B is for lot size
Thin people want a batch size of ‘One’. It’s a mantra, a bit like saying ‘Om’ repeatedly.
If response time is the be all and end all then this is a good target.
If you make medical diagnostic products, the people who use them want thousands of tests to get the same result every time. Give them a lot size of one and they’ll continue ‘lot to lot variation’ and buy someone else’s product.
Six Sigma is theoretically a solution for this, but maybe not in reality.
The lean movement has its roots in automobile manufacturing. What’s good for car manufacturing isn’t necessarily good for other products, so don’t get too indoctrinated about it. If you make a multi-billion per year product and it’s a mature market, ie the volume is very constant, why not make a lot at once? You will save a lot of exchange, quality control and quality assurance expenses. During growth or decline, you want to respond to changes in demand. You need small batches to reduce waste from expiration or obsolescence and to quickly replenish stock when demand spikes. If not, you can take the cost savings that come from fewer changes, quality control, and warranty. Lean thinking has gotten so far into the front line that it’s amazing how hard it can be to persuade people to go bigger.
It’s like using the gears of a car. You need a low gear to accelerate, but fuel economy comes from shifting when you reach a constant high speed. Does your factory really have to speed up that much?
…B is also for Budgets
Your business needs them.
When it comes to productivity improvements, you often find that someone in Corporate dictates what the unit cost will be. Typically a 5% reduction year over year. What this should mean is that you sit down with your list of improvement projects, decide which ones will work, calculate the project expenses to make it happen, and put those numbers into your capital budget.
The capital budget is set, also by Corporate.
The priorities for the Capital budget are in this order:
1. Compliance with corporate edicts, eg installing sprinkler systems, teaching people how to park a car (see Corporate Nonsense)
2. Health and Safety Projects3. Equipment needed to provide capacity
4. Improvement projects
It’s no wonder that 5% year-over-year improvement is getting harder and harder. What happens in the end is that the voice of Finance is heard. The productivity improvement people are costing X million dollars, producing improvements that are half of X. Go for a one-time saving of the other half X by getting rid of the productivity improvement people and you’ll meet your 5% target for this year.
A good productivity improvement expert has helped Finance with the calculations. Perhaps you used some Activity Based Costing to better estimate the cost of the improvement. He or she should have an integrity breach issue that forces them to seek fruitful employment elsewhere. Or jump ship into a Line role.
