Most manufacturing companies with batch-and-queue 'push' production systems have been blindsided by today's consumer who expects quality products and services delivered on demand and customized to individual taste. In The Perfect Engine, manufacturing experts Anand Sharma and Patricia E. Moody describe for the first time how leading 'pull' production pioneers build to order by reducing inventory, decreasing cycle time, minimizing floor space, and eliminating waste. Drawing on scores of examples and detailed case studies of three leaders in the demand economy field -- Maytag, Pella, and Mercedes-Benz -- Sharma and Moody demonstrate how these companies achieved astonishing results using the pathbreaking Lean Sigma SM Transformation. Combining lean production and quality elements from the famous Six Sigma process, Lean Sigma produces annual productivity gains of 15 percent to 20 percent. In addition, the authors show, inventory turns more than quadruple; cycle times drop by more than 70 percent; and floor space reductions of 30 percent to 50 percent are not uncommon. Sharma and Moody provide immensely readable explanations of key technical aspects of the process--for example, how cell-based one-piece flow can replace batch-and-queue with dramatically improved lead times and inventory turnover. A chapter on a revolutionary design technique the authors call Design for Lean Sigma or 3P (product and production preparation) shows how to build flexibility into the product design and the production systems at very low risk, which will be especially helpful when forecasts and customer orders deviate from original projections, as they usually do. Further, the Design for Lean Sigma method is devised to produce profitability at short-term volume projections, which makes it a perfect tool for the new demand economy. Essential, timely, and important, The Perfect Engine is perfect reading for this new manufacturing era.
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Anand Sharma has spent the last two decades developing and manufacturing improvement programmes. Patricia Moody is a manufacturing management consultant with about thirty years of industry, consulting and teaching experience.Excerpt. © Reprinted by permission. All rights reserved.:
Chapter 1: A Better Way
Stepping into the huge kitchen cabinet assembly plant, you are assaulted by the sights, sounds, smells, and by-products of a very busy operation. There is a thick haze of sawdust in the air and on the floor. Mile-high racks of parts storage hold an accumulation of dusty laminated doors and trim pieces. A fleet of fork trucks race down the aisles, moving empty bins and depositing fresh crates of piece parts in open areas that become acres of in-process inventory storage.
Your eyes, stung by paint and glue fumes, burn, and you start to sniffle and sneeze as the vapors and dust settle in on your clothing. Tiny bits of particulate matter float by.
At shift change, operators blow the sawdust off their equipment with air hoses; the material makes fine grit underfoot until hours later, when a sweeper comes by to stir up new piles of sawdust and pieces of laminate. He works his way through the plant, pushing and piling mountains of accumulated trimmings -- evidence of yesterday's, and last week's, and last month's endless attempt to make schedule. Please customers. Fill trucks. Get paid.
Out at the shipping dock, trucks appear hourly to unload heavy sheets of plywood and laminate. Suppliers hustle boxes of hardware and drawer fixtures while shipping clerks, overwhelmed with the press of paperwork and fork trucks and upstream demands for more raw material, move from one disconnected operation to another.
On the floor, fork trucks rush pallets of raw material to cutting machines; the big saws' high whine makes it impossible to understand operators' shouted explanations of their process. Everything about this plant is busier, noisier, dirtier, and heavier than what one would expect from a twenty-first-century North American manufacturing giant.
This particular building houses final assembly for a high-volume producer of premium wood cabinetry. It's a complex operation and, with a booming construction economy fueling strong demand, every day is an opportunity.
The best way to understand the scope and rhythm of any facility is to follow one complete product from receipt of raw material down to various processing steps, into final assembly, packaging, and the shipping dock. This plant, however, presents a special challenge because its multiple subassembly and processing departments feed huge variety to the final assembly lines. It is possible to walk through key subassembly areas that feed the final assembly line, and each one of them is an eye-opener.
Down on the white door line a team is tackling one gigantic lamination machine that seems to stall out once per shift. The work stoppage ripples outward and causes immediate downstream disruption as four expeditors from final assembly converge on a lone table saw operator. Larry is a six-year veteran of endless rush orders, expedites, and firefighting. The expeditors are impatient and they wave scraps of paper bearing endless parts shortage lists in his face -- "line's down," "gotta have it," "can't find it," "big customer," and "won't wait" punctuate their demands.
Confronted with four orders for hot shortages, Larry silently moves to his small work cell and begins, one by one, to cut parts. There's a quiet determination about him that belies the hopelessness of his task. Every day, Larry's work routine becomes a long series of interrupted and equally frantic calls for help from downstream assembly workers who cannot keep their lines running, who must pull incomplete cabinets off to the side while they wait for missing pieces.
In fact, what was designed to be a smooth line-of-sight assembly has been transformed by a nightmare process filled with missing doors and damaged trim pieces into a line interrupted, a broken series of incomplete customer orders. Everything waits; nothing flows. And yet, final assembly is where all the sins, all the missed deliveries and quality issues and design problems make their very visible appearance. While operators can still be expected to work the occasional miracle, they simply cannot run lines with no parts. Henry Ford knew this, countless appliance and electronics and computer factories proved this, and certainly the competitors know this.
It's every operations manager's nightmare, every customer's frustration, and Larry's problem. But this hurry-up-and-wait way of running manufacturing is not atypical -- thousands of factories across the world struggle from day to day with the same uneven pace, the same horrific ergonomics and the same frustrated customers.
Throughout the plant there are other signs of a bad operation -- an imbalance of huge computer-controlled machines played off against highly used, small, manually operated equipment. Long lines are broken by accumulations of mismatched parts, operators working to keep up a desperate pace, and workers who wander from one operation to another. At the end of the day they return home not knowing exactly what they have produced, or how they may have accomplished some vital piece of the company's mission.
For years customers have ordered semicustom products -- oak, maple, or birch cabinets of any size or height configuration -- for promised delivery within six to eight weeks. A few orders make the quoted lead times, most don't. Marketing has learned the danger of exact promises and production doesn't know the difference.
Recently, Custom Kitchen Cabinets, Inc., has encountered strong competition from lean producers who quote two-week deliveries on most items. Management would like to improve lead times and continue to grow volumes -- but the usual fixes, such as overtime, more operators, the addition of seven high-speed cutting machines, are not working.
It doesn't have to be this way. After 150 years of integrating various manufacturing processes into smooth flows that balance associates with process and materials, lean producers are proving every day that there is a better way.
Why Become Lean?
Lean and Beyond
What Custom Cabinets wants to do -- make money and grow the business -- is what every manufacturer in every industry wants. Despite all marketing and strategic plans, however, Custom is prevented by its own broken and flawed manufacturing processes from accomplishing anything greater than simply making payroll. Bad manufacturing simply won't support good growth and profits.
A map of Custom's main assembly process shows a dangerous mix of batch-and-queue or "push" production. They have a heavy dependence on large, automated equipment and spaghetti-like flows that frequently circle and loop back on each other. With such flows, line-of-sight manufacturing is an impossibility.
Feed the Machine
Further, Custom is drowning in piles of work-in-process and raw material inventory. With so much cash tied up in inventory and storage and handling systems, it will be difficult for Custom to refocus on new products or faster deliveries, especially when the market takes a cyclic downturn. E-commerce will produce a predictable back-room response for Custom. Even as customers go online to place their orders, Custom's stressed manufacturing system will run faster and faster to meet nanosecond waves of demand with nineteenth-century methods. It simply won't work.
Batch-and-queue production is inefficient and expensive. Lean manufacturing, especially comprehensive systems like the LeanSigma Transformation, offers producers the opportunity to work smarter with fewer associates, less material, and lower costs. Moving to pull systems such as this -- with cellular production, single-piece flow, and repeatable, consistent quality -- requires management determination and leadership, as well as visible support.
The Era of Good Manufacturing
Incredible results from elegant, lean manufacturing processes continue to carry the pioneers -- like Wiremold, Lantech, Pella, Maytag, Mercedes-Benz, and Vermeer -- into new areas of opportunity. These companies are the early adopters whose management saw and immediately understood the potential from adopting lean production and design methods.
Over fourteen years after the first North American implementations, these companies use kaizen breakthrough methodology and LeanSigma Transformation to create manufacturing process innovation. They have designed and implemented brilliant but simple information systems to control and track costs, to integrate with the extended enterprise.
Lantech has drawn on the wisdom of kaizen to redesign its design process. Hartford, Connecticut's Wiremold has acquired a dozen smaller producers with its freed-up cash flows. And Pella Corporation, once a small, perfect player in a large market, has transformed its manufacturing capabilities to take the lead in a growing market. In merely six years Pella has more than doubled its sales in a relatively slow growth industry while, at the same time, increasing its profitability by 250 percent, without any infusion of additional capital or resorting to layoffs. Mercedes Truck Operations in Brazil, in the heart of traditional automotive pressures, has demonstrated that manufacturing process excellence is cross-cultural. Maytag is building an innovation machine to compete with Third World labor rates and mass production methods. Vermeer is not only improving its existing manufacturing, it is using LeanSigma concepts to design and develop new machines and new products.
For some CEOs, tackling internal processes such as manufacturing, engineering and marketing may not be hot on their list of favorite activities. Manufacturing is especially unappealing because factories are usually dirty, noisy, even dangerous places. But production is where wealth is created and where customers are captured and retained. With flawed processes, marketing may make the call and close the deal, but without deliveries of high-quality, value-priced product, the customer will be disappointed and sales will dwindle. The challenge is not terribly complex or expensive. Simply put, lean processes can be a big step because of the push systems and heavy assembly line-type flows that are already in place. Moving to a very different and simple system requires parting with tradition and one's comfort zone and going through the pain of change, and it is the most difficult challenge for management. Essentially, most manufacturers must tear down processes that have worked, although not well, before they can build back up, the right way.
Manufacturing in a Changing World
While the 1950s and 1960s may be known as decades of stability and growth, the 1980s and 1990s launched huge shifts for business. Marketing, information systems, and workforce management saw enormous shifts in the philosophy of management, as well as the preferred methods of expanding markets and capturing customers. The possibilities seemed endless if factories could just make enough "stuff."
What began as an exploration into better ways to control electronic processes at Bell Labs in New Jersey blossomed into a whole new focus on basic production processes. Manufacturing became an area of interest, but it was not yet seen as a revenue generator. It was more a cost center line item, or at least a barrier to unlimited market and profit growth.
While manufacturing was just beginning to see the way to more customer responsiveness, MBA classes still taught classic marketing and strategic push planning. The schools churned out executives who well understood how to tempt and push a market until consumers were ready to buy, and willing to wait. Mass media draws like TV ads and even print media were guaranteed investments that would lead consumers, even create a market. How wonderfully predictable and safe this approach proved for so many years to so many companies -- giants like Procter and Gamble, the cereal producers, General Motors, and even IBM.
Shifting Consumer Behavior
Manufacturing in a changing market means that the older triggers of newly created consumer demand don't always work, and don't quite buy producers the longer lead times and predictable responses that they had grown accustomed to. Consumer behavior shifts and is as unpredictable as a teenager's fashion sense.
Each new vehicle or entertainment or personal communications device is loaded with as many technology devices as the computer industry can cram into products. With the month-long life cycle of most high-tech technology products, it is inevitable that bigger consumer products -- like cars and trucks, and even lawn mowers -- will undergo life cycle growth and decline that parallels the electronic industries'. Here today, junk tomorrow. There is no way that manufacturers operating at "ordinary" or "traditional" human design and production speeds can "push" into such markets, or even successfully follow and respond to monthly product redesign swings.
New, New, New
Whenever new technologies create new markets, the dominant players' competitive game ups the ante for all the other players. Success draws success, and new levels of furious competition inevitably raise anxiety levels, even for companies that believe they are somewhat protected by patent and trademark laws. Hewlett-Packard's first hand-held calculators were high-end, beautifully designed, but expensive devices. As soon as backwards data entry became passé, however, dozens of competitors rushed in with cheaper devices. Prices dropped from close to one thousand dollars for the first machines to well under fifty dollars in about ten years, with incredible lessons about the power of improved manufacturing methods and costs.
Excellence Is Achievable
We have the answer for many production questions and we think producers already, unknowingly, have the means to become more flexible and responsive, to satisfy a consumer's shifting demands. And fortunately for CEOs, good models of lean production such as the Lantech and Wiremold success stories mentioned above exist now on every continent. There are wonderful lean auto assembly plants in Brazil and Turkey, home appliance manufacturers in Mexico and China, camera producers in Scotland, and dozens of smaller, agile producers at second- and third-tier levels supplying automotive, electronics, and aircraft industries.
Here's an example that highlights the difference between mass production and lean production:
A pen is an assembly of about a dozen metal and plastic components and one subassembly. To build a single red pen using old-fashioned, mass production methods, many big pieces of equipment and a series of human assemblers would be brought together to produce huge batches of shells, cartridges, and clip subassemblies. The entire production process might take two dozen process steps, from cutting, shaping, and painting raw metal to inserting a cartridge supplied by an outside supplier, testing the pen, and wrapping it for shipment with thousands of others.
Typically, if a customer wanted to order one dozen red ink pens and two dozen black ones, he might not expect to receive the completed order for several days or weeks unless it happens to be available from inventory.
The production sequence of operations, following raw mate
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