How to eat a chocolate elephant: Step by step method to reduce lead time

To reduce lead time, the first step is to prioritize the operations which will yield the most results, then review transactional history to check actual performance.

By Tom Voss, Daniel Penn Associates, LLC March 26, 2015

How do you eat a chocolate elephant? Well, the answer is easy and well-known – one bite at a time. The same is true when nibbling away at reducing lead time. A value stream map identifies opportunities through the build-up of work-in-process (WIP) which exists between operations in a process.

The first step is to prioritize the series of operations which will yield the most significant results. Nothing ensures continuous improvement like early success, and the bigger the success, the more momentum a team will gain in working to gain further improvements.

There are two ways to determine lead time.

The first is by checking actual 

performance, through reviewing transactional history from routers attached to the material. This should be done during the data gathering phase of the value stream mapping process. If routers aren’t used, then transactional history may be taken from the enterprise resource planning system’s material management module.

The second method, and perhaps even more revealing, is to calculate the lead time using Little’s Law. While on the data gathering walk of the VSM event, count the inventory at each operation. Then, use the simple formula. Little’s Law is simply expressed by dividing the amount of work-in-process by the daily requirement. The result yields the number of days of lead time.

(Hint: Don’t mix methods! Use the actual days from routers OR Little’s Law). Regardless of how the team arrives at the lead times, the work of the following kaizen events is to reduce lead times.

The kaizen team should regard every queue as the waste that it is. Work-in-process should not be arbitrarily reduced to 0. The technique is known as “Lean”, not “Anorexic”. The correct amount of work-in-process is calculated by dividing the operation’s total cycle time by takt time. This result yields standard work-in-process(SWIP).

There may be a lengthy change-over that’s not a SMED (single minute exchange of dies), but more like a SHED (single hour exchange of dies). There may be staffing issues, which reveals the need for standard work combinations and effective cross-training. More complex an issue may be large equipment installations that preclude co-locating into a cell or process layout. Along with implementing improvements, visual controls must be put in place so there’s no ‘augmentation’ to the defined SWIP. And, any amounts of WIP in excess of WIP required by current process limitations remain targets for further kaizen.

Case study:

A company had identified opportunities through a value stream mapping event. They divided the process into four major VSM planning loops, with a fifth loop focused on administrative (planning, forecasting and order receipt) activities. They saw opportunities with the final sequence of operations – two inspection operations, an assembly kitting operation, and a final pack operation.

The material is lot-controlled, so the parts can maintain traceability through the entire product lifecycle, an important requirement in the industry they serve. Parts would pile up while inspectors were performing other duties – the symptom of large lot, batch method material movement. When orders became due, or overdue, then it was an all hands on deck call to hustle material through the operations and onto a plane to the customer. This approach chews up a lot of space, a potential quality issue with mixed lot materials, and the pressure to get stuff out the door almost at all costs.

How about air-freight and overtime costs? The team used the Little’s Law approach to calculate lead time – 10.5 days of WIP. The sum of all operations’ cycle times was 10 minutes, which is about one minute of work per day per piece (not a great example of material flow).

They calculated standard work-in-process, which worked out to be 2. They decided that each of two different products (size and number of pieces per assembly set), it would be best to establish two inspection cells, facilitating flow for each product. Then the SWIP was now 1 for each cell. As the parts were inspected, kitted (left and right for the large parts; left, right and center for the smaller parts, and bagged, they were placed on a cart bound for pack. When the SWIP was reached – indicated by the filling of the rack on the cart, it was wheeled out of the clean room to a packing station where the inspector would final pack the parts, print the label, and call for pick up from shipping. They would then return to the clean room to commence inspecting the next group of parts.

While it would be a perfect ending to say this ended the air freight, it did not, at least right away. When there was enough in the supply chain, the company was able to start shipping by truck, so that air freight is an occasional charge, not a daily expense.

The total cost of the improvements was about $500 – a cart, some racks, and some colored tape. Lead time was 10.5 days and is now 5 days. The team stays focused on further improvements to reduce the WIP to SWIP, which would result in a 2 day lead time.

Chocolate elephant? Not completely eaten, but it’s lost some weight!

Tom Voss is senior consultant at Daniel Penn Associates, LLC. He has developed and implemented Lean enterprise solutions for more than 15 years. Trained and mentored in Lean concepts by the founders of Shingijitsu Company, Ltd., renowned experts of the Toyota Production System. Daniel Penn Associates, LLC is a CFE Media content partner. Edited by Joy Chang, digital project manager, Plant Engineering.

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