In my last posting I began
relating the saga of my first experience in a manufacturing operations
management role. I had been hired as the
new General Manager and was charged with the responsibility to either turn this
failing facility around financially or close its doors. I saw this as the largest challenge of my
life because closing this facility would be a failure on my part and I hate
failing. Plus, there were some 250
employees who needed these jobs, so in my mind closing the plant was not an
option.
In my last posting I talked
about what we called a Herbie Hunt. For
those of you who have never read The Goal,
Herbie was an over-weight boy scout with an overloaded back pack who controlled
the pace of a boy scout’s overnight hike.
The troop finally figured out that if they could reduce the weight of
Herbie’s back pack, the troop could increase the amount of distance covered on
their hike. This was how the authors of The Goal, Eliyahu Goldratt and Jeff Cox, chose to introduce
the concept of the constraint. Let’s
continue now with story-line of this plant’s transformation.
One of the first
constraint’s our team discovered was when it was time to mount the hardtop on
the chassis of a BMW Z3. Along the
hardtop mounting surface there were 48 control points that had to be
within the specification limits provided by BMW. To our amazement, 36 of these points failed
to conform to the specification limits.
Many of the points were above the spec limits and could be repaired, but
many times they were below the limits and had to be scrapped. In fact, approximately 20% of all of the tops
fell into this category which caused deep financial pain for our plant. I also discovered that the hardtop was 4 months late coming to market.
We formed a team of hourly employees and our one,
lone Engineer to solve this problem which turned out to be an alignment issue within our bonding
process. The team determined the root
cause of the mismatch in surfaces, implemented an
SPC initiative and the scrap level fell to almost zero which immediately
improved both our on-time delivery metric and the customer’s perception of our
quality. We celebrated this success with
a pizza party which brought our two camps that I mentioned in my last posting
much closer together. In addition, the
morale of the work force as a whole jettisoned upward.
One of the problems I didn’t
mention much in my last posting was the quality of materials being received
from our suppliers. I remember on at least two occasions scrapping
an entire batch of resin used in our hardtop molding process. We also had supplier delivery issues from the
standpoint of on-time delivery. Part of
this was due to our inability to pay our bills on time and part of it was due
to the poor processes that some of our suppliers had. As some of you might have guessed, the
previous leadership, in an attempt to improve profitability, chose the lowest
cost suppliers which in some cases had the poorest quality and on-time delivery
rates. One of our hourly employees
suggested that we have a Supplier Appreciation Day and invite all of our
suppliers into our plant. He reasoned
that if they could see how their products were used and talk about the problems
we were seeing with their products, there would be an immediate improvement in
both quality and on-time delivery.
Another employee suggested that we pay all of our bills within 30 days
as an incentive for suppliers to improve their delivery performance. Guess what……both ideas worked!! Within a matter of weeks, our supplier
performance improved dramatically and because we were paying within 30 days we
were able to negotiate significant early pay cost reductions which helped our bottom
line.
I mentioned in my last
posting that when we subordinated the rest of our process to the constraint,
our efficiencies took a hit. I remember
our corporate office sending a team down to our plant to determine the cause of
our deterioration in efficiencies. They
came unannounced….just sort of showed up at our front door. I invited them into our conference room and
they made a presentation demonstrating on a run chart the sudden decrease in
efficiencies. I let them finish their
presentation and asked them if they had looked at any other performance
metrics? Of course they hadn’t! I had anticipated a visit from corporate at
some point, so I had prepared a brief presentation of my own for when they
arrived. The very first slide said it
all. It was a plot of weekly on-time
delivery and I think it shocked them.
When I had arrived, the plant’s on-time delivery was just under 60%
while the efficiencies were around 80% which was still too low for the
corporate “experts.” When they saw it,
they didn’t believe it because even though the efficiency had dropped to around
65%, the on-time delivery now stood at 88% which was still not good enough
for me. Actually the most current week
which had not yet been plotted now stood at 94%!!
I asked the “experts” if
they would like to see how it was possible to improve on-time delivery while
reducing our process efficiencies. I
went through my traditional drawings of the piping system and simple four-step
process and explained the concept of a physical constraint that I’ve presented
many times in other postings. But for
those of you who haven’t read these postings, here are the two drawings I used.
In this first drawing I
asked the corporate “experts” the question in the box just beneath the drawing
of the simple piping system. They
answered the question correctly in that it would be necessary to increase the
diameter of Section C. I also asked them
if increasing the diameter of any other section would increase the flow of
water through this system and again, they answered correctly by saying no, only
Section C. This exercise was intended to
implant the concept of the system constraint firmly in their minds. I then inserted a second drawing of a simple
four-step process for manufacturing something.
I repeated the same
questions I had asked about the piping system and they answered each one correctly. I then asked them to tell me
what would happen if I were to run every process step as fast as I
could to increase efficiency like they wanted? One of the
"brighter" corporate folks got a smile on his face and said that you would end up
with two piles of inventory…..one in front of Step 2 and an even larger one in
front of Step 4. When I asked him to
explain, he said that because of the differences in capacities it would be a
natural effect. Since Step 1 could
produce at double the rate of Step 2 the WIP in front of Step 2 would build up
at a rate of one extra part per minute.
The pile of WIP in front of Step 4 would be even bigger. I then asked this same man to tell me the
rate at which I should run the current process and he correctly stated one part
every 5 minutes to match the rate of the constraint. Everyone had just experienced that concept of
slowing down in order to speed up and that attempting to drive efficiencies
upward could have a negative impact on on-time delivery. The team from corporate packed up and went
home.
In my next posting, we’ll
dive deeper into what happened at this plant in Kentucky and describe some of the
other things that took place….some good and some not so good.
Bob Sproull
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