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Profitless Part Proliferation

leadwireI wrote a post a little more than five years ago about Variety Reduction Program (VRP), an amazing but little known product design optimization tool.  At the time I referred to VRP as an idea whose “time had not yet come.”  Last week, as I gave a short presentation on VRP, I realized that five years later its time apparently still has not come.  In the interest of creating more interest around this significant technique, the following post expands on my epistle from 2011 and provides a couple of tangible examples of that significance from my own experience.

First, I think the technique deserves a new, mnemonic and alliterative moniker:  Profitless Part Proliferation.   I suggest this clarification because the word “variety” has an unfortunate positive connotation in the sense of greater customer selection, and therefore turns off sales and marketing folks before you can explain that VRP is not about product line trimming.  That was my initial experience in my own company many years ago.  “Just another anti-customer maneuver by operations,” I heard.  In fact, VRP aka P3 is about trimming needless part variety and all of its associated costs (e.g. drawings, inspection, purchase orders, stocking locations, etc.)

Secondly, I would like to call attention to the false sense of profitability that is often created through the addition of new parts and assemblies.   Minimizing the functional cost of material (the one that shows up on variance reports) for a single product looks good on paper, but almost always creates huge overhead costs arising from complexity.  Engineers and cost accountants typically focus on the apparent profit from product X, but ignore the resulting system costs.   They can’t see the forest for the trees, so to speak.   The following two examples for common part commodities, one a purchased part and the other a sub-assembly, speak to this problem:

O-rings.  A project was initiated to examine O-ring specifications and dimensions – things like durometer, chemical resistance, temperature range, ID and OD.   The first thing we realized was that there was no single repository for this information.  Our computer part master record contained dozens of fields to support ordering and costing, but most important design information was squished unintelligibly into a description field.  After cataloging specs and dimensions for O-rings, we realized that twenty-nine different O-rings were stocked.  Our discoveries:

  • Our information system made it difficult for designers see what was already available when they were choosing parts. It was just faster and easier to go to a supplier catalog. An alarming amount of part variety arose simply from poor design tools.
  • Once we were able to view O-rings as a part type from a design standpoint, we realized there was considerable overlap in specs and dimensions. Of the twenty-nine O-rings we cataloged, we determined that all production needs could be handled by only five O-rings.
  • Of the five remaining O-rings, one had metric dimensions because of unanticipated tolerances with mating parts. Rather than deal with correcting the mating parts, a unique O-ring was selected as a “bushing.”  Incidentally, that particular new part required the addition of a new supplier.

The rub was that the most robust O-rings cost a few cents more than marginally acceptable specifications.  Cost accountants argued that using the most robust  O-rings would increase product cost, ignoring the additional costs of maintaining two-dozen unneeded parts.  In fact, as we were a low-volume high-variety producer, we pretty much had to order months of supply for every one of the different O-rings anyway.  Finally, engineers argued that the cost of an engineering change – particularly a drawing change – was too great.  “We have better things to do” I heard.   Fact is, engineers are typically not rewarded for fixing up old parts; they are recognized for designing something new. Ultimately, however, some concessions were made in the interest of experimentation and the O-ring variety was reduced.

Lead wires.  A more egregious example of Profitless Part Proliferation was the variety of lead-wire assemblies. As a manufacturer of electro-mechanical products, my company built thousands of different lead-wire assemblies to support perhaps three dozen product families. At one point we dedicated a full bay of ASRS storage to lead-wires.  Still, lead-wire assembly stock-outs represented a major cause of late customer deliveries. Lead-wires were cut and terminated in large batches owing to the long set-ups on the machine.  While working on set-up reduction of the lead-wire machine, a production team lead astutely wondered why many lead-wires differed by insignificant lengths, as little as 1/32”.  During a project launched to catalog the variety in gauges, stranded or solid, terminations, insulation color and material – and many other specs – we did in fact identify an important opportunity just in lead-wire length variety.  This variety, we suddenly realized, stemmed from a single statement regarding the length of the connection leads outside the end item enclosure.  Sales and technical literature read something like this “Lead-wire length:  12” outside enclosure.”  In fact, our customers would have been happy with “at least 12” outside enclosure.”   Twelve and one-half inches would have been fine, as would twelve and one-thirty second inches, and so on.  The authors of VRP advised us to be clearer regarding which dimensions should be fixed and which could be variable within a range.   Once the product specification was changed to reflect “at least 12 inches outside,” the number and type of lead-wire assemblies plummeted!  So did the stock-outs.

These are just two of many specific examples where parts proliferation was pointless and profitless.  Now, before you say to yourself, “Oh that would never happen in my factory,” I’d encourage you to choose a common commodity of a purchased or manufactured part, and investigate the variety.   Please share a story for our readers about your discoveries. (One lucky commenter will be selected to attend GBMP’s 12th annual Northeast L.E.A.N. Conference coming in October to Worcester, MA. I am delighted to reveal our four exceptional Keynote presenters will be: Art Byrne, John Shook, Steven Spear & Dr. Eric Dickson (not to mention the forty other educational, informative, motivational and fun breakout sessions).

Shigeo Shingo was quoted as saying “The worst waste is the waste we cannot see.”   Help us to see by sharing an example from your experience.   I’d hate to think that I’ll be reflecting again in another five years on an idea whose time still has not yet come.

O.L.D.

BTW: GBMP’s calendar of Shingo Institute workshops is jam packed through October. Check it out here and join us for a workshop (or two) soon.

lfxAlso, I’m happy to share that GBMP’s online streaming video subscription service which we launched in March and call Leanflix  is receiving terrific reviews. We are so glad that we have been able to provide convenient, low-cost, on-demand video training content to meet the varied and ongoing training needs of so many in our Lean community. If you haven’t checked it out, I hope you will set aside a little time this week to do so.

– Bruce

 

Indefinite Postponement

Today’s post isindefinite inspired by the politically charged gobbledygook we call presidential primaries.   This battle of principles turned battle of wills reminds me that the role of the change agent can be as much theater as science.  But, at least in a public forum the positions of the opponents are plainly laid out for us to see.  We expect them to take a stand on important issues.

In the less public day-to-day business of politics, there’s a subtler tactic exercised by opponents to put the kibosh on ideas that don’t appeal to them.   In the parlance Robert’s Rules of Order, it’s called “indefinite postponement”, intentional procrastination to avert debate and deadlock.  In fact the decision “not now” is more effective than “not ever,” because the merits of the change take a back seat to arguments regarding scarcity of resources.

On their face, these arguments may seem reasonable and sincere, but my cynical side suggests to me that our resistance to change can be as much a matter of lining up the data points to fit our prejudices as they are reasoned conclusions.  Whether intentional or subliminal, the not-now tactic can be extremely effective at both starving good ideas and deflecting the short attention spans of managers.   In no special order, here is a Top Ten List of reasons for indefinite postponement that I hear pretty regularly, each with a brief counter argument to prevent your Lean transformation from withering on the vine: They all begin with “I’m in favor of Lean, but . . .

  1. . . . we should wait until we move to the new building.” This is a big mistake, because the opportunity to improve for the move rather than just moving every process in situ is lost when we wait.  In fact, after improvement you may realize the new building was unnecessary.
  2. . . . we’re too busy right now.” To be sure, balance is everything and sometimes getting the orders out must take precedence, but this lack of commitment can be like Waiting for Godot (from a post I wrote five years ago).
  3. . . . we can’t afford it at the present time.” More than 25 years ago Phil Crosby taught us that Quality is Free and more recently Alan Robinson pointed out that Ideas are Free.   In fact, the best improvements cost little or nothing and quickly accrue to the bottom line.
  4. . . . there are a few key hires we need to make first.” This is a surprisingly common cause for indefinite postponement.  Would the same argument be offered if, say, the issue concerned providing a product or service delivery to an external customer or for dealing with a safety hazard in the factory?   I understand there are proportions to consider, but the proportions for continuous improvement are often very small.  In fact, sometimes the postponement may be intended to await a new hire who is less interest in Lean.
  5. . . . we need to get our deliveries back on track first.” This is a variant of “too busy right now.”   Who can argue that customer does not come first?   On the other hand brute force delivery tactics only perpetuate the problems that lead to late deliveries in the first place.   Firefighting is a very tough habit to break.  Our body memory and the ‘high’ of overcoming the odds, impede the application of less exciting root cause problem solving.
  6. . . . let’s wait until vacations are over.” This is perennial  condition that will never end.  Rather than capitulating to vacation schedules and losing twenty-five to thirty percent improvement time each year (not to mention the loss of momentum), why not seek countermeasures to levelize the improvement process?
  7. . . . we’ll have to dollarize the impact first.” Here is veiled starvation technique using traditional cost accounting measures as the reason for postponement.   Taking a machine down, for example, to practice set-ups, will not look good on paper, nor will building or buying smaller quantities.  Lean is a learned by doing.  It’s not a paper exercise, especially not one bounded by non-Lean measures.
  8. . . .we’ll need to first figure out how to modify our sampling policies to accommodate small lot and one-piece-flow production.”  This is a circular argument sometimes advanced to defend sampling.  Rather than thinking about how 100% quality can be confirmed at the source, we postpone smaller lots by thinking about how it can’t be done.
  9. . . . we have to finish our computer system implementation first.” This is the granddaddy of excuses because it sucks up so many resources for such a long time.  It seems reasonable, except that if time were spent first to simplify before automating information flow, both the IT system and the business would reap huge benefits.
  10. . . . ISO-xxxx must come first.” As with IT implementations, quality systems will be greatly simplified after Lean improvements.  At the very least, the quality system (ISO) and the quality culture (Lean) should be implemented concurrently.  They are two sides of the same coin.

I think this is the short list.  Do you have any other reasons for indefinite postponement?    Please share a few.

O.L.D. 

Quick note about GBMP’s schedule of upcoming Shingo Institute workshops. Several new ones have been added to the line-up – including May in Minnesota and June in Puerto Rico. See the schedule.

How We Learn

While I am an unabashed proponent of learning by doing, I have a list of books that have over the years been essential to me as a framework for experiential learning. Most of these books were written before 1990, and one of the most insightful, Managerial Engineering by Ryuji Fukuda, was first published in English over 40 years ago. I think it was the very first book published by Productivity Press (publisher of Shingo’s and Ohno’s books as well.)

howwelearnAs the book’s title suggests, the topic is about better management practices.   There is so much substance to this book, some of which is only now being revisited in more contemporary texts. Among other things, Fukuda introduced CEDAC (cause and effect diagram adding cards), a substantial improvement to the Ishikawa diagram. And policy deployment was not even a part of the English lexicon until Fukuda’s development of the X-type matrix. Window analysis, a simple way to clarify kaizen maturity and guide it forward, is another gem from this text.

This post, however, reflects on just one key point from Managerial Engineering. A diagram on the front cover of the book describes a simple, practical improvement model that the author, a Deming Prize Winner, dubbed ‘Managerial Effectiveness.”

His three-step method begins with identifying reliable methods (referred to today as ‘tools’), which he qualifies as having the impact of reducing either set-ups or defects to zero. In other words, he was ahead of the curve on why the tools should be used, a popular topic today for latter day lean disciples. Also, Fukuda is challenging managers with this step to follow the leaders, not the pack, a concept still missing from many business strategies.

The second step in Fukuda’s model, create a favorable environment, is a real mouthful. Today the term “culture” is substituted for Fukuda’s phrase, but I like his term better. Forty years later, many organizations are rediscovering that the best problem-solvers will hide problems if they are afraid to report them. Fukuda puts the onus on managers to recreate the work environment by changing their work, an idea popularized years later as “manager standard work”.

Finally the biggest challenge, keep everyone practiced, is a call to action for daily kaizen. Dr. Fukuda uses the game of golf to make his point. If we want to be good, we should first of all learn from the best and then practice every day  in an environment that nurtures experimentation and discovery. After four decades of event-type improvement, organizations are finally realizing that this is how we learn.

Is your organization learning or parroting?   Share a story.

BTW: Managerial Engineering is available used on Amazon for $1.47  : )

O.L.D.

Don’t forget: Our next Tea Time with Toast Guy Webinar is next Tuesday, August 12 from 3:00 – 3:45 p.m.   The topic is “Creating a Realistic Pace for Improvement”. Read more and register here.

Bonus!  We’ll select one person from the list of participants to win a free registration to our October 1-2 Northeast L.E.A.N. Conference. Learn more about the conference here.

What is Advanced Manufacturing?

I am looking for some help to answer this question.   Seeking illumination, I recently attended a presentation offered through CCAT, a non-profit Connecticut corporation with a mission not unlike that of GBMP – “to apply innovative tools and practices to increase efficiencies, improve workforce development and boost competitiveness.”

The word optimization was used more times than I could count.  One slide in particular from the presentation, entitled “Rapid Manufacturing Scenario,” caught my eye.  The speaker described a series of two improvements (noted in the bar charts at the bottom of the slide) using “machining process optimization software tools.”   “Hmm,” I thought “interesting stuff: virtual verification of NC code, 3D part scanning and digitization, optimal tool paths, automatic program correction”.   But I couldn’t help noticing that as operational times were being slashed, the orange bar – Setup on Machine – stayed the same.   In fact, nowhere in the presentation, was there a mention of machine setup improvement.

I wondered, ‘Would this ‘improved ratio’ of setup to runtime cause a machine shop to run fewer parts or more parts?”   For a site grounded in Lean, I think the answer would be ‘always work on setup reduction in order to run exactly what is needed for the next process.”   In the absence of that grounding however, I worry that the ratio would create more over-production to “optimize’ part cost.

After the presentation, I jumped onto the CCAT website and did find a one-day course on set-up reduction (none scheduled however) and an article on Lean simulation software, not a favorite approach with me.  I think the real floor is where the action is, not the virtual floor.  Call me old-fashioned.

Investigating a little further, I discovered that the state of New Jersey understands Advanced Manufacturing (AM) to “make use of high-tech processes in their manufacturing plants including installing intelligent production systems such as advanced robotics.”   Same thing in Iowa and Georgia and, of course, my home state of Massachusetts.  In fact, this AM description appears in pretty much every reference to advanced manufacturing I could find.    Ultimately, I landed on the website of NACFAM, a non-profit who describes itself as  “the voice of advanced manufacturing in Washington, D.C.”   They appear to have offered the authoritative definition of AM, the one that everyone else is parroting:

“The Advanced Manufacturing entity makes extensive use of computer, high precision, and information technologies integrated with a high performance workforce in a production system capable of furnishing a heterogeneous mix of products in small or large volumes with both the efficiency of mass production and the flexibility of custom manufacturing in order to respond quickly to customer demands.”

In June 2011 our national government announced it would spend $500 million to support advanced manufacturing.  I hope they understand what it means.  I’m still confused.  I worry that Advanced Manufacturing sounds an awful (and I mean awful) lot like Lee Iacocca’s “agile manufacturing” strategy (vintage 1990) to leapfrog Toyota’s system.  History did not validate this approach; I hope it has not been repackaged for 2012.

I recall a complaint offered by Shigeo Shingo in 1989 that while at that time nobody was paying attention to SMED (Single Minute Exchange of Dies), there were a swarm of doctoral dissertations on algorithms for optimizing economical order quantity (advanced manufacturing?)  Have we grown beyond that thinking today, or are we still squirming in quicksand?

What do you think?  Let me hear from you.

O.L.D.

BTW:  Mark your calendar.  The Northeast Shingo Prize Conference is coming up September 25-26, 2012.  Hope we’ll see you there.

Incremental Elimination of Weeds

Spring is my favorite season because of the spirit of renewal it brings with it.  So here is a post dedicated to spring that is inspired by a comment made recently by my colleague, Menrika Louis:

“I am one with the weeds,” Menrika commented jokingly while we were working together on an improvement project.   She was referring to the nitty-gritty realities that present themselves to us when we are that close to the ground.   The expression typically refers to getting too tangled up in details.   But while it can be argued that a broad perspective may not be achievable from the ‘weeds,’ I think there are too few kaizen leaders who spend enough time there.  Menrika’s comment reminded me of a few lessons I learned from my Dad when I was a tot – maybe 7.

My father had a knack for breaking big problems down into palatable chunks, something I suppose he brought home from his job as a factory manager.   One Saturday morning he showed me the Frank Hamilton method for pulling weeds.   He was not a big fan of herbicides, preferring to use a weed grubber to control weeds.  To demonstrate, he placed a three-foot square frame on the ground and proceeded to move systematically from left to right and top to bottom identifying and removing weeds inside the frame.  He named them for me as he removed them: dandelion (pictured right), crabgrass, plantain, clover, chickweed, wild onion, and a few others.  These were analogous to the seven wastes – they starved the lawn of nutrients and moisture.   “If you get close enough to the weeds,” my dad said as he pulled up a small sprig of crabgrass “you can see them before they take root and you won’t even need the grubber.”

“Funny,” I thought, “the lawn looks so much different at knee level.”   There were stones and mold and bare spots and insects — all sorts of different problems that were only visible when, as Menrika would say, I was one with the weeds.

“But why do you use the frame for weeding?” I asked.

“There are two reasons,” he explained.   “First the frame helps to focus the task so you’re less likely to miss weeds.  And second, it divides the job into manageable tasks.  If you look at the lawn as a whole, the job seems overwhelming.  But in smaller increments it’s not so bad.”

“So when do you think we’ll be done with this job?”  I asked.

My dad smiled and replied, “We’re never completely done with this job, Sport.   But if we work at it a little bit each day it won’t take much time and we’ll have a nice lawn.”

Happy Spring!

O.L.D.

What does 3P Stand For?

3P, “Production Preparation Process,” is a method introduced to the US in the mid-80’s by Chihiro Nakao, a contemporary of Mr. Ohno, and founder of Shingijutsu consulting.  I recall the method was called “New Production Preparation” (NPP) early along, but apparently succumbed to a marketing intervention, hence 3P.   The basic idea of 3P is to achieve, in Mr. Nakao’s words, “breakthrough or transformational changes in production process” through rapid, integrated prototyping of both product and process.

I had a 3P experience recently that reminded me how much I learn from customers.  My inspiration occurred during a “mini-event” to develop a build-out addition to a surgery center.  The decision to use a 3P approach to develop a better floor layout was made pretty late in the process. We had one week to investigate the current condition and understand design requirements. Then, we began, a team of eight clinicians – docs, nurses, techs and housekeepers — to “trystorm”, a term connoting brainstorming activity combined with actual doing.   The first of Mr. Nakao’s  “16 Catch Phrases” advocates minimal pre-planning and “lightning fast” prototyping, a criteria we closely followed: the event lasted 1½ days.

Most of the 3P team had minimal previous exposure to Lean concepts.  But all were very passionate about patient care and “constructively dissatisfied” (a theme I take up in GBMP’s DVD Moments of Truth) with the status quo at the surgery center:  Bed shortages in the recovery area, ORs waiting for available beds in recovery, surgeons waiting for ORs and, of course, patients waiting for everything.

When I introduced the concept ofpatient-centeredhealthcare from a Lean perspective, a connection between passion and principle occurred – not a perfect understanding, more a fuzzy idea that focusing on the care from the patient’s point of view might yield a breakthrough.   By the end of the first day (actually half-day), there was consensus regarding the status quo and a first pass concept for improvement.  We agreed to “sleep on it.”  This, I have found is a very important, if not scheduled, part of the 3P process.

On day two we jumped into trystorming with a vengeance.  One participant advised that she’d awakened at 2:00 a.m. with a thought.  “What was it?”  I asked.  “That we might not come up with a better layout.” she replied.  Nervous laughter.  We trudged on with a concept that was based upon “adjacencies,” a word that connotes relative locations of departments to facilitate workflow.  I reminded the team to focus on patient flow, and placed a couple Lego people on the prototype layout to signify the patient and his family.  As we broke for lunch, there was a feeling within the team that the trystorm layout created so far would not be a breakthrough.  We were facing a 4:00 p.m. deadline for a solution, and CHI-E was kicking in.

Lunch was over quickly  — back to work.  A team member blurted out as we restarted, “If we can’t fix the recovery area problem, the rest of this expansion won’t matter.”   “Go with that idea,” I suggested.  A new layout idea developed quickly working back from an “ideal patient recovery area.”   The principle was right: patient-focused.  Ideas were popping now: trystorming and more trystorming.  Within an hour, the team was sensing a breakthrough, and anxiety turned to excitement.   By four o’clock, an operationally superior plan emerged that was, in the architect’s words, “totally different from what we would have drawn.”

A follow-up email from the project leader for this 3P effort sums it up:

“I know that my staff who were able to come really gained valuable perspectives and were definitely engaged in ‘thinking outside the box’. I must admit that I was unsure how we could begin to make change, but count me in as a true believer in the process. I have always believed that if you need change to happen, it needs to happen with the caregivers first- it needs to be their ideas or the change never happens. I think this is only the beginning for us and I hope to be able to use what I learned from now on every day.”

So what did I learn from this customer?  That, if the right people (in this case the direct patient providers) have the passion to improve, then the keystone to improvement is the right principle.  The technical side of lean is important, but the people side is essential:

3P = People + Passion + Principle

Do you have a 3P experience you can share?  Please send it along.

O.L.D. 

BTW:  Speaking of principle-based transformation, there’s still time to register for the fast-approaching International Shingo Conference in Jacksonville, April 30 – May 4.  I’ll be there, and hope to see you too.

JIT, Boy Scouts, and Stooges

I take my work very seriously, but sometimes when I have excess idle time (like on the red-eye from Phoenix to Boston), I’ll have a whimsical idea.  Here’s one I’d like to share, to demonstrate the universality of a good idea.  My stream of thought begins with recent participation in the Boy Scouts Merit Badge University.  As a counselor for music merit badge, I attended a course for their  “new” training method, referred as the EDGE method.   I noticed that it bore a striking resemblance to the methods used during World War II to backfill and rapidly train workers in US plants.  The same method subsequently was used to help the Japanese manufacturing economy rebound after the war.   And today it is experiencing resurgence on US shores, helping to standardize and improve operations in many industries.  Most recently, it appears to have made it into the latest edition of the Boy Scouts Handbook.  Hurrah for the Scouts, an organization from whom I think I learned more that I did from college. I suppose there is a TWI’er in Scouting today who had the foresight to pass this thinking along.  I can only hope that as scouts grow into business people, that EDGE will eventually become their means for training employees.

Boy Scouts of America Edge Method  (2011)
The Trainer’s EDGE uses contemporary training techniques and emphasizes the importance of experiential learning, or “learning by doing.”

The acronym stands for:
Explain how it is done – Tell them.
Demonstrate the steps – Show them
Guide learners as they practice – Watch them do it.
Enable them to succeed on their own – Use memory aids, practice it, they teach it.

Training Within Industry Job Instruction Training  (1940)
A step-by-step on the job training method in which a trainer:

(1) Prepares a trainee with an overview of the job, its purpose, and the results desired,
(2) Demonstrates the task or the skill to the trainee,
(3) Allows the trainee to mimic the demonstration on his or her own, and
(4) Follows up to provide feedback and help.

So far in my story, no particular whimsy.  However, by coincidence, a recent email from my brother, an inveterate Three Stooges fan, contained a link to a Stooges classic, that sums up the learn-and-do spirit and structure of Job Instruction Training in 1938, fully three years before the advent of TWI! Watch it for yourself:  “Swinging the Alphabet.”

Could it be that that the creators of TWI were Stooges fans?

Have light-hearted day.

O.L.D.