. These “insultants,” however, often got away with it, with audiences looking past the invective for useful ideas, and I think it is the appropriate response. Ignore the rant and engage on substance. If some is offered, you will be better off for it.

It is also worth pondering why people feel compelled to act this way. For John Seddon, I don’t know; I am not privy to his thoughts, but I can guess. We should remember that, in the market of ideas, we in the US have a worldwide home court advantage. Ideas command more attention and are more credible simply because of the “Made in America” label.

Lean is the most ironic example. The Toyota Production System did not come out of the US, yet the worldwide internet chatter and consulting business about it is dominated by a US version known as “Lean,” which is as faithful to the original as Disney’s Aladdin and The Hunchback of Notre Dame are to Arabian Nights and Victor Hugo’s novel. Borrowing, metabolizing and even distorting ideas from other cultures is done everywhere, and is to be expected; what is special about the US is that the American version radiates back to the world and overwhelms the original.

Last year, the Olympics opening ceremony in London reminded the world where the industrial revolution began. For more than a century, the world looked to Britain as a model for politics, economics, and manufacturing, but these days are gone, and for an idea to come from Britain is now a handicap rather than a credibility enhancer.

John Seddon happens to be British. For 28 years, he has been making a living as a consultant to service organizations in the public and private sector and, as anyone with this kind of experience would, he has developed an approach to doing it. We may or may not agree with it, but it deserves a respectful hearing. What I read into Seddon’s current stridency is that he has not been getting it. I think he is turning up the volume to prevent his voice being drowned out in the Lean tsunami coming out of the US.

Seddon dismisses Lean consultants as “tool heads.” I like tools. I use tools all the time, both in private and professional life. But I don’t use them indiscriminately. Following are three questions about a tool, that I would not ask about a hammer or a phone, but would about, say, Kanban or SMED:

1.    Who invented this tool?
2.    What problem was he/she trying to solve?
3.    Do I have that problem?

They strike me as a reasonable way to decide whether to apply it or not. And where did I find these questions? On John Seddon’s website. I think I will use them with clients.

 

By • Deming, Management • 8 • Tags: , , , , , ,

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