Thursday, June 11, 2009

Improving problem solving

Setup reduction is an ideal way to improve the problem solving skills of everyone in the company. The problem is contained, yet, as we have seen, it involves everyone. It is also a “safe” problem, in that it is a part of a long-term strategy, and never a short-term survival measure. Finally, a lot can be accomplished without the need for capital spending.

One key to success at solving problems is developing “eyes for waste”. Whether the waste is of time, material, labour, or some other asset, close observation over time will reveal the pattern of activities that yield no value. In the case of setup, the value is a productive machine or process, with a different output from before it was stopped for changeover.

Another key to success at problem solving is measuring results. The only think that needs to be measured for setup reduction is time – did it take less this time than last? Of course, you can’t cheat – poor quality, injuries, disruption of other activities can’t be traded for less time setting up.

Some key lessons learned from problem solving for reduced setup time include:
- the value of good observation
- the value of standardization
- the value of organization
- the value of planning
- the value of measuring and tracking
- the value of training
- the value of communication
- the value of questioning

If these lessons are not learned, setups will not be reduced.

Organizations depend on problem solving for continued business success. Using setup reduction as the training and proving ground for problem solving makes good sense. And into the bargain, you get lower costs and better service.

Wednesday, June 3, 2009

3C+C: Essential to Quick Setup

Quick setup helps to smooth flow and reduce inventory at s single point in the process. The justification for the effort to reduce setup time is based to a large extent on the ability to produce to customer demand that short setups provide. There are less direct, but equally important, benefits that flow from achieving consistently short setups.

Improved cooperation and coordination between groups in the organization is necessary for production to customer demand. Without the central element of quick setup, it is easy for departments and groups to work toward their own optimization and comfort. But consider the roles of selected groups and departments in ensuring that setups happen precisely when and how they need to, for inventory to be low, and flow to lead to on-time delivery:

The toolroom- This is a key function in ensuring that the tooling works flawlessly each time. The toolroom must be aware of the production schedule, and plan its work to complete the last off inspection, and any necessary repair and adjustment, in the short interval between runs.

Upstream processes – When WIP quantities are reduced, upstream processes must perform to plan, or production comes to a halt. Quality, production quantities, uptime and cycle time are all critical to smooth flow. Many point kaizens fail to deliver on their promise because they fail to take into account variability in supplying processes.

Purchasing and engineering – Standardization of tooling, purchased parts quality and availability are essential to quick, accurate setups. Cost considerations regarding tooling and purchased parts must take into account the value of quick setups in the overall cost structure of the business. The lowest purchase price or the smallest tool base are not necessarily the best choice. This approach can be difficult to accept for those steeped in departmental-specific measures of performance.

Managers and operators – It is easy to get caught up in a fire-fighting culture; after all, it is exciting (and often praised, when it “works”). But a fire-fighting culture will never achieve consistent quick changeovers, and the resultant large inventories will just cover up problems. Everyone involved and responsible for setup need to become problem-solvers, and need to keep in constant training for their tasks. Training in setups, even when a particular setup is not required, and setup competitions, are good practices.

A key element of a Lean culture is sometimes referred to as 3C+C: This means Communication, Cooperation, Consideration + Commitment (to action). From the above, we can see why. What this means in practise is that each improvement and kaizen must be communicated to, and if possible, involve, key members of affected and affecting groups.

Thursday, December 4, 2008

Quick setup is safe setup

When setup reduction is first discussed, one of the concerns is whether safety will be compromised. After all, the thinking goes, it must be necessary to work faster to set up faster; and that can only lead to mistakes, and possibly injury.

What is found is quite the opposite: setup reduction leads to improvement in safety.

A key element in quick setup is standardization of all activities. This means that each activity is analyzed, and a standard set of movements for each participant is developed. Whether it is how to handle heavy items, or where to stand during their movement, for example, safety can be integrated into the standard work of setup. The need for precision in all aspects of the setup thus has a direct impact on safety.

Improvement in safety also comes from better organization and cleanliness, which are essential to faster setup. There are reduced chances for slipping, for unexpected sharp edges, and for awkward reaching or using incorrect tools.

Finally, setup takes place more often, and therefore there are more opportunities to find unsafe conditions and practices, and to correct them. Participants are also better practiced due to increased frequency of setup.

Sunday, November 30, 2008

Quality Improvement from Setup Reduction

Setup reduction is usually accompanied by quality improvement. Why is that? There are several reasons: equipment improvement, elimination of adjustment, and faster feedback on quality are the key ones.

Quality improves when equipment improves: Many machines need to be overhauled and improved as part of setup reduction. Bearings may be worn, there may be oil leaks that require repair, nuts and bolts may be loose, and filters and fluids may be due for replacement. All of these repairs can lead to improvement in capability and repeatability of the machine. This will improve quality. It is also usual to move all key gauges to one point, where they can be easily monitored. This improvement will allow the operator to ensure that the machine is working at an optimum setting at all times. Again, quality will usually improve as a result. Not only machines, but tooling will be improved as part of setup reduction. With more frequent setup, weaknesses in design will be found, and improved. More frequent checks of the last part in a run will ensure that the tooling is kept properly adjusted.

Quality improves when adjustment is eliminated: A key cause of variation in quality is variation in machine settings. Many operators are constantly making small adjustments. One operator sets the machine differently from another. This lack of process control needlessly causes defects and variation. Once the correct settings have been established, there is no need for constant adjustment. It is also frequently found that purchasing agents change vendors to get a better price. While the specifications are apparently followed in material selection, small variations will be found in material quality. Setting the specification properly can be a key element in the elimination of adjustment. This also leads to better quality. The higher yield achieved justifies keeping a tighter specification, and possibly somewhat higher prices. Looking at the system as a whole, rather than from a limited perspective, shows its importance in this instance. Looking upstream, incoming quality from internal operations will also be improved, as variation that causes extended setup time for extra adjustment is discovered and corrected.

Faster feedback leads to better quality: This is a key to quality improvement through setup reduction, as long as setup reduction is followed by batch size reduction. It is possible to improve the learning curve, and to speed up the feedback cycle, when batch sizes are smaller. If a mistake is made, in features, specifications, settings, and other aspects of the production process and product design, it can be corrected next time the product is run. Faster learning also leads to reduction and even elimination of inspection throughout the process. Not having large quantities on hand that need to be depleted should a defect be found, or a design feature changed, the time to improvement is shortened, and equally important, fewer customers will have been inconvenienced. Fast improvement to a feature can also have the beneficial feature of showing the market responsiveness to customer opinion.

Thursday, November 6, 2008

More economic arguments for setup reduction

In addition to the cost of acquisition, there can be significant expenses in actually being in possession of inventory, including, but not limited to:

- Borrowing costs of capital
- Cost of storage space – racking, storage bins, building space rent, lighting, heat, etc.
- Insurance
- Spoilage of inventory (e.g. obsolescence or deterioration)
- Theft, pilferage and other losses
- Damage to inventory – physical damage from lift trucks or during other handling
- Cost of handling to move or rotate
- Cost of management, measurement and accounting for inventory
- Cost of inefficiency due to inventory issues – e.g. layouts may be less than optimal in a large factory with large amounts of inventory
- Loss of business due to inventory problems – e.g. inaccuracies in inventory records that lead a business to assume that there is sufficient inventory, when there in fact is not, leading to overdue deliveries

A reasonable rule of thumb is to estimate that inventory holding costs can equal 25% to 33% of the inventory value each year.

Also considered by some is the opportunity cost – the value of other uses of the money identified above. It should be noted that opportunity cost is not a category in a financial statement.

Some estimates put the total cost of inventory as high as 50% per annum.

We have seen some of the benefits of quick setup:
- flexibility, for better customer service
- lower costs, due to less inventory

Other benefits to be explored are:
- improvement in quality
- improvement in safety
- improvement in general operations, due to need for coordination
- ability to work to customer order instead of forecast
- smaller factories improve communication
- improvement in problem solving
- ability to level loading

Wednesday, November 5, 2008

Setup reduction and flexibility - the economics

The above image shows how quick setup provides flexibility to an operation. By reducing the time spent setting up, it is possible to retain the original productivity, but reduce run size.

There may be marginally higher costs to initiate each order. These could include more material handling, more supervisory time (on paperwork, and the like), more maintenance time (on last off inspection to determine tool condition), more time spent preparing and cleaning up after each setup, and perhaps other similar activities. In the above example, the WIP was reduced by a factor of 12 (i.e. greater than 90%).

Depending on circumstances, the cost of holding WIP and finished goods is 30% to 50% annually (including opportunity cost). There is also a value to the business of the increased flexibility that is harder to determine – but it pertains to how well the customer is served, and what benefits this provides. It is mainly the cost of servicing return business compared to the cost of obtaining new customers. Furthermore, to achieve this level of flexibility, quality and maintenance must be very good, further reducing the cost of production.

Tuesday, October 14, 2008

Open eyes, open mind

It takes open eyes and an open mind to start the process of setup reduction. The psychology of observation tells us that in many cases, especially those we are familiar with, we mostly fail to see what is in front of us. We fail to notice, we fail to pay attention to what we see.

Observing a setup, either recorded or live, there is a lot going on. It is easy to assume that we know what it is that is taking place. Even when we analyze a video tape of a changeover process, assuming it captured the salient activities, we tend to write down what we think is taking place.

It takes an open mind to question each and every activity – is it necessary? why is it done this way? why is it done at this point? Especially when these questions are asked by someone on the team who has not done the setup personally, or is from outside the immediate area, especially if it is someone from the office, or someone without subject matter expertise, the questions may sound silly to those who are familiar with the process. It is especially those familiar with the process who need an open mind. The typical reaction is to want to explain an activity as making sense, as being the right thing to do.

It may take extensive 5Why, or Fishbone, or other root cause analysis, to determine whether an activity is actually needed, or whether it is done in the best way.