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Silos and the silo effect

02/16/2012 : 0 Comments  

Growing up in Illinois, I had crisscrossed the “prairie states,” met my share of co-op farmers, and seen plenty of silos. I never gave much thought to the gigantic storage tanks. Until three weeks ago.

It took a trip to rural Georgia and a conversation with a silo manufacturing company to develop an appreciation for the importance of silos in our lives.

While traveling through a former farming community, I learned that the farmers who originally inhabited the area built several large brick silos for harvest storage. Homes were built near the silos and up sprang the towns of Roswell, Alpharetta, and Milton, Ga. Today, these historical silos stand as a “link with the past” and have created a sense of pride for the community.

By sheer coincidence, two weeks after visiting the Crabapple Silos, I had a conversation with the largest maker of agricultural silos in North America. During my conversation with a senior manufacturing executive, I learned silos are extremely complex to design, build, transport, and assemble.

A vice president at the company mentioned that even though making silos is complex, even more complicated are the “intellectual silos” that are a daily occurrence in manufacturing plants.

The phrase “silo effect” has become popular in business and especially in manufacturing. It commonly refers to a lack of open communication and common goals between departments in an organization. This “silo effect” gets its name from the farm storage silo. Each silo is designated for one grain or specific product.

To a manufacturing executive, a lack of communication and “silo thinking” causes departmental breakdowns and a lack of free-flowing ideas from other departments. The net effect is confusion and a disruption of efforts toward common business goals.

The “silo effect” is caused by a remarkably small number of people who gradually drain the silo‘s grain. Its negative impact can be huge on the performance of the total team; eventually leading to a loss of business. However, I’ve seen clients successfully deal with these “silo effects” within the walls of their company. I’ve sat in on several Pull Design Workshops and have personally seen this transformation occur.

It takes a concentrated and ongoing process improvement program. During these workshops we gather the thoughts of the leadership team and then, in one to two days, work with them to develop a course of action to reduce the “silo effect” and develop a sustainable process improvement program. The result is improved productivity, right-sized inventories and more working capital. Often workshop attendees see improvements in customer service, too, once the strategies are implemented.

What are you doing to break down organizational silos? What’s been successful for your organization?
Post by Bill Z.

From one extreme to the other

02/06/2012 : 0 Comments  

There are many misconceptions about lean in high mix manufacturing facilities. Based on my experience, people tend to have one of two (polar opposite) misconceptions:

1) “I can apply the techniques that Toyota has made popular to my high mix environment and viola!”

This person has typically read the books, and invested time to master the concepts and techniques.

The trick is that these techniques must be adapted and modified to better match the realities of high mix manufacturing. Using a cookie cutter approach of Toyota’s techniques will not work in a high mix environment. When I talk with manufacturing professionals and they say: “Lean will work for us!” I often suggest modifications they can make to improve the implementation and the results at their facility.

2) “Since my industry doesn’t look like Toyota, Lean won’t work for me.”

This person has typically read about Lean, manufacturing excellence, Six Sigma and other leading manufacturing efficiency programs. Every industry is different – and, well, every plant is a little different, for that matter.

The philosophical teachings of Lean and what Toyota pioneered can be applied to any industry, including high mix manufacturing – with a few adaptations. The modifications don’t represent flaws in the lean methodology, nor a problem with how your facility operates.

The same Lean principles apply in high mix environments – they just need to be tweaked.

How have you adapted Lean thinking to fit at your plant?

February Webinars Scheduled!

01/31/2012 : 0 Comments  

Our popular Webinars are back for February. Join us for our Lunch-and-Learn series.

February 22, (Wednesday) 11:00AM EST
Join Invistics CEO Tom Knight for a concise 1 hour session on Lean Pull Design.

February 28, (Tuesday) 1:00PM EST
Join Invistics VP Charles Agulla for a concise 1 hour session on Inventory Optimization.

Click HERE to register and check out our upcoming webinar schedule!

Kingsman's Equation and Your Plant's Utilization

01/26/2012 : 0 Comments  

Our last blog post provided a general summary of Kingsman’s Equation and how it relates to your manufacturing operation. Today we’re going to delve a little deeper into the equation to prove that when it comes to lowering the Average Queue Time (or Average Wait Time) of your resources, Utilization is King.

For every system whether it’s a single machine or an entire factory, the time a resource spends as raw material or work-in-progress can be divided into two parts.

1. -Process Time. This is value-added time it takes per machine or machines to process the resource and churn out a finished product.
2. -Queue/Wait Time. This is non-value added time the resources are set aside to wait at the queue of machine or bottleneck, on a machine’s setup, etc

Lead Time = Queue Time + Process Time. In most manufacturing systems, the Queue time can comprise 80-85% of the lead time. This is all non-value added time that should be reduced in order to maintain a Lean operation.

Now let’s take another look at Kingsman’s equation:

AQT = Average Queue Time.
p = Utilization, expressed as decimal
C_a² + C_s² = arrival and process coefficient of variations.
τ = average process time

so what does this mean exactly? First let’s look at some examples where utilization(p) is at .25, .5, .7, .9, and .99. For these examples, we’ll just assume: (C_a² + C_s²)/2 = 1 and process time(τ) = 60 minutes.

Case 1: If p = .25, Average Queue Time (AVQ) = (.25/(1-.25) * 60 = 20 mins
Case 2: If p = .5, Average Queue Time (AVQ) = (.5/(1-.5) * 60 = 60 mins
Case 3: If p = .7, Average Queue Time (AVQ) = (.7/(1-.7) * 60 = 140 mins
Case 4: If p = .9, Average Queue Time (AVQ) = (.9/(1-.9) * 60 = 520 mins
Case 5: If p = .99, Average Queue Time (AVQ) = (.99/(1-.99) * 60 = 5940 mins or 99 hours

In this example since (C_a² + C_s²)/2 = 1, the STDEV of the respective variables would have to equal the mean to get 1. While such high variability does exist in the real world, it’s not very common. But regardless, this example is enough to illustrate two very important take-aways.

1.) Despite such high variability in both arrival and process times. If the utilization of the machine(s) is low, as it is in case 1 or case 2, the Average Queue Time is still manageable. This is because in terms of reducing your AQT, machine utilization is by far the most important factor.

2.) As you can see from the exponential increases in AQT over the cases, it is very, very wasteful to run your machines at such high utilization because your Average Queue Time goes through the roof. Can you imagine an 99 hour Average Queue Time for each of your products? And the screeching of your customers or sales reps? No thanks.

One final thing I should note is that the AQT in Kingsman is not the exact AQT, but more of a likely upper bound of your real AQT. Though it’s accurate enough to get the point across.

The King of Manufacturing Equations

01/23/2012 : 0 Comments  

In queueing theory, Kingman’s formula states that the mean waiting time is given by:

AQT = Average Queue Time.
p = Utilization, expressed as decimal
C_a² + C_s² = arrival and process coefficient of variations.
τ = average process time

So what are the practical, manufacturing take-aways?

1. The longer the average process time is, the more important is the queue length. For example a process that takes a minute, with a queue of 5, is much better than a process that takes an hour with a queue of 5
2. Utilization is king. If utilization is low (~50% or less), arrival variation and process variation will have a small impact. If utilization is high (80% or higher), arrival and process variation will matter much more.
3. service, and assembly, extra capacity may not be as expensive compared to it’s manufacturing counterparts. This is because it is easy to move/add employees between functions.
4. Since many service processes are longer than manufacturing processes, variation is generally more tolerable in service than in manufacturing. In other words, it is generally much more effective to focus on reducing failure demand than variation when it comes to service organizations.
5. Reducing time variation is generally less critical than reducing utilization. Utilization is affected by errors which generate failure demand or rework.
6. Arrival variation should not be ignored. It is just as important as process variation. Can your arrival variation be influenced through salesmen, incentives, informing customers or reducing supply chain amplifications?
7. The work release behavior of processes upstream of bottleneck is important. The smoother (less lumpy) the orders come in at those work stations, the faster the bottleneck will process the orders.

Additionally, the Theory of Constraint advocates 5 steps of improvement: identify, exploit, subordinate, elevate, and repeat. Kingman’s equations gives these additional insights:

-To identify the constraint (bottleneck), it is easier to examine only the load and compare it with demonstrated capacity. Kingman shows that overload begins at less than 100% utilization, and that sensitivity variations is particularly important at high utilization.
-Exploiting constraints should include variation reduction in addition to other methods such as buffering with Inventory.
-Subordinating other resources should include looking upstream of the constraint to examine arrival variation coming into the bottleneck.

Kingman’s equation ties together Lean, 6 Sigma, TOC, and service systems to show that there’s not a one-size fit all when it comes to adding value to your operations. The key is in knowing when to apply each school of thought.

(Be sure to check out John Bicheno’s “The King of Equations” in the Lean Manufacturing Journal for more information and tips related to Kingman’s equation).

Video Demo of Kanban and Pull

01/13/2012 : 0 Comments  

The people at Educatevirtually.com posted this video demonstration of Kanban and Pull in action at a made-up Sailboat company in Naples, FL. With the help of some Legos, they demonstrate what it’s like to let customer demand drive production, rather than rely on demand forecasts used in traditional Push systems. What do you think?

For more information on Pull and it’s implementation, be sure to check out our Whitepaper Switching to Pull-Based Inventory Optimization in Complex Manufacturing Environments.

Manufacturing Trends in 2012

01/02/2012 : 0 Comments  

Jeff Moad, executive editor at Manufacturing Executive, wrote a great post about the trends and challenges awaiting manufacturers in 2012. Beyond the basic political, economic outlook, he cited two particular trends that are becoming more and more common throughout the manufacturing world, affecting businesses in a wide variety of industries:

Soaring Customer Expectations Lead to Increased Complexity

Blame it on the Internet which has taught customers in all industries to expect practically unlimited product variety and near immediate availability. Throw in the need to satisfy the sometimes unique requirements of customers in developing economies around the world, and you end up with substantially increasing complexity facing just about every manufacturing process, from new product innovation to production planning, through to post-sales support. As one of the recent winners of the Manufacturing Executive MegaTrends contest noted, this means more SKUs to manage and more complex networks of suppliers. And this will only increase in 2012 as concepts such as mass customization take hold in more manufacturing verticals.

The Focus Shifts from Planning to Real-Time Visibility and Quick Response

Even as complexity increases, customers are demanding shorter lead times. (Hey, they’ve got their own complexity issues to contend with.) The only way for manufacturers to cope is to build more agility into the system. Don’t get me wrong. Forecasts and planning won’t go away. But manufacturers in 2012 will be placing more emphasis on spotting things like shifts in demand, quality problems, and supply shortages as soon as or even before they actually occur. Monitoring and analyzing such events in near real time will become a big deal, as will the need to build agility into production networks so that, when demand suddenly spikes in Mumbai, you can quickly and profitably adjust by boosting production in South Carolina. Global process standards also will become a major focus as manufacturers seek to gain global visibility and agility.

How will your business adapt to these changes?

Happy Holidays!

12/21/2011 : 0 Comments  

All of us at Invistics wish you a happy holiday season – filled with the blessings of the season.

Best wishes for a prosperous and Lean new year! We look forward to connecting with you in 2012!

Janurary Webinars Scheduled!

12/14/2011 : 0 Comments  

Our popular Webinars are back to jump start the New Year. Join us for our Lunch-and-Learn series.

January 26, 1:00 PM
Join Invistics CEO Tom Knight for a concise 1 hour session on Lean Pull Design.

January 31, 12:00PM (Noon)
Join Invistics VP Charles Agulla for a concise 1 hour session on Inventory Optimization.

Click HERE to register and check out our upcoming webinar schedule!

Survival Tips for Manufacturers

12/14/2011 : 0 Comments  

I’ve been following this discussion for a few weeks now: Top 10 Survival Tips For Manufacturers: What Are Yours?

If you are not a member of Manufacturing Executive community, you probably should be. Here is this great list from Guy Morgan, president of Performance Improvement LLC and managing director of business advisory consultants BBK

1. Maintain your focus
2. Reinvent your products regularly
3. Enhance product and process design
4. Manage your supply chain
5. Rethink off-shoring
6. Improve quality
7. Diversify your customer base
8. Embrace globalization
9. Invest in your employees
10. Facilitate total productive maintenance

And a Lean mentality naturally supports several of these points. I might change #8 to “embrace  change” – as globalization is part of the changing world we live in. And I would add #11 – “measure the right metrics.”

What are your survival tips for manufacturers?