World Class Manufacturing Benchmarks

Posted by on May 16, 2012 Comments Off

Customer of 21st century is very demanding, in terms of good quality product, reasonable price and on time delivery. This thing has forced manufacturer to adopt such philosophies that can meet customers’ needs challenges.

That’s why, world class organization are trying to invent new theories and principles of process optimization and using old ones in more effective manner. Also this has forced companies to adopt modern manufacturing techniques and to have less focus on human performance.

The companies, who are leader in manufacturing practices, are Toyota Motors, General Electric, Boeing Corporation, Honeywell, Rockwell, NCR, ITT industries and Motorola. These companies have set the trend s for manufacturing quality. Other companies are adopting quality and improvement tools being used by these organizations. The performance level of world-class companies and other companies can be seen in the table.

Performance MeasureWorld Class2nd Class3rd Class
Quality rejection per millionWC-500, 2nd-1000, 3rd-2000
Setup timeWC-10 min, 2nd-20 min, 3rd-30 min
Utilized CapacityWC-90%, 2nd-75%, 3rd-55%
Breakdown LossesWC-1%, 2nd-5%, 3rd-19%
On Schedule productionWC-100%, 2nd-90%, 3rd-80%
Engineering Change Process Response timeWC-1 day, 2nd-5 days, 3rd-10 days

Tools used by these companies for process and system improvement are:

- Six Sigma a statistical tool being widely used by a large number of companies. Companies who gave tremendous results from its implementation are Motorola, GE, Allied Signal, and Kodak etc. All the companies are in pursuit of excellence by using this tool. Major benefits achieved by companies are:

• Cost reduction
• Productivity improvement
• Market share growth
• Customer retention
• Cycle-time reduction
• Defect reduction
• Culture change
• Product/service development

- Lean Manufacturing developed by Japanese is focusing on providing best quality product to the customer, within the minimum possible time, on the targeted place with minimum waste of material, labor, space and time.

- Total Productive Maintenance developed by Japanese is not merely a maintenance tool, but it has unified operator and maintenance person. They both are responsible for safe, cost effective operation of machine or equipment. This concept has given operators more ownership of machine and job satisfaction. This theory has given concept of zero breakdown.

- ISO 9001 A number of companies are applying for ISO 9001 registration. Today, over 950000 ISO 9001:2000 certificates had been issued. But only some companies are getting real benefits out of it. Rests of organizations are only using it as trade mark. The potential benefits that can be obtained by ISO 9001 are many.

- Benchmarking is the process of comparing organization’s practices with the best in class organization. The purpose of this tool is to enhance productivity, Quality, Customer satisfaction and reduction in cycle time or lead time by comparing practices of that best class organization.

- Total Quality Management is a combination of three words, Total, Quality and Management. It means involving every body of the organization for achieving best quality products and services as a whole.

Malcolm Baldrige National Quality Award this award is given to those organizations, which perform best in the following seven categories:

1. Leadership
2. Process Management
3. Customer & Market Focus
4. Strategic Planning
5. Workforce Focus
6. Measurement, Analysis and Knowledge Management
7. Results

This tool is also a good motivating factor for organization to improve their performance level. Every tool has its own significance and that’s why to become world class organization, these tools must be applied in a sequential and systematic manner.

TPM And Lean Production, Is It Worth The Effort?

Posted by on May 16, 2012 Comments Off

The young production manager speaks enthusiastically to the top management team. He has just returned to the plant after attending an inspiring seminar and now he is convinced that they need to do something.

“We should implement Lean Production and TPM in our plant”, he says. “This will make our production more reliable and increase our delivery accuracy”.

The MD is paying attention but is not yet convinced. He wants to put the ideas to a test.

“Looks interesting”, he says, “Please come back with a good calculation of the Return on Investment so that we can see if it fits into next year’s budget.”

This is where the story might end. How could you possible estimate costs and benefits from such advanced management techniques as TPM and Lean Production? These concepts are known to be difficult to plan in advance, and they require a mind-shift for everybody in the facility.

Well, it may be difficult but you have to do the calculation anyway. Arguments as “we have to do this” or “everybody else is doing it” are just not convincing enough.

A change project must be looked upon as an investment that will come with initial costs and hopefully bring something back in return. This is no different from any other investments. If you can not give an educated guess on its financial impact, there is a big risk that the project might not be given the necessary resources for what it needs to succeed. Even if the financial impact of important factors such as shorter lead times and better delivery accuracy are not known, we need to describe how this project will raise profits in the company.

To give an answer to these important questions we have put together some simple guidelines for you to use, and if you prefer, a free calculation tool that you may use to do your own estimations.

What will the costs be?

The main cost will consist of:

Training and Consultancy
No successful implementation of TPM and Lean Production has succeeded without the help of experienced professionals. You will have to train your employees and you need support in your project team. A good estimation is a yearly cost of $100.000 per 100 employees involved

Increased initial maintenance costs
Elimination of manufacturing wastes and implementation of improvement ideas are likely to increase the maintenance costs. Expect maintenance to increase up to 20% the first year, but with it stabilizing at a level less than today after one to two years

Project team members
You will need people to run the project. Project management and coaching equals to about one full-time coordinator per 100 employees in the facility

Benefits

Increased Overall Equipment Efficiency (OEE) is the main factor that may be used to approximate the return on the efforts. Simply speaking, the OEE is the ratio of the facility’s actual output compared to the theoretical output that would be possible if the machinery was run at full speed every minute, without break-downs, lack of raw material, quality losses or set-ups. As the OEE-ratio is a direct reflection of your plant’s capacity, it may be used to calculate the future productivity after improvements.

An example: A plant produces 10,000 units per year with an OEE-ratio of 50 percent. After improvement, the project team estimates that it will be possible to reach an OEE-ratio of 80 percent. This means that they will be capable to produce

10,000*80/50 = 16000

units in the same facility without investments and with the same manning as before.

Can the increased capacity be used to increase sales?

One important question is if there is a market for expansion. If so, the increased capacity may be used for increased sales. It is common that the company’s market share might grow after implementing TPM or Lean Production. This is possible as improved delivery accuracy and shorter lead times make more sales possible even if the market is stagnant.

If expansion is not considered possible, the increased capacity may instead be used to lower the production costs. This is possible through

- less overtime

- fewer shifts

- fewer parallel production lines maintained and operated

The direct labor costs for production will therefore decrease as the OEE-ratio increases.

Successful Implementation Of 5s

Posted by on May 16, 2012 Comments Off

Let me reveal a secret. Most employees actually want a clean and well functioning workplace.

I know some people could find it hard to believe. The present situation in many companies might indicate that employees are lazy when it comes to housekeeping. Well, I have different experiences.

As I conduct 5S training, I meet employees from all kinds of businesses. I always ask what would change if their workplace would be clean and in good order,

“It would save a lot of time,

“I would be less irritated at work”,

“I think we would be prouder about our workplace”, are some typical answers.

For me, it is clear that almost every employee wants the facilities to be in good shape.

How can we have messy workplaces and employees who want good order?

One explanation to this contradiction is: it is acceptable for most people to take care of their own waste, but few people like to take care of somebody else’s.

A shift worker would certainly not be pleased if he one day would found his workplace dirty and messed up. The first time it happens, he might clean it up, but the next time he will not be that generous. Soon he will stop and say:

“Seems like no one else cares about this place, so why should I?”

This means that the overall level will gradually deteriorate. If we do nothing, we will end up with a situation where the least interested employee will set the housekeeping standard for everybody else. As I see it, a cluttered and dirty workplace is not a choice of the employees; it is a result of a bad system where a few lazy people can tear down the work satisfaction for all the rest.

This is, of course, unacceptable, but it is the main reason why we need systems for scheduling, consistency and self-discipline as 5S.

Involvement is the key for a successful 5S implementation

As most employees actually want 5S, you need to involve them in the work. If you do this right you will not just get a better running operation, but also motivated employees eager to continue with the change process.

So how could you do that? Based on my experiences, these steps are the best for successful 5S implementation involving everyone in the work area:

1. Start by choosing at which department to start. As 5S will use resources, you should begin somewhere where the payback time is shortest. Do it right so that you have a good example to set for the next.

2. Perform 5S training. In a production plant, the training involves all production personnel, maintenance, managers and staff.

3. Treat the first S, Seiri (Organization) as waste reduction. The goal is to release time for housekeeping and to make housekeeping as easy as possible. The best way to do this is to go out in the facility in cross-functional teams and search for everything that creates unnecessary effort. Sort out unnecessary objects; mark all known problems, find leakages, and remove hazards. Red-tag every problem and make an action plan that you carry out within 30 days.

4. The second S, Seiton (Orderliness), focuses on arranging everything at the easiest and most efficient access. In practice, you might integrate Seiton in the action plan from Seiri, or it could be a task for empowered work teams.

5. The third S, Seiso (Cleanliness), is crucial for the acceptance of 5S. There are two goals with Seiso: the first is to agree on what cleaning standard you mutually think is right, the second goal is to document what you needed to do to get there. Just like Seiri, everybody working in the area, including managers and staff, should perform the Seiso activity. Split the area into small parts and appoint teams to take care of each. Let the teams note down what cleaning they needed to do, and ask them to estimate how often this cleaning should be repeated in the future. Finally take a photo of the new standard. Remember that Seiso is a one-time activity; the next S´s will keep up the new standard.

6. The forth S, Seiketsu (Standardized Cleanup) is most important. If you fail here, all other steps are unnecessary. When you come to Seiketsu you will be happy if you have a good documentation of Seiso. If so, you already know what the necessary housekeeping tasks are, and you have an estimation of their intervals. The good news is that the new habits are not something that you have invented. Instead they were proposed by the people doing Seiso. You just have to decide which system you will use to schedule the proposed activities.

7. The fifth step, Shitsuke (Discipline) is what will change the future. Even if your schedules are world class, it does not matter if you do not follow them. Agree on a top management policy on cleaning, put the photos from Seiso on the walls, appoint people responsible for all systems that you introduced, and use audits to prevent the level to drop.

There you go. A plan to implement 5S involving all employees. Be consistent, and you can expect impressive and lasting results.