Why FLOW is important irrespective of production system?

Any manufacturing organization can be classified based on the production system. The production system is primarily based on TWO factors

1. Volume

2. Variety.

As shown in Pic, any organizations production system falls under any of the categories

1.Unique / Project Type production
2.Customized, Job Order production
3.Standardised, Batch Type production
4.Mass / Flow Production


You can fit your organization production system in any one of the above production systems.

However, irrespective of your production system, what matters for business profitability is SEAMLESS FLOW.

The ultimate objective of any organization is to striving towards continuous flow from the upstream process( RM Procurement from suppliers) to downstream process ( FG dispatch to customers).


How is the flow measured in manufacturing?

Flow is measured as Lead time. (Definition of lead time)

why flow is affected in any production system?

• Cycle time imbalance between work center
• Rejections / rework  at each stage
• Machine Breakdowns
• Changeovers or setting time
• Lack of  resources (material/man)
• waiting for decisions

Impact of poor flow on the business :

1. WIP between work centers
2. Long lead time
3. More Space
4. More Movements and Handling efforts
5. Rejections / Rework
6. Communication issues
7. Low productivity
8. Low flexibility to the customer

Solutions approach to improving flow in ANY production system:

Continuous-flow manufacturing (CFM) is an approach 

Continuous improvement efforts to integrate all elements of the production system.
The goal is a best possible balanced production line with little waste, the lowest possible cost, on-time and defect-free production.

Benefits of Continous flow improvement approach is as follows

• WIP inventory reduction
• Space utilization
• Set up time reduction
• Lead time reduction
• Reduce material handling distance
• Productivity improvement
• Quality improvement
• Better teamwork and communication
• High Flexibility 
• Better Visibility

To sum up, irrespective of your production system, you need to continuously improve the flow for sustainable business profitability !

Changeover time loss reduction is compelling need for organization- why?

When the manufacturing facility produces a different component of same of the different family, it needs time between one component to another component change in the equipment or facility. The time required between two components production is called change over time or setting time.

To be specific on the definition of changeover or setup time is the time elapsed between last good piece of component  A to the first good piece of component B.It comprises Preparation Time before setting + Actual setting in the equipment + Quality proving the new component as per specification.

Why is there a compelling need for changeover time loss reduction initiatives?

In external socio-environment, there had been a shift in customer's preference, lifestyle, affordability, and expectation of spot delivery or short lead time and so on. This change in external leads to the following challenges to the business internally.

1. Frequent new product launches and reduced shelf life  of the product

2. Increase in variety with moderate/high volume

3. Meeting delivery commitment  

How the external scenario affects the organization capability on changeover time loss reduction?

Unlike it is justifiable to have dedicated equipment/facilities, the organization has to produce all varieties of the same family group in the same equipment/ facilities. If the changeover time is high, it will affect the organization in the following ways

1.Utilization loss to the equipment/facilities

2.Loss of capacity

3.Increase in manufacturing cost as all the losses would be accounted as manufacturing overheads only

4.o counter high changeover, if the organization goes for higher lot sizes, it will affect regarding higher WIP / FG inventories, possible rejections/ rework/planning cumbersome and other communication issues.

on the contrary, if the organization is continuously working on reducing changeover or setup time loss, it will  help

1. Faster delivery leads to customer 's acceptance and possible sales volume growth

2. Better manufacturing cost, in turn, product price

3. Quality improvements due to coordinated and standardized work during setting 

4. Improves the morale of the working people as they are mostly affected due to unorganized changeover process.

5 Short changeover time brings flexibility to the organization to produce variety and at the same time, not losing the utilization and people efficiency loss.

Going forward, those organization who are specialized in variety handling with minimal production cost would be fittest to survival.

One of the competitive advantage for the organization is that developing the capability to reduce the changeover continuously and increase the flexibility in meeting the customer's requirement

Why must continuous Lead-Time reduction be the focus for a Business head?

From customer's perspective, Lead time is the time taken between customer placed the order for product/service and the time the customer received the product/service.

This lead time may be further broken down into supply lead time, manufacturing lead time, distribution lead time and so on.Those classifications are internal to the organization, and the business head must focus on to reduce the overall lead time continuously.

Why lead time reduction is an essential focus for the business/business head?

Lead time reduction is important from four perspectives.

1.Working capital & Finance perspective

2.Triggering sales & operations teams towards growth performance

3.Operational Efficiency perspective 

4. Customer's perspective

Let us understand from each perspective.

1.Working capital & finance perspective:

When the product/service order fulfillment lead time is more, the expenses incurred to cover the product/service till getting payment from the customer will also be more. The business gets the cash only when the product/service is sold to a customer and converted as cash.

For example, if the lead time is six months, business will get the cash only after six months. Till such time, the business has to fund for all the expenses like salary, material procurement, and other overheads, etc .that is working capital is required for six months..(Pl ignore, advance payment, credit times, payables, receivables, etc. as those are all tactic arrangements by the business)

If the business team reduces the lead time by three months, working capital required only to fund three months expenses.

Hence, if you have high working capital, one of the causes and solution approach would be a LEAD-TIME reduction of your order fulfillment.

2.Triggering sales & operations teams towards growth performance:

Typically entire organizations' speed depends on the PULL.For example, If lead time is six months and the order execution capability of 6 months, say one crore, then the organization can make only two cr as sales turnover annually. Based on the execution capability or capacity of the organization, the sales and marketing function also behaves and operates. Once the lead time is reduced by 50 %, say by three months, then organization capability is also increased to 4 cr as sales turnover. The point is when Operations engine pulls more, the other parts of the organization also pull more from the market or customer.

The business head responsibility is to understand this behavior and must focus on lead time reduction.If your organization sales turnover is stagnant, one of the reasons could be high lead time and complacent in the organization.

3.Operational Efficiency Improvement 

When the lead time is high compared to actual value addition time, it means, your product/ service is held up in the value chain as waiting or delay. This results in accumulation of inventory in the form of WIP, which sometimes leads to rejections/ rework, making the communication complex, storage, handling, manpower deployment and so on.

Also, your strategic decision on supply chain leads to high lead time in getting the raw materials and high lead time in reaching the customer .Typically when the lead time is high; it brings all the inefficiency or wastes in the system. When the lead time is low, it brings flexibility into your production system as you can move from " Build to stock" to "Build to order."Also, the change in your production system will reduce your inventory and its derivative wastes in the system.

If you are struggling with low efficiency in your operations, one of the causes could be high lead time

4.From customer's perspective :

In today's fast-moving lifestyle, the customer does not want to wait, and he is willing to pay more for quick delivery than negotiating and followup with your team on delivery dates.Less the lead time, more customer's satisfaction and there is possibilities of further business partnership.If the lead time is high and non-negotiable, there is a possibility of your customer move to the competitor.

In essence, as a business head, your continuous focus must be on reducing the lead-time either in supply chain or operations or distribution. 

This focus will give tremendous benefits in terms

1.Capability to increase sales turnover

2.Reducing the cost of the product

3.Reducing the working capital

F

Understanding “Time Elements in Operations Management"

Cycle Time

Cycle time is the time required to process one piece

For example,

Grinding Cycle time = 100 sec

It includes,

Loading Cycle time + Auto Cycle time + Unloading time

=20 sec +75 sec +5 sec

=100 sec

ie Every 100 sec , we can get one component 

Throughput Time 

Throughput time = Sum of ( Cycle time in entire process of a component)

Total processing time for one component

For example,

Bearing ring throughput time = 240 sec

It means

Parting cycle time +Grinding cycle time +Turning cycle time

=60 sec +100 sec+80 sec

=240 sec

ie To process one bearing ring, the total time required is 240 sec

Lead time 

Lead Time = Sum of ( Cycle time in the entire process of a component) + all non-value added times in the system

ie  Lead time = Throughput time + all waste/delay time in the system

For example,

Bearing Lead time = 2 days, 

It means = 240 sec+all delays leads to 2 days