Starting a Start-up: Lean Manufacturing Techniques
Minimize waste, maximise value, an introduction into how to get your start-up manufacturing making money from day one
When commencing on any manufacturing project and subsequent supply chain systems, it can be difficult to understand where to concentrate resources, attention and capital.
Variation, wastage and defects can eat into funds quickly. If you don’t reference a robust process, the manufacturing game can be over before its begun. To ensure you start from the strongest possible position, a Lean Manufacturing process is required; this means building the most efficient manufacturing and supply chain systems possible.
Lean manufacturing is how to minimise waste and maximise value. It’s a straightforward principle. As with everything in manufacturing; data-driven methodical thinking constructing great processes that control, allowing you to make the best decision for the right reasons; ultimately producing the best product possible.
Lean is looking at every single step of your process, and methodically assessing it for waste. Waste comes in many different forms; in this article, we discuss how we can look at individual processes and analyse the steps needed to get to that lean perfection.
I was fortunate enough to be based in China as a quality manager for a major automotive OEM, beginning to end of several major projects. Some projects were in a constant state of turmoil. Just as an example; a project I owned had over £425 million in stock waiting for re-work. I cannot state how important getting lean process together can help in getting product out the door and into customers hands.
There have been a few times I have joined mid-way through projects and thought; I wish they had just produced a lean process from the outset.
There is an easy to remember mnemonic that allows you to assess each stage of your process, analyse for waste, variation and ultimately increase your profits; assuring you are lean from the inception of your manufacturing project.
TIM WOOD
T- Transport, the identification of movement in the process, assess if the movement of product is required in each step of your process. Every time a product is moved, touched or processed unnecessarily, there is a risk that the product can be damaged, lost or delayed.
Don’t get too hung up on thinking about big production lines with many processes.
A simple process where a document requires sign off can be used as an example: A document is taken from one desk to another for sign off.
Ask the question; does this need to be moved, is this transport of document needed in the processes? What needs to happen to remove this movement, and with it; the removal of the risks.
Moving this document from A to B is transport.
And that’s where we want to get to. Questioning every single step in the process, gaining clarity, measuring it with data.
Data: time, costs, delays, damages.
How long does this transport take, what’s the risk to damage, at what cost, who is going to absorb that cost?
Is that cost worth it?
I- Inventory, this includes all components in the process. Components in process meaning; finished products that are not being processed, raw material and work in progress. Each of these represents a capital outlay not producing income. The larger and the longer stock sits in one of these states, the more it contributes as a waste.
Smoothing stock workflow by ensuring excess amounts of inventory are minimized in each state will allow the reduction of excess stock and, subsequently, a reduction of waste; increasing profits and cash flow.
Which is why we are all here, right?
I have a personal example of this exact event. We are currently working for a client. Managing the moulding of plastic components. Having been experimenting with different plastic compounds to gain the ‘perfect’ component (fit, finish, interaction with the mould etc.) and had after many days of testing; material selection nailed.
Raw plastic was purchased in anticipation of production. Having run batches and entering into continuous production, more stock of raw plastic was purchased.
Because of upcoming holidays, we needed to ensure we were not caught out with shipping and delivery of the plastic. So over a 1000kg was purchased (enough for a 3-day run); 500 components.
However, because of the holiday (and tool breakage on another component), production was stopped and postponed.
Therefore we have (at personal cost) over a ton of raw plastic sat on a shelf. This story holds importance because although these issues in Inventory were not totally within our control, the process was not smooth and continuous, meaning that we could not accurately anticipate the stock levels at a given time. Through planning and stock inventory control, this situation could have been totally avoided.
The result: cash flow is reduced, and if you are a start-up cash flow is precisely what you need. Only hold the inventory you need; smooth out that supply.
M- Motion, motion waste is different to transport waste as described above. Motion is specifically looking at the waste created when moving the items around that make the product.
This is looking at the wear and tear on a tool or the repetitive strain injuries on workers that could attribute to downtime of the facility. These little intrinsic nuances are easy to see post-event of an issue. But its entirely possible that you can pre-empt the issues in set up.
One of the best examples, documented; well before ‘Lean Manufacturing’ came to be the buzzword it is today, comes from an American Engineer named Frank Bunker Gilbreth. At the age of 16, he was observing the movement of bricklayers.
It occurred to him that the movement of bricklayers was inefficient, different workers moved differently. Some moved more efficiently.
As Frank moved through the ranks of management, he started to optimize the movement of teams of bricklayers.
Through the implementation of adjustable scaffolding, the bending over motions of workers was reduced, the stacking of bricks improved, and through hand tool optimisation he was able to reduce movements from 18 steps to just 5.
Reducing wastage and improving efficiency.
W- Waiting, this one is pretty self-explanatory. When a product is neither in a process nor being transported, it is in a state of waiting. Much like the inventory step, when you have stock waiting, it costs, as you have material/ workforce stationary; not earning money.
Typically this is in a queue, its no surprise that when you think of any process, be it making a cup of coffee in a morning, to the most complex of production lines in a car factory, the majority of the time a component is in a queue. Be it a coffee bean waiting to be ground in a machine, or an exhaust system sat at the side of a production line waiting to be fitted. They are in a queue.
As discussed before the cost of stock on the ground is just that. Its cost. You want to reduce the waiting for many reasons. Be it the production line workers waiting because of downtime of tool breakage, or stock in a rework queue.
What can be frustrating here is not having the data around you. This is where data can start to really help. You can time workstations or time areas that stock storage.
Lean this up to its most efficient point, and it can lead to the pinnacle of manufacturing supply: JIT, Just In Time. Without going into too much detail, just in time systems allow for products to be shipped to the production line from sub-suppliers just in time. Thus allowing for stock inventory and waiting to be reduced to their leanest point. This is especially beneficial in high expense items such as vehicle exhausts, and indeed it is employed in vehicle exhaust system production and assembly.
O- Overproduction, producing more product than required, produces several forms of waste that should be avoided at all costs. This can be the real make or break of a new company embarking on their manufacturing journey.
Let's look at why; its often overlooked by many new startups. The holding of vast stocks is deemed as an asset rather than a liability. Lets set the record straight. Holding too much stock at any point in your supply, be it from the buying of material to the holding of stock in your end warehouse. Have too much at any one point is waste. Overproduction is the classic hidden cost.
There is little point taking advantage of the reduction in the cost of bulk purchases and the decrease of piece cost production if those cost benefits are wiped out by excess stock storage fee, or worse, having to scrap stock because you overproduced.
It’s also a hard one to fix, and a fine balancing act is required. Again data is a necessity here. Sales projections are a must. Guage your market, look at your competitors, look at the market conditions you are entering into. Don’t have overly inflated sales figures. It can seriously impact upon cash flow and ultimately if you have to scrap stock because it goes unsold, that's profit.
Overproduction is the worst kind of waste.
O- Over-processing, this is a difficult waste to get right. Over-processing is the description of doing more processes to a product than what the end customer requires.
And this is exactly why it's a hard waste to get right. Because everyone wants a quality product, but if the quality is far above than that what is required by the end consumer, then its been over-processed. It can come from ultimately a misunderstanding as to why customers buy your product. What looks better to the product designers may actually be detrimental to what the customer wants to use it for.
This waste can be removed in the customer research phase of your product development. Consumer research may seem like a strange place to look when trying to lean your manufacturing processes, but data comes from the entire spectrum of the product lifecycle.
So how can you fix overprocess waste? Look to your target market and the end consumer. Are they using or going to be using the product in the environment that you have designed it for? Does your product need the level of quality that it has been designed to?
Be very careful when looking at this type of waste. You don't want to step too far to the detriment of product quality.
D- Defects, defects themselves will need an entire thread to discuss how to tighten up manufacturing variation to reduce defects and increase profits.
It's not rocket science to understand why putting parts off the production line straight into the bin is a bad place to be, or employing expensive quality control; then putting them in the bin, even worse your customers either putting them in the bin or sending them back to you to put in the bin. Each way put, it's cash in the bin.
There are countless systems to fix defects, some are easier to implement than others, and of course, always depends upon the failure modes that the product is experiencing.
DMAIC is the Six Sigma approach, and we will be discussing in future articles how to employ defect finding systems robustly.
The above TIM WOOD description will allow you to look at each step in your process and start to analyse in detail. The shift in mindset you need to employ as a start-up manufacturing company is that through the employment of the above mindset, you will be able to improve your product.
Don't forget that if you are working with manufacturing facilities anywhere in the world; this system can be employed. In fact, any system in any industry can have the same system implemented. Lean not need to be for the manufacturing world. It can be for all walks of life. If you wish you can lean up your coffee making in the morning.
Its a totally transferable system that's ultimately scalable to everything in life.
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