The LEAN Accountants

Webinar Recap: LEAN Operation Practices

We had another fantastic webinar yesterday presented by David Blain around LEAN Operation Practices! Thank you to everyone that attended and received CPE credit.

LEAN teaches a systematic approach to eliminating wastes and creating flow throughout the enterprise. We will be discussing the 5S concept of establishing a standard process and sustaining that process to create efficiency in any environment to help you reduce their internal cost of operations and overhead.

Be sure to check out our Upcoming Events page for news and updates on our future seminars and webinars.

Below, you will find the links to download a copy of the PowerPoint slides as well as replay the presentation, enjoy!

Download the PowerPoint LEAN 5S Webinar Slides.pptx

Link to view the presentation in a new window

Take The Time To Do It Right

Success in the manufacturing/distribution business starts with your order entry system. It's an expensive proposition to say there's no time to do things right the first time but always time to redo mistakes over and over again.

"Always do right. It will please some people and astonish the rest."         - Mark Twain

If you don't get it right the first time, your costs add up and your bottom line erodes. You can spend hours, or even days, fixing errors and squandering resources. The costs go beyond measurable forms, such as customer complaints, lost orders, wasted inventory and excessive overtime. Your staff may become frustrated and apathetic.

Shore up your bottom line by ensuring the efficiency of your order entry system. Put a priority on the following areas and set the foundation for tightly controlled costs, satisfied customers and new revenue streams.

Priority 1: Spell out job responsibilities. It should be unacceptable for any employee to say, "It's not my job." Employees must recognize the importance of taking responsibility for getting the job done, whether it's part of their specific role or not. The customer is always right and each employee must be held accountable for upholding that principle.

Priority 2: Make sure information flows freely. Your sales staff needs reports and updates quickly so they can pass the information to customers. You need to send orders immediately to the warehouse for processing. Look for bottlenecks. Make certain your employees communicate with each other, with customers and with product manufacturers. Explore technological solutions, such as more efficient use of e-mail, laptops, or software geared to your specific needs.

Priority 3: Keep a fastidious database. Gathering and storing customer information is the foundation for successful, targeted marketing programs. Keep your database continuously and consistently updated. Include the products that customers order, the amounts and dates. Keep a record of promotions offered and accepted. Log conversations with customers. Make sure your employees know the importance of correctly entering data. A simple price error costs time and labor to fix and could cost a customer. And maintain only one database. Too often, companies keep more than one and they cannot easily make a change to correct everything at one time.
 
Priority 4: Establish a firm pricing policy. Customers and employees must clearly understand your pricing system. Special pricing programs can drive promotional campaigns. Your staff should use these policies to advise customers placing orders to take advantage of discounts and special offerings.

Priority 5: Customers want guaranteed delivery times. Be sure your shipping department allows your sales and service reps to make that promise. If you receive an order by a certain time, your system should enable you to ship it the same day. Offer customers partial shipments if an item is unavailable and make every effort to get the missing items quickly. Your delivery times should be in line with, or better than, the competition's. In addition, your process should allow for the quick handling of emergency or irregular orders from both existing and new customers.

Details count. Small errors can work their way into your system and be difficult to weed out. In the end, your bottom line suffers and you run the risk of losing valuable customers.

To learn more about this topic, please contact the LEAN Accountants of McKonly and Asbury, LLP.

Do you know your TAKT Time?

Most manufacturers understand and know the traditional way to analyze the efficiency of a process. Typically a manufacturing line has been reviewed for how much output can be produced at any one time. Once that is established, then it is determined how much can be produced for a customer to meet its demand.

What is the problem with this equation? The problem is that you are not truly satisfying the customer demand and requirements but telling the customer what you can produce for them. What the manufacturer is working from is a “Push” rather than “Pull” theory of production. Push meaning that the production occurs through a push of materials and labor in the process to meet customer demand versus allowing the customer demand to pull produced product from production to meet customer demand while allowing production to flex with this demand.

What this article is going to focus on is how to increase efficiency in production through understanding TAKT Time. TAKT Time is used to design assembly and pacemaker processes, to assess production conditions, to calculate pitch, to develop material handling containerization and routes, to determine problem response requirements, and so on. 

TAKT Time is a LEAN equation that was developed by Toyota with its LEAN process and Six Sigma management. What TAKT Time ultimately answers is “How fast should we produce.” TAKT Time synchronizes the pace of production to match the pace of sales. TAKT Time also identifies the rate needed for assembling a product based on sales rate.

 

Keep Production Lines Efficient – Eliminate the Unnecessary

It's a build-to-order manufacturing environment and that means frequent changeovers in your production line. And each time you make changes to produce a new item, you suffer significant downtime.

But there may be ways to shave time off those non-productive periods. These four suggestions have proven to buy manufacturers time:

Lean Material Stocking     Instead of trying to trim retooling time, try eliminating it with a lean material stocking system.     An established principle of time management is to handle each piece of paper just once. It's rare to achieve that efficiency, but aiming for it makes you think about unnecessary steps. Applying that principle to parts and maintenance, compare these two scenarios of the typical route from delivery to production:      Before the lean method:     Shipment arrives.     Parts are stocked until needed for production.     Parts are assembled into kits and sent to production.     The parts are ready for production when needed.     After the lean method:     Shipment arrives     Parts are sorted and sent to carts holding bins labeled for each part number.     When production is ready, the cart is moved to the job.     What the lean material stock system does:     Eliminates the labor-intensive steps of storing, locating and retrieving materials, and assembling kits.     Provides visual inventory control, because by looking at a bin, you can see if a part is in short supply.     Offers just-in-time capabilities. Almost as soon as materials are received, they are ready to be used in production.

1. Measure setup time. It should be a key metric in batch-driven processes. If you're not establishing goals and monitoring setup time, it can get away from you.

2. Mimic NASCAR. One company occasionally stops production to hold a contest, putting together "pit crews" to see who can set up a machine the fastest. The winning team's time becomes the new goal. Winners get bragging rights.

3. Think Japanese. Manufacturers in Japan are known for their efficiency and ability to make quick changes. One of the techniques they use is Kaizen. Assemble a team that cuts across disciplines and spend three to five days tackling a process improvement problem. For example, one company had a team reconfigure work and storage areas. It reduced setup time from 6 hours to 40 minutes.

Several factors contribute to Kaizen success:

•  Holding the event elevates the problem to priority level.
•  Include people on the team who have no production experience, along with those who do. This improves the problem-solving process.
•  Follow the Kaizen event outline.
•  Set the expectation that the team will make a major achievement in a very short time.

4. Consider another Japanese method. Japanese industrial engineer Shigeo Shingo developed the "Single Minute Exchange of Dies" process for Toyota as an essential component of just-in-time manufacturing. He maintained that most approaches to reducing setup time limit their success by focusing on improving employee skills rather than on making changes in the process that lower the skills needed. Shingo describes how to implement SMED in his book, A Revolution in Manufacturing: 

•  Analyze the production system thoroughly and the role setup plays in that system.
•  Study the internal setup, or those processes that can be carried out only when the machine is idle, for example, changing dies.
•  Study external setup, or those processes that can be carried out while the machine is running, such as transporting dies or checking availability of materials.
•  Determine how internal setup can be converted to external setup, thus streamlining the entire process.

The best changeover is no changeover. Look at ways products can be redesigned to share more of the same parts. Moreover, if you're running small batches of similar products, you might be able to avoid changeover by taking some processes offline.

For more information on this article and LEAN, please contact our LEAN professionals at Mckonly and Asbury, LLP.

 

LEAN is for More than Manufacturing

In today’s manufacturing world, LEAN is the buzzword symbolic of operational efficiency and process improvement. Synonymous with Six Sigma, LEAN has become the mantra of the manufacturing word when it comes to eliminating waste and improving workflow and movement.

 

But, can LEAN be incorporated into other industries such as service industries or other non-manufacturing related industries. The simple answer to this question is: ABSOLUTELY!

 

The concepts of LEAN are universal. Whether it is manufacturing or even banking, the concepts and principals of LEAN can be incorporated into any industry. This article will focus on one specific industry outside of manufacturing and how LEAN principals can be incorporated into its systems and operations.

 

LEAN for the Construction Professional

 

So, how can a construction company use the principals of LEAN? One of the biggest issues in the construction industry is workflow management. Project delays due to stoppages in workflow are the most likely causes of wasteful spending and inefficiencies with construction projects. LEAN construction aims to reduce the waste caused by this unpredictable workflow. LEAN’s focus is to build the project while maximizing value, minimizing waste and pursuing perfection, for the benefit of all project stakeholders.

 

Get a Clear Picture of Your Operations

If you're like most manufacturers, you don't track order-processing. Yet focusing on this performance metric can identify operational inefficiencies that are cost-cutting opportunities. And continued monitoring lets you keep those costs in check and predict future outlays.

Profiles and Histories Consider using a system that manages data about customer buying behaviors along with tracking order-processing. Customer profiles and order histories enable you to develop sales strategies based on demand and forecast opportunities to cross-sell and up-sell.

Customer order management means different things to different people. It may be limited to account processing and the activities involved in the entry, maintenance, and fulfillment of orders. Some of the tasks include pricing, managing customer credit, checking parts availability, inquiring about order status, invoicing and processing accounts receivable. In other words, customer order management includes every process from order to payment receipt.

Your company needs to develop a blueprint that delineates the tasks to be measured.

Tracking begins with a specialized enterprise resource planning (ERP) system or online workflow management program that can capture the workflow transactions involved in order processing. This is done in much the same way as you'd measure non-linear workflow in the production setting. As orders move from one person or terminal to another, they are automatically time-stamped and the number of times an order "changes hands" is recorded.
An analysis of the workflow metrics is handled by a business intelligence program that gives a non-IT person, such as a

An Example One award-winning manufacturer conducts weekly reviews of order management and other logistics of costs and performance.    Data is gathered and analyzed using the same parameters that companies typically use on the manufacturing floor - first-pass yield, cycle time, and on-time delivery. Every Friday at 3 p.m., the results are reviewed and problems are discussed and worked out.

COO, the ability to "slice and dice" the data into a meaningful report. As the system gathers data over time, you'll have a performance and cost record that can be used to analyze and fix inefficiencies. This ongoing analysis becomes an important tool for continuous improvement and forecasting.

The visibility that tracking brings to order-processing reveals costly patterns that provide a basis for planning and scheduling. Furthermore, in discussions of order-processing, tracking offers objective data that puts everyone on the same page.

While computer programs are essential for gathering data, analyzing complex processes, and providing routine monitoring, don't overlook the human element. Make order-processing improvements a priority, and charge a team of stakeholders with streamlining the process.

You can learn a great deal about your operation when you know, for example, the steps involved in entering a new order. How many departments and individuals handle the order? How many pieces of paper change hands? What happens when an order changes? This lets you determine where bottlenecks exist and what transactions need to be changed, eliminated or added.  

To learn more about this and other LEAN ideas, our LEAN Accountants can help. Feel free to contact them at WWW.LEANACCOUNTANTS.com.

 

Identifying the Major Causes of Waste in Information Flow Can Help Improve Supply Chain Operations

As part of the Value Stream Mapping process, significant time is spent understanding the movement of personnel and materials. This mapping can identify root causes of inefficiency and wasted motion and process. This post will identify some of the root causes of waste within the information flow process and recommendations for improving overall information flow.

 

Major Causes of Waste in Information Flows

 

• Dependent Decision Cycles – This relates to the inability of key decisions to be made or key operations to start prior to the receipt of one or more key data flows from another part of the process.
• Push-Pull Conflicts – These occur as a result of incongruent dataflow triggers between two or more sequential parts of the process. An example would be a document pushed by the originating department into the in-tray of the recipient department without any type of signal to the recipient decision-maker that the document was available.
• Complex interfaces with External Entities and Suppliers – Unlike the physical replenishment process where the organization typically interacts on a one-to-one basis with a supplier, the information domain often reflects a complex interface with its suppliers. As an example, a manufacturing operation could be involved with coordinating information flows with four primary suppliers, including a manufacturer of an own-brand product, a design agency, a reprographic agency, and a printer/supplier of carton packaging. This complexity could be further exacerbated by a mutual dependency between the suppliers.
• Bottleneck Functions and Inappropriate Capacity Planning – When an administrative process is viewed as a production system it can be seen to be composed of a series of work centers with varying capacities. Inevitably, one or more of these work centers or departments or functions will form a bottleneck, which is often neither recognized nor managed effectively. Time wasted at a bottleneck is time wasted by the whole system.

The Eight Deadly Wastes – Do You Know What They Are?

There are many wastes that can occur in a manufacturing process. Re-work, in-efficient movement and production down time are just a few of the obvious waste. But, do you know what the eight most common waste are and how does it impact value added and non-value added activities.
 

Before we can even talk about waste, we need to define what is value added versus non-value added processes in a manufacturing environment. Value added is any activity that changes the fit, form, or function of a product. This typically is a modification to a products performance that enhances its efficiency. An example of this would be increased fuel economy due to an engine redesign. The key to value added is that the customer must be willing to pay for these activities.
 

So, what is non-value added? Non-value added is any activity that does not change the fit, form, or function. The customer is typically not willing to pay for these. These are the costs that must become the focus to be reduced or eliminated.
 

The key to a LEAN manufacturing environment is to eliminate these eight wastes. The eight wastes are non-value added activities. By eliminating these eight wastes you will increase your value added abilities which will ultimately increase profitability. If you can manage these wastes it will improve your earnings potential and improve cashflow.
 

The acronym for the eight wastes is DOWNTIME. Downtime stands for:

Defects

Overproduction

Waiting

Non-value added processing

Transportation

Inventory excess

Motion waste

Employee/people waste
 

1. Defects

Defects are usually due to inspection and rework of defective material in inventory. Some causes of defects are:

• Weak process capability
• Poor quality controls
• Uncontrolled inventory levels
• Poor process documentation
• Misunderstood customer needs
• Design changes
• Poor machine capability

2. Overproduction

Overproduction is making more than is required by the customer, making earlier than is required by the customer and making product the customer does not want. This is a major flaw that occurs unknowingly with most manufacturers. This waste can tie up significant working capital resources that can be used for other business operations. Some key causes of overproduction are: