Tag: lean manufacturing

Guest Blog Part 2: Start Your eKanban Implementation with Value-stream Mapping and Engaging Your Suppliers
by Jim Shore

Through this guest blog series, my intent is to share some of my experiences implementing supplier quality and Lean manufacturing initiatives by focusing on eKanban systems. My first post offered advice for planning an eKanban rollout (advice that could be applied across any Lean manufacturing project). In this installment, I’d like to talk about strategies for rolling out an eKanban project that have proven successful for me.

Whether you use Google maps, Apple, MapQuest or some other breed of navigation, you know you must enter both a starting location (or allow the system to “know” your current location) – and a desired destination. Too often, I see manufacturers get excited about the destination of best-practice process improvement without carefully considering the starting point.

The Value in Value-Stream Mapping

In my view, the process starts by gaining a clear understanding of the current, “as is” state, because you can’t make process improvements unless you can explain the problem you are working to resolve. With eKanban implementations, this can be any number of problems including excess materials on hand, slow inventory turns, too much scrap and more.

So, once you have universal buy-in on the project (see Guest Blog1: Real-world Advice for Getting Started on eKanban), the first step toward execution is to develop a good process, or value-stream map. For an eKanban project, this would involve documenting the flow of the current, manual Kanban process. (If you’re not using a manual Kanban system, map the current inventory replenishment process.) Next, document the process for the future state – using an eKanban system – and note the gaps. The goal is to identify the processes that do not provide value (e.g. waste) so they can be eliminated or improved upon.

Take the time to ensure you’ve mapped out everything. It may seem tedious, but it is worthwhile. For example, in one facility I worked with, it took us a day to develop a good process map. Over the course of the exercise, we found multiple variations in the current, 66-step process that produced excess waste. For example, they were literally logging 7 miles a year to track down inventory! Once we streamlined our map and implemented the eKanban system, the process was trimmed to just 6 steps. The exercise exceeded expectations, providing all team members with quantifiable value of the project.

Before I move on, I want to take a moment to tie the value-stream mapping exercise to the key take-aways from the first blog in the series: Communication and buy-in. Those involved in developing the process maps will likely buy into its outcomes, hopefully becoming vocal advocates of the eKanban project. As in the example above, the mapping exercise also provides useful data points for leaders and others to communicate across the organization.

Strategies for Getting Suppliers on Board

Some manufacturers experience supplier resistance to a new electronic Kanban solution. This push-back may stem from the perception that they are being forced to adopt new technology, pay the price, and/or hold the risk.

This criticism is based on the idea that when a supplier holds the inventory, they hold all the risk. One manufacturer I worked with had a unique solution to this dilemma. First, they started their eKanban implementation with a software pilot in a controlled area of their organization – and engaged just their top three suppliers. The manufacturer approached these three suppliers and entered into to a contract with them where they would assume half of the risk. Then they created a test environment where they could get the suppliers comfortable with the software. The suppliers received training on various scenarios, became familiar with email communications they would be receiving – and gained visibility into the supplier portal where they could monitor the manufacturer’s consumption and/or receive replenishment signals.

The manufacturer also gave their suppliers an incentive by including their eKanban software usage as part of their performance rating.

By taking more of a partnership approach with their suppliers, the suppliers became more engaged and, in fact, found their own benefits in using the system. One of the suppliers, while finding the software easy to understand, liked the ability to monitor demand through the eKanban supplier portal. Another supplier who was initially concerned about having excess inventory, found the eKanban system allowed them to better level-load. As a result, they reduced their over-time costs and were able to increase capacity without added expense. A win-win for all.

The Pilot Program and Beyond

As was demonstrated in the use case above, a pilot (or vendor free trial) is not only helpful for suppliers, but for internal adoption and continuous improvement. Starting an eKanban implementation on an isolated line or work cell allows you to work out any kinks or issues before rolling out the software to other areas. Internal chatter about the system starts to take hold and, based on my experience, employees start hoping their area is next in line.

Beyond the pilot program, it’s time to start measuring progress toward what you set out to accomplish – and the metrics that will influence those outcomes. The manufacturer in my example established metrics for baseline inventory reductions and increased inventory turns and were able to recoup their initial software investment before implementation was complete.

Metrics typically associated with eKanban projects include:
- Inventory turns/Inventory cost
- Replenishment lead time
- Stock buffer health
- Supplier performance
- Freight costs
Improving these metrics often contribute to corporate-level goals of expense reduction, improved on-time delivery and greater throughput.

Keep the Goals Top-of-Mind

When executing a transformative process, ensure no one loses sight of the mission. Continually reinforce the value of the outcomes and regularly communicate progress toward goal attainment. This not only helps to set expectations as you roll out the project, but creates anticipation for its results.

In summary, for a successful eKanban project rollout, here are the steps I recommend:
1. Map the current and future states of the process.
2. Start focused – implement a pilot in a controlled area, make necessary adjustments and continue rolling out through a pragmatic approach.
3. Partner with your suppliers to make the implementation a win-win.
4. Monitor your metrics.
As you think about eKanban – or similar Lean projects in your organization – I hope you find this insight helpful. Next time, I’ll address post-implementation strategies of “listening to the process” and focused continuous improvement.

Jim Shore is the Principal of Quality Lean Solutions, a Consultant Firm that specializes in Medical Device companies, Supplier Quality and Lean Manufacturing principles. Mr. Shore is co-author of “Proactive Supplier Management in the Medical Device Industry” (2016: Quality Press). Jim has 25 years of quality and supplier management experience in medical devices, semiconductor, aerospace and defense for firms and organizations including Titan Medical, Nypro Healthcare, Boston Scientific, Aspect Medical, Brooks Automation, Raytheon and ACMI Gyrus (now Olympus). He is Six Sigma Black Belt and Quality Manager/Operations Excellence-certified by the American Society for Quality (ASQ), as well as an ASQ-certified Quality Auditor and Mechanical Inspector. A veteran of Operation Desert Storm, he served in the U.S. Marine Corps for more than 15 years.
December 18, 2017
FAQ: What is the Difference Between Pull Manufacturing and Demand-Driven Manufacturing?

I often talk about pull manufacturing and Demand-Driven Manufacturing as though they are one and the same. That’s because, in my mind, they are. However, after reading through a couple of online articles this afternoon, it’s clear not everyone sees it that way. In fact, some of the various ways pull manufacturing is described on the Internet can be a bit confusing.

In pull manufacturing, replenishment of raw materials or components is triggered by downstream demand. For example, if an order for 100 widgets is released into the system, it will pull production through the system from raw materials orders all the way through to the finished goods.

There is an important distinction made by some writers between pull and Demand-Driven manufacturing: the demand signal. For me, the order for 100 widgets is triggered by demand from an end-customer in both pull- and Demand-Driven Manufacturing. Working backwards, 100 widgets are sold at retail, which in turn creates a replenishment order for 100 widgets at the distributor, which translates into an order for 100 widgets at the manufacturer.

However, some proponents of pull manufacturing argue that the pull signal can also come from 100 widgets that will sit unsold on a shelf in the warehouse waiting for a customer order. Because production is being pulled from a demand signal downstream, it is still pull manufacturing even if it isn’t customer demand driven. This seems to me like putting a pull veneer on push thinking, and it can limit your ability to achieve your objectives because, even if you can reduce WIP inventory levels, you still run the risk of excess finished goods inventory and a lot of waste.

When I get to this point in the discussion with manufacturers who are new to Demand-Driven Manufacturing, they often ask a good question: Can I still have safety stock? For decades, we’ve been conditioned to setting safety stock levels for raw materials and key components. Doing without them can seem like performing a high-wire act without a net.

Is There a Place for Safety Stock in a Demand-Driven World?

In a perfect world, all production in Demand-Driven Manufacturing is triggered by an actual order, eliminating any excesses in raw materials, WIP inventory, or unsold finished goods. But, whoever said we live in a perfect world?

Most Demand-Driven Manufacturers will still do some level of forecasting of demand, but it’s more for long-term planning than short-term production. Buffer stocks are also a feature of Demand-Driven Manufacturing, but it’s important to understand the difference between safety stock and buffer stock. The Lean Enterprise Institute describes it this way:

“The terms buffer and safety stock often are used interchangeably, which creates confusion. There is an important difference between the two, which can be summarized as: Buffer stock protects your customer from you (the producer) in the event of an abrupt demand change; safety stock protects you from incapability in your upstream processes and your suppliers.”

In other words, safety stock is excess inventory that is designed to cover inefficiencies in your production processes. If you’ve studied Lean principles, you probably remember the rocks and water example. The rocks are the problems in your factory such as scrapped production runs, long set up times, and unplanned downtime. Inventory is the water that covers these rocks so that they don’t impact your ability to serve your customers. This excess inventory removes the urgency to make long-term improvements, which means real improvements are seldom made and inventory levels remain excessively high.

In Lean Manufacturing (and Demand-Driven Manufacturing) inventory should not be used to cover a problem. Instead the problem should be resolved. However, many Lean and Demand-Driven manufacturers will still use buffer stocks to protect their customers from variability in demand.

For some real-world case studies highlighting the benefits of pull manufacturing/Demand-Driven Manufacturing as it was meant to be, we invite you to visit our web site.

December 11, 2017
FAQ: Is Demand-Driven Manufacturing the Same Thing as Lean?

Many of our customers don’t start out looking to implement Demand-Driven Manufacturing per se. Often, they’re focused on Lean Manufacturing or at least some element of it. In fact, customers often find out about us as they search for an eKanban or production scheduling solution that will work with their current ERP system.

However, at some point in the conversation, they will inevitably ask, “Is Demand-Driven Manufacturing the same thing as Lean Manufacturing?”

Demand-Driven Manufacturing isn’t synonymous with Lean or other related initiatives such as Theory of Constraints. Instead, it supports and is supported by them. To understand that, let’s look at basic definitions of each of these philosophies, including Demand-Driven Manufacturing, to see how they are related.

Demand-Driven Manufacturing enables a synchronized, closed loop between customer orders, production scheduling and manufacturing execution.

Demand-Driven Manufacturing is a manufacturing method that enables a synchronized, closed loop between customer orders, production scheduling and manufacturing execution – all while synchronizing the flow of materials and resources across the supply chain.

Another term commonly used for Demand-Driven Manufacturing is pull-based or demand-pull manufacturing. Instead of producing to what you think will happen (forecasts) or to maximize an efficiency metric like asset utilization, the only variable is actual demand, and all production is synchronized to it.

Both Lean Manufacturing and Theory of Constraints emphasize managing variability as part of a continuous improvement effort.

Lean Manufacturing focuses on the removal of waste from the production system; waste being defined as anything the customer isn’t willing to pay for. Pull manufacturing isn’t the same thing as Lean, but it is one of the five principles of Lean as defined by Womack and Jones in their landmark book Lean Thinking. So, at some point in your Lean journey, you should be replacing your push-based production scheduling approach with one that is pull- or demand-based.

On a side note, going from push to pull is almost impossible to do when your schedule is reliant on the push-based logic found in most ERP systems. (Most notably MRP and APS.) That’s why we developed Synchrono software, including SyncManufacturing, as web-based applications that can be easily used with your existing systems. For a more thorough discussion on push vs. pull, download our white paper The Next Generation of Planning and Scheduling Solutions.

Demand-Driven manufacturing is also one of the easiest and quickest elements of Lean Manufacturing to implement. Even though it’s number four on the list of five principles of Lean, you don’t have to get through numbers one through three before you can start realizing benefits such as reduced lead times and lower inventory levels.

Theory of Constraints (TOC) emphasizes increasing throughput. Be careful though. In the vernacular of TOC, throughput does not refer to production. Instead, throughput is the rate at which the organization generates money by producing finished goods that are sold. Excess inventory sitting in the warehouse is not counted. That tightly matches Lean philosophy in that Lean defines waste as anything the customer is not willing to pay for. Excess inventory and the storage and handling of it certainly falls into that category.

A constraint is defined as anything that limits throughput. Inside the facility, that is often a work center. Instead of managing the production capacity of every work center, TOC focuses on synchronizing production to the constraint. This is a vital component of Demand-Driven Manufacturing as well, and you can see how this works in this excerpt from one of our recent webinars.

I hope this discussion not only helped clarify the differences between these common manufacturing philosophies, but also highlighted how Demand-Driven Manufacturing can help you reach your goals regardless of which philosophy drives your organizational thinking. As always, we welcome your comments – and I’d be happy to answer any specific questions you might have. Just submit them below.

November 6, 2017
Guest Blog: Real-world Advice for Getting Started on eKanban
by Jim Shore

Through this guest blog series, I’d like to share some of my experiences implementing supplier quality and Lean manufacturing initiatives by focusing on eKanban systems. This first entry offers advice for planning an eKanban rollout – suggestions that can also be applied across any Lean manufacturing project.

As a result, my hope is that you, too, will experience successful Lean results.

Leadership matters

My training as a U.S. Marine gave me many skills I carried over into civilian life and into my work as a Lean practitioner. First, I gained deep respect for strong leadership; and second, I’ve come to value a pragmatic approach to project execution.

Successful projects start with buy-in from the top and an eKanban initiative is no exception. At a minimum, recruit an executive sponsor to serve as the project spokesperson – someone who will fully support and clearly communicate with all stakeholders the rationale for the project. I know it sounds simple. Even though the benefits to the business are real (e.g., reduced inventory waste and carrying costs and more) asking people to change the way they work is also real. Let your leaders know project success is accelerated through gaining universal buy-in. (If you think about it, this is also a waste-reducing, Lean strategy!)

The reality is that sometimes change is welcomed and other times you may meet resistance. Efficiency programs, whether Lean, Six Sigma or Theory of Constraints (ToC), require that teams understand the impact change can have on an environment. Change management strategies stress over-communication of:
1. What the organization intends to accomplish;
2. Why the organization is undergoing the change;
3. What the change means to each individual;
4. How success will be measured;
5. How accountability will be measured.
From the plant floor to senior management, buy-in starts with a clear rationale and explanation of how the new eKanban process or Lean methodology will add value. Leaders must effectively engage all levels of the team; explaining how the new process is great for them, the company, the customer and suppliers (for those using supplier Kanbans). The last two bullets are extremely important. Ensure it is clear how success will be defined and how everyone will be held accountable for achieving it. In my experience, the best method is tying the annual bonus to the success of the project.

Overcoming barriers to create lasting change vs. “initiative-of-the-month” change

While rare, resistance can manifest as blatant sabotage of the new Lean initiative. More likely, resisters will remain quiet and hope the advocates of the new method will lose enthusiasm and the execution of the Lean project will fade, reverting to the status quo. To reverse this, make them part of the solution.

On an eKanban project I led for a materials testing and extrusion-control instrumentation manufacturer, the rollout of the new software involved multiple sites. Corporate leadership sponsored and evangelized the project, but we still needed buy-in at the local plant level. By involving outspoken resisters in the process, we ended up gaining some real advocates – it also helped that we were able to reduce the replenishment process from 66 to just 6 simple steps.

It goes without saying that for this – and any eKanban project – you achieve success through consistent communication and universal team buy-in. Depending on where your replenishment occurs, this principle extends beyond the four walls of an individual plant or enterprise, to your suppliers. (I’ll provide advice for engaging suppliers in the next post.)

As part of their advocacy for the eKanban initiative – or any modern demand-driven supply chain project – leaders need to distinguish the project as a serious, ongoing operating process, not an initiative of the month.

Drive the planning process with bottom-line facts

A significant part of the planning process is business justification. Automating replenishment with an eKanban system provides some highly quantifiable returns.

There is a real cost of carrying inventory and eliminating this cost frees up accessible cash that can be reinvested into the company. Consider the following:
- The cost of just carrying inventory at a component level adds 10% to the valuation of the actual part – and that valuation increases by 10% for every month the material is not transformed into sellable goods.
- On average, the cost of carrying finished goods is approximately 20% of its cost.
For manufacturers managing materials with expirations, these costs can be compounded through scrap.

These are just some examples of costs I help clients quantify as part of their business case for investing in an eKanban solution. Examine how these cost savings could impact your business. You can see how real-time inventory replenishment with an eKanban system can pay for itself fairly quickly.

In the next post, I’ll cover some best practices for eKanban implementations utilizing Kaizen events and value stream mapping.

Related resources:

Article: Going eKanban – Moving from a Manual to an eKanban system

Case Study: Continuous Improvement Immersion + the Right Tools Proves Profitable for Dynisco

White Paper: Common Barriers to Moving from Push to Pull Manufacturing

Jim Shore is the Principal of Quality Lean Solutions, a Consultant Firm that specializes in Medical Device companies, Supplier Quality and Lean Manufacturing principles. Mr. Shore is co-author of “Proactive Supplier Management in the Medical Device Industry” (2016: Quality Press). Jim has 25 years of quality and supplier management experience in medical devices, semiconductor, aerospace and defense for firms and organizations including Titan Medical, Nypro Healthcare, Boston Scientific, Aspect Medical, Brooks Automation, Raytheon and ACMI Gyrus (now Olympus). He is Six Sigma Black Belt and Quality Manager/Operations Excellence-certified by the American Society for Quality (ASQ), as well as an ASQ-certified Quality Auditor and Mechanical Inspector. A veteran of Operation Desert Storm, he served in the U.S. Marine Corps for more than 15 years.
October 30, 2017
3 Ways to Put Big Data to Work in Your Factory

Is enthusiasm for Big Data wavering?

In 2015, McKinsey Global Institute claimed that the IIoT had the potential to create as much as $3.7 trillion in economic value in the global manufacturing sector by 2025. They also predicted that 80 to 100% of manufacturers will have implemented IIoT applications by then and already be reaping the benefits of data-driven insights into their operations.

When Gartner surveyed manufacturers in 2016, nearly three quarters said that their organization had invested or were planning to invest in Big Data, perhaps putting the manufacturing sector a bit ahead of schedule.

However, the Gartner survey also uncovered signs that Big Data investments may not yet be providing the anticipated returns. A full 85% of projects were still at the pilot stage. And, as further evidence that enthusiasm for Big Data may be wavering, only 11% of those who said they had invested claimed their Big Data investments were at least as important as other IT initiatives.

To drive ROI, begin with a purpose in mind

From our perspective, a large part of the reason Big Data/IIoT projects fizzle out is because team leaders and company executives don’t have a clear vision of the purpose of the initiative. They gather data as though it were a valuable raw material, but then they struggle to make anything useful out of it.

In this post, I’ll cover the three ways you can use Big Data to improve operational performance.

#1 Predictive analytics – The most common benefit espoused by Big Data enthusiasts is gaining insight into what might happen so you can prepare. Bernard Marr, a noted speaker and columnist for Forbes, describes it this way. “Big Data works on the principle that the more you know about anything or any situation, the more reliably you can gain new insights and make predictions about what will happen in the future.”

Predictive maintenance is probably one of the best-known applications of predictive analytics and Big Data. Before the IIoT, manufacturers had to guess how long a piece of equipment would last and when it would need maintenance. Unplanned downtime was common and costly.

Intelligent machines (even if that intelligence is retro-fitted) provide alerts on when the equipment is performing outside of normal parameters, e.g., running at a higher temperature indicating excess friction. And when connected to smart manufacturing tools like SyncOperations™, automated workflows and alerts to maintenance address the issue before it becomes a problem. From a demand-driven manufacturing perspective, this turns unplanned downtime into planned downtime and gives the planner/scheduler time to adjust and optimize flow.

Related resource: How Technology Will Connect Your Enterprise and Create the Demand-Driven Factory of the Future – Today.

#2 Continuous improvement – Continuous improvement is the cornerstone of any Lean initiative and has become a best-practice throughout the industry, even in those organizations that don’t consider themselves Lean. Big Data gives you the data you need to measure what matters and the ability to work with real data as opposed to someone’s best guess about what’s happening on the factory floor.

Of course, it goes without saying that a BigData initiative is only as good as the data the manufacturer has to work with – and if the right data can be accessed by the right people at the right time. In a typical manufacturing operation, data may be stored in dozens of places. Managing issues impacting production is easier with software like SyncManufacturing™ that can leverage its own data in addition to that stored in an ERP or other external system – and use it to make real-time adjustments to ensure production is flowing and resources are synchronized throughout the factory and extended supply chain.

Related resource: Metrics that Drive Action

#3 Real-time responsiveness – Finally, most manufacturing operations can be considered something like “controlled chaos.” Rush orders come in. People get sick. Raw materials shipments are delayed. Scheduling to known constraints is a piece of cake compared to optimizing flow when the unexpected happens. Demand-driven manufacturing can take signals from the shop floor to automatically synchronize production based on what is actually happening in your operations.

Related resource: Set the Right Pace for Production

Just as you wouldn’t buy a piece of equipment without knowing what it’s for, you shouldn’t launch a Big Data initiative without knowing what you want to accomplish. Beginning with a clear idea of what you want to accomplish can help keep enthusiasm high and ensure you see a return on your investment and efforts.

October 16, 2017
Doing more with less: Learning from Kanban

The manual Kanban cards that were the precursor to Lean Manufacturing have evolved into eKanban systems that automate inventory replenishment and reduce material waste...

READ MORE on our guest post on EBN, the premier online community for global supply chain professionals.

October 11, 2017

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