Saturday, September 13, 2008

Separate internal from external - not as easy as it sounds

We have indicated that the simplest and most effective way to reduce setup is to separate internal from external. But we have also indicated that there are many reasons why this does not happen. Some of the key reasons are:

  1. The person responsible for the setup is also the operator/value creator. This means that there is no time to carry out the external tasks while the operations are in process, since the operator is engaged in value creation. Many organizations are not convinved that a separate setup function can be justified, especially if customer demands are being met. Some organizations designate setup an “indirect” function, and follow a management metric regarding the ratio of “direct” to “indirect” labor – the higher the ratio the better. Another reason given for operators to perform their own setup is that this places full responsibility for the setup on one person. When efficiency or performance to standard is used as a measure of performance, it is thought that setup personnel will rush to complete the setup, and may not pay sufficient attention to quality.
  2. The scheduling system has a “standard” for setup, and the standard is being met. Consequently, there is no perception that setup needs to be reduced, especially if large lots are not understood to be more costly that small lots. Furthermore, the perception is often that faster setups are synonomous with simply working harder, or rushing and cutting corners. If customer demands are being met, the standard is unlikely to be reviewed. The fact that the standard may have been set without significant study, or even arbitrarily, is usually quickly forgotten by those setting up the scheduling system, and completely unknown to those who come after. It is even the case that when the standard is not routinely met, the extra time taken to set up is allocated to some other aspect of the reporting system, usually breakdown.
  3. For various reasons, what to do next is not communicated to those responsible for the changeover. Often, expediting is the way the next job is selected. This can be a result of “first come, first served” – reasonably so in, for example, a restaurant. Or perhaps there are constant change to priorities – again, reasonably so in, for example, an emergency ward of a hospital. On the other hand, in some instances, each sales person or manager believes that his or her job is more important, and selection is a result of last minute negotiation. It may also be the case that jobs take an unknown amount of time to complete, perhaps because of material shortages, breakdowns, labor shortages, and so forth. In this instance, the perception is that scheduling is futile, and one might as well wait until the job is complete before deciding what to do next.

It may thus be the case that there is a lot of change required, before the simple rule of separation of internal from external can be applied, to reduce setup. A strong vision of how to get to the point where setup reduction can be applied to significantly improve customer satisfaction while improving profits is required. This vision is encompassed by the term “Lean” or “the Toyota Production System”. We thus refer to “lean healthcare” or “lean manufacturing”, and other lean business systems. The key element is “flow”, or lead time reduction.

1 comment:

sigs said...

Nice speculation with a practical touch.