"Batch of One" Thinking
The objective of applying Batch of One thinking is to streamline the flow of your products or services to meet the exact customer needs in terms of customization and timing. Basically, what would it take to make one at a time. Here are some of the principles...
1. Processing equipment, actions, and/or procedures for making One unit are grouped together to improve flow and reduce time/movement between process steps.
2. Separate the person from the equipment or the operation. What if one person can make the whole product and moves down a line of equipment...no waiting between steps, reduced cycle time, no inventory. This applies equally to administrative processes.
3. Requires workload smoothing...a rethink. If your operation is labor intensive, can you get additional equipment to set up each person to make "one" from start to finish.
The value of this thinking is to explore possibilities! You WILL change workflow, reduce wasted time between steps (process time), reduce paperwork tracking of steps, reduce waste in scheduling, and reduce inventory (the root of all evil) by applying Batch of One thinking.
To succeed, requires each operation to run reliably (that's a good thing), requires reductions in setup time/cost and maybe even dedicated setup on machines.
This should not be taken to extreme. It doesn't make sense for one person to make a car from start to finish, but maybe one person should do everything to assemble the dashboard insert. Batch of One thinking is a mental tool and drives real cost savings and efficiency improvements as the barriers to success are revealed.
This is one of my favorite concepts. Please reach out to me in a comment or email if you want help thinking about this in your operation.
Wednesday, March 18, 2009
Thursday, March 12, 2009
Business Builder Bob - Just-in-Time #6
The Value-Add Viewpoint:
Do Only those things that add value to products and services...as judged by the customer!
The value-add viewpoint helps us pinpoint operations that add value and more importantly, those that do not. It is a great way to identify improvement opportunities.
The value-add viewpoint can be applied by small groups, whole departments, or between different functional areas.
The value-add viewpoint is based on the concept that we only do those things that add value and we vigilantly identify and eliminate the ten wastes to provide a "new set of glasses" for judging our business practices and processes.
A good way to start walking the talk is to take a tour of your operation with this "new set of glasses". Make a list of all wastes and any include any nonvalue-added operations that you observe. This is your new improvement list!
Bob Tetu
Business Builder Bob
Do Only those things that add value to products and services...as judged by the customer!
The value-add viewpoint helps us pinpoint operations that add value and more importantly, those that do not. It is a great way to identify improvement opportunities.
The value-add viewpoint can be applied by small groups, whole departments, or between different functional areas.
The value-add viewpoint is based on the concept that we only do those things that add value and we vigilantly identify and eliminate the ten wastes to provide a "new set of glasses" for judging our business practices and processes.
A good way to start walking the talk is to take a tour of your operation with this "new set of glasses". Make a list of all wastes and any include any nonvalue-added operations that you observe. This is your new improvement list!
Bob Tetu
Business Builder Bob
Monday, March 9, 2009
Business Builder Bob - Just-in-Time #5
The only Situations where inventory may be needed:
1. When there is a long distance for products to get to the customer, it may be necessary to have a local warehouse to meet quick turnaround requirements for customers.
2. If customer demand exceeds the capacity of your manufacturing operation.
3. Situations where demand is unpredictable and is genuinely impossible to control or anticipate.
That's it. Just three. All other inventory is EVIL.
And, don't look at these three reasons for inventory to justify having inventory. There is a lot that can be done to reduce inventory even under these circumstance.
Bob Tetu
Business Builder Bob
1. When there is a long distance for products to get to the customer, it may be necessary to have a local warehouse to meet quick turnaround requirements for customers.
2. If customer demand exceeds the capacity of your manufacturing operation.
3. Situations where demand is unpredictable and is genuinely impossible to control or anticipate.
That's it. Just three. All other inventory is EVIL.
And, don't look at these three reasons for inventory to justify having inventory. There is a lot that can be done to reduce inventory even under these circumstance.
Bob Tetu
Business Builder Bob
Friday, March 6, 2009
Business Builder Bob - Just-in-Time #4
Why Inventory is the Root of all EVIL...
To put it simply, inventory hides the problems your team should be working on.
Picture a lake that is full of large rocks that are hidden below the surface. Those rocks represent quality problems, equipment downtime, work-force imbalance, low yields, etc. The water level is inventory and it is hiding your improvement opportunties. To find the opportunitites, you have to lower the water level (inventory).
If you are thinking that lowering inventory would cause problems, you are halfway to improving your process time and reducing cost. Make it a goal to lower inventory and start systemically solving the problems that stand in the way. Want more examples of what is hiding below the surface of your inventory lake?
How about production process deficiencies. These include system design, capacity balancing (especially for dependant processing steps), unnecessary work (non-value added), material flow and information flow.
How about production planing and control deficiencies. These include priority control, dispatching, standards, master records, scheduling, and capacity planning.
The question you should have in mind is NOT...how much inventory should I get rid of. The question should be...why does it exist at all? Inventory reduction is a tremendous diagnostic tool for locating problems or barriers to more efficient systems, Just-in-Time, reduced process time, improved flexibility, responsiveness, etc.
In the next post I will share the only acceptable reasons for having Any inventory...there are only three. Can you figure out what they are?
To put it simply, inventory hides the problems your team should be working on.
Picture a lake that is full of large rocks that are hidden below the surface. Those rocks represent quality problems, equipment downtime, work-force imbalance, low yields, etc. The water level is inventory and it is hiding your improvement opportunties. To find the opportunitites, you have to lower the water level (inventory).
If you are thinking that lowering inventory would cause problems, you are halfway to improving your process time and reducing cost. Make it a goal to lower inventory and start systemically solving the problems that stand in the way. Want more examples of what is hiding below the surface of your inventory lake?
How about production process deficiencies. These include system design, capacity balancing (especially for dependant processing steps), unnecessary work (non-value added), material flow and information flow.
How about production planing and control deficiencies. These include priority control, dispatching, standards, master records, scheduling, and capacity planning.
The question you should have in mind is NOT...how much inventory should I get rid of. The question should be...why does it exist at all? Inventory reduction is a tremendous diagnostic tool for locating problems or barriers to more efficient systems, Just-in-Time, reduced process time, improved flexibility, responsiveness, etc.
In the next post I will share the only acceptable reasons for having Any inventory...there are only three. Can you figure out what they are?
Wednesday, March 4, 2009
Business Builder Bob - Just-in-Time #3
Wage War on Waste
For the next several blogs I will review some of the key process techniques of Just-in-Time manufacturing. The first technique is to wage WAR on Waste. There are many kinds of waste. Check out this list and think how they may apply to your business. Where are the biggest opportunities to reduce waste?
1. Complexity
2. Labor
3. Over Production
4. Space
5. Energy
6. Defects, Errors, bad product
7. Materials
8. Idle Materials
9. Time
10. Transportation
I will just highlight a couple for clarity since most are obvious. First, complexity is a waste when there is a simplier way to do something. Some processes are complex by nature. The waste is in unnecessary complexity which consumes time, labor, materials, etc.
Material waste is fairly obvious. It is yields below 100%. It is materials lost due to errors. It is materials damaged in transit or lost.
Idle material is basically inventory. Remember that the goal of Just-in-Time is to instantly convert raw materials into finished goods. Any time materials are sitting on a pallet or in a vessel waiting for the next step, that is cash tied up in inventory unnecessarily - wasted cash. You can view ALL inventory as idle materials and wage war.
Next up: Why is ALL Inventory Evil...
For the next several blogs I will review some of the key process techniques of Just-in-Time manufacturing. The first technique is to wage WAR on Waste. There are many kinds of waste. Check out this list and think how they may apply to your business. Where are the biggest opportunities to reduce waste?
1. Complexity
2. Labor
3. Over Production
4. Space
5. Energy
6. Defects, Errors, bad product
7. Materials
8. Idle Materials
9. Time
10. Transportation
I will just highlight a couple for clarity since most are obvious. First, complexity is a waste when there is a simplier way to do something. Some processes are complex by nature. The waste is in unnecessary complexity which consumes time, labor, materials, etc.
Material waste is fairly obvious. It is yields below 100%. It is materials lost due to errors. It is materials damaged in transit or lost.
Idle material is basically inventory. Remember that the goal of Just-in-Time is to instantly convert raw materials into finished goods. Any time materials are sitting on a pallet or in a vessel waiting for the next step, that is cash tied up in inventory unnecessarily - wasted cash. You can view ALL inventory as idle materials and wage war.
Next up: Why is ALL Inventory Evil...
Monday, March 2, 2009
Business Builder Bob - Just-in-Time #2
Where does the CASH come from?
Reducing Process Time - the goal is to instantly process raw materials into finished goods! Although it is not literally possible, the quest to move as close to the objective as possible causes all kinds of good things to happen. But first, to get your attention, how does cash end up back in your pocket? Just-in-Time Manufacturing, Pull Systemz and/or Value-Add Processes should:
1. Produce only the products that customers want (no unwanted products in inventory).
2. Produce products at exactly the rate that the customer buys them (no extra inventory),
3. Produce high quality (customers will buy more)
4. Produce instantly - no unnecessary lead-time. (customer won't have to go elsewhere if they need it right away. This also reduces cost, but that may not be obvious yet).
5. Produce with no waste, 100% yields, and with no idle inventory (lower cost of manufacturing).
In one of my assignments, the company had $13 million of inventory with a 90% order fill rate. Process time was dramatically reduced such that inventory turns improved from 3 to 15. More important, inventory was reduced to $6 million and order fill rates improved to 99.5%. The inventory reducton alone put $7 million of CASH back on the company balance sheet. There was also a significant reduction in cost of goods.
I can tell you that the prevailing thinking before we started was that it would take more inventory to improve fill rates. The only way to fill all the orders all the time was to have enough inventory to cover any scenario. This is an incredibly flawed approach which is still prevalent in many businesses.
In fact, the best way to improve fill rates is to reduce process time...the ability to (nearly) instantly make what the customer wants. Maufacturing flexiblity and turnaround time are the key.
Reducing Process Time - the goal is to instantly process raw materials into finished goods! Although it is not literally possible, the quest to move as close to the objective as possible causes all kinds of good things to happen. But first, to get your attention, how does cash end up back in your pocket? Just-in-Time Manufacturing, Pull Systemz and/or Value-Add Processes should:
1. Produce only the products that customers want (no unwanted products in inventory).
2. Produce products at exactly the rate that the customer buys them (no extra inventory),
3. Produce high quality (customers will buy more)
4. Produce instantly - no unnecessary lead-time. (customer won't have to go elsewhere if they need it right away. This also reduces cost, but that may not be obvious yet).
5. Produce with no waste, 100% yields, and with no idle inventory (lower cost of manufacturing).
In one of my assignments, the company had $13 million of inventory with a 90% order fill rate. Process time was dramatically reduced such that inventory turns improved from 3 to 15. More important, inventory was reduced to $6 million and order fill rates improved to 99.5%. The inventory reducton alone put $7 million of CASH back on the company balance sheet. There was also a significant reduction in cost of goods.
I can tell you that the prevailing thinking before we started was that it would take more inventory to improve fill rates. The only way to fill all the orders all the time was to have enough inventory to cover any scenario. This is an incredibly flawed approach which is still prevalent in many businesses.
In fact, the best way to improve fill rates is to reduce process time...the ability to (nearly) instantly make what the customer wants. Maufacturing flexiblity and turnaround time are the key.
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