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August 5, 2002
Lean Manufacturing for Lower Costs
by Bob Utech, Powder Visions, Brooklyn Park, MN
As a consultant, I recently went to a job shop that needed some assistance. As our conversation continued, the manager to whom I was speaking with told me that he was concerned about the quotes he was producing. He said that he could not believe how low he had to go to get business. He even told one customer that he would have to go out of business before he could reduce his prices to where the customer thought they should be. Unfortunately, that's what's really happening to many shops throughout the U.S. Lately, I hear all too often about companies that are failing. Some have been in business for many years. What went wrong?
Well, the first thing to remember in business is that the customer expects 3 things. They are:
Quality = It guarantees customer satisfaction.
Service = Customers expect it.
Pricing = Must be competitive or the customer will go elsewhere.
If any of the above are missing or don't meet your customer requirements, you will have problems and possibly lose the customer or worse your business. All of these items are part of today's Lean Manufacturing criteria and can be looked at with critical attention.
By looking at manufacturing without waste (Lean Manufacturing), other factors such as facility layout, excessive setup times, incapable processes, poor maintenance, uncontrolled work methods, lack of training, lack of organization, lack of supplier reliability, lack of accountability, and/or not communicating can be added costs to you. These costs are then delivered to your customer/s. They do not want to pay for this cost.
When a company's deadline looms and the parts are far from ready, workers often stay overtime to "rush" through important functions. It is at these times that workers tend to skimp on testing and quality assurance to get a product out the door. Then a company must resign itself to customer complaints and frayed nerves. It is a never-ending cycle that always seems to have the same pattern of never having enough time to do things the right way. Still, customers continue to want faster service and competitors are offering to deliver it.
Half of the causes of unnecessary delays that a firm may not have paid much attention to such as incompatible tools and overly complex production processes are simply a matter of wrong priorities. Ultimately, a company should design its processes to maximize efficiency. This is what lean improvement is really all about.
The optimal process is one where each step flows at the same speed, like boxcars in a train, rather than having each car go as fast as it can, like cars on the highway. Having everyone go as fast as possible can be more harmful that good, because people end up getting in each other's way.
By attacking the root causes of flow problems, a company can improve its quality, delivery schedule, and pricing permanently. Dealing with causes instead of symptoms saves money and improves product quality. The techniques are not hard. Simply apply basic principles in a methodical fashion, be open to new ways of doing work, and remember that your competitors are constantly striving to be faster. --BU
quality system and saving for the technology change
by Tom Pullizzi
In the order of importance, I would place the items in the list like this:
Maintenance which is good enough to prevent breakdowns, but bad enough to increase the scrap rate rightly falls into the quality system, such as QS-9000.
Sometimes, a supplier of a niche market can be surprised by the fact that he is no longer competitive because of a failure to benchmark his production system with others in closely related industry.
An example of this might be a printed circuit board shop who supplied 6 mil lines and spaces for 25 years to a captive military shop, only to find that the technology has gone to surface mount and they can no longer have a market for their product. By keeping track of what is going on in the industry, and by reserving some percent of profits for capital equipment each year, you will be able to switch to the new technology. Without reserving some profit, it will be impossible to fund the cost of capital for a technology change with one year's profit, and the company will not survive -- TJP
Third world status or bust
It's too late for an esoteric academic analysis. US Industry has been carpet bombed into submission by greed and bad Government and to suggest it is our own fault is to be out of touch with the realities of the business climate these days. The manufacturing base of the United States can't compete with countries paying slave wages all down the process line regardless of whether or not they execute their business plans flawlessly- PERIOD. No way, no how. Many of us retooled during the 80's and I'm glad we did. It was vital. Those who didn't are gone already. But unless our Government sees that their policies are nothing short of selling the family jewels for a night on the town then we are watching the demise of the US as a world economic power and we will only be kept alive by the rest of the world much the same as a drug dealer protects his junkies from overdosing: so as not to lose his cash cow.
The golden goose was killed for a single meal not because we were bad stewards of business but because of the stewards of our country.
We are heading for second rate status because of them. Not because of a couple of tactical misfires on the part of American businessmen. -- FZ
The Best Air is Near the Floor
Thanks for putting it better than I've been able to, Frank. Yes, smart approaches like lean manufacturing are helpful . . . but are they like telling people trapped in a sunken submarine: "Go Lean and your air supply will last longer"?
Virtually every major corporation is moving all their new high tech manufacturing to China, keeping their dilapidated American plants on a death-watch no-investment schedule as unemployment soars, wages plummet, and growth is negative despite the Fed dropping the interest rate to zero. The only money made in the last decade was via soon-to-crash ponzi schemes (Enron, Madoff, and a thousand others), and each of our tiny grandchildren comes into the world owing $50K and counting.
So, at this point in our history, as we rush to relocate the arsenal of democracy to China, and put condos where our factories used to be, is practicing "lean" really vital, or is it a distraction little different from learning to fiddle well while the country burns or arranging deck chairs while the ship sinks?--TM
Your article really hits home. I am amazed at all the fancy titles and programs that are making a few people wealthy but miss the real mark. What ever happened to just doing the job right the first time and treating your customers with respect.
I spent 20 years in the US Air Force, after my separation I was knocked down by the degree of ineptness that most business operates. As an example safety is treated like an after thought instead of making it part of the task. Training programs are non-existent and marginally adequate in most companies. And maintenance is by far one of the biggest opportunities for a real impact on the bottom line but is frequently viewed as a necessary evil.
Well I think if I go out and hire me a black belt to deal with my "sick sigma" and a couple of PhD's to take care of my TQM I am certain everything will be better. --TW
<email@example.com> - Ottawa, Canada
I agree with you, trends & catch words hold no weight; and without realizing it, all the items you mentioned fall under lean thinking which is why it is changing industries, hospitals and even the military.
- Respect for People is part of the foundation of Lean, as is safety, and focusing on the customer/end user.
- Higher levels of training are found in lean organizations, as is worker retention, and operators perform more maintenance themselves and have direct input.
- There is heavy emphasis on "doing the job right the first time" as it reduces rework (a waste).
You are correct on all these items, and companies are learning to see what you already know - which is driving the adoption of lean practices in all industries.
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