Lean transformations

Are you using the basics?

by Mark Gooch

I spoke recently at an annual convention of manufacturers. The topic was “Taking Lean to the Next Level.”  After my presentation a small business owner approached me and with the greeting, “I am disappointed in your presentation. You gave me nothing new to work with and everything you focused on doesn’t even help companies like mine.”

I asked him to explain his situation and offered some personal focus time. As he spoke, several things became apparent. He had been to courses, workshops and conferences and read a few books, but had never committed to learning or applying the basic tenants or principles of Lean.

When we talked about identifying waste in his system, he recounted the actions he had taken over the years to assure waste never entered his business. When I asked about TAKT time, his recoil was “That doesn’t apply to our company. We are a custom design manufacturing business and you can’t use that automotive stuff in my plant.”

I soon learned Mr. Disappointed’s idea of overproduction and excess inventory (specifically WIP – work in process) was focused just on the shop floor. He had indeed reduced manufacturing cycle time (chip cutting and some assembly work) quite impressively over the years, but he had never looked at engineering, CNC programming, purchasing, quality or other functions that supported the manufacturing area (shop floor). When he spoke of a three- to four-week cycle time, he ignored the 15 to 18 weeks that jobs spent in the previously mentioned areas.

As we spoke, I gathered some of the following information and began applying the Lean techniques. His major and most expensive area for inventory was in billable engineering hours required and sold for design, layout and machine tool programming. This became WIP in the purest sense, but was not considered such by the business owner since it was not “traditional.”  The average job entered his process within two days of receiving an order, and the initial design work was completed within the first week of cycle time.

The job then waited in a second queue more than 30 days before it moved to the next process in another building where part layout and final dimensioning was completed in one to two days. Week 10 began the programming activities, which were usually final in one day. At this point, more than 30 hours of labor were “tied up” in billable hours, 11 weeks were gone and no invoicing had completed.

A scheduler was hired in the engineering group (disguised as an engineering administrator) to log jobs, track open jobs through engineering and schedule jobs for the next level of activity.

All of this was over-production — 30 hours (less than 4 days of work) had been accomplished but the complete cycle time was now in excess of 11 weeks!  Approximately five percent of the cycle time was value added, leaving 95 percent as non-value added to the customer or the business owner — the only entity that had experienced any cash flow was the negative impact the business owner had experienced.

When purchasing received the job, they usually ordered the material the same day, since they were now being pushed by the owner to “get that material in here immediately.” (After being invited to work with this company for several months, I discovered that a premium was paid 30 percent of the time to expedite material delivery, something that could have easily been avoided by having the design person order the material when it was specified 10 weeks earlier.) 

This can be classified as processing (or over-processing) waste since expediting is seldom necessary. The “need” was created by internal delays in getting the job completed. It was an under-utilization of talent: the design person was completely willing and able to place the order.

Weeks 12 to 14 were usually waiting days since the material was on order. Week 15 began the actual manufacturing of the average order. Even with the focus that had been placed on the manufacturing process over the years, there was still opportunity. Approximately three hours of manufacturing was required, yet it took three weeks to accomplish the task.

Mark Gooch has held senior level positions with GE Aircraft Engines, Goodrich Aerospace and Williams-International. He has worked with operations ranging from 15 people to organizations of 30,000. Contact Coach Gooch at 641-620-1320; E-mail: mgooch@simpler.com. 

This article appeared in the August/September 2005 issue of MRO Today magazine. Copyright 2005.

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