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Made-As-Part-Of (MAPO): A level of the bill of material that is ignored by the MRP system
for scheduling. The subassembly is, as the name implies, made as a part of the next higher
level assembly. It is typically an additional part type classification, similar to make or
buy. (See Blow-Through)
Maintenance: Condition-Based: The concept is to enhance your normal scheduled
maintenance with sensory information that provides a heads-up that maintenance may
now be required. It involves the monitoring of equipment to provide an early warning that
something is out of the normal operating conditions and that maintenance may be required.
This monitoring utilizes vibration sensing, in-line gauging, sound levels, and other such
devices.
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Maintenance Signals: As inventory is reduced, the need to respond quickly to a machine


down situation becomes critical. Flashing lights, horns, pagers, walkie-talkies, cell phones,
etc. should be utilized as needed to assure that your maintenance people are immediately
notified. Make sure that the normal filler work being performed by these key individuals
is of a nature that it can be interrupted at a moments notice: e.g. process improvement
projects, PM, etc.
Maintenance Work Area Lighting: Many maintenance operations occur within the dark
recesses of the equipment. Permanent or portable lights can be of great help. Also, make
sure that every maintenance person is provided a high quality, lightweight, hands-free head
set light.

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Recent Posts
Steel Stories: Strange and Innovative Things
Weve Seen While Transitioning Metals

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Weve Seen While Transitioning Metals


Producers to Lean
Smoothing Customer Demand: Lean
Manufacturing Topic of the Day
Lean Manufacturing Topic of the Day: From
Make to Stock to Make to Order
Lean Manufacturing Topic of the day: The
Rubber Factory
Lean Manufacturing Topic of the Day: The
High Cost of Complexity
Lean Manufacturing Topic of the Day: Making
the Case for Multiple Shifts
Lean Manufacturing Topic of the Day: Lean
Manufacturing and Government Contracts
Lean Manufacturing Topic of the Day: Facility
Considerations for Lean Manufacturing
Lean Manufacturing Topic of the Day: The
Hidden Costs of Procurement
Lean Manufacturing Topic of the Day: How to
Optimize Your Entire Plant

Maintenance: Modularize & Cascade: In some capital intense industries, extensive


scheduled maintenance periods can cause disruptions in flow, mandate large kanban levels
between operations, and cause additional complexity (see the article Running Steel Lean).
One obvious solution is to reduce the extent of time required per down period, i.e.
modularize the maintenance events. Instead of doing one 24 hour down period per
month, the attempt would be to do one six-hour maintenance each week. Making this
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Lean Manufacturing Topic of the Day: How to


Attain Near-Perfect On-Time Delivery
Performance?
Lean Manufacturing Topic of the Day: Its All
About Cash Flow!
Lean Manufacturing Topic of the Day: Does
the concept of Takt Time Apply in Your
Business?
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transition will require overcoming many obstacles, not the least of which is resistance to
change. It will generally also require some capital expenditures. Cascading maintenance
means to schedule maintenance on machines in the order that product flows. Doing so
allows the hole (depletion of inventory between operations) to flow from machine to
machine.
Maintenance Operator as Teacher: Weve had some excellent results by re-defining the
role of the maintenance people to include training. Ask your skilled maintenance
personnel to teach operators to do routine maintenance: oil, grease, clean, inspect, etc.
This can free up the skilled maintenance people to focus on the difficult infrequent
maintenance and on equipment upgrades.
Maintenance: Point of Use Tool Storage: For common maintenance, involving relatively
inexpensive tools, locate the tools directly at the point of use. Securing such tools with
simple clips or other quick-release securing devices can significantly improve efficiency. In
some applications the tool can be permanently attached to the machine, i.e. weld the
ratchet onto the nut, switch to wing nuts, etc. Standardizing hardware can also assist with
maintenance.
Make / Buy Considerations: Too often, companies fail to consider the true full cost of
procurement. They also tend to undervalue the loss of control that comes from procured
vs. in-house make items.
This topic is explained in detail in our post The Hidden Costs of Procurement.
Make to Order: The strategy of making a customers product only after the receipt of an
order. From a lean perspective, this is the ideal. This strategy eliminates the wastes of
carrying finished goods inventory. Ideally, the product is produced, packed, and loaded
immediately onto a truck / railcar just in time for shipment. No double handling, minimal
risk of obsolescence,
A brief article discussing the benefits and methodology of making the transition to Make to
Order is explained here.
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Lean Manufacturing Topic of the Day: What


Does Lean Mean to Top Management?
Lean Manufacturing Topic of the Day: How
Can We Leverage Lean in the Marketplace?
Lean Manufacturing Topic of the Day: How to
Leverage Americas Competitive Advantage?
Lean Manufacturing Topic of the Day: Making
Lean Happen in a Job Shop
Lean Manufacturing Topic of the Day: Lean
Aerospace
Lean Manufacturing Topic of the Day: Lean
Manufacturing in Los Angeles
Lean Manufacturing Topic of the Day:
Definition of Lean Manufacturing

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Make to Stock: The corporate strategy of carrying finished goods inventory in anticipation
of an order. Generally, the intent is to provide quick delivery, i.e. the marketplace will not
wait for the necessary lead time to make to order. Problems associated with this strategy
include the considerable cost of carrying high-dollar, inflexible finished goods inventory.
The concept is more fully explained in our article From Make to Stock to Make to Order.
Management By Walking Around (MBWA): We worked with a client that produced all
sorts of labor efficiency / utilization reports for their supervisors. The only problem was that
the report data was, at best, meaningless, and at worst, outright wrong! It turned out that if
the supervisors would spend less time poring over reports, and more time on the shop floor,
they would know how, and who is performing!

Jack on Lean Manufacturing Topic of the Day:


Does the concept of Takt Time Apply in Your
Business?
chris boycks on Lean Manufacturing Topic of
the Day: Does the concept of Takt Time
Apply in Your Business?
Jack on Lean Manufacturing Topic of the Day:
Its All About Cash Flow!
Robson macedo on Lean Manufacturing Topic
of the Day: Its All About Cash Flow!
Jack on JUST DO IT

As an organization moves toward Lean, many of the traditional measurement devices fail
to perform accurately or timely enough. People are cross trained and move back and forth
to various jobs. Operators perform minor maintenance. Natural work teams work on
improvement projects. Kanbans will cause short term delays, etc. Measurement often
must move from individual performance to team performance. In some progressive
companies, the teams themselves provide input into the individual reviews. There is,
however, no substitute for being out there on the shop floor.
Management Implications: The kinds of results you should expect from your transition to
lean are detailed in our article What Does Lean Mean to Top Management?
The implications of making such a transition are far from trivial. A transition to Lean
Manufacturing can generate a heap of up-front tax-free cash, but adversely affect your short
term accounting profits, require an overhaul of your measurement and reward systems,
change your typical work week, and modify your perspective in regard to make/buy.
The rewards of such a transition, if done correctly, can be huge. As Nike would say, Just Do
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The rewards of such a transition, if done correctly, can be huge. As Nike would say, Just Do
It!
Management Questions: It is not sufficient to simply empower your workforce. It is
critical that the efforts of your people be focused on real business issues. Here is a list of
some standard Lean Management questions that will help guide the efforts of your people.
Add your own. Get started today!
What Would Keep Us From Doing That TODAY?
What Value does that add?
How could we cut that inventory / lead time in half?
Would you help me help you?
Have you tried that?
What can I do to help?
Why? Why? Why? Why? Why?
How could we do that better / faster / cheaper?
How could we make it impossible for that defect to re-occur?
Is any value being added to that inventory?
You will also want to point out that Every solution creates new problems.

Master Production Schedule (MPS): The Master Production Schedule (MPS) is the key
driver of the Material Requirements Planning (MRP) portion of an Enterprise Resource
Planning (ERP) system. As the name implies, the MPS is your production completion
schedule. It identifies the products and quantity to be produced and the time bucket in
which they are to be completed. The MRP logic then explodes the requirements and
schedules them accordingly.
Master Production Schedule (MPS); Using Negative Numbers for What-If Analysis:
Some of the older MRP / ERP software is not capable of what if analysis. One low-cost
way to provide such capability is to allow the MPS (Master Production Schedule) to accept
negative numbers. A trial run, un-netted, of a change only MPS will show the material
and labor changes caused by the proposed change. E.g. what if we were to add 20 widget
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As and make 15 less widget Bs? We would schedule only the delta As and negative
delta Bs in a trial MPS, and explode requirements un-netted. The result would be a
netting of any common components and would show the net additional materials and labor
needed, as well as identifying any surplus parts that this change would cause.
Master Schedule: See Master Production Schedule (MPS) .
Material Requirements Planning (MRP): A back scheduling, gross to net logic system that
calculates material requirements based on the Master Production Schedule, Bill of Material
structure, on-hand inventory, scheduled receipts, lead times, lot sizing, safety stock rules,
etc. (See Enterprise Resource Planning, ERP) (See the article ERP & Lean for a detailed
explanation with illustrations)
Measurement & Reward Systems; Performance Against Standard: The largest
productivity improvements come from methods changes, not from increasing the level of
effort of the people. Traditional PAS logic calls for a standard change when ever a
process/procedure changes. Yet, if the standard is changed every time there is a method
improvement, performance typically will fall! Why, because people are new at the new
method. They need practice to come down the learning curve.
This is obviously a negative incentive to change the method.
In a lean environment, we are always looking for a better way to do things. Seek a
performance measure that encourages process method improvement. This is best
accomplished by comparing current actual cost to historical actual cost. If improvement is
what you seek, it is pretty much irrelevant what it should cost based on some theoretical
standard. What really matters is is it currently costing me less than last year? Last
month? Last week?
Instead of spending time and energy calculating a theoretical standard, you will be much
further ahead if you focus on finding a better way, and on providing people timely feedback
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as to how well they are performing. If you feel compelled to have a performance against
standard system, at minimum calculate performance vs. both the current standard and
against a fixed standard. The former measures theoretical level of effort (current standard).
The latter measures their impact on profitability and rewards people for innovation
(methods changes) as well as effort.
Measurement & Reward Systems; Unit Output Measures: Many traditional organizations
have M&R systems that encourage local optimization, often at the expense of aggregate
total company well being. These will invariably become an impediment to your lean
transition efforts. (See Optimize the Whole)
Unit optimization has another insidious impact. It adds to complexity.
Metal Producers: Transitioning to Lean has some additional complications in capital
intense industries like Steel, aluminum, etc. Equipment is huge and seldom allows the
making of traditional cells. Many batch sizes are large and mandated by the equipment and
processes and cannot be substantially reduced. Equipment maintenance and change-over
costs, loading the mill to capacity, labor constraints, etc. further complicate the situation.
Weve been working with metal producers since 1989. As a result, a different approach and
a few unique techniques have been developed to cope with these issues. The results have
been dramatic. To date, we have worked with seven different metal producers, world
wide.
Our industry average return on investment exceeds 90 to 1.

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Milk Run Running a regular circuit for delivery and/or pickup of material. We have used it
very successfully in conjunction with kanban / min-max signaling devices for requirements
planning. A large electric motor manufacturing client of ours ran trucks from their wire mill
to a series of motor assembly plants. The truck driver would radio in the requirements from
each plant as he dropped off yesterdays requirements. The wire storage racks contained
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all of the min-max information necessary.


Milk Runs allow for small, frequent, regular material deliveries / pickups.

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Mind Storming: Similar to Brain Storming but considerably more efficient. Instead of a
flip chart, ideas are written on 5-9 cards. As people shout out ideas, they also write a
couple key reminder words on a card. After the ideas stop flowing, the cards are collected
and then sorted by the group (subjectively) based upon the estimated potential impact on
company well-being, and on ease of implementation. Any ideas that score high on
Impact, and Easy on implementation difficulty, are rapidly pursued. (See Nine Block)
Minimum Modularized Down Time Intervals: This is a technique appropriate for some
assembly line type operations, i.e. an environment where a failure of any one piece of
equipment will shut down the entire line.
We worked with a steel pipe mill. Maintenance had been neglected for years, and the line
was regularly shut down as one after another problem occurred. An interim solution was to
have each operation develop a list of 2 hr maintenance / reliability projects. The rule was
established: When any piece of equipment breaks down, the entire line will remain shutdown for at least 2 hrs while everyone works on their area projects. Within a few months,
total line up-time was significantly improved.
Minimum Specifications: Cull out the critical performance characteristics. Specify these as
to the minimum acceptable requirements. Then loosen or eliminate all other
specifications. This is particularly beneficial during the design phase of a new product. By
specifying only the critical performance attributes, the design team has considerably more
room to be creative. Note that this is also true for your suppliers. We have found dozens of
cases where a non-critical parameter was causing a supplier to quote a high price. Once
these non-critical constraints were relaxed, major cost and quality gains were attained.
(See Design for Manufacturability and Designing to Target Costs)
Minimize The Number of Suppliers: The cost of a purchased part includes much more than
its purchase price. Reliability of delivery, lead time, quality, packaging, freight, response to
change requests, delivery location, delivery frequency, etc. are all factors effecting the total
cost of purchase. Find one or two top performing suppliers for each commodity type, and
then concentrate your purchasing volume with these suppliers. Discuss with them your
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requirements, annual purchase volume, delivery expectations, etc. Negotiate price based
on annual expected purchase volume. Share information. Ask for capacity reservation so
that lead times remain stable and delivery reliable. (See Capacity Reservation and
Minimum Specifications)
Over the years, we have developed an extensive supplier evaluation checklist. We hope
youll find it helpful.
Min-Max Controls: Upper and lower trigger points for inventory control. When the onhand inventory level reaches a pre-established Minimum, it triggers a replenishment order.
The Maximum sets the upper limit that is allowable for this item. As an example, we have
set the min-max for a particular purchased item at min = 1000 and max = 5000. A recent
pull of this item from stock has dropped our on-hand inventory to 800. The system
(computer or manual) will trigger the buyer to place an order to get our on-hand inventory
back up above the minimum of 1000. He/she is authorized to buy as many as 4200,
bringing our projected on-hand balance back up to the max of 5000. (See Two Bin
System)
Mixed Model Production. Simplicity saves money, and the simplest scheduling system is
First In First Out (FIFO). Strive for the flexibility, both internally and from your suppliers, to
produce your products in the sequence that orders are received. This will require
responsive suppliers, flexible manufacturing operations, quick changeovers, and flexible
capacity. (See SMED and Rubber Factory)
Monuments: A slang term for large, extremely difficult to move, pieces of equipment. An
environment with monuments will typically require some different lean techniques than
those used in a standard widget maker factory. (See the article Running Steel Lean)
Modularize Planned Maintenance: In capital intense industries, planned maintenance
often removes critical pieces of equipment from service for multiple shifts or even multiple
days at a time. The disruptive impact of this planned outage can be huge. This is
particularly true when we have reduced the allowable queue between operations, i.e.
installed inter-unit kanban controls.
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The idea is to re-engineer the maintenance processes to allow them to be done in smaller
increments, modules. Thus, instead of scheduling one 24-hour maintenance period to be
done every month, we would seek to replace this schedule with one 6-hour down period,
each week. (See Total Productive maintenance and Cascade Planned Maintenance)
Move Equipment: Plan on a 2nd & 3rd Move: Continuous improvement means continuous
change. Build flexibility into your re-arrangement on the 1st move: e.g. Flexible power
drops, flexible air connections, light equipment on lockable wheels, equipment on skids,
etc. Encourage and expect a 2nd and 3rd move as your people continually tweak the
arrangement.
Move Some Maintenance People to the Off Shifts to Get Time on the Machine. We
were working with a corrugated box plant client. The production people said that their
biggest issue was that the equipment was breaking down due to lack of preventative
maintenance, and that equipment upgrades were not getting implemented in a timely
manner. The maintenance crew agreed with the assessment, but complained that they
could never get time on the machine. It turned out that the maintenance staff was
scheduled to work the identical hours that the production people worked (three shifts, 5
days / week). They couldnt work on the equipment because the equipment was
scheduled for production. We met with the entire maintenance crew, explained the
requirement and logic, and proposed a few alternatives. The team went off alone, and in a
few hours came back with an excellent plan. They had prepared a twenty four hour by
seven day crewing schedule, that was acceptable to all crew members and that was much
more cost effective than those that we had recommended.
By having access to the idle equipment on weekends, an excellent Preventative
Maintenance program was implemented, and equipment upgrades were addressed in a
timely manner. Within six months of the change, this issue was no longer a problem and
productivity jumped by 20%!
Muda: See Waste
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Multiplier Effect: Extensive supply chain inventory has the effect of exaggerating demand
swings at the lower end of the chain. This effect is caused by an attempt to adjust days
supply of inventory at the same time as adjusting for the change in rate of usage. Example:
I have an inventory policy of keeping 4 weeks supply of a component (raw material) on
hand. My demand has been 100 per week. I now anticipate my demand dropping to 90
per week. Instead of ordering 90 per week of this component, I would need to order less,
so as to adjust my inventory level. I currently have 400 pieces in inventory (100/week * 4
weeks). Now I want a 4 weeks supply (4 weeks * 90/week = 360 pieces on hand). If I
smooth the inventory reduction over a few weeks, I may change my orders to 80 pieces
per week.
Net result: Where our company saw a 10% change in demand, our suppliers will see a 20%
change in demand! Thus the Multiplier. The same effect happens when demand
increases. And, the further down the supply chain, the greater the swings.

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You can readily see that the extent of this multiplier is proportional to the amount of
inventory in the supply chain, and the number of levels in the chain.
What can you do about it? Reduce inventory throughout the supply chain.
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Note: your customers will carry inventory of your product in proportion to your lead time
and your delivery reliability. Do these things well, and youll minimize the multiplier.
Youll also want to monitor and compare changes in your products demand to changes in
top level demand.
Analysis of the recession of the 1970s showed that while the end demand for steel
products fell ~ 10%, the demand on the steel industry (the bottom of the supply chain) fell
by over 40%! Needless to say, a Lean supply chain is essential. Maintaining short lead
times, and reliable deliveries to your customers is crucial (see Boom Bust Cycle)
Natural Work Teams (NWTs): By reducing the inventory between operations, natural
work teams will automatically come about. Inventory elimination and a pull philosophy
forces a mutual dependence upon operators. Inventory reduction may even allow
operations to be placed physically next to one-another (a manufacturing cell). In such an
environment, a problem at one operation rapidly impacts both the upstream and the
downstream operations, forcing operators to communicate and begin acting as a team.
Note: We are NOT forming teams for teams sake. We are squeezing out the inventory,
which results in the formation of teams whether you want them or not! It is at this time,
when people are closely interdependent, that additional teaming skills training will be
needed. Books like Zapp and Heroz can be useful training aids. (See Training: Do a
Chapter a Week and Problem Idea Charts)
Natural Work Teams; Discretionary Budgets: One way of providing NWTs with a sense of
empowerment is to provide them with a discretionary spending budget. The idea is to
allow the teams to buy items that they need to improve their performance, and to
encourage the NWTs to try low cost things that may, or may not, work. The budget is
generally $X per month. No management approval is required for the team to spend their
allotment.
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While this discretionary budget can be both an employee motivator and a practical process
improvement aid, this is one area that we would NOT advocate just do it. Spend some
time. Think it through. Establish clearly defined acceptable uses for the spending.
Create a straw man procedure as to how the team would make spending decisions.
Discuss safety precautions that the teams must consider.
Some companies have established team accounts at places like Grangers, and allow their
teams to place orders against these accounts. Others provide debit cards. Remember: It is
a whole lot easier to increase the spending limits than it is to decrease. Start slowly, and
then build upon it. And dont second-guess valid attempts that did not work out. These
budgets are typically small, and therefore low risk. It is not at all unusual for the teams to
spend several hundred dollars on items that had little or no positive effect, before they
eventually hit the project that saved the company tens of thousands of dollars. The idea is
to encourage sensible trial and error!
Nesting: Trim losses can be substantial in some industries. Paper, corrugated containers,
sheet metal processors (service centers, finishing plants), etc. will generally do some form
of nesting.
Nesting is the combining of various production requirements (sales orders, replenishment
requirements, etc.) in such a way so as to minimize the trim losses. There are now some
fairly sophisticated software packages that will assist with this function.
As always, there are trade-offs between minimizing trim losses and maximizing overall
company benefit. For example, nesting is more effective when there is a large selection of
items to be produced (i.e. backlog of orders). Large backlogs tend to extend lead times. In
addition, when we reach out to run future orders we will likely incur the costs of carrying
the extra inventory until it is due to ship.
In dozens of our client plants, TOTAL costs went down, dramatically, even though the
amount of scrap due to trim losses increased. This was due to the benefits of shorter lead
times and reduced lot sizes. Bottom line; nesting is an effective tool, but must be used
prudently! Remember, our objective is to optimize the total, not necessarily each
individual operation.
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Nine Block: A powerful mind Storming idea evaluation technique is generally referred to
as a nine block.
Mind storming generates a considerable amount of ideas. The Nine Block allows the group
to easily rank these ideas, subjectively, based on two critical criteria: How big an impact
would this idea have if successfully implemented? And, How easy would this idea be to
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implement?
The ideas that fall in the upper left corner become priorities!

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NPI (New Product Introduction): Use a multi-function team to develop and prototype
new products. Engineering, manufacturing, procurement, sales/marketing, etc. Make sure
that adequate time is allotted to tweaking after the initial prototypes are produced.
It has been our experience that NPI has an 80/20 law of its own. Twenty percent of the
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time and cost will be required to develop a viable concept. The remaining eighty percent
will be required to bring this concept to a saleable product. Note that in almost every
industry, time to market continues to grow in importance. It IS possible to set deadlines.
And it is critical to set a cut-off on design changes (for the introductory model). In todays
environment, it is almost always preferable to have good product out first, rather than a
great product out late.
Objectives, Strategies, Tactics (O.S.T.): Top level goals (Objectives) must be supported by
2nd tier Strategies, which are supported by departmental Tactics (goals and measurements).
(See Goal Curves)
Old Equipment: In some industries, and some circumstances, old otherwise obsolete
equipment can be cost effectively used if dedicated to a very limited product line. The
savings come from the lack of any changeover and from a very reliable repeatable process.
This situation is typically practical in environments where excess space is not terribly costly,
since the equipment is generally idle for long periods of time.
One Up, One Down: A minimum cross training objective in many World Class companies. It
means that every supervisor / team leader seeks to have all of their employees able to
perform their own primary job, plus the preceding and following jobs, at a proficient level.
On-Time Completions: Many companies maintain a respectable delivery performance by
carrying substantial amounts of finished goods inventory. This is true even in make to
order environments. They accomplish this by scheduling to a padded completion date:
We promise shipment for 9/30, but we schedule completion internally for 9/23. The
logic is that if we happen to have a production hiccup, we can still ship to the customer ontime.
Needless to say, if we are ever to drive out this resulting finished goods inventory and
associated hidden waste, we must measure, set goal curves, and improve performance on
on-time completions. Measure the percentage of completions that occur exactly on the
date scheduled. Then set goal curves to dramatically improve this performance. On-time
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completions should become a critical gauge of company well-being, and treated


accordingly. Establish a mantra of on-time, all-the-time
On-Time Delivery: While it is important to measure your shipping performance, this
parameter is of less importance to your customer than on-time delivery. While it can
sometimes be difficult to measure and control, it is, however, a critical factor to consider. In
some industries, such as automotive, on-time delivery is THE critical parameter. Missing a
delivery can idle a production process costing millions of dollars per hour. If it is not yet
critical in your industry, it will be in the future. Work with your A customers to find ways to
measure and improve this critical measure of performance. Monitor you carriers
performance to stated lead times. Utilize the tracking systems that most carriers now
provide. Look into using company-owned vehicles in lieu of common carriers, etc.
On-Time Shipment, to the Original Promise Date: I spoke to the president of a steel
service center the other day. He candidly told me We will not turn down an order. We
promise what the customer wants to hear, then beg forgiveness. When I asked what his
delivery performance was, he replied, We ship 95% on time. How do you explain the
disparity? Easy. They kept revising their promise date until they finally shipped the order.
Then they measured against their final promise. I still dont know why they werent 100%
on time! I guess they just got too lazy to re-promise some orders! Needless to say, the
only credible benchmark is the original promise date, unless, of course, the customer
initiates the change.
Beware: Some companies delude themselves by saying we talked to the customer, and
he said it was OK. In actuality, all weve really done is reinforced the idea that the
customer should ask for his product earlier than he really thinks hell need it. Treat on-time
delivery, as measured against the original promise date, as another critical quality
parameter.
On-Time Shipment to the Request Date: An additional measurement that some top
performing companies track is their delivery performance versus the initial customer request
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date. Doing so can identify opportunities: Can we charge a premium for less than standard
lead time? Can we gain share, or increase prices if we cut our standard lead times to less
than the competition?
Note: Short lead times are of little value if your delivery performance to your promise is not
near perfect. However, short lead times combined with reliable delivery performance can
be a significant competitive advantage. Caveat: Prove out that you can perform BEFORE
you advertise the capability.
One Perfect Unit Day: A full, or partial day is set aside to focus on perfect quality at
every station: Standardizing procedures, establishing written sequential inspection criteria,
identifying and implementing failsafe devices, clarifying quality standards, implementing
visual quality boards, etc.
One Size Does NOT Fit All: Various Lean approaches and techniques are effective for
various industries and situations. Kanban controls are an excellent example. Kanban is an
extremely powerful tool. It is not, however, applicable in some environments (sporadic,
infrequent product demand; job shop; engineer to order; etc.). Too many consultants have
one set of tools, and attempt to force their use into inappropriate circumstances. Think of
this article as your tool kit. You, as the craftsman, must apply the appropriate tool as / when
needed. If the tool fits, use it. (See Solutions Looking for a Problem and Goal Curves)
Operation Checklists: A pilot goes through his/her pre-flight checklist to make certain that
no important parameter is overlooked. This same logic can and should be applied to
equipment start-up procedures, and even between shift hand-offs between crews. Similar
checklists are a basic fundamental of good maintenance procedures. Such checklists
protect the equipment, and are an important safety procedure.
Opportunity Capacity: It can be a significant profit enhancer to reserve some capacity when
aggregate demand exceeds capacity. It is normal in such situations for industry wide lead
times to extend, and delivery performance to degrade. The capability to reliably deliver in
short lead time can command significant price premiums. This situation has occurred
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repeatedly in the steel industry, and the technique is called opportunity tons.
Opportunity Signals: Visual or auditory signals that identify a need, i.e. more material, or a
problem, i.e. the machine is down.
Optimize the Whole, Not Necessarily the Pieces: A Lean initiatives primary focus should
be on optimizing the entire organization. As inventory is squeezed from between
operations, all units will tend to be operated at the speed, and in the sequence of either
customer demand or in such a maner as to optimize a bottleneck operation. While this will
increase the performance and effectiveness of the entire operation, it will generally have a
negative impact on some unit efficiencies.
One of the most difficult obstacles that many companies must overcome is the fact that
their current measurement and reward systems target unit optimization. The easiest way
to think about this is to picture an automobile assembly line. Every piece of equipment is
paced to the rate of the line, yet most of the equipment could produce considerably more
than that pace. Doing so, however, would require queues of inventory between operations,
different crewing schedules, etc. We could indeed increase the effectiveness of the
individual pieces of equipment, but how efficient do you think the total factory would be?
Note: There are techniques that can and should be applied to individual units that have
been sub-optimized to improve their effectiveness as well. However, the biggest gains
come from the initial phase of optimizing the whole. Take a look at the cost of complexity
that unit optimization brings about.
Order Delivery (O.D.) Cycle: The elapsed time from the receipt of an order to the
delivery of the product is called the O-D cycle. Needless to say, this is an important
parameter in the eyes of most customers. Measure it and set goals to reduce it.
Then expand the measurement to include the payables portion, i.e. the order payment
(OP) cycle.
(See Lead Time: How to Calculate)
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Order Entry: Hours of Operation: While many companies already operate 24 x 7 customer
service departments, those that only have humans on duty during business hours need to
take a look at their customer-base geography. The idea is to man your phones during the
business hours of your customers. An east coast company with a substantial amount of
customers on the west coast will appear to be rather customer unfriendly if they close at
2:00 PM in the afternoon (Pacific Time)! Staggering the hours of your customer service
people can readily remedy this situation.
Order Point (AKA Reorder Point): A predetermined level of inventory, for a repetitively
used item, that triggers a replenishment order. It is typically calculated as the amount of
inventory that we expect to use during the time required to replenish, plus some amount of
safety stock. The idea is to refill the bin before it goes empty. EXAMPLE: If we, on
average, use 10 pieces per week, and we need 3 weeks to replenish the stock, wed want to
order when the on-hand inventory reaches 30 pieces. This level, however, does not allow
for fluctuations in demand, or potential slippage of supply. In our example, we might look
at the historical demand pattern, and the reliability of the replenishment source, and
conclude that wed be comfortable with a 10 piece safety stock level. Our order point
would therefore be 40. Our in-house inventory control systems would be set up to
automatically trigger a replenishment signal when on-hand inventory of this particular SKU
hits a level of 40 or less on hand.
Note that kanban controls can often fulfill this role more effectively.

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Order Promising: It is critical to on-time delivery that order promising be done with
consideration of available material and capacity. The rule is to make reasonable promises,
then focus on doing all that is required to execute to that promise. This may mean paying
premium freight for delivery of shortage materials, and working any necessary overtime to
accomplish the schedule.
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Establish a corporate mantra of On-Time, All the Time


Organization Chart, Flatten it: A by-product of a lean operation is the elimination for many
non-value adding, typically middle management, tasks. Self-directing teams, minimized
scheduling, simplified accounting, etc. allow the lean organization to eliminate many levels
of the typical management pyramid. Streamlining the organizational structure will reduce
cost while improving communication and customer service.
Paint: A coat of white or light colored paint on the ceilings, walls, and floors (even cabinets
and equipment) can have a dramatic effect on lighting, as well as employee attitudes and
product quality. Its difficult to catch a defect if you cant see it! It also makes oil leaks
more readily detectable.
Paper Templates of Equipment used for re-arrangement trials: With small easy to move
equipment, we will typically advocate that only cursory paper layout planning be done.
Well come up with a general idea of how & where things should go, then get on the floor
and do a lot of trial and error. However, when equipment is big and/or difficult to move, it
makes sense to spend more time planning. While scale drawings are a good start, there is
nothing like walking the new layout. This can be achieved by making full sized cardboard
cut-outs of the equipment and then letting the entire team play paper dolls until a
comfortable mutually agreed upon arrangement has been established. Mark out the
locations on the floor, and then do the real equipment move.
Paretos Law: The 80/20 rule is typically applicable in inventory control. Annual dollar
usage, i.e. the quantity of an item used per year, times the unit cost, is ranked in descending
order. In most companies, the top 20% of the items, or SKUs (stock keeping units), will
constitute about 80% of the total annual spending dollars. In many industries, like electro
mechanical assembly, the ratio is more likely to be 90/10. (See ABC Inventory
Classification)
Pay For Raw Material on Shipment Rather Than Receipt: As the frequency of raw
material deliveries increases, the number of receiving transactions also increases. There are
many ways to circumvent this additional transaction cost. One such way is to pay for your
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many ways to circumvent this additional transaction cost. One such way is to pay for your
vendors material based on the amount of product your company has shipped. A simple
example: We manufacture bicycles. I shipped 20 bikes, therefore I must have used 40 tires.
Since we have good records of our shipments, and we have complete and accurate bills of
material, the computer can readily calculate raw material usage. Needless to say, such an
arrangement requires approval from your vendors, and demands that your inventory
turnover be high. Youll also have to have very low scrap rates and a good way to collect
scrap data.
Perpetual Inventory Control: Ive got 20 units of item A on hand. I bring in 10 more units,
and use (ship / scrap, etc.) 5 units. Whats my new on-hand balance? (20 + 10 5 = 25
units are left on hand)
This is an example of what a perpetual inventory system does. The computer processes
incoming and outgoing transactions, typically through MRP / ERP type inventory control
software, so as to maintain an on-going, i.e. perpetual, accurate inventory balance at all
times.
Peter Principle: A common business expression meaning the elevating of a person in
responsibility until they reach their level of incompetency. The term was coined by Dr.
Laurence Peter and Raymond Hull in their 1969 book The Peter Principle.
The typical example is the taking of an excellent technical person (engineer, software
programmer, etc.) and promoting them into a management position that requires an entirely
different set of skills. The problem is exasperated by the unwillingness, in many
organizations, to correct the situation when an individual is clearly struggling.
Many innovative companies now provide a corresponding technical path that similarly
rewards key individual contributors. This allows them to continue doing the things that
they are equipped to do well, while achieving the financial and status rewards similar to the
progression available through the management ranks.
Physical Inventory: As opposed to a perpetual inventory, a physical inventory (PI) is a go
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out and count them process. In most companies, day to day inventory balances are
maintained via perpetual inventory control. A physical is generally done as an event for a
specific purpose; e.g. accounting audit, due diligence process, etc. (See Cycle Counting)
Physical Inventory: Thumbnail: When you find yourself in an inventory accuracy
emergency this technique can be an effective band-aid. The idea is to do a thumbnail
physical inventory by checking the appearance of the on-hand physical supply vs. the
inventory record. That looks like about 100 and the records say 120. Close enough.
Move on to the next idem. The idea is to quickly catch the gotchas that will bite you.
Then, go back and do a good physical inventory, and implement all the necessary
procedures to maintain on-going accuracy.
Physically kitting to find shortages CREATES shortages: Weve all seen it. The raw
material inventory balances in the system are not accurate, so someone comes up with the
idea to pull the parts early to identify the shortages. Sounds reasonable. It isnt! Parts,
available on one kit, are short on another. Pulling parts early significantly decreases the
odds of being able to make ANYTHING complete! The only viable option is to fix your
inventory accuracy, and put systems in place to keep it that way. (see Trial Kitting)
Planning Percentage Bills of Material: Forecasting is generally easier, and more
accurate, when done at the product family level. However, in order to utilize the planning
data for material requirements purposes, the forecast must explode down to the specific
part level. One easy way to accomplish this is through the use of a planning BOM. The
planning BOM contains parts and labor requirements that represent the entire family of
products, by proportions. The easiest way to create this bill of material is through the use of
percentages. For example: Our product family Adult Mens Bicycle is anticipated to sell
22% Flyer model, 47% Clipper model, and 31% Off-Road model. We would create a
percentage planning BOM with these three products as components. The quantity per for
each would be the forecast % of the family sales for each product, i.e. .22 Flyer, .47 Clipper,
and .31 Off-Road. Thus, when we load the forecast into MRP and explode requirements,
the resulting component parts and labor forecast will accurately represent this product mix.
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Plant / Process Tours for All Employees: An operator had been doing a manual operation;
scraping tape residue off a transformer core; for eight years. His thumb was all buggered
up. We asked where the part went next. He had no idea. So, with approval of his
supervisor, we walked the process. You guessed it! The section that hed been manually
scrapping for all these years, was, at the next operation, cut off and thrown away!
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We are continually amazed at the number of employees that have no idea what is being
done in the other areas of the factory. Take the time to provide a tour for your operators.
You may be surprised at how it increases there caring and awareness of opportunities for
improvement. Note: This same concept has produced huge benefits when extended to
customer and supplier sites.
Point of Use Stock and Supplies: Do you see any non-value adding activities in this familiar
process? Parts are received, the count is verified, a sample is inspected for quality, a
transaction is processed, they are moved to another location, another transaction is
processed, some of the parts are then withdrawn, and another transaction is done, and the
parts are finally moved to the assembly area.
Wouldnt it make more sense to put the parts immediately where they can be used for
production? Now, I understand that lots of groundwork must be done to accomplish this
logical step. Just like the Frito Lay delivery guy, lets get the supplier, where ever practical,
to deliver quality parts (weve pre-qualified his process), in reasonable batch sizes (weve
shown him how to cut his set-up times), directly to the point of use. Transaction costs can
be minimized through backflush.
Point of Use Tool Storage: Store any low-cost tools where they are needed. Put clips on
the equipment to hold the screwdriver, wrench, ratchet, etc. within reach of the
maintenance person. At one plant, we watched the maintenance person spend 20 minutes
searching all over the plant to find a set of vernier calipers. Investing a few hundred dollars
in additional tools, combined with clearly defined locations for their storage, saved
thousands of dollars, annually, in lost productivity.
Note: Many tool supply companies will now furnish vending machines that are placed
throughout the shop floor and are stocked with commonly used tools and supplies,
generally on consignment. Operators/supervisors are provided with credit-card type keys
that record when, what, and by whom, each part has been used.
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Poka Yoke: See Failsafe


Pre-Agreement: Get agreement in advance. If , Then e.g. If we can show that is
the case, then do you agree that we can? We had a go-around with a quality engineer.
We had him verify that not one test failure had ever occurred after the initial hour of testing
(shake & bake). Yet, he refused to reduce the test time (8 hours). It took us months to
convene all the right players to override this guy! (See Let the Data Decide)
Pre-Meeting Coaching Sessions with the CEO: Our Rapid Impact process requires that Top
Management monitor our lean transition progress via regular TMAC (Top Management
Advisory Council) meetings. One trick that we utilized with great success is to hold a short
pre-meeting get-together with the CEO prior to the TMAC. This provides us an opportunity
to coach him/her as to where we anticipate resistance. E.g. We are going to suggest
Jim is going to want to study it. Wed encourage you to suggest that we just give it a try
Preventative Maintenance: (See Total Productive Maintenance, TPM)
Price Changes: In some industries it is standard practice to pre-announce price increases.
Doing so has several consequences, all bad! As mentioned elsewhere in this website, we
are constantly seeking ways to smooth demand . Pre-announcing a price increase has just
the opposite effect. Orders spike as customers attempt to beat the deadline, and slump
afterward. Customers attempt to guess what theyll need, and then are forced to call in
change orders. All of these actions adversely affect the company. Our suggestion:
Announce, right now, that the companys new policy is to no longer pre-announce price
increases. Then enforce the policy.
Problem / Idea charts: This can be a powerful tool in some environments. Natural work
teams are provided simple flip charts in their work areas. The chart has a column drawn
with the heading: Problem/Idea. This is used for employees to post any issue. Two
additional columns: Responsibility, and Promise Date provide a way for the team, and its
support people, to keep track of commitments made to resolve such problems. Every
problem is an opportunity. Make sure that they are posted, and then seek a solution. This
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is additionally powerful when combined with Management by Walking Around, and unit /
area / kanban goal curves.

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Product focused layouts: Many traditional industries are arranged in process focused
layouts, i.e. all lathes are in one area, all presses in another, etc. As we attempt to squeeze
out interdepartmental inventory, it soon becomes apparent that a product focus makes
more sense. E.g. to arrange the various kinds and quantities of equipment together so as to
cost effectively produce a specific product or family of products. (See Cellular
Manufacturing)
Product Structure Types: Most companies / product lines fall into one of the classical
product configurations: The Pyramid, The Inverted Pyramid, or The Hourglass.
The Inverted Pyramid is most often found in raw material processing type industries, like
steel making, injection molding, etc. Here, a small number of raw materials (e.g. iron ore,
plastic resins) can be used to make a wide variety of products.

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The pyramid is typical of electronic assemblies where a large number of component parts
are used to make up a few products.

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The Hourglass configuration is found where a large number of component parts make up a
limited number of subassemblies. These subassemblies can be configured into a wide
variety of finished products (flavors).
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Profit Impact of Driving Down Inventory. Inventory reduction generates cash and
improves operating performance. However, due to labor variance, and/or under absorption
of overhead, accounting profits can actually go down, temporarily, during these periods of
rapid inventory reduction. Also, a significant reduction of inventory can expose LIFO / FIFO
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layers in the inventory accounting system. The impact of this may cause accounting
profitability to go in either direction. It is important that the CFO be tasked to provide a
proforma of the impact on accounting profits that will occur if the targeted inventory
reductions take place. Once this has been done, get approval from the board to go ahead.
(See the article Transitioning to Lean)
Program Du Jour: A slang term for the syndrome of some companies to constantly change
the corporate focus. It is often the fad of the moment: A new book comes out on work
teams, so that becomes the drive, then another comes out on six sigma, and the emphasis
changes. The only consistency is that little or nothing seems to get accomplished.
Prune the Customer Base (All Customers are NOT Equal): It is a useful exercise to
evaluate your customers for margins, volumes, and a somewhat less tangible hassle factor.
Most companies find that a normal curve exists. A few customers are quite profitable.
The majority of customers are moderately profitable. And a few customers are just not
worth continuing to do business with. Raise their prices to the point that you are now
willing to keep them as a customer, or just get rid of them. (See Activity Based Costing)
Pull vs. Push: In a Pull philosophy, the next operation is considered a customer. As such,
it is reasonable to ship a product to a customer only when it is requested, i.e. only when it is
needed. In a Push environment, product is delivered to the next operation based on
schedule, or simply availability, whether the next operation needs it or not. A pull
philosophy is seen as superior for a number of reasons. Pull minimizes WIP inventory build
up and thereby keeps congestion down and assures short lead times.
Push systems have a tendency to constipate the system, adding to WIP and necessitating
expediting. (See Kanban Controls)
Pull Systems: Utilize the Pull Philosophy. This is generally accomplished via kanban
controls. The same pull philosophy can be extended as far up and down stream as your
suppliers and customers allow. Visualize a chain of events triggered by the end user.
He/she removes a product from the retail shelf, which causes the supplier to generate a
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replacement, which initiates demand for one more set of component parts, etc. (See the
article Taking the Mystique out of Kanban Systems)
Purchase Price Variance, PPV: A measurement tool often used to evaluate buyers. The
idea is to reward purchasing people for procuring material at favorable prices (compared to
standards or historical purchase prices).
While the idea of PPV is quite appealing, it has a major shortcoming. It ignores all of the
other costs associated with a purchased item: Transaction costs, Freight, De-trashing
(getting rid of packaging material), Receiving, Incoming inspection, Stocking, Record
keeping, Pulling the material from stock, Shrinkage etc.
A higher priced product that is vendor managed, delivers directly and frequently to the point
of use, just in time, with perfect quality, and re-usable packaging, etc. may be a far better
bargain.
In most cases, we suggest replacing PPV with a measurement that includes the Total Cost
of Purchase.
Put Time Limits on Discrepant Material Resolution: Discrepant material is in limbo. You
cant count on it, yet if you order replacement and then the discrepant material is released
as OK, youll have excess inventory. And, un-dispositioned held material adds to
complexity.
Establish turn-around targets for time to disposition. Measure it. Push to assure that all
functions required to make such disposition are available as close to 24 7 as feasible. You
cant have your operations waiting on material that may, or may not, be available for
production.
One effective technique is to require that all discrepant material remains within the kanban
allotment, i.e. if you are allowed 20 pieces between operations, and 5 are on hold
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(discrepant), then only 15 good pieces are allowed in the kanban. This will add operating
pressure for quick discrepancy resolution.
Quantity Discount: See Column Pricing
Quick Changeover Tooling: There is a large complement of tooling and equipment now
available that has been designed to simplify and speed up typical set-up operations. Quick
clamping devices, slotted holes, turn bolts, hydraulic systems, etc. Pickup catalogues
and/or search the web. There is no sense in re-inventing the wheel!
Raw & In-Process (RIP) Inventory: Traditional manufacturing accounting separates
inventory into three groupings: Raw Material, Work in Process (WIP), and Finished Goods.
Work orders generate kits with pick lists. The kits are picked and the entire job is released
to Work In Process. This transaction relieves the raw material parts from raw and puts the
job in WIP. When the job is finished, the job is closed and the inventory value is transferred,
eventually, into Finished Goods. As lead times and lot sizes are reduced, and raw material
is stored at or near the point of use, WIP becomes small enough to eliminate it as a separate
category of inventory. Products are back-flushed upon completion, thereby relieving the
raw material inventory. The accounting categories are thus RIP and Finished Goods. Many
of the non-value activities of processing pick lists and issuing transactions are thereby
eliminated.
Receive at Night: There are several advantages to receiving incoming material at night. It
often makes it easier for the shipping companies (traffic is lighter) and very often truck
drivers must wait overnight before being able to unload. It also allows the received
material to be entered in the system so all material shows for planning purposes during
normal business hours.
Red, Yellow, Green: In many batch environments, there are certain high-use products
where it is more economical to process the entire batch rather than process just the quantity
required for the order. An example is the blanking of sheet metal parts from a coil of steel.
If the product/s being blanked are high volume runners, completing the entire coil may
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make good economic sense (in many circumstances, there are very real capital limitations to
SMED). On the other end of the spectrum, there are low-usage products that should NOT
be processed ahead. This scenario is particularly true in the steel service center business.
A cursory study of each products historical demand, cost of processing, and cost of carrying
the additional inventory can lead to simple decision rules. The various products are coded.
Green: Cut up the entire coil. Red: Cut only what is needed, then put the unused portion
of the coil back into stock. Yellow: Use your discretion.
Reduce Set-up / Change-over costs to allow further lot size reduction. The basic rule is
Make just what the customer wants, just when he wants it. Any additional production is
waste and adds to inventory. The ideal is lot size of one. Historically we determined the
lot size based on the change-over costs. A better direction is to determine the right lot size
based on customer demand, then drive down your change-over costs, where possible, to
allow such.
Also see SMED: Single Minute Exchange of Dies
Remove doors wherever theyre not essential: We want product to flow, ideally, without
interruption, through the entire process. Walls, doors, fences, separate buildings, etc.
inhibit this flow. I toured a plant recently, where many of the departments were in separate
rooms. Unless separate rooms are needed for process constraints, e.g. environmental
controls, or security, a good 1st step to improve flow and communication is to remove the
doors. The next obvious step is to remove all unnecessary walls as well.
Rent Space at Your Customers Site: I visited a blow-mold bottle maker a few years ago.
Their process was highly automated, with minimal WIP. Palletized bottles were shrinkwrapped to protect them from dirt and dust. They had a large warehouse full of palletized
bottles and a tremendous amount of shipping, with trucks continually departing. When
asked for my recommendations, I said, You are storing and transporting AIR!
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I suggested that they rent some space at their primary customers site (this customer used
80+% of their volume), cut a hole in the wall, and deliver bottles directly to the bottling
line.
The result: No pallets. No shrink-wrap. No storage. No transportation. And a customer
for life.
Reorder Point: See Order Point.
Replenishment System: A mechanism to simply and reliably re-order and obtain parts or
services when needed. Replenishment system is a general term for specific mechanisms
such as the two-bin system, kanban controls, min-max, etc. As the name implies, the idea
is extremely simple: replenish what gets used. Note that such systems have limited
applicability in job shop, one-of-a-kind environments. Kanban systems are explained in
detail here.
Reserve Capacity for A Customers: Your critical few top customers should expect, and
receive, short fixed lead times and reliable delivery, no matter what your backlog position
may be. In times of super heated demand, this can still be accomplished by closely
working with your A customers to reserve adequate capacity to handle their actual
(realistic) demand. Lead times for B and C customers may float in and out. Not so with
your A customers. Provide them with short fixed lead times, even in a hot market, and
youll have a customer for life.
Note: while lead times may float for the Bs & Cs, reliability cannot. Credibility is
paramount. Say what youll do, then do what you say.
Reserve Capacity for Pillage & Plunder: In times of scarce supply and excessive
demand, it may make sense to reserve additional capacity beyond that required for your A
customers. In such markets there is often an ability to attain a significant price premium for
quick delivery. Note: if the hot order does not come in, simply pull some of the backlog
ahead, i.e. capacity is not lost.
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Resource Restriction: can be used to force innovation and process improvement. Take
away a person. Challenge the team to make the schedule without them. Squeeze the
space. Challenge engineering to find a suitable substitute for expensive supplies /
materials. Necessity is the mother of invention.
Results, or Lack Thereof: Weve been funding a Lean Transition effort for over three
years. Weve generated lots of activity and trained the heck out of people, but the results
just arent there. said the division president of a large corporation. He wasnt alone. It is a
theme we hear repeated over and over.
What SHOULD you expect from a lean transition? Large, tangible corporate-wide results.
If you are dissatisfied with your lean progress, give us a call. It wont cost you a dime, and I
guarantee that you will find the discussion Value Adding.
Returnable / Reusable Packaging: In some industries, packaging and the cost of detrashing i.e. getting rid of the packaging, can be a major expense item for you and your
customer. Work with your A customer/s to find ways to reduce or eliminate the
expendables: Use standardized, nesting, returnable shipping containers, pallets, fold-flat
returnable plastic containers, etc. Also look for dual function packaging, e.g. packaging
that can be used as part or all of the end-item packaging, e.g. use the same box to ship the
picture tube that the customer (assembly plant) will use to ship the finished TV; Or the
packaging becomes a part of the final product, etc.
RIP: See Raw & In Process Inventory.
Roaming Around Other Departments / Functions: A very astute boss of mine advised that I
allocate a certain percentage of time, each week, to roaming around the company. The
awareness of the big picture that doing so provided, was invaluable. Take the time to
understand what the other organizations do within the company. Get a good overview of
how the various pieces fit together. Doing so will pay for itself many times over, both in
terms of providing more value to the company, and in advancing your career.
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Rocks & Water Analogy: Consider your company as a ship sailing across a pond. Under
the water are dangerous rocks. However, as long as the water is high enough, there is no
need to worry about these rocks. In this analogy, the rocks represent problems that cost the
company in terms of productivity, customer service, and quality.
The water represents inventory.
As in this analogy, corporations can continue to operate while hiding a myriad of problems
beneath a blanket of inventory.
If we begin to drain some of the water from our pond, some of these rocks will be exposed.
We will then have to remove them so that our ship can continue to sail. The same occurs
in our factories as we begin to reduce the inventory. Lot size / set-up time, vendor
reliability, lack of flexibility, un-reliable processes, etc. will slowly be exposed as the
inventory is reduced. Fixing these rocks reduces cost and improves quality and customer
service.
Note: A company-wide inventory reduction process serves to optimize the Whole plant.
See the analogy below.

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Root Cause Analysis: The process of researching a problem / defect to discover the real
underlying cause. The real Root Cause is easiest to uncover when the defect / problem is
discovered and research immediately after it occurs. Time is the enemy of identification:
the trail rapidly gets cold. (see Five Whys and the article Total Quality Lean ).
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Rope Off Customer-Required F/Gs to Prove That They Are Not Necessary: Some
companies are contractually required by their customer to maintain a certain level of
finished goods on hand. This safety stock is meant to protect the customer in situations
where the supplier misses a production schedule. Once lead times are reduced and ontime completion performance improved, these safety stocks my no longer be required. At
one client site, we invited the customer to witness the inventory being held in his account.
We recorder the lot numbers, and then taped off the entire inventory (several pallets) with
the bright yellow police tape. We asked for agreement that if we could continue to ship at
100% performance, without breaking into this buffer, we be allowed to eliminate the buffer
requirement. A compromise was reached that allowed our client (the supplier) to cut the
safety stock requirement in half with each month of successful on-tine delivery. The
requirement was eventually eliminated.
Rope Off Freed-Up Space: or it will refill. Space, freed up via the lean transition process, is
a valuable asset that upper management can use for new products, acquisitions, sub-lease,
plant consolidation, distribution warehouse. etc. Do not let this asset slip away. We have
gone so far as to use yellow Police tape to cordon off the area. Post large notes stating
that written approval from the plant manager is required to store anything in the area.
Nature abhors a vacuum. Take aggressive steps to preserve the empty space or it will
rapidly refill!
Rough Cut Capacity Requirements Planning, e.g. Rough Cut CRP: A detailed Capacity
Requirements Plan (CRP) uses all detailed production schedules generated from MRP, i.e.
the build schedules for all levels of the bills of material.
Rough Cut CRP uses the Master Production Schedule (MPS) to calculate labor requirements.
The typical rough cut CRP algorithm uses the MRP / ERP system master schedule plus a
rolled-up bill of labor to calculate future labor requirements.

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As an example, the MPS calls for us to build 20 mens 26 bicycles in period four. The labor
requirements for period four would be 20 times the rolled up bill of labor (which would
include all fabrication, subassembly, final assembly, test, and pack labor requirements for a
mens 26 bike.)
To be reasonably accurate, Rough Cut CRP requires flat bills of material, short lead times,
small lot sizes, and little or no safety stock requirements, and works best in make to order
environments. It is generally adequately accurate in a lean organization. (See Capacity
Requirements Planning, CRP). !
Rubber Factory: Build flexibility into your capacity. Use part-timers, overtime, cross
training, move people between departments, etc. While it a very worthwhile effort to
attempt to smooth production , quick response will, at times, demand some level of
flexible capacity.
Our article, The Rubber Factory, details this powerful technique. (See Counter Cyclic
Products)
Rule or Exceptions? In most discussions as to why a lean initiative cant be done, it is
the exception that is used to justify things. Look at frequency and percentages as well as
the facts given; e.g. Weve got long lead time items from China (on 1% of the parts!).
One of the nice things about the Lean techniques is that they do not need to be used
universally. Select the appropriate techniques and then use them only where appropriate.
(See Figures Dont Lie, But Liars Figure)
Safety bag: For small component users, a very simple form of replenishment signal is to
place a quantity of components (sufficient to cover on-going operations during the
replenishment cycle) in a separate bag that includes a replenishment kanban card. The
instructions on the card advises to use these parts last and to order more once the bag of
parts has been opened. The card can even contain the necessary reorder information. The
card is provided to procurement, or the supplier, for order placement. (See Faxban)
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Safety Stock: Be Cautious. In many MRP programs, Safety Stock is treated like a priority
item, triggering expedite messages. Doing so can cause credibility issues with the systems
recommendations and lead to second guessing, or worse. (See the article ERP & Lean)
Salary Increase Matrix: This is a powerful tool that can be used to help your company
make rational and reasonably consistent salary adjustments. The logic is straight forward.
The intent is to rapidly move your excellent performers to the appropriate range of pay for
their current job description.
A salary Increase Matrix is easy to explain to your employees and is generally seen as fair.

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The management team agrees on the matrix parameters, i.e. how to pay your people based
upon their job performance and their current level of pay. Then the emphasis changes to
accurately and consistently evaluating the performance of your people.
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As an example, Slim is an outstanding employee (A performer) and is currently being paid in


the first quartile of his salary range. The matrix suggests that Slim receive a substantial
increase (10-15%) in his pay. The logic is that an outstanding performer should be paid in
the upper part of the salary range.
Similarly, Mark is an average performer (C rating) but is being paid in the top quartile of his
job pay range. The matrix suggests that he is currently being overpaid for his contribution,
and his salary should be adjusted accordingly.
Same As Except Method of Estimating: This is an excellent way to quickly, and often
more accurately, estimate the cost for a new product. When faced with the need for a
quick cost estimate, begin with a similar existing item with a known cost. Then add &
subtract for estimated differences. This method is almost always faster than a bottoms-up
estimate, and often more accurate.
Schedule Accountability, By Shift: Delivery performance demands that the schedule be
accomplished in all areas of the organization. Start with schedule completion each day.
This will then lead you to measure & improve on-time schedule accomplishment by shift.
You will soon, however, run into a problem. The typical multi-shift operation has shifts that
are back to back, i.e. one shift ends at the same time that the next shift begins. If your
process allows, it can be a significant benefit to stagger the shifts, thereby leaving a gap
between shifts for recovery, repairs, and preventative maintenance; e.g. 1st shift runs 7:00
AM 3:30 PM, 2nd shift runs 7:00 PM 3:30 AM (3.5 hr gap). Each shift can then be held
accountable to make the schedule, exactly, before going home. Instill a discipline: The
shift ends when the schedule is done. (See On-Time Completions)
Schedule Adherence; Order Entry: In most manufacturing companies, the majority of
orders come into the company during day shift. Yet, to ensure a short lead-time, wed like
to be able to produce these orders on 2nd and 3rd shifts. This requirement results in a
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philosophy of The day ends when all orders have been entered into the system and are
available for production. Stagger the hours of your order entry people. Get agreement
that the last person on duty will stay until every order is in the system (same day). As you
continue to shorten your response times, making this change will become more important.
(See Order Entry: Hours of Operation)
Schedule Randomizer: In some industries, it is still accepted practice to promise shipment
week of. Obviously, this is NOT a world class practice! Be that as it may, until scheduling
practices change, weekly schedules can cause a problem with the MRP back-scheduling
algorithms when lead times are dramatically reduced. A case in point: We worked with a
steel company that scheduled all of their shipments for Friday of the promise week. The
operations planning department had no good scheduling tools to provide credible day of
the week completions. As we reduced the lead time, and began holding operations
accountable for on-time schedule completions at the individual operation level, unrealistic
schedules began to appear. Since many products had similar routings, and everything was
scheduled to complete on Friday, workload lumps appeared at various operations.
A quick and easy fix was to apply a simple randomizer to the internal completion date. This
smoothed the completions over the promise week, and provided producible schedules.
The customer continued to receive a week of promise date, but internally the operating
and scheduling people were measured to the completion day. Needless to say, the next
obvious step is to begin providing daily ship date promises to the customer. So far,
however, we havent been able to win that battle!
Scheduling Function: Hours of Operation: We were working with a large corrugated box
producer. They had customers clambering for next day delivery. We had streamlined the
production operations to allow for extremely rapid turnaround. However, orders were
received until 5:00 PM, yet the scheduler for the corrugator went home at 3:30. With some
work-shift schedule changes, and some cross training, the problem was overcome. It was
necessary to overlap the scheduling function beyond the end of 1st shift so that all of
todays orders could be entered into the schedule and be available for production TODAY.
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A similar problem arose at a steel finishing plant. Standard practice was for production
scheduling to be done on weekdays, day shift only. However, production operations ran 24
x 7. Needless to say, as the internal lead times were reduced, it became unrealistic to
attempt to schedule production that far in advance. The schedulers agreed on new work
schedules. Schedulers were also provided with PCs and the ability to access the
scheduling software at home. This allowed for critical schedule changes to be made
electronically from the schedulers home, if needed, 24 x 7.
Additional scheduling pattern options are discussed in our article Alternate Crewing
Schedules, and our blog re. multiple shifts.
Scheduling: Upstream & Downstream From a Bottleneck: In many industries, there exist
true bottleneck operations. If the upstream and/or downstream operations are NOT true
bottlenecks, i.e. have excess capacity, then the objective is to use only one schedule; that
which optimizes the bottleneck; for ALL operations. The same scheduling sequence (also
called a line up) used for the bottleneck, is applied to as many up & down stream
operations as feasible. The end result is a Lean environment while still optimizing the
bottleneck operation.
Sequential Inspection: Have each operator check the product for quality before
proceeding with their own operations.
Heres an easy first step in establishing sequential inspection. Have every operator write
down the items that they could possibly mess up. Pass this list to the next operator as
his/her checklist. Run for a week or two, adding to and correcting the list. Then formalize
(print up, add color photos, etc.) and post at each work-station.
Sequential Pull: Many kanban systems are product specific, i.e. the kanban tells you
what to make, when to make it, and how many to make. However, a more streamlined
form of kanban, applicable in many industries, is sequential pull. In this system, the
kanban signal is generic; it tells you when to move or make a part, but does not tell you
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what to make. A schedule, or line up tells you the specific item to move or make.
The automobile assembly line and associated feeder lines are set up in this fashion. By
pulling the correct parts in the correct sequence, a complete final assembly is produced
with minimal WIP inventory, just in time. Note, that while this is by far the most efficient
form of pull system, it requires a considerable amount of pre-work. Quality and reliability
of all processes must be truly world class, as any defect or line disruption can throw off the
sequencing. (See Kanban)
Set-Up Person; New Role as Teacher: Some companies have high skill set-up operators
that are on-call to perform change-overs on the production equipment. This often causes
delays, while production operators wait for the change-over expert to get to their operation.
Weve had some huge successes by re-framing the set-up persons job to include
simplifying the change-over, and training operators to do their own change-overs, or at least
aid in the change-over. Transition your set-up people into trainers and SMED experts
(simplify the change-overs, document the procedures). Teach operators how to do their
own change over. Then elevate the responsibilities of the set-up person to include process
improvement.
Shadow Boards: Help people put things back where they go by creating a shadow board.
By putting the outline of the tool on a board, or in a drawer, where the tool is supposed to
be located, the location for a tool becomes obvious. Combining the outline with colorcoding can be even more effective.
(See 5S / Area Organization)
Sharing Equipment / Work Stations: We visited a transformer plant and noticed that more
than of the arbor winding equipment was un-manned. When we asked why, we were
told that the 2nd shift operators all had their own equipment, and that no operator could
continue the work of another. Winding was considered art, not science. The addition of
standard methods, checklists, and a 5 minute shift overlap, allowed space, equipment, and
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WIP inventory to be cut in half.


Shop Floor Control: This term is generally used to denote software & hardware systems
that are used to track, reschedule, and prioritize products that are currently in production.
Many companies have spent a considerable amount of time & money installing shop floor
control systems, and, in some industries they are an absolute necessity. Too often,
however, they simply mask a host of underlying problems: If schedules are credible, and
on-time completion rates are high, there is little need to track, reschedule, or prioritize
items in WIP.
However, when lead times are excessive; lot sizes are too large; schedules are un-realistic
(poor capacity planning and/or shop loading discipline); and accountability is lacking, SFC
systems will be seen as a necessary solution. NOTE: They will NOT solve the problem.
In most industries, if Lean is done correctly, the need for SFC is greatly reduced or
eliminated, and, in the few industries that truly do require SFC systems, their credibility will
be greatly enhanced by a lean initiative. The cost of complexity caused by these
underlying drivers can be substantial.
Shorten Lead Times by Adding Shifts: Heres a quiz: Our product requires four operations
to be performed, in sequence. Weve got four operators, each performing a different
operation. Each operation takes 8 hrs to perform. There is only one shift. Whats the
minimum lead-time? Right: 4 days. On day 1, operation 1 is completed. On day 2
operation 2 is completed, etc.
What happens to WIP inventory levels and lead times if we were to move 2 of our operators
to the 2nd shift? Operation 1 is done on day one, 1st shift. However, operation 2 now can
also be performed on day one, on the 2nd shift. Same with operations 3 & 4. The leadtime and WIP inventory levels are cut in half.
Note: we did NOT increase capacity. Four operators still produce 1 completed unit each
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day. However, by manning more of the available hours, we are able to keep the product
flowing, thereby cutting inventory, space requirements, and lead times accordingly. We
used 8 hour operations for illustration purposes. Moving a portion of your capacity to the off
shifts will have the same impact regardless of the work content.
For more information on this powerful technique, check out Making the Case for Multiple
Shifts.
Show Me: We were working in a traditional assembly plant and were about to re-arrange
some equipment. I asked that the wiring be left flexible so that future minor equipment
moves could readily be accomplished. However, the maintenance man assured me that
this was not allowable per the code. I politely asked him to please show me where the
code said this. I waited a few hours, then sought him out. As I had expected, he could not
find any such prohibition in the code.
Many constraints are perceived, habit, or hear say. Require the letter of the law be shown.
Dont be afraid to challenge convention. All too often, its being done that way because
its always been done that way!
Side-Loading Trucks: The problem with the typical rear opening truck is that only a small
amount of product can be reached at any time, and that the product flow is LIFO: Last In
First Out. A lean environment requires frequent deliveries of material to the point of use.
Thus, a side loading truck, combined with modified receiving capabilities along the entire
periphery of the plant, provides a more fitting arrangement. Material can be accessed along
the entire length of the truck, allowing material to be stored and unloaded where and when
needed.
Silence is Acceptance: A culture of continuous improvement demands on-going change.
It is difficult to make rapid progress if approvals are required for every action taken. Institute
a procedure that encourages teams to notify people of actions they intend to take. The
onus is then on those notified to raise a flag of concern. Speak now, or forever hold your
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peace! (See Just Do It!)


Similar To BOMs (Bills Of Material): If you do not have a final design, load the BOM for a
similar product into your MRP. Then evolve it as product definition firms up. The similar
to item is treated like the same as, except item discussed elsewhere. Schedule the
anticipated demand in your master schedule, and then use the system to warn you of long
lead item requirements, reserve capacity, project cash flow, etc. (See Same as, Except)
Single Handle: Once an item is in the hands of an operator, try to do as many value-adding
operations as make sense. Much time is wasted picking up, putting down, and conveying
material. If practical, arrange operations that require different small pieces of equipment in
a U shaped arrangement. The operator swivels his/her chair or walks the item through
each operation before putting it down. (See U-Shaped Cells)
Situational Approach: Just Do It vs In-Depth Study: While we are advocates of the Just
Do It philosophy, there are indeed situations that warrant a more studied approach to a Lean
transition. If the area of concern is a bottleneck, if the intended action has a potential
impact on personnel policies or could stimulate union organization efforts, if the intended
action could cause a significant / life threatening impact on the company (i.e. drilling
below the water line), if the action risks anyones safety, then a more cautious studied
approach is justifiable.
Six Sigma: A powerful analytical method for quality or process problem discovery and
resolution. Due to the amount of training required to become proficient, six sigma is often
utilized by training a small elite group of internal experts (black belts). Six Sigma is a
rigorous situation analysis process. It is quite powerful for determining and resolving a
complex process / quality problem. It is not, however, a general overall business
improvement methodology. Do NOT attempt to use it as such. (See the article Is Six
Sigma Right For Your Company?)
Slippery Floors: Heres a rather radical idea. We worked with one company that made
pillows. The product shipped in large, relatively light-weight (about 40 pounds) but
cumbersome boxes. In discussing alternatives with a safety expert, the decision was made
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cumbersome boxes. In discussing alternatives with a safety expert, the decision was made
to try slippery floors and equip all operators with rubber soled deck shoes. The boxes
were then slid to the shipping area. This was clearly seen as a superior alternative to lifting
each box to put it on a conveyor or other conveyance device (risk of back injury). Another
major advantage: there were no conveyors blocking routes; No wheeled vehicles to take
up space, deadheaded back to where needed, or stored.
Small lot, JIT deliveries, to the point of use: Receiving transactions, incoming inspection,
moving parts to a stockroom, recording transactions, picking parts, etc. are all non-value
adding functions. One solution is to evolve to frequent vendor delivery directly to the point
of use, bypassing receiving, incoming inspection, and the raw material stockroom. It is
important to recall the many pre-requisites required to reach this objective. Vendor quality
must be sufficient to bypass incoming inspection (see vendor certification). An alternate
method must be put in place to assure vendor part count delivered (see backflush). A
simple trigger must be put in place to notify the vendor when it is time to deliver (see
replenishment system). And, youll need a simple means to get the vendor paid
(backflush, line operator sign off, bar codes, fixed quantity parts containers, point of sale
terminals, etc.)
It may also be wise to re-investigate your make-buy policies . Additional flexibity and
responsiveness can often be gained by moving processes in-house where you have greater
control.
Small, Flexible Machines, Multiple Copies: There are several advantages to having
multiple small machines vs. one large mega-machine. If the mega-machine is down, all
production stops. If one of the small machines is down, partial production can continue.
The mega-machine runs one product at a time. Several small machines can run several
different products at the same time. Mega-machines generally have extensive set-up costs
(change-over between products). Smaller machines are usually less complex and lend
themselves to quick set-up. Plus, with several copies of the same small machine, it is often
possible to leave one machine set-up on a key product all the time, i.e. eliminate change
over all together!
Small machines often are simpler than the mega-machine and therefore more reliable and
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easier to fix. Mega-machines generally have a fixed output rate and crewing requirements.
Its either on or off. Multiple small machines, in contrast, can be crewed to provide
variable rates of output. Note that doing so also keeps the labor costs in line with the actual
volume required.
Note: If your operation is not already running 24 x 7, you may be able to attain many of
these same benefits by increasing the available hours of operation. This concept is further
explained in the articles Making a Case for Muliple Shifts, Alternate Crewing Schedules
and The Rubber factory.
SMED: Single Minute Exchange of Dies: As we reduce inventory, the lot size rock will
generally appear. In order to further reduce inventory, we will need to reduce production
lot sizes and thereby increase the number of changeovers. This will cause changeover
costs to increase. As a result, set-up / changeover costs must be reduced. SMED is a
proven set of techniques that allow one to reduce changeover costs. There are entire
books written on the subject.
The typical process is to form a team involving the equipment operators, set-up people,
maintenance, and an outsider or two. A standard changeover is then video taped. The
team reviews the tape, identifying and challenging all elements. Can it be done while the
machine is running? Can it be done better, faster, cheaper? Do we need all off these
screws/nuts? Can we use quick clamping devices? Etc.
In areas where no previous set-up reduction efforts have been taken, it is quite typical to
reduce the changeover times by 50%-75% with little capital outlay. (See Quick Change
Tooling)

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Solutions Looking For a Problem Beware: We see all too many lean transitions begin
with this unfocused approach. Lets do a 5S; Lets re-layout this area; Lets blitz the
stockroom; etc. All too often: 1) The considerable amount of activity and expense
involved creates local excitement, but has little or no effect on bottom line results, and/or
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2) The effort must be completely un-done when it is discovered that: the process blitzed
should be eliminated; the area 5Sed should be re-located; the re-laid out area must be
moved to fit with the overall plan for product flow, etc.
The problem is not that these endeavors are necessarily wrong. And it is certainly correct
that people will learn from the effort. The point is that there is a more efficient and
effective way of focusing the efforts.
If you wish to generate cash, reduce lead times, and prioritize your efforts in the most
effective manor, use inventory / cycle time reduction to drive the process. Reducing
inventory generates cash. It also highlights that next rock that must be attacked.
The Hands-On Groups Rapid Impact process utilizes an inventory reduction goal, along
with an on-time delivery goal, to drive the improvement process. As you progress toward
these simultaneous objectives, problems will appear. Kanban installation, SMED initiatives,
5S blitzes, NWTs, Vendor workshops, Cross training, Manufacturing cells, etc. are used as &
when needed to fix these problems. The process of driving inventory out of the system
acts to prioritize your specific actions. The specific tools, found in this article, are then
used to achieve this inventory delta objective. And, the cash generated through the
inventory reduction process will typically more than fund the cost of the transition.
Lean is about eliminating waste. Doesnt it make sense to use a lean transition process as
well?
Source Inspection: Incoming inspection is a non-value adding activity. Doing source
inspection is a stopgap measure, used until your supplier can install process controls that
assure a quality product. Typical steps include: Eliminate incoming inspection by imposing
source inspection (by your own people at the vendors site, by 3rd party folks, or by
certifying one of the vendors people). Note that the additional expense of doing this
inspection is best if it is incurred by the vendor. Doing so provides an additional incentive
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for the supplier to implement adequate process controls so as to eliminate this additional
expense. The final step is to move to process control verification, and thereby eliminate
both the source inspection and incoming inspection requirements.
Staggered Crewing: refers to a crewing pattern in which not all employees are working
the same days/week, e.g. Joe works Monday Thursday (10 hours per day), Suzy works
Tues Friday, etc. The primary purpose of such crewing patterns is to allow greater
utilization of the full work-week. Doing so allows for shorter lead times, reduced space
and inventory, and increased equipment and tooling flexibility. For more detail, check out
the articles A case for multiple shifts and Alternate Crewing Patterns.
Standardize Parts, Equipment, and Processes. We worked with a well-respected company
making a high volume electro-mechanical product. After forming a natural work team, one
of the operators suggested standardizing the screws for this product. Further investigation
showed that 16 different screw types and/or lengths were required for this one level of
assembly! The natural work team worked with a design engineer, and in two weeks
reduced the complexity down to 2 different screws.
Standardizing reduces procurement costs, complexity, and opportunity for error.
Standardizing equipment reduces spare parts requirements and improves maintenance
know-how. Standardizing processes aids in employee rotation and cross training/flexibility.
And, the impact on quality is obvious. (See Value Engineering)
Standard Work: Generally speaking, there IS a best way to do things. Involve the people
in the evaluation process, document the best way, and then teach your people how to do
it that way. Expect that their performance may fall off during the change process until the
new method has been fully learned. (See Let the Data Decide)
Station Controls (Zone Controls): A centralized location that provides all necessary
information, tools, and supplies required by the work area. This might include quality
charts, go/no-go gauges, measuring devices, clip board and calculator, photos / samples
illustrating quality criteria, production cost data, on-time completion data, vacation
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schedules, goal curves and status, area layout diagram, tooling and supply catalogs, etc.
Statistical Process Control (SPC): A powerful analytic technique for process control,
involving the frequent measurement of various product attributes to detect if the production
process is drifting out of control. It involves, as well, the analysis of process capability to
verify that the current equipment is capable of holding the desired tolerances.
In our experience, a similar but much simpler procedure is often adequate: Divide the
tolerance by 4. Consider the middle two bands around nominal as green. The outer bands
are yellow. Outside of tolerance is red. Set up your SPC control charts and actions
accordingly. (See Six Sigma)

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Steal with Pride: Many of the tools and techniques mentioned in this article originated
from previous clients. We have utilized them and/or modified them as required to serve in
other applications.
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The point is that it is not necessary to develop all the needed tricks by yourself. Take
advantage of the wealth of knowledge already out there. Attend professional society
meetings.
Send your people to workshops and seminars.
Participate in plant tours where available.
One distinct advantage of using experienced consultants is this transference of knowledge
capability: The ability to steal with pride non-proprietary tools that can be similarly
deployed at other companies and in other industries. Our 25 years of consulting
experience at over 100 client sites has provided us a depth of understanding that is difficult
to attain solely from books and seminars.
Steel Industry and Lean Manufacturing: See Metal Producers and the article Running
Steel Lean
Stockroom Location Systems: There are many methods for deciding where to put parts
within a stockroom, and there are plusses & minuses for each. A few of the common
methods are listed here: Stocking by Commodity Type will put all resisters in one location,
heat sinks in another, etc. Stocking by Part Number places each part in the correct
sequence based on its part number. And Random stocking assigns the location after the
part has been put up (first available opening).
The advantages of commodity and part number methods include ease of training and ease
of finding lost parts. The disadvantages are the poor use of space, and the difficulty in
adding new part numbers. Random location systems maximize the use of the cube
(warehouse space) but have no logical pattern and depend heavily on correct input of
location data into the system. Most effective warehouses use combinations of the above.
As an example, small parts might be placed in standardized bins in part number order. A
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card is then inserted in the bin identifying the location of any over stock that would not fit
in the bin. Large or awkward parts are stored in random locations.
Stock Rotation: Methods to assure that old stock (inventory) is used/sold prior to newer
material. The ideal stock rotation method is First In, First Out (FIFO) . Back loading, gravity
feeding, flow racks are an example technique to assure stock rotation.

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Stop the line. Fix the problem: If you truly seek a quality process, this technique is a
must. The intent is to attempt to permanently fix the process. Stop the line, identify the
root cause, and either fix it, or make certain that a clear responsibility and due date has been
assigned (Who? By When?) to fix the problem, before continuing operation. Note that
the schedule must still be completed on time. Therefore, a stop of the line will often
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require overtime. The companys willingness to incur this short-term cost to assure a longterm fix sends a clear message to the workforce regarding the commitment to a quality
process.
Walk the talk.
Caveat: As processes are linked to one-another via kanbans or other means, this task
becomes considerably more difficult to enforce. Stopping one area, will soon lead to
stopping upstream and downstream areas as well. There will be a temptation to exceed
the kanbans and only work overtime in the affected area. Occasionally this may be justified.
However, be very cautious as to the message being sent to the troops. Each exception
makes the next exception a little easier, and can rapidly lead to a loss of discipline. (See
failsafe) (See One Perfect Unit Day)
Supermarket: A central area to draw parts and/or subassemblies. Supply of parts to the
supermarket is typically kanban controlled. This method is utilized in circumstances that
make sequential pull impractical such as the need for immediate off-the-shelf delivery.
Supplier Development: Few companies can become truly world class without the
assistance of world-class suppliers. The typical process involves 1) Evaluate your current
suppliers. 2) Eliminate the obvious poor performers. The typical goal is to have no more
than 1 or 2 suppliers for each commodity type. 3) Hold a supplier day kickoff meeting.
Explain what the company is trying to achieve, and your expectations of your suppliers.
Establish key measurements and set goal curves for your key suppliers. 4) Assist in supplier
training where necessary. 5) Measure all suppliers (lead time, on-time delivery, quality,
etc.) and provide on-going feedback. 6) Take corrective actions as / when needed.
Phase two: Work with all key suppliers to reduce or eliminate the non-value adding
activities typically associated with procurement: Product packaging, freight costs, receiving
transactions, incoming inspection, stocking, accounts payable, record keeping, etc.

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One of our clients posted all vendor performance charts right in the lobby for all to see.
For additional information, see our article Lean Supplier Development.
Supply Chain: The total sequence of process steps and supplier companies involved in the
production and sale of an end item. Most products have multiple supply chains: one or
more for each major commodity used in the final product: e.g. sheet metal, electronics,
hardware, etc.
Needless to say, every companys total product cost, quality, and delivery performance is a
summation of both their internal operational excellence, as well as that of their entire
supply chain. For this reason, world class companies go through an extensive selection
process when choosing their critical suppliers.
Some industries, such as automotive, have evolved to the point that it is literally one
companys supply chain vs. anothers.
A complimentary strategy is Vertical Integration: It can substantially streamline your supply
chain IF you can pull it off. This topic is substantive and will be discussed further in an
upcoming article. Suffice it to say that autonomy, measurements, proprietary processes, the
threat of unionization, etc. are all critical considerations.

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Takt Time: This concept is based on the idea of leveling production for efficient use of
your resources. The sales requirement is divided by the planned work hours to arrive at a
required rate of production, e.g. we need to produce one automobile every 60 seconds.
All operations are then targeted to achieve this production rate. This approach has
considerable practical application in industries where demand is level (e.g. government
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contracts) or where the company is running at maximum capacity.


However, it has been our experience that this concept, while a worthy objective, is not very
practical in many industries. With very few exceptions, customers do NOT buy linearly, i.e.
the takt time is constantly changing. This problem has been alleviated in some industries
(automotive, etc.) by artificially flattening demand. They accomplish this by establishing a
production schedule for some fixed period of time (a week, a month). Needless to say, if
actual demand is varying, and our production schedule is fixed, we must depend on finished
goods inventory to take up the difference. This clearly violates the PULL concept of
making something only when the customer requests it. As we shorten lead times and
become more responsive to actual customer demand, the concept of takt time becomes
less relevant. Instead, the emphasis needs to be put on flexibility and agility. (See Rubber
factory and the post of the same name)
Target Costing: A design / marketing approach whereby the design team is provided cost
and feature tradeoffs. Cost targets are set for the various new product performance levels
desired. The challenge is for the design team to provide viable new product configurations
and production methods that will allow the product to be produced at or below the targets
set.
Teachable Moment: People learn best when they have a pressing need to know.
Education and training is much more effective when done at a time when people can
immediately use the information. The Lean transition, when correctly done, lends itself to
this efficient form of training. By reducing the inventory throughout the system, problems
that were previously hidden will now become painfully apparent. The ideal time to teach
the applicable technique to overcome such a problem is when this problem has become
the obstacle. This is the teachable moment when your training will be most effective.
Teach the concepts and technique/s, then immediately go out and apply them. Learn and
do.
Teams for Teams Sake. A large transformer plant had spent a sizable amount of time and
money training employees and forming teams. The teams worried about lots of important
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issues, like what radio station to pipe into the plant! When we asked the general manager,
what results have you attained? Dead silence! They had spent a heap of money, and 18
months of time, forming teams and teaching their employees teaming skills. What they
had NOT done, was create an environment where teaming skills were REQUIRED! A Lean
transition process removes the inventory that hides waste. This inventory reduction process
does two things: 1) It removes the buffer (inventory) that separates operations and thereby
forces inter-dependence. And 2) It exposes meaningful problems that the natural work
teams need to address. Employees are forced to communicate and coordinate like never
before. Teaming efforts become focused on the problems that the inventory reduction
process surfaces.
The point is: Dont form teams just to form teams. Drive out the inventory, and natural
work teams will automatically occur. Teach the teaming skills as/when the need arises.
Not before. This issue and others are discussed in more depth in our article How to Screw
Up a Lean Transition.
(Also see Teachable Moment)
Test a New Layout By Removing Excess WIP: Rather than wait until the level of WIP can
be worked down to the target levels, we have found it practical, in some applications, to
remove the WIP, test out the new process, and then slowly feed back the WIP to remove it
from the system.
Thank You Note in the Local Newspaper: A client of ours ran into a serious procurement
problem.
However, their key supplier was able to jump through some hoops and bail our client out of
their jam. As a way to show their appreciation, our client placed a large Thank You ad in
the local newspaper in the suppliers hometown. Needless to say, it was warmly received
by all.

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When a salesman from the supplier called our client to say thanks, he was told Wait til you
see the ad we have if you screw up!
Remember: Companies dont do things; people do. A little appreciation can go a long way
in achieving sustainable world-class performance.
Theory of Constraints: The idea is to focus all efforts on improving the output of the
bottleneck. And as such, it is a simple, fundamental, and powerful concept. As an
example, we were working with a steel mill client that had a true bottleneck at its cold
mill. The first thing we did was to optimize the cold mill rolling schedule (the sequence
in which the various coils of steel would be rolled). We then pushed that identical
schedule, to the extent possible, upon all upstream and downstream operations. This
schedule reduced the efficiency of some non-bottleneck operations, but increased overall
efficiency of the mill, while still allowing steel to flow rapidly through the entire process.
Like so many other good tools, this one is also subject to abuse. TOC becomes pretty trivial
in environments that are not truly capacity constrained. The constraint, per the literature, is
now lack of sales. Not much of a revelation! (See Bottleneck, Optimize the Whole and
Scheduling: Upstream & Downstream From a Bottleneck).
Theory X / Theory Y: Two contrasting management theories / philosophies based on the
1960s work of author Douglas McGregor. Theory X believes that people dont want to
work and will avoid it unless forced (the cattle prod approach!). Theory Y says that people
have an innate desire to achieve and will seek responsibility if the environment is
supportive.
We have been working with companies since 1988, and weve seen both extremes. We
have seen companies abuse Theory Y: They provided no guidance as to what the company
needs to achieve, no time frames for achievement, and no accountabilities. And, weve
worked in companies that were so Theory X that people were afraid to make any decision,
and would wait for specific direction for the most mundane of tasks.
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Theory Y does not absolve management of their responsibility to set direction and provide
clear objectives and accountabilities. And, Theory Y is situational: Responsibility must be
doled out as the group / individual has grown to accept and handle it. In most
organizations, the best balance has proven to be: Management decides what needs to be
done. Employees are provided considerable latitude in HOW those objectives are to be
achieved.
Time Lapse Video: One of our clients had traffic flow problems in their facility. We
mounted a video camera near the ceiling where it could see just about the entire shop floor,
set it on time lapse, and let it run for a full shift. The next day, it took less than an hour of
watch the tape to clearly identify the issues, and generate a list of solutions.
Top Management Advisory Council, TMAC: A Lean transition impacts all areas of the
company, and as such, the effort is best led by top management. The TMAC is top
managements forum for monitoring and controlling the lean transition process. Team
members typically include the CEO and his/her staff. The TMAC reviews the progress that
has been made vs. the goals that they have set. We recommend that these review
meetings be incorporated into the normal weekly staff meetings. This regular meeting,
along with the appropriate presentation of the goal curves and actuals provides the control
mechanism needed for top management to truly steer the lean transformation process.
(See Goal Curves and Cause and Corrective Action)
Total Cost of Purchase: A measurement of purchased items that, in addition to the
suppliers price, includes the associated hidden costs: Transaction costs, Freight, Detrashing (getting rid of packaging material), Receiving, Incoming inspection, Stocking,
Record keeping, Pulling the material from stock, Shrinkage, etc.
In general, Total Cost of Purchase is a far superior measurement than standard PPV (Purchase
Price Variance). Lean Manufacturing focuses on reducing the Total Cost.
Total Productive Maintenance (TPM): AKA Preventative Maintenance, Scheduled
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Maintenance. The concept of preventing equipment failure or downtime by doing all


necessary lubrication, parts replacement, etc. as and when needed, i.e. prior to failure.
There is an entire discipline related to this subject, and multiple excellent books that
expand on the details.
Total Quality: Form, fit, and function are no longer sufficient criteria for quality. A quality
product is just the beginning. It must be the right product, complete, and with all the
requested options. It must also have reliability, cosmetic appeal, attractive packaging, ship
with the correct paperwork, to the right location, to the attention of the appropriate person,
at the right time. The order should ship complete. The billing should go to the correct
address, and have the correct price and terms. Today, the term quality must be expanded
to encompass all aspects of the process that effect overall customer satisfaction.
For a more in-depth discussion of the linkages between Lean Manufacturing and Total
Quality see our article Total Quality Lean.
(See Inventory & Quality)
Total Quality Lean: The philosophy and set of Lean techniques that are fundamental to
World Class quality performance. Lean methodology minimizes inventory, and thereby,
lead times throughout the value stream. Minimal inventory means minimal defects when a
process problem does occur. Minimum lead times also mean that a defect will be quickly
discovered, thereby aiding in identifying the root cause. A more thorough explanation can
be found in the article Total Quality Lean
Multiple Lean techniques provide additional robustness to the entire quality process:
Sequential inspection, failsafe devices, stop the line / fix the problem, etc.
Total Quality Management (TQM): Systems / methodologies used to assure that internal
and external processes will provide Total Quality. (See Total Quality)
Training: Do a Chapter a Week: There is an incredible amount of Lean and related
information available today in the public domain. The problem is no longer availability, it is
getting the time and commitment to read and absorb such information. One simple, yet
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powerful technique is to ask people to swallow the elephant by reading one chapter each
week. Select some good books / articles and schedule a regular weekly discussion session
to talk about the weeks assignment. Use targeted questions, e.g. How is this concept
applicable to our environment? A variation of this approach is to provide audiotapes / CDs
of the material. This allows employees to read the assignment while in the car during the
commute to work.
Trial Kitting: A software routine, provided in most MRP / ERP systems. It is a very useful
tool. The idea is for the computer to, on paper, pull the parts for all scheduled
assemblies, to see what kits can be pulled complete and what parts shortages affect the
other assemblies. Typically, the software will identify shortages, by assembly, and show
the promise dates for each shortage. It allows management to see what can actually be
build from the existing on-hand inventory without having to physically pull parts.
Two-Bin System: A simple form of kanban control. Parts or assemblies are kept in two
bins (or bags, or boxes, etc.) When one bin empties, it signals the need to buy or make
more. The 2nd bin provides parts to cover demand during the replenishment cycle. (see
Replenishment System) Note: There is a simple but powerful graphic demonstration of
a two-bin system available on our sister site, tpslean.com.
Under-Capacity Planning: The general rule is to never book the plant to 100% of
demonstrated capacity (24 x 7). Some reserve capacity is needed to assure delivery
performance. On-time delivery must be considered an absolute requirement. Reserve
some capacity for the unforeseen happenstance. Pull work forward if needed so that there
is no capacity lost if things go well. (See Opportunity Capacity)
Unit of Measure: An inventory control term that designates what kind of measurement is
being used for each item (SKU). Typical Units of Measure include each or piece meaning
a count of the number of individual parts / units; Units of length (feet, meters, etc.);
Volume Measures such as gallons, liters, etc.; Weight, such as pounds, tons, etc.
A Unit of Measure is designated for every part / Stock Keeping Unit (SKU) and is generally
found on the Part Master File in a companys ERP system.
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Unit Optimization: A measurement and reward system that encourages optimization of


individual operating units / departments.
The typical measurement is the unit cost (or labor hours per piece) required to get a product
through each production unit. Management and operators are measured and rewarded for
producing product through their department at the lowest processing cost. In the metal
producing industries it is commonly referred to as Tons per Hour.
Using a unit optimization reward system is almost always an obstacle to overall company
optimization and inhibits the successful transistion to a Lean Operating Environment. The
reasons are fully explained in our post How to Optimize your Entire Plant. This is one of
the measurements that youll likely want to get rid of.
U shaped cells: Removing the cues from between operations allows equipment to be
located next to one another. Arranging such equipment in a U shaped cell provides several
advantages. Product begins and ends on the same aisle. The shape enhances
communication. And, a U shaped cell minimizes travel distance, i.e. one operator can
walk the product through the cell if / when needed. NOTE: There is an illustration of a U
shaped cell at Cellular Manufacturing. (Also see Single Piece Flow)
Value Add: Those process steps that the customer would be willing to pay for. Most
production steps are value adding. Non-value adding steps are things that do not alter the
fit, form, or function of the product. Examples of non-value adding activities include
receiving, inspections, transaction processing, transportation, de-trashing, product
movement, storage, etc. One objective of Lean is the reduction / elimination of all nonvalue activities. (See Waste)
Value Engineering: An engineering effort focused on improving existing products. The
term is generally used to denote a focus on cost take-out while retaining product
functionality.
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Value Engineering: Providing the Time and Resources. We worked with several
Engineer-to-Order clients. In each we heard a similar theme: We dont have time to do
any value engineering and in the very next breath we hear We always keep a backlog of
engineering work to assure are engineers are efficient.
Think of the engineering workload as a sine wave with peaks and valleys. Most companies
staff the engineering department to handle the average workload. Backlog buffers the
peaks and valleys so all engineers are pretty much constantly doing design engineering. If,
however, you man at a level closer to the peak load, backlogs can be kept low (quicker turn
around of designs) and the idle time can be used for value engineering, product
enhancement, new product development, etc.

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Value Stream: The entire chain of participants, from basic raw material to the ultimate
consumer. It involves suppliers, customers, wholesalers/distributors, retailers, and
transportation steps. Since the ultimate consumer price is a function of the cumulative
costs of the entire value stream, streamlining it becomes critical. In many industries, the
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competitive environment has boiled down to one industry leaders value stream vs. another.
On a more narrow perspective, value stream is also used to denote the entire stream of
activities required to move a product through the internal processes and activities within a
company.
Value Stream Mapping: The process of flow-charting all activities required to move a
product through the value stream. The focus is then on identifying and removing/reducing
the non-value adding activities.
Vendor Certification: The process of validating that a supplier has put in place all
necessary process controls required to assure that their products will arrive fit for use at the
customers site. The purpose is two fold: verify quality so that incoming inspection can be
eliminated, and assist your suppliers with process control thereby reducing costs and
increasing reliability.
(See Source Inspection)
Here is a vendor checklist to help start the process.
Vendor Stocking Programs: Have the suppliers provide components without the need of
the customer to place an order. This powerful technique can effectively remove/reduce
several categories of non-value adding activities: requirements planning, procurement,
receiving, receiving inspection, stocking, etc. We have had several clients gain 100% of a
new customers business while charging higher prices! They did this by eliminating many
of the customers procurement costs, thereby reducing the total cost of purchase for their
new customer.
Vertical Integration: Combining several, typically separate, processing steps within a
company. For example, many electro-mechanical assembly companies will buy their
fabricated parts and/or electronic subassemblies, from outside suppliers. A vertically
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integrated company would produce such component parts in-house, either at the same
facility, or at a separate location.

The advantages can include the elimination of the suppliers profit, reduced packaging and
transportation costs, spreading of overhead, etc. From a purely lean point of view, vertical
integration can accomplish the elimination of a considerable amount of non-value adding
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activities.
There are, however, many disadvantages that must be considered. These include the likely
need for expanded areas of expertise (loss of focus), a possible lack of process and patent
rights, introduction of internal transfer pricing and associated accounting ramifications, and
the increased risk of being targeted for unionization.
Video Kanban: How do you get the replenishment signal to a distant supplying
department? Using cheap TV cameras and monitors can greatly enhance a simple
traditional kanban system. Position the camera and monitors such that your fork truck driver
can see the kanbans as well as any comments/notes via flip chart or white board.
Visible Data: Keep all pertinent data clearly visible at the work area: schedule, quality
criteria, inventory lever vs. goal, on-time completions vs. goal, cross training matrix, notes
from the previous shift, tolerances, work instructions, sample boards, etc. (See Problem /
Idea Charts)
Volume Discount: See Column Pricing
Wall of Fame: Employee recognition is a powerful motivator. One of our clients posted
photos of the various work teams, their names, and short story of their successes on a
corkboard in the cafeteria where all could see it.
Walkie-Talkies for maintenance operators: On large pieces of equipment, it is often
essential for the maintenance operators to communicate sight unseen (for both efficiency
and safety). Hands-free walkie-talkie sets can be a helpful tool.
Walk the Talk: What you say will be of far less impact than what you do. Your people will
watch you closely to see if you really are willing to do as you say. There will be incidents
where making an exception to the principles may make good business sense. However,
make sure you weigh the impact on perceptions when making any such decision.
Walk to the Work Station: This technique works well for infrequently built assemblies.
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Workstations are set up with all parts needed to produce one or more various subassemblies. Kanban signals are used to indicate when a sub-assembly needs to be
replaced. Then an operator walks to the station and produces it.
War Room / Strategy Room: We try to equip at least one meeting room with the typical
tools needed for productive team meetings. This includes things like plant layouts, goal
curves with current status, computer/s with access to the company data base and the
internet, telephone with speaker, flip charts, white boards, plenty of markers, masking tape,
note pads and pencils, scissors, and a projector.
Ideally, this room is dedicated to the lean improvement process so that the charts, notes,
layouts, etc. can remain on the walls between meetings.
Waste: Anything that does not add value, from the customers perspective. Ask the
questions: Would the customer pay extra for us to do this? Would the customer care if
we eliminated this activity? Constantly push to minimize / eliminate all non-value adding
activities from the entire value stream. Note that there are likely going to be certain
activities that still must be done that do not add value. (See Value Add)
What Would You Do If You Were In Charge? I recall, early in my career, complaining to
my boss about how this and that were screwed up. He asked this question. What would
you do if you were in charge? I told him several things that Id change. Then he said So
why dont you change them? Go see the appropriate people. Take the time to present
your case. All good advice. (See 90% of Authority is Assumed)
Who, By When. Make this a mandatory meeting procedure. Try not to leave an item of
discussion without attaining: Who? Is to do something, and: By When? Is it to be done.
Record each commitment. Follow-up. Enforce Accountability. NOTE: There is an
illustration of a simple visual recording device at Problem Idea Chart. (Also see
Doneness Criteria)
Work In Process / Work In Progress (WIP): The total inventory inside a manufacturing
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company is typically divided into three major components: Raw Material, Work In Process
(WIP), and Finished Goods. WIP, the Work In Process portion, is that material that has begun
work, i.e. it is in process of being transformed from raw material into a finished product.
During the WIP process, the product (or job) will acquire labor (and shop overhead) in
addition to the value of the raw material.
In practice, WIP is the designation of material that has been issued to the shop floor (often in
the form of a kit). It is no longer considered WIP when it is completed and closed to
finished goods.
From a Lean perspective, WIP is extremely important. It is the area over which we have the
most control. The amount of Work in Process directly affects the time required to get a
product through all manufacturing processes (lead time). It hides defects and delays their
discovery. It adds complexity. And it hides scheduling and process problems.
Pressure to reduce WIP can be used to force a culture of continuous improvement..
Workplace Layout. Utilize all 3 dimensions. Some companies have effectively used
pallet racking over the workstation as a place to store point of use inventory. Take the time
to look above and below work areas for needed storage.
World Class Manufacturing: A general term encompassing lean and all associated
disciplines to describe best in class performance in all areas. Id highly recommend
Richard Schonbergers classic book World Class Manufacturing
Zero Defects: A quality initiative based on fail-safeing all processes. The premise is that
all defects are related to flaws in the process, and that it is theoretically possible to create
processes robust enough to literally eliminate defects. (See Fail Safe)
Zero Inventory: An earlier name for Lean Manufacturing. See the excellent book Zero
Inventory by Bob Hall.
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Note: For Tools in the A L Range, click here.

As a company, we need to be faster in all kinds of waysfaster to decide, faster to


choose, faster to act. We need to take more risks, act on less perfect information.
Worth Magazine 2000/02

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