Improving Efficiency by Understanding Your Processes

September 5th, 2011

The ultimate goal of any manufacturing process should be to create value. Value is anything your company does that creates something that your customers are willing to pay for. As an example, an employee tightening a bolt on a piece of equipment is generating value. An employee hunting around to find the right wrench to do that job is not generating value and is, therefore, generating waste. The ways that companies can increase the amount of value they generate are surprisingly simple, in many cases, but require work to identify.

There has been extensive work done on identifying waste. The Japanese auto companies were some of the leaders in identifying where money is lost in the manufacturing process and, given their successes, the value of these methodologies is easy to understand. Inventory is one of the sources of loss that everyone is familiar with. There are others, however, including over-processing, the movement of resources unnecessarily and waiting that all conspire to drain a company’s resources while providing no benefit to the company. Eliminating them starts by understanding them.

If an employee is striving for excellence, for example, that is always a good thing. Sometimes, however, employees will do more work than needed on a product. This translates directly to waste. Communicating this to employees without making it seem like you’re asking for lower-quality work is difficult, and potentially destructive to morale. A consultant knows how to address these issues and to communicate that the overall goal is to create a better product, something any dedicated employee is generally enthusiastic to do. The many sources of waste in your company can be eliminated and, by doing so, you can increase efficiency and develop better processes. This helps profitability and helps your company compete in today’s global marketplace.

DRAWING THE LINE BETWEEN THEORY OF CONSTRAINTS AND SIX SIGMA

September 4th, 2011

The Theory of Constraints and the Six Sigma approaches are two of the most popular and most widely-accepted and practiced management paradigms. Some principles of the TOC run parallel to some of the basic tenets of Six Sigma. First, both paradigms believe that root causes of problems in the company or organization should be understood with a logical and rational approach. Second, both paradigms highlight the crucial role of top-line performance to the overall growth and progress of the company. Third, both paradigms uphold the value of the customers. Thus, the customer is indeed king. Last, both paradigms aim for stability in the performance of the system and clarity for improvement.

However, there are also several principles of each of the two paradigms that can be compared and contrasted with the other’s basic principles.

1. Focus. The Six Sigma method focuses on the smallest divisions and components of a company or organization. It focuses on the growth and development of smaller divisions. On the other hand, the Theory of Constraints focuses only on the most critical issues and on the entire organization. The Six Sigma believes that efficient smaller divisions will translate into a more efficient company. However, the TOC believes that a company made up of efficient and effective smaller departments may not even be effective and efficient as a group.

2. Method. Six Sigma uses a quantitative method and data-based philosophy in solving the company’s problems. TOC advocates a qualitative analysis and logic-based tools in dealing with critical issues.

3. Perception of Variation. Six Sigma aims to reduce variations and extraneous variables. TOC takes into considerations the individual differences and other potential variations. It will make the market healthier.

HOW THE THEORY OF CONSTRAINTS CAN BOOST YOUR BUSINESS

September 3rd, 2011

A holistic management philosophy popularized by Dr. Eliyahu Goldratt, the theory of constraints believes in the inherent simplicity of complex systems. According to this perspective, an organization may be made up of a lot of components and divisions but only a few or one factor can have a strong impact on the overall status of the organization. This factor, known as the constraint, serves as a hindrance to the group’s achievement of its goal.

The theory of constraints helps organizations and institutions to identify critical issues that hamper the organization’s growth. By identifying these critical points, organizations can take necessary steps and use these constraints to propel to greater heights. Thus, the theory translates impediments into profits and growth. These constraints include product quality, product cost, product engineering effectiveness, materials procurement, production planning and control and marketing.

The theory of constraints drives organizations to focus on the optimum efficiency of the organization. The optimum efficiency of the smaller units and divisions should come secondary. The theory of constraints operates using a five-step process. First, the organization needs to identify its constraints. Next, you need to think over and develop a plan on how you can exploit the identified constraints. Third, you need to place all the components of managing your organization subordinate to the constraints. Fourth, you need to place the identified constraints higher than everything else in terms of level of priority. Once you have broken the constraints, you should repeat the five-step process.

The theory of constraints also shares a couple of parallel or similar principles with other management philosophies. In TOC, continuous improvement is emphasized. Employees should be actively involved and empowered. Educating the entire organization is necessary. You have to transform and build a new organizational culture. TOC’s quality measurements are also clearly defined and established. By focusing on organizational goals over departmental goals, TOC helps eradicate barriers and divisiveness.

Theory of Constraints: Constraints Explained

August 14th, 2011

DIFFERENT TYPES OF CONSTRAINTS

According to the theory of constraints by Dr. Eliyahu Goldratt, an Israeli physicist, constraints are specific variables or factors that affect the performance of an organization or company. These constraints block a company from achieving optimum efficiency and limit the company’s ability from improving its output.

Constraints usually take different forms. These variations include capacity constraint, market constraint, policy constraint, logistical constraint and behavioral constraint.

Capacity Constraint. The first type, capacity constraint, exists when the demand outstrips supply. Capacity constraint indicates that the system cannot supply the amount of output needed to meet the demands of the market. Some capacity constraints include personnel hiring and manning guidelines. The market constraint is the exact opposite of capacity constraint.

Market Constraint. Market constraint indicates that the company has the capacity to produce more than what is needed by the market. In short, the supply outstrips the demand. There are more than enough products to meet the demand of the market. Examples of market constraints are pricing schemes and commission policies.

Policy Constraint. Policy constraints are policies or regulations imposed or implemented that can limit the potential of a company to develop and grow. This type includes ‘no overtime’ policies.

Logistical or Physical Constraint. Logistical or physical constraints are probably the easiest to explain and illustrate. A company experiences logistical or physical constraints when a particular mechanical resource cannot meet the demands expected of it. Logistical or physical constraint indicates that particular equipment cannot produce what it should be producing.

Behavioral Constraint. Behavioral constraint refers to the lack of capacity in the human resources to produce the output that is expected from the team.

The theory of constraints emphasizes that focus should be given to these constraints instead of on other insignificant factors.

Improving Efficiencies with Lean Warehousing

August 13th, 2011

The process of Lean thinking is an improvement methodology that has now become a global phenomenon. Though initially it started off in the manufacturing process, it has now commonly deployed across other sectors and has helped delivering both organizational efficiencies and customer satisfaction.

The principles and tools of Lean management help create customer value and also help produce goods with lesser defects and better quality, at the same time eliminating the unnecessary 7 wastes and lesser capital. Let us understand how to take these lessons to our warehouse and distribution centers.

FLOW- the primary objective of lean warehousing, contests us to improve the materials flow through the distribution center or warehouse. An ideal situation is where the demand from a customer is responded to immediately and this is the major challenge for any warehouse. This process is called “Pull”.

Creating an optimal warehouse layout is a critical factor in creating material flow, whether inbound or outbound (to customers). The Japanese principles of 5S can be employed for designing the functional areas, inventory, methods of storage and many warehouse processes. It is a very basic tool and relates primarily to housekeeping. But applying these Japanese Principles under macro guidelines, it can be extrapolated to warehouse managements as well. By using these principles, picking routes can be optimized and errors can be minimized. Under Lean warehousing, the main objectives are low inventory, less space, and human efforts. This will lead to less capital, lower operating costs and lesser investments in storage and handling costs. Lean warehousing can lead to lower delivery times and better customer response time.

The spirit of Kaizen must be employed in every organization, which could become the difference between you and your competitors.

Lean Warehousing

August 12th, 2011

The crux of Lean thinking lies in reducing waste and the continual pursuit of quality processes; especially in today’s business environment, where your customers expect the best quality of services and timely delivery, all at affordable costs.

Huge investments in technology, software and tools may not be the only modes that make companies develop superior supply chains. The sphere of lean tools and Kaizen needs to more seriously looked into.

Let us understand Lean Warehousing in detail

“The eradication of waste and the persistent pursuit of productivity and customer service through Kaizen”

Muda, the word coined by Japanese, for waste, is currently being used by almost every organization and deals with the elimination of any activity that consumes time and resources without creating any value additions to the process. In short it does not have any effect on the end product or service.

Applying Lean Thinking in the Warehouse

Taichii Ohno, the father of Toyota Production System categorized Muda (waste) into seven different categories. Overproduction, Waiting, Transporting, Inappropriate processing, Inventory, Motion and Defects. In Lean warehousing the challenge lies in identifying each and every activity that consumes time and resource that does not create any additional value. An example of a non-value process in a warehouse could be receiving wrong messages or errors for picking. The process and supply of parts in warehouse could be simpler if such inefficiency could be eliminated. Another major waste in warehouses is poor utilization of space. Every unutilized square foot is money wasted. Also, the parts pickers will have to travel extra or drive past spaces to pick the products they want. This consumes time and erodes productivity.

And last, but not the least is the amount of inventory that is held throughout the value stream. Higher inventory demands more space. For Lean warehousing, all but minimum inventory is described as waste and needs to be eliminated.

Lean Distribution Defined

August 11th, 2011

The theory of lean distribution is based on the doctrine of lean manufacturing. The ideology of lean manufacturing initially grew out of Toyota’s Production Management approach. It considers that any resource that is used which does not create a value for the end product or the customer is wasteful in nature and is thus a target for elimination.

Understanding from the perspective of a customer who uses the end product or service, it is defined as any process/ action for which a customer would be willing to pay for. In totality, the final goal of lean methodology is to enhance more value of the final product with less work and effort.

In the process of lean distribution, the lean policy starts with the customer order. It applies to tools and techniques that help to streamline and improve material flow, minimize errors, do away with unnecessary material handling, maximizing facility utilization and improving management of inventory.
However, applying the lean methodology in a distribution environment may not be an easy task due to one critical element; variability. In the earlier example of mass production processes, the nature of production is both consistent and repetitive in nature. But distribution operations are almost the opposite, and are highly fluid in nature.

Order quantities from customers differ in size, time sensitivity, product mix and plenty of other factors. Thus the amount of work needed to satisfy these orders have to be customized in nature. This variability generates challenges when lean concepts are applied in distribution. But by following a few steps mentioned below, the challenges involved in lean distribution can be overcome with encouraging results. Following are steps to successfully implementing lean distribution. Following them in true spirit can help a company gain maximum reward:

1) Establish objectives, goals and policies
2) Assessment of current processes.
3) Conduct studies and improve to newer processes
4) Incentivize your employees on any new Kaizen idea they generate in this subject.

What is a Visual Workplace?

August 9th, 2011

More and more companies are turning their factories and production lines into visual workplaces and for good reason. Visual workplaces help keep communication going and they urge people to work as a team and not just as individuals. They also help to keep things going on schedule. But, what actually is a Virtual Workplace?

Definition

A visual workplace is defined as self-regulating and self-explaining environment. It is characterized by the presence of visual devices that help guide people and help them set their priorities. In such a workplace, visual devices help keep things ordered and help keep things running on schedule.

Visual Devices

Visual devices are an important part of a virtual workplace. Some functions of virtual devices include:

• Showing Area Designations – Visuals showing the names of the specific areas in the work floor will help orient new employees and it will also facilitate travelling from one area to another.
• Preventing Accidents – Even reminders as simple as a board that says ‘Wet Floor’ can decrease the incidence of accidents.
• Preventing Defects – Visual reminders of the right way and the wrong way to do assemble something can keep workers on tract.
• Providing Easy Access – Visual devices showing the ideal places for personnel access can reduce confusion and make things go faster.
• Sharing Common Work Priorities – This is another way to keep people on tract and keep them

Devices should be tailored to the type of workplace you have. Employees should also be properly informed about how to work with the devices properly.

Factories are not the only ones that can benefit from a visual workplace. There are many companies that are looking at the possibility of it and of visual management for offices. Taking down barriers to improve visibility and setting common long term and short term goals can work will certainly help improve efficiency.

The Two Schools of Change Management

August 8th, 2011

Historically, change management is looked at through two predominant perspectives. The first perspective comes from an engineer’s point of view and is focused more on Mechanical Change or on the business process alone. The second looks at the people involved in the change.

Both can be used independent of one another in order to create change in certain areas. In most instances, however, applying the two at once may be the most helpful business strategy

Machines and Processes

This business transition POV is more focused on changing the processes itself. If a machine is outdated and requires upgrades, this will be very helpful. It starts by addressing business issues and making improvements to a process.

Success is measured based on improved performance and increased profit. Statistical metrics are also be used to measure success in this field, this includes an improved rate of production and better utilization of a machine. It takes a direct approach at changing the mechanics and the process, hardly is it going to look at anything else.

Focusing on this is going to help create effective solutions and efficient processes.

Human Resources

This business strategy looks more at how people are affected by change. It starts with looking at the degree of resistance expected and at how much buy in the company will have. The goal is to increase job satisfaction with employees.

Success is measured by looking at a company’s turnover rate and their productivity levels. One of the main concerns here is to help individuals to make sense of the organizational change implemented and what that change means for them. By focusing on this, companies will help have employees who are receptive to changes.

Adhering to the extremes of one side of the other is rarely a successful business strategy. It is then important to take something from each point of view and apply them to the ongoing change.

Empowerment: Making Changes in the Way Organizations Change

August 7th, 2011

Change management: Implementing Change

Change management has always been an important part of a business, but the strategies involved have evolved in the past few decades. Personnel empowerment has had a big influence of how change is applied today and it is something that looks like it is going to stay.

Changes used to be implemented without second thought of how employees took to it as it was merely a process that needed to be done. An employee’s opinion was hardly of consequence. As personal empowerment became a reality, this take on change has become ineffective. Today, managing organizational change is not only focused on the actual business processes, but it also looks at employee reaction.

Change management: Empowering the employees

Empowerment has really had a significant effect on how companies saw their employees. No longer are they simple workhorses that performed the necessary tasks. They have become important parts of what a company is and are seen as integral to the success of the organization as a whole.

People have become more aware of their worth to a company. They have started to look after themselves and they have also learned to appreciate their individual and collective value. No longer do they do the bidding of upper management without a thought for personal satisfaction. They have become learned their worth.

Business transformation strategies applied today would be wise to look at how employees take to change. Making the employees comfortable with the change is going to make transition smoother. However, good change leadership involves finding that balance between personnel satisfaction and effective change.

Change management: How to properly implement

Change cannot be just about the employees. There has to be a balance between creating effective processes and employee satisfaction. Doing so is going to help make sure that an organization implements the necessary effective changes while having employees who are receptive and willing to work with them.


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