In the last month or so I have worked with three different manufacturers who (1) figured out that the essence of lean is accelerating flow, and (2) promptly went out to re-arrange their factories to achieve better flow. They get an 'A' for effort, but to think that lean flow is simply a matter of factory layout is to delude yourself into believing that cycle time compression can be bought for the price of a few hours of rigger time. It isn't that easy. That is a bit like me thinking the only thing keeping me from the PGA Tour is my second rate golf clubs. While I would certainly need new and better clubs to be a pro golfer, there are a some bigger, more fundamental problems to solve before that is the the only thing stopping me.
While neither the logic nor the math are difficult it seems to be difficult for some folks to wrap their minds around the idea that the basic measurement of flow is cycle time: How long it normally takes for a unit of purchased material to go from the receiving dock to the shipping dock. And inventory is merely the physical manifestation of the cycle time. If you ship 50 items per day on average, and each product you ship takes 1 pound of a particular steel, and you have 200 pounds of that steel in your purchased inventory, it will take 4 days for the next pound of steel you buy to pass through your raw material inventory – you are shipping 50 pounds a day (50 units X a pound each) – so the 200 pounds in inventory equates to four days (200/50) of cycle time. All of this assumes first-in-first-out, of course. So the more inventory you have, the longer each pound of steel will sit, the longer the cycle time from receiving to shipping.
It is a fairly straightforward exercise to walk the entire process and count the inventory along the way and do the cycle time math. If you find a tub of 150 widgets stamped from that steel in process along the way, that tub represents 3 more days of cycle time. More WIP = longer cycle times.
So now we get to this factory layout matter. You have to ask yourself why there are three days worth of those widgets sitting there in that tub. It may well be that the next operation is a country mile away because the factory layout is lousy, so you can only afford to pay someone to haul them all that way every three days. More likely, however, is that three days of them were made because it takes a long time to set up the machine that stamped the widgets, so they are made in batches of 150 at a time. If that is the case, you can pay some guy a lot of money to pick up the stamping machine and move it next to the next machine in the process, but you will still have a tub of 150 widgets … and 3 days of cycle time.
In short, it does you no good to save distance if you are not saving time.
The reason for the batch may be a lot of things other than distance. It may be that you are not producing to demand pull so they were built to a forecast that turned out to be wrong, as forecasts always are. Or it may be that quality is shaky so you want to have plenty of them around just in case you encounter a bunch of defects. Or it may be that the machine breaks down a lot so you keep plenty of parts around for that eventuality. Sometimes the reason is as simple as having a handling container that holds 150 parts so people don't move things until they have filled the container – and all that is needed are smaller containers.
Sooner or later you will get to the point at which the biggest constraint to flow is the factory layout – the distance from one operation to the next, so sooner or later you will have to step up to it and pay those high priced riggers. For most factories, though, there is a lot of work to be done before you get to that point. And it stands to reason that you are not going to realize any of the enormous benefits from cycle time compression – flow – if you don't resolve the things that are truly constraining cycle time compression.
It's the same as me needing to do a lot of work on my putting … and chipping … and driving … and get rid of that wicked slice … and that ugly hook … before lack of professional clubs is the biggest problem I have to solve.
Jim Fernandez says
Thank you. You have helped me to better understand lean flow. And yes my factory floor is full of inventory.
Steve Dardaris says
I have read a lot of these blogs over the past several years and I never felt obligated to respond to your comments. This one falls close to home. As a first step to understanding the power of flow and lean manufacturing it is imperative that processes that are linked be close together regardless of there cycle times. The closer the better, so close that parts can’t accumulate between processes. The cycles, buffers and downtime will become evident once you try to make one move one. Flow is first thing you can see, and the problems and issues created will be the areas of focus on your mission to one piece flow. I have first hand experience at creating flow in manufacturing environments with large batches and the instant results were stunning. Thanks for the opportunity to share my thoughts.
Mark Welch says
This post nicely illustrates why as much waste needs to be removed from a process as possible before a 2P (Process Planning). Although the intentions and efforts of the manufacturers you were working with were noble, what they wound up doing was ensuring that they were still designing around a lot of waste. One wonders how much better their new designs could have been had they taken the time and had the discipline to do some kaizen (who knows how much) before they worked on the new layouts.
Jim Fernandez says
OK, wait a minute. Did I just read two opposing view points?
Steve wrote that if you put processes as clost to each other as possible, then “the parts can’t accumulate between processes. The cycles, buffers and downtime will become evident”.
And Mark wrote that we need to remove waste from the process before we design the layout. Which is what I believe Bill was saying in the original post.
Joe M. says
I have to throw a comment into this one. While the benefits of flow are not realized until changeovers, machine availability, etc. are improved I completely disagree that they are the primary target before creating flow. Creating flow first allows people to visualize the gains and in increases awareness to the issues. I completely dissagree with Bill on this one. FLOW FIRST!
Bill Waddell says
Guys,
As I pointed out, sooner or later you have to realign the factory to facilitate flow. I also appreciate the value of creating visualization. The problem is that I have the habit of wanting to play with the winnings, instead of my own money.
There is little financial gain from moving things around in the factory without first reducing lot sizes, improving quality and machine reliability and the like. It can cost quite a bit of money to do the rearranging, however.
I strongly recommend first improving the cycle time by solving the underlying problems – which usually generates a whole lot of positive cash flow – and then using some of that cash to pay for moving machines, running electrical, water and air lines, etc…
If someone needs to look at a big pile of inventory in order to get motivated, it shouldn’t be too hard to find it for them without rearranging the factory to do so.
Bill
Kathleen says
I understand what you’re saying Bill but I’m inclined to follow Joe on this one. You can’t do it all at once and if plant reorganization provides the dramatic effect they need to see the positive changes lean can create, then I see that as a win too. Sure it’s not as efficient and it’s more costly with the potential of needing rework but it could be the shot in the arm that inspires a firm to embrace further needed changes.
Bill Waddell says
You folks go your way and I’ll go mine, but from my experience if a company does not grasp the concept of cycle time intellectually, “dramatic effect” is a waste of time. Their lean journey will go nowhere until they see batch manufacturing as inherent waste regardless of the plant layout.
Grant Lindsay says
Since cash is often a constraint for many companies and typically the layout isn’t the primary cause of high inventory, I think it makes sense to focus on the causes for high inventory first. Plus, a lot of learning is likely to take place along the way that may influence the future layout.
Ultimately, you should arrive at a similar spot, but the time and cost of the routes may differ.
Grant
Kevin says
This is one I can comment on from personal experience, having tried it both ways. I’m now inclined to agree with Bill – but perhaps from a different perspective, and not because I’m biased as his coblogger. My current operation is in three separate buildings, none optimal – lots of convoluted rooms and such. But we’re now building a new large building and all the operations will be combined into a large completely flexible “ballroom.”
Had we built this building three or four years ago we would have really screwed up. Instead over the past several years we’ve learned about lean, focused on optimizing our processes in our convoluted facilities – which meant working on changeover, quality, one piece flow, demand flow, inventory minimization. Now, and only now, are we ready to lay out the production floor in a new facility. We simply didn’t know enough about the true underlying capability – and opportuntity – of our processes.
Tim Bowler says
Kathleen if you dont sort those underlying issues as Bill mentioned, then you run the risk of spending an awful lot of money rearranging the furniture, for effect only, without making real and serious gains and you will lose face. Lean is about taking continuous small bites in a slow and planned way. It is not the latest fad, where you rush to complete before moving on to the next buzz word, it is a way of thinking and that is what I believe Bill is trying to get across.
Sort the small underlying issues that are causing waste first using Kaizen, this will then make the rearrangement of the production floor much more obvious and easier, because there is less WIP and waste to contend with making improved flow simpler to implement and attain.
Joe M. says
All good points. Remember, we are all speaking from learning’s through past experiences. I have worked through a lean implementation in a very heavy industrial setting which means it is expensive to move equipment. I am currently working through an implementation where a majority of the equipment is small and flexible thus making it cheap to move equipment. Now, in MY experience I have found that it is best to get processes aligned first and then move on to removing the more apparent waste. Finally statements like “It is not the latest fad, where you rush to complete before moving on to the next buzz word” shows me that you are not open to others ideas. Tim, please send me the blue print that you and Bill use for successful implementations, I would love to see it.
“If you have an apple and I have an apple and we exchange apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas.”
George Bernard Shaw
Have a great weekend.
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