Eliminating the Production Bottlenecks

The Process Bottleneck

• A bottleneck is any resource whose capacity is equal to or less than the demand placed upon it. A non-bottleneck is any resource whose capacity is greater than the demand placed upon it. It is important to balance flow, not capacity in relation to demand. If bottleneck capacity is kept equal to demand, and demand drops, costs will go up resulting in a loss of money. The objective is to maintain capacity at slightly less than demand.

• Total plant capacity equals the bottleneck capacity. Bottlenecks should be optimized by eliminating time wasted through idle bottleneck time, processing defective parts, or producing parts which do not contribute to throughput.

Process Analysis• The best way to improve the process is to analyze it.

This allows a better understanding of the activities involved, their relationships and the values of relevant measurements. Process analysis usually involves the following tasks:

• Process identification of all the steps involved from entry point of the process inputs to exit points of the process outputs;

• Construct a process flowchart that illustrates the various process activities and their interrelationships;

• Determine the capacity of each step in the process. Calculate other measures of interest;

• Identify the step having the lowest capacity (bottleneck) and evaluate further limitations in order to quantify the impact of the bottleneck;

• Use tools and approaches to make the process run more effectively and efficiently.

Process Improvement• Process improvement is successful only when you

address the underlying problem. A useful way of improving processes successfully is to use a lean manufacturing technique called Value Stream Mapping (VSM). It originated at car manufacturer Toyota, where they called it 'material and information flow mapping.' VSM is now widely used in a variety of industries as a way of identifying improvement projects.

• The basic idea behind Value Stream Mapping is this: if the underlying process is right, the outcome will be reliable. To get the process right, you have to understand the sequence of activities that provide value to your customers.

Measuring process performanceProcess aspects of interest to managers are cost, quality,

flexibility and speed. The following is a list of process performance measures that can be used to assess these aspects.

• Capacity - The capacity of the process is its maximum output rate, measured in units produced per unit of time. The capacity of a series of tasks is determined by the lowest capacity task in the sequence. The capacity of parallel sequences of tasks is the sum of the capacities of the two sequences, except for cases in which the two sequences have different outputs that are combined. In such cases, the capacity of the two parallel sequences of tasks is that of the lowest capacity parallel sequence.

• Capacity utilization - the percentage of the process capacity that actually is being used.

• Throughput (also known as flow rate) - the average output of a production process (machine, workstation, line, plant) per init time (e.g. parts per hour). The maximum throughput rate is the process capacity.

• Lead time (also known as throughput time or flow time) - the average time that a unit requires to flow through the process from the entry point to the exit point. Flow time includes both processing time and any time the unit spends between steps.

• Cycle time - The cycle time is measured as the average time from when a job is released at the beginning of the routing until it reaches an inventory point at the end of the routing.

• Process time - the average time that a unit is worked on. Process time is flow time less idle time.

• Idle time - time when no activity is being performed, for example, when an activity is waiting for work to arrive from the previous activity. The term can be used to describe both machine idle time and worker idle time.

• Work In process (WIP) - the amount of inventory between the start and end points of a routing.

• Set-up time – Setup time is the time a job spends waiting for the station to be set up..

• Direct labor content - the amount of labor (in units of time) actually contained in the product. Excludes idle time when workers are not working directly on the product. Also excludes time spent maintaining machines, transporting materials, etc.

• Direct labor utilization - the fraction of labor capacity that actually is utilized as direct labor.

How to Create and Use Your Value Stream Map

• The objective of Value Stream Mapping is to create a picture of how items (such as materials, designs, or customer needs) flow through the value stream – from raw materials and inputs through to the customer's end product.

• Value Stream Mapping is best applied to processes that are reasonably routine and standardized. Manufacturing companies are obvious examples of these, however, any organization that delivers a standard set of products or services is likely to benefit from applying VSM. Value Stream Mapping is unlikely to be useful where work processes change continuously or where bespoke products are delivered, because the flow may change with each customer or project.

steps to use the Value Stream Mapping tool:

Step One – Identify the Product or Service to MapChoose a process for which you would like to implement leaner, more efficient practices. It's important here to define the scope of your map. Identify the start and end points, and make sure that you map from one end of the process to the other end, so you can see where the blockages and non-value activities are.You also need to identify which part of the overall process you need to look at. As an example, if the amount of profit you're generating from each order is falling, then you may want to look at how an entire order is fulfilled. If the volume of orders is falling, then you may want to look at the sales process in more detail. If you have shared equipment or other resources then, instead of looking at the manufacture of one product, you might want to look at manufacturing as a whole system.

Example

• To illustrate the steps of creating a Value Stream Map, we'll use a simple example: the process of transforming an Internet order into a shipped product.

Step Two – Draw the Current Value Stream MapTo help you draw the map, gather a team of people representing the stakeholders in the process. Include people who both manage and support the various parts of the value stream. It is vitally important here to include people who actually do the work, and not just the managers of team leaders - otherwise you risk creating a VSM that shows what should happen, rather than what actually happens.

You can then observe and gather data to complete the map: – Brainstorm who is involved, both internally and externally; what is needed to

deliver the product or fulfill the customer need; and the tasks or activities that go into producing the products.

– Put these tasks in order, as much as possible, and include costs and actual working time for each task, in order to build up a picture of average performance for each task (and – ultimately – for the entire, end-to-end process).

– Look at the delays in between stages of the process – for example, the length of time a task sits in someone's in-tray – and add that.

ExampleHere are the tasks involved in order processing and

delivery for our example:– Order entry and processing. – Supplier liaison. – Inventory management. – Order picking. – Packaging. – Shipping.

Depending on your operations, any of these tasks could be the subject of its own Value Stream Map – that's why defining scope is so important.

Here's how you would organize the tasks in our example:

Step Three – Assess the Current Value StreamIn this step, you analyze whether each activity in the process is adding value. This is where you can look for lean improvement opportunities:

What is 'value add'?Value-add activities change an item, and make it worth more to the customer. Car assembly is a perfect example: as the car body moves along the production line, more and more pieces or assemblies are added, making it more complete. Eventually, it becomes a fully operational vehicle that people will buy. Each step adds value (although clearly the most value is added when the final component is installed!)

• At each point in the map, ask yourself, “Does this activity add value?” • Identify your value-add points. • Identify your no-value-add points (for example, places where material is stored,

redundant or excessive paperwork, and places where there are long lead times). • Determine which no-value-add points are still necessary (for example, for meeting

regulatory requirements, addressing other compliance issues, and ensuring worker safety).

• Step Four – Create a 'Future State' Value Stream MapMap how you want your improved process to look in the future. How will the process work after you've eliminated the waste you identified in the previous step? Follow these tips:

– Assume that anything is possible. – Ask yourself what your leanest competitor would do. – Consider how you would structure the process if you were starting the business today with unlimited capital. – Look for similar activities, and see if there's a way to group them. – Identify bottlenecks and critical events. – Look for ways to simplify activities that are complex. – Confirm that customers actually value each transformation activity.

Look for common forms of waste, such as these:– Moving product/materials inefficiently. – Using equipment and people unnecessarily. – Keeping too much or too little inventory. – Performing inefficient quality checks. – Stockpiling finished goods. – Adding features or conducting processing that the customer does not value.

Example• Here are some of the opportunities for

improvement in our example:

Eliminate redundant approvals or move them earlier in the process to prevent unnecessary work. – Improve the flow of information (paper or electronic). – Restructure the warehouse operations for efficiency. – Update the inventory control system.

Step Five – Create a Plan to Implement the Desired StateWhen you have identified your objectives, you can develop a plan for change. At this point, many organizations also begin other lean processes – like Kaizen, Kanban, and Just In Time. Remember, though, that the time you invest in VSM will pay off only if you follow through with the implementation plan.

These guidelines will help you do that:– Use the VSM to communicate your goals and objectives. – In your VSM team, include people who will work with the new activities. This helps increase

buy-in. – Talk frequently about lean and efficient operations so that it becomes part of your corporate

culture. – Look for ways to reward efficient work and efficiency suggestions.

Step Six – Implement the PlanVarious techniques can be used, but one of the most popular used with VSM is a series of 'Kaizen Blitzes,' each lasting approximately one week. These gradually move you from the current state to the future state.

Step Seven – Review the Results, and Repeat

Flow Charts

• A flow chart can therefore be used to:• Define and analyze processes; • Build a step-by-step picture of the process for

analysis, discussion, or communication; and • Define, standardize or find areas for

improvement in a process

How to Use the Tool:• Most flow charts are made up of three main

types of symbol:– Elongated circles, which signify the start or end of a process;

– Rectangles, which show instructions or actions; and

– Diamonds, which show decisions that must be made

– Arrows represent flows.

• Within each symbol, write down what the symbol represents. This could be the start or finish of the process, the action to be taken, or the decision to be made.

Identifying processes

Give them names that express their beginning and end states. For instance:

• Manufacturing: procurement to shipment• Product development: concept to prototype• Sales: prospect to order• Order fulfillment: order to payment• Service: inquiry to resolution

TYPICAL PROCESSCustomer Communication

Manufacturing Capability Development

Strategy Develop

ment

Product Develop

ment

Customer

Design and

Support

Order Fulfillme

nt

Concept

Development

Manufacturing

Market Customer

Process Improvement• Improvements in cost, quality, flexibility, and speed are

commonly sought. The following lists some of the ways that processes can be improved.

• Reduce work-in-process inventory - reduces lead time. • Add additional resources to increase capacity of the

bottleneck. For example, an additional machine can be added in parallel to increase the capacity.

• Improve the efficiency of the bottleneck activity – ensure that the bottleneck has no idle time.

• Move work away from bottleneck resources where possible by inspecting quality of parts waiting to be processed – no need to waste valuable time processing a part that has a defect in it.

• Increase availability of bottleneck resources (if possible), for example, by adding an additional shift - increases process capacity.

• Minimize non-value adding activities – decreases cost, reduces lead time. Non-value adding activities include transport, rework, waiting, testing and inspecting, and support activities.

• Redesign the product for better manufacturability - can improve several or all process performance measures.

• Flexibility can be improved by outsourcing certain activities. Flexibility also can be enhanced by postponement, which shifts customizing activities to the end of the process.

Lean Manufacturing Basics• Lean manufacturing is based on finding efficiencies and

removing wasteful steps that don't add value to the end product. There's no need to reduce quality with lean manufacturing – the cuts are a result of finding better, more efficient ways of accomplishing the same tasks. To find the efficiencies, lean manufacturing adopts a customer-value focus, asking "What is the customer willing to pay for?" Customers want value, and they'll pay only if you can meet their needs. They shouldn't pay for defects, or for the extra cost of having large inventories. In other words, they shouldn't pay for your waste.

Eight Categories of WasteWaste is anything that doesn't add value to the end product. • Overproduction – Are you producing more than consumers

demand? • Waiting – How much lag time is there between production steps? • Inventory (work in progress) – Are your supply levels and work in

progress inventories too high?• Transportation – Do you move materials efficiently? • Over-processing – Do you work on the product too many times, or

otherwise work inefficiently?• Motion – Do people and equipment move between tasks

efficiently?• Defects – How much time do you spend finding and fixing

production mistakes?• Workforce – Do you use workers efficiently?

Lean Manufacturing Process

• Stage 1 – Identify wasteOne of the key tools used to find this waste is a Value Stream Map (VSM). This shows how materials and processes flow through your organization to bring your product or service to the consumer. It looks at how actions and departments are connected, and it highlights the waste. As you analyze the VSM, you'll see the processes that add value and those that don't.

• Stage 2 – Analyze the waste, and find the root causeFor each waste you identified in the first stage, figure out what's causing it by using Root Cause Analysis.

• Stage 3 – Solve the root cause, and repeat the cycle Using an appropriate problem-solving process, decide what you must do to fix the issue to create more efficiency.

Tools to reduce waste• Just in Time – This is the core idea of lean manufacturing and is based on the "pull" model. To

minimize stock and resources, you only purchase materials, and produce and distribute products when required. You also produce small, continuous batches of products to help production run smoothly and efficiently. By reducing batch size, you can also monitor quality and correct any defects as you go. This reduces the likelihood of quality being poor in future batches.

• Kanban – This is one of the key ways to involve people in the lean manufacturing process. Here, you support the Just In Time model by developing cues in the system to signal that you need to replace, order, or locate something. The focus is on reducing overproduction, so that you have what you need, only when you need it.

• Zero Defects – This system focuses on getting the product right the first time, rather than spending extra time and money fixing poor-quality products. By using the Zero Defects system, you'll reinforce the notion that no defect is acceptable, and encourage people to do things right the first time that they do something.

• Single Minute Exchange of Die (SMED) – This helps you build flexibility into your production. For example, in the automotive industry, it could take days to change a line to produce a different car model. With SMED, the assembly process and machinery are designed to support quick and efficient changeovers. (Here, a "die" is a tool used to shape an object or material.)

• The 5S Philosophy – Lean manufacturing depends on standardization. You want your tools, processes, and workplace arrangements to be as simple and as standard as possible. This creates fewer places for things to go wrong, and reduces the inventory of replacement parts that you need to hold. To accomplish a good level of standardization, use these principles:– Seiri (Sort) – Sort items according to their importance of use. Discard items

that are not useful.– Seiton (Set in order) – Arrange items in an organized and meaningful way. For

instance, place the tools you use frequently the closest to you. – Seiso (Shine) – Keep the workplace clean. – Seiketsu (Standardize) – Establish best-practice rules, and apply them

throughout the organization. – Shitsuke (Sustain) – Train and motivate everyone to follow these practices on

a daily basis. This prevents people going back to less efficient methods and systems.