Six Sigma Manufacturing

The U.S. economy is coming out of its recent stall, the manufacturing sector expanded at a respectable rate in July on strong orders and higher productions rates.

The Institute for Supply Management said its manufacturing index registered 62.0 in July, up from 61.1 in June. It was the 14th consecutive monthly increase and was in line with the consensus forecast of analysts.

An index reading above 50 indicates expansion, while one below 50 indicates that manufacturing activity is contraction. The gauge has been above 50 since June of last year.

"July represents a good start for the third quarter, and the outlook continues to be very encouraging as new orders and production accelerated during the month," Norbert J. Ore, chairman of the institute's survey committee, said in a statement accompanying the report.

As the expansion continues, many manufacturers are once again experiencing problems in meeting production schedules, maintaining high quality products and satisfying customer requirements. It's important that your company takes advantage of this opportunity to increase their competitive edge. 

What can you and your company do to improve your competitive edge? The winners choose to identify and master the 8-Steps of Six Sigma Manufacturing. If your company wants to eliminate shop floor chaos and end-of-the-month scrambling and create a fun work environment, be sure to read this week’s article and pass it along to those who could benefit from its message.

Have a nice day, keep the faith, and stay connected.  

Bill Gaw
bg@bbasicsllc.com
760-945-5596  

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MASTERING THE 8-STEPS OF SIX SIGMA MANUFACTURING

In their efforts to draw closer to customers, many manufacturers have lost focus on what should be a company's primary success factor - profitable growth. In today's competitive manufacturing environment, it takes more than quick fixes, outsourcing and downsizing for companies to consistently achieve their growth and profit objectives. While these options may yield temporary financial relief, they will not lead the way to long-term growth and profitability. For companies to grow and consistently exceed bottom line expectations, they need to get lean. And, to get lean they must master the basics of lean manufacturing.

Over the past 30 years, we were led to believe that computerized systems would provide the solution to all of our growth and profit challenges. Material Requirements Planning (MRP) and Enterprise Resource Planning (ERP) System gurus assured us that if we implemented their software programs the bottom-line would take care of itself. Well it hasn't happened!

Like most perceived panaceas, each of these programs received a lot of hype, produced a few success stories but in general, contributed little towards helping companies identify and achieve their full growth and profit potential.

For a measure of their shortcomings, one needs only to spend some time in an MRP scheduled manufacturing facility - especially during the last weeks of the final financial quarter. In a typical company, you'll find that converting the quarterly financial forecast into reality still requires overtime, internal/external expediting, last minute "on-the-run" product changes and even a little "smoke and mirrors". 

Results are scrap, rework and warrantee costs that negatively impact profitability. Then there are quality and shipment problems that deliver less than acceptable customer satisfaction. Companies have spent many thousands of dollars in pursuing MRP and ERP only to see their growth and profits decline due to uncontrolled operating costs that produced non-competitive pricing.

So, after introducing MRP/ERP computer systems and more, why is it that most businesses are still struggling to sustain profitable growth and are no where close to achieving their full growth and profit potential?  

The first reason is simple - the results achieved by any computer system are only as good as the people at the controls and the integrity of the data they provide.

The second is complex - most manufacturing managers facing major day-to-day problems and constraints adopt a totally reactive management style. Consequently, their time is consumed with "band-aiding" and/or finding ways to work around system and process problems - leaving them little or no time to analyze and eliminate the root causes of ineffective systems and processes. 

How does one turn around such a classic "cart before the horse" syndrome? What's required is first a company-wide, in-depth understanding of the fundamental of manufacturing excellence and then a total commitment to the consistent and tenacious execution of the 8-Steps of Six Sigma Manufacturing™. 

Delineated below are the 8-Steps: 

INFORMATION INTEGRITY: It is not uncommon for front office management to become disenchanted with computerized systems results when time schedules and promised paybacks are not achieved. Acceptable systems results cannot be achieved when systems are driven by inaccurate data and untimely, uncontrolled documentation.

PERFORMANCE MANAGEMENT: Measurement systems can be motivational or de-motivational. The individual goal setting of the 80's is a good example of de-motivational measurement - it tested one individual or group against the other and while satisfying some individual egos, it provided little contribution to overall company growth and profit. Today, the balanced scorecard is the choice of manufacturing winners.

SEQUENTIAL PRODUCTION: It takes more than systems sophistication for manufacturing companies to gain control of factory operations. To achieve on-time shipments at healthy profit margins, companies need to replace obsolete MRPII/ERP shop scheduling methodology with the simplicity of sequential production. Manufacturing leaders have replaced their MRP shop order "launch and expedite" methodology with continuous production lines that are supported by real-time, visual material supply chains ... sequential production. The assertion that sequential production only works in high production, widget-manufacturing environments is a myth.

POINT-OF-USE-LOGISTICS: Material handling and storage are two of manufacturing's high cost, non-value added activities. The elimination of the stock room, as it is known today, should be a strategic objective of all manufacturers. Moving production parts and components from the stockroom to their production point of use is truly a return to basics and a significant cost reducer.

CYCLE TIME MANAGEMENT: Long cycle times are symptoms of poor manufacturing performance and high non-value added costs. Manufacturers need to focus on the continuous reduction of all cycle times. Achieving success requires a specific management style that focuses on "root cause" proactive problem solving, rather than "fire-fighting."

 PRODUCTION LINEARITY: How linear do your production departments produce to the company's master schedule? As companies struggle to remain competitive, one of the strategies by which gains in speed, quality and costs can be achieved is to form teams of employees to pursue and achieve linear production. Companies will never achieve their full profit potential if they produce more than 25% of their monthly shipment plan in the last week of the month or more than 33% of their quarterly shipment plan in the last month of  the quarter.

RESOURCE PLANNING: One of the major challenges in industry today is the timely right sizing of operations. Profit margins can be eroded by not taking timely downsizing actions and market windows can be missed and customers lost by not upsizing the direct labor force in a timely manner. These actions demand timely, tough decisions that require accurate, well-timed and reliable resource information.

CUSTOMER SATISFACTION: Customer satisfaction is in the eyes of the beholder - the customer. Perceptions are what we need to address when it comes to improving customer satisfaction. It does us no good to have the best products and services if the customer's perception of our "as received" quality and service is unsatisfactory. We need to plan and implement proactive projects that breakdown the communication barriers that create invalid customer perceptions.

While many business gurus have identified one or more of these steps as important to the successful pursuit of business excellence, the fundamental importance of these six sigma steps has been lost in the proliferation of buzz words and the mania of systems sophistication.

We say it is time for companies to put a hold on sophisticated systems development that cause self-inflicted, day-to-day chaos. In its place, they should immediately initiate an action learning program for gaining a company-wide understanding and acceptance of the importance of the 8-Steps to Six Sigma Manufacturing™.

Once buy-in and commitment have been achieved, aggressive planning and tenacious implementation must follow. In short, let's put the "horse before the cart" - such a program will build a solid foundation for redefining and revitalizing a company's pursuit of profitable growth.

If you and/or your company want to learn how to master the 8-Steps of Six Sigma Manufacturing,  click here--> http://bbasicsllc.com/kblm.htm

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