Thursday, October 24, 2013

Focus and Leverage Part 267

Focus and Leverage Part 267

This is the final posting on The Cabinet Maker and we hope you have enjoyed it and learned from it.  Once again I want to thank Bruce Nelson for writing this wonderful piece of writing.

The Improvement Implementation Strategy

The improvement team made the initial presentation to the management team and shop floor personnel to share the findings and make the recommendations for moving forward.  To sum it up in a few words the management team, and some shop floor workers were “stunned” to hear the recommendations being presented.  Remember up front the management had wanted the improvement project focus to be on improving “efficiency” and reducing the “cost per part” even more!

The improvement team recommended that the “efficiency” measure be stopped immediately!  The team presented the evidence as to “why” the efficiency measure was causing chaos in the system.  Instead of efficiency, the recommendation was presented to move towards “synchronization.”  The improvement team used the reference environment of a marching band where each member of the band is marching, but they are out-of-step with those in front of them and behind them.

Both management and some shop floor folks presented arguments about “why” efficiency was so important and necessary to cost savings and cost-per-part reductions.  When asked to show “the evidence” of cost savings and reduced cost-per-part reductions, none could be provided.  They were ALL sure the money was there, but nobody could find it. In the end, management conceded to give synchronization a try. (NOTE: I honestly think that management conceded to give it a try, not because they thought it was the right thing to do but, rather because they wanted to prove us wrong!)

Because of the efficiency measure each work station was working to a different “drum beat” and therefore, totally out of synchronization.  By bringing order to chaos, and using synchronization, the improvement team felt like the system could move forward by orders of magnitude.

It’s a common situation in many companies where the first constraint is not necessarily on the shop floor, but rather in the policies and procedures used for management.  Such was the case for the cabinet makers.  The enforcement of the efficiency policy was creating untold consequences and chaos in the system as a whole.

Let’s go back through each work station and present the recommendations from the improvement team.

Step 1 - Planners

The basic job of the planners did not change.  The architectural drawing still needed to be converted to shop drawings.  However, the emphasis was shifted from the entire project to focusing on each room in the project.  Cut lists were modified to encompass each room, or building location.  The cutting and assembly instruction were now released one room at a time rather than a project at a time.  When all the rooms were complete then, the project was complete.

The planners slowed the release of projects to the project managers. Instead of releasing work when they could, they released it only when they should.  The WIP dropped dramatically.

Step 2 – The lay-up

Nothing at this work station changed.  The laminate (proper color) was glued to either MDF or plywood panels and moved to the saw.  The capacity was sufficient to maintain the new synchronization model.

Step 3 – The Saw

Needless to say, the saw operator was “furious” to learn that his efforts at efficiency were meaningless and actually the cause of the system chaos. However, he was on-board to give this “synchronization” thing a try.

The rules for the saw operator changed from efficiency to synchronizing the work flow through the system.  Instead of cutting the pieces that provided the highest efficiency, the saw operator now cut all of the pieces to provide the parts for a single box.  This meant the saw cutting instructions were changed several times for each box. (doors, sides, top and bottom).  As the pieces for each box finished cutting they were placed on a pallet.  Each pallet contained ALL of the pieces to build a single box, except for the back – they still came from a separate location.

Instead of moving a pallet of 30 pieces at a time, the pallet now contained all of the pieces for a single box.  Once the system kicked in, there were actually plenty of pallets to do the “one-piece-flow” concept.  In the case one piece equals one box.  We also assigned a person to move parts from the saw to the edge banding machine.  The saw operator was no longer required to move the parts.

Step 4 – Edge Banding

For the edge banding machine the process stayed the same.  All they needed to know was edge banding color and type (wood or plastic) and this information was provided in the production packed.  When the need to change banding color did happen, the set-up could be completed in 2 minutes of less.

In essence, they now banded all of the parts for a complete box (sides, top and bottom, doors and drawer fronts).  When the parts finished, they were placed back on the pallet and moved to the Morbidelli.  The same material mover assigned to move parts from the saw to edge banding also moved the pallets to the Morbidelli before going back to the saw for the next pallet.

Step 5 – The Morbidelli

The Morbidelli operator was also annoyed by the shift from efficiency to synchronization.  He too had more computer commands to be entered based on the parts being drilled (sides, dowel holes, and doors).  However, the transition was smooth and presented no real problems.

Step 6 – Kitting

In the previous system parts moved from the Mobidelli to the box press.  In the new system the Kitting step was added to prepare everything prior to the box press.  We discovered the need for this step by using an Interference Diagram.  At the center of the diagram we concluded “More box press time” and determined what the interferences were that stopped us from getting that.  One of the major interferences was the press operators were spending too much time looking for parts.  The injection was for the operators to spend less time looking for parts, and subsequently off-loaded that task to a new process step – kitting.

At the kitting step the boxes where checked to make sure ALL of the parts were accounted for compared to the project checklist.  If something was missing, or out of place, the job was placed in a “hold” area until the missing parts could be found.

The kitting team also moved the doors and drawer fronts to the final assembly area.  Doors and drawer fronts had no need to go through the box press.  The box backs were added to the pallet to make a complete kit and moved to the box press.

Step 7 – The Box Press

For the box press team life was wonderful!  Each pallet that arrived had ALL of the necessary pieces to press a complete box.  As one box was being pressed (3 minutes), the team did the rough assembly on the next box.  When the box is the press finished, the pressure was released and the box slide out into the receiving area for final assembly.  The rough assembled box was slid into the press, the pressure applied, and the next box was rough assembled.

Step 8 – Final Assembly

The rework and confusion for final assembly dropped dramatically.  They no longer felt the pressure to assemble a door ahead of time just to look busy.  The doors and drawers fronts for the box coming out of the press had already arrived a few minutes prior.  Now the proper assembly sequence could be conducted of hanging the hinges on the box first and then attaching the doors.  Door and drawer hardware (pulls) were added and the box moved to shipping.

Step 9 - Shipping

Although the actual process steps for shipping didn’t change much, the boxes they were getting took on a new meaning.  Shipping now understood they were receiving boxes based on a specific sequence.  The new sequence of receiving boxes based on a particular room and not just a job site helped in the loading sequence of the truck.

In order to reduce the build-up of WIP in the shipping area, a new policy for gaining truck capacity had been implemented.  Instead of buying any new trucks to increase the capacity, they instead rented the trucks, as necessary, to move product to the job site.  Even though it was an added operational expense to rent trucks, it was also much less expensive than buying a truck.  The throughput gained from the extra truck capacity far outweighed the expense.

Step 10 - Installation

The installers were a much happier group!  The change from efficiency to synchronization allowed them to receive ALL of the necessary boxes to complete the installation in a single room.  No longer did they have several rooms almost done and waiting for more boxes, but now they could complete a room and move to the next one.

The Results

As simple as all of this sounds, the improvement approach was not readily apparent to the management team.  Their focus, which they had for years, was in the wrong direction.  The primary focus of trying to maintain high efficiency, reduce the cost-per-part, and save money had not served them well.

The real improvement effort turned out to be exactly the opposite of what they were thinking.  Instead of a high energy focus on efficiency – forget about it!  Instead of trying to reduce the cost-per-part through efficiency – forget about it!.  Instead of focusing on trying to save money – shift the focus to “Making Money.”  The strategy to save money is much different than the strategy to make money.

The lead-time through the shop, from the time wood started lay-up until it ended up on the shipping dock, was reduced from 4 to 6 weeks to 4 hours?

There is good news and bad news about the final end results.  First, because of the improvements implemented and the results achieved, the competitors took notice.  This cabinet maker was eventually bought out by one of the competitor companies at a very attractive selling price.  The bad news is that shortly after acquiring this company, the new owners reverted back to standard cost accounting methods, including efficiency, reduced cost-per-part, and cost savings.  They filed for bankruptcy and went out of business about 14 months later.

Bob Sproull




Vellu said...

I was older post Anonymous #1. I used different computer so I didn't use ID.

Interesting end to the story. Can you tell how the people took the improvements? I mean did they bought it totally and did the improvements show in bottom line? I ques so because competitor got interested. Sad thing that they got back in "dark ages".

Bob Sproull said...

Thanks for your comments Vellu. Bruce will be responding to your latest one, hopefully later today.

Bob Sproull said...

Hi Vellu,

At first some of the people were reluctant to change, especially the guy at the saw. He had spent a long time trying to maximize his efficiency and However, the way we made everyone happy was to measure throughput at shipping rather than efficiency in isolation. Once the measurement rules changed everyone was fine with the changes. Most were happy to see the huge reduction of WIP on the floor. Employees could actually move around from work station to workstation without inventory in the way. I think everyone got a pay raise as well. Management understood (with some coaching) how much effort the employees had put forth to make it all work.

The throughput went up exponential!! Hence, the ability to sell the company at a higher price. It was good for the owners but, not so good for the employees went the company finally went under. It truly was a sad ending for a company that had huge potential to excel and succeed even more.

Bruce Nelson