Monday, January 28, 2013

Is there a Lean way to measure productivity?

Hello folks, I wanted to share my lasted post from which is Michael Balle's website (author of The Lean Manager and The Gold Mine)

The question of the moment is:

Is there a Lean way to measure productivity?

As the ole’ saying goes “you can lead a horse to water……”, well you can give a person a measure but you can’t ensure it’s going to be totally value added. I think most people understand the concept of managing by the numbers or objectives it’s more common than not; if you tell me what you need and you are my boss then I will normally do what is necessary to get you that number especially if it’s tied to my performance evaluation, bonus, wage increase, or promotion (*note just because I meet numbers doesn’t always mean I deserve a promotion). I see this very often in organizations and what is amazing is people will find a way because we have been conditioned to be result driven, it’s our human nature really; the problem lies when we are asked to sift the sand to see if there is any gold there—most often there isn’t.
As always I draw from my experience and my valuable teachings from my Japanese trainers at Toyota (TMMK). I had the very fortunate opportunity to be hired before we actually ran saleable production, this timing gave me the opportunity to see how all the components (thinking) came together to determine how we measured how efficient we were in our processes while bringing the waste to the surface in order to improve and meet customer need. By doing business this way we weren’t able to mask problems so easily like many organizations do without really knowing that’s what they are doing, it’s years of conditioning “that’s how we’ve always done it!”. I often hear folks say to me, “well those processes were easy for you to do because you had a green-field situation, but we are already established (brown-field) it’s very hard to implement that infrastructure or cultural thinking” in an existing workplace. Well, I call…… I will let you be creative there. If you have time to give me ten excuses why you can’t do it (usually leadership); then to me, you can use that time more wisely and begin to look at the order to customer process and ask yourself; “how long I can sustain this current thinking we use in today’s challenging market without knowing what is hemorrhaging out our door?” It truly is scary when you do some cost translations to your key performance indicators.
Some of the numerous lessons I learned from my trainers was to understand first and foremost what does the customer need from our organization, and how does each process work to meet that. So in our case we referred to that as our “takt time”, (this was a German term actually not a Japanese term), we needed to know how fast the customer was pulling from us (this can be any service, output or product). This suggests you may have to involve other departments within the organization like sales, purchasing, engineering, and suppliers. . Was all this easy, no! Did it take discipline and accountability from our leadership, yes!
In our case we looked at it on a monthly schedule based on the past 3 month average. This gave us the information we needed to understand another key component which is machine or process capacity (cycle time), basically what are we capable of? If we aren’t capable to meet what the customer needs then should be a red flag, most organizations can’t tell you this much they just run wide open and stock inventory which looks really good on paper if that’s what you measure.
So it’s important to understand as an organization to be able to differentiate cycle time and takt time. Cycle is what it takes your process to meet the takt time (customer), they do not necessarily have to be the same based on certain factors (leveling, mold or equipment changes). In my experience working in the Plastics department we had factored in mold change time so our cycle time was actually faster than takt time to accommodate for “planned” downtime. It’s also crucial to perform production capacity studies for each process (equipment/machinery), again you must know production capability to recognize gaps to the customer need. **Please note there is a difference between total capacity; meaning I can just run the equipment 24/7 (if you are running to total capacity as the norm then common sense will tell you there will be problems meeting customer need), versus process capacity which can be a normal working day time requirement.
If you were to create an ideal state you would want to know what your customer pull is, and then purchase the specific equipment that meets that need (cycle), but always be aware that even if I meet the ideal state today, tomorrow that may change. So built in to our production system at Toyota was the ability to adjust when the customer demand changed either way, we had to build in flexibility in our processes in order to remain competitive and not pass cost onto the customer. We did this by always understanding takt, cycle, capacity and manpower for every process. Most do not have that luxury of knowing the answers to all the questions above, they may be just deciding to join the Lean journey perhaps, so then it’s time for them to grasp the current state and understand where is the waste, how can we kaizen in those areas, and what other options are possible to effectively meet the customer (manpower, equipment upgrades, or outsourcing to name a couple). If this is the journey you are going down then it’s important to have leadership on board.
Once the takt, and process capacity are understood then it’s time to develop standardized work to assist in determining the manpower necessary for production needs. Each process knowing its capability must have standard work that involves specific steps with times to complete the cycle time. After these are developed then Job Breakdown sheets are created for the key points and reasons in order to use Job Instruction training (JIT/TWI) so each person is able to fully understand expectations so they can see abnormality at a glance and recognize potential improvements as they do the process each day.
So the tool we used to help visualize the cycle time, equipment involved and standardized work was the work combination table. This was how we would know what the machine is doing and when, what the worker was doing and how much time per step, along with any walk time involved to fully see the complete cycle, this was the benchmark for future kaizen. This was done for all processes that created outputs, when you think about it, how you can do business effectively and sustain for the long-term and be flexible without understand these key components? Without them you definitely can’t measure how you are doing based on the customer’s expectation of you and be flexible to their ever-changing needs.
So what does all this mean at the end of the day? So for me as a team leader and a group leader in the organization I needed to know on an hourly basis where I was against the standard, so I had a “plan versus actual” board for each process. This visualized what I did each hour, factored in downtime we had that could have been equipment related, training related, or andon pulls etc. We also had a variable called “wait kanban”, what that meant was the Assembly shop we were providing parts to had downtime which in turn didn’t allow them to return their carts for replenishment (pull system), so instead of continuing to run and “stack” parts, we stopped. This time was not calculated as downtime, but “wait kanban”, which didn’t go against our production efficiency, it was how we did business (TPS), but knowing everything above was necessary to extrapolate all this information. So after our shift each day I was responsible for a daily report to calculate productivity for our group which contributed to a department need; which supported the plant need. This report factored in our capability, our run time, downtime, repair, scrap, delay work, wait kanban, and supplier/vendor shortages. This gave us our daily “parts per hour” efficiency rate, which we based on the expectation which gave us our productivity rate for the day. We knew every day where we fell short of the standard and what we were going to do about it the next day to try not to replicate the same problem (PDCA). This was considered grasping the problem situation or the first step of problem solving. So I often tell folks our infrastructure we had in place always allowed us to grasp the situation or give us a problem awareness at all times because we knew what was happening versus what should be happening based on Assembly pull which was determined by the customer.
Every day we managed to the customer need not a number pulled from a hat that met an objective that looks good on paper short term. If a person doesn’t understand daily expectations based on takt time, cycle time, production capabilities, and standardized work then they are just haphazardly running till the next shift comes in to take over (vicious cycle), not sustainable for long-term growth, nor can you ever understand how to improve. Although I’m describing somewhat of a manufacturing setting this thinking can be applied in any industry. I always ask folks who tell me “that works great if you make cars”, I reply by asking them if they have the 3P’s – Do you have processes? Do you have people? Do you have problems? Then this thinking can be adapted if services or outputs are being created and a customer has an expectation.
Until next time,
Tracey Richardson

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