Made-to-Order Lean

Excelling in a High-Mix, Low-Volume Environment

Greg Lane

• Publisher: Productivity Press
• Year: 2020
• ISBN:
  9781420086881
• Edition: 1
• Topic: Business
• Subtopic: Industrial Management
• Index: Business

Toyota Production System methods have rendered remarkable results in high-volume manufacturing plants, but they have not been fully understood and correctly applied in high-mix, low-volume environments. While lean principles do apply, the implementation methods and tools must be adapted and alternate methods embraced in a low-volume environment. This volume is specifically geared for manufacturers that have hundreds to thousands of active part numbers with few or no ongoing forecasted volumes, and for job shops that build only to order. The primary focus is eliminating non-value-added activities and instituting improvements on the most repetitive jobs, a strategy that gives you more time to produce your low-volume work or one-offs.

About the author:

Greg Lane is a faculty member of the Lean Enterprise Institute and an advisor to the Instituto de Lean Management in Spain. During his time with Toyota, he was one of a handful of candidates selected for a one-year training program conducted by the company's masters. He became certified as a Toyota Production System (TPS) Key Person and continued his work with Toyota, training others in TPS.

He has been highly active in working on implementing lean around the world, supporting large and small companies alike. In 1998, he began to focus his lean endeavors on meeting the specific needs of high-mix, low-volume enterprises. During his time as an independent consultant, Greg purchased and operated his own manufacturing company, which specialized in fast turnaround on high-mix, low-volume parts. Greg used TPS to grow the business and nearly double its sales.

Greg and his associates have experience not only at adapting the methods contained in this book, but also in applying other tools that are too numerous to detail here. They can be reached for further support with your lean transformation via email: [email protected]

1

Managing Visually

Visualizationis an important starting point for managing in real time, either on the shop floor or in the department where the work is being completed. If you cannot clearly and quickly understand the status of your system, you will have a hard time prioritizing your limited resources. Putting simple visualization systems in place helps you in developing an eye for waste or at least pushes you into asking specific questions and getting to the root cause of problems.

What gets measured usually improves, yet many companies are content to perform financial measurements at a high level within the company. Activity on the shop floor is assumed to mean the area is productive, yet that activity is rarely measured directly. Even if everyone in the organization has well-developed eyes for waste and knows how to bring such waste to the attention of management, quick visualization systems allow you to manage in real time, not in a production meeting after the fact. Although there may be comfort in discussing waste in the meeting room the day after, by that point, capacity is already lost, and it can never be regained.

Visual management (also called visuals) allows you to quickly grasp the current situation in real time. It comes in many forms: business or project plans; standardized work; schedules; production performance charts; shadow boards; value stream maps; andon signals; and so on. Although there is a fine line between “visual management” and “industrial wallpaper” if you do not create a lean foundation on the shop floor and construct useful visuals, you have wasted your time.

When developing any visual, you need to involve everyone who will either supply information or utilize the available information. Explain the reasons for the visual and get feedback and buy-in. This chapter first focuses on ensuring you are measuring the correct items, and then shows you how to utilize the best visual format on your shop floor and in your office.

Using the Right Metrics

Metrics (also known as performance indicators) are measurements used to determine whether a process is improving. Often, metrics are based on quality, productivity, cost, delivery, profitability, and safety. Good metrics are aligned through the organization in the form of strategic planning, starting from the corporation’s goals, which are then linked to the plant’s goals and then further linked to each department’s goals.

Before discussing how visual management is implemented most effectively in the office and factory, be sure your management is using the right measurements to drive improvements. All measurements drive behavior, and the wrong measurements can cause negative effects. Financial performance measures record history whereas nonfinancial numbers can measure in real time and can be traced directly to financial results.

Traditional “management by objectives” taught in business schools can be dangerous since it recommends performance be measured by quality, inventory, customer service, profit, labor efficiency, overhead costs, machine utilization, etc., when in fact improving one of these measures can drag down another and confuse management. Lean instead focuses its measures on improving the flow of materials and information, knowing this will improve performance.

Since we need measures to understand if we are improving, ask yourself: Does the metric measure what is important, and does it drive the correct behavior? When reviewing visuals, be clear about who is responsible for this chart/measurement, know what it is actually measuring, and make sure your metric does not fall into one of the following three categories:

1. The responsible manager has little influence. Understand how the metric is calculated and what influence the responsible person has over the factors in the equation. Assuming the metric consists of a numerator and denominator, does the manager have influence over one or both? Consider, for example, a production manager who is responsible for a productivity measurement of “wages/sales.” In many cases, a production manager is not able to directly influence wages (although he or she might have a small influence regarding overtime), because there is a fixed number of permanent employees at predetermined wages. Sales figures are usually the responsibility of the sales department; therefore, the production manager has little influence (he or she can try only to get all orders shipped by the request date). However, if you change the metric to “minutes/part,” there is direct accountability, which should push the production manager to improve productivity. It is advisable to review your metrics and determine whether the responsible manager(s) actually has a direct influence over the factors comprising the measurement.
2. Metrics are subject to opinions or outside factors. RPPM (returned parts per million) is an example of an important and necessary measurement, but it often represents the customer’s inspection/perception. There is also usually a delay in obtaining and acting on this data, and some customer complaints are either outside the internal inspection limits or are caused by outside factors (for example, shipping damage, improper application, and so on). So although this metric must be looked at and all returns must be analyzed, it is sometimes better for the quality and production managers to track and base immediate actions on internal quality measures rather than quality issues that make it through to customers. (Also, internal quality should measure and reflect the types of RPPMs being discovered and should periodically be adjusted ...