"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.
Friday, February 27, 2009
Business Builder Bob - Just-in-Time #1
Processing Time is the Common Thread...
There are several important "Process" concepts that all come back to the same root idea. Just-in-Time, Pull Systems, and Value-Added Systems have a common measure of success. That metic is Process Time or P-Time.
Process time is the number of hours, days or weeks to take raw materials and deliver the final product to the customer. The greatest value comes from inclusion of supplier P-time and downstream distribution channel P-time in your calculation.
Here's an example. Think of yourself as the 3 X 5 printed shipping label that will end up in a consumers desk drawer and follow your journey. Let's assume it took 8 weeks to get from the paper mill to the print shop. There are two weeks of raw material inventory at the print shop (that's 10 weeks total). Let's assume there are multiple steps in the manufacturing process - print the labels, cut them out of the print web, count them into small packs, put small packages into boxes and finally move them into finsished goods inventory. If in process materials sit on pallets for a week between each step, that's another 5 weeks (15 weeks total). Then you sit in finished goods inventory at the print shop for 3 weeks and finally you ship to a retailer and sit on the store shelf for another 2 weeks before being purchased. You have lived 20weeks from when you were born in the paper mill to when the consumer purchased you. The P-time is 20 weeks.
The objective of "Just-in-Time", "Pull Systems", and "Value-added Process" concepts is to reduce P-time. An efficient supply chain and manufacturing process could could reduce the 20 weeks to 3-5 weeks.
So, what if it takes 20 weeks? What's in it for me to reduce P-time? The answer is CASH in your pocket. Tune in to the next few blogs.
Bob Tetu
Business Builder Bob
There are several important "Process" concepts that all come back to the same root idea. Just-in-Time, Pull Systems, and Value-Added Systems have a common measure of success. That metic is Process Time or P-Time.
Process time is the number of hours, days or weeks to take raw materials and deliver the final product to the customer. The greatest value comes from inclusion of supplier P-time and downstream distribution channel P-time in your calculation.
Here's an example. Think of yourself as the 3 X 5 printed shipping label that will end up in a consumers desk drawer and follow your journey. Let's assume it took 8 weeks to get from the paper mill to the print shop. There are two weeks of raw material inventory at the print shop (that's 10 weeks total). Let's assume there are multiple steps in the manufacturing process - print the labels, cut them out of the print web, count them into small packs, put small packages into boxes and finally move them into finsished goods inventory. If in process materials sit on pallets for a week between each step, that's another 5 weeks (15 weeks total). Then you sit in finished goods inventory at the print shop for 3 weeks and finally you ship to a retailer and sit on the store shelf for another 2 weeks before being purchased. You have lived 20weeks from when you were born in the paper mill to when the consumer purchased you. The P-time is 20 weeks.
The objective of "Just-in-Time", "Pull Systems", and "Value-added Process" concepts is to reduce P-time. An efficient supply chain and manufacturing process could could reduce the 20 weeks to 3-5 weeks.
So, what if it takes 20 weeks? What's in it for me to reduce P-time? The answer is CASH in your pocket. Tune in to the next few blogs.
Bob Tetu
Business Builder Bob
Tuesday, February 24, 2009
Business Builder Bob - Blogging for Business #4
It would take 10 or 15 posts to cover the how to blog, what to blog, and strategies for building a new customer base. Suffice it to say, this should be important to manfacturers, distributors, job seekers and home business owners. Building credibility and attracting new customers is something universally in demand.
And, for every one person executing a best practice for blogging for business, there are 100 people doing it wrong. Maybe a thousand.
For an in depth understanding of the best practices, you may want to visit one of my websites. There is some hype about making money on the site, but look past that. The value of this site is the training materials. They are outstanding and will take you to the current best practice for blogging and Advanced Social Marketing in general.
Here's the site:
asm.businessbuilderbob.com
Or, go ahead and take the leap. Go to gmail.com and create a gmail account. Then go to blogspot.com and create a blog site using the gmail account. Follow the quidelines in these posts and you will be off to a good start. Send me an email if you get stuck.
Bob Tetu
Business Builder Bob
Next up: Pull Systems and Value-Add Concepts.
And, for every one person executing a best practice for blogging for business, there are 100 people doing it wrong. Maybe a thousand.
For an in depth understanding of the best practices, you may want to visit one of my websites. There is some hype about making money on the site, but look past that. The value of this site is the training materials. They are outstanding and will take you to the current best practice for blogging and Advanced Social Marketing in general.
Here's the site:
asm.businessbuilderbob.com
Or, go ahead and take the leap. Go to gmail.com and create a gmail account. Then go to blogspot.com and create a blog site using the gmail account. Follow the quidelines in these posts and you will be off to a good start. Send me an email if you get stuck.
Bob Tetu
Business Builder Bob
Next up: Pull Systems and Value-Add Concepts.
Monday, February 23, 2009
Business Builder Bob - Blogging for Business #3
Branding:
This is a huge subject and could take up many blog posts by itself. For now, let's take an initial stab based on some simple criteria.
First, blogging is an individual activity. Even if you are blogging to attract new customers to your business, you are building personal credibility. The individual writing the blog may be an employee or the business owner, but they represent the company and will become personally credible on your company, products, etc. Don't try to make your blog from "the company". It must be from a person.
If you wish to promote your company, "The Widget Company", you can blog under a pseudonym (brand) "The Widget Master". You can also chose to use your own name as the brand. Try to brainstorm some brands that would work with some of the subjects you choose after the last post. Bounce some ideas off people. Look at what other bloggers are doing.
If you are a job seeker, you probably want to promote your own name, but you can also use a brand that identifies the subject you are passionate about. I am passionte about helping manufactuers keep jobs in the USA...to build an arsenal of best practices...thus, Business Builder Bob is my Brand. I identify my brand and my name in most postings.
If you are not ready to use a brand or nothing comes to mind, use your name as a starting point. You can add a brand later.
This is a very abbreviated view of branding considerations. If you want more help, feel free to contact me.
Bob Tetu
Business Builder Bob
businessbuilderbob@gmail.com
This is a huge subject and could take up many blog posts by itself. For now, let's take an initial stab based on some simple criteria.
First, blogging is an individual activity. Even if you are blogging to attract new customers to your business, you are building personal credibility. The individual writing the blog may be an employee or the business owner, but they represent the company and will become personally credible on your company, products, etc. Don't try to make your blog from "the company". It must be from a person.
If you wish to promote your company, "The Widget Company", you can blog under a pseudonym (brand) "The Widget Master". You can also chose to use your own name as the brand. Try to brainstorm some brands that would work with some of the subjects you choose after the last post. Bounce some ideas off people. Look at what other bloggers are doing.
If you are a job seeker, you probably want to promote your own name, but you can also use a brand that identifies the subject you are passionate about. I am passionte about helping manufactuers keep jobs in the USA...to build an arsenal of best practices...thus, Business Builder Bob is my Brand. I identify my brand and my name in most postings.
If you are not ready to use a brand or nothing comes to mind, use your name as a starting point. You can add a brand later.
This is a very abbreviated view of branding considerations. If you want more help, feel free to contact me.
Bob Tetu
Business Builder Bob
businessbuilderbob@gmail.com
Thursday, February 19, 2009
Business Builder Bob - Blogging for Business #2
Picking the subject of your blog:
The objective of your blog is to reach out to like-minded people and to get a following of readers that will get noticed by search engines. Your credibility is built by the quality of your blog posts and by your ranking on search engines such as Google. A high ranking implies you are an expert in your field, well known, and an internet professional.
I started this blog and some other social marketing methods in January and I have most of the first page in Google under my name, Bob Tetu; and I have a good position on the second page of Google under by brand, Business Builder Bob, which is up against very stiff competiton.
You need to be capable of writing a blog post almost every day. So, you need to pick a subject that you know a lot about and you are interested in. There are generally two paths you can follow to pick a subject for your blog and neither of them is a sales pitch.
Option 1 is to write about your companies products, how they solve problems, features, technical information, case studies. With this type of blog you are targeting like-minded people in a specific industry. Be careful not to use a customers name or brand without their permission. And, be certain that this is anecdotal and informative...Stay away from selling in your blog.
Option 2 is to write about your passion - a sports team, a hobby, a past-time or a cause about which you are very enthusiastic and knowledgable. A small manufacturing business owner can choose this option and still build credibility and attract new customers by connecting to customers in the industry that have similar interests.
I chose option 2. I am passionate about finding best practices and keeping jobs in the U.S.A.
There are some other considerations before finally choosing your subject. For now, brainstorm one or two subjects for option 1 and option 2.
Bob Tetu
Business Builder Bob
The objective of your blog is to reach out to like-minded people and to get a following of readers that will get noticed by search engines. Your credibility is built by the quality of your blog posts and by your ranking on search engines such as Google. A high ranking implies you are an expert in your field, well known, and an internet professional.
I started this blog and some other social marketing methods in January and I have most of the first page in Google under my name, Bob Tetu; and I have a good position on the second page of Google under by brand, Business Builder Bob, which is up against very stiff competiton.
You need to be capable of writing a blog post almost every day. So, you need to pick a subject that you know a lot about and you are interested in. There are generally two paths you can follow to pick a subject for your blog and neither of them is a sales pitch.
Option 1 is to write about your companies products, how they solve problems, features, technical information, case studies. With this type of blog you are targeting like-minded people in a specific industry. Be careful not to use a customers name or brand without their permission. And, be certain that this is anecdotal and informative...Stay away from selling in your blog.
Option 2 is to write about your passion - a sports team, a hobby, a past-time or a cause about which you are very enthusiastic and knowledgable. A small manufacturing business owner can choose this option and still build credibility and attract new customers by connecting to customers in the industry that have similar interests.
I chose option 2. I am passionate about finding best practices and keeping jobs in the U.S.A.
There are some other considerations before finally choosing your subject. For now, brainstorm one or two subjects for option 1 and option 2.
Bob Tetu
Business Builder Bob
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