Purists might preach against mixing information technology (IT) with Lean manufacturing, but automation professionals like Darren Hogg aren’t listening. The IT director at WIKA Instrument Corp. (www.wika.us) in Lawrenceville, Ga. has found that not only can IT support Lean principles, but also these principles can work at least as well beyond manufacturing. Because more manufacturers have made this discovery too, the philosophy has been evolving into a kind of Lean thinking that permeates every activity of a business, including information management. The results can be quite astonishing.
WIKA is a good example. After launching its Lean manufacturing initiative in 2001, this manufacturer of temperature and pressure instrumentation quickly discovered that achieving its efficiency goals would require more than moving equipment around. Management realized that it needed to broaden the initiative to include all of its business processes. The company now averages about two kaizen events a month for its business processes, which is the same rate as for manufacturing processes.
The change in focus was an important strategic decision because of the high cost of indirect labor and business related processes. Moreover, “we can produce a gage within about four minutes,” says Hogg. “That’s really the value-added from the customer’s perspective.” As necessary as IT, order entry, and the rest of the organization are, they add little to no value to the products.
To focus the company more sharply on the customer, management decided to change its chief performance metric from production efficiency to on-time delivery. The move would solve some of its biggest problems. “We were roughly 60 percent on time, so customers were constantly calling us asking where their orders were,” recalls Hogg. Not only did the lateness generate a measure of dissatisfaction, but fielding the calls also was consuming resources.
After mapping the order-fulfillment process, the kaizen teams were able to streamline it. For example, one way was to remove three to four days from the order entry process and load orders directly to manufacturing. “Taking four days out of my business process translates into four days of cash because it allows me to get the customer the product faster,” notes Hogg. Another team tuned the company’s Dynamics AX 2012 enterprise resource planning (ERP) system from Microsoft Dynamics (www.microsoft.com/en-us/dynamics/default.aspx) to generate better delivery dates. Now, the company ships 95 percent of its orders on time.
This ability to adapt the ERP system to support kaizen events was an important reason why Hogg decided to implement it in 2006. When selecting new software, his rule of thumb is find a package that will give you 80 percent of what you want and to tailor it over time. “You don’t want to spend years looking for the perfect one,” he says. Because the perfect one for a particular business probably does not exist anyway, he advocates using kaizen events and other Lean techniques to improve it over time through small incremental changes that take 30 days or less to institute.
Hogg, however, is selective about which changes he makes. “If a change is business critical, then we would modify the software,” he says. “If we determine that it’s not, then we live with what the software can do.”
Another reason that Hogg chose the Microsoft ERP system is its ability to support kanban and a move away from batch processing toward a pull-to-order flow. Because the company more than doubled sales and began asking customers to place smaller orders more often, production orders increased from about 14,000 in 2001 to about 160,000 in 2005. The average order used to be 200 pieces; now it is seven.
“To support the increased traffic, we needed a system that would react faster than the old one could,” says Hogg. Because of the difficulty in finding one, “we were starting to think that maybe Lean gurus James Womack and Daniel Jones were right in that we should throw the computer system out altogether.” He changed his mind in 2005, however, when he found Dynamics AX and an add-on pack from eBecs (www.ebecs.com), a Microsoft integrator in Norcross, Ga. “The kanban functions allowed us to pull the materials to order directly to the manufacturing cell.”
Even though IT continues to play an important role in Lean manufacturing at WIKA, Hogg still takes seriously the spirit behind the advice given by Womak and Jones. “Computer systems can be data-hungry monsters that consume a lot of your time entering data that doesn’t really add much value,” he says. “You have to be careful to give it just enough data to provide the key performance indicators that you need for driving improvement and executing to the customer’s needs.”
Automate away your costs
Hogg is not alone in recognizing the value of the support that information management can offer Lean manufacturing. Ryan King, IT director at ARPAC (www.arpac.com) of Schiller Park, Ill., sees it, too. In fact, since he discovered the programming tools in his ERP system four years ago, his mission has been to transform his department from being a necessary cost into a contributor to the bottom line. “To do this, IT cannot just be plugging in printers, changing monitors, and fixing mice,” he says. “It must improve processes by applying technology.”
By developing what he calls Lean Automated Processes (LAPs), King and his team have led the packaging machinery manufacturer and service provider on a Lean journey. They have been looking for opportunities to eliminate waste by identifying what employees should not be doing, and what the ERP system from Epicor Software Corp. (www.epicor.com) of Irvine, Calif., could be doing. Then, they have been deploying information technology to automate these business processes.
The first candidates have involved the handling of paperwork and routine interactions with suppliers. “Every interaction costs money,” notes King, especially when you can have hundreds a day. “If you can fulfill your needs without having a buyer talk with a supplier, you’ve saved yourself time that could be better spent on other tasks, such as contract pricing, interacting with new suppliers, and problem solving.”
A good example is the electronic kanban system developed by IT using the tools in Epicor ERP. To begin working on a new-machine order, an employee scans a barcode. The software automatically creates the purchase order, alerts suppliers by e-mail, and posts the order and packing slip on the web site so the parts will arrive in kits. It also grabs any necessary drawings. “And I’ve automated the accounts payable piece as well so we don’t have to enter the data again to pay the supplier,” says King.
“It used to take more time to do the paperwork than to create the part,” he notes. “Now it’s all done with one swipe of the bar code.” ARPAC estimates that the kanban tools available in Epicor have saved the company 15 work-hours a week just by automating the paperwork, which amounts to approximately $11,700 per year.
Even more savings accrued from the tools that helped King to develop some online portals. An example is ARPAC Vendor Inventory System (AVIS), the portal for managing the in-house inventory of parts that the shop consumes in large volumes. The portal not only allows suppliers to monitor their stock at ARPAC, but it also alerts the appropriate suppliers by e-mail when the inventory drops to a predetermined level. The suppliers then log onto the AVIS site to access the purchase order, as well as a packing slip that has a bar code for ARPAC’s receiving department. Today, more than 40 suppliers use the portal, and ARPAC no longer needs a full-time person dedicated to managing the inventory.
Better manufacturing
The tools available in ERP systems are not the only means for eliminating non-value-added activities. Some automation vendors are also offering software that helps users to avoid redundant tasks while fitting the vendor’s components together into their designs. Systems integrator Inter-Strap (www.inter-strap.com) in Hato Rey, Puerto Rico, for example, is using the MTpro software from Bosch Rexroth Corp. (www.boschrexroth-us.com) of Charlotte, N.C., to select linear motion products, configure pneumatic cylinders and mechatronics systems, lay out packaging lines, and generate bills of materials and budgets.
As designers select components from the library, the software takes care of dimensioning and checks that the parts belong together, such as ensuring that a drive module is right for the particular conveyor chosen. Antonio Fernandez Salas, Inter-Strap’s engineering manager, estimates that the tool reduces design time by about 75 percent on average.
Salas reports that designing a packaging solution for a medical device manufacturer went 800 percent faster than it would have with conventional computer-aided design (CAD) software. As the parts emerged from a cleanroom via a chute, three workers on each side of the packing station place these parts in boxes before the boxes go to the main line for weighing, sealing, and palletizing. The speed of the software gave the designers the time to iterate on the design to generate efficiencies that reduced the number of packers by 40 percent.
While design tools like this can certainly help systems integrators to deliver their products, a broad number of other software packages can provide information for optimizing entire factories and supply chains. GE Intelligent Platforms Inc. (www.ge-ip.com) of Charlottesville, Va., reports that it is organizing its Proficy suite of industrial software around a more generic version of the Toyota Production System that its consulting business is developing.
“The Toyota Production System was geared toward automotive and its high-volume automated production lines,” explains Rich Breuning, product manager for discrete solutions for operations management. Although the model is appropriate for GE’s appliance business, it is not as applicable to some of GE’s other more complex, longer manufacturing cycle businesses, such as jet engines and gas turbines. Consequently, the automation vendor has expanded the manufacturing model to apply the same concepts to a broader range of applications.
Now that the model has been developed, the company has been rolling out solutions within GE businesses over the past several years to prove the concept. “Now, we are taking it to key customers,” says Breuning. So far, it looks promising, judging by the results coming from Nissan North America Inc. The automaker is reporting that its new plant in Canton, Miss. has quality and uptime approaching Six Sigma and it was able to bring the plant online with an engineering staff that was s quarter the size of its competitors’. IT certainly has had no trouble supporting Lean thinking there.
Bosch Rexroth (www.boschrexroth-us.com)
Epicor Software (www.epicor.com)
GE Intelligent Platforms (www.ge-ip.com)
Invensys (http://iom.invensys.com)
