Systems Improvement Part 3

In my last post in this series on systems improvement, I presented a simple piping system to demonstrate what a system constraint looks like and why it's so important to identify it as a focal point for your improvement efforts.  I then translated that same context to a simple 4-step manufacturing process and demonstrated how the constraint controls the output rate of the system being improved.  I finished my last post by asking a simple question, which was, "In its current state, how fast should Steps 1 and 2 be running?"  In this post we will answer that question and then continue our discussion on systems improvement.  As a reminder, here is the simple 4-step process I presented in my last post.

If steps 1 and 2 continue to produce semi-finished product according to their current capacities, then clearly an accumulation of work-in-process inventory (WIP) will be the result as is demonstrated in Figure 1. Figure 1 represents the state of this system after one 8-hour day, and if Steps 1 and 2 continue to produce product at their current capacities, then work-in-process inventory will simply continue to accumulate within this process.

Figure 1

Figure 2 represents the state of this system after 3, 8-hour work shifts with all steps producing to their current capacities.  It makes no sense for this system to continue producing product at these rates because the net result is increased work-in-process inventory (WIP), which needlessly ties up cash, causes delayed deliveries to customers, and a host of other negative effects.  Again, I ask, how fast should each step be running to avoid this explosion of WIP?

Figure 2

In my first post in this series, I introduced the characteristics of a system and explained that every system contains elements and has at least one constraining factor that controls its output. In our manufacturing system we identified Step 3 as our constraining factor.  The fact is, in order to avoid the explosion of WIP and all of the other negative consequences associated with it, Steps 1 and 2 should be producing product at the same rate as the constraining factor which in our example is 1 part every 90 minutes.  Again, if we want to increase the output of this manufacturing system, we must reduce the time required to process material in Step 3.

The most effective way to reduce the cycle time of our system constraint is by looking at it through the lens of both waste and variation.  There are many different forms of waste that exist within all manufacturing systems.  Table 1 is a tool I have successfully used many times to search for sources of waste within manufacturing systems. You will notice that I have listed ten different sources of waste, and symptoms of their existence, instead of the traditional eight forms of waste. I do this to be as specific as possible in our search for waste. For example, I have listed over-production and inventory separately, because the negative impact of over-production exhibits completely different symptoms than waste of inventory and will require different actions to correct. It helps us focus better.

Waste Description	Symptoms to Look For
Waste of Transportation	1.      Too many forklifts 2.      Product has to be moved, stacked and moved again 3.      Process steps are far apart
Waste of Waiting	1.      Frequent/chronic equipment breakdowns 2.      Equipment changeovers taking hours rather than minutes 3.      Operators waiting for inspectors to inspect product
Waste of Organization and Space	1.      Operators looking for tools, materials, supplies, parts, etc. 2.      Large distances between process steps 3.      Not able to determine process status in 15 seconds 4.      Many different work methods for same process 5.      Poor lighting or dirty environment
Waste of Over-processing	1.      Rework levels are high 2.      Trying to produce perfect quality that isn’t required by customer 3.      No documented quality standards
Waste of Motion	1.      Process steps located as functional islands with no uniform flow 2.      Excessive turning, walking, bending, stooping, etc. within the process
Waste of inventory	1.      Product being made without orders 2.      Obsolete inventory 3.      Racks full of product.
Waste of Defective Product	1.      Problems never seem to get solved and just keep coming back 2.      Independent rework areas have become just another step in the process 3.      Excessive repairs
Waste of Overproduction	1.      Long production runs of the same part to avoid changeovers and set-up time 2.      Pockets of excess inventory around the plant 3.      Making excess or products earlier or in greater quantities than the customer wants or needs.
Waste of Under-utilization	1.      No operator involvement on problem-solving teams 2.      No regular stand-up meetings with operators to get new ideas 3.      No suggestion system in place to collect improvement ideas 4.      Not recording delays and reasons for the delays
Waste of Storage and Handling	1.      Many storage racks full of product 2.      Damaged parts in inventory 3.      Storing product away from the point of use

Table 1

Waste and variation reduction efforts are not effective if they aren’t done so with a systematic plan that ties both steps together. You want waste and variation to be attacked simultaneously, to ensure that any changes made in the name of waste reduction, aren’t negatively impacting variation and vice-versa. Remember that for now, because the constraint dictates throughout, and increasing throughput yields the highest potential for significant profitability improvement, you are focusing your waste and variation reduction efforts only on the constraint. The exceptions to this would be, upstream process steps causing the constraint to be starved, or downstream process steps are scrapping product or causing excessive rework. You cannot ignore these two exceptions, but primarily, you will be focusing your improvement efforts on the system constraint.

Now that we have discussed waste in our system, let’s now want to turn our attention to variation.  In my next post in this series, we will do just that.