Lean

Mar 18 2014

A Definition of Lean | Mike Rother

See on Scoop.it – lean manufacturing

Maybe it’s time for a better definition of “Lean.” Here’s one for you to consider and build on.

Michel Baudin‘s comments:

The proposal is “Lean is the permanent struggle to flow value to one customer.”

Permanent struggle is fine, but I prefer pursuit. It means the same thing but it is shorter and “pursuit of happiness” sounds better than “permanent struggle for happiness.”

On the other hand, I have a problem with “flow value,” which I see as the sort of vague abstraction that would prompt Mike Harrison to ask whether it come in bottles. It is exactly what Dan Heath is warning against in the video included in the slideshare.

I also have a problem with the exclusive focus on customers, which I see as Business 101 rather than Lean. Lean includes many features like heijunka, that are intended to make life easier for suppliers and are transparent to customers. Going Lean means looking after all the stakeholders of the business, not just its customers.

This is why I define it instead as the pursuit of concurrent improvement in all dimensions of manufacturing performance through projects that affect both the production shop floor and support activities. 

Yes, I know, it is specific to manufacturing, but that is not my problem.

See on www.slideshare.net

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Mar 14 2014

Forthcoming book: The Deming Legacy

The-Deming-Legacy-coverAbout two years ago, I started posting essays on this blog about Deming’s 14 points and their current relevance. Now I am writing on Points 11.a and 12 through 14, which I have not covered yet, organizing the material, and editing it into an eBook entitled The Deming Legacy, that will be available shortly in PDF, iBook and Kindle formats. If you are interested, please visit the site and let me know. Comments here are also welcome.

The posts on the topic to date are as follows:

  1. Create constancy of purpose toward improvement of product and service.
  2. Adopt the new philosophy.
  3. Cease dependence on inspection to achieve quality. 
  4. End the practice of awarding business on the basis of a price tag. 
  5. Improve constantly and forever the system of production and service.
  6. Institute training on the job.
  7. Institute leadership.
  8. Drive out fear.
  9. Break down barriers between departments. 
  10. Eliminate slogans and exhortations.
  11. b. Eliminate management by objectives.

The title is a ploy to convince Matt Damon to play Deming in the movie version.

Matt-Damon-with-red-bead-paddle

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Mar 11 2014

Lean Handbags and Micro Failures | Mark Graban

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Blog post from Mark Graban at Lean Blog :

“I enjoy reading the magazine Inc. for my interests in startups and entrepreneurship. There are often examples and case studies that directly reference Lean thinking or just sound like Lean and Kaizen with another label…”

 

Michel Baudin‘s comments:

Well run businesses are always good reading, even if their stories are usually embellished. Starting the design of fashion accessories from a market price or organizing to allow chefs in a restaurant chain to experiment with new dishes, however, just sounds like good management, not examples of “Lean Thinking.”

I have never found much depth in the contrasting of “Margin = Price – Cost” with “Price = Cost + Margin,” maybe  because I have never worked in a cost-plus business. Commercial manufacturers usually do not have the power to set prices this way. Perhaps, the Big Three US automakers did have that power in the 1950s, and Toyota didn’t.

In Tracy Kidder’s 1985 documentary book House,  a Boston lawyer hired a local contractor named to build a house in the suburbs. The contractor rigorously calculated the costs of the materials and labor, tacked on a 10% profit, and presented a bid with no wiggle room. It was not intended for negotiation, but the lawyer just had to wrangle some concession out of the contractor.  The culture clash between the two makes great reading, but also throws light on how “cost-plus” works in practice.

The equation “Margin = Price – Cost” is based on the assumption that Price and Cost are characteristics of the same nature, both attached to each unit of product. It is true of Price: whenever a unit is sold — in whatever form and however it is financed — it has a unit price, and it is not ambiguous.

Unit cost, on the other hand, is the result of allocations among products and over time done in a myriad different ways, with different results. By shifting overhead around, managers make the products they like appear cheap, and the ones they want to kill appear expensive. Once the “expensive” products are terminated, the same overhead is spread among fewer survivors, thus making new ones unprofitable, and the death spiral ends only with closure of the factory.

Instead of the simplistic  “Margin = Price – Cost” for each unit, a sound economic analysis of manufacturing considers the flows of revenues and expenses associated with making a product in given volumes over its life cycle, and sometimes a product family rather than an individual products with, for example, some products given away as free samples to promote the sale of other products.

See on www.leanblog.org

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Mar 8 2014

Is OEE a Useful Key Performance Indicator? | Jeffrey Liker

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“For manufacturing that is equipment-intensive, how the equipment works is often the main factor in productivity. Total Productive Maintenance (TPM) has become a buzzword in lean and a generally accepted metric is Overall Equipment Effectiveness (OEE). This is measured as the product of three factors:

  • OEE = Availability x Performance x Quality
  • Availability = run time/total time
  • Performance = Total count of parts/target count (based on a standard)Quality = Good count/Total count

Ignacio S. Gatell questions whether companies using OEE really understand it, can explain it clearly to their customers, and understand what it means to compare OEE as a KPI across plants. He questions whether even plant managers understand how it is calculated and what it means.

The only good argument for OEE is that at a macro-level in a plant it provides a high level picture of how your equipment is functioning.”

Michel Baudin‘s insight:

About 15 years ago, a summer intern came to work at a client plant in aerospace machining. I thought a great project for him would have been to identify a common tooling package for machining centers that were grouped in a “Flexible Manufacturing System” (FMS). It was challenging, but it would have actually given the FMS the flexibility it was supposed to have. It was a real engineering project that would have improved performance.

Management, however, decided that a better use of his time was to collect data and calculate OEEs for another set of machines. It did keep the student busy all summer, but resulted in no change, and no improvement bragging rights for the student.

I have had a problem with OEE ever since. It is an overly aggregated and commonly gamed metric that you can only use by breaking it down into its constituent factors; you might as well bypass this step and go straight to the factors.

Among these factors, I find Availability to be most often confused with Uptime. The availability of a device is the probability that it works when you need it, and the total time in the denominator has to be the time you need it for. For example, if you work two shifts a day, the availability of a machine is not affected by your taking it down for maintenance on third shift. There have been cases of managers overproducing to increase run time and thereby boost the OEE of their machines…

See on www.industryweek.com

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MB--Philip Marris-- Christian Hohmann 2-27-2014

Mar 1 2014

Meeting in Paris with Pen Pals Philip Marris and Christian Hohmann

Philip Marris and Christian Hohmann have been on-line pen pals of mine for years, but we had never actually met. My visit to Paris this week was the opportunity to fix this and trade manufacturing war stories for four hours while having dinner at the landmark La Coupole restaurant.

Both Philip and Christian Doc - Mar 1, 2014, 10-55 AMhave been consulting as long as I have and are authors of books about Lean in French. Philip is an Englishman who speaks French without even a trace of an accent, and writes in French. He describes his own book,  Le Management Par Les Contraintes, as “very boring,” because, unlike Eli Goldratt’s The Goal, it is focussed on technical nitty-gritty rather than entertainment. As I told him, this is my favorite kind.

Christian Hohmann has written the following four books:

He has also posted 50 short videos on Youtube. I first approached Christian 15 years ago, when writing Lean Assembly. I had found a picture of an electronics assembly line that he had posted. I wanted to use it in the book, and it had some features I did not understand. I asked him and he gave both the answer and permission to use the picture. When I thanked him this week, he had forgotten about it.

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Feb 27 2014

A brief rant about the ABC’s | Bill Waddell

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“Apparently the folks writing about stratifying inventory into A, B and C items and building calculations of such into ERP packages didn’t get the lean memo.

Wikipedia is typical of such thinkers when they describe the ABC thought process as:

  • ‘A’ items – 20% of the items accounts for 70% of the annual consumption value of the items.
  • ‘B’ items – 30% of the items accounts for 25% of the annual consumption value of the items.
  • ‘C’ items – 50% of the items accounts for 5% of the annual consumption value of the items.

The idea of micromanaging some items and slacking off on others based on purchase price is the very same theory they taught me at the University of Cincinnati back in the days  when … ”

Michel Baudin‘s comments:

I agree with Bill that, from the point of view of manufacturing operations, the purchase price of materials is not the most important parameter. because the lack of a nail can prevent the completion of a product as effectively as the lack of a pump costing 1,000 times more.

It doesn’t mean, however, that classifying items to treat them differently is wrong, but it must be done by frequency of use rather than price, and I prefer to call the categories “Runners,” “Repeaters,” and “Strangers” rather than A, B, and C.

As a function of rank, I then look for the percentage of units actually built that can be fully assembled with only the items of this rank and higher. It starts at 0%, and, as long as it stays at 0%, I consider the items to be Runners, essentially items you can’t build any product without. At the other end of the spectrum, I call Strangers all the items without which you can make 95% of the units. And everything in-between is a Repeater.

Then you may decide, for example, to dedicate an easily accessible storage location to each Runner, and make special arrangements with suppliers. For Repeaters, you may use the Kanban system, with smaller dedicated locations.  And you don’t keep any stock of Strangers, but order them as needed and store them, if at all, in dynamically allocated slots.

See on www.idatix.com

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