A simplified manufacturing environment provides a company with a clear picture of available material and capacity. This type of visibility is the foundation of the Just-in-Time (JIT) and lean manufacturing movements and is critical for ERP implementation success. Simplification allows for the elimination of process steps designed to add buffers of capacity, labor, and/or material. The idea is to eliminate processes that are not needed and then only automate what remains. It has been demonstrated over and over again that something as intuitive as simplifying a storeroom layout prior to automation can cut search and retrieval time in half. The "understanding" step of the USA Principle reveals processes that can be profitably simplified. Areas to focus on for simplification include the following:
Product design—Often manufacturing organizations have many products with similar components or subcomponents. An excellent area for simplification is the modularization of bills of material. If an organization can take its complex array of end items and reduce the number of components and common parts, it can achieve simplification of product. A paint gun manufacturing company was producing guns in a make-to-order fashion. Lead times were long, manufacturing costs were high, and capacity was running short.
After careful analysis, the manufacturer determined that much of the gun assembly could be modularized and standardized to be used in multiple gun configurations and the components could built and stored prior to actual customer orders. When a customer order arrives, the component parts can be assembled to meet the requirements for virtually any gun. This reduced lead times and manufacturing costs while increasing capacity.
Outsourcing—Accounting departments have been outsourcing payroll for years. Why? Because keeping current with tax laws, tracking the garnishment of wages, and reconciling overtime claims are not value-added services. It is time for other departments to outsource tedious, non-value-added tasks.
It can be done. A New York manufacturer of cement mixers had a motor subassembly with over 60 parts from different vendors. The kitting of the parts and the paperwork associated with all the vendors swamped the small manufacturer. They simplified this process by arranging to have a preferred vendor perform the kitting. By doing so, they eliminated over 59 purchase orders, 59 invoices, and 59 receipts— a substantial reduction of unnecessary work.
Consider internal processing and paper shuffling to determine what processes to outsource. Look at every process within your company. Analyze each process to see if it adds value. If it does not—outsource it.
Housekeeping—Develop the discipline within the manufacturing organization to have a neat, clean shop floor. A sloppy, crowded, disorganized area is a warning that there are training problems, procedures, facilities, or equipment that are not up to the job. In addition, time and effort are spent on finding inventory and tools when it could be better spent on producing product. Consolidate material, improve marking and labeling, have a proper place for everything, work on alleviating congestion. Try checklists and an emphasis on orderliness.
One company had trouble finding finished goods during a pick-and-pack operation so they ended up having more finished goods than necessary. However, after changing the storeroom layout, they found that they didn't need as much inventory since it was now all visible and could be found more quickly.
Workflow and work cell layout—Many manufacturers are familiar with the concept of arranging presses, punches, and assembly benches into work cells to increase plant floor throughput. However, few organizations consider office work cells. The idea is not as unreasonable as you may think.
For example, if order entry personnel are constantly asking accounting for a credit check, place a credit manager with order entry personnel. If customer service has to constantly seek out engineering for revision information, place an engineer side by side with the customer service representatives. If AP is constantly checking with purchasing on pricing, consider placing an AP clerk back with the purchasing agent and so on. There is no reason why the accounting function cannot be spread throughout the office.
The office area of a manufacturing or even a service organization is fertile ground for functional layout improvements. With a little creativity, areas within the office can be organized into highly productive work cells. A reorganization of the office area can duplicate the gains manufacturing organizations achieve through plant floor reorganizations.
Eliminate duplicate effort—In many organizations data is typed into one system, and then another, and even another. It is not unusual for a manufacturing company to have the sales department write up a customer order by hand and then have the information retyped onto shipping papers, acknowledgments, and invoices. This amount of retyping is not only a waste of time but practically guarantees mistakes. A simplified process should capture all of the necessary information once and then retrieve the information only when needed through the use of the ERP system.
Increase the number of processes—This seems contradictory to the simplification step of the USA Principle, but in reality it is not. An increase in the number of processes performed by an organization actually streamlines daily activities. Traditional processes are usually overly complex because incorporate special procedures, checks, and steps to handle all possible exceptions. This slows the processing of items without exceptions—the majority of processing.
The first step in any process should be a classification step. By classifying the type of response required by the situation, an order can then travel down the path tailor-made for its unique situation. It is a kind of "triage" which provides a quick resolution for common situations and rapid identification of all exceptions. If a situation arises that doesn't fit any current processes, it can be easily identified and addressed as a onetime exception, or a process can be developed to handle any recurrences of the situation.
To Be Continued
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