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Challenge: Understand and Adapt for Sales Pace Growth

by Jeff Smith
May 21, 2014

Challenge: Understand and Adapt for Sales Pace Growth

by Jeff Smith
May 21, 2014 | Comments (7)

Sam runs a small CNC Machining business. One department working one shift has 30 machines—25 people (working on those machines directly and another 5 people supplying materials—plus a supervisor. Pete wants to grow his business to keep pace with customer demand that is increasing 20% beyond his current volume of 5,000 rods a day.

Sam’s challenge (and yours) is to understand where exactly his team stands at this particular moment and what changes are necessary for growth. Pete’s guys and gals have always shipped on-time.

Each process looks like this:

Each machine cycle takes 2 minutes to make a piece. The human time is 8 seconds to unload, load, and cycle the machine. There are 5 seconds of walk while the machine is cycling to pack completed items and grasp new stock. The automatic time of the machine is 112 seconds. (Recall there are 30 of these machines and 25 direct people to work them). The shift is 480 minutes of work time. Any machine is down once weekly for 20 minutes. Quality is spot on (sure would be nice in the real world, wouldn’t it?). Machines are on wheels and can be moved around easily.

Samn’s daily customer volume is 5,000 of these little machined rods. Profit Margin on the product stands at 33%.

So, if you were Sam, what would you look at from a capacity and layout perspective? How about from an individual human growth perspective for the employees? Pete’s people have been working this way for 20 years. Your plan for change needs to address this as much as it addresses what technical changes are required. Remember, the technical aspects are important, but success or failure will be determined by your approach to change.

There are many issues bundled into this challenge. For example, consider how effectively the resources are being used. Can they be better utilized to capture the market growth available? This goes beyond just a cost perspective—how will you generate support for these changes and enthusiasm for continuous improvement?

Your assignment: Come up with a plan and share it in the comments section below. There are many possible ways to improve this situation, on both the technical and human involvement side of things. What’s yours?

The views expressed in this post do not necessarily represent the views or policies of The Lean Enterprise Institute.
Keywords:  coaching,  gemba,  problem solving,  strategy
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7 Comments | Post a Comment
Eddy May 21, 2014
2 People AGREE with this comment

Resource utilization: People. The team is gathered to discuss the significance of their work and the opportunities for the organization in a global market place.  Assuming the right players on the bus there is the question are the players in the right seats.


The same team members begin working on a manually created value stream map. A known element identified there is 30 machines and 25 operators and 5 handlers.  


A key unknown is does all 30 machines run the same process completing the piece or is there a step process in this CNC shop that requires the piece to move through a series of machines to arrive at the finished product?


Understanding the people is key with leading the idea of change to better improve the business performance. A couple of key pieces to understand about the team members is intrinsic and extrinisic motivators. This helps to identify how coachable is each team member. With this knowledge a change leader and coach will be able to determine the requirement to apply the power of persuasion (short term gain/unsustainable results) or the sources of influence (long term gain/sustainable results).


With this information no transparent the team moves forward to determine are manchines properly located, is material distribution better automated so those resources can be applied to operating idled machines.


Since, lean is about continuous improvements I will stop here I think there is enough to start the change and drive it on a sound road for sustainability.

 

Eddy Shelby

Walpole, Ma

eddyshelby@aol.com



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Vitezslav Pilmaier May 21, 2014

Just doing some quick technical calculations there is an excess of net capacity of machines as well as net time of people, if (ideally) each machine can do each piece and each person can work on each job.

The unknown is why such excess has happened - it might be related not only to the layout, but also to machine setup (and batch volumes), planning and/or pull vs push stream logic and so on.

Thus I do agree the very first step would be to uncover these unknowns but using the team himself.

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Jorge Gustavo Anschutz May 21, 2014
1 Person AGREES with this comment

Making some calculations on capacity and availabilty we have:

New customer demand = 6000 daily


Takt Time = 28800/ 6000= 4,8 seconds

Availability of each machine = 96%

Tackt Time considering availability = 4,6 seconds


Quantity of machines necessary to reach demand = Cicle Time / Takt Time = 120 / 4,6 = 26 machines necessary to reach new demand of 6000 pieces


Also with and automatic cicle of 112 seconds / 8 manual seconds= 14 people to attend the 26 machines.


I will have to verify this on the gemba and try a new layout. Also I would like to verify the OEE of each machine to understand if there are more oportunities on capacity and resources involved.


For sure the profit will increase with this saving approach.

jorge

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Farzad May 27, 2014
Dear friend For suggesting some scenarios we should know if your products are as one type or different types? If all your machines can process all types or special type? And how is your workers training to process all types of products on all types of machines? And how is the material flow in your shop? Best regard

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Luis Loya May 29, 2014

Jorge, your calculations are spot on except that the availability of each machine is not at 96% but rather at 99%.  The 20min of downtime is per week per each machine, not daily.  26 machines is still the calculated machine requirement as one would never want to balance to 100% of takt time as this would leave no margin for process or part to part variation.

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Jorge Gustavo Anschutz May 30, 2014
I completely agree with your comments, thank you Luis!!

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James SMith May 29, 2014
1 Person AGREES with this comment
Samantha realizes she need 25 machines to build the new demand of 6000 rods daily.  Each machine making 240 rods per day (480 minutes/ 2 min rod)( * 25 machines)

However each person only has 13 seconds per rod or 52 minutes of work daily to produce the Sales quantity of 240 rods per machine at a 2 mintue takt time. (480 minutes/ 240 rods daily). So that is one challenge--lots of time on hand. She realizes that in every two minutes (with a better layout) that each person can handle roughly 8-9 machines (120 seconds/13 seconds manual work per rod)

This would require an equal sign layout with one machine on the end to multi-process handle 9 machines where the operator/expert would grasp a part from a flow rack, unload last, load new, cycle machine,walk to next machine, repaet 8 more times. Thus making a part every 2 minutes on each of the 9 machines.

Her new challenge is that is would only require 4 people direct and 1-2 indirect to feed parts, with 19 people to spare for new business growth, or to utlize the extra capacity elsewhere in the business to cover absenteeism, production problems. But ideally she could add new sales without adding labor cost to produce those sales-- higher gross margin


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