1. INTRODUCTION
Irrespective of whether you end up choosing to make Value Stream Maps, just being well-versed with the mechanisms of this impressive Lean Manufacturing tool can be a rewarding experience.
Lean recommends organizations to pursue Operational Excellence by focusing on 'Continuous Improvement', 'eliminating Waste' & 'getting the right Things, to the right Place, at the right Time, in the right Quantity'. Simply stated, in a world of limited resources and multiple constraints, Lean guides us to make the most from what we've got.
So how does the Value Stream Mapping tool facilitate Lean Manufacturing? Let us break down the term into its components-
While Value is what a customer is willing to pay for, a Value Stream represents those Material and Information 'Flows' that are involved in getting a Product Family from its Raw Material state into Finished Goods in the customer's possession.
Mapping the Current State of the Value Stream not only gives us a high-level, end-to-end view of the manufacturing operations as-is, but it also forms a basis for introspection: helping us recognize how Value flows and think of ways to improve it as well as spot the sources of Waste and think of ways to eliminate it. This allows us to develop a Future State Design of the Value Stream: blending the insights derived from the Current State Map with aspects such as 'anticipated demand', 'product characteristics', 'evolution of customer preferences', 'capability of workforce', 'advances in manufacturing technology' & 'vision of the organization'. This ideal / improved map-based depiction of the Value Stream forms the basis of, and lends direction to, the organization's manufacturing & overall business strategy.
SECTION HYPERLINKED TABLE OF CONTENTS
1. Introduction
2.3 Bullwhip Effect
4.1 Case Background
4.5.1 The Bottle Neck Analogy
4.8 Conclusion
Video 1: Comprehensive Walkthrough of this article + TWI Industries Case Study (View in 1080p)
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1. Continued Alongside the 'How?' which we'll cover in-depth, it also important know the 'What & Where to apply Value Stream Mapping to?', in a manufacturing context.
Assume that you are tasked with mapping the Value Stream of Mapro - a prominent Indian manufacturer of fruit-based confections such as candies, syrups, jams and mixers.
- Would you map the Value Stream of its entire plant i.e. for all its products? The answer is No
- Neither will you map a discrete production chain such as Fruit-processing or Packaging
- Nor would you map its entire Supply Chain i.e. from farmer to end-consumer
Value Stream Mapping is performed on a Product Family and its scope extends to the manufacturer's span of Direct Influence.
To elaborate on the former, a Product Family is 'a group of products that pass through similar processing steps and over common equipment, particularly in the downstream processes'.
Using this definition, three Product Families at Mapro have been identified, as depicted below- Click on the image to enlarge
Meanwhile, a Manufacturer's span of direct influence typically extends 'from its immediate Supplier at one end, to its immediate Customer on the other'. The rationale is to use the tool only where there is sufficient scope to implement operational changes in the Future State timeline envisaged.
For example, while Mapro can directly influence the buying behaviour of its immediate customers (the Wholesalers) if it desires so by making policy-changes (eg. MOQ), the lack of direct transactional relationship with the end-consumers of confectionery implies that Mapro would struggle to influence their buying behaviour effectively if it feels the need to make that change. Think of having to make them buy a pouch of thirty candies every quarter from their scatter-buying approach currently. Thus, it makes sense for Mapro to only extend the scope of Value Steam Mapping till the Wholesalers on the downstream-end.
Similarly, Mapro can negotiate Product Quality terms with its immediate Supplier (Sugar Manufacturer) much more effectively than it can influence the Farmers (Suppliers to the Supplier) to cultivate a different variety of Sugarcane. As a result, it is practical for Mapro to extend the scope of Value Stream Mapping till the Sugar Manufacturer on the upstream-end.
And goes without saying, Mapro can certainly add new Packing machines at its own Plant in order to produce smaller-sized candy pouches in the future, if it desires so. To implement changes in its own operations is certainly within its span of influence.
2. OPERATIONS & SUPPLY CHAIN ASPECTS TO KNOW
2.1 PRODUCTION CONFIGURATION
A Product Family's Demand Characteristics, among other factors, influences the manufacturers to adopt a particular type of Production Configuration. For example, end-consumers expect Mapro candy to be available at their nearest shop whenever they crave for a sweet treat. Since it is a FMCG product, the entire Distribution Network needs to be agile. Distributors, Wholesalers, Retailers all expect their Lead Time, which for them is the time it takes to receive the consignment from their respective suppliers after placing a Purchase Order, to be short. Mapro receives Purchase Orders from its immediate customers - the Wholesalers, which it strives to fulfill on-time, in-full (OTIF).
Being entrenched in the confectionery business for several years, Mapro finds that the annual demand for its candies is fairly stable: nominal growth with limited variability, year-on-year. Monthly demand is consistent too, barring a significant surge during festive periods. It estimates the future demand for candy using Forecasting software - which utilizes and processes inputs such as historical demand market trends, competitor performance, point-of-sale data, and other pertinent information. This Demand Forecast output is subsequently used to determine the Production Plan & Schedule i.e. how much candies to produce and when, in order to fulfill the Customer Demand.
This type of Production Configuration is called 'Make-to-Stock' or 'Build-to-Stock with Forecast' (refer Figure 5). In this approach, a manufacturer 'mass produces' the products preempting its customer requirements as it cannot wait for order confirmations to arrive and then begin manufacturing, due to the unfavorable impact it has on the customer (Lead Time) preferences. For example, if Mapro's candy is not available at the nearest retailer, the end-consumer would not hesitate to buy another brand of candy. The same effect reverberates upstream in the network - in the relationship between the Retailer and the Wholesaler, the Wholesaler and the Distributor, and so on.
To share a contrasting example, think of Fenesta - a leading uPVC Windows & Doors manufacturer in India. Once a prospect expresses interest to install uPVC Windows, Fenesta instructs its Presales team to visit and obtain measurements from the customer's site.
Feeding these into a Bill of Material software, Fenesta is able to determine the exact quantity (and cost) of raw material that would be required to manufacture the windows. Subsequently, it prepares a Sales proposal for the customer and only upon confirmation and advance payment does Fenesta initiate manufacturing the Windows.
Because the primary Raw materials used are few and standardized (eg. uPVC Granules, Wood etc.), and because the manufacturing volumes are high, Fenesta keeps ample Inventory of Raw Material at its Warehouse, to be transferred to the Plant in quick time when it needs it. This type of Production approach is called 'Make-to-Order' and it lies near the opposite-end of the Production Configuration spectrum in the figure below as the entire manufacturing process, with the exception of Raw Material Procurement and Production Engineering, is initiated only after Order Confirmation from the customer. The customer, on his part, is prepared to wait too - knowing fully well that it would take some time to manifest his demand for high-quality furniture.
In Supply Chain, the strategy of delaying Production as much as possible until the customer order arrives is known as Postponement and the degree of Postponement utilized is reflected in the Production Configuration a manufacturer chooses to adopt. The underlying concept in both -Production Configuration and Postponement Strategy - is that of Push v/s Pull i.e. which operations will an organization choose to complete before the customer order arrives in order to be responsive as well as reap the benefits of Scale, and which manufacturing operations would it initiate only after Order Confirmation in order to restrict its risk exposure and prevent the generation of Waste.
Click on the image to enlarge
Each Production Configuration has its pros and cons and a manufacturer must be willing to embrace the trade-offs that accompany the approach adopted. A shift in production strategy is usually phased than radical. Consider General Motors, the vehicle manufacturer that found its ambitious investments in Automation tank, thereby ceding market share to the quality-centric Toyota Motor Corporation. Just as well, a contrasting example like Dell also exists - which broke away from the norms of the computer hardware industry by adopting a Make-to-Order Production Configuration with a 'Just-in-Time' Inventory System and created a thriving niche of its own as it was quick to capitalize on latent customer desire for customized laptops.
Knowing the characteristics of a Production Configuration is vital, especially from the Future State Design perspective. Value Stream Mapping initiatives are undertaken by manufacturers who typically want to reduce their dependence on 'Push' & incorporate more 'Pull' in their Production approach. This means moving further to the right in the Postponement Framework depicted above. While Push-based Manufacturing benefits from 'Economies of Scale', its flaws come to the fore when Customer Demand is volatile (Refer Bullwhip Effect) and volatility is prevalent across most industries today.
2.2 THE 7 WASTES OF LEAN PRODUCTION
Manufacturers must strive to eliminate Waste from their Value Stream to achieve peak levels of Productivity. However, Waste is not a singular entity. Rather it comprises of various, often inter-related components. Lean categorizes Waste under seven types, as depicted in the visual below, which also contains description and examples-
Click on the image to enlarge
Overproduction is considered the deadliest Waste among all, as its existence spurs the generation of Waste in its other forms - be it excess Inventory, unnecessary Transportation, increase in Waiting Time or more Defects. This malaise can stem from unreliable Forecasts or from the often misguided appeal of producing in bulk in order to benefit from lower Raw Material procurement costs.
2.3 BULLWHIP EFFECT
The Bullwhip Effect in Supply Chain highlights how small fluctuations in end-customer demand triggers bigger fluctuations in the ordering behaviour across the Distribution Network, ultimately resulting in a vicious cycle of Overproduction / Underproduction at the Manufacturer's end.
The visual below demonstrates this effect using fictitious Demand data of Mapro Syrups-
Click on the image to enlarge
To highlight the repercussions of this unfavorable phenomenon, while the actual demand for Mapro Syrups from the end-Consumers at a particular Retail shop averaged 30 bottles per day in the previous week, the Retailer ends up placing the next week's order to his supplier - the Wholesaler - at a rate equivalent to 40 bottles per day on an average i.e. 10 additional bottles per day.
Subsequently, in response to the average demand rate of 40 bottles per day from the five Retailers it serves, the Wholesaler places his next fortnight's order to his supplier - the Manufacturer - at a rate equivalent to 48 bottles per day per Retailer on an average i.e 40 additional bottles per day overall.
Eventually, in response to the average demand rate equivalent to 48 bottles per day per Retailer from the five Wholesalers it serves, the Manufacturer ends up producing at a rate equivalent to 60 bottles per day per Retailer on an average for the next month i.e. 60 additional bottles per day per Retailer or 300 additional bottles per day per Wholesaler.
The root cause that triggered this spate of overordering across the Distribution Network was the small fluctuations in daily demand from the end-consumers. Moreover, the rate of overordering amplified as one went upstream. As a result, the Manufacturer had the severest reaction - not just because it produced 300 bottles per day in excess of the demand from its immediate customer - the Wholesaler. In reality, it overproduced at a rate of 750 bottles per day than the actual Syrup consumption last month! (60 Production - 30 Consumption * 5 Wholesalers * 5 Retailers).
Assuming that the daily fluctuations continue, but the total demand from the end-consumers next month remains the same as the previous month, we would witness a reversal in the Ordering behaviour in the next cycle - a spate of underordering across the Distribution Network and underproduction by the Manufacturer. This is because each stakeholder would realize that it has excess Inventory of Mapro Syrups to sell and hence, would order less than the actual demand. The Manufacturer would face the maximum brunt again - it would realize that it has enormous Inventory of Syrup bottles. And just as it happens routinely in the real world - this excess Inventory would be deep-discounted and put up for Sale in order to stimulate consumption and to reduce the extent of losses that would arise if the Inventory lies idle, or worse, perishes! Thus, Bullwhip Effect demonstrates how Demand volatility wreaks havoc across the Supply Chain.
'But what could be the reasons behind this spate of Overordering in the first place?
For example, wouldn't Retailer #.1 been better-off placing an order of 8 cases (160 bottles) with Wholesaler #.1 in response to demand of 150 bottles, instead of ordering 10 cases (200 bottles)?'
Here are some of the possible reasons that could have influenced the Retailer to overorder-
Since demand was volatile the previous week, the Retailer's natural tendency would be to overorder just to be certain of not running the risk of turning customers away due to Stockout
The Wholesaler's Minimum Order Quantity could have been 10 cases, leaving the Retailer with no choice but to Overorder
The Retailer may have ordered extra to qualify for (higher) Supplier Incentives
Since the Syrup consignment arrives once-a-week, ordering extra would act as a safeguard for the Retailer if there are Transportation delays
Similar reasons could influence overordering across the Distribution Network which would result in the mismatch between actual demand and order to amplify upstream. Having rapid visibility of actual consumption, i.e. Retail point-of-sale data, would enable better ordering and manufacturing decisions.
3. VALUE STREAM MAPPING SYMBOLOGY
Those who wish to know about the origins of Value Stream Mapping may read this resource. The depiction below contains some commonly-used icons that are used to prepare Value Stream Maps along with a short description for each. They have been categorized under Process, Material Flow, Information Flow and General columns. The editable icons file can be downloaded here.
Click on the image to enlarge
4. VALUE STREAM MAPPING CASE - ACME STAMPING COMPANY
Reference Material & Credits:
- Learning to See: Value Stream Mapping to Add Value and Eliminate Muda Book by Rother & Shook
- Lean Supply Chain MBA Course by Professor Arvind Subramanyam
4.1 CASE BACKGROUND
The entity in concern - Acme Stamping Company - manufactures automotive components. It wants to map the Value Stream of the Stamped Steel Bracket Subassembly Product Family.
This Product Family fits underneath a vehicle's Instrument Panel and consists of two products- 1) Bracket for Left-Hand Drive (LH) vehicle
2) Bracket for Right-Hand Drive (RH) vehicle
Both these products are sold to one customer - a vehicle manufacturer called 'State Street'.
4.2 DRAWING THE CURRENT STATE VALUE STREAM MAP
Assume that you are a manager tasked with driving this Value Stream Mapping initiative. You have full access & authority to obtain information pertaining to the Acme's manufacturing operations straddling independently operating processes & departments. Grabbing sheets of A3 paper, stationery and a timer, you take a tour of the manufacturing plant to get an overview of the production sequence involving Brackets. Your initial objective is to obtain data pertaining to 'Material Flows'.
The first destination to collect information at Acme's plant is the process that lies farthest downstream in the Value Stream i.e. closest to the customer - the Shipping Department. You'll obtain the Customer-related datapoints here and then work your way backwards i.e. upstream, collecting process information along the way and eventually completing the audit at 'Stamping' process - which receives the primary Raw Material of Brackets - Steel Coils - from the supplier Michigan Steel.
Using the information gathered from the Shipping department, you draw the Customer Box which is labelled with the name of the customer. Below it, you've added a Data box which captures key metrics pertaining to this customer-facing process. State Street has a monthly demand of 18,400 Brackets, ~2/3rds of which (12,000 Brackets) are for the LH variant and the rest are for the RH variant.
The Brackets are not sold individually but in Trays where each returnable Tray (refer Figure 11 below) contains 20 Finished Brackets each - exclusively LH or RH. Upto 10 Trays are packed within a Pallet before being shipped. Since the Pack Size is a Tray - because the customer orders Brackets in this denomination and not in Pallets - you capture only the former in the Data Box.
Note: Value Stream Mapping involves high-level charting of the Material and Information Flows. Less relevant information can be documented separately for reference during Current State analysis or Future State planning.
State Street, the customer, operates its vehicle manufacturing plant in two Production Shifts every day and requires one shipment of Brackets from Acme on a daily basis.
Figure 10: Shipping Operations View in Acme's Value Stream Map
After mapping customer-side information, you proceed to acquire the information regarding Manufacturing operations of the Brackets Product Family. It is important to map discrete manufacturing processes and to identify these, you'll have to observe whether Inventory is flowing freely within a process.
The figure below shows the five discrete manufacturing processes that you've identified and mapped - Stamping, Spot Welding #.1, Spot Welding #2, Assembly #.1 & Assembly #.2.
Note: The Manufacturing Operations view depicted on a Value Stream Map does not in any way represent the Physical Layout of the plant i.e. how the processes are arranged on the shopfloor.
Q. Notice the triangular icons between all these Process boxes. What does it represent?
A. It means that Inventory is not flowing freely between the Process boxes i.e. Inventory is stagnating and accumulating on the manufacturing shopfloor before being utilized by the next process downstream. It also indirectly implies that Inventory is flowing freely and uninterruptedly within each of the five manufacturing processes i.e. Input enters the process, gets operated on, and exits the process as Output without pausing anywhere in-between.
The observed quantity of Inventory stagnating and/or the duration of its stagnation is depicted using the label underneath the triangle icon. For example, as depicted in Figure 12 above, you've observed 4600 pieces of LH and 2400 pieces of RH Brackets stagnating before Spot-Weld #.1 and 5-days' worth of Steel Coils stagnating before Stamping.
Video 2: Stamping Process
The 200-Tonne Stamping Press is the equipment used within Stamping process. Since the Raw Material - Steel Coil - gets stamped into a RH or LH Bracket variant, hence you've depicted stagnating Inventory in quantity terms downstream of Stamping on the map. Before Stamping, the Steel Coil stagnation was depicted in duration terms. Video 3: Welding Process
The striped Arrow between two Process boxes signifies 'Push'-based Flow i.e. the upstream process manufactures Output for its downstream counterpart in large Batches as per a Production Schedule issued to it by a centralized Production department.
Video 4: Assembly Demonstration
The number of Manpower handling a process is depicted within the Process box - for example, in Acme's Current State, all processes are handled by one Operator each.
The Data Box underneath a Process box captures vital operational metrics pertaining to the Material Flow, in about 3-5 rows. In Acme's Current State Map, the following data categories are captured-
Cycle Time (C/T): This is the rate at which a manufacturing process releases a single unit of Output. For example, a Cycle Time of '1 second' in Stamping's Data Box indicates that one Stamped Bracket is churned out as output every second from this process, during a Production Shift, when the Stamping Press equipment is operational that is. In Acme's case, Cycle Time of a Process = Production Lead Time of that Process, for all the manufacturing processes. Production Lead Time represents the length of time it takes to complete the stated procedure. That both are equal at Acme indicates that a Bracket spends it entire time within a manufacturing process being processed. This further reinforces that all the manufacturing processes you've depicted under individual Process boxes in the map are discrete processes i.e. a Bracket is continuously processed within, without pause
Changeover Time (C/O): This is the time it takes for the Operator to set up into processing another variant in the Product Family - from LH to RH Bracket or vice versa, in Acme's case. It includes all the time that goes into getting ready to produce a different product, such as equipment setups, material availability, resource readiness, and so on
Uptime %: signifies on-demand availability of the equipment in the process or the process' reliability in general. For example, an 85% Uptime within 'Stamping' process indicates that the Stamping Press equipment was inoperable (Downtime) for 15% of the Available Working Time, historically. This datapoint is typically documented by the equipment operator or can be pulled from the equipment log - it is not to be measured based on anecdotal evidence
EPE (Every Part Every or Production Batch Size): This indicates the time a process continues to make a particular variant in a Product Family before performing a Changeover to manufacture another. For example, an EPE of 2 Weeks in Stamping process indicates that the Stamping Press produces stamped LH Brackets for 2 weeks before changing-over to produce stamped RH Brackets for the subsequent 2 weeks
Production Shift: This is the number of man-days the plant is operational in a single workday. The Brackets Product Family is manufactured at Acme's plant in 2 Production Shifts where 1 Shift = 8 hours or 1 man-day
Time Available: This is the Available Working Time per Production Shift. It is captured in seconds so as to avoid any confusion that may arise from depicting this metric in a higher denomination in a decimal form. Lunch break of 20 minutes per Shift is deducted from Acme's Shift Duration of 8 hours to arrive at the '27,600 seconds available' metric
While the categories listed above are sufficient to capture the key metrics of Acme's manufacturing operations pertaining to the Brackets Product Family, one can also use other metrics such as-
Production Lead Time: the length of time a product travels within the process,
Scrap rate: the rate at which defective products are being generated, and
Rework rate: the time spent by a process on correcting defects i.e. not producing fresh output
At the bottom of the map lies a Timeline section which depicts Production Lead Time information across every juncture of the Value stream. The elevated portion of the Timeline highlights the length of time a unit of Inventory spends between two Process boxes - which is purely Idle Time in Acme's case. It is computed by dividing the quantity of Inventory stagnation by the average Customer Demand for Finished Brackets per day. For example, you observed that 7,000 Brackets stagnate between Stamping and Spot-Welding #.1 and given that State Street's monthly demand for Brackets is 18,400 units, this translates to 920 Brackets per day as there are 20 workdays in a month. Hence, 7000 ÷ 920 translates into a Production Lead Time of 7.6 days depicted on the Timeline in Figure 12 above. The depressed portion of the Timeline highlights the length of time a unit of Inventory spends within a Process box - which is equal to the Cycle Time in Acme's case, as indicated earlier.
The Timeline Total box located towards the bottom-right of the Value Stream Map depicts two summary statistics: a) Production Lead Time Total which is the sum of all the Production Lead Times in the Value Stream i.e. the total length of time spent by a Bracket in the entire Value Stream from Raw Material state to Finished Goods, and b) Processing Time Total which is the sum total of all the Process Cycle Times i.e. the time spent by a Bracket being transformed and accreting value.
Thus, the Processing Time Total (188 seconds for Acme) can also be called 'Total Value-Added Time' of the Value Stream.
Production Lead Time Total, on the other hand, is the sum of all the 'Value-Added Times + Non-Value-Added Times' in the Value Stream.
Note: Production Lead Time Total is not the sum of all the Non-Value-Added Times despite it appearing as such in Acme's case. This is because a unit of material's total Processing Time across Acme's Value Stream is very low - in seconds - compared to the time a unit of material spends outside of being processed - captured in Days. The Total Non-Value-Added Time in Acme's Current State Value Stream is actually 23.6 Days minus 188 Seconds.
While Inventory Stagnation can be eliminated completely, it may not be possible or practical to remove all forms of Non-Value-Added Time completely from the Value Stream (even removing stagnating Inventory completely is not prudent at certain times). For example, if Inventory is sent to an outsourced facility for processing, it will spend some time in Transportation which is a form of Waste in Lean. A manufacturer may be able to expedite it, thereby reducing the time wasted to an extent, but eliminating transportation time completely is not possible, naturally (Assume that doing this processing step within the plant itself is not an option due to higher costs).
After mapping customer-facing and manufacturing operations, you proceed to acquire information for the last portion of Material Flows - the Supplier-facing Operations. Michigan Steel is Acme's only Raw Material Supplier for the Brackets Product Family and it ships 'Steel Coils' twice-a-week to it.
Having mapped the Material Flows, you proceed to plot Acme's 'Information Flows'.
- Acme's centralized Production Control department receives 90, 60 and 30 days of Forecast from State Street, the Customer i.e. the total quantity of Brackets that it estimates to procure over the stated timeframe. Actual Purchase Order for Brackets is received from the customer on a daily basis
- Production Control feeds the Forecast and Order datasets into its MRP (Material Requirement Planning) software, which processes it and releases a Weekly Production Schedule to each of the five manufacturing processes and a Daily (Outbound) Shipping Schedule for the Shipping department
- Production Control also uses MRP to generate and transmit its own 6-Week Forecast for Steel Coils (Raw Material) to the supplier - Michigan Steel. Actual Purchase Order for Steel Coils is released to the supplier on a weekly basis
- All communication with external stakeholders is done electronically using phone, fax, emails (depicted as a wiggly line), whereas all internal communication within Acme is transmitted manually, orally or in writing (depicted as a straight line)
The Current State Value Stream Map of Acme is now ready to be viewed in its entirety- Click on the image to enlarge and download
This 'As-Is' view of the Value Stream has several insights to reveal. What are your observations?
4.3 FUTURE STATE DESIGN OF A VALUE STREAM
The Future State Value Stream Design represents revised Material and Information Flows that shall facilitate Lean Manufacturing. While the Current State Map was prepared using the information acquired from the audit of plant operations, the Future State Value Stream will be designed using the insights derived from analyzing the Current State, Lean Manufacturing guidelines, and Acme's assessment of the internal and external conditions prevalent in the future. Several designs of the Future State may be iterated over a period of time, based on evolving conditions.
The objective behind incorporating Lean in manufacturing operations is to make the product 'with the shortest Production Lead Time, of the highest Quality, at the lowest Cost, and with the most dependable Delivery'.
Let me reveal Acme's Future State Value Stream Design right at the outset-
click on the image to enlarge and download
4.4 UNPACKING ACME'S FUTURE STATE DESIGN
Below is a summary of just the factual information depicted in Acme's Future State Design. Tally it.
Material Flows
'Weld+Assembly' Continuous Flow workstation shall house both the Spot Welding and both the Assembly operations and shall be run by three Operators
Three Supermarket Pull Systems will be deployed, which shall regulate the flow of a) Steel Coils, b) Stamped Brackets & c) Finished Brackets respectively
Four Kaizen Bursts have been planned: one for the 'Stamping process' - a) reducing the Stamping Press' Changeover time; and three for the 'Weld+Assembly' process - b) limiting Total Work duration to a maximum of 168 seconds, c) reducing Weld Changeover time, and d) increasing Welder Uptime
Both Inbound and Outbound Shipping would be done on a daily basis
Information Flows
Production Control Department will now release Production Order / Instruction with a Pitch of 20 minutes to the 'Weld+Assembly' process
State Street, the customer, will continue to share three Forecasts with Acme: the total quantity of Steel Brackets it has estimated it will procure a) over the next three months, b) over the next two months, & c) over the next month. Acme will also continue share one Forecast with its Supplier - Michigan Steel - the total quantity of Steel Coils it has estimated it will procure over the next six weeks
State Street will continue to share its Purchase Order for the Finished Brackets with Acme on a daily-basis while Acme will issue its Purchase Order for the Steel Coils with Michigan Steel on a daily-basis too
Operations Timeline
Acme will target to restrict the Total Production Lead Time to 5 days with the Total Processing Time being 169 seconds
4.5 WHAT DOES DESIGNING A FUTURE STATE ENTAIL?
'What prompted Acme to revise its Material & Information Flows in this manner? What was the methodology used to identify Waste and introduce countermeasures? How does Acme benefit by adopting Lean Manufacturing?'
We'll hone in on addressing these pertinent questions shortly.
Know that designing a Future State Value Stream is as much an expression of imagination and craft as it is an exercise in logical thinking. There are Lean Manufacturing Guidelines to refer to, formed from the insights derived from previous implementations, which act as an ambit within which Design iterations can exist. Once a design is prepared, the various stakeholders involved can arrive at a consensus and subsequently prepare and sign-off on an implementation plan to transition to the modified Manufacturing strategy in the timeline envisaged.
Lean Manufacturing is an interplay of several technical concepts which warrant a deep level of understanding and we shall explore it in detail throughout the course of this elaborate article. However, you'll also need to make the connection between Lean Manufacturing and the Future State Map-based Design, and I feel this linkage is neither best explained nor understood by theory alone.
Hence, these three Analogies should prime you for what’s lies ahead, in a holistic way -
4.5.1 THE BOTTLE NECK ANALOGY
'Bottleneck' is a commonly-used in Operations parlance and implies impeding Flow and Productivity. It is important to diagnose the bottleneck(s) in the Current State Value Stream in order to remediate it in the Future State Design. Let me elaborate what a Bottleneck is using (well) a Bottle's Neck:
In a regular bottle (left), the neck is as wide as the mouth of the bottle and this property is very useful as it throttles the outward flow of the liquid within, allowing you to drink from its mouth or pour from it at a convenient pace. Q. 'Sounds like a useful property. Then when does a Bottle's Neck become the negative Bottleneck?'
A: When the neck, representative of the liquid's maximum flow rate, is narrower than the bottle's mouth, which is representative of the user's consumption rate.
In the image below, the bottle's neck is located in the middle of this fancy bottle and its mouth is wider than the neck as well. Now imagine that you can purse your lips conveniently around this bottle's mouth and that you are very thirsty. As you begin to drink, the beverage present in the section to the right of the bottle's neck flows into your mouth at a breezy pace, and you gulp it down with glee. However, as the right section empties and the beverage from the left section enters into your mouth, you feel an immediate sensation of dissatisfaction - because it is flowing out at a slow pace!
Now in an Operations context, consider this dissatisfied person who is drinking the beverage as the 'Customer', and the bottle as being representative of 'Manufacturing Operations'...
Thus, if any manufacturing process throttles the rate of product creation below the customer's rate of product demand, then that process becomes a 'Bottleneck'.
Q. 'What if the customer is satisfied with the Flow Rate nonetheless?' A: In that case, by applying the definition above, the Value Stream would be considered as devoid of bottleneck(s). However, the manufacturer shouldn't feel excited in such a scenario - he might want to feel very worried instead - the manufacturing chain may be Overproducing! (Recall Seven Wastes & Bullwhip Effect). This is because if the weakest manufacturing process is producing output at the same rate at which the customer is demanding the finished goods, then it is indicative that the other manufacturing processes situated upstream to the bottleneck may be producing output quicker than the customer's rate of demand. This tantamounts to Overproduction as it is not restricted to producing excess of Finished Goods alone - producing excess Work-in-Process (WIP) Inventory is also considered as Overproduction and is a Muda (Japanese for Waste) as per Lean. While in the analogy, the bottle has its own utility as it acts as a 'repository' for the liquid, you do not have to make your manufacturing operations a repository of excess Inventory.
Inventory can be any of these three types: a) Raw Material Inventory, b) Work-in-Process (WIP) Inventory or c) Finished Goods Inventory and is representative of the capital and resources spent on aspects such as Raw Material, Processing, Operators, Sorting, Auditing, Transportation, Material Handling, Storage and Financing. Till the time excess WIP Inventory is processed into Finished Goods and sold to the customer and payment for it is received, the cost of capital and resources deployed acts as burden and contributes towards an increase in the overall cost of production which lowers profitability. Moreover, the capital and resources invested here could have been diverted to other Product Families. The capital could also have been invested elsewhere for better returns or even lie in a bank deposit accumulating interest. Hence, besides Cost & Cash Flow implications, there are significant Opportunity Costs involved in keeping excess Inventory in the Value Stream.
In Acme's Current State, observe that large quantity of Inventory is stagnating before every Process box. While the cost of Inventory is not depicted on the map, its negative impact is actually being captured on the map - in duration terms (Production Lead Time) which is evidently very high.
Using this 'Bottle Neck' analogy, you've understood three very important aspects of Lean Manufacturing and also our objectives for designing the Future State Value Stream:
a) Knowing the Rate of Customer Demand allows a manufacturer to identify the 'Bottleneck' process(es) in the Value Stream i.e. those processes that are churning output at a slower pace than the rate of demand for Finished Goods. The location of the Bottleneck process(es) in the Value Stream impacts the pace of Production for the processes downstream to it as well. To arrive at the Rate of Demand, Total Customer Demand has to be aligned with the Available Working Time. Upon doing so, one can derive a key metric in Lean Manufacturing - the 'TAKT Time'
b) While the Bottleneck process(es) leaves the manufacturer susceptible to Underproduction, which is naturally undesirable, having no Bottleneck(s) at all in the Value Stream may be indicative of Overproduction i.e. a) producing more output than the Total Customer Demand for Finished Goods, and/or b) producing output at a pace that is quicker than the Rate of Customer Demand for Finished Goods. Overproduction contributes towards the generation of Waste in its other forms as well and thus, Lean absolutely despises it. Therefore, the manufacturer should aim that all his manufacturing processes produce output only as much as the Customer Demand and at a pace that is similar, if not equal preferably, to the Rate of Customer Demand for Finished Goods
c) reducing the Production Lead Time of (stagnating) Inventory would allow the manufacturer to flip the capital invested in production into sales faster - also known as 'Inventory Turnover' in Accounting. This would lower the manufacturer's requirement for Working Capital and result in an improved Operating Cash Flow, a vital metric for business health
4.5.2 THE LIBRARY CARD SYSTEM ANALOGY
The way the traditional Library Card System (Newark System of Charging & Discharging) works makes for a fine analogy to demonstrate the utility of 'Information Signalling' in a Lean Value Stream. Knowing the intricacies of this simple yet profound system will aid you in understanding the all-important 'Supermarket Pull System', introduced in a later section, with much more clarity.
In the Newark System, the Borrower obtains the book from the shelf and submits it with his 'Borrower's Ticket' at the Librarian’s desk, which is typically located either at the Library's entrance or just before the bookshelves section. The Librarian proceeds to extract the 'Book's Card' from the 'Book Card Holder' within the book, makes a data entry in it with the Borrower's details, inserts it together with the Borrower’s Ticket in the latter’s Pocket, and files it for record-keeping until the book is returned. Also, the Librarian will stamp the book's return date on the 'Due Date Sheet' located on the book's flyleaf and subsequently hand it to the Borrower.
The Borrower will also make a data entry about the book's name and its due date in his own 'Borrower's Book Issue Card' and present it to the Librarian who will sign it as an acknowledgment and hand it back to him. At the time of return, the Librarian will scratch off the entry as well to acknowledge the receipt of the book which makes it way back to the designated bookshelf.
'What purpose does this Library Card System serve?'
It is an elaborate system of recording a transaction. One which allows the Librarian to know how many books have been issued and how many books are lying in the bookshelves at any given point in time. This saves the need undertake a physical audit
Because the Librarian is seated at the Library's entrance or near the bookshelves section, it serves as a surveillance spot and signals the visitors to get the borrowing procedure done, if applicable. This reduces the scope of missing books or erroneous records
The Borrower will also know from his Book Issue Card about the books he has borrowed, which have been returned, and the due dates for returning the remaining books. Thus, he is also spared from performing a physical audit. Therefore, this Signalling mechanism is of considerable utility to both the Stakeholders involved - the Librarian as well as the Borrower
In the Future State Design context, because Lean entails manufacturing processes to ‘pull' small Production targets (Instructions) on a frequent-basis throughout the workday from their downstream counterpart instead of producing to large targets (Production Schedules) issued to it by a centralized Production Control department, the need for reliable Information Signalling system is felt to facilitate robust and Waste-free manufacturing operations.
Effective Information 'signalling' mechanisms help in-
ensuring systematic transfer of Production Instructions between two processes – akin to the transfer of book-related information between the Librarian and the Borrower in this analogy
reducing the need to conduct frequent Production Audits
enabling the 'Kanban Cards' signalling devices to work as a circular transaction loop – akin to the various cards and components in this analogy. Details elaborated later
ensuring operational efficiency. A Supermarket is designed to be situated near the 'producer' process in a Value Stream so that it can keep a close tab on the consumption of its 'customer' process downstream – akin to the location of the Librarian's Desk and how it serves as a vantage point to keep a tab on Library visitors in this analogy
4.5.3 THE ONE-DAY INTERNATIONAL (ODI) CRICKET CHASE ANALOGY
Through this analogy, several technical aspects of Lean Manufacturing, and more importantly their inter-relatedness, can be unpacked in an easy-to-grasp way.
In the scorecard to your left, the target set by England, after batting first, for Australia in this One-Day International (ODI) format cricket match, was 302 runs. While Australia chased it down just in the nick of time to win the match in reality, I would like to transport you to the halfway mark - when England completed its batting innings.
Australia knows that in order to breach England's challenging score, it would need to score at a rate of just over 'a-run-a-ball'. This is because ODI is a 50-Over format where an Over equals 6 balls. Hence, a total of 300 balls are available to chase down the target of 303 runs.
The Australians would benefit if they keep their run scoring rate in the vicinity of their opponent's asking rate. This is because if their rate of run-scoring is slower than the asking rate, chasing down the target would become uphill, and eventually an improbable task. On the contrary, scoring aggressively would increase their risk of losing precious wickets, which would also imperil the chase. Hence, timing the chase would be vital - understanding the nuances of the various phases of the game, adjusting approach based on own as well as opponent's strengths & weaknesses, and importantly, keeping abreast with the asking run rate at all times.
Firstly, in a Lean Manufacturing context, think of England as the 'Customer' and the target it has set after batting first as being representative of 'Demand'. Chasing down the target may be challenging for Australia i.e. the 'Manufacturer', but it is imperative in order to survive and thrive. Fulfilling the Demand is, therefore, a necessity as the customer will not hesitate to defect to a competitor otherwise, which would be a loss on multiple fronts - revenue, market share, profitability etc.
As indicated in the previous analogy, the manufacturer would do well to produce output at a rate that is equal or similar to the rate at which the customer is demanding the finished goods. Being aggressive and producing more than the rate of demand will lead to Overproduction - an abominable sin - whereas being cautious and producing at a slower rate would lead to Underproduction, thereby preventing the manufacturer from fulfilling the Customer Demand on-time, in-full (OTIF).
Secondly, would it be wise for the Australian coach to issue a Scoring 'Schedule' to all the Australian cricketers at the outset? 'Player 1 - your target is to score fifty runs', 'Player 2 - your target is to score seventy runs...', and so on?
The answer is No because the Australian batsmen will be better placed if they adapt their scoring strategy to the prevailing match situation when they step out to bat instead of scoring as per a predetermined Schedule issued by their coach before the chase begins. The Australian coach, on his part, would do well to break down his scoring expectations into small targets and issue it initially only to the opening batsmen who step onto the field to begin the run chase.
Similarly, Lean recommends that rather than a centralized Production Control department issuing individual MRP-based Production Schedules to multiple / all manufacturing processes, it should issue the Production target to preferably one manufacturing process only - typically to the one that is situated closest to the customer i.e. the most downstream process in the Value Stream. The other manufacturing processes upstream to this process should be linked via 'Pull' so that their pace of Production becomes tethered to and regulated by this Pacemaker's rate of Production.
This is because issuing large targets incentivizes process operators to produce it in large batches and in a silo-ed manner, which induces the generation of Waste. Moreover, 'Pull'-based Production Flow is flexible and better equipped to handle volatility in Demand.
Thirdly, Production Control must not issue the Production target to the Pacemaker process all at once. Instead, it should release it in small and practical quantities at consistent time-intervals.
To elaborate, let's call the Pacemaker process as Process Z, and the process that lies immediately upstream as Process Y. In a Lean Value Stream, Process Z must not receive a large Production target from Production Control such as 'Make 7500 units of Product Alpha and 2000 units of Product Beta by the end of the week'. Rather, smaller Production targets (Instructions) should be released to it throughout the workday, such as 'Make 50 units of Product Alpha now', 'Make 30 units of Product Beta now', and so on. Also, Process Y should 'pull' its production targets based on Process Z's consumption patterns rather than being issued a separate and large Production target from Production Control. This approach of upstream-production-tethered-to-downstream-consumption should replicate throughout the value chain (as much as is pragmatic) - between Process X and Process Y, between Process W and Process X, and so on.
To translate this logic in cricketing terms, the Australian coach would be better off if he issues his run scoring expectations in small chunks at uniform intervals - let’s say, in five tranches - first before the match begins to the opening batsmen, and subsequently at the end of every ten overs to the Australian batsmen on the field at that point in time based on the prevailing match situation.
'What effect does releasing small Instructions at consistent intervals have?', you may wonder.
It will persuade the Process Operators / Cricketers to remain switched on and be mindful of their rate of Production / Scoring, and get into a 'flow' of achieving small targets with perfection rather than being swayed by large targets and attempting to chase it down in a haphazard manner.
In Lean terminology, this 'Levelling of Production Volume' helps create a TAKT 'Image' for the Pacemaker process.
TAKT or TAKT Time is the time in which a process should manufacture one unit of output in order to fulfill the Customer Demand completely from its Available Working Time.
The purpose behind Levelling the Production Volume is to 'miniaturize' the large Production target and release it in small chunks so that it 'signals' TAKT to the Pacemaker process' Operator. Doing so will synchronize his rate of Production with the customer's rate of Demand and therefore, cultivates a sense of duty towards the customer (the Image in TAKT Image). Moreover, by virtue of being linked with 'Pull', the manufacturing processes upstream would produce at a similar rate and align themselves to the end-objective. Thus, Production will be working as a team to systematically chase down the 'target' set by the Customer.
By contrast, if the Production Instructions are released a) all at once, or even in large quantities, and/or b) to multiple/all processes as a Schedule, then the sense of TAKT Image would fade - beginning at the Pacemaker process and amplifying upstream in the Value Stream as the processes will be susceptible to decoupling and producing as individual entities in Batch Production mode - which is a hotbed for Waste such as Overproduction, excess Inventory and more Defects. Hence, maintaining a TAKT Image, i.e. a customer-oriented and a predictable Production Flow, throughout the Value Stream using Production Volume Levelling is an important objective of Lean Manufacturing.
The miniaturized Production target is called 'Pitch' in Lean Manufacturing and it is usually equal to, a fraction of, or a multiple of TAKT Time * Customer's Pack Size or Minimum Order Quantity or Average Order Size. The idea is that besides being a a small quantity, the Pitch should also form a practical Instruction, one which the Operator can relate to and work towards.
To explain this in cricketing terms, the Australian coach should not issue a Scoring Instruction such as ‘score 20 runs every 19.5 balls’, as despite it being a small target this is clearly impossible for the batsmen to pursue as the number of balls is not an integer. Even a feasible Instruction such as ‘score 50 runs every 49 balls' - is difficult to align to as it translates to a decimal form in the denomination that cricketers are more comfortable with - Overs - 8.1 Overs in this case. Rather, an Instruction of ‘score 50 runs every 8 Overs' would fulfill both the criteria of a good 'Pitch' - it is a small quantity as well as a practical and easy-to-follow instruction.
Fourth, in the ODI format in particular, there is a handy tradition of 'Rotating the Strike' - which means that the two batsmen at the crease frequently interchange strike to face the bowler. This tactic has two notable benefits - a) it unsettles the bowler's rhythm, thereby increasing the chances of receiving easy scoring opportunities as well as reducing the probability of losing a wicket & b) it allows the on-strike batsman to take a breather while his partner can renew his focus just as well. As a result, the partnership flourishes and in a daunting chase such as this, the momentum is not lost.
In terms of objectives for Lean Manufacturing, this is equivalent to switching frequently between manufacturing a particular variant of a Product Family to another, rather than continuously producing one variant for a long time, even if the Production Instructions are miniaturized and released in short intervals. This concept is known as ‘Levelling the Production Mix’.
There are several benefits that can be obtained from Levelling the Production Mix-
a) it enables Production to become flexible - as it can quickly respond to changes in customer orders
b) it reduces the need for keeping large quantities of Working Inventory for all the variants - as they'll be manufactured much more frequently
c) it reduces the scope of Operator Idle time or Overtime - as the Operators may resort to Batch Production in the absence of this strategy, which induces these
d) it reduces the scope of Defects - another bane of producing large batches, and
e) it reduces the total Production Lead Time - as all the product variants would be manufactured much more frequently. Moreover, Mix Levelling also entails minimizing the Changeover time i.e. which reduces the Lead Time as well
Collectively, the concept of Levelling the Production Volume and Production Mix is known as 'Load-Levelling' or 'Heijunka' in Lean Manufacturing. The objective behind Load Levelling is to convert uneven Customer Demand into predictable Production Flow.
To summarize, from this ODI Cricket Chase analogy, you've gathered these important aspects of Lean Manufacturing and also our objectives for the Future State Design:
The manufacturing processes must synchronize their rate of Production with the Customer's rate of Product Demand
Issuing Production Schedules to multiple manufacturing processes is not desirable as it incentivizes silo-ed Manufacturing in general and producing in large batches specifically. Instead, the Production targets should be issued to ideally just the manufacturing process situated closest to the end-customer and the manufacturing processes upstream should link up via 'Pull' mechanisms and borrow their production targets from their downstream counterpart's rate of consumption. Organizations that pursue customized manufacturing are an exception when it comes to the location of the Pacemaker in a Value Stream - refer to the TWI Value Stream Mapping case explanation in the YouTube video - it is prudent to issue the Production target to a more upstream process in such organizations as doing so would enable a manufacturer to regulate Production at an early stage whenever the customers make changes to their Orders
The Production target issued to this downstream 'Pacemaker' process must not be issued all at once either. Rather, it should be miniaturized and released at consistent intervals (the Pitch) to allow for a predictable Production Flow across the Pull-linked Value Stream (Levelling of Production Volume). This would generate a 'TAKT Image' for the Process Operator - a signal that his rate of Production is being aligned with the end-customer's rate of Demand
Together with Volume-Levelling, a manufacturer must opt for 'Levelling the Production Mix' i.e. spreading the distribution of production of all the product variants in a Product Family evenly over time, with minimum time spent on performing Changeovers
4.6 GUIDELINES FOR LEAN VALUE STREAM & FUTURE STATE DESIGN
The image below summarizes the key objectives for Lean Manufacturing, as explained using the three analogies just now, that should be incorporated into the design of the Future State Value Stream-
Click on the image to enlarge
4.7 INTERPRETING THE CHANGES PROPOSED IN ACME'S FUTURE STATE DESIGN
Below, you'll find a comparative Slider of both the Value Stream Maps-
4.7.1 SPOTTING THE BOTTLENECK PROCESS(ES)
To identify the presence of Bottleneck(s) processes in the Value Stream, if any, let us determine Acme's TAKT Time first - which is the rate at which it must produce Finished Brackets in order to meet State Street's Demand from its Available Working Time.
Acme's Production Control has estimated that State Street's monthly demand is expected to remain the same in the future i.e. 18,400 Finished Brackets. Since there are 20 workdays in a month and 2 Production Shifts in a day, this translates to the Customer Demand Rate per Production Shift being 460 units. As the duration of a Shift is 8 hours, the Total Working Time available per Shift is 28,800 seconds. Given that 20 minutes per Shift is apportioned to Lunch break - Acme is left with 27,600 seconds of Available Working Time per Production Shift. This translates to a TAKT Time of 60 seconds. (Available Working Time in a Production Shift ÷ Customer Demand per Production Shift).
This TAKT can be interpreted as - Acme has to manufacture at a rate of one Finished Bracket every minute, when operational, in order to fulfill State Street's monthly demand of 18,400 units.
From the datapoints captured in the Current State map, you'll observe that out of all the five manufacturing processes, only Assembly #.1 is producing output at a pace slower than TAKT. Hence, Assembly #.1 is a Bottleneck process in Acme's Value Stream.
4.7.2 WHERE TO IMPLEMENT CONTINUOUS FLOW IN THE VALUE STREAM?
As indicated previously, linking Production processes in Continuous Flow, wherever feasible, is a top priority in Lean Manufacturing. Below is a conceptual explanation of this 'Flow' Strategy-
CONCEPT NOTE: 'CONTINUOUS' FLOW STRATEGY
Imagine this tweak in Acme's Current State Map - that there are three sequential operations occurring instead of the Assembly #.1 process - Drilling, Coating & Inspection respectively. Each of them is being performed by one Operator each.
However, in the revised Value Stream Map (left), we continue to display only a single Process box, albeit with three Operators now and with a new Process name to represent.
Q: Why did we not draw a separate process box for each of the three operations?
Hint: Search (Ctrl+F) for the phrase 'Discrete manufacturing processes' in this article
A: We've chosen to draw a single Process Box as all the three operations are linked in a Continuous Flow (enlarge Figure 28) - where all the three Operators are seated in a compact workstation and where the output of Drilling operation is instantly transferred as an input for Coating which begins processing it immediately, and similarly, the output of Coating operation is instantly transferred as an input for Inspection which begins processing it immediately as well i.e. Inventory does not stagnate in this processing chain. Hence, Continuous Flow is also called 'One-Piece' Flow as a unit (or a batch) of Inventory is processed & transferred one-at-a-time here.
For Continuous Flow to function in its pure form, all the operations need to produce at a similar pace i.e. have similar Cycle Times so as to minimize the instances of temporary Inventory stagnation.
Subsequently, the output from Inspection operation is transferred to Assembly #.2, but Inventory stagnates before it reaches it - in the form of 1200 LH & 640 RH Welded Brackets as is evident in the Current State Map. Hence, the Continuous Flow breaks after Inspection. Which is why Assembly #.2 has a Process box to itself - it is a discrete manufacturing process with Inventory stagnating before it.
A Value Stream Map has a very functional display - with the motive to highlight activities in a Lean-context. If sequential operations are linked in a Continuous Flow, as is the case in our hypothetical scenario, it is indicative that Inventory spends the entire duration in this processing chain accreting Value - which is what Lean wants to happen ideally as well. Hence, there is no need to allocate precious real estate on the map towards these three operations separately and they can be merged and depicted as a Joint-operation under a single Process box.
Also, as can be inferred from the visual above, Continuous Flow can exist in a manufacturing shopfloor limited in or completely devoid of Automation. Even if some Inventory were to end up stagnating, but if the quantity and duration of stagnating Inventory is tiny, we can still treat the processing chain as being linked in a 'Continuous' Flow and depict it accordingly on the map.
4.7.2 Continued
The sequence of selecting processes in the Value Stream that could be linked in a Continuous Flow begins with the closest customer-facing manufacturing process first, and going upstream from there i.e. from right to left in a Value Stream Map. The rationale for this direction is the same as was applicable while drawing the Current State Map initially - a manufacturer would like to ensure that the downstream processes are particularly Lean-attuned as they will be responding to Acme's Production Instructions and also will be the manufacturer's first line of defense against demand volatility and changes in customer orders.
Q. 'Why this emphasis on closest customer manufacturing process though?' A. This is because any manufacturer's most downstream process where Material Flows occurs is the Shipping / Outbound Transport process, and linking it in a Continuous Flow would imply that Inventory must not stagnate between Production and Shipping i.e. the very moment a finished good is manufactured, it is loaded onto a dispatch vehicle. As you will concur, this never happens in reality as Finished Goods are staged before being shipped. 'Staging' is a temporary Storage area where the Finished Goods are accumulated, sorted, audited, documented, inspected etc., until a go-ahead is given for dispatch and the transportation vehicle is available. Hence, Inventory stagnation is inevitable between Production and Shipping. Thus, by definition, a Continuous Flow cannot be implemented at Shipping - it has to be deployed in Production.
Note: This does not mean that we cannot do anything to regulate the quantity and duration of stagnant Inventory in Shipping - we very well can, and we shall explore the way to do so in a later section.
Therefore, let us begin with Acme's last manufacturing process - Assembly #.2. Linking it in a Continuous Flow implies that Inventory can be made to flow uninterruptedly between Assembly #.1 and Assembly #.2.
Is linking these two processes in a Continuous Flow possible? If possible, would it be pragmatic?
Why not? There is nothing to indicate that having a common Continuous Flow Workstation for Assembly #.1 & Assembly #.2 processes is not viable. Yes, their individual Cycle Times are slightly apart, however, notice that Assembly #.1 has a slower Cycle Time (62 seconds) than Assembly #.2 (40 seconds). This means that Inventory wouldn't stagnate between the two in a Continuous Flow setup, although the Operator for Assembly #.2 will be underutilized i.e. encounter idle time. Implementing Continuous Flow here would be beneficial as Acme will be able to eliminate the Inventory stagnating at this juncture (1200 LH & 640 RH) completely, which will release 2 days of Production Lead Time.
Having said that, do observe that there is plenty of Inventory stagnating between the other manufacturing processes upstream as well - between Spot Weld #.2 and Assembly #.1, Spot Weld #.2 and Spot Weld #.1 & Stamping and Spot Weld #.1.
Q. 'So can Acme deploy Continuous Flow between all the manufacturing processes, then?'
A. It can, but unfortunately, it must leave out one process. At Acme, the 200 T Stamping Press equipment operates on multiple Product Families i.e. Stamping's Production Shift is not entirely dedicated towards processing Brackets alone - as can be inferred from the altered icon used to depict its Process Box on the Map. Moreover, its Cycle Time (1 second) is much quicker than of its downstream counterpart - Spot Weld #.1 (39 seconds). Implementing Continuous Flow here would necessitate Acme to slow Stamping's Cycle Time by at least 38 seconds so that Inventory does not stagnate between the two processes in a Continuous Flow workstation.
Note: In case you are wondering, No, it does it does not make sense to do it the other way around i.e. making Spot Weld #.1 cycle quicker. This is because a manufacturer has to target to cycle its processes towards the TAKT Time and not away from it.
However, you'll also realize that Spot Weld #.1 is cycling much quicker than the TAKT of 60 seconds. Hence, in reality, Acme would need to slow Stamping's (as well as Spot Weld #.1's) Cycle Time to TAKT level. Recall that producing faster than the rate of Customer Demand incentivizes Batch Production and risks Overproduction - something which Acme intends to avoid in its Lean Value Stream of the future. Slowing the Stamping Press equipment by 59 seconds is not practical at all as it would render this high-capacity equipment to be unable to operate on other Product Families it serves - this is because all of its Available Work Time will go towards operating on the Brackets Product Family alone if it were to cycle Stamping at 'a-Bracket-every-60 seconds' pace. In such a scenario, Acme would need to invest in procuring new Stamping Press equipment in order to perform Stamping operation on the other Product Families. Not a wise thing to do, clearly.
Just in case you need another reason to be convinced about not implementing Continuous Flow here, notice that the Stamping Press has an Uptime of 85% currently i.e. it has been out-of-order for 15% of its Available Working Time, historically. In a Continuous Flow workstation, Process Reliability matters as all the operations within need to be synchronizing efficiently. Also notice that Spot Weld #.1 and both the Assembly processes have a 100% Uptime historically - in a Continuous Flow setup, they would bear the brunt of Stamping Press' inefficiency. Hence, Equipment Downtime is an impediment that one should take into consideration while deciding which processes to link in a Continuous Flow setup.
While Acme will not link Stamping in a Continuous Flow, it would need to find a way to regulate its Production nonetheless, as it is producing the Stamped Brackets in large batches currently, which leads to high levels of Inventory stagnating before Spot Weld #.1 (4600 LH & 2400 RH).
All the remaining four manufacturing processes (from Spot Weld #.1 to Assembly #.2) are dedicated to processing Brackets alone. Linking them all with a Continuous Flow / One-Piece Flow would be an attractive option, if feasible. Let us explore the possibility-
All the four processes have broadly similar Cycle Times. By making the following Process Improvements - a) reducing the Cycle Time of Assembly #.1 (a Bottleneck process as it slower than TAKT by 2 seconds currently), and b) maximizing Process Reliability of Spot Weld #.2 (80% Uptime currently), a Continuous Flow workstation from Spot Weld #.1 to Assembly #.2 can certainly be viable and an attractive possibility. Attractive because it would eliminate 6.5 days-worth of Production Lead Time due to Inventory Stagnation that occurs between these processes currently. All this Idle time is a Waste - significant Capital is blocked in stagnant Inventory which is only recovered when the Inventory is converted into Finished Goods, sold to the customer, and payment is received for it.
In the Future State Map, the Process box for this Continuous Flow Workstation can be labelled as 'Weld + Assembly', and by virtue of it being the most downstream manufacturing process in Acme's Value Stream of the future, it would also become the Pacemaker process - one that receives miniaturized Production Instructions from Production Control and whose own Rate of Production would influence the Rate of Production for the manufacturing processes connected by 'Pull' upstream.
Note: This Continuous Flow processing chain has scope for finetuning - details elaborated in the Rapid Process Improvements section.
4.7.3 IF NOT CONTINUOUS FLOW, THEN WHAT?
As a reminder, Lean advocates the integration of Continuous Flow in the Value Stream. This is because wherever it is feasible to apply it, it will ensure that Inventory will be operated upon uninterruptedly, thereby enabling value-addition and eliminating stagnation.
However, the need for stagnant Inventory is felt in certain situations - for example, to safeguard against Demand Volatility, Supply Volatility, Transportation Delays & Equipment Downtime.
Also, Inventory stagnation can sometimes be inevitable - for example, when the Cycle Time of a process is much quicker than its downstream counterpart - as is evident at Acme (Stamping & Spot Weld #.1). In such situations, the manufacturer still has to ‘regulate’ the production of such processes so as to ensure that Batch Production is not resorted to, and that minimal Waste is being generated in the Value Stream. To do so, a manufacturer can consider deploying either a 'Supermarket Pull System' or a 'First-In, First-Out (FIFO) Lane' Flow Strategy instead. Let's understand both these alternate Flow Strategies conceptually first-
CONCEPT NOTE: THE SUPERMARKET PULL SYSTEM
The use of Supermarket and Kanban together in a Value Stream is called the Supermarket Pull System.
SUPERMARKET
You must have visited a traditional Supermarket before – where you can shop what you need and leave while the staff replenishes the shelves at regular intervals so as to keep it full of Inventory at the customers' disposal. Similarly, a Supermarket in Lean Manufacturing is a 'controlled Inventory zone' – where a customer process can shop for Inventory inputs as per its immediate requirement, and the supplier process is asked to manufacture Inventory output only when and only as much as is needed to replenish the Inventory in the Supermarket to its default. Overall, this intuitive approach not only helps regulate stagnating Inventory in the Value Stream, but also it ensures that Production is tethered to Consumption via 'Pull'.
KANBAN
Regulating the Material Flows via Supermarket is just one half of the job.
While Information can be transmitted reliably in a myriad of ways in Batch Production - orally, email, telephone etc. - as the frequency of communication is limited - would any of these mediums be effective to exchange Pitch-based Inventory Withdrawal and Production Instructions multiple-times-a-day between the Supplier process, the Supermarket and the Consumer process reliably? Considering that a standard manufacturing setup has numerous processes and that the Operators are paid to produce efficiently and not to communicate effectively?
This is where the need for an effective 'Information Signalling system' such as Kanban is felt.
Recall the Library Card System analogy - while the Supermarket is akin to the Library, the various Kanban components have a function similar to the Library Cards. The figure below depicts a Supermarket Pull System deployed at a Chipset manufacturing setup where Process B's Operator extracts a Tray containing 20 Chipsets from a Stock Bin near his Workstation in order to process it and once it is emptied, he keeps the Tray aside. Process B's Material Handler spots the empty Tray and pulls out the Withdrawal Kanban Card (WK) attached on it and proceeds to submit it to Process B's Supplier - A's Supermarket - which stores Process A's Chipset output. The receipt of WK signals the Supermarket that the customer process is demanding 20 Chipsets and it proceeds to give a new Tray full of the desired Inventory to the Material Handler. Upon receipt, the Material Handler deposits the Tray it in Process B's Stock Bin, thereby replenishing it to its default state.
At the Supermarket, upon receiving the WK from Process B’s Material Handler, a Production Kanban Card (PK) is printed and handed over to Process A's Material Handler who submits it to Process A's Operator. The Operator thereby receives the ‘signal’ (Production Instruction) that he has to initiate manufacturing 20 new Chipsets. Once ready, Process A’s Material Handler will transfer it to A’s Supermarket. Upon doing so, the Inventory at A's Supermarket will be replenished by the same quantity of Chipsets that was withdrawn earlier by Process B. Isn't this methodical? This is the standard way of utilizing the Kanban Card System. The components of a Supermarket Pull System as depicted in Figure 33 above are utilized on a need-basis i.e. not all components are utilized every time.
Now imagine a scenario where Process A's Chipset manufacturing equipment has a processing capacity of 70 Chipsets at a time i.e. while processing a lesser quantity of Chipsets is possible, but it will incur the same cost, time and resources as it would to manufacture 70 Chipsets. In such a situation, transferring just a single PK from Supermarket to Process A, which signals a Production Instruction of 20 Chipsets, would be misrepresentative. As will transferring 3 or 4 PKs together too.
Instead, a Signal Kanban is used as the signalling device. A metal triangle will be dispatched from the Supermarket to Process A when the Supermarket Inventory reduces by a minimum of 70 Chipsets i.e. upon the receipt of four or more WKs from Process B. So, if you assume that A's Supermarket is designated to hold 10 Trays of Chipsets, only when the number of Trays breaches 6 will the Signal Kanban be issued to Process A, whose Operator will thereby interpret receiving this signalling device as an Instruction to 'begin manufacturing a new set of 70 Chipsets'. The denomination of Signal Kanban (also known as Batch Kanban) is predetermined. From a Mapping perspective, the slanted arrow underneath Process A in the figure above will now read 'Every 70 parts' whereas the plain rectangular Production Kanban icon will be replaced by the triangular Signal Kanban icon.
The Kanban Post has a function similar to the Book's Card Holder in the Library Card System analogy - it is a holder where Withdrawal Kanban Cards may be accumulated before being transferred to the Supermarket at suitable intervals - example, every end-of-day. Lastly, the Physical Pull icon is used to depict manual Material Flow from the Supermarket i.e. when Inventory is transferred without the use of Material Handling Equipment such as forklifts or trolleys.
Overall, the Supermarket Pull System is an effective Flow Strategy which regulates Material Flows using Supermarkets and reliable Information 'signalling' mechanisms. It is typically deployed when a) the number of products in a Product Family is limited and b) the Supermarket Inventory can be quickly replenished i.e. the Lead Time upstream is less.
Note: Just like the Library Card system, the Kanban system is also transitioning to Electronic format.
CONCEPT NOTE: FIRST-IN, FIRST-OUT (FIFO) LANE
First-In, First-Out (FIFO) Lane is another Pull-based Strategy to regulate Material Flows which can be deployed in specific situations where implementing Continuous Flow is not viable. It has a contrasting use case to the Supermarket Pull System - in that it is typically deployed when a) the number of products in a Product Family is high. Its use is also preferred when b) the time it takes to replenish Inventory is high i.e. the Lead Time of the processes upstream is high or when c) the Inventory is perishable in nature, or very expensive, or infrequently used.
Let's break the FIFO Lane Flow Strategy into its two components: 'First-In, First-Out' and 'Lane'.
First-In, First-Out: It means that Inventory is transferred to the consumer process in the order it was manufactured i.e. older Inventory is the first to be consumed.
Lane: In the demonstration depicted in Figure 36 below, Process B is located on the ground floor and Process A lies directly overhead on the first floor. An Inventory 'Tube' connects both these processes, and it can store up to six cartons of Processed Goods. Process B can extract its Inventory inputs from the bottom of the Tube as per its requirements while Process A will replenish the Tube from the top with its Inventory output. Within the Tube, the cartons will always be sorted in the order that it was (manufactured and) deposited by Process A. Process B, by virtue of being located on the lower floor, will always extract the Inventory in the same order it was deposited.
(click to enlarge)
The Tube is representative of the Lane in FIFO Lane. Because the Tube has an Inventory holding capacity of 6 cartons, this acts a Production regulator. Process A intuitively receives the signal that it only has to produce as much as is required to replenish the Tube to its full capacity.
FIFO Lane typically occupies a portion of the shopfloor between two processes in a Plant. The vertical, gravity-based Tube in this demonstration is just used to drive home the logic involved.
Both, Supermarket Pull System and FIFO Lane have the same end-goal though: to induce 'Pull' in the Value Stream in order to regulate Production.
4.7.3 Continued
At Acme, the number of variants in the Product Family selected for Value Stream Mapping are few (LH & RH Brackets). Besides, there is only a single Raw Material involved and Brackets are formed at the very first manufacturing process (Stamping). The Production Lead Time for manufacturing Brackets is anticipated to be low in the Future State - because the actual Processing Time / Value-Added Time is very low, and the Non-Value-Added Time will be reduced considerably due to adherence to Lean Manufacturing. Moreover, Brackets aren't perishable, expensive or infrequently consumed products either. Hence, installing a Supermarket Pull System is a better Flow Strategy across Acme's Value Stream than deploying a First-in, First-Out Lane.
Moving on, as depicted in the figure below, since the four processes from Spot Weld #.1 to Assembly #.2 will be linked in a Continuous Flow in the Future State, Acme is left to decide whether or not to deploy Supermarket Pull Systems at the three remaining junctures in the Value Stream: to regulate the flow of ‘Raw Material’, ‘Stamped Brackets’ & ‘Finished Brackets’.
- The decision to install a Raw Material Supermarket will hinge on whether Michigan Steel Co. is able to reduce its Lead Time for the delivery of Steel Coils (currently twice-a-week) in order to replenish the Supermarket as per the consumption rate of the Stamping process. Also, it makes sense to regulate the observed Raw Material Inventory stagnating at this juncture – the 5-days-worth of Steel Coils.
- The decision to install a Stamped Brackets Supermarket is dependent on whether Stamping, who itself is dependent on Michigan Steel, can replenish the Supermarket Inventory as per the consumption rate of Spot Welder #.1. The need to install this Supermarket is strongly felt as Acme would like to regulate the humongous Inventory stagnating before Spot Weld #.1 (4600 LH, 2400 RH)
- As for the Finished Goods Supermarket, its viability is again dependent on the Production Lead Time of the processes upstream i.e. its own Replenishment time. Meanwhile, large quantity of Inventory stagnation is observed at this juncture too (2700 LH, 1440 RH) and it makes sense to regulate it. That being said, another alternative is available as well - Production Control can issue Pitch-based Production Kanban Cards to Weld+Assembly and instruct it to transfer its Finished Brackets output to the Staging area in Shipping as soon as it is produced, thereby completely eliminating the stagnating Inventory at this juncture. This is known as Producing directly to Shipping. Which option would you choose? Let's explore what Acme has decided-
SUPERMARKET #.1: STEEL COILS (RAW MATERIAL) SUPERMARKET
The Steel Coils Supermarket would link Inbound Shipping to Stamping's consumption via Pull.
Steel Coil (Raw Material) consignment arrives at Acme's plant twice-a-week. Acme wants to improve the Lead Time and it is of the view that Michigan Steel, the vendor, can supply the consignments on a daily-basis in the future.
This is because Michigan Steel already supplies Coils to several customers in the region. If it were to adopt a 'Milk Run' delivery method, it can dispatch smaller consignments to multiple customers on a daily-basis instead of larger consignments to fewer customers bi-weekly as it does today.
Q. Why would Michigan Steel be interested in making this adjustment?
A. It can offer better delivery service to its existing customers without having to alter its own Coil Production Lead Time.
Acme has targeted that it will keep 1.5 days worth of Coil Inventory in this Supermarket.
Note: Inventory stored in a Supermarket format is not to be mistaken with Safety Stock. While Safety Stock is typically utilized in emergency situations such as stockouts, demand surges or equipment breakdown, Inventory in a Supermarket is predominantly a repository of Working / Cycle Inventory - which is utilized to meet cyclical changes in customer demand so that Production remains unaffected and continues predictably. That being said, a separate portion of Supermarket Inventory can be dedicated as a safeguard towards material shortages arising due to replenishment delays or from production issues upstream (eg. Defects, Rework). Hence, another way to interpret Safety Stock is that it is utilized in situations where Working and / or Buffer Inventory becomes insufficient or is non-existent. Safety Stock is stored and accounted for separately as well.
Thus, the 1.5 Days of Inventory earmarked for the Coil Supermarket represents 1 Day of Working Inventory to meet cyclical changes in Steel Coil demand from the Stamping process (its customer process) + an additional 0.5 days of Buffer Inventory to protect against any Coil transportation delays or Production issues from Michigan Steel.
Q. 'How was this break-up determined?' you may wonder.
A. Recognize the connection between the duration of Working Inventory (1 day) and the Inventory Replenishment time (1 day): it is practical for Acme to keep Coil Working Inventory limited to only a single-day's worth at this Supermarket - just enough to meet the cyclical changes in demand that occurs during a workday. For anything beyond, Acme would just need to place its daily Purchase Order, which Michigan Steel shall fulfill the next day thereby replenishing the Supermarket Inventory. Thus, the Stamping process will not face a shortage of Raw Material inputs, in general circumstances. Moreover, Acme has reserved half-a-day's worth of Buffer Inventory that can be utilized when there is a temporary unavailability of Raw Material due to Transportation delays or Coil Production issues.
By introducing this Coil Supermarket in the Value Stream Design, Acme's Production Lead Time would reduce by 3.5 days (70%) at this juncture (5 days of existing Inventory Stagnation which will be eliminated minus 1.5 days of Supermarket Inventory that will be introduced).
In terms of Information Flows, as there is an external stakeholder involved (Michigan Steel), the Kanban Card System will not be deployed in the traditional way from the outset (receipt of Withdrawal Kanban from Stamping & issuing equivalent Production Kanban to Supplier). Instead, the Withdrawal Kanban Cards that this Supermarket will receive from Stamping process will accumulate throughout the workday in a Card Holder called Kanban Post. Each Withdrawal Kanban Card would represent the consumption of a Steel Coil. At the end of the workday, Production Control will collect all the accumulated Withdrawal Kanban Cards from the post and get to know the total quantity of Coils consumed by Stamping during the day. Subsequently, it will place its daily Purchase Order with Michigan Steel, who will replenish the Supermarket Inventory by the same quantity that was consumed by Stamping the previous day.
SUPERMARKET #.2: STAMPED BRACKETS SUPERMARKET
The Stamped Brackets Supermarket will link Stamping's production to Weld+Assembly's consumption via Pull. Acme has decided to keep 1.5 days-worth of Stamped Brackets Inventory at this Supermarket: Same logic as Supermarket #.1 - 1 day of Working Inventory (920 Brackets) + 0.5 days of Buffer Inventory (460 Brackets) to safeguard against Replenishment delays or Production issues that occur upstream.
By installing this Stamped Brackets Supermarket, Acme will eliminate 6.1 days (80%) of Production Lead Time from this juncture in the Value Stream (7.6 days existing minus 1.5 days introduced).
In terms of Information Flows, the Withdrawal Kanban Cards will be transferred as default - i.e. individually - from Weld+Assembly to the Stamped Brackets Supermarket. Each Withdrawal Kanban shall represent the consumption of one Bin of LH or RH Stamped Brackets. A Bin is a small plastic container that will hold 60 Stamped Brackets.
Q. 'What is the logic involved? How has the 60 Brackets denomination been determined?'
A. The first Operator (Welder #.1) will benefit from having Stamped Brackets in close proximity i.e. within the compact Continuous Flow Workstation. This would help reduce the existing 10-minute Changeover time to an extent as the Stamped Brackets are kept in Trays in a large Bin outside the workstation currently (Minimizing the Changeover time allows for better Production Mix Levelling in a manufacturer's quest to incorporate Lean into the Value Stream). Moreover, keeping Inventory nearer to the Operator enhances his productivity - recall that Motion is a form of Waste. As to a Bin's holding capacity, processing sixty Stamped Brackets into Finished Brackets is expected to take 'Weld+Assembly' one hour or less, given that Acme will need to run this operation at a pace not exceeding the TAKT of 60 seconds - which translates to 'a-Bracket-a-minute'. Hence, the quantity of sixty Stamped Brackets in a Bin is represents 'an hour of work' for the Operator - a convenient metric. Moreover, recall that State Street places orders for Finished Brackets in Trays (the Pack Size) where 1 Tray holds 20 Finished Brackets. That the denomination of Inventory Transfer has an equivalence to the Customer Pack Size (3X) is also a handy characteristic for Production Volume Levelling to work effectively, a topic which will be covered shortly.
As for the other half of the Kanban loop, Acme has decided not to maintain an equivalence in the Production Instructions i.e. this Supermarket will not issue a Production Kanban Card to the Stamping process upon the receipt of a Withdrawal Kanban Card from Weld+Assembly. Instead, this Supermarket intends to issue a Signal Kanban (the signalling device is typically a metal triangle) to Stamping, every time the quantity of Supermarket Inventory is reduced by 5 LH Bracket Bins or 3 RH Bracket Bins i.e. when 5 LH Withdrawal Kanban Cards or 3 RH Withdrawal Kanban Cards are received from Weld+Assembly. When Stamping's Operator receives this Signal Kanban, it shall serve as a Production Instruction for him to perform a changeover on the Stamping Press equipment and begin manufacturing a new batch of either 300 LH Stamped Brackets or 160 RH Stamped Brackets (the former equals the quantity of 5 WKs, the latter is a shade below 3 WKs).
Q. 'Why did Acme decide to use a separate signalling mechanism for Withdrawal & Production Instructions? And why is Stamping being issued such a large Production Instruction - doesn't Lean despise Batch Manufacturing?'
Pause for a moment to think about it - you are already familiar with the rationale.
A. State Street's Demand Rate per Workday is 920 Finished Brackets - 600 LH Brackets and 320 RH Brackets. Notice from the Current State Map that the Cycle Time of the Stamping Press is very low - 1 second - while its Changeover Time is very high - 1 hour. While in the Future State, Acme would have to minimize Changeover Time, the real question to contemplate is - 'Does it make sense for the Stamping Press equipment to changeover from LH to RH and vice versa very frequently, which will consume a comparatively lengthy period of time, given that Stamping's Cycle Time is so tiny?'.
If Stamping performs Changeovers on one-PK-to-one-WK basis i.e. in denomination of 60 Stamped Brackets, this would essentially mean that the Stamping Press will manufacture 60 LH Stamped Brackets in 'a minute' (given its 1-second Cycle Time) and then the Operator will perform a Changeover (which will take some time, even after assuming that significant improvement can be made from the current duration of 1 hour) before producing the next batch of the RH Stamped Brackets in 'a minute' again. This 'Short LH Production Time - Long Changeover Time - Short RH Production Time' loop will continue till the daily demand of 920 Stamped Brackets from Weld+Assembly is manufactured.
Does it appear practical to you? Your answer may be on similar lines-
'No, it does not make much sense - might as well allow Stamping to process Brackets in larger Batches. Besides, the Stamping Press has to serve other Product Families too - so we must not waste its Available Working Time on performing Changeovers for the Brackets Product Family. That Stamping's Production has been integrated with 'Pull' due to the installation of Stamping Supermarket is a good thing - at least it will not be overproducing now as it did before.'
The Production Instruction of 1 Signal Kanban - Batch of 300 LH & 160 RH Stamped Brackets - has not been determined arbitrarily either. It is linked to State Street's Finished Brackets Demand Rate per Production Shift.
In a Lean Value Stream, the emphasis is to reduce EPE (Every Part Every...) on an incremental basis as much as is pragmatic - the ultimate goal being EPE-Pitch. For example, if every product in a Product Family is being manufactured once-in-a-day currently i.e. EPE-1 Day, then the next target should be to lower it to EPE-1 Production Shift, then to EPE-4 Hours, … to EPE-1 hour, … and ultimately to EPE-Pitch i.e. where all the product variants are manufactured interchangeably at short intervals based on the miniaturized Production Quantity i.e Production Volume Levelling. This would inculcate flexibility in Production, which would in turn enable a manufacturer to meet volatile customer demand / changes made to customer orders adroitly.
In Acme's Current State, Stamping's EPE is 2 weeks - which means that the Changeover to produce another Bracket variant happens only 'every-fortnight'. Until then, the Stamping Press continues to produce only a single variant (LH or RH Stamped Bracket) whenever it is operating on the Brackets Product Family. By linking Stamping's production to Weld+Assembly's consumption using a Supermarket Pull System (Weld+Assembly itself is linked to State Street's Demand Rate of 920 Finished Brackets per day), it is certain that Stamping will receive Production Instructions totalling 460 Stamped Brackets (300 LH and 160 RH) from Weld+Assembly every Production Shift in the Future State. As a result, because each Signal Kanban instructs to Changeover and interchangeably produce a batch of either 300 LH or 160 RH Stamped Brackets, Stamping will have to manufacture both the Bracket variants - RH & LH - in the same Production Shift itself in order to fulfill, indirectly, State Street's Brackets Demand Rate per Production Shift - thereby making 'EPE-1 Production Shift' - which is a 96% improvment from the EPE-2 Weeks in the Current State!
Note: The transition in EPE will be done gradually, as it depends on the incremental improvement initiative to reduce the Changeover time of the Stamping Press, discussed later. Irrespective, Acme must target to achieve a minimum of EPE-1 Day in Stamping at the very least, as the entire Future State Value Stream - from Inbound Shipping to Outbound Shipping is designed to respond to State Street's 'Daily Demand Rate' of Finished Brackets.
SUPERMARKET #.3: FINISHED BRACKETS SUPERMARKET
Acme has decided that installing a Supermarket here will be a better option than allowing 'Weld+Assembly' produce Finished Brackets straight to Shipping (Staging).
The Finished Brackets Supermarket would link Weld+Assembly process' production to the Shipping department, via Pull.
Producing straight to Shipping would have been ideal, as Inventory would cease to stagnate at this juncture completely (2700LH, 1440RH), as indicated earlier in this section. But it would be challenging to implement this strategy as Weld+Assembly may struggle to align its Continuous Flow production with demand volatility from State Street, if it occurs. Moreover, this all-important Pacemaker process will assume challenging Rapid Process Improvement responsibilities in the Future State in order to be a viable Continuous Flow process commanding Acme's Value Stream. Therefore, Acme considers it prudent not to leave this most downstream manufacturing process exposed to fickle customer tendencies, for the moment. Deploying a Supermarket is not a bad alternative either - it acts as a safeguard against demand volatility, and will also regulate the quantity of Inventory stagnation even if not completely eliminating it.
Acme has decided that it will keep 2 days of Finished Brackets Inventory in this Supermarket - 1.5 days of Working Inventory (1380 Finished Brackets) to meet cyclical changes in demand from State Street + 0.5 days of Buffer Inventory (460 Finished Brackets) to safeguard against delays in replenishment & equipment issues faced directly by Weld+Assembly or indirectly by the other processes upstream. As a result, the revised Production Lead Time at this juncture will be 2 days, a reduction of 2.5 days (56%) from the existing 4.5 days.
In terms of Information Flows, both the Withdrawal & Production Kanban Cards will be used as default - i.e. individually - and each card will represent 1 Tray i.e. 20 Finished Brackets. This is an easy choice to make - the Customer's Pack Size of 1 Tray would be a practical Kanban Size too.
4.7.4 LOAD LEVELLING WITH PACED WITHDRAWAL AT THE PACEMAKER
You may recollect the ODI Chase analogy, where I had introduced and shared an overview of this important Lean strategy. Because Acme will be installing multiple Supermarket Pull Systems from Raw Material to Shipping, the entire Value Stream will be linked via 'Pull'. As a result, Production Instructions can be issued by Production Control to just the most downstream manufacturing process i.e. the Pacemaker and Continuous Flow-linked 'Weld+Assembly' process.
Now, there are two aspects that Acme will have to determine- a) the quantity and distribution of Production Instructions, and
b) how Pull will be triggered in the Value Stream
For addressing the former, Acme will deploy 'Heijunka' (Load Levelling) technique. And for the latter, Acme will utilize 'Paced Withdrawal' technique. Let me explain these concepts first-
CONCEPT NOTE: LOAD LEVELLING WITH PACED WITHDRAWAL
LOAD LEVELLING
The ‘Load’ in Load Levelling comprises of two components: Production Volume and Production Mix. Meanwhile, 'Levelling' is a form of Balancing.
The purpose of Levelling the Production Volume is to miniaturize the Production Instructions in order to create a predictable Production flow. For example, if the Demand Forecast for Finished Goods for the next week is determined to be 1,000 units, the idea is not to issue Production Instructions all-at-once to the Pacemaker process - ‘Produce 1,000 units over the next week’ or even in large chunks - ‘Produce 500 units over the next three days’ twice. These sort of Instructions will only incentivize the Pacemaker to produce in large batches, and in doing so, it will untether itself from the customer’s rate of demand i.e. have a faint TAKT Image. And by virtue of being connected by Pull through the use of Supermarkets, the manufacturing process upstream will untether and batch-produce as well. This can induce Overproduction, which a Lean Manufacturer is desperate to avoid.
'So, to what extent should Production Control miniaturize the Production Instructions?'
The miniaturized Instruction or Pitch should be practical to execute on a frequent basis. Determining the TAKT Time is the first step. Subsequently, one can see if the customer has a preferred Pack Size of ordering: example - Cases at Mapro Syrups where one Case contained 30 Syrup bottles. Assuming that Mapro's TAKT Time is 60 seconds or 'one-Syrup-bottle-in-a-minute' - the Production Instructions can be scaled up to ‘Produce thirty bottles in half-an-hour’. Besides Pack Size, Minimum Order Quantity or Average Order Size can also be used as a scaling parameter. Remember that the Instructions are not conveyed via traditional communication methods in a Lean Value Stream - they'd be transmitted using clever signalling mechanisms such as Kanban (elaborated in the previous section).
From the demonstration depicted in the figure below, you'll observe how Levelling the Production Volume on a 3-weekly basis helps bring predictability in Production despite there being high variability in the Demand Forecasts. This balanced Production quantity facilitates stable Work Schedules, which also helps reduce the stress levels of the Operators. This is in contrast to Just-in-Time Production approach which, upon encountering volatile customer demand, contributes to significant Operator overtime and/or idle time.
Notice from the depiction above that Levelling the Production Volume entails the need for additional Inventory (negative End-of-Week Inventory) whenever cumulative Demand is greater than cumulative Production. This is where Supermarket Inventory is utilized – for Working / Cycle Inventory needs.
Since Levelling is dependent on Demand Forecasts, the Forecasts need to be reliable. If they have a high variance from actual demand, then the Supermarkets should keep a higher quantity of Working Inventory to counter it (Acme kept an additional 0.5 days of Working Inventory in the Finished Brackets Supermarket precisely due to this reason - it anticipates State Street's demand to be volatile).
The purpose of Levelling the Production Mix is to ensure that the distribution of Production of a Product Family is evenly spread over the Available Working Time, with minimal time spent on Changeovers, thereby enabling the manufacturer to produce flexibly and be more responsive to changes in Customer Orders.
Both Production Volume Levelling and Production Mix Levelling are applied concurrently. Although, I must add that while Volume Balancing is comparatively easier to comprehend, Mix Balancing is trickier to implement and may also appear counterintuitive.
For example, imagine that there are three products in a Product Family: A, B & C. Their daily rate of demand is 200 A, 400 B & 800 C units respectively. The Changeover time, i.e. the time it takes to setup the equipment and resources to manufacture another product, is 30 minutes for all the products.
Load Levelling i.e. both Production Volume and Production Mix Levelling would entail that the Production Instructions may flow in this order:
20 A -> Changeover -> 40 B -> Changeover -> 40 C, 40 C -> Changeover ->
(Repeat) 20 A -> Changeover -> 40 B -> Changeover -> 40 C, 40 C -> Changeover ->
-> (Repeat 8 more times in a workday)
Batch Production, on the other hand, could entail a Production Schedule such as-
100 A, 100 A -> Changeover -> 200 B, 200 B -> Changeover -> 400 C, 400 C
Q. Which of the two Production approaches is better to pursue? Many of you may opt for Batch Production - as the Instructions are large, less complicated and there are only 2 Changeovers in between - Less stressful, right?
A. You'd be wrong in thinking so! Despite the numerous Production Instructions due to smaller batch-size, and a whopping 20 Changeovers in total, Load Levelling (both Volume & Mix) is the better Production Approach should you intend to have shorter Production Lead Times, be more responsive to Demand Volatility and incorporate Lean in the Value Stream
Some of you would may wonder, and rightly so, ‘What about the 30 minutes of Changeover time? If 20 Changeovers are performed using the suggested Load Levelling approach, 10 hours (20 Ch. * 0.5 hours) in a workday will just go towards setups! How is that feasible?’
This highlights the important aspect - Load Levelling usually functions well only if the Changeover time is very less. Therefore, this manufacturer must focus on minimizing the Changeover time, and eventually eliminate it completely.
‘Wouldn’t that be difficult to do?', you may be wondering Yes, reducing Changeover time could be challenging, but is doable. Changeover Time can comprise -
Time taken to setup the Equipment – Potential solution could be retooling the equipment
Time taken to bring necessary Inventory to the workstation – Potential solution could be keeping Inventory in close proximity to the Operator, within the workstation itself (recollect the Bin used in Acme's Stamping Supermarket)
Time taken to perform Quality Checks – If so, potential solutions can be to find faster, better inspection alternatives, mistake-proofing (Poka-Yoke), better equipment maintenance.
While some of the solutions to reduce Changeover time can involve making engineering or design changes, know that a significant reduction in Changeover time can be achieved just by incorporating Lean in a Pull-based Value Stream. For example, in a Continuous Flow process, the Operators are seated within a compact workstation with all the components required for Production kept in close proximity. This would help in addressing point 2) above. Additionally, the upstream processes will supply all inputs frequently too, because Load Levelling would extend upstream in a Pull-based Production Flow, resulting in less Waiting Time. Similarly, by getting rid of Batch Production, a manufacturer ends up regulating Overproduction, unnecessary Transportation, Overprocessing, and so on. This indirectly helps in reducing Defects, which aids in addressing point 3) above.
To initially determine the extent of Production Mix Levelling that can be applied, a manufacturer can determine how much time is left in the workday after deducting the time that would be spent towards manufacturing the daily Production target at the process' Cycle Time. This spare time is the time that can be allocated towards performing Changeovers. Subsequently, more Changeovers can be added as the time per Changeover reduces and/or the process is made to cycle quicker through Rapid Process Improvement initiatives.
To continue with the previous example, if the Cycle Time to produce any variant is 30 seconds, then the time taken to produce a total 1400 units of A, B & C would be 42,000 seconds or roughly 12 hours. Therefore, if a workday spans 2 Production Shifts of 8 hours each, that would leave 4 hours for Changeovers - which would imply enough time for performing 8 Changeovers at 30 minutes per Changeover. Hence, the manufacturer should incorporate Production Mix Levelling accordingly. After making Rapid Process Improvements, if the time per Changeover decreases and/or the Cycle Time reduces, then the Production Distribution can include more Changeovers in order to balance the Production Mix further.
This highlights the ongoing nature of Load-Levelling and by extent, of Lean, which is based on the philosophy of Continuous Improvement. At the same time, the objective of minimizing Changeover time should be prioritized and pursued fervently. Hence, instead of standard incremental improvement initiatives (Kaizen), a Kaizen Burst (rapid and time-bound incremental improvement event) is better suited approach to minimize the Changeover time.
Reminder: A key metric for Production Mix Levelling is EPE - Every Part Every… - the objective should be to lower EPE on an incremental basis till it reaches EPE-Pitch.
PACED WITHDRAWAL
Now that you are aware about the quantity and distribution of Production Instructions, let me explain how it should be integrated in the Value Stream to induce Pull. The technique used is called Paced Withdrawal. The image below depicts a Load Levelling Box - a signalling device that is used to facilitate Paced Withdrawal.
The Y axis depicts the 'Name' of the three products in the concerned Product Family - A, B & C.
On the X axis lies 'Time of the workday' arranged at Pitch increments. Pitch is determined during Production Volume Levelling and is usually TAKT Time * Customer's Pack Size, or a function of it. In the depiction above, the Pitch is 10 minutes as evident from the timeline increments - it signals that after every Pitch interval of 10 minutes, another variant in the Product Family has to be manufactured (after performing the Changeover of course, which is implied).
A Load Levelling box basically stores sequenced Inventory Withdrawal Instructions for the Shipping department for the workday, which subsequently triggers Inventory Production Instructions for the Pacemaker process as the Kanban loop is closed.
Before the workday begins, Production Control will arrange Withdrawal Kanban Cards in the hollow cells of the box as per the Load Levelling sequence determined. Paced Withdrawal is initiated when a Material Handler picks the 8 am Product A's Withdrawal Kanban Card from the Load-Levelling Box and submits it to the Finished Goods Supermarket. This will result in the Supermarket giving a Pitch Size-worth of Finished Goods to the Material Handler who will proceed to stage these products for Shipping. Meanwhile, the Supermarket will seek to replenish the withdrawn quantity by printing a Production Kanban Card and sharing it with the Pacemaker process who thereby receives the Production Instruction to initiate manufacturing a Pitch Size-worth of Finished Goods. Once the manufacturing is completed, the new Inventory will be deposited in the Supermarket, thereby replenishing it to its original level.
Simple, right? This same cycle is repeated at 8.10 am with Product B's Withdrawal Kanban Card and at 8.20 am with Product C's Withdrawal Kanban Card, and so on.
Thus, the Paced Withdrawal of one Withdrawal Kanban Card from the Load-Levelling Box every Pitch Interval triggers Pull in the Value Stream as the Pacemaker process will produce only as much as is needed to replenish the withdrawn quantity and this loop will continue upstream wherever Kanban System is utilized (indicative of Pull effect irrespective of the presence of Supermarkets - which are just a repository of Working Inventory).
4.7.4 Continued
At Acme, the TAKT Time of 60 seconds multiplied by the customer's Pack Size of 1 Tray i.e. 20 Finished Brackets translates to 20 minutes, which is both, a miniature quantity as well as a practical Production Instruction and hence, it will be adopted as the Pitch for the Future State. So, Production Volume Levelling means that Production Instructions will be issued in chunks of 20 minutes or 20 Brackets-worth at a time.
In terms of Levelling the Production Mix, the split of daily customer demand for Finished Bracket variants is roughly 2:1 (600 LH: 320 RH). Hence, the Production Mix will be distributed in this order- RLLRLLRLLRLLRLLRLLRLL... (Paced Withdrawal using Load-Levelling Box would basically be sequenced in this manner)
Therefore, Production sequence after applying Load Levelling would flow as follows:
20 RH -> Changeover -> 20LH, 20LH -> Changeover -> Repeat, until the daily customer demand of 920 Finished Brackets is manufactured.
Using this Load Levelling approach, a total of 15 Changeovers would be required for the Spot-Welding operation. This is equivalent to a 9000 seconds or 2.5 hours being spent by a Spot-Welder on Changeovers in a workday at the Current State level of 10 minutes per Changeover. (Assembly can easily perform as many Changeovers as required as its per-Changeover-time is negligible)
Does Acme's Production have this much time to spare?
Assuming that the Cycle Time of the Weld+Assembly process will match the TAKT Time of 60 seconds as a bare minimum, manufacturing 920 Finished Brackets at this pace will naturally exhaust all the Available Work Time (55,200 seconds). Thus, Acme will need to find ways to-
either - increase the pace of Production to 50 seconds per Finished Bracket (arrived after deducting the 9,000 seconds of required Changeover Time from the Available Work Time)
or - eliminate the 10-minute Welding Changeover Time completely
or - a tradeoff between the two combinations i.e. reducing both Process Cycle Time as well as Welding Changeover Time, to a certain extent
What Acme decided to pursue is covered in the Rapid Process Improvement section up next.
As for the mechanism of Paced Withdrawal, the Withdrawal Kanban Cards can be drawn by the Material Handler at a Pitch Interval of 20 Minutes from the Load-Levelling Box. The box can be placed near the Staging area by Production Control. As each Withdrawal Kanban is submitted to the Finished Goods Supermarket in exchange for a Tray-worth of Finished Goods, this will result in a corresponding issuance of 1 Production Kanban every 20 minutes which will signal Weld+Assembly to produce a new set of 20 Finished Brackets each time it receives the Card.
The Load Levelling Box would be sequenced as below-
4.7.5 RAPID PROCESS IMPROVEMENTS
The Future State Design is nearly ready - there are just a few finishing touches left before we can be assured of having created a workable roadmap that will incorporate Lean into Acme's Brackets Manufacturing operations.
There are two ways to identify which processes need improvements, and of what nature:
a) By spotting inefficiencies in the Current State
b) From fine-tuning the Future State Design
As indicated earlier, Lean is based on the philosophy of 'Continuous Improvement' - popularly known by the term 'Kaizen' which entails striving to be incrementally better, perpetually. It endorses making steady improvements to Process Operations over making radical alterations to Production Configuration, Equipment, Plant Location & Process Technology. This is because Process Improvements are sufficient to considerably reduce Waste from the Value Stream and this implies that the organization will be able to manufacture the Product Family quickly and at a low cost, thereby increasing customer satisfaction and positively impacting profitability.
However, in the context of the Timeline envisaged for Future State implementation, just steadily improving processes would prove to be insufficient. The need is for Kaizen to be achieved very quickly without compromising on its method of incremental improvement. Hence, this would entail that the manufacturing team strives to achieve the desired improvements in mission-mode. This rapid approach to Process Improvement is known as 'Kaizen' Burst or 'Continuous Improvement Blitz'. The Concept Note for this topic is included below-
CONCEPT NOTE: 'KAIZEN' BURST
Japanese-origin Lean terminology such as 'Kanban', 'Heijunka' and 'Kaizen' may sound overwhelming to you. However, these are very pragmatic techniques that enable an organization to eliminate Waste from its manufacturing operations and produce high quality output at a customer-friendly pace.
Processes earmarked for Kaizen are to be incrementally improved over a long time-horizon. For example, if Mapro - the candy manufacturer - seeks to reduce the energy consumption of its Boiling process by 10 percent over the next year, a systematic approach can be taken to achieve this objective - small targets of one percent improvement each month with the aid of moderate changes such as better temperature controls, equipment maintenance, altering material composition of the inputs etc.
On the other hand, processes earmarked for Kaikaku are to be radically improved in a short time-horizon. For example, Fenesta - the window manufacturer - may want to increase the output of its uPVC Profile Extrusion process by 40% in order to meet the anticipated surge in customer demand next quarter. A project team is setup to find a viable solution and the approach undertaken is intensive and high priority. Procuring new Equipment, increasing the duration of a Production Shift, addition of another Production Shift, outsourcing production to Contract Manufacturers are some of the potential ways in which Fenesta can achieve this challenging Process Improvement target rapidly.
In a Kaizen Burst, the Process Improvement target is moderate (<20%) and the method of improvement is incremental in nature, however, the timeframe of achieving the target is very short - A Kaizen Burst event is scheduled to achieve the desired improvement and its duration is typically set no longer than a week. This signals the urgency of the mission. As a result, Task Force is often set up, there is a high degree of collaboration between the stakeholders during the Burst event, Key Performance Indicators (KPI's) are set up and monitored extensively, Top Leadership is involved, Incentives are offered, and so on. Some of the possible ways in which the Improvement targets can be achieved incrementally, but in a short timeframe are - by retooling an equipment so that it can changeover in minimal time to produce a new product variant, by training the workforce so that the Operators can produce reliably and with fewer defects, by redesigning the workstation to boost productivity and convenience, and by maintaining the equipment so that it doesn't breakdown as often.
In a Value Stream Mapping context, the idea is to spot the sources of Waste in the Current State, subsequently develop a Future State blueprint that generates minimal Waste, and proceed to identify the processes within that would need efficiency tweaks in order to transition to the ideal Value Stream design. This top-down approach of identifying scope for 'Bursts' or Rapid Process Interventions, based on evidence obtained from Value Stream Mapping, is a much better way than engaging in ad-hoc Process Improvement initiatives based on anecdotal observations.
4.7.5 Continued
There is a need to improve both the manufacturing processes of the Future State - Weld+Assembly & Stamping. The former is the 'Pacemaker' process of the Value Stream and therefore, focusing on improving its efficiency as well as improving how it is serviced by Stamping process is vital.
In the Current State, the Total Work Duration from Spot Weld #.1 to Assembly #.2 is 187 seconds (sum of the Cycle Time of all the four processes). Thus, the Average Work Duration is 47 seconds per Operator which signals to us that if we were to combine these processes in a Continuous Flow Workstation, it would cycle comfortably faster than TAKT. However, in reality, the Cycle Time of this joint-process will be influenced by the Cycle Time of the longest operation within - Assembly #.1 - which has a Cycle Time of 62 seconds. By virtue of it being 2 seconds slower than the TAKT of 60 seconds, it is a Bottleneck process in the Value Stream. Leaving it as it is in the Future State would jeopardize Acme's Value Stream.
Also, we've determined in the Load Levelling section previously that in order to accommodate 15 Changeovers within the Available Work Time in a day, Acme would need to-
a) either cycle this process at 50 seconds i.e. 10 seconds faster than TAKT,
b) or eliminate the Spot Welding per-Changeover time of 10 minutes completely,
c) or an iteration involving improvements in both a) and b)
Option c) is a balanced approach. With option a), Acme would risk falling into the trap of Overproduction as untethering from TAKT results in loss of TAKT Image, and option b) is challenging objective - eliminating Changeover time altogether appears impractical.
Note: It is important to recognize that eliminating Waste takes precedence over boosting Process efficiency in Lean Manufacturing. Minimizing Waste is, in a way, essential to producing efficiently.
On that note, let me elaborate the Kaizen Burst events that Acme has decided to undertake to ensure that the new Value Stream Design functions efficiently in the Future State.
KAIZEN BURST #.1 - INCREASE RELIABILITY OF SPOT WELD #.2 EQUIPMENT
In the cross-section of Acme's Current State to your left, you can observe that the Uptime % of Spot Weld #.2 stands at 80%. This means that Weld #.2's equipment was out-of-order for 20% of the Available Working Time historically.
This certainly calls for a Kaizen Burst - to minimize Equipment Downtime - as a Continuous Flow operation necessitates the need for maximum Reliability of all the processes within. That this Continuous Flow process is also the Pacemaker process of the Value Stream makes the introduction of this Kaizen Burst all-the-more-necessary.
Fortunately, Acme has determined that by applying better maintenance techniques during the Burst event, the Downtime of Weld equipment can be eliminated completely.
KAIZEN BURST #.2 - REDUCE CHANGEOVER TIME OF WELD EQUIPMENT
Minimizing the Changeover time for Weld Equipment from the existing 10-minutes will be the objective of Acme's second Kaizen Burst event.
Due to Production Mix Levelling and the installation of Supermarket Pull Systems, Stamping will be called to produce Stamped Brackets on an EPE-Production Shift basis in the Future State, a feat that is possible for Stamping to accomplish only because the Coil supplier Michigan Steel will be reducing its Transportation Lead Time to a single day.
Thus, Welder #.1 will have a much more steady supply of LH & RH Stamped Brackets, thereby reducing the Changeover Time.
Besides, due to the Continuous Flow operation, Material Flows will be instantaneous too, so the benefit in Changeover Time shall spillover to the next Welding operation as well.
Also, recall that (excess) Motion is a Waste. A way to reduce Changeover time further is to have the Material Handlers load the Bins brought from Stamped Brackets Supermarkets onto gravity-feed Racks within the workstation itself. This will facilitate enhanced productivity for the Operators who will have convenient access to their Inventory inputs.
Due to these, Acme has determined that it can incrementally reduce Welding's Changeover time to just a few seconds from the existing ten minutes (99% improvement), during the Kaizen Burst event.
KAIZEN BURST #.3 - REDUCE CHANGEOVER TIME OF STAMPING PRESS
Moving upstream, the 200 Tonne Stamping Press equipment in Stamping process has a high Changeover Time of 1 hour. This is representative of both - Changing over from one Bracket variant to another as well as changing over from another Product Family to the Brackets Product Family. Reducing this Changeover time would not only improve Stamping's efficiency, but also improve the Pacemaker's efficiency, as explained in the previous Burst.
Acme is confident that it can work towards reducing the Changeover time of the Press to 10 minutes (83% Improvement). This is because the ways to reduce its setup time by retooling it are well-known in the industry. Besides, the Raw Material Supermarket will facilitate ready supply of Steel Coils to Stamping whenever it needs it, which will reduce the Changeover Time even further.
KAIZEN BURST #.4 - LIMIT TOTAL WORK DURATION OF 'WELD+ASSEMBLY'
While the first Burst event will be targeted towards improving the reliability of the 'Weld+Assembly' Continuous Flow process, the second Burst of reducing Weld Changeover time will be aimed at resolving Acme's objective of accommodating 15 Changeovers in the Welding process. And I had taken a detour for the third Kaizen Burst which involved another process (Stamping), because a reduction in its Changeover Time will facilitate this fourth and final Kaizen Burst event at the Pacemaker process again.
Supposing that the Weld Changeover time is reduced to 40 seconds after Burst #.2, and assuming that the Pacemaker will cycle at / below TAKT, this would only amount to a maximum of 10 minutes of Welder overtime (15 Changeovers * 40 seconds per Changeover. Cycling exactly at TAKT would naturally exhaust all the Available Work Time).
Q. 'Does this mean Acme doesn't have anything else to improve in this Pacemaker process, besides ensuring that the Bottleneck process - Assembly #1 - cycles two seconds quicker to match the TAKT ?'
A. The answer is No. Acme has scope to finetune this Pacemaker process further. Recollect that the Average Work Duration per Operator in this Continuous Flow operation is ~47 seconds - significantly less than TAKT. This statistic indicates that this process' Operator resources are being underutilized.
If Acme were to run 'Weld+Assembly' process with one Operator less i.e. with 3 Operators in total, then the Average Work Duration would become ~63 seconds (187 seconds of Work ÷ 3 Operators). This resembles TAKT much closely and the Operators' Available Work Time would be utilized in a better way. In such a scenario, the first Operator would need to work on Spot Weld #.2 besides Spot Weld #.1 process. The second Operator would need to operate on Assembly #.1 besides Spot Weld #.2 process, while the third Operator would need to operate on Assembly #.2 besides Assembly #.1 process. This shuffling of work elements may require Acme to facilitate additional training for these Operators so that they can work effectively on another operation, but it is certainly worth the try it as doing so successfully would free up Operator #.4, who can be deployed elsewhere productively.
Acme has determined that, due to the positive impact potentially arising from the previous Kaizen Bursts as well as due to the uninterrupted Material Flow occurring within the Continuous Flow workstation, its Total Work Duration can be limited to 168 seconds (10% reduction from the Current State of 187 seconds. Translates to 56 seconds per Operator). This would become the objective of conducting this fourth Kaizen Burst - and it is implied that Assembly #.1 would cease to be a Bottleneck process if this intervention is successful, as its own Cycle Time would end up improving by at least a couple of seconds certainly i.e. aligning with TAKT.
4.8 CONCLUSION
I must emphasize that while the Kaizen Burst events discussed in the previous section will be conducted keeping the Future State adoption timeline in mind, seeking out incremental Process Improvements using Kaizen would continue even after the Future State Design is implemented. Afterall, Lean Manufacturing is synonymous with Continuous Improvement - there is no halting that!
Below is the summary of the changes made to Acme's existing Value Stream i.e. in response to the Lean Manufacturing guidelines. Click on the image to enlarge
Overall, while obtaining buy-in from the stakeholders involved and robust implementation is key, Acme has already laid the foundation of a high-on-performance and low-on-waste Manufacturing Operations. If everything goes to plan, Acme will reduce the Production Lead Time for its Brackets Product Family to 5 days - an improvement of 80% over the Current State. Also, the Lead Time from issuing a Production Order to the Pacemaker process to shipping the Finished Brackets to the customer would be 2 days - this implies a much-improved Inventory Turnover. That this boost in efficiency has been derived by fine-tuning the Material & Information Flows and by eliminating Waste from the Value Stream, not by procuring expensive equipment and technology or by relocating the plant is essentially the hallmark of Lean Manufacturing.
IN THE MOOD FOR MORE? I wanted to cover the TWI Industries Steering Arms Case in this article itself as it has a nice contrast to the Acme Stamping Brackets Case and the reader would enhance his / her grip on Value Stream Mapping. However, I have breached my website service provider's word limit (Overproduction!). Hence, you may refer to the video walkthrough of TWI case from this timestamp in my comprehensive video on Value Stream Mapping.
You can try your hand at Value Stream Mapping your manufacturing operations, service operations or even your daily personal routine. While the foundation remains the same, the applications of Value Stream Mapping are numerous.