Tag Archives: true north

Profitless Part Proliferation

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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

 

Eye of the Beholder

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kanbaMany moons ago when I was just getting started on my lean journey, I visited a large automotive supplier to benchmark pull systems.  My own factory had started a pilot kanban between two work centers and I was hoping to gain some insight from a more experienced source.  To my disappointment, when I was escorted to the factory, the aisles were crowded with pallets of kitted orders.  “What is this inventory?” I asked my tour guide.  “That’s Kanban,” he said.  “How so?” I asked. “Every day the stockroom pulls stock for the floor,” he explained, emphasizing the word “pull.” I thought to myself that this particular material looked just like traditional factory orders, launched before they were needed.  The floor of this benchmark facility was more crowded with inventory than my own.   Not wishing to be rude, I tactfully inquired, “Isn’t the kanban supposed to stay near to the supplying work center?”   The factory manager confidently responded, “Oh yes, we have a central Kanban area.  I’ll show you.”  With that, he led me to large storage area that looked just like my stockroom only larger. “We pull from here,” he reiterated, once again emphasizing the operative word, “pull.”

“Amazing,” I thought to myself, “the factory has just swapped its STOCKROOM sign with one that reads “KANBAN.”  (Thirty years later, by the way, that factory has been closed.)  The point here is not to focus specifically on the tool, in this case kanban, but rather to highlight the difficulty that arises when the concept behind any tool is misunderstood.  If we don’t understand “what good looks like,” we could be doing exactly the wrong thing.

Two days ago, for example, I heard a machinist jokingly describe his factory’s use of Andons:  “When there’s a problem with my machine, I set the Andon to red and that signals everyone that I’m away from the machine hunting for the maintenance department.”    Unfortunately, while the front line employee knows this not how Andons are supposed to function, the details are less well understood elsewhere.  There is not a single Lean tool I can think of which is not burdened by misconceptions.  Here are six common ones.  Perhaps you can add to the list in the comments section below and we’ll keep a running tally (think we can get to 50?):

  1. Ganging up shop orders with similar set-ups regardless of due date in order to amortize set-up time, and then calling it “set-up reduction.” This is set-up avoidance. The whole idea of reducing set-ups to “build the customer’s exact order immediately” is lost when orders wait their turn for the right set-up.
  2. Creating dedicated “cells” which sit idle 80% of the time. People tell me, “We don’t have room for cells.”  No wonder.
  3. Moving the stockroom to the factory and then referring to months of stock on hand as “point of use inventory.”
  4. Referring to work instructions as “standard work.” In fact, having a clear work standard and job instructions build an important foundation for standardized work but too few sites understand standardized work as a dynamic choreography matching supplier capability to customer rate.
  5. A subset of the above, confusing Takt time with cycle time.
  6. One of my favorite misconceptions came from an engineering manager who let me know that he appreciated the “8th waste” (loss of creativity) because he was tired of his engineers wasting their creativity on production problems.

Confronted by these kinds of mis-perceptions, I’m reminded of an old Twilight Zone episode, Eye of the Beholder.   Watch the two-minute clip to see how ugly things can get when we don’t have a good understanding of the concepts behind Lean tools.  In the last several years, a great deal of attention has been given to creating a Lean culture rather than just implementing the tools.  This is an ideal I subscribe to wholeheartedly so long as we define culture as an environment favorable to continuous improvement, and recognize that a proper understanding of the tools by both workers and managers is a key part of the culture.

O.L.D.

PS I’d be remiss if I didn’t remind folks that the Early Bird price for The 12th Annual Northeast L.E.A.N. Conference  – “Lean-By-Doing: Accelerating Continuous Improvement”– ends May 31. It’s a great event and all the better if you can save your company some dough when you register your group. (It’s still a really affordable event even if you wait until the summer to register, no worries.) I am really looking forward to it and hope you are making plans to join us. There will be keynote presentations by John Shook, Steven Spear, Art Byrne & Dr. Eric Dickson, plus more than 30 interactive, educational, inspirational and fun breakout sessions rounded out with networking socials, yokoten in the Lean Lounge and much more. Here’s the agenda. See you in October, I hope!

As an added incentive to add to my kanban misconceptions list, one commenter will receive a free registration for the whole event! Good luck! BEH

 

 

 

Indefinite Postponement

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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.

True North Pole

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truenorthpoleMany years ago a small expedition to the North Pole was funded by several American toy manufacturers, anxious to better understand how Santa’s workshop achieved such incredible productivity and just-in-time delivery.

“How can Santa produce all those toys in such a short time?” one manager questioned in disbelief as the small group of managers furtively approached a window of Santa’s workshop. “Be quiet,” the group’s leader whispered to his fellow conspirators as he carefully wiped away a patch of window frost, “we want to learn as much as we can about their process before we’re discovered.”   Through the window, an army of diminutive workers could be seen producing to a cadence such as never before witnessed by these American managers.

“Look how they move these toys down the line without a hitch,” exclaimed one manager.

“Yes and look at the smiles,” noted another, “no entitlement here. My workers are three times the size of Santa’s but don’t produce even a fraction of the volume. All they do is complain.”

A third manager observed, “There appears to be a chart in the middle of the floor that tracks production by the hour. No doubt Santa uses that to crack the whip.”

“Indeed,” noted yet another manager, “and there is some kind of chart above the workers that shows how they optimize their production, and another white board that shows what’s expected of the team.”   “We could never get away with this my plant,” lamented one manager. “It’s clear that the North Pole has a team culture that’s foreign to the U.S.”

Suddenly the production line stopped. Apparently one of the workers had found a defect. Workers swarmed to the area where the defect was found and then gathered to talk about it. “How can these little people be so productive when they stop just because of a single defect?” laughed one of the managers who was immediately joined in laughter by the others.   “Yes, shouldn’t they just call the quality department?” one queried.

Still, the managers agreed there we some unusual new tools that appeared to be central to Santa’s secret. If only they could learn more about how those tools worked.   As if to answer their wish, Santa suddenly swung open the workshop door and bid his industrial spies, “Merry Christmas! Please come in. What would you like to know?”

The startled visitors thereupon entered Santa’s workshop and spent the remainder of the day asking questions about the tools that he had devised to improve productivity.   With cordiality that befit the season, Santa answered every question.   “Even if our employees are not as good as Santa’s,” remarked one of the managers, “at least we can take advantage of these new tools.”

As the shift was winding down, Santa’s visitors thanked him for answering their many questions, and then departed, intoxicated with these North Pole manufacturing techniques. When the visit ended, one of Santa’s employees asked Santa, “Why have you answered all of these questions from our competitors?”   Santa smiled wryly and replied, “Do not worry, what they need to know they will not see.”

Ho, ho, ho and Merry Christmas. See you next year.

O.L.D.

Up, Back and Around

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up backWatching the US Women’s Team take the World Cup last week caused me to reminisce about my short-term coaching stint of a U12 soccer team. Before becoming a coach, I hadn’t played soccer or even watched a game, but there were not enough coaches in our town league so I volunteered.   After a two-week clinic for new coaches, I’d learned enough to know when I was allowed to substitute players, what was meant by off sides and a few other key rules. I’d even learned how to clumsily dribble and pass, but, like many other coaches, not well enough to actually teach the kids.  Fortunately for the team, however, a parent of one of the players knew John G., a local resident who at one time had played on the Portuguese national team. John seemed to know everything about soccer from basic skills to game tactics and even strategy for the season. Beyond this, John motivated and energized the kids. His personal enthusiasm and love of the game was contagious. Whenever I would thank him for sharing his skill and experience, he’d humbly respond, “The game is the best teacher.”

“No doubt,” I thought, “the boys are learning to play by playing, but John G. observes each boy’s every move, making subtle adjustments in skill and teamwork.”

Practice, after all, does not make perfect; it makes permanent. John had the boys practicing dribbling, passing and kicking the right way. Over the course of the season, every player improved individually, and the group of giggly eleven year old boys became an accomplished team – not World Cup, but pretty darned good.   “Better teams beat better players,” John G. exclaimed when any player appeared to be less than selfless in his play. Along the way I also became a better coach observing and listening to him.

Watching the superb play last week by the US women reminded me of one more of John G.’s lessons, which like his other coaching tips have had direct application to my work. “Up, back and around” he’d shout to the field during scrimmage. “Don’t always try to beat the defender directly. If the resistance is too great, then pass the ball back to your teammate and play around the defense.” While this tactic appeared to be “two steps forward and one step back,” it led ultimately to many goals.

So it is approaching True North.   The goal does not change, but depending upon the resistance at any point we should take John G.’s advice and avoid forcing the play. Don’t try to change the status quo by yourself. Share with your team members, and take the change up, back and around.

Do you trust all of your team, or do you only pass to certain team members? Let me hear from you.

O.L.D.

PS I’ll be in Gorham, Maine on the 23rd of this month at Jotul N/A for an afternoon “Lean Learning Bite” event on Gemba Walks. Maybe you can join us. Here’s more info.

PPS We’re offering The Shingo Institute workshop “Discover Excellence” in Texas for the very first time at the end of the month. Check it out here.

And just one more thing – GBMP just released the agenda for its upcoming 11th Annual Northeast Lean Conference in Springfield MA. See the agenda, get more info about the event and register on the conference website: www.NortheastLeanConference.org

I hope I’ll see you there!