“Companies have to wake up to the fact that they are more than a product on a shelf. They’re behavior as well”
– Robert Haas, Levi Strauss
“Industry is at the heart of Europe and indispensable for finding solutions to the challenges of our society, today and in the future. Europe needs industry and industry needs Europe. We must tap into the full potential of the Single Market, its 500 million consumers and its 20 million entrepreneurs.”
– Antonio Tajani, Vice President of the European Commission, responsible for Industry and Entrepreneurship
Europe must wake up and make manufacturing more efficient, and today it is more important than ever to be able to visualize one’s process flows.
Previously, the producers/ manufacturers/ suppliers ruled over the selection of offerings. Nowadays the circumstances are the opposite, as the end user is the one who determines which products/ goods/ services that will be available on the market.
If you are not aware enough and not able to look further into the horizon, your company and products could be short-lived. It does not make it easier for the market to deliver according to Just-In-Time (JIT); we also have to compete on the global market to create sustainable growth. This means that we have to ensure our own business regardless of the product/ goods/ services we were planning to deliver.
As Blücher & Öjmertz (2008) put it: “Lean production is based on the principle that more can be produced with less human effort, less machinery and equipment, less time, less space and less waste to provide customers with exactly what they want and when they want it.”
Blücher & Öjmertz have studied Swedish companies and write that have a very good improvement potential. Over the past 30 years, Sweden has gone from 4th place on the GDP list to the 8th place (see charts below); one explanation for this is that the market prices are falling while the wage levels are increasing. The trend is also that the Nordic countries are falling behind in sustainable growth.
Productivity should rise sharply in order to follow the trend. This means that we have to review our core competencies and create businesses with outstanding improvement rates. Product development must be quick and innovative, and the production must be made more efficient and compete with other countries cost-wise.
Lars Medbo & Carl Wänström at Chalmers University of Technology have conducted a study which shows differences and possible savings of materials, direct work time, material capacity and movements within Swedish industry according to the Toyota philosophy. The study showed that the Swedish car industry could reduce the walking distance (movement) by 60 percent, direct work time by 24 percent (average improvement of six work stations), material capacity with about 60 percent and length by 80 percent. These savings create increased flow and ability to deliver service with higher quality.
Medbo & Wänström have summarized the results and identified areas where evidence from shorter throughput time and reducing costs had been shown. Below are some examples of improved focus areas:
• Where operators perform value-added work
• Packaging adapted to component
• Using smaller and more slender packaging, deeper material facades
• Flexible and modular materials racking
• Create attractive system for filling
• Fewer inner packaging
• No pallets and pallet collars
• Sloping chutes and braces for materials
We have emphasized the importance of taking a helicopter view by looking at the entire flow from raw materials to end customers to create synergies. Industry has high potential and unused capacity that can be streamlined and create a long-term growth. Through the years, studies and statistics have shown how much better we can be, but how can we take advantage of the opportunity before developing countries surpasses us in Europe? Below, we have summarized reflections and input from a case we have done that can be used as a guideline.
What do our processes and flows look like?
A process is a continuous set of activities that is repeated in time, and is described as an activity that begins with an input and ends with an outcome. Processes transform resources into achievements and are what creates value in an organization. Within the quality field, as well as in most improvement programs such as Lean, the focus is on processes. The processes are to be measured and improved in order to increase quality, reduce lead times, etc.
We need to start mapping our processes, delegating ownership of the processes and linking them to its product. When the process is defined, the opportunity to discover the deviations is created. Owning the process also implies an authorization to change it. A clear focus also means that time/resources and opportunities are being reserved for work with one’s process.
It’s not enough to have a delegated ownership of the process; the leadership should be just as focused/learning/demanding and supporting in its execution. Through clear rules and regulations, we know within which frameworks to move and continue our work.
Do we listen to the customer’s actual requests/needs, or do we only listen to the customer’s specification of requirements? Do we need a varying product spectra and specifically the customer unique product if the customer will not return again? Do we need spare parts for the product in case repairs are needed in 5-10 years?
When visiting businesses we can still see products that were ordered by customers during one peak season, remaining on the store shelves. Since the majority of seasonal products are renewed next season, the shelf warmers need to be scrapped. Not long ago, we visited a national inventory of parts that contained unusually high inventory levels, primarily copper wire. Having such a high inventory level implicates a safety aspect for the business and the organization as it attracts crime. It is no longer “just” a capital issue but also a safety (security surveillance) and work environment aspect that has to be considered.
It is not efficient to appoint a new project group each time we get a customer unique special order, which may never be ordered in the exact same fashion again. Think about it: how much could we shorten the lead time of the project/process if we took advantage of our competencies at an earlier stage, instead of constantly creating and dissolving project teams?
Lead time is a symptom of a disease – something in the flow that is sick, an uncertainty in the flow created by us or by the customer. This may involve uncertainty about demand, processing and capacity and/or about delivery. This uncertainty leads to the so-called “bullwhip” effect, which means that variations in the demand are being reinforced on the way back through the chain. See graph example below.
Lead time is often compared to tailbacks in order to explain the braking effect. Compare cars waiting at the traffic lights: when the lights turn green, car no. 2, 3, 4 cannot drive until car no. 1 starts driving – even though it is green. The effect is that car no. 2, 3 and 4 fall behind with at least 2-4 minutes.
Within Lean, dynamic flows are often resembled to ocean waves; the smoother the waves are, the less energy is lost by the moving ship. Now compare this with the flow: the more volatile demand and deliveries are, the bigger supply, express deliveries and under- or overused capacity is to be expected.
Depending on the service and product you are offering, the main flow may sometimes have to be divided into multiple parallel streams to satisfy customer needs. We have some good examples from our study visit below…
Is it possible to divide the flow into two parts, with one standardized and one special feed?
Toyota Material Handling Sweden (BT forklifts), is a good example of how the flow has been divided in order to create efficiency as well as flexibility in the processes.
They manufacture forklifts in all shapes, from hand trucks to high-tech forklifts. Since 2001, they are being supported by Sensei coaches from the Toyota Motor parent company in Japan. Since most of BT‘s large customers wish customized trucks based on color, equipment or print (logo), it is difficult to set up an efficient production line for all customer orders. That would imply long set-up times and queues in the system.
There are still customers who mainly order standard products with the basic components and equipment. In that case the solution lies within two variants of flows with the highest number of production lines for standard products and 1-3 production lines for special products. These can also be adjusted and produce standard or special products depending on the need of customer orders.
Another good example is the Gripens midwife clinic in Karlstad which created a better division of labor and flexibility in the booking of patients. Instead of the functional way of thinking with a geographical area for each one (compare with an installation or a purchasing department), the way of work has been divided into a rotating frontline (two sets of phone hours for incoming calls and registrations) and a backline (longer follow-ups, health discussions etc.).
– “Since we were previously responsible for our own geographical catchment area, some of us could end up with many registered pregnant women, while others just got a few,” midwife Anna-Lena Ågren says.
– By looking at this we can see how many newly registered pregnant women each midwife has and see the schedule, says Ann-Christine Fagerberg, Head of Unit, (left in picture). – An important part of lean is the visual, the things that makes it easy to see, understand and get an overview, Anna-Lena Ågren fills in.
The key to efficiency is to LEARN TO LEARN and thus produce innovative co-workers and organizations!
Should we raise the level of capacity? Can we raise it from short-term to long-term?
Can we have separate flows special / standard?
How do we involve the organization / customers / suppliers / partners?
How can we as a preventive measure maintain machines when we are working below production capacity?
How do we as a preventive measure maintain the organization and our relationships when we are working below capacity?