The main thing that separates a traditional company from a lean company is that the traditional company produces things in “batches” while the lean company produces in a “flow.” The two principal reasons for this have to do with differences in organizational structure and in setup times.
The traditional company is organized into functional departments by type of equipment, or by individual specialty, if it is a service type company. This structure creates the need for batching, as different equipment runs at different speeds, and because functional departments are spread out from each other, creating the need for long travel distances and lots of waiting time. When you consider that most equipment is designed for speed and long runs, and not setup time, you compound the problem.
Setup time can be a real barrier. If it takes three hours to change a machine from one product to the next and, in a one shift operation, you change that machine three times in a week, you in effect lose a whole day of production. Beyond that, most traditional companies take their setup times for granted, which solidifies the batch mentality, and creates the need for economic lot sizes—MRP production planning where everything is made to a forecast and not to demand, which results in very long lead times.
The lean company seeks to adhere to the lean ideal of “sell one, make one.” It organizes itself into value streams and within that, into one-piece flow cells. The first thing it discovers is that this is not possible unless you reduce setup times dramatically. And I don’t mean going from, say a three-hour set up to a two-hour setup. I’m talking about going to at least a single minute setup so that you can respond to the pull of the customer with a smooth flow of production, and doing so by using your brain and not your wallet.
The lean company recognizes setup reduction as one of the most strategic things it can do. The company that can change a piece of equipment in one minute has an enormous strategic advantage over its competitors who take two hours to change the same piece of equipment. Their costs will be lower, their quality and capacity will be higher; and most importantly, their lead times will be measured in days and not weeks, thus giving them a powerful strategic advantage.
Now I would expect that you won’t find too many companies that would call in the security analysts to have a presentation on setup reduction. The analysts wouldn’t understand. They would see this as “some minor manufacturing thing” and miss the strategic aspects completely. In fact, most traditionally managed companies don’t understand this, and even if they did would reject it as not possible. After all, their equipment has always taken 2 to 3 hours to change over, and all of their manufacturing managers and engineers are telling them that this can’t be changed.
But what if it could? In fact, what if it could be changed dramatically? Would this change their minds? Perhaps some examples might help.
The Setup Olympics
The following are all examples of setup reductions I have been involved with over the years. Just as a rule of thumb, at Wiremold our experience was that on average we could achieve about a 90% reduction in setup on almost any type of equipment during a one week kaizen. The following examples were not all completed in a week but give some perspective of what is possible on different types of equipment.
Fourteen hours to six minutes
When I first became CEO of The Wiremold Company, I was out on the floor one day looking at one of our rolling mills. I had never seen a rolling mill before. This particular mill was called a raffted mill. When I asked how long it took to change over, they said 14 hours. My response was, “oh no, we have to get it under ten minutes.” Well, of course, they thought I was nuts, but we started with one kaizen then another and another. We had to make some physical alterations to the mill. Nothing very costly but it took time as the mill was very busy and we could only get at it on weekends and holidays. In fact it took about 18 months…but by then the setup time was 6 minutes. They didn’t think I was quite so stupid then.
Three hours ten minutes to one minute
This setup reduction also occurred at Wiremold, and was with a 150 ton punch press that was coil fed and had a large, heavy progressive die. Our initial one-week kaizen got the setup down to around 25 minutes. That was nice but we kept going back with more kaizens. Most of the best ideas to eliminate waste on this press came from our two operators, who were great. We created roller tables to allow the dies to be easily rolled in and out of the press. We also added hydraulic clamping which was the only expensive part of the changeover. Eventually we got to the point that the changeover could reliably be done in one minute.
Two and a half hours to two minutes
At Wiremold, we had about 30 injection molding presses, mostly in the 150 to 250 ton range. When we started, these were being set up using overhead cranes, which took between two and a half and three hours. We switched to side loading and built dedicated carts next to each machine to allow one person to move the molds manually. It took some time to get all the equipment converted as we had to alter all the molds slightly to be able to load them from the side. We also consolidated all of the connections to the molds to one side of the press which eliminated the operator having to switch from side to side. After we reduced the setup to between one and two minutes on average we then dedicated molds to each press (even though they could work on any press) and built a rack at the end of each one that could hold 8-10 molds. This eliminated a lot of time looking for molds and moving them around from a central storage place.
Two hours to one minute
This was at one of my Group companies when I was a Group Executive at the Danaher Corporation. The plant was in West Hartford CT and made bolts. The equipment used was cold headers of different sizes. At the start of the kaizen the teams presented their target for the week to go from two hours to one hour. Our Japanese consultant stood up, ripped the paper off the flip chart, crumpled it up, threw it on the floor and jumped up and down on it. “No”, he said, “you must get it under ten minutes.” Needless to say everyone thought that was nuts. Come Friday, however, we shut the whole plant down and had all the cold header operators come to watch the setup done on one of the machines. It took one minute. You can’t spend a lot of capital in one week and this one spent almost none.
A progressive die in less than one month
At Wiremold, we had a good-sized tool room at a time when most manufacturers were outsourcing their tool and die work to lower costs. We saw our tool room as a strategic weapon. We had over 1,600 punch press dies to maintain and were constantly continually introducing new products that required new dies. The tool makers were a great asset but a little hard to manage. They felt they were the most skilled people in the plant (they were) and didn’t want to change the way they had always operated.
Historically it was taking us three to four months to make a new progressive die with four to six stations. This meant we couldn’t introduce new products very quickly and couldn’t fast follow if a competitor did. It took some persuasion but eventually we were able to organize a kaizen in the tool room with the target of knocking out a progressive die in about a month. We rearranged things and created a one-piece flow in the tool room. It took several kaizens over some period of time but they eventually made a new progressive die in just under a month. Wow, talk about excited. The guys in the tool room were ecstatic. They wanted to beat the new record on the next one and they did, giving us tremendous strategic advantage.
Setup reduction is a necessary step to go from traditional management to lean--or said another way, from batch to flow and from push to pull. It sounds like some “manufacturing thing” but in fact is one of the most strategic things you can do. After all it is the key to lower cost and better customer service, which of course are very strategic. It is easy to do and costs almost nothing. The main hurdle for the traditional manager is in their head. Or, more precisely, in their brain. Their whole staff will tell them that nothing can be done about setup. Eventually they will come around to this point of view and thus doom themselves to the world of batch and queue forever. Hopefully this post can help by showing solid examples help a few CEOs and management teams get over that way of thinking.