Comparing major manufacturing improvement methods — Part 2

EDITOR'S NOTE: The past decade has seen the development of a number of manufacturing management concepts. Chief among them are: lean manufacturing, Six Sigma, supply chain management, total productive maintenance (TPM), and reliability centered maintenance (RCM). While these names are well known, they are not well understood.

10/01/2001



Lean Manufacturing

Lean Manufacturing is more a philosophy or condition than it is a process. For example, when you're lean, you minimize waste in all its forms by:

  • Having minimal inventory, work in process, and raw material

  • Having high on-time delivery performance

  • Operating in a "pull" mode; that is, you make only enough to fill near-term demand

  • Making more smaller batches and having fewer longer runs (a bit counter-intuitive)

  • Minimizing delay times and system cycle times.

    • And you use techniques such as:

      • One-piece flow, quick changeover, takt time, and mistake proofing (Takt time is the pace at which the plant operates to meet market demand—and no more.)

      • Measuring system cycle times and delay times, and managing them effectively

      • Minimizing the variability of your processes

      • Having very reliable equipment through proactive maintenance.

        • Process plants tend to be inherently leaner than batch and discrete plants — they don't or can't carry a lot of intermediate stocks to compensate for disruptions. But they also tend to "push" production more so than batch and discrete plants. This tendency to push generally relates to a lesser ability to operate efficiently at production rates below design. Process manufacturers generally also have better reliability, better operating and maintenance practices, and better plant management support in the application of these principles.

          Batch/discrete manufacturers tend to carry more intermediate stocks to handle production and equipment disruptions. They also tend to be less reliable, having poorer operating and maintenance practices.

          But, they can more effectively operate in a pull mode, due in large measure to a greater tendency to have manufacturing "cells" that can operate relatively autonomously without sacrificing the efficiency of the total operation.

          If you don't have reliable processes and equipment, it will be very difficult to be lean. You need that extra "stuff" (buffer stocks, spare parts, spare equipment, etc.) to manage your unreliability and still meet customer demands. You must have the basics of good reliability practices in place to assure lean manufacturing performance.

          Further, good reliability is not just about maintenance. Superb reliability requires excellence in design, procurement, operations, and maintenance. MCP Consulting, in its work with the Dept. of Trade and Industry in the United Kingdom, observed that some 40-50% of equipment breakdowns were related to poor operating practices; 30-40% were related to poor equipment design or condition, and 10-30% were related to poor maintenance practices.

          Several Fortune 500 manufacturers have also reported that two-thirds of equipment downtime is a result of poor operating or design practices, not poor maintenance, and that some two-thirds of all production losses, as measured against ideal, are not related to equipment downtime.

          Clearly, if you want reliability, the first order of business is to ensure excellence in operating practice, then over the longer term excellence in design practices. Of course excellence in maintenance is always a plus.

          Six Sigma

          Six Sigma is a statistical term that characterizes quality as having less than 3.4 defects per million for a given product or process specification. However, Six Sigma has also become the name for a methodology for reducing the variability of processes such that the result is greater quality and consistency. It stresses simultaneously achieving seemingly contrary objectives:

          • Being stable—and innovative

          • Seeing the big picture—and the details

          • Being creative—and rational.

            • Similar to Deming's "plan, do, check, act," Six Sigma applies the DMAIC model — define, measure, analyze, improve, control — on core processes and key customers.

              Principal themes of the Six Sigma methodology include:

              • Focus on customer satisfaction/success

              • Data/fact driven management

              • Process management and improvement

              • Proactive management

              • Boundaryless collaboration

              • Drive for perfection, but tolerance for failure.

                • Principal tools/methods used in the Six Sigma method include:

                  • Continuous improvement

                  • Process management

                  • Process design/redesign

                  • Customer feedback

                  • Creative thinking

                  • Analysis of variance

                  • Balanced scorecards

                  • Design of experiments

                  • Statistical process control

                  • Improvement projects.

                    • One of the cautions regarding the use of Six Sigma is: don't start with a "nerdy" monologue on SPC or statistical analysis. This approach damages its credibility, particularly with the shop floor. According to David Burns of SIRF Round Tables in Australia, the first step in applying Six Sigma principles is to address the obvious and make sure good basic practices are in place. The second step is to standardize your processes. And step three is to perfect your processes. Of course, applying the tools described above is a good approach. The point of emphasis here, however, is that achieving step one — getting good basic practices in place first, including excellence in maintenance and reliability — is essential for success.

                      Supply Chain Principles

                      A supply chain is a supplier, a manufacturer, and a customer working as a team in a supply chain to optimize "chain" performance.

                      Applying supply chain principles can minimize business system cycle times, inventories, and costs, while assuring timely delivery, to improve customer satisfaction and profits, supplier profits, and your profits.

                      To accomplish these objectives, you must review the entire "chain," and use process mapping techniques to predict the chain's performance in area such as business system cycle times, inventories, distribution requirements, costs, risk/delays, and so on.

                      Then you must work to optimize the chain. In doing so, teams typically address issues such as:

                      • Designability

                      • Producability

                      • Affordability

                      • Salability

                      • Other appropriate capabilities.

                        • In the method described by Robert Parker, a champion is appointed for each area, from each company. Decisions on supply chain issues require that each team member be "at least 70% satisfied" with the team's decisions and direction.

                          Decisions are always focused on meeting or exceeding the needs of the ultimate customer in the supply chain. Peer pressure usually mitigates or eliminates any "lone ranger" behavior among the team.

                          Team members must committed to:

                          • Cooperation, communication and trust

                          • Using competencies of the supply chain

                          • Generating long term benefits

                          • Common measures of success

                          • Continuous improvement

                          • Sharing of competitive pressures within the extended enterprise.

                            • Surveys are often conducted among team members to ensure that these commitments are being met, and if discrepancies are observed, corrective actions are taken to minimize them.

                              Benefits reported include 20-70% quality improvement, 30-90% shorter cycle times, 15-30% waste reduction, threefold-or-more technology gains, and diminished hazards through shared risk. Benefits are typically shared 1/3 to end customer, 1/3 to the principle chain member, and 1/3 to other chain members

                              Here are some observations and suggestions concerning supply chain management.

                              Don't use "supply chain principles" as a method for squeezing suppliers on price, as some have done. It provides less than optimal results. If you squeeze your supplier too hard on price, they'll have to make money some other way, sometimes by eliminating things you need even more than the price break. Your focus should be on concepts such as value, supply chain performance, total cost of ownership, and net operating results with key suppliers.

                              Do use supply chain principles to create "winners" throughout the chain.

                              If your plant isn't reliable, supply chain management is much more difficult.

                              As you likely have noticed, all three of the approaches discussed so far (lean manufacturing, Six Sigma, and supply chain) have a lot in common. In particular, they all assume some very basic principles are being applied to assure exceptional equipment and process reliability.

                              But, in my experience, few plants demonstrate excellence in reliability practices, making these management methods particularly problematic in their application.

                              You can't be lean if your processes and equipment aren't reliable. You'll need lots of extra "stuff" to make up for the disruptions, delays, and process variability, and your lean manufacturing strategy will not be nearly as successful. Indeed, if you take out the inventory and the people before you ensure excellence in your processes, it will fail.

                              You can't apply Six Sigma in a manufacturing plant very effectively if your equipment isn't reliable. Its unreliability induces lots of variability, not to mention frustration. Or, as one of my friends at a Fortune 500 company opined, "It's hard to be a six sigma company in a two sigma environment."

                              Finally, you can't have really good supply chain performance if you can't deliver your products in a timely, dependable, quality way. Lots of delays and costs are induced by unreliability in plant processes and equipment.

                              So, how do we assure basic reliability of the plant before, or as part of, launching into lean, Six Sigma, or supply chain efforts? Two of the more common methods are total productive maintenance (TPM) and reliability centered maintenance (RCM). These will be discussed in part 3 of this series.




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