New Book Part 16

In my last post we completed our first pass through the entire Ultimate Improvement Cycle by explaining the basics of steps 3a, 3b, 3c, 4a, 4b, and 4c.  As a refresher, the figure below is a graphic of the UIC.

In today's post I will begin to explain the methodology for implementing this improvement cycle.  As a reminder, this material is taken from my newest book, The Focus and Leverage Improvement Book - Locating and Eliminating the Constraining Factor of Your Lean Six Sigma Initiative. published by Routledge/Productivity Press.

How to Implement the UIC

In our last post, we completed the first rotation of the Ultimate Improvement Cycle, so now it’s time to get started with your own cycle of improvement. I have hopefully convinced you of its value for your company. If I have convinced you, then you probably are wondering about the best way to get started. “Do I go out and just start at Step 1a of the Ultimate Improvement Cycle?” The answer is no, because if you did that, you would almost immediately begin hitting barriers and obstacles that would limit your success or maybe even question the validity of this cycle of improvement. So, if not Step 1a, then what?

Let’s first consider the question of what we are attempting to do. You need to start by accepting that the basic goal of all “for profit” organizations, is to make money now and in the future. If you’re already making money, perhaps your goal might be better stated as, “to make more money now and more money in the future.” If this is your goal, then the question you would ask yourself, “What is preventing me from making more money now and more money in the future?” My experience tells me that there are a host of things that prevent companies from making more money.

In its most basic form, making money involves generating revenue that is greater than what it costs to generate it. So, obviously if operating expenses are too high, and you aren’t generating enough revenue, then you won’t be making money. So, the question is, just how do you generate more revenue? Assume for a moment that you have more orders than you have capacity to fill them. Since you are unable to satisfy market demand, it follows that your throughput is too low. If your throughput is too low, it must also mean that your cycle times are too long. It follows then that the key to generating more revenue, must be reducing cycle times. How do we reduce cycle times? Let’s first look at something called Little’s Law.

Little’s Law states that, Cycle time equals WIP divided by Throughput (i.e. CT = WIP/T). It should be clear that reducing cycle time implies reducing WIP, as long as Throughput remains constant. So, if you have large amounts of WIP, then clearly you have an opportunity to reduce cycle time. But what if you don’t have large amounts of WIP in your plant (I’m betting you do though)? How else might we reduce cycle times?

We know that cycle time is equal to the sum of all processing times for each process step. We also know that cycle time is the sum of all value-added time, plus all non-value-added time in the total process. So, if we want to decrease cycle time, then we have three choices:

1. We can reduce value-added time
2. Reduce non-value-added time
3. Do some of both.

Just think about which activities add value, versus those that do not. Let’s make a list.

• Transport time – moving product from point A to point B.

• Set-up time – converting a process from one configuration to another.

• Queue time – time spent waiting to be processed.

• Process batch time – time waiting within a batch.

• Move batch time – time waiting to move a batch to the next operation, which could also include time in storage.

• Wait-to-match time – time waiting for another component to be ready for assembly.

• Drying time – time waiting for things like adhesives to become ready to be assembled.

• Inspection wait time – time waiting for products to be inspected

There might be others we could add to our list, but for now assume this is our list. Which of these items add value? Clearly none of them do, so they would all be classified as non-value-added. There obviously are things we could do to reduce each one of these. For example, process batch time, is driven by the process batch size, so we could do two things that would reduce this time. We could optimize the batch size that we produce, and in conjunction with this, we could reduce the time required for set-up. In doing these two things, we would probably also reduce the move batch time, and maybe even the wait-to-match time. Clearly these actions would reduce the overall cycle time.

Clearly, non-value-added time by far and away accounts for the largest percentage of total cycle time in all processes. This would imply that, if we significantly reduce non-value-added time in our process, then we could significantly reduce cycle time, which would in turn, significantly improves our on-time delivery, Throughput, and revenue. So, what are these non-value-added times that we have referred to? Just think about which activities add value, versus those that do not. Let’s make a list.

In my next post, we will continue our discussion on non-value-added times and how we can capitalize them for cycle time reductions.