By: Bruce Ennis, MEE Cluster Lean Six Sigma Master Black Belt
In 2008 Toyota surpassed General Motors as the largest and most successful car company in the world. GM had a 35-year head start on Toyota.
Toyota passed them – on productivity AND quality. There are many reasons this happened. You can learn about those reasons in scores of books and in university courses the world over. One of the biggest reasons however was Toyota’s focus on process efficiency.
My expertise is in the field of Lean. Lean is an ingenious way of doing business. Process efficiency is central to Lean. The principles of Lean originated at Toyota soon after World War II. Today Lean is practiced by many of the most successful businesses in the world. Approximately 70% of today’s Fortune 500 companies are applying Lean principles in various areas of their business.
The goal of this blog is to awaken you as to the importance of process efficiency.
Many businesses devote a lot of time, money and resources to improve the efficiency of their machines – CNC’s, lathes, shears, etcetera. That is good. Consider this however: What if most of the time spent converting your raw materials into finished products wasn’t in machining? What if the majority of time was spent in “another” area? Wouldn’t it make more sense to focus on this area?
Take a look at Figure 1. This is a real business – a former client. I’ll call them “ABC Oilfield Inc.”
ABC has been around for over 50 years. They are successful. Their process has seven work stations. The total machine time is 305 minutes, about 5 hours. I like to call this “work time.” In Lean jargon this is referred to as “cycle time” – the time where work is actually happening. Like General Motors, ABC’s engineers, supervisors and operators worked for years to improve the efficiency of these work stations using metrics like “uptime” or “OEE – Overall Equipment Effectiveness” to measure how effective each machine was running.
The goal of companies all over the world very often is the same; how do we make our machines work faster and more efficiently? If we can shave off a few minutes from each work area – wouldn’t that be huge? It’s just common sense.
But is there a bigger opportunity?
Is there an elephant in the room?
What did Toyota see that the rest of the world did not see?
What are we missing?
Take a look at Figure 2. ABC’s “work” time was 305 minutes, however their “wait” time was 632 minutes. 67% of ABC’s improvement opportunity was hidden in the “dead time” between machine times. Sixty-seven percent!
Like GM and other “non-Lean” manufacturers, ABC was blind to the “big prize” – process efficiency. 632 minutes of “dead time” represented more than 10 hours of waste for every item produced. ABC had twice as much dead time as work time. If this sounds bad … I have bad news. Your business might be worse. Having worked across the USA and Canada for over twenty years, 67% dead time is not the worst I have seen – far from it.
If you are like ABC, you could be spending significant time and resources trying to improve the performance within machine operations but neglecting to focus on the dead time between machine operations. Lean calls this “queue time.” It is the time that your part waits for the next step to be ready to work on it. I call this “dead time.” I want my clients to know there’s a million-dollar opportunity staring them in the face, like an 800-pound gorilla – and they don’t see it.
Until Toyota discovered this pot of gold, the smartest business leaders the world over continued to focus most
of their energy on “within” work inefficiencies but not so much on “between” work inefficiencies. It was a blind spot – a multi-billion dollar global blind spot.
In a 1990 book titled “The Machine That Changed the World” authors James Womack, Daniel Jones and Daniel Roos awakened the world to what Toyota already knew – that there is a better way. Toyota recognized this simple but crucial reality:
Machines can be lightning fast and efficient – but what good does that do if there is no coordination between machine stations?
In Figure 3 we see that reductions to actual machining time sometimes have little impact on total production time. Reducing the time between machining processes often can have a far greater effect. On a related note, reducing machining time can involve significant investments of capital while reducing time between processes is mostly a matter of improved processes and planning.
Think of a football team without a coach, or a playbook. Think of an orchestra with talented musicians but without a conductor, or sheet music. If your business is operating the old mass production way – striving to improve individual machines or work areas without having a clue about how all those machines (or departments) work together – you’re missing an opportunity . At best, you are missing an opportunity to radically improve your business. At worst, your competition might have already learned about Lean – and your business is on borrowed time.
In 1980, the top 10 TV manufacturers in the world were American companies. Names like RCA, Zenith, Phillips and Magnavox dominated the marketplace. None of these brands exist today. Traditional mass production techniques pioneered one hundred years ago have been improved upon.
Lean employs ingenious techniques like workflow leveling, kanban and visual management to be the “conductors” of the workplace. Lean is a symphony conductor that makes work flow smoothly without bottlenecks or dead time. Focusing on achieving a smooth process flow can eliminate thousands of hours of dead time, improve productivity – and generate millions of dollars in additional revenue.
Machine Efficiency will always be critically important. A business cannot survive without high performing machinery that is fast, efficient and reliable. That will never change. But keep in mind the elephant in the room. The inefficient flow of your process might be what’s really eating your lunch.
The MEE Cluster is committed to helping Western Canadian businesses improve. If you are interested in learning more about how Lean can transform your business, email us at info@meecluster.ca or call us at 1.403.356.4935.