The Fabricator - November 2013

FABTECH® just keeps getting better. In fact, the entire purpose of FABTECH is improve- ment. But hidden in the flash of new and better equipment and the appeal of the latest practices and methods is the real question: How do I reduce my total unit costs to generate a sustainable competitive advantage? In other words, how do I improve beyond my company’s current norm, but also more than the competition?

To do this, you have to reduce those costs, and not just by improving the throughput rate of a given machine. You have to do some digging.

Over the past year in this column I have addressed a number of topics related to this. ;is has included the importance of selecting what to improve; that is, identifying all the areas of potential improvement, selecting the important few, and seeing those projects through to their completion. ;is is critical for achieving any real gains from your improvement initiatives. ;e what part and the discipline to follow through without di;using your available resources are the prime distinguishing characteristics of companies that really do improve. Without these characteristics, no amount of talent or management or procedural competence can drive e;ective improvement.

Sometimes the what part is pretty apparent; you may need to improve the capabilities of people or machines. But usually the what isn’t apparent at all, because many root causes are hidden and not terribly obvious in common business metrics.

;ere are various hidden cost drivers. Some are inherent in almost any value-producing operation; others are most damaging in high-product-mix operations such as custom fabrication. Further, these costs tend to confound other improvement e;orts unless they are exposed and dealt with. So let’s shed some light on the ones most pertinent to high-product-mix operations.

Information

;e amount of information flying around in high-product-mix shops still amazes me. Necessary information on what to build, when to build, what and when to order, changes in dates, quantities, revision levels, acceptable quality, and a host of other details can be overwhelming.

A lot can go wrong. In fact, the odds of something going wrong go up with the amount of information and its variety, and if that information is communicated unclearly. ;e information issue drives a lot of di;erent kinds of waste. It can be a monster.

In a high-product-mix shop, the amount and variety of information aren’t likely to change. ;at’s not really under your control. But you can improve by translating the incoming information to a standard output format that is understood and actionable to a very high degree of accuracy.

;e goal is to have a mechanism that provides correct information to the actual processing activities, especially those on the shop floor. ;e information needs to be correct, unambiguous, timely, understandable by anyone in the activity, and identically actionable—that is, it causes the same action regardless of who does it.

;is is a pretty tall order. But when you do a root cause analysis of what went wrong and what generates unnecessary costs, you will find that information flaws almost always tops the list. You also will find that most of these flaws can be overcome.

Here’s a simple but
common example: You
just bought a new ma-
chine that can process
parts 50 percent faster
than the old one. ;at’s
improvement, right? Well,
not if you build to the
wrong revision, or overbuild, or build the wrong
thing at the wrong time. ;e throughput im-
provement will be eaten up by the costs incurred
to make things right. And those costs will be bur-
ied. Although hidden, these costs are real, never-
ending, and cumulative unless you do something
about them.

Searching

Searching wastes are truly hidden because they almost look normal. We are very accustomed to seeing ourselves and others in the familiar activity of saying, “Let’s see … where can that be…” It’s perfectly normal, but also perfectly costly and completely avoidable.

;e only good thing about search waste—a form of information waste and downtime waste—is that it is relatively easy to improve. Any sustained 5S/ visual workplace initiative will cure 80 percent of it. It is one of the few improvements that in principle can be initiated easily. ;e only expertise required is in the sustaining plan and execution.

It’s hard to find any real reason to put up with search waste and its costs. ;ey usually show up in e;ciency variation and cumulatively contribute to everything from schedule disruptions to overdue orders, because search waste steals available time.

Excessive Material and People Movement

Here’s another simple one. It’s hidden because like search waste it’s hard to “see.” Moving material around a plant is perfectly normal. People moving around also is normal. But excessive movement of material and people has virtually the same e;ect as excessive searching. It’s another classic waste identified in lean principles. It is a bit harder to remove because it can involve plant and equipment layout changes, build quantity and scheduling discipline, and a focus on part flow. But like search waste, it is eminently improvable. It does take expertise to get an optimal solution. But improvements can be made bit by bit. Cells and virtual cells are good examples.

In general, when you actually “see” and measure the amount of cost linked to searching and excessively moving, you will be unpleasantly surprised. But understand those excessive searching and moving costs are only part of the total waste they contribute to.

Time lost is cumulative, and if not corrected, building excess capacity—with overtime, or even adding more people and machines—is the only tool left to recover that lost time. And adding that capacity costs money that you wouldn’t have spent if you had the movement waste under control. ;is is what makes this waste so hidden—and so expensive.