"Lean" principles apply to health care

Bizjournals.com

Donna Daniel
From the Puget Sound Business Journal

Each year, innovations offer hope in improving health care: breakthroughs in disease prevention, new technologies for early detection of neurological conditions, innovations in cellular medicine and dramatic advances in gene therapy.

Yet, it may be a time-tested manufacturing practice that promises the most compelling change in patient care today. Leading health-care organizations across the country are beginning to implement a manufacturing principle called "lean" in their organizations in order to eliminate waste, streamline processes and cut costs.

Sure, it has decades of success in the automotive industry ... but health care? It may help to understand the essence of lean before dismissing it altogether.

Lean is an integrated set of industrial principles that emerged in the post-World War II Japanese automotive industry and gained traction in the United States in the 1970s. It eliminates waste by taking out unnecessary processes and redirecting human effort toward value-added business operations. This reduces production time, decreases costs and improves customer satisfaction.

Experts agree that our health-care system is fraught with inefficiencies and redundancies that have an effect on patient care. When an individual spends more time in the waiting room than with a doctor, for example, this suggests some inefficiency is taking place. When a medication error occurs or medication isn't administered in time, this can be attributed to some breakdown, bottleneck or miscommunication in the process. These problems, in turn, increase costs and decrease the quality of medical care and health insurance for employers and workers.

So, how does lean apply to health care -- where practitioners aren't factory workers and patients aren't widgets? Both manufacturing and health care have a work flow -- a succession of steps and an established process -- that requires interaction with humans. As different as they are, both industries require this interaction to produce an output or outcome; it could be an automobile or a healthier patient.

Most people in health care will tell you that, like manufacturing, health care must cut costs and streamline operations to improve quality of care. This understanding has led a number of health-care organizations to adopt the methodology. Virginia Mason Medical Center in Seattle has applied it. Children's Hospital and Regional Medical Center, also in Seattle, has adopted it.

The organizations listed above that have applied lean should not intimidate the smaller, budget-strapped medical practice. There are books on the subject. Simple research on the Internet yields an abundance of information and case studies. The Institutes for Healthcare Improvement (IHI) promotes the adoption of the methodology and offers information on its Web site (www.ihi.org). The Lean Enterprise Institute (www.lean.org), a nonprofit organization that promotes the principles of lean thinking, might offer assistance. Health-care quality improvement organizations (QIOs) -- there is one in every state -- may offer free services too.

Regardless of the path to lean you choose to pursue, it will require some investment of time. As with any culture change, you should expect challenges. In order to ensure that your lean program has a chance to succeed, consider these elements:

Lean is a "top-down" endeavor. In order to succeed, you must have full management support to engage in the lean concepts.

Be patient with the process: It can take years to yield results.

Be prepared to address skepticism. It may be effective to benchmark the processes prior to implementation and then measure them at an appropriate time afterward. Share results and improvements with management and employees.

Consider hiring a consultant from the manufacturing industry or schedule a visit to a lean enterprise or factory for guidance and perspective.

Conduct "value stream mapping" or another mapping tool/technique to identify, analyze and lay out the effective and wasteful processes used presently within your organization.
From this "present" snapshot of your organization, create a map of the "future state" of your organization.

Eliminate or consolidate those steps that do not bring value to the process, creating a work flow that is more efficient.

Making the shift to a lean enterprise, whether it's in a hospital, a physician practice or a nursing home, isn't easy. Like any culture shift, it will require commitment and time. There may be resistance, especially given the complex nature of health care. But stay the course.

Lean has a successful track record in many industries so you will need to provide education, communication and reinforcement throughout the process. Lean may be challenging to implement at first, but it may be the best investment your organization can make to improve financial performance and the quality of care you deliver to your most important customers -- your patients.

DONNA DANIEL is director of performance improvement at Qualis Health (www.qualishealth.org), a nonprofit health-care quality improvement organization with offices in Washington, Idaho and Alaska. Reach her at donnad@qualishealth.org.

Go Lean to remain competitive

NewKerala.com

Hyderabad: Captains of industry should adopt Lean Production Systems, an idea conveived by Toyota for its car-making, to transform their plants to efficient ones, for survival in the globalisation era, Sundaram Clayton Limited Brakes Division President C N Prasad said today.

''Globalisation has changed the way manufacturing is done. Lean manufacturing, a tool to achieve zero-waste manufacturing, could alone help retain customers in a competitive environment'', he said, delivering the keynote address at the Confederation of India's ''Man Exe-05'', a leadership series on manufacturing excellence.

Using Information Technology in manufacturing and adopting ''Six Sigma'', a rigorous, focused and highly effective implementation of proven quality principles and techniques, were necessary to ensure that performance improved, he said, stressing the need for new product development, daily review as against monthly or quarterly reviews and team culture for achieving results.

Giving a presentation on Small and Medium Enterprise clusters - the Ambattur experience, Mr K P Gopal of Stuser Tools Chennai said the cluster approach helped lower costs, facilitated peer pressure and benchmarking, group learning and mutual sharing from sucessess and failures.

The lessons from the cluster project showed that manufacturing excellence did not depend on the size of the company and was not at all expensive. The age of a company was not a restricting factor, Mr Gopal added.

Toyota ready for Number 1

Autocar.co.uk

Toyota's expansion could mean that it takes over from General Motors as the world's biggest car maker, according to a report published by the Financial Times.

General Motors sales have been in decline and the Japanese marque is next year expected to boost production to over 9.2 million vehicles - nearly a million more than this year - with the arrival of new diesel engines and new models including the second-generation Rav4 off-roader and Yaris supermini.

Meanwhile the new Yaris has achieved five stars for occupant protection in the latest round of Euro NCAP crash tests. The result is particularly impressive considering the European Car of the Year nominee's short front overhang, but that same feature means the car suffers in pedestrian impact tests.

The two-star result lags behind the three achieved by the long-nosed new Fiat Punto, but the Toyota matches the Fiat for child occupant protection, with three stars.

Lean Alone No Longer Cutting It

IndustryWeek.com

Competition requires deeper and quicker cost reductions.

By Tonya Vinas

Oct. 25, 2005 -- Manufacturers and lean gurus speak frequently of lean transformations as journeys, tapping this oft-used metaphor to convey that embracing lean requires a holistic and ongoing approach as opposed to managing events or projects.

The journey includes pitfalls and setbacks, but up to now, most of those have been internal: convincing upper management of lean's long-term worth, forcing a painful review of inefficient practices, and leading reluctant employees to new thinking and action.

But now, we've reached a point where the pitfalls and setbacks are out of manufacturers' control: skyrocketing costs for raw materials and services (i.e., transportation, health-care benefits), China's advantage via its doctored currency, and the emergence of low-cost labor locations that offer quick cost-cuts that are more easily understood and appreciated by equity shareholders and the Wall Street community.

It's a dicey time for manufacturers that have spent the past five to 10 years on the lean journey. They and their top-level executives are finding that lean alone is not enough. The cost cuts that derive from lean process improvement are not delivering savings deeply enough or quickly enough.

Consider these findings from the 2005 IW/Manufacturing Performance Institute Census of Manufacturers:

A whopping 92% of the 550-plus U.S. plants responding saw their raw material and/or component costs increase this past year. Only 5% enjoyed a decrease.

Excluding raw materials, per-unit costs increased for about half of the surveyed manufacturers, a finding made more significant when considering that material costs ranked a median 50% of cost of goods sold for the plants. That means that for half the manufacturing plants out there, half of the bills that they pay have gone up--and these are things that don't even end up in the customers' hands, so it's difficult to pass along these costs.

Which brings us to transportation, energy and employee benefits. Considering the latter alone, the median increase in the cost of providing health-care insurance rose 12% this year over 2004, and close to 30% of the surveyed plants were forced to reduce these benefits.

While the survey did show improvements in important metrics such as return on invested capital, cycle time and first-pass yield, it also showed that fewer plants are using lean as their primary improvement methodology, and 22% have no primary improvement methodology, up from 14% reporting the same in 2000. This is validated further by a reported decrease in training.

What's happening here? It could be several forces combined. Lean guru James P. Womack, presenting at an IW Webcast on Oct. 19, said "program fatigue" may be part of the answer, meaning that manufacturers have realized that programs aren't what lean is about but rather culture change, so lean efforts are less outwardly showy but still are pervasive.

This indeed could be part of the answer. But I think also happening is a demand for immediate cost cutting that lean doesn't always provide. Sometimes kaizen events result in immediate savings, but in the face of the increases these companies are facing, kaizen-derived savings are, again, probably not deep enough, especially with the allure of incredibly cheap labor in China.

Additionally, I have had manufacturers tell me that they've actually had to reverse some lean gains as a result of more materials and components coming from overseas. For instance, some that had been able to eliminate inspections of incoming supplies have had to re-institute them because the offshore suppliers are indeed cheaper, but their products are of a lesser quality than domestic. Also, I've seen manufacturers that have had to increase inventories of raw materials because the delivery of offshore supplies is less reliable than domestic.

Here and there, manufacturers are dealing with this using new ideas that fit into lean thinking, such as the concept of trade payables, whereby a third party owns inventory from the time it leaves a supplier until it's pulled for production. This way, manufacturers can order extra from overseas suppliers but can still keep their inventories low. What I am wondering, however, is if manufacturers aren't coming up with these ideas quickly enough.

Think about it. U.S. manufacturers did not embrace the Toyota Production System (TPS) with loving arms. True they are all in love with TPS now, but life-threatening competition was what forced them to see the beauty in this wallflower. And once they did, productivity zoomed.

We're seeing the same dynamic in the management-union relationship: It has taken Delphi's bankruptcy and GM's bedridden financial status to make the auto unions realize that their retirees are going to have to pay more than $10 for prescription co-pays.

Considering all of this, I urge manufacturers not to forget about lean but also, not to be lulled by it. If what Womack says is true, that lean is becoming wallpaper rather than a centerpiece, then that's a good thing. Now manufacturers can focus on this unprecedented competitive environment and come up with new solutions. Perhaps it's time to view local health-care providers as suppliers and demand the same lean performance out of them as suppliers of raw materials; or perhaps it's time to review cost-of-customer or develop a product mix that is less cyclical.

I'm not sure what the answer is for each manufacturer. But I do know that heralding lean improvements just doesn't have the same awe-inspiring ring that it used to. Lean isn't going away, and it shouldn't. But times are calling for more than process improvements; they are calling for in-depth reviews of all aspects of your enterprise and your sector. Don't abandon the journey, but start looking around a little more.

Think of manufacturing as the road. For the most part, U.S. manufacturers have made travel more efficient by smoothing out the road with lean. Now, if they keep staring at the road, they aren't going to see coming obstacles, and they aren't going to notice things along the way that could make the journey even smoother.

Tonya Vinas is managing editor of IndustryWeek. She is based in Cleveland.

Way outside the box

Magazine Article, Source : The Manufacturer US
Zone : World class manufacturing
Published : 12 Oct 2005 17:14

Companies are looking into shaping up by performing an exercise geared to continuous improvement.

It’s kaizen, the Japanese concept that is still changing American business after two decades. Barbara Axelson asks how

Kaizen is a Japanese term that combines kai (change) and zen (good) that translates as continuous improvement. In the 1960s and ’70s, Toyota Motor Company initiated the first kaizen workshop, a high-end event to demonstrate principles of lean manufacturing to company suppliers.

This year the Kaizen Institute (at its North American operations in Austin, TX), founded by Masaaki Imai, celebrates its 20th anniversary. With 200 professional consultants and offices in 29 countries, Kaizen Institute assists companies on a global basis to implement strategies of continuous improvement and facilitate cultural, technical and organizational change processes required to achieve competitive advantage.

According to Jorge Barron, director of North America operations, “lean [manufacturing] is a way of doing business for global corporations. Kaizen is the integration of full improvement; the umbrella term that includes three pillars: JIT (just-in-time), TPM (total preventive maintenance) and TQM (total quality management). The lean concept is now popular in the US. Lean and kaizen mean the same thing.”

The Institute’s core business is consulting. It serves industries such as automotive assembly, electronics, component manufacture, assembly operations, plastic forming and molding, aerospace and consumer products. “We employ a unique comprehensive system that facilitates measuring, tracking, prioritizing and monitoring of the process as it unfolds in one facility or across multiple facilities,” says Barron. “The powerful Kaizen Management System effectively manages implementation, linking strategic goals with action in every phase of the journey.

“In the US, 95 percent of companies still work on a forecast basis, two weeks or more in advance. The customer needs a day-based framework. Today’s challenge is for business to implement build-to-order systems. The ultimate goal is to build-to-order on firm customer orders.”

Kaizen Institute customer Trek Bicycles, based in the small town of Waterloo, WI, manufactures high-end bicycles. The only North American-based bicycle manufacturer, the company, which worked with a traditional forecast system five years ago, has become a built-to-order manufacturer. The objective was necessary for Trek to maintain a competitive edge with its expensive components and labor-intensive production, which includes extensive welding and attention to detail as products go into final assembly. According to Barron, “it’s always a challenge to keep labor-intensive operations in the US. This particular systems integration was a daunting task.”

It was worth it. Today Trek has realized reduced lead times of 80 percent and has seen an 80 percent cut in work-in-progress, as well as being able to give up leased warehouses.

Other Institute clients include companies such as German manufacturers DaimlerChrysler and ThyssenKrupp, French-based global automotive equipment supplier Valeo and fine spirits manufacturer Allied Domecq. Like many companies in the electronics industry, customers Hitachi and Molex are influenced by Asia’s acceptance of kaizen. Barron notes that lean is making especially rapid inroads into business cultures in Brazil and Eastern Europe in Rumania and the Czech states. “Resistance to change is everywhere,” he adds, “but new companies have the benefit of not having to fight old paradigms.
“We care about our long-term relationships with clients and maintain close contact over a five-year period. We’re not driven by numbers; rather we partner with our customers to ensure they accomplish sustainable continuous improvement initiatives that are linked to their strategic business goals.”
The Institute provides Benchmarking Tours, arranged publicly twice a year in Japan and Germany, and privately, to complement the implementation process with on-going consulting clients to give company executives the chance to see world-class companies in action. The October 2005 event included a DaimlerChrysler plant tour to showcase superior workflow, plus tours of companies with strong TPM practices and management models. Participants were invited to the Institute’s German facility to see the unique kaizen office environment.

The Institute cautions that many companies in the lean marketplace are capable of delivering kaizen-like events without the integration to business strategy capability and without creating the leadership structure and systems necessary to assure sustainability of lean. The Kaizen Institute delivers sustainable improvement processes through development of the internal structure for deployment and enables all levels of the workforce to maintain continuous improvement initiatives.

Bill Schwartz, executive vice president of business development at TBM Consulting in Durham, NC, explains: “The kaizen concept has been embedded in Toyota’s production systems and supports the Japanese concept of getting better, whereas many US companies think the status quo is fine.” TBM serves the international marketplace across all industries, of which manufacturing is primary.
Kaizen is indeed a method for implementing change. Part of the journey to lean, the workshop is a five-day event with a cross-functional team of 10 to 12 people across business areas and business levels. Intent is specific, rather than enterprise-wide or departmental. Focus is on a process that may touch multiple business functions. The team has an executive sponsor, who could be the vice president of sales or the CFO, someone who “owns” the process.

The typical team comprises three company groups — perhaps people from the plant floor such as a design engineer, a supervisor and a quality specialist, and then a contingent from the offices including IT and other functions, completed possibly with representatives from sales and cost accounting. The mix varies, but it is representative of those involved in the processes upon which kaizen will focus that week. Objectives, such as more efficient product assembly or a revamped machining line, are set. Maybe production needs to be taken from five to two days, or 150 steps cut to 40 or a group of nine workers reduced to seven. It varies drastically and can affect leadtime, quality, inventory, floor space or production.

“Kaizen is like bricks in a wall,” explains Schwartz. “It’s an implementation tool. The events are usually part of a bigger picture. We advise companies to first initiate executive education, in a two-day workshop called Quest for the Perfect Engine, and then to conduct an assessment and create a work plan and objectives.”

What will it cost? The individual focus is on how much will be saved. Schwartz used an example of a $124-million company that could save $1.2 million the first year after implementing kaizen. Companies usually generate a return of 10 times their initial investment. TBM uses no contracts and offers an unconditional guarantee of five percent.

A kaizen event, known as a breakthrough event, blitz or workshop, has an agenda:

On day one, Monday, six to eight hours are devoted to training on lean manufacturing, kaizen and related tools.

Day two, Tuesday, is known as the Day of Discovery, in which the team goes out and walks through processes with stopwatches, exploring steps, workflow, measurements such as floor space, defects, historical data, how many people touch a process and how it can be mapped out. Results, posted on sheets of paper on the walls of the workroom, are reviewed at lunchtime and mid-afternoon. At this point, Schwartz says, “we tell people to have fun.” There is a high level of enthusiasm and empowerment for these tasks. Team members become grounded in facts. “We’re looking for waste,” adds Schwartz. “We teach teams to eliminate waste, to eliminate extra work. It’s simple, but very powerful. By Tuesday night, we generate ideas and brainstorm. Everyone is cautioned not to spend money—no new computers or equipment. And it must all be implemented by Friday; the idea is: get it done now!”

So what happens? A department might be 500 feet away from another department with which it interacts. That department could be moved on Day Three, Wednesday, which is Action Day when all approved changes are implemented. Or an assembly line might be taken apart. Immediacy is important; there’s often a tradition of inertia in which no one wants to do things fast. Here, the executive sponsor figures in and, usually, according to Schwartz, approves the action. Additionally, the whole company stands by to assist with related challenges.

Day four, Thursday, refines and documents what is referred to as the “standard” work. Documentation is operator-friendly and flowcharts solidify processes. “Companies often say they get more done in one week than they would in six months,” says Schwartz. “Too often, in the US, we look for perfection, but 60 percent kaizen is great!”

Finally, Friday is the day of recognition and celebration when the team makes its presentation to management.

What’s next? Kaizen is not just a one-time event; in many companies, such events are ongoing. Schwartz explains it’s not unusual to see productivity gains of 20 to 30 percent, drops of 50 percent in defects and time-cycle reductions from 15 to 25 percent.

TBM customer Hubbell in Orange, CT, is an international manufacturer of quality electrical and electronic products for commercial, industrial, residential, utility and telecommunications markets. As a result of the company’s lean journey, some significant improvements include a net sales increase of 54 percent between 2001 and 2004, an increase in net income of a whopping 320 percent in the same time frame, as well as a decrease in inventory of 53 percent and a space reduction of 1.5 million square feet.

Hubbell president and CEO Timothy H. Powers sums it up: “The kaizen process is powerful because it concentrates the energies and talents of a group of people on finding a solution to a single business problem—in the span of about five days.”

Saint-Gobain Increases Production Capacity for Aerospace Composites

Source: Netcomposites.com


The image is a side-view of Saint-Gobain’s CNC 5-axis machine.

Saint-Gobain Flight Structures today has issued plans to expand its operations in Ravenna, Ohio (USA) to manufacture composite parts for aerospace applications.
This expansion will enable the Saint-Gobain factory to specialize in lightweight composites – including cargo doors, wing tips, access panels, fairings and other components – for commercial and general aviation aircraft.

“We’re harnessing 50 years of experience and success with high-performance Norton radomes into a high-technology manufacturing centre for aerospace composites,” states Eric Hilliard, business manager for Flight Structures. “Our composite factory uses specialized composite materials, CNC machines, robotic spray painting, and lean manufacturing cells. Our capabilities put Saint-Gobain in the top tier of composite parts manufacturers. We also have the ability to rapidly design, build and FAA certify composite components for both new OEM production and the aftermarket.”

The Ravenna plant is a self-contained business specializing in the design, manufacture, repair and certification of high-performance aerospace composites and Norton radomes.

Bank joins manufacturing group to learn more

Source: ManufacturingTalk.com

Barclays Bank has joined the Warwick Manufacturing Group at the University of Warwick, to further expand the manufacturing knowledge of its relationship directors.

Earlier this year Barclays underlined its long-term commitment to UK manufacturing by announcing GBP 500 million of lending to support growing businesses within the sector. This month it has taken that commitment to manufacturing a step further by joining forces with the Warwick Manufacturing Group at the University of Warwick, the UK's premier manufacturing education group, to further 'hone' (expand, sharpen up) the manufacturing knowledge of its Relationship Directors. Demonstrating the bank's strong and clear focus on the industry, the decision to use Warwick Manufacturing Group (WMG) is reflective of its desire to provide its relationship directors with an ongoing and comprehensive industry education programme, which it believes will ultimately be of benefit to its manufacturing customers.

The training provided by WMG will encompass subjects such as lean manufacturing, supply chain management, best practice, innovation and off shoring.

Andy Martin, national director for Manufacturing at Barclays, said: 'The decision to provide training of this sort reflects just how much we value the benefit of industry knowledge when it comes to our relationship with our customers'.

'Manufacturing is a very broad fast moving sector and we need to understand better how manufacturing is changing'.

'Working alongside WMG will allow us to do this and leave us better placed to work proactively with our customers and help them to generate value through their operations.' Speaking of Warwick's association with Barclays Professor Lord Bhattacharyya, director of WMG said, 'We are delighted to be working with one of Britain's premier financial institutions'.

'Barclays is dedicated to manufacturing success and that is a dedication we share'.

'We will be working with Barclays to improve the knowledge base of its manufacturing relationship directors and that can only be good for manufacturing clients.' WMG, established in 1980 by Professor Lord Bhattacharyya, has over 480 staff and works closely in partnership with leading industrial organisations such as BAE Systems, JCB, Rolls Royce and Ford Premier Auto Group with the aim of improving competitiveness through the application of value adding innovation, new technologies and practices, and skills deployment.

Continuous Improvement -- Get The Muda Out Of Meetings

Source: Industry Week

It makes sense to streamline the most wasteful of business practices.

By Bruce Vernyi

Oct. 11, 2005 -- Many companies have incorporated the principles of lean manufacturing into operations and functions on their shop floors and, now that they know how well the philosophy works, stand to gain further by taking those practices into their offices.

In fact, the door from the lean manufacturing shop to the front office ought to be kicked open and wedged with a permanent doorstop to let ideas for continuous improvements walk in, and a likely place to begin the process of improving office systems is at the meetings that soak up so much time and expense.

A recent study of U.S. and European companies done for American Express Global by A.T. Kearney recently found that one of the fastest growing expenditures for businesses is the category of budgets for meetings.

"Our new study shows that, as companies examine every kind of expense to buoy profits, many have begun to more closely review their meetings costs," Mark Webb, senior vice president for American Express Global Corporate Services' Global Client Group, said in a press release. "But the study also indicates that firms can make even further gains in controlling meetings costs by implementing more extensive improvements over all areas of meeting planning and management."

In fact, research by Meeting Professionals International says that the planners who arrange events for corporate, independent, association and non-profit purposes expect a 5% increase in budgets for corporate meetings in 2005, and this comes after a 3% rise in 2004.

Consider those increases in expenses in light of the reputation that meetings have as notoriously inefficient uses of time. There are many meetings at which wasteful materials are distributed, visual presentations lack meaning, and participants wonder what they are doing there and what their role might be.

A team approach to planning a meeting and a management technique that sees meetings as a complete event could combine to improve the efficiency at even the briefest meetings.

Successful business sessions are planned in advance and include a well defined agenda, coordinated and focused visual elements, participation limited to those persons involved in the process, and a room chosen as the correct size for the group. These are office-related analogies to the planning, kanban systems and use of materials and resources in place on the shop floor.

A.T. Kearney said it has research that shows that companies can save as much as 10% to 15% of annual meeting expenditures by implementing an end-to-end meeting management program, incorporating such best practices as demand management (for instance, by eliminating unnecessary meetings), supplier management, compliance management and streamlined transaction processing.

To derive the greatest benefits, continuous improvements should encompass the entire manufacturing enterprise.

Bruce Vernyi is the Editor-in-Chief of American Machinist, Welding Design & Fabrication and Gases & Welding Distributor.

(The American Express Meetings/Events Best Practice Study is provided only to American Express card customers. Information on the company's Global Corporate Services is available at http://corp.americanexpress.com/gcs/cards/us.)

Improving packaging line changeover times

Source: Ferret.com.au

EQUIPMENT changeover times are important for many industries including the packaging industry. Time taken to changeover between product runs impacts on the chargeable time for any machine. While many companies have tried to reduce changeover times, many have never really known how to do it, according to Improvement Tools.com.

Lean manufacturing specialist, Bob Carter from Improvement Tools.com, was recently involved with a kaizen team reviewing a product change on a packaging line. The team was amazed to find that only 2 minutes and 40 seconds were actually required to change the line over, yet it took them 28 minutes to change from one product run to the next.

When the company analysed what had happened they found the operators travelled over 600 steps between them, retrieving material and parts (nearly 6 minutes each) and carried out a lot of tasks that could have been done prior to and after the changeover.

Effective changeovers can be carried out in less than 10 minutes and can significantly reduce the amount of scrap produced during initial set-ups and adjustment time.

The time to ‘make good product’ can be reduced and in some cases eliminated, making a real impact on material yield rates.

Remember that every minute saved from a changeover can be converted into additional value-adding time - time used to create and sell more product.

Tools used to improve changeover times and yield loss include the implementation of an Overall Equipment Effectiveness (OEM) program, point-of-use storage for changeover items, quick-release fasteners and error-proof systems.

Making manufacturing more competitive

Source: The Financial Express

NMCC’s draft strategy identifies key issues, but doesn’t stress enough on critical firm-level factors

Nagesh Kumar

The National Manufacturing Competitiveness Council (NMCC), set up by the Prime Minister, has just come up with a draft national strategy for manufacturing and has placed it on its website, seeking feedback from all stakeholders.

A focus on manufacturing competitiveness is timely and critical for sustaining a higher GDP growth rate at 8% or more. Manufacturing that is not competitive in the global market place has no future. Revival of manufacturing is also key to employment generation for India’s growing work force. The NMCC feels the sector’s annual growth rate should increase from the 7% seen over the past decade to 12%. This would generate 2.5 million jobs in place of the one million seen in the past. It would also bring the contribution of manufacturing to GDP to 23% from the 17% in 2003. Which, of course, would still be low, compared to the East Asian countries.

NMCC has identified factors that impinge on the broader issue of competitiveness, like tariffs and indirect taxes, cost of capital, innovation and technology, infrastructure, regulatory environment, etc., and has come up with a set of recommendations. While the factors identified are important, they only partly explain competitiveness. An important set of determinants of competitiveness lie in the domain of enterprise-level decision-making. NMCC has apparently not been able to pay due attention to the enterprise-level factors, although it recommends that firms are encouraged ‘to build abilities to acquire, assimilate, develop new technologies and reduce production costs’ and seeks a national programme of lean manufacturing.

In terms of the most objectively measured criterion of manufacturing competitiveness of an enterprise, i.e., its export performance, one finds a very wide variation across firms. All firms in an industry broadly face a similar macroeconomic environment, cost of capital, tax treatment, infrastructure availability, and external market conditions. Yet, the outcomes vary widely. Some firms try to establish themselves in international markets and build a niche, while others are not motivated to export at all. Obviously, enterprise dynamism has a role to play in producing export successes, besides other factors. A detailed analysis of the export performance of 4,500 firms across industries, conducted at RIS, revealed a number of important factors affecting their export performance and may be considered by the NMCC in its work.

For instance, firm size has an important influence on export performance, with the relationship between the two variables taking an inverted U-shape. Implying that smaller firms are clearly at a disadvantage in export markets until a threshold size is reached. Policies assisting smaller firms with information on opportunities, technological support, credit and export distribution channels through development of clusters may help. It also suggests a role for policies for nurturing world-class enterprises or national champions or flag-bearers in select sectors, who could be assisted to grow to world-scale and compete with their own brands, overseas investments and acquisitions.

• Factors affecting competitiveness go beyond the macro, to the firm-level
• Policy must be tuned to the role played by firm size and its innovative activity...
• ...As also to the fact that export-oriented FDI brings in global best practices

The RIS study also finds an enterprise’s own innovative activities play a key role, especially in knowledge-intensive industries. Developed country governments spend billions of dollars in R&D subsidies to national enterprises. Such subsidies have been made non-actionable under WTO rules. In India, R&D activity has been encouraged mainly through weighted tax deductions in certain industries. It is arguable that a more direct support in the form of R&D subsidies for specific projects for development of products or processes may be desirable. Another policy to promote local innovation could be protection accorded to minor innovations through utility models and industrial designs protection, as done by a number of East Asian countries.

Finally, the quality of FDI varies a great deal and not all FDI flows may bring to their host countries the best practice technologies. In this context, it may be important to focus on export-oriented FDI, as these investments have to be competitive right from the beginning. And, hence, tend to bring in the best-practice technologies. They also have other favourable externalities and crowd-in domestic investments by creating demand for intermediate goods.

Here, we can learn from China’s experience. FDI has been pushed to export-oriented production and today, foreign affiliated firms account for nearly 55% of China’s manufactured exports and 80% of its high technology exports. Export-oriented FDI could help the Indian manufacturing sector tie up with the global production networks of MNCs. Our large and expanding domestic market and our low-cost, but high-quality, human resources need to be leveraged effectively for India to be viewed as a base for export-oriented production. China, among other countries, has effectively bargained with MNCs on the access to its domestic market, in return for accepting certain export-obligations.

Proactive targeting and promotion of export-oriented FDI could also be useful for exploiting India’s potential in attracting export-platform FDI. Incidentally, contrary to general perception, export-obligations are fully consistent with WTO’s Trims agreement and can still be employed without any problem.

NMCC has started to address the important, but complex, and challenging task concerning India’s manufacturing revival. These are a couple of issues that may be of interest to it!

The writer is director-general, Research and Information System for Developing Countries (RIS). These are his personal views

Kaizen: Japanese philosophy gives Solectron focus

Source: SiliconValley.com

By Karl Schoenberger

Mercury News

Team Penang came from Malaysia to Silicon Valley in late September wearing matching khaki jackets and ball caps to compete in a new kind of contest. Armed with spreadsheets and PowerPoint presentations -- and with the war whoop ``kaizen!'' -- they claimed victory. And they took home a $10,000 grand prize.

The battleground was an auditorium at the Milpitas campus of Solectron, the struggling electronics manufacturing contractor. The Penang gang's strategy was the same as other Solectron teams from around the world: ``thinking lean'' for efficiency. They did the best at squeezing the waste out of the production process, innovating with their own ideas instead of taking orders from managers.

If this sounds like a page out of the Japan-U.S. auto wars of the 1980s, that's no coincidence. Solectron is putting its bets on Toyota Motor's kaizen (pronounced ``kye-zen'') philosophy of perpetual improvement, believing that the discipline can be applied to the intricate supply chains of electronics manufacturing with equal success.

In the dog-eat-dog world of electronics outsourcing, anything that promises lower costs, better quality and higher speed is an advantage. These contractors make just about everything from consumer personal computers to Internet routers, all built anonymously under the brand names of their customers.

Conversations around Solectron have been laced with Japanese terms ever since Marc Onetto, executive vice president for worldwide operations, arrived on the scene. Onetto is a former protege of Jack Welch at General Electric and a true believer in Toyota's kaizen approach to manufacturing. He joined Solectron in 2002 after 15 years at GE in the medical equipment division.

``We're trying to make the supply chain responsive to the customer, which is really hard in the electronics industry,'' said Onetto, 54. ``There's a tendency to stockpile components in warehouses and write them off when they're not wanted. But kaizen is all about eliminating waste and accelerating the supply chain.''

The character compound for kaizen means ``change'' and ``good.'' But kaizen convert Ravi Ramanan, Solectron's vice president for ``functional excellence,'' thinks kaizen's zen might come from Zen Buddhism.

`Spiritual discipline'

``It's almost like a spiritual discipline,'' Ramanan said. ``We don't have brainstorming sessions anymore where you waste time sitting around and talking about the problem. You go out on the shop floor and fix it, fix it, fix it.''

There would seem to be a risk that all the Japanese jargon will remind Solectron's customers that the Japanese manufacturing juggernaut fell on its face in the early 1990s.

Not so, says industrial efficiency sensei (guru) Jim Womack of the Thin Enterprise Institute. He advised Solectron on its productivity makeover and he also served as a judge at the company's Sept. 26-27 kaizen contest, along with Chihiro Nakao, Toyota's master of kaizen.

``These are Toyota terms, not Japanese terms,'' Womack said. ``Japan's industry might have failed, but Toyota is getting ready to eat General Motors.''

At Solectron's first annual Global Kaizen Competition, the finalists took turns at the podium describing how they improved operations over the past year. The winning workers at the factory in Penang, Malaysia, fixed the glitches that were slowing down production of mother boards for high-end work stations they made for a big customer in Santa Clara.

(Solectron doesn't name customers, other than to say 18 percent of its business is making things for Cisco Systems, which was not the customer in this case.)

The line workers took matters into their own hands -- without wasting time on management approvals -- and resolved nagging quality-control problems. From 32 percent of production passing quality standards a year ago they raised the pass rate to 81.3 percent, and shortened delivery time to the customer from 18 days to seven.

Drilling down

Even if kaizen succeeds in transforming Solectron's top layer of contract manufacturing, there are questions about how far down the food chain it can go. Much of the manufacturing that goes into finished electronics products happens at small companies on the subcontractor and material supplier levels.

``The reality of this industry is that you can't be better than your customers or your suppliers,'' Womack said.

Solectron has been going lean in other ways lately. In April it announced a restructuring plan that involved cutting about 3,500 jobs in Europe and North America.

Among the major electronics contractors -- including Sanmina-SCI of San Jose and Flextronics, which is incorporated in Singapore but operates out of San Jose -- Solectron has taken the most heat from Wall Street since the technology crash of 2000.

Andrew Huang, a financial analyst with American Technology Research, scolded Solectron last week for lower-than-expected revenue and earnings in its most recent fiscal quarter. Solectron's annual revenue continues to sag, decreasing from $11.6 billion last year to $10.4 billion in fiscal 2005, which ended Aug. 31.

``Having consistently disappointed for the last six quarters,'' Huang wrote in a report, ``we believe Solectron management has very little credibility left.''

Harsh words for a company that has dedicated itself to kaizen.

But industry analyst Pamela Gordon, president of Technology Forecasters in Alameda, gives credit to Solectron for its enthusiasm for productivity reform.

``The lean-production movement isn't unique to Solectron, but it's been their calling,'' she said. ``I think any contract manufacturer is selected by the customer for its efficiency, and lean production can only help the bottom line.''

Lean manufacturing storage issues

Connecting Industry

(21/10/2005) A lack of awareness and understanding of lean manufacturing has limited its uptake in the past. Happily, there now appears to be signs that this is changing…

Lean manufacturing can offer benefits to manufacturers who need to improve performance, increase efficiency and optimise processes.

The concept was originally devised by the Japanese motor industry and was adopted by many other automotive organisations. It is now reaching other industries.

The essence of the concept is to eliminate wasteful processes and maximise efficiency in the production supply chain. At its heart is the need for efficient handling and storage of components, sub-assemblies and finished products and the creation of ergonomic working environments that enable tasks to be completed with the minimum number of actions. This means that manufacturers can be more responsive to changing business conditions and offer more flexibility to customers. The result is a shortening of the value chain that enables earlier invoicing and a reduction of inventory to release capital for use elsewhere in the business.

Concepts such as kaizen, just-in-time, total quality management, and cellular production are all interrelated with lean manufacturing.

Central to lean manufacturing is the ability to create a production environment matched to a specific requirement where processes are optimised for efficiency, productivity and reduced costs.

An increasingly popular method of supporting lean manufacturing is to use modular storage and handling systems which can be assembled into a variety of units including live storage, carts, trolleys and ergonomic workstations that can be used throughout the production process.

The first benefit of this is reduced production line design cost because components are interchangeable and reusable, eliminating the need for bespoke or ‘turnkey’ facilities where decisions about infrastructure must be taken at the start of the design phase because of potentially lengthy supply and installation times and subsequent changes can be expensive or impractical.

Modular environments can be designed to meet the specific requirements of the process which means, for example, that the right area is occupied by each process to ensure optimum use of available volume. Modifications to installations can also be made while the process is being implemented.

One user of the LeanTek modular storage and handling system from The Tube & Bracket Company, for example, was able to upgrade and improve manufacturing processes on two UK sites in days rather than weeks by adopting modular lineside racks. Project engineers were able to incorporate bespoke storage equipment solutions that were not readily available off the shelf into individual work cells to maximise efficiency. This resulted in improved ergonomic work areas, reduced operative movement and the introduction of ‘just in time’ component supply.

Maximising productivity
Lean manufacturing productivity is maximised because the production environment can be optimised to ensure the steady flow of materials through the supply chain. At the lineside, for example, live storage to feed assembly areas can be configured so that replenishment is maintained without disrupting production. Working areas can be designed so that components, tools and equipment are within easy reach. Trolleys and carts can be created that are exactly matched to the specific handling requirement rather than using off-the-shelf products.

One company reduced the number of lineside containers by 58 per cent in the final assembly area of its factory by installing modular live storage racks supplied by The Tube & Bracket Company. The bespoke live storage racks were integrated with existing permanent fixtures. The use of reinforced roller track promoted first-in-first-out stock rotation and allowed part delivery to the exact point of use rather than at the end of the line.

Fundamental aim
A fundamental aim of lean manufacturing is to sustain continuous improvement. In conventional production environments the investment in resources and infrastructure often leads to rigid processes where change can only be justified if the projected improvement is significant. This can mean that smaller improvements are delayed because there is an insufficient business case.

Lean manufacturing, on the other hand, relies on the idea that changes can be implemented whenever required because the underlying infrastructure enables this. Any improvement, however small, can be introduced as soon as its potential has been identified so that the organisation can begin to realise benefits. Over time the incremental changes that are achieved can lead to significant improvements.

One Tube & Bracket Company customer, for example, uses hundreds of modular storage racks in its factory and modifies them frequently to adapt to changes in operations. A small stock of components, supplemented by overnight delivery of additional items allows the company to respond quickly to changing requirements and ensures it can meet its performance targets. The company estimates that this has helped it to improve its TAKT time – a key performance measure in lean manufacturing – by up to 20 per cent.

Another major consideration within lean manufacturing is the creation of ergonomic working environments. In some industries ergonomic considerations start and end with health and safety but more enlightened users recognise that there are also workspace efficiency and productivity gains to be achieved. Modular handling and storage systems allow users to create ergonomic installations that ensure fewer and shorter movements are needed to access, retrieve and replace a component or assembly than might be possible in traditional working environments.

These small savings contribute to improved productivity while reducing the risks associated with repetitive tasks or unnecessary handling.

The Tube & Bracket Company
For more information, visit www.tubeandbracket.com

State on path to industry success

Postcrescent

By Rich Ryman
Gannett Wisconsin Newspapers

BRILLION — Manufacturing in Wisconsin has taken a beating in recent years, but it’s been a beating based more on transition than extinction.

“Our message is Wisconsin manufacturers can win,” said Mike Klonsinski, chief executive officer of Wisconsin Manufacturing Extension Partnership. “This can be the manufacturing capital of the country for a lot of good reasons.”

Klonsinski spoke Friday at a manufacturing forum at Ariens Co.’s museum in Brillion. The forum was hosted by Ariens Co. and state Rep. Terri McCormick, R-Greenville.

Klonsinski said Wisconsin has the experience, the skills and the infrastructure to continue to succeed as a leading manufacturing state, but it also has challenges.

Those include a growing shortage of skilled workers, a regulatory and tax climate viewed as bad for manufacturing, a shortage of industrial research and development compared to the rest of the country and productivity that trails the nation as well.

He said Wisconsin companies must focus more on applying new technology to existing industries than trying to attract manufacturers of new technology, something on which economic developers often spend a lot of time.

“We have a department of tourism and a department of agriculture, but we don’t have a department of manufacturing, even though it’s bigger than both of them,” he said.

The Extension Partnership has been one of the foremost proponents of lean manufacturing, which seeks to remove waste from manufacturing processes.

Ariens Co. adopted the lean approach five years ago when it was facing severe financial problems. The company has significantly reduced both waste, inventory and production lead-time.

“If we aren’t taking care of our own business, driving the waste out, becoming more lean, we aren’t going to survive,” said company president Dan Ariens. “Flexibility is going to become the competitive weapon of business in North America.”

Rich Ryman writes for the Green Bay Press-Gazette.

Clinical processes

Nashville Business Journal

Sumner Regional Health signs on to HPP's Lean management system
Roy Moore
Nashville Business Journal

Sumner Regional Health Systems has expanded its relationship with Healthcare Performance Partners, putting more of the system's operations under the Lean business improvement analysis.

The system's flagship hospital has worked with Gallatin-based HPP since earlier this year on process improvements that originated at Toyota. A new deal will include centralizing material distribution in one location and then sending individual items to the hospitals, potentially creating bulk savings, system administrator Bruce James says.

The deal gives HPP eight health care clients in the 18 months since its parent, the Access Group, brought the manufacturing techniques to the health care space. CEO Charles Hagood says the company could have another four significantly sized facilities in the next month.

The Lean concept has been common in the manufacturing space for decades, instituted as part of the Toyota Production System to eliminate waste in the production cycle. That concept has been adopted to other industries and has finally made its way into health care, the nation's largest sector at $1.7 billion spent annually.

Under Lean, every event undergoes a value stream analysis that looks at individual pieces for improvement. For a visit to the emergency room, such analysis could lead to reduced waiting times or faster processing of paperwork.

"Now that I've been doing this for a while, it's almost like this was designed for health care," Hagood says.

Analyzing Sumner Regional's operating room cut the turnover time between cases by 25 percent. For workers, improved processes makes them more efficient without cutting jobs.

"With the ability to move things through the process faster, that's better for the patients, that's better for the physicians and that's better for the staff," Bruce says.

Such changes could benefit health care providers, who suffer from pricing constraints from insurers. With payments limited, the only way to improve bottom-line results is through increased efficiency. A more efficient surgery center can see more patients in the same amount of time, boosting both revenue and profit.

"This is one of the ways to drive cost out of the operations so we can thrive in an environment that's constantly being challenged on the revenue side," Bruce says.

Hagood believes there's plenty of waste to be cut from the health care space, upwards of 80 percent. The biggest opportunity is among the support functions, starting with making scheduling and registration more efficient.

By removing the financial and time waste, providers can spend more money on new equipment and services and give caregivers more time with individual patients, potentially cutting down on medical errors.

Writing in last month's Harvard Business Review, Steven Spear of the Institute for Healthcare Improvement said the University of Pittsburgh Medical Center implemented the Toyota approach to its pharmacy department. By examining the steps in their pharmacy management, the time spent looking for medication dropped by 60 percent and stock-outs fell by 85 percent.

More facilities are expected to embrace the change. Besides Sumner Regional, Parkridge Medical Center, an HCA facility in Chattanooga, has adopted the Lean concept.

Hagood believes in the next 24 to 36 months, the Lean concept will be a major buzzword among health care executives nationally. rmoore@bizjournals.com, 615-248-2222 ext. 117

Vermont furniture factory comes back after nearly closing

Burlington Press

By Leslie Wright
Free Press Staff Writer

BRANDON -- Imagine buying a company that hasn't turned a profit in years, with no knowledge of the business, in an industry that's fleeing the country for cheap labor overseas.

A reasonable person might guess the odds were long for such a venture.

Jon McNeill and Fred Musone didn't see it that way. Two years ago, they bet that Vermont Tubbs, a furniture manufacturer with deep Vermont roots, had a chance. To make it work they had to retool manufacturing and retrain workers, flying in the face of long held industry standards.

"Everybody in the furniture business said that really didn't work," Musone said. "We were too inexperienced to come to that conclusion."

Defying their detractors, Mc- Neill, 39, and Musone, 61, have engineered a turn around at Tubbs that has others in the industry asking them how they did it.
Starting over

McNeill found out about Vermont Tubbs on Labor Day weekend 2003. McNeill, an entrepreneur from the Boston area, had just left Sterling Collision Centers, a chain of auto body shops he started.

While he was looking for new opportunities, the Tubbs call came when he was on vacation and had promised his wife and children he wouldn't mix business and pleasure.

The voice on the other end of the line pleaded. Brandon wasn't that far from Waitsfield, where he was staying. Couldn't he just take a ride over the Green Mountains? There were jobs at stake and people who needed those jobs to put groceries on the table.

McNeill knew the Tubbs brand of solid ash furniture. His kids had Tubbs beds and he liked them. He acquiesced.

After he toured the factory, he rang Musone, who was on his boat and also not taking business calls. Musone had been on the board of Sterling Collision Centers. He, too, agreed to take a look.

When they visited the plant, production was winding down in advance of a liquidation that was just weeks away.

New orders were no longer being taken. After several rounds of layoffs the plant was down to 58 workers working three-day weeks. Unsold inventory was stacked up.

"We saw a business that was definitely broken from a manufacturing standpoint, but the question was how healthy was the brand?" McNeill said. "It's one thing to fix an operation. It's another thing to fix a brand."

McNeill checked in with retailers, like Crate & Barrel, which constituted more than half of the company's business. He was surprised that despite delivery lag times as long as four months, retailers were fans of the furniture and wanted more of it.

They urged him to keep the company alive. That was a good sign. The product had customers -- enthusiastic customers.

Musone saw the problems with the manufacturing operation as another a good sign. If the company was in trouble with good customers and efficient manufacturing, there would have been no saving it because there would have been no room for improvement, Musone said.

McNeill, Musone and a silent partner decided to buy the company. The deal was risky enough that federal and state government guarantees were vital to landing a $2.3 million loan with KeyBank. McNeill declined to reveal the purchase price.
New school

Given the situation at Tubbs when they bought it, McNeill and Musone knew they had to make some radical changes. The old way of doing things clearly wasn't working.

Under the old system, furniture was built in anticipation of orders, a practice called cutting. This was, and still is, the standard manufacturing method in the furniture business, McNeill said.

At Tubbs, projections were often wrong. The company sat on unsold inventory, tying up cash. Plus, lead times for delivery were running as long as five months.

Like many U.S. manufacturing businesses, Tubbs was competing with cheap labor from overseas. Sales of imported furniture have jumped dramatically in the past decade. In 1994 imported furniture accounted for 22 percent of sales. Last year imports were 43 percent of furniture sales, according to the American Home Furnishings Alliance.

To compete with overseas manufacturers, Tubbs had to get delivery down to four to six weeks. Another way to compete with overseas manufacturers was to deliver quality. Furniture from places like China comes in containers shipped over the ocean. Delivery takes about five months and typically, 25 percent of a shipment is damaged in transit or has quality problems, McNeill said.

The answer was lean manufacturing. McNeill and Musone had been down this road before in another industry -- auto body repair.

McNeill started Sterling Collision Centers in 1997. When Sterling was sold in 2001 to Allstate Corp., the insurance giant, there were 60 centers with $170 million in sales. McNeill continued to work for the company into 2003.

At Sterling, McNeill applied lean manufacturing principles to auto body work. Lean manufacturing uses minimum inventory levels, streamlines manufacturing and eliminates the need for middle management.

Musone was an expert in the method, having been president of a U.S.-based company that sold airbags to Toyota, a pioneer in lean manufacturing.

"Furniture in and of itself doesn't generate cash," Musone explained. "Only the order generated cash. So we had to shift from thinking about building pieces of furniture to building orders because that's the only thing that rang the cash register."

Tubbs isn't the only manufacturer in the state to adopt lean manufacturing. Vermont Teddy Bear Co. in Shelburne recently shifted to a similar system called modular manufacturing in which workers are cross trained on a variety of tasks and work in teams, doing away with assembly line-style production.

Other companies have taken a hard look at how to manufacture more efficiently and capitalize on their strengths, said Bob Zider, director and chief executive officer of the Vermont Manufacturing Extension Center in Randolph.

In general to survive in the world of low-cost manufacturing, companies have to figure out how to offer things that their cheaper competition can't, like customer service and custom orders, Zider said. "If you are a company that is nimble, agile, with quick turn-arounds, that adds real value, especially in today's world," he said.
Turning heads

Tubbs has made money in two of the last three quarters and is heading into what looks like a profitable fourth quarter, McNeill said. Furniture is being built by 110 workers in three shifts.

The product line has increased by 50 percent and 24 paint colors have been introduced in addition to the traditional stains. Painted furniture is now 60 percent of sales. Returns are running at less than one-half percent, down from 10 percent. Deliveries are on time 99.5 percent of the time, up from being on time less than 60 percent of the time.

"We give it to you fast so you don't have to carry inventory. We give it to you in the way your customer wants it in the color they want, the style they want, and you get 99.8 percent quality, not 75 percent quality," McNeill said.

A line of home entertainment centers and office furniture is about to be launched to round out Tubbs' bedroom furniture offerings.

One hundred and twenty new accounts have been lined up, for a total of 440. McNeill and Musone won't reveal sales figures, but said annual sales have surpassed the $6 million mark, up from between $1 million and $2 million in sales when they took over.

The furniture industry has noticed. Both McNeill and Musone have done consulting work for other furniture companies, bartering their time for machinery and a trade show booth, to show others how lean manufacturing works.

Competitors have tried to hire workers away from Tubbs, Musone said. Not only is he optimistic about Tubbs future, he's convinced the U.S. furniture industry can survive. Tubbs proves that U.S. manufacturers can compete, he said.

"We are three guys that never saw a furniture factory before, competing against 25 cents-an-hour labor in China, and we are celebrating our third Christmas," Musone said. Contact Leslie Wright at 660-1841 or lwright@bfp.burlingtonfreepress. com

Continuous Improvement -- Get The Muda Out Of Meetings

Industry Week

It makes sense to streamline the most wasteful of business practices.

Tuesday, October 11, 2005
By Bruce Vernyi

Many companies have incorporated the principles of lean manufacturing into operations and functions on their shop floors and, now that they know how well the philosophy works, stand to gain further by taking those practices into their offices.

In fact, the door from the lean manufacturing shop to the front office ought to be kicked open and wedged with a permanent doorstop to let ideas for continuous improvements walk in, and a likely place to begin the process of improving office systems is at the meetings that soak up so much time and expense.

A recent study of U.S. and European companies done for American Express Global by A.T. Kearney recently found that one of the fastest growing expenditures for businesses is the category of budgets for meetings.

"Our new study shows that, as companies examine every kind of expense to buoy profits, many have begun to more closely review their meetings costs," Mark Webb, senior vice president for American Express Global Corporate Services' Global Client Group, said in a press release. "But the study also indicates that firms can make even further gains in controlling meetings costs by implementing more extensive improvements over all areas of meeting planning and management."

In fact, research by Meeting Professionals International says that the planners who arrange events for corporate, independent, association and non-profit purposes expect a 5% increase in budgets for corporate meetings in 2005, and this comes after a 3% rise in 2004.

Consider those increases in expenses in light of the reputation that meetings have as notoriously inefficient uses of time. There are many meetings at which wasteful materials are distributed, visual presentations lack meaning, and participants wonder what they are doing there and what their role might be.

A team approach to planning a meeting and a management technique that sees meetings as a complete event could combine to improve the efficiency at even the briefest meetings.

Successful business sessions are planned in advance and include a well defined agenda, coordinated and focused visual elements, participation limited to those persons involved in the process, and a room chosen as the correct size for the group. These are office-related analogies to the planning, kanban systems and use of materials and resources in place on the shop floor.

A.T. Kearney said it has research that shows that companies can save as much as 10% to 15% of annual meeting expenditures by implementing an end-to-end meeting management program, incorporating such best practices as demand management (for instance, by eliminating unnecessary meetings), supplier management, compliance management and streamlined transaction processing.

To derive the greatest benefits, continuous improvements should encompass the entire manufacturing enterprise.

Bruce Vernyi is the Editor-in-Chief of American Machinist, Welding Design & Fabrication and Gases & Welding Distributor.

(The American Express Meetings/Events Best Practice Study is provided only to American Express card customers. Information on the company's Global Corporate Services is available at http://corp.americanexpress.com/gcs/cards/us.)

Suppliers face need for new approach

Chris Vander Doelen
Windsor Star

AUBURN HILLS, Mich. - Just as Detroit's Big Three are remaking themselves to resemble Japanese companies, machine, tool, die and mould-making companies will have to learn to love lean manufacturing in order to survive, one of the industry's leading suppliers says.

Yet a lot of Windsor and Detroit's top MTDM companies "don't want to hear" what they could be doing differently to make themselves more efficient, says Tony Pekalski, president of Auburn Hills based Single Source Technologies Inc.

Five years into "the crunch" that has seized the segment since China stormed into world markets, bankrupting dozens of weaker, smaller and undercapitalized firms on both sides of the Canada-U.S. border, most companies are willing to invest in new equipment and training in order to stay competitive.

But too many of them are ignoring two of the three main components of success, says Pekalski, a former mould maker whose SST Inc. now equips tool, die and mould companies and teaches them how to compete internationally.

Technology is only one leg on the tripod of success, he said Wednesday during a tooling trade show here that attracted about 600 companies from the region. The show continues today.

The other two legs of the tripod are creating mutually supportive relationships - such as those enjoyed between Toyota, Honda and their intensely loyal supply chain - and lean manufacturing.

While tool and mould companies may not be able to remake their relationships with Detroit's Big Three overnight, they can certainly find savings in their operations, Pekalski says.

"There is so much waste internally," he said of most MTDM companies he sees - particularly in the field of two-dimensional cutting processes. Often, companies ignore 2-D cutting to focus on three-dimensional work, he said, throwing away significant savings and cost advantages they could gain on competitors.

Over the past year, SST has taken people from nearly a dozen Windsor-area MTDM companies on tours of Japanese plants to convince them of the benefits of going lean. What they learn usually surprises them, says Keith Kauzlarich, vice-president of the company.

They found "that our machining is equal to or even better than what the Japanese do," Kauzlarich said. "But they're more efficient and organized than we are -- they've much better than the companies in North America. "

Japanese organizational know-how can translate into 95 per cent "up" time for their cutting machines, and eliminates many of the hours wasted in North American shops as tools or moulds sit between operations.

Most Canadian MTDM companies, at least, appear to have recognized the competitive threats arrayed against them and are moving to keep up with the global pack. "The Canadians are so united - they have much greater unity than over here," and higher awareness of the risks, Pekalski said.

Eventually, the entire MTDM industry will turn itself inside out to compete globally, he said. Like it or not, "being lean is being forced upon them," Pekalski says.

© The Windsor Star 2005

Lean Operator

Source : The Manufacturer US
Published : 26 Sep 2005 18:59



Remmele Engineering’s Automation Division focuses on lean processes to take its design/build expertise of custom equipment to the next level. Linda Seid Frembes reports

Located in St. Paul, MN, Remmele Engineering’s Automation division provides the people, resources, and processes to design and build custom equipment for product development and commercial manufacturing. As a leader in custom equipment, Remmele Engineering applies their manufacturing expertise and resources for customers who are looking to scale up its production for either new or existing products.
Fred L. Remmele began what is now Remmele Engineering as a tool and die business in 1949. Today, Remmele Engineering is a national organization with four facilities and more than $85 million in annual sales. The company’s two divisions (Automation and Contract Manufacturing) employ nearly 500 people in the Minneapolis/St. Paul metropolitan area and service both national and international leading-edge companies.

“The majority of what we do is design and build custom equipment, and it all starts with a customer request or inquiry,” says Terry Johnson, vice president and general manager who is responsible for the Automation division. “Our project engineers and program managers work together with the client to determine needs and solutions.” Those needs can range from product and process development, proof-of-principle, design of experiment, contextual design, design and build, and integration services.


Upon client acceptance of the proposal, a Remmele project engineer, design and control engineer, and program manger lead a team in the execution of the client’s project. There can be six to eight major project teams in action at any one time. Project stages include the design and development of the equipment in CAD, approval of the design by the client, procurement to obtain parts or in-house fabrication of custom parts, assembly, commission and testing of the equipment, and then installation in the client’s designated manufacturing facility.

Remmele Engineering’s wide range of expertise includes novel drug delivery systems, in-vitro diagnostics, energy storage, consumer products, electronics, and medical devices. “We offer technology across a broad range of markets,” says Brian Raehsler, manager of client development, who is responsible for marketing, sales, and program management of the Automation division. “The areas where we fare well are in the medical arena; in particular with drug delivery, in-vitro diagnostics, and energy storage. Those segments comprise roughly two-thirds of our business.”

In drug delivery, Remmele’s range of experience encompasses all phases of the product development process, including pilot lines, proofs-of-principle, clinical manufacturing, commercial manufacturing, and validation testing. “Some segments of the market are very mature, with lots of commoditized, standardized equipment like syringe assemblies, for instance,” says Raehsler. “The type of projects that we get involved in are emerging platforms like a pulmonary drug delivery system, for example.”

Remmele’s team was hired by Aradigm Corporation of Hayward, CA, to produce the dosage form for its AERx pulmonary drug delivery system, which was in late stage development for the delivery of insulin through the lungs. Instead of using a needle to administer the insulin, the patient would breathe into a mouthpiece, and the system would meter the patient’s breathing rate and calculate the appropriate dose. “Our customers are usually product or process innovators,” says Raehsler. “We can help them with the engineering to scale up or build a custom manufacturing solution.”

Since the demand for high-end capital equipment is limited and spending is very discretionary, Remmele’s business can sometimes be unpredictable. The company recognizes the need to be flexible and scalable at all times. Brian Miles, manager of design and control engineering who is responsible for the engineers assigned to various client projects in the Automation division notes: “We strive to be complete and accurate for our clients; and to always focus on our core competencies. Scalability of resources is a key point. Our people are specialized but can explore different industries for opportunities in a vertical market segment. It keeps us operationally excellent.”

Remmele’s world class manufacturing strategy revolves around four primary areas of continuous improvement and growth: total organization commitment, lean business practices, total resource management, and six sigma. The Automation division’s Purchasing Manager, Linda Schmitz, also serves as its world class manufacturing coordinator. “We’ve always had an initiative for business process improvement,” says Johnson. “Our formal world class manufacturing program started three or four years ago, and at first it was hard to recognize how to use it since we do not make the same parts on a repetitive basis. For us, continuous improvement is more about applying lean principles to the business processes. It’s a focus on removing waste from our business practices, developing robust processes, and driving resource management to on-time delivery.”

Continuous improvement holds true for both internal and external projects, as the team must engineer for lean and six sigma customers. “Improvement has to be included in the engineering according to the customer specification; therefore, we must be well-versed in a broad range of methods,” says Miles.

Remmele Engineering conducts an active engineering co-op program, whereby the company recruits from five local universities in mechanical and electrical engineering. The co-op accepts four students per year who get involved in client projects. Remmele strives to hire from their co-op. Once hired, the full-time employee will spend an additional three years in an internal associate engineering program; some also continue to pursue a master’s degree. At the end of the three years, that Remmele engineer is able to lead client projects. Miles adds: “Training is part of our culture. We were originally machinist centered where we offered apprenticeships. We have now added the engineering co-op program which is a similar spirit but different execution.”

Remmele Engineering maintains its continuous improvement journey as it has since its founding. The company recently hired a Director of Supply Chain Management to streamline procurement practices for both of its divisions.

Bring Lean to Your Product Development Factory

By Hazimeh, Oliver; Thut, Mark
PRTM's Insight
October 2005

Imagine trying to implement manufacturing best practices in a factory unlike any you’ve ever seen—where information, not product, flows from station to station; where the time to complete the job is measured in months, not days; and where it’s almost impossible to quantify capacity. Then imagine trying to implement lean manufacturing practices in this factory.

For decades, lean concepts, which focus on eliminating waste and improving quality, have been a best practice for manufacturing companies. They’re now becoming popular outside the factory floor, as the mandate to “do more with less” becomes a standard operating requirement.

Complex product development is one area where lean shows especially strong potential to deliver. In the automotive and aerospace industries, where product development is very capitaland time-intensive, increasing the rate at which new winning products are developed is critical for improving market share and profitability. Lean has helped leading companies like Boeing realize significant improvements in cycle times, throughput, and productivity.

Two automotive original equipment manufacturers (OEMs) used lean concepts to improve the productivity of their product development organizations over the past decade (Figure 1). One company newly embarking on a lean product development initiative achieved breakthrough gains in productivity (42%), while a company that had already implemented lean realized impressive continuous improvement benefits (31%).Notably, the gains of a third OEM, which did not embrace lean practices, were only moderate (15%).

Figure 1: To Lean or Not to Lean




But while lean product development is in many ways analogous to lean manufacturing, it introduces a whole different set of challenges. In general, product development is a much longer process because it has very long lead times. It can take years for a new product idea to go through the many development phases, from initial concept to market launch. In the case of a complex product, the idea passes through multiple organizations, people, and systems while market conditions keep changing—a journey rife with inefficiencies and unpredictability.

What, then, is the secret to successful lean product development? In our work with clients, we’ve found it helpful to model the product development organization after a manufacturing facility— we call this new organization the “Product Development Factory.” When you’re ready to assemble the factory, use a sequence of steps we’ve developed—our “implementation logic”—to ensure optimal results.

The Product Development Factory

The “Product Development Factory” model provides a useful way to translate lean manufacturing concepts to the product development arena (Figure 2). In our experience, three functional elements are especially important to focus on: factory planning and control, main line flow, and the lean work cell.

Figure 2: A Lean Diet for Product Development





Factory Planning and Control (P&C). As the primary planning function of the product development factory, the P&C’s objective is to “level load” the factory, that is, reduce fluctuations in workload demand to optimize overall factory throughput performance. In this sense, P&C is comparable to rough capacity planning in manufacturing, but is highly strategic because it involves long-range product planning and senior leadership.

The scope of the P&C function covers both the portfolio and program levels. On the portfolio level, it balances and level loads resource requirements, plant loading, and capital investments. Lean manufacturing has impressively demonstrated how imbalances in factory loading can create waste and inefficiencies in down-stream operations. Balancing and load leveling the product development factory help address this problem—and provide the stability critical for expanding development productivity.

On the program level, the P&C function gives input to many different requirements, including customer needs, functional requirements, product design, reuse targets, manufacturing processes, quality targets, and financial objectives. Once again, the objective is to balance the various program requirements in the context of the overall product development factory. Leading automotive companies, for example, have mastered the program cycle planning of “all new” and “derivative” programs, so that every program has the resources it needs while product profitability is maximized.

Main Line Flow. This element is concerned with the movement of a product development program through the sequential phases of development, engineering, design, validation, and launch. It’s analogous to the movement of components and systems through the automobile assembly line. In product development, however, it’s not a physical product that flows along the “line,” but all the business and technical program information that’s needed to create a winning product. During product development, this information comes from many different sources and in different types of media—CAD files, blue prints, and presentations. With potentially hundreds of people working on a program simultaneously, understanding the main line flow and supporting flows is critical for determining interdependencies and priorities. Understanding these flows also helps simplify the complex product development process so you can align the different phases of development and formulate clear target requirements. In addition, you can ensure that “main line stations”— the major steps within each development phase—are appropriately connected and sequenced. That way you can prevent wasteful rework cycles or worse, product characteristics and functions that don’t meet your customers’ needs.

Lean Work Cell. This is the basic operational unit of the product development factory. Unlike a traditional lineup, where functions operate independently of one another, the work cell consists of representatives from each of the engineering and non-engineering functions needed to complete a particular product specification or development activity. This setup helps both to reduce the time needed to complete the required activities and to identify potential problems early on in the process.

It's instructive, in fact, to think of the entire product development process as a network of connected work cells. Each product development work cell team completes its own set of deliverables, which it then hands off to the next work cell in the line to work on. When that work cell completes its set of deliverables, it hands it off to the next in line, and so on—a streamlined arrangement that reduces costs, improves quality, and increases productivity.

One of our aerospace clients wanted to make some major improvements to its commercial aircraft. The company redistributed its staff into engineering change work cells so these improvements could be made without slowing down the development process and introducing unnecessary errors. Each cell took ownership of one engineering improvement from start to finish—a realignment that reduced change order cycle times by 35% and increased throughput by 25%.

Implementing Lean Product Development

So how do you implement lean practices in your product development organization? As a preparatory step, you need to define and map out the particulars of your product development factory, focusing on the factory’s key elements, scope, and major development phases. Define the major functions that contribute to the creation of the product, put them in a logical sequence, and specify their deliverables. The goal at this stage is to provide a factory blueprint that can be used across the various implementation work teams—not conduct task-level process mapping.

You are now ready to implement your blueprint and build the product development factory. This is a large undertaking that involves putting many different yet dependent elements in place. Consequently, the implementation logic—that is, the way you “assemble” all the critical pieces of your product development factory—is of critical importance. As Figure 3 demonstrates, conduct three activities in this sequence, stabilize—synchronize— standardize, to implement each of the lean factory elements. While following this sequence, apply a top-down approach, going from the broad factory level to the main-line program flow level to, finally, the specific work cell level.

Figure 3: Trying Out the Lean Recipe




How do these two implementation dimensions work in combination? To begin with, the “stabilize” step concerns the level loading of workload and resource requirements. Start at the overall factory level, where the factory planning and control function will “stable” factory load levels. Program management and cell operators will then address level loading of the main line and individual work cells respectively.

We’ve found that the best way to balance your factory’s resources is to use a resource model that produces a transparent view of imbalances across the enterprise. This model helps to address demand and supply issues on both strategic and operational levels. Strategic planning can use the model to determine how to align product plans with growth objectives, while budgeting and HR can use it to determine how to allocate their financial and manpower resources. On the operational level, the model can be used to address program-specific workload and resource balances.

By adding this modeling capability to its product portfolio planning process, a U.S. automotive company gained visibility into the workload and capacity utilization of each of its cross-functional development functions, including Chassis Engineering, Engine Controls, Prototype Build Shop, Purchasing, and Advanced Manufacturing. This enhanced visibility helped senior management fine-tune existing product plans, identify opportunities for new program development, and adjust the deployment of resources across the organization. The results were significant: a reduction in resource imbalances by 40%, an increase in productivity by 15%, and an improvement of throughput by 25%.

The “synchronize” step has to do with connecting the various factory elements, main-line stations and work cell processes to ensure that everyone gets the right information at the right time. The lean concept of “pull”—not starting something until the “customer” wants it—plays a critical role in the synchronizing of both the main-line programs and the individual work cells.

The “pull” concept is especially important during the design phase because it ensures that all activities in the development program are in sync with end-customer requirements.“Pull” techniques help translate customer requirements accurately into product design, functional engineering, and process design. These techniques also ensure that critical requirements are transferred consistently between the different main-line stations.

The much-praised Boeing 777 aircraft is an example of how “pull” can help in designing a better product. In this case, the development team employed Voice of the Customer techniques to collect direct customer feedback and determine what the critical customer requirements were. Then cross-functional sub-teams systematically