Automate or emigrate

Aug 2005 10:11
Investment in new materials handling equipment can improve efficiency, but is it a serious rival to low-cost overseas labour, asks Debbie Giggle

Many materials handling processes can be automated but, for the UK manufacturer, the decision whether to invest in automation can be a difficult one. The benefits are obvious. Automation can achieve improvements that may never be possible manually, and can greatly improve health and safety performance. Off-set against this however are issues of upfront outlay and potential inflexibility once the investment has been made. If production requirements change, will the shiny new crane end up a white elephant? And whilst automated systems provide outstanding performance on repeatable, high-volume tasks, how effective will they be for manufacturers who make to order, or who have frequent changeovers and short production runs?

As UK manufacturers go head-to-head against overseas companies with lower labour costs however, the pressure to achieve results through automation has never been greater.
Greg Smith of Industrial Automation – a company specialising in customised automated systems – said: “Often manufacturers are faced with a clear decision: automate and keep manufacture in the UK, or migrate production to a low cost economy. Simple as that.
“Companies with well-established continuous improvement programmes generally come to us with comprehensive data on existing production efficiency on which to base any cost-justification, so the potential payback period can be rapidly assessed. Companies who are newer to lean manufacturing may not have these metrics in place and we work with them to gauge the benefits. In either case, UK manufacturers typically look for a payback period of between twelve and 18 months combined with solid long-term efficiency improvements that close the gap between costs of manufacturing here and overseas.”

For Starpoint Electrics Limited based in Chessington, Surrey, the decision to invest in in-line automation to eliminate a manual stage of its process was taken as part of a larger cost-reduction exercise. The company manufactures a range of products for amusement and gaming machines, vending and point of sale. Manufacture of some highly price-sensitive products is sub-contracted to a company in Asia, but the company wanted to ensure that its core business – the manufacture of reels and push-buttons for fruit machines – could be retained in the UK.
In addition to competing with reel manufacturers overseas, Starpoint faces competition from an alternative technology. With the introduction of touchscreens, some game designers are experimenting with video-based alternatives to traditional reel-based games. Reducing production costs and improving efficiency are key to the company’s success.

“We invested in two new automated lines with robotic handling which incorporate test equipment positioned after each work station,” explained Mike McEvoy, Starpoint’s operations director. “Each reel is immediately tested at high speed and without operator intervention after each phase of the manufacturing process. This provides higher output with a reduction in direct labour. As problems are identified immediately rather than at the end of the line, reworking is reduced. The line also automatically alerts a supervisor if more than seven units are identified as having faults, to enable the batch to be stopped and the root cause identified rapidly and effectively.

“We were able to increase our rate of reel mechs produced per person per day from 50 to 89 through automation alone. With further design-for-manufacturing improvements we expect this figure to rise to 114. Quality levels have increased. Rework rates are drastically reduced and, as the lines do not require full-time supervision we now have the potential to move from a standard eight hour shift to 24 hour, round-the-clock production.”

Starpoint is not alone in favouring robotic technology according to Smith.
“Robotic technology has been around for a long time, but its popularity continues to grow,” he said. “It’s not necessarily because the technology itself has changed. I think it is because manufacturers are now much more confident about reconfiguring and re-using the equipment. Many companies now have a strong base of robotic programming skills in-house and can see the long-term potential and flexibility of the equipment if their needs should change.”

According to Nick Tyler of Tube and Bracket Company, flexibility has also become an issue for non-automated materials handling equipment.

“People want to get the maximum use out of existing equipment for storage and movement of materials, such as racks and trolleys, rather than throwing it out and buying more,” he said. “That’s praiseworthy in today’s economic climate, but older equipment is often too ‘fixed’ and inflexible. If equipment can’t be reconfigured or adapted the manufacturer ends up fitting the process around the shortcomings of the materials handling equipment, and that is very bad news for any continuous improvement team.”

Tube and Bracket Company supplies a modular system called LeanTek which comprises coated steel piping, joints and fixtures that can be assembled into a variety of solutions including live storage, carts, trolleys and ergonomic workstations for use throughout the manufacturing process. When requirements change the pieces can be unassembled and reconfigured to suit the new demands.

“If the right piece of equipment is used, instead of muddling by with something less suitable, a dramatic improvement can be made,” continued Tyler. “For example a 50 per cent space-saving and a 70 per cent improvement in pickability could be expected where the materials handling equipment is fit for purpose.”

TRB Limited, the automotive switch manufacturer uses modular storage and handling solutions including dynamic lineside racking, trolleys and workstations. Mike Robinson, assistant manager, production engineering at TRB Ltd said: “We supply switches to our customers on a just-in-time basis and have to be able to build and adapt racking, often at short notice, that has the right depth and incline for our specific production and handling requirements.”

When the TRB factory in North Wales first opened it sourced modular storage components from the Far East, but deliveries could take up to six weeks, which did not allow the company to implement rapid changes in production areas. This year it moved to local supply from Tube and Bracket Company, who provide LeanTek components from stock on overnight delivery. TRB estimates that using fit-for-purpose materials storage and movement systems has contributed to an increase in takt time efficiency of between 10 and 20 per cent, depending on the specific model.

Perhaps some of the greatest opportunities for materials handling improvements however relate to packaging, warehousing and dispatch.

R S Components has invested in the region of £60 million in automation in recent years. Its warehouse in Nuneaton is fully-automated and uses advanced barcode technology and automated routing to process its workload. It handles 4,000 transport modules per hour through its bulk storage area and 2,800 parcels per hour through its outbound area. The investment encompasses three cross-belt sorters, 28 automated cranes and around ten kilometres of conveyor. Each item of inventory is stored in a special container with barcode identification. The warehouse management system carries real-time information on the status of all 530,000 store locations and has built-in intelligence to know automatically where to store and locate each item.

Chris Hewerdine, systems support manager at RS Components Nuneaton said: “The installation of the equipment is really just the beginning. You obviously make immediate improvements in speed of order picking, operational costs and customer service with the installation of the system, but the benefits don’t stop there. The fully-automated system has been in place for almost eight years at Nuneaton but, as we learn more and more about the capabilities of the technology and redesign our processes, we are achieving even greater efficiencies.”

RS Components uses lean manufacturing tools such as measurement of key performance indicators and value stream mapping to design and enhance existing processes. Areas of the site and specific operations are divided down and analysed in detail to understand opportunities for streamlining of processes. On-going performance is monitored through a structured review schedule which includes weekly planning meetings.

“Our historic data provides a strong basis for the design of new pick processes,” Hewerdine continued. “For example in the light of changes in insurance regulations we have recently created a controlled products area within the site for the specialist storage of flammable and aerosol items. Historic data enabled us to determine the most effective pick method and the optimum use of manual intervention and automation.

“Another recent example is a project we have carried out to improve crane efficiency. The cranes have six tables: three upper and three lower. The upper and lower levels had traditionally worked independently of one another but, with more advanced knowledge of the technology, we have been able to link the operation of both levels together for far greater efficiency. This goes beyond the design capabilities of the equipment as supplied by the crane manufacturer and takes us into previously unavailable areas of functionality. We estimate that this has increased storage capability for each crane by around 30 per cent and, as we move several thousand items per hour, this equates to a significant overall improvement in performance.”

“The important thing is to apply joined-up thinking,” concluded Smith. “When assessing how automation can help, consider every area of manual intervention from goods in, through manufacturing, to loading of transport at dispatch. Then apply rigorous decision-making processes using historic data to decide where and how to automate.”

Source: The Manufacturer

Placement Accuracy Management: Key to Better Profits

The importance of quality control in PCB assembly operations has never been greater than it is now due to shrinking component and assembly sizes. Because of this, the ability to monitor and analyze trends in placement accuracy before they become a quality issue has never been more critical.

By Rick Flayler
Statistical analysis based on fundamentals of Motorola’s six sigma program is the most effective means to determine placement accuracy results. This principle of measuring quality in a quantifying manner lends itself to strides in machine performance, troubleshooting and analysis. The minimum target you want to achieve when applying six sigma principles to a chipshooter is sigma-level 4 (Cpk of 1.33 with a 1.5-sigma shift). This corresponds to a yield level of 99.38%. At this level, a user can expect to have 6,200 defects per million components placed (DPMO). These defects as they relate to SMT operations could be anything from misaligned, misplaced, tombstoned components, incorrect components, or dropped or missing components.



Figure 1. Chipshooter placement head.

These numbers seem easy enough; however, most chipshooters in the field do not operate at these levels. If they do, they unfortunately do not stay there for long. Many chipshooters out in the field are producing at levels of sigma 3 (Cpk of 1.00 with a 1.5-sigma shift). This corresponds to a yield level of 93.32%. At these levels, the defect rate per one million components placed jumps to 66,800 DPMO. Let’s look at a typical SMT line with the following assumptions:

Throughput per hour: 20,000 components
Shifts per day: 1
Hours of work per shift: 7
Days per week: 5
Weeks per year: 48

In this case, the total number of chip components placed by the chipshooter annually is about 34 million parts. At 4 sigma (1.33 Cpk), this results in 210,800 defects annually. However, at 3 sigma (1.00 Cpk), defect numbers increase to 2.3 million per year. The importance of monitoring and tracking the performance of your chipshooter is paramount to the success of your operation; and is a key ingredient to profitability in the manufacturing environment.

Until the acceptance of AOI in the SMT manufacturing sector, methods to determine the amount of defects off the line usually were left to the discretion of the operators or, in most cases, the final inspector at the end of the line. A chipshooter with a faulty nozzle would produce dozens of boards requiring rework before anyone would notice the problem. Often, this was the case because the person in charge of determining quality also was the last person on the line.
The AOI platform was created to combat this issue. However, this does nothing to help solve the chipshooter placement-accuracy problem. It simply catches the problem quicker, before too many boards have been affected at one time on the line, minimizing rework expenses when the process gets out of control. However, because the average in-line AOI unit can cost almost $125,000, this is an expensive solution. This seems like quite an expense for something that does nothing to solve the real issue - an out-of-control chipshooter.

In both cases, the solution (or perceived solution) is a reactionary one. The mindset is that we know we are going to have placement issues with our machines; therefore, let’s invest more money and technology to help detect the issues faster before occupying too much of company profits in rework expenses. The other perceived method to combat quality issues with SMT placement equipment is to adopt regimented maintenance schedules that may or may not have any bearing on the actual performance of the machine, at least in the short term. Not to say preventative maintenance (PM) is not important or vital to a machine’s well-being, but how do you really determine if the PM you are performing every week is achieving your goal? How do you know, for example, that your machine would not perform as well and for as long if you performed PM every two weeks instead of one week? Without a true method to analyze the placement accuracy of your machine, you may never know.

Predictive Analysis Control
This is a method in which a chipshooter owner can become more proactive in achieving 4-, 5- or 6-sigma levels on their machines, and keep the machines at those levels. Without a method to analyze and interpret placement accuracy, these methods cannot be achieved. This system:
Analyzes trends in nozzle wear and determines nozzle life expectancy. The benefits of this are maximizing the life cycle of a nozzle, but replacing it before it becomes a quality liability in regard to misalignment issues and component waste.

Verifies the accuracy and longevity of third-party nozzle manufacturers that allow users to take the guesswork out of determining which nozzle manufacturer is most suitable for their application.

Removes the guesswork from trying to determine which head or nozzle is reducing company yields at any given time.

Reduces the amount of time machines are down because of scheduled maintenance. Determine maintenance schedules based on when the machine needs them.

Issues Faced by Operations Managers
Traceability/Process Control: External customers are directing you to provide cp and cpk levels internally for SMT production equipment.
Quality and yields could be better; however, it cannot justify why adding more AOI equipment resolves this problem.
Rework costs should be reduced and scrap rates are unacceptable.
Every minute counts in any environment. Use the four hours on Saturday that normally would be slotted for weekly maintenance. What affect will this have on machine performance if you skipped a week?

Conclusion
By using a tool to measure placement accuracy, users become more proactive with regard to quality - instead of reactive. Instead of throwing money away on ways to “find” quality issues, users can focus on eliminating these quality issues before they reach the AOI machine.
Rick Flayler, president, TimeKey Corp., may be contacted at (925) 371-1600; e-mail: rick@timekeysolutions.com.

Surface Mount Technology (SMT) August, 2005Author(s) : Rick Flayler

Source:SMT

The Evolving Enterprise: Lean Manufacturing

Abstract: Smart companies have turned to lean techniques as a way to achieve lower costs and more factory throughput. The most progressive companies, seeing the astonishing success that lean provides on the shop floor, have begun to apply lean methods to the entire supply chain.

Companies that understand the evolving enterprise know that every step in the supply chain, even those that occur at the customer or supplier, has to be examined using lean techniques in order to achieve the maximum benefits. These companies find that they not only survive in difficult times, but they actually thrive and gain market share as their competition falls behind.

This paper includes the following topics:

• The demand-driven supply chain
• Outsourcing, global manufacturing and their business ramifications
• The role of IT architecture in a lean environment

The bottom line when it comes to lean is no different for a mid-size manufacturer or a multi-billion dollar manufacturer: Lean business processes require lean IT processes to succeed. And a lean IT environment by definition must be implemented to fit the precise needs of the individual manufacturer. Going lean doesn't have to be hard, or overly expensive, as long as it's done right.

Source: Bitpipe

Reassembling the assembly line

Engine rebuilder Reviva becomes 'lean' showcase

BY JOHN WELBES

Pioneer Press

Reviva is in the business of resurrecting broken-down diesel engines, but managers there decided that the plant itself needed some renewal.

In recent months, the company's Fridley plant has implemented a "lean manufacturing" process, a strategy that thousands of companies around the nation embrace.

Lean manufacturing processes are commonly associated with Toyota, the Japanese automaker that found ways to refine assembly-line methods dating to Henry Ford. The goal is to root out inefficient operations and cut costs.

The popularity can be seen in a state government program that has given out dozens of grants since 1999 to help Minnesota companies implement lean strategies.

Though Reviva, which is based in Brooklyn Park, hired a private consultant for its project, by late July the resulting changes turned the plant in Fridley into a showcase for other companies wanting to learn what lean manufacturing really meant.

Chief Operating Officer Duane Wanner can point to dozens of changes across the factory floor, which is almost the size of two football fields.

Before lean manufacturing, the plant's floor "was almost like a mouse maze," Wanner said. Low-slung knee walls separated work areas, and the huge inventory of parts crowded others.

As part of the move to lean manufacturing, teams of workers and managers came up with ideas for changes.

The plant started cleaning the engines' exteriors before they were disassembled, its assembly line was reorganized, and its work force was trimmed of temporary employees. The low walls were taken down. The company also managed to reduce its inventory by $2 million and empty its floor space, making room for potential expansion.

"We have freed up a ton of cash that we can reinvest in the company," said Melissa Sawin, Reviva's director of continuous improvement.

The Minnesota Job Skills Partnership also has seen the wisdom of helping the state's manufacturers implement lean strategies. Since 1999, the state has given out $13.3 million in lean-related grants to 56 companies. The program requires a company match for a portion of the grant.

While many manufacturing companies turn to more efficient, cost-cutting strategies to keep up with competitive pressure from China and other overseas locations, the impetus at Reviva was different.

"It wasn't competitive pressure," Wanner said. Reviva's competitors are domestic, because any overseas competitor would have to contend with two-way trips for the engines. That means slower turnaround times for customers and higher transportation costs.

Reviva had a plan to grow its business before the "lean" move, but its leaders weren't satisfied. Sales were flat. The business, which uses hundreds of engine parts, appeared to be running out of space, and at least one consultant said a bigger plant was needed.

To launch the lean process, Reviva started working with Dusty Duckett, managing director of TBM Consulting Group Inc. The Durham, N.C.-based company works with dozens of firms around the country to streamline their manufacturing processes.

About 25 to 30 percent of productivity gains typically come from reconfiguring the assembly line, Duckett said. That was also true at Reviva, where the reorganized line allowed the company to reassign five workers, he said.

Close to 70 percent of the plant's employees are part of a "Kaizen" team, working to refine their portion of the operation. The word Kaizen refers to a Japanese management philosophy of incremental improvement.

One relatively small change involved how parts move through the plant. Hundreds of parts are used on each diesel engine, and the plant remanufactures several varieties and makes of engines. In the past, workers walked over to rows of shelves to grab parts as needed.

Now, as part of the "lean" process, the parts are picked off the shelves ahead of time and put on a cart. The cart follows the engine through its remanufacturing process, saving time.

"In the old world we had tons of bottlenecks everyday" in various parts of the plant, Wanner said. At the testing station, where the finished engines are hooked up to a fuel line and fired up, there was always a line of engines waiting their turn. Now, the changes made in the early part of the process mean the engines come off the line at a steadier, more manageable clip.

Reviva managers emphasize that the lean strategy didn't cost any full-time workers their jobs, though it did mean the loss of about 30 temporary employees during the process. Most of the temps had worked for the company for about six months before the new strategy, and the company typically used temps to find new full-time employees. Reviva now has 65 workers remanufacturing various parts of the engines. Its employees are not unionized.

Not all the employees liked the new way of doing things, said Sawin, the plant's improvement director. Plant workers now wear uniforms, and Reviva doesn't allow employees' radios to add to the din of the various machines. A handful of employees quit over those changes, she said.

In late July, more than 25 managers and employees from other manufacturers around the country spent a week at Reviva to see what the company has done differently. The tour, organized by the TBM consulting firm, included representatives from Pella, the window company; Sealy, the mattress maker; Clorox; and Waterloo Industries, which makes tool-storage equipment.

While many industries respond to overseas competition by moving their operations there, that's not always the best move, said John DuBiel, managing partner at Supply Chain Edge, a business consulting firm based in Ohio.

"One of the mistakes that many companies make is they run offshore … before they get their own house in order," he said. Before doing that, companies "need to benchmark those costs against doing the job the right way in-house first."

John Welbes can be reached at jwelbes@pioneerpress.com or 651-228-2175.

Source: Twincities

Inform the Enterprise: Executives, Managers Must Be Up on the Lexicon of Lean

by Oracle Corporation

Abstract: Six Sigma complements lean because its very mission is to eliminate variability and improve process reliability.

Lean focuses on eliminating waste-anything that doesn't add value is history. That guiding principle is a great starting point, but to truly be lean, it is necessary to:

• Eliminate variability so as to institute consistent processes, because without them, wasted effort can't be identified.
• Increase the flexibility of business processes, so that as business conditions change, ongoing lean efforts become easier. That calls for a lean, agile IT infrastructure.

Leading manufacturers are combining lean and Six Sigma with an IT infrastructure that supports these disciplines. If a company focuses its corporate culture on enhanced productivity and continuous improvement -- and the philosophy is adopted by employees ranging from top executives to line operators -- it positions itself to gain and maintain competitive advantage.

Lean principles offer a structured means of reducing cycle times, increasing quality, and cutting costs, reducing inventory investments, and improving asset performance. Cardiff Business School advises companies to pay attention to these five principles:

• Specify the value of your product to your customer in its totality, including branding and packaging.
• Map the value stream by which you get products into customers' hands.
• Introduce flow, eliminating waste and moving to the smallest-possible batches.
• Base your manufacturing on demand-pull.
• Pursue perfection-not only in terms of total quality, but also in getting as close as possible to your target cost.

Source: Bitpipe

Dabbawallas' planning turns awry at hands of nature

Apurv Pandit / Mumbai

For this six-sigma rated hand that feeds Mumbai, the past week has been the worst ever. Reputed for their flawless tiffin-box delivery service to over two lakh workers and schoolchildren, the famed Dabbawallas of Mumbai saw their cutting-edge planning go completely awry at the hands of nature.

The Dabbawallas' service got completely shut down throughout the record 94 cm downpour on July 26 and 27, while more than 30 per cent of their clientele living in suburbs along the Central Railway local train system still await the resumption of the lunch delivery service that they had become so dependent on.

"Our entire system functions at the mercy of local trains, all of which were on a complete halt at some time or the other in the past week, leaving us in the lurch. Never has our service been so hampered in its century-old history," the Nutan Mumbai Tiffin Box Suppliers' president Raghunath Medge told The Pioneer.

While local trains on the Western and Harbour suburban lines of Mumbai have largely resumed, those on the Central line, serving key middle class residential hubs such as Kalyan, Mulund, Dombivali, Ghatkopar and Powai are still undergoing repair work. The Dabbawallas deliver lunch boxes to more than 50,000 people from these Central line suburbs.

"We have been delivering lunch boxes to schoolchildren that can be reached using bicycles, but more than 30,000 office workers from Central suburbs are still cutoff due to lack of local trains. The 2,000-odd Dabbawallas who serve these people have nothing to do but to wait for the trains to start again," informed Medge.

Until then, office goers from these parts would have to carry their lunch to workplaces."Customers understand the problems and conditions that we work in, so they have not complained about the stalled service," said Medge.

Each of the 5,000 Dabbawallas has his own story to tell of the fateful Tuesday when incessant rains perpetrated the worst-ever havoc on Mumbai. With water levels reaching 5 feet in Mahim, Bandra, Ville Parle and Andheri, most Dabbawallas fought a hard battle handling crates full of tiffin-boxes by the scores. The local train monthly passes of many got washed away in the water, while others lost their footwear.

During moments when the end of survival lay a few inches away, some of them abandoned the tiffin boxes with willing samaritans at temples, shops and homes to be picked after the floods receded.

Medge claimed proudly that each of the tiffin-boxes had been accounted for and, even though it may take time for them to be delivered back to owners, the boxes were safe.

For any comments, queries or feedback, kindly mail us at feedback@dailypioneer.com or pioneerletters@yahoo.co.in

Source: The Pioneer

Cutting waste gave us a healthy slice of profit

LOCAL businesses are being urged to think lean if they have plans to get big.

Shopfitting company Morris and Spottiswood has reaped the benefits from the new scheme

A scheme based on management principles founded in a Japanese car plant is being offered to SMEs in Glasgow and across Scotland.

Scottish Enterprise is launching the latest instalment of its Lean Thinking Programme - and the savings for firms could be huge.

Last year there were 150 participants on the scheme, and average savings per business worked out at £33,000 per company.

The programme is based on a set of ideas originally developed by car manufacturer Toyota.

The starting point for businesses is to recognise that only a small fraction of the total time and effort taking place within the company actually adds value for the customer.

By defining a clear value for a specific product or service from the customer's perspective, all the non-value activities - or waste - can be targeted for removal step by step.

According to Cardiff University's Business School, for most production operations, only 5% of activities add value, while a massive 60% of effort made adds no value at all.

Eliminating this waste is the greatest potential source of improvement in a firm's performance and customer service.

Scottish Enterprise lean manager John Peter said: "We saw this as a real opportunity to companies in Glasgow to add value to their bottom-line processes and profitability.

"This programme cuts across all sectors, so it doesn't matter if you work in production or servicing, this scheme will help businesses of all shapes and sizes and add value to products and processes.

"There is an initial interview with potential companies where we try to bottom out exactly what the issue that they are trying to find a solution to is.

"A project team is then assigned to the business, who then work with senior management to start implementing changes.

"I think it helps companies to have a fresh eye on things."

Glasgow Business Awards winner Morris and Spottiswood was one of the firms to achieve an improved bottom- line performance after taking part in the programme.

The shopfitting and property support business has been involved in various initiatives looking at external plant hire, procurement and most recently detailed analysis of its manufacturing operations.

'Lean' principles are now well imbedded in the company through measuring basic performance and looking at customer requirements.

Chief executive James Andrew said: "Overall, taking part in the programme has transformed our understanding of the benefits of lean, with real savings achieved.

"Having an external party looking at processes and procedures brings a new perspective to how the business was approaching certain tasks.

"Every firm must look for improvements and this programme has helped us."

Source: Evening Times

The role of supply chain management

MIM SPEAKS
By NICK WREDEN AND MARCUS OSBORNE

IT is probably safe to assume that the supply chain does not figure strongly at most Malaysian retail firms. After all, in the last month how many times have you heard the classic line (normally delivered with an uninterested shrug of the shoulders) “No stock lah!”?

But there’s more to supply chain management than ensuring sales staff have something to do. SCM is shorthand for the interconnected coordination of the flow of materials, information and finances (credit terms, payment schedules, etc.) as they move in a process from supplier to manufacturer to wholesaler to retailer to customer.

Without effective SCM, companies cannot deliver on the promises made to customers.

Just as importantly, ineffective SCM raises costs across the board. According to the consulting firm A T Kearney, supply chain inefficiencies can eat up to 25% of a firm’s operating costs.



SUCCESS STORY: Zara has successfully adopted the lean manufacturing system which responds to actual demand, rather than try to predict it. --STARpic by SIA HONG KIAU

Poor SCM is the cause of many branding mistakes. Offerings are advertised without adequate inventory, leading to that all too familiar refrain “No stock lah, can come back next week?” which results in unhappy or, more likely, lost customers.

Excess inventory leads to obsolescence or sales at a loss. Late deliveries disrupt customer schedules. This in turn reduces profitability, diluting the brand.

Despite the poor performance of global brands such as Sony, GM, Ford and others that use advertising to build their brands, it is really sad to hear advertising agencies and brand consultants still talking about branding in terms of logos, slogans, positioning, advertising campaigns, static websites and even new business cards while ignoring the role of operations and supply chain management (SCM).

Such supply chain failings are common, but not easily fixed due to enormous complexity – which is often why Malaysian firms ignore it. However, the problem of sales at a loss will not go away.

The supply chain is often visualised as serial linkages, like an assembly line, but actually it is a choreographed network of interconnected activities, each dealing with uncertainty, conflicting objectives and resource constraints.

Steve David, CIO of Procter & Gamble, lays out the vision of the supply chain as a branding tool: “To realise the vision of a fully integrated and efficient supply chain, we need to have data visibility across all of the supply chain.

So, when a consumer buys a roll of paper towels, the forest products company knows immediately they need to cut another tree to send to the pulp maker who supplies Procter & Gamble so that we can make another roll of towels to send to the retailer.”

Achieving this vision requires progress in three interrelated areas. The first, of course, is greater use of the Internet to encourage collaboration and automate transactions within the supply chain.

Remember that the phenomenal branding ability of the Internet does not rest on advertising but rather on its capacity to make supply chain activities transparent.

Second, data integration standards are required. Sometimes, a powerful industry giant like Wal-Mart can enforce such standards; other industries may see protocols like XML as a solution.

Finally, organisational imperatives have to evolve. Companies with price driven strategies will not work.

Other areas to address include:

“Lean” or agile manufacturing: Most manufacturing today represents a holdover from the mass economy. By contrast, lean manufacturing seeks a system so responsive that production can respond to actual demand, rather than try to predict it.

Lean manufacturing enables short, profitable production runs with quick changeovers, or machine conversions to manufacture different products.

Lean manufacturing requires redesigning manufacturing processes, increased supplier involvement and improved resource planning. This is a model adopted by Zara, the fastest growing fashion brand.

Zara has grown at 20% per annum since 1990 and their double-digit net profit margins are the envy of the industry.

Logistics: Late deliveries are a prime source of customer unhappiness. Yet, according to an Economist survey of 70 global companies, only 22% of the companies were consistently able to deliver on time.

Companies must incorporate transportation management systems for routing and scheduling, or rely on advanced Fedex and other carrier capabilities to improve delivery experiences.

Forecasting: Accurate demand forecasting is one of the biggest supply chain challenges. Poor forecasts lead to lost sales or profits through excessive inventories. New demand planning systems can help.

These systems combine sales history, promotional plans and other information with sophisticated algorithms to predict demand for each product, reducing the possibility of over- or underproduction.

The best forecasts are achieved with close supplier and customer collaboration.

The payoffs from these initiatives can be substantial, especially since it is estimated that supply chain costs form 50% to 75% of a product’s final price.

According to the consultancy FinListics Solutions, reducing SCM costs at a typical US$5bil company would increase annual profits by US$20mil.

Additionally, supply chain improvements also contribute to accountability, still being ignored in most branding discussions.

Measurement can encompass three areas: performance, including order fill rates and return rates; cost savings, including inventory turns; and capital efficiency, including percentage of work-in-progress inventory to total inventory.

In the mass economy, marketing departments could build brands through “positioning,” advertising and other tactics.

In today’s New Economy, it requires an organisational effort to build a brand based on relationships. In the emerging economy, branding will require the coordinated efforts of the whole organisation.

Nick Wreden and Marcus Osborne are joint managing directors of Fusion Brand, a brand consultancy headquartered in Kuala Lumpur. Nick's latest book, ProfitBrand: Building the Profitability, Accountability & Sustainability of Brands, will be available mid-August 2005. For more information, please contact +6 03 7954 2075. Alternatively, e-mail marcus@fusionbrand.com or nick@fusionbrand.com. Or visit www.fusionbrand.com

Source: The Star Malaysia

Starting on the journey to 'lean' with your business

Monday, August 1, 2005

Scott Clark

It is difficult to read business success stories today and not see the terms 'Lean manufacturing,' 'Lean re-engineering,' or 'Lean thinking.' These Lean initiatives had their start in large manufacturing corporations and were focused on assembly lines.

Subsequently other corporations adopted these principles for non-manufacturing environments, because their processes and policies had caused them to become mired in inefficiencies that significantly increased their overhead costs. These corporations used Lean thinking to wring out unnecessary costs and transform themselves into fast, efficient and customer-focused businesses.

In today's highly competitive environment, even smaller companies can use Lean thinking principles to become more agile and more productive. Here are three fundamental Lean concepts you can apply in your business to get you started.

Work

In the world of Lean, when you move paperwork or products in your business and in the process add value to it, this is defined as work. When you move these items and do not add value, this is called waste. Both work and waste add cost, but the cost added by waste is usually unnecessary.

Based on a limited study of 120 businesses, when the average employee puts in 100 hours on the job, only 5 percent is work (as defined above); the other 95 percent is spent on moving, waiting, searching, or redundant actions, all activities that fall under the broad category of waste.

Customers are willing to pay for work but not for waste; therefore, to remain competitive, businesses should maximize work and minimize waste. You can start your own analysis by evaluating your basic office processes step by step. Involve some of your employees in the process.

Analyze each step of each process to determine where waste occurs and how it can be eliminated. Can steps involving waste be combined, or performed in a different order, or eliminated so that waste is reduced?

Hard decisions need to be made, and some employees may consider certain wasteful steps to be essential, which is why you need a cross-functional team to review the steps and then develop a team consensus regarding how to best eliminate waste in your processes.

Once your team has completed its analysis, do not wait; implement the recommendations immediately. When you do this there will initially be a short period of regression (things getting worse before they get better), because you are changing from a wasteful, but familiar flow, to a streamlined, more efficient flow, and changes always require time to adapt.

Within Lean, the analysis process is never complete. Within a year, after the leaner flow has been accepted and efficiencies realized. Have another team analyze this new flow. Chances are that after the initial waste has been eliminated, this team will come up with additional ways to lean-down the process.

Visual Control

When just one or two people know where things belong (tools, manuals, job orders, purchase orders, etc.) this can be a recipe for disaster. Companies committed to Lean have a place for everything (using color codes, flags, labels, positions, etc.), so that every worker in the area knows when something is out of place.

By keeping all material in its proper place, waste is minimized because employees need not spend valuable time looking for a needed item; they know where it is and they can secure it rapidly. Visual control also uses color codes or placement to allow employees through these visual cues to assess the current status of an item.

For example, if a special order is in-process, visual cues allow employees to see its current status.

Flow

To understand the concept on flow in the Lean environment, envision a mountain stream meandering down the mountain from top to bottom in a straight line. The water delivered at the bottom of the mountain is maximized in terms of the volume of water delivered and the time it took to get there. Thus the flow is predictable and maximized.

Now envision a typical mountain stream with many sharp curves, boulders, tree roots, beaver dams, and sandbars, periodically slowing the current and creating many stagnant pools and eddies. Now the flow rate at the bottom is constantly changing, unpredictable, and considerably diminished.

If we envision the flow in your business (for example the process of a customer making a purchase, or an employee placing an inventory order, or a product being fabricated), there are probably a number of stagnant pools and eddies. These equate to waste, increased cost, and decreased customer satisfaction.

Some of the ways Lean thinking can resolve these issues include:

• Co-locating employees who have functional responsibility for sequential steps in a process
• Decreasing inventory and batch sizes so flow is continuous rather than sporadic
• Focusing on higher quality at the source rather than quick problem identification or quality issue detection later in the process
• Using multi-skilled work teams rather than a series of employees each with a single skill

Focus on these three inter-related concepts to launch your company's Lean journey. If this topic has piqued your interest, you can expand your knowledge of the application with the following books:

• "The Goal: A Process of Ongoing Improvement," by Goldratt and Cox (a good first introduction to Lean; reads like a novel and demonstrates the effectiveness of Lean application)
• "Lean Transformation: How to Change Your Business into a Lean Enterprise," by Henderson and Larco (although having a manufacturing focus, most of the principles can be applied to any business)
• "Lean Thinking : Banish Waste and Create Wealth in Your Corporation, Revised and Updated," by Womack and Jones (Considered one of the basic Lean handbooks written by the industry leaders of Lean Manufacturing and Lean Thinking, this is a detailed textbook on Lean)
• "Learning to See Version 1.3," by Rother, Shook, Womack, and Jones (an in-depth focus on Value Streams, the process of enhancing your flow).

Source: Biz Journals

Lean Manufacturing needs Lean Design

A personal view of embedded product design

By Michael R. Corder

Embedded.com (08/01/05, 17:33:00 PM EDT) The principles of Lean Manufacturing have revolutionized the way companies implement their manufacturing procedures. Companies that used to have large warehouses full of raw materials stockpiled have moved to a just-in-time process whereby raw materials go straight from the loading dock to the line and out the back door as product in the minimum possible time. Thus supply chain integration has become a critical competitive advantage. Other companies, realizing that their core competencies lie elsewhere, have gotten out of the manufacturing business completely. Instead, they rely on contract manufacturers to provide them with product. Unfortunately, many products being built in a Lean Manufacturing environment are still designed with procedures that date back decades. Complement Lean Manufacturing with Lean Design If companies are to prosper in this manufacturing environment they must find a Lean Design process that complements Lean Manufacturing and allows them to get innovative new products to market in the shortest possible time at the lowest possible price. Lean Design has many parallels with Lean Manufacturing, and it can have a massive impact on how quickly products can be brought to market. In this context, it is important to realize that design processes and procedures that evolved during the Wintel-based PC era of one dominant hardware platform, and one dominant software platform are no longer appropriate nor practical. The future of electronics is much more likely to resemble the automobile industry, where SUVs, sports cars, trucks and sedans all coexist and thrive in the marketplace. Much time and ink is wasted talking about who is “winning” the PDA war but the simple fact is that both the Palm and Windows operating systems will continue to exist and thrive. In addition, there will probably be several new viable operating systems emerging in the next few years. One device that “does it all” may come to pass, but only as one of many alternatives. The histories of the Palm Pilot and the iPaq illustrate my point: The Palm Pilot was a huge success, while the Newton and Momenta units failed. Nobody was able to forecast the eventual huge success of the Palm. The developers got the product close enough to what the customer wanted, viral marketing kicked in and the product validated an entire market segment. The same can be said for the success of the Compaq iPaq handheld. WinCE (Pocket PC) machines failed one right after another until Compaq came up with a product the customer found acceptable. No amount of market research could foretell the success of this product and the failure of others that appear so similar. Unfortunately, the design environments at most companies today are so cumbersome that it takes far too long to get product into the hands of the customers in the current fast-evolving market. Why not design products that may not be perfect, but are "good enough" and place them in customers’ hands as quickly as possible, and then use customer feedback to refine the product for greater customer acceptance? But instead, most design teams are still structured as if they were designing mainframe computers when they should be structured like the music recording companies. Record companies don’t expect songs, or even groups, to last for a long time. Hence they’re like sharks - always moving. Companies who want to continue to exist must adopt a similar mindset. If they don’t, they’ll resemble a record company with a bunch of great disco groups in their portfolio and will have about an equally good chance of surviving. Some rules for achieving a Lean Design There are many ways to streamline the design process. Here are a few techniques that have been shown to work well: Treat every project like a VC start up - A traditional VC-backed start up usually goes through several funding rounds before it becomes self-sustaining. Each round is typically funded for a specific purpose and the deliverables are measurable. If a team knows that they only have a given amount of money in the “bank” they will stay focused. The funding for the next round should be treated just like a VC would; if you don’t meet your goals with a given amount of funding, you should have a good reason why not and be able to convince the company to fund your next round. Keep the team small - Each additional person added to the team greatly increases the number of interactions that occur between team members. Only add team members when there is a clearly defined task for them to do and using one of the existing team members would decrease the team’s efficiency. Don’t make it if you can buy it - Most companies develop the majority of the their new technology internally. Others will pick up outside technology on a sporadic basis. A few, like Cisco, build a large percentage of their Intellectual Property base via acquisition. In general, Cisco has been successful with this approach but others have failed. Still the concept is interesting; let the VCs and entrepreneurs plant the seeds, nurture them, weed the garden and fight off the pests. Then when the flowers bloom (if they do), buy the flowers that you like. The company wins, the VCs win and the entrepreneurs win. Another benefit is that an acquisition can reduce time to market. Having a product to sell today is usually much more useful than having the same thing a year from now. Is it possible to acquire just the product, not the company? In a similar fashion, acquire bits of technology instead of developing it yourself. For example, there is no reason to build your own operating system when there are so many good alternatives on the market at attractive prices. Developers must know the customer - My first job out of grad school was in an IBM development lab. We were building one of the first point-of-sale systems. One day I wasn’t real busy since I was waiting for others to get me things I needed. My boss noticed and asked me why I was idle. I explained why I wasn’t that busy, and he suggested I get out of the office for the rest of the day and hang around a grocery store and watch the clerks, watch the customers. Figure out how a grocery store worked. Where did stuff come in? How did power and any other required utilities get to the check out station? Such an approach was a complete eye opener for me and taught me more about what I was doing that any college course ever did. He was completely right, of course. There was no way that we were going to come up with a truly outstanding system if we didn’t completely understand the customer, and we weren’t going to learn all that chained to our desks in a cube farm in South San Jose! Benevolent dictators work best - Groups seem to work best when they are run like Singapore – there is a benevolent dictator at the top who makes sure that people keep marching in the desired direction. History provides us with some great development leaders who inspired passion in their team members but still kept a firm hand on the tiller. Examples include Dave Packard at HP, Kelly Johnson at the Lockheed Skunk Works, Linus Torvalds with the Linux project and Herb Kelleher at Southwest Airlines. Version 1.0 is special - Version 1.0 is the first exposure the customer has to the product and the first generator of external cash flow. It is the first chance the development team has to get feedback from real customers. Thus it is vital that Version 1.0 be placed in the customers hands as quickly as possible, and that is done by not including any features that are not absolutely critical. Examine each feature; if the product clearly could not be sold without this feature, then it goes in. Otherwise, omit it. Have a clearly defined set of features in the next release - This is really a corollary to the above point. The features that will be in the next release should be well defined. Developers often get bored with implementing that which is necessary and drift off into implementing the features that are of most interest to them, but it is highly inefficient and costly to work on features that are not in the next release. "Feature creep" is a very common cause of slipped schedules. It always seems so easy to add a simple feature that will only take a day to implement. Then it turns out to take longer than a day to implement, impacts some other feature in an unforeseen way, makes the product less stable, and people become unsure of exactly what features are in the next release. Be prepared for "small" successes - Not even Barry Bonds hits a home run each time he goes to the plate. An article in the September 2001 issue of WIRED noted, “American notebook manufacturers won’t release a new model without assurances that they’ll sell at least 250,000 units worldwide, but Japanese OEMs are far more experimental. For Sony, Fujitsu, Hitachi, Toshiba, Sharp, Casio and NEC, 25,000 is a niche big enough to support a new form factor.” Guess who’s probably going to win over the long term. Eat your young - Someone is going to kill your current hot selling product. Is it going to be you or your competition? Record companies assume that hits are short lived and so should you. Long term successes are a pleasant surprise but they are not the norm. It’s only a matter of time before someone bests your current model. Make sure it’s you. Michael R. Corder is an independent software consultant based in Santa Cruz, Ca. Involved in software development for over three decades, he served as CEO of Extenex Corp., a venture backed startup which designed a portable, personal video device using embedded Linux. He can be contacted at mike.corder@micor-research.com Source: Embedded

Ballbar helps keep machine tools running

News Story from: Renishaw
Edited by the Engineeringtalk Editorial Team on 3 August 2005

Renishaw's QC10 ballbar is used for both diagnosis and predictive maintenance to keep machine tools running and producing to specification.

Rockwell Automation Power Systems specialises in providing technologies and services for optimising power transmission performance and productivity.

In 2000, the company turned its analytical and creative skills to developing an integrated process for continuous improvement of the manufacturing processes in its own plants.

Named Power Lean, Rockwell Automation's programme integrates the tools and methodologies of Lean Enterprise, Six Sigma, and Total Productive Maintenance.

Focused on fast, bottom line results, Power Lean was implemented across multiple Power Systems plants.

In one facility the programme has reduced total inventory more than 20%, cost of quality more than 25%, cycle time by almost 80%, while increasing on-time delivery by 99% and productivity more than 35%, along with freeing valuable manufacturing space.

A key tool in the Power Lean arsenal is just that, a tool.

'The Renishaw ballbar is an incredibly powerful tool for us', says Larry Sykes, Lean Programme Manager.

The QC10 ballbar gives maintenance technicians an internationally recognised standard for assessing the dynamic motion and positioning precision of machine tools and production machinery, he explains.

'The ballbar gives us a preventive and diagnostic tool for making sure that our machines are capable of producing to required part specifications'.

This provides vital benefits to both six sigma quality and lean efficiencies.

'Machine capability is critical when you're machining parts to tolerances in the tenths', says Bill Murphy of group maintenance.

At the same time, ballbar tests generate trend data to help technicians implement predictive and preventive maintenance to keep machines functioning properly and part quality within spec.

The ability to do proactive maintenance greatly reduced unexpected downtime to support the move to high-throughput, lean work scheduling, says Sykes.

Ballbar tests are done periodically for performance tracking under the predictive maintenance programme, as well as when a machine problem is suspected.

'The great thing is, ballbar testing is simple and fast, so you're minimising disruptions and downtime', stresses Sykes.

'It only takes about 15 minutes to check out a machine'.

Literally a telescoping bar with machined balls at either end, the ballbar affixes magnetically to socket devices mounted to the machine's spindle and bed.

As the machine runs the ballbar through a sequence of programmed routines, a precision transducer tracks machine movements.

Renishaw software converts the data into a polar plot of the machine's true movement.

The software tracks machine movement to +/-0.5um, allowing precise assessment of machine geometry, circularity and stick/slip error, servo gain mismatch, vibration, backlash, repeatability and scale mismatch.

The ballbar software not only provides diagnosis of specific errors in accordance with ISO230-4 and ASME B5.54 and B5.57 standards, but also ranks errors according to their overall effect on machine accuracy.

The 15-minute ballbar routine compares with circle/diamond/square tests previously used to check machine capability and accuracy.

The features would actually be machined into test piece, which would then go to quality.

It would check all the dimensions to make sure the machine was able to produce properly.

If there was a problem with a feature geometry, however, the cause might not be obvious, notes Sykes.

By comparison, he says: 'With the ballbar quick check system, you can evaluate a machine in 15 minutes and be able to tell if it can produce a good part'.

'If there is a problem, the ballbar software gives us the ability to check through all the different possibilities, telling us which factor we need to address on the machine tool'.

'Sometimes we're able to just make adjustments to parameters in the machine controller to offset some ballscrew issues in the machine'.

Renishaw is constantly coming out with new and more powerful diagnostic capabilities, says Sykes.

'We particularly like the trending abilities of the software'.

A machine history function enables monitoring of an individual machine through its life cycle to help predict and schedule future maintenance, he notes.

Responsible for that maintenance, Bill Murphy appreciates the ability to use the trend data to allocate resources.

'We can prioritise the maintenance and make decisions on what needs to be done to extend machine asset reliability'.

Another new software feature, the Ballbar Plot Simulator allows 'what if' scenarios by simulating machine adjustments, letting maintenance technicians view the effects on ballbar data before making any actual machine adjustments.

'Today, if there's a problem with a part, we can run a ballbar test and either eliminate or target the machine tool', stresses Sykes.

The ballbar has helped Rockwell Automation take corrective maintenance to a higher level with lean time savings.

Sykes cites a CNC lathe with a damaged way that needed to be replaced.

'Through working with the OEM and with Renishaw, we were able to capture all the accuracy information we needed and actually do the replacement and realignment of the way right here in the plant'.

'Before, we'd have sent the lathe back to the factory for the repair, which could have taken a couple months'.

'Our own maintenance people did the job on the shop floor in three weeks using the Renishaw ballbar'.

Ballbar use spread to other plants of Power Systems after plant and lean managers saw it demonstrated at a Champions Forum instituted under the Power Lean programme.

'The idea is to bring people from all the different plants to share best practices', says Sykes.

'After we demonstrated what the ballbar was doing for us at one plant, it was quickly adopted by our other plants'.

Power Lean's emphasis on searching out and sharing innovative tools and techniques has been such a success internally for Power Systems that Rockwell Automation decided to extend the sharing.

It began offering the programme to customers and other industries, even creating a four-week Power Lean Master Certificate Programme with Clemson University.

'What makes us different from consulting-type operations is that we are all manufacturing people', says Sykes.

'The things that we teach we have actually implemented in our plants'.

The Power Lean training programme emphasises hands-on training, says Sykes, now a programme manager.

'It's two days of classroom material, then three days of actually working out on the shop floor implementing the things they just learned'.

Source: Engineering Talk

Keep It Lean and Safe

Advice on incorporating ergonomic safety initiatives into your continuous improvement processes.

by Kevin Newman and Theodore Braun

Your long-awaited vacation is finally here! You pack up the car, chart the most direct route from point A (home) to point B (hot vacation spot), bring snacks to avoid unnecessary travel breaks and set off for a week of fun. Obviously, you want the ride there to be as fast and efficient as possible. So you take it a step further, driving 20 miles above the speed limit, weaving in and out of traffic, and traveling through the night without any rest breaks. In all the rush, you forget to wear your seatbelt. It sounds crazy but this is exactly what happens when companies apply Lean Manufacturing strategies without considering safety.

What is Lean?

Lean Manufacturing evolved from Toyota's post-WWII efforts to close the productivity gap with American automakers. They refined earlier Just-in-Time manufacturing systems to increase productivity and quality and focused their efforts on cutting waste at all levels. In 1990, a group of MIT academics, reporting on Toyota's successes, coined the term "Lean Manufacturing." Embraced immediately by other manufacturers, Lean Manufacturing became the catch-all phrase for a variety of new strategies aimed at "cutting the fat" out of production processes. Three widely used Lean Manufacturing approaches include:

Kaizen - a series of highly focused events dedicated to cutting the waste out of production operations.

Six Sigma - a process change methodology based on defining and measuring the problem, then analyzing, improving and controlling it.

5-S - the five S's are Japanese terms, loosely translated as Sort, Set-in-order, Shine, Standardize and Sustain. Once unnecessary mess and clutter are reduced, tools, parts and inventory are then organized for maximum efficiency.

Used separately or in combination, the strategies empower companies to continuously identify and reduce the seven "deadly" forms of waste: overproduction, waiting, transportation, processing, inventory, motion and defective units.

You're Lean, but are You Safer?

Unfortunately, "Lean" doesn't necessarily mean safer even though the two should go hand in hand. After all, a poorly designed task that requires a worker to reach excessively is not only inefficient, requiring more time and motion than needed, but is also likely to cause injury. Similarly, a worker lifting materials beyond his or her strength capabilities takes more time and energy to perform the task and runs the risk of overexertion.

On another level, the lost time and productivity following workplace injury are indicative of the waste that Lean strategies aim to avoid. When an injury occurs, production halts. Managers spend valuable time on administrative tasks such as locating replacement workers and line workers are distracted and perform less efficiently. Remedying these problems can take a few hours – or a few weeks – and the bottom line impact from direct and indirect costs is significant.

In the worst-case scenario, an overzealous company may implement extreme Lean Manufacturing strategies where safety is not merely overlooked, but compromised. Like the example of the eager vacationer, process shortcuts and streamlining can end up sabotaging the ultimate goal when high risks lead to accidents. In the end, increasing efficiency without incorporating safety will cost you far more than it saves.

Make Lean and Safety Work Together

So, what can you – the safety professional – do to ensure that safety and Lean are properly integrated at your company?

Step One: Get involved.

Too often managers perceive Lean events as only production-oriented. You may be inclined or even advised to stay out of the continuous improvement process. But it's your job to take the initiative and become part of the process. To do this you need to familiarize yourself with your company's Lean methodologies and learn the lingo. If you can speak the language and explain the value of safety interventions in productivity terms, management will listen. Better safety means less waste – let that become your mantra.

Step Two: Identify Links between Unsafe Practices and Waste

All Lean philosophies have their roots in reducing or eliminating one of the seven "deadly" forms of waste making it easy to incorporate safety. Look at your operations and identify the safety issues that need attention in each of these areas.

Overproduction: Excess production indicates that workers may be working faster than necessary, which can increase the risk of a repetitive strain injury. A well-paced line reduces this risk and decreases the likelihood of the next "deadly" form of waste (below).
Inventory or Work In Process (WIP): Excess material between operations due to large lot production or processes with long cycle times impedes movement, increases the risk of trip hazards, distractions, blind spots for pedestrians and fork lifts and manual handling injuries
Transportation: Excessive product movement increases exposure to materials handling and industrial truck injuries.

Processing waste: Inefficient work flow and extra processing steps – like avoidable reaching, twisting and materials handling tasks - increase overexertion risk.

Motion: Unnecessary motions - such as reaching over the head for a tool instead of having it within normal reaching distance - are wasteful and hazardous.

Waiting: Delays and time wasted because of a poorly designed materials flow system can impact employee motivation and can increase the risk of falls and overexertion as workers rush to catch up with materials – design tasks that do not overload or underload employees physically or mentally

Making defective products: Defect prevention requires less work and involves fewer injury exposures than defect discovery and repair. High levels of defects may also signal poor housekeeping and/or lighting – which may create other safety issues such as distraction and eye strain.

Step 3: Incorporate Expert Ergonomics Analyses into Your Company's Lean Processes

Productivity and profit rises, injury and waste plummets when you integrate ergonomic analyses and design principles into your Lean Manufacturing. Here's how to sell it:

Conduct loss source analyses to see where the accidents are happening. Communicate the problem areas to management and relate the problem to production and efficiency, rather than OSHA requirements

Describe the problem using visuals in a way that will get their attention
Analyze the production process from an ergonomics perspective and find the root cause of the injuries

Apply ergonomic design principles to reduce or eliminate the sources of injury

Step 4: Ask Questions

When all else fails, asking questions the right way may be the best way for safety directors to get management's attention. Instead of focusing squarely on the safety issue, incorporate Lean concepts and terminology into your questions. Some basic questions to help your safety recommendations get the management attention they deserve:

Is there repetitive bending/reaching that is making your process less efficient?
Is poor housekeeping or excessive material leading to slip and fall injuries?
Are there machine-guarding initiatives you would like to address as part of your Total Productive Maintenance (TPM) process?
Are there mechanical issues that compromise safety and create bottlenecks in the production line?

A 6S Success Story

One company learned the hard way that Lean without safety doesn't work. Here is how they finally reduced waste by integrating ergonomics:

An outdoor power equipment manufacturer, which strongly adhered to Lean Manufacturing with the 5S and Kaizen methods, still experienced a high number of ergonomic-related injuries. The reason: they failed to incorporate safety into the continuous improvement process. The cost: $300,000 in medical payments and wages over a 24-month period on just one line.

With help from their insurer, the company identified the problem and integrated safety into their Lean system. A loss source analysis identified where the injuries were happening and created a visual management piece (commonly used in Lean processes) to illustrate the findings. The problem: excessive reaching on a single speed transmission assembly line was causing a high number of shoulder injuries. The cost: the injuries comprised more than half the company's total injury frequency and loss dollars. The company performed an ergonomic analysis to determine what percentage of the employees could perform the task without overexertion and found that only a very small percentage of women could do so. Workstation adjustment made a significant difference since more than half of the workers on the line were female.

Speaking the language of productivity and waste reduction, the company's safety director presented these findings as part of the fact-finding session of the Kaizen event. Then, together with the continuous process improvement group, the safety director identified other simple and effective ergonomic solutions to eliminate hazards and reduce waste. Solutions included the addition of more than 20 lift devices to reduce overexertion from materials handling (processing waste), and adjusting workstation and conveyer system height to optimal work heights to reduce excessive reaching (unnecessary motion). The rest of the week-long Kaizen event was spent implementing the changes.

In the 8 months since the ergonomic changes were implemented, the company has had no shoulder injuries on the line. Based on this success, they expanded their 5S Lean approach to include a 6th "S" for safety. The new 6S system includes a single event in the continuous improvement process dedicated to safety.

The net result: quality improvements, productivity gains, better safety awareness, and a safer workplace.

Kevin Newman is a loss prevention consultant for Liberty Mutual's Business Market unit. Theodore Braun is a Technical Director for Liberty Mutual. For more information, e-mail Kate Principe at kathleen.principe@libertymutual.com.

- Kevin Newman and Theodore

Source: Occupational Hazards

The Power of Metrics: KPIs: Avoiding the Threshold McGuffins, Part 4

By Kent Bauer

Hospitality Industry Case Study

Over the past several months, the basic building blocks for development of key performance indicator (KPI) targets and threshold levels have been introduced and discussed. Both KPI x-bar charts and KPI range charts were profiled in detail (see the May and June issues of DM Review, respectively). This knowledge will now be leveraged to illustrate a real world case study in the hospitality industry - the challenge to effectively track and manage reservation wait times, an important success ingredient for retaining existing customers and acquiring first-time customers. Keep in mind that the Six Sigma control chart techniques presented here could also be extended to similar venues such as call centers, help desks and service repair. In fact, any KPI metric that emanates from a process with normally distributed observations is a candidate for this control chart approach.

Hospitality Industry Overview

During the last decade, the reduction in business travel and the cyclical nature of the hospitality industry has challenged management to develop creative branding approaches (nap hotels, executive apartments, HHonors Rewards/frequent guest programs), superior accommodations (Heavenly Beds/Grand Beds, digital HDTV, high speed Internet) and optimized operations (Energy Star compliancy, weekly commission payments). Throughout the hospitality industry, the mantra of "excellence" is consistently mentioned as the key ingredient to success. All the major players have imbued their vision statements and core values with references to pride, spirit, integrity, quality and consistency - all imperative inputs to the excellence equation. The value statement for Starwood Hotels and Resorts Worldwide, Inc. specifically mentions a "passion for excellence" and "encouraged innovation." In the search for performance management excellence, the Hilton Hotels Corporation has implemented a balanced scorecard that incorporates revenue maximization, operational effectiveness and brand management. The culture at Marriott International, Inc. prides itself on its reputation for superior customer service - "people serving people."

Over the years, standard metrics such as RevPar (revenue per available room), ADR (average daily rate) and occupancy (rooms sold divided by rooms available) have been developed to capture financial and operational excellence. While these metrics are useful in capturing the current and past "state of the business," they fail to forecast business trends for the coming weeks or months. Within the balanced scorecard framework, these types of KPIs are referred to as lagging indicators. In the ideal world, the balanced scorecard would also contain several leading indicators that predict customer growth and future revenues. While these indicators represent the holy grail of KPI metrics, their definitions and constructs often remain elusive. In the following case study, we will explore one such KPI that meets the criteria for a leading indicator.

In an industry where customer interactions occur on an hourly basis, each customer touchpoint is critical for building personalized service creditability and developing customer affinity. One of the most important touchpoints occurs early in the customer experience cycle during the hotel reservation process. An initial negative or positive customer reservation experience can significantly influence future impressions and expectations. A miscue at this stage, such as excessive wait time, can lead to a lost reservation and potentially a lost customer. In the next section, we will explore how control chart techniques facilitate the development of effective (and statistically valid) wait time KPI targets and KPI thresholds that can assist hospitality management in controlling and reducing reservation wait times.

Control Chart Implementation

In this series of columns - "KPIs: Avoiding the Threshold McGuffins" - many new terms and concepts have been introduced relevant to control chart methodology. Six Sigma terms such as x double bar, control limits and adjustment factors have peppered our recent discussions. For those of you experiencing a Six Sigma overload, I have created a glossary (see Figure 1) that consolidates all the terminology required for the control chart implementation process that follows. More extensive discussions on development of the x-bar and range charts can also be found in the earlier columns of this series.

Figure 1: Control Chart and KPI Glossary

Before embarking on the specifics of the hospitality case study, a quick review of the relationship between KPIs and control charts is appropriate. The objective in this case study is to develop effective and statistically valid KPI targets and KPI thresholds for reservation wait times. This is accomplished by sampling daily wait times and using these observations to calculate x-bar and range control charts. The x-bar becomes the KPI target, and the XUCL (upper control limit) and XLCL (lower control limit) become the upper and lower KPI threshold levels, respectively. The KPI targets and thresholds are thus driven by historical data rather than gut feel or Kentucky windage.

The comprehensive control chart development process consists of eight important steps. All the relevant data collection forms, formulas and charting tools are illustrated below.

Step 1: Select process to chart - define the variable to be measured.

• wait time required by customers to make contact with a reservation agent

Step 2: Determine process sampling plan - describe number of samples and frequency of sampling.

• eight subgroup samples collected starting at 6 a.m. and ending at 10 p.m. EST
• each subgroup sample will consist of four observations collected over two-hour time periods

Step 3: Calculate data from process - capture and organize observations from sampling plan.

• see sampling plan data in Figure 2 for results from the eight subgroup samples

Figure 2: Sampling Plan Data

Step 4: Calculate control chart specific statistics - develop fundamental statistics.

• see Figure 2 for calculations of x double bar and R bar
• x double bar = 2.97 seconds (average of x-bars of subgroups)
• R-bar = 1.50 seconds (average of ranges of subgroups)

Figure 3: Control and Warning Limit Calculations

Step 5: Calculate control and warning limits - calculate formulas and factors to calculate control limits.

• see formulas and calculations in Figure 3 (Control and Warning Limit Calculations)
• because n = 4 observations per sample group, use following adjustment factors: A² = 0.73, D³ = 0 and D⁴ = 2.28 (see Figure 4: Control Limit Factors)

Figure 4: Control Limit Factors

Step 6: Construct control chart - construct both the x-bar chart and range chart.

• incorporate averages, control limits and warning limits calculated in Steps 4 and 5
• wait time values are graphed on the y-axis and the subgroup sample number are reflected on the x-axis (e.g., for subgroup 8, the red circle indicates the value of 4.2 seconds on Figure 5, while the range value of 1.3 seconds is shown on Figure 6).

Figure 5: x-bar Control Chart

Figure 6: Range Control Chart

Step 7: Interpret control chart results - examine the x-bar and range control chart for anomalies and trends.

• examine range chart first to ensure stability of KPI metric process: because no ranges are outside the RLCL or RUCL, the wait time process is in control (see Figure 6)
• examine x-bar chart (see Figure 5) to identify statistical patterns and data outliers (see the June 2005 issue of DM Review for a portfolio of pattern detection rules)
  • Rule violation 1 - four consecutive data points in a row trending up or down merits a caution. This occurs in subgroups 1 to 4 where the x-bar starts at 2.4 seconds and edges up to 2.5, 2.7 and finally 2.9 seconds. This violation will alert management to potential problem areas.
  • Rule violation 2 - one individual data point outside a control limit is a serious problem. This occurs for subgroup 8 where the value of 4.2 seconds exceeds the Upper Control Limit of 2.97 seconds. This violation must be addressed immediately to identify the root cause and correct the situation.

Step 8: Incorporate KPI thresholds into triggers and visuals - design visual elements and triggers.

• pattern detection rules need to be integrated as business rules and triggers into the delivery and presentation system
• pattern detection rules can then be linked to visuals such as stoplights, beacons and flags
  • Rule violation 1 - four consecutive data points in a row trending up would trigger a yellow beacon indicator
  • Rule violation 2 - one individual data point outside the control limit would trigger a red stoplight or flag

Keep in mind that development of the reservation wait time control charts is only the first phase in a continuing process to meet the customer service excellence mantra. Potential opportunities exist to further decrease reservation wait time by understanding the business and process drivers. Additional Six Sigma techniques such as y-to-x treeing, input/output analysis, cause/effect matrix, fishbone diagrams and SIPOC analysis would be effective as follow-on activities.

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For more information on related topics visit the following related portals...
Business Performance Management and Metrics/KPI/BSC.

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Kent Bauer is the managing director, Performance Management Practice at GRT Corporation in Stamford, CT. He has more than 15 years of experience in managing and developing CRM, database marketing, data mining and data warehousing solutions for the financial, information services, healthcare and CPG industries. Bauer has an MBA in Statistics and an APC in Finance from the Stern Graduate School of Business, New York University. A published author and industry speaker, his recent workshops have focused on integrating performance management and Six Sigma for KPI and dashboard development. Please contact Bauer at kent.bauer@grtcorp.com.

Source: DM Review

Lean Versus Six Sigma ... And the Winner Is?

Monday August 1, 7:45 am ET


MYSTIC, Conn., Aug. 1 /PRNewswire/ -- Today's competitive global business environment leaves little room for error and inefficiency, which explains why Six Sigma and Lean have become part of today's everyday business language. Many extol the virtues of these continuous improvement methods as a way to drive out waste and reduce variation in everything from customer service to overall process performance. However, which continuous improvement methodology is more prominent and popular?

"As part of our executive recruiting practice we track a large amount of industry trend data in order to better target our business efforts and serve our client base," says Tim Noble, managing principal of The Avery Point Group. "We monitor three main indices to give us a long- and short-term view of the disciplines we service. We look at the number of books published each year by topic, the number of Internet keyword searches, and the number of jobs posted online by keyword."

Based on these three indices, Six Sigma still dominates Lean as the more prominent and popular methodology by a wide margin.

Over the past five years both methodologies have seen an explosion of books published covering their topics, which will only help to elevate the interest in Six Sigma and Lean as more business leaders become immersed in the published materials now being made available. Each year, however, books published on the topic of Six Sigma consistently outpace Lean by a wide margin.

Based on Internet search engine keyword search counts, Six Sigma search inquiries still outpace Lean inquiries by a 2-1 or greater margin. However, keyword searches on Lean have been gaining ground recently.

Based on Internet job board postings, the use of the keyword Six Sigma outpaces Lean consistently by more than 50%.

The difference in prominence between Six Sigma and Lean may be due to the fact that Six Sigma has been able to move beyond its roots in manufacturing into other disciplines, while Lean is still largely perceived as a tool to improve manufacturing processes. "This perception is changing as more and more businesses across the board are looking to blend the best of each methodology to accelerate their continuous improvement efforts," says Noble. "Companies are increasingly realizing that these are truly complementary tool sets and not necessarily competing philosophies."

In the end, the real winner is any company that successfully engages in some form of continuous improvement, regardless of whether it is Lean, Six Sigma, or some other well-executed approach. "I can't think of any company that claims to be world class that is not utilizing some form of continuous improvement approach," says Noble. "World-class status is a constantly moving target defined by both your customers and your competitors. Without a continuous improvement approach you're not even treading water in today's global economy."

For more information about The Avery Point Group and its executive recruiting and search services, contact Tim Noble at 860-536-8605 or visit http://www.averypointgroup.com/.

This release was issued through eReleases(TM). For more information, visit http://www.ereleases.com.

Source: Yahoo!