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How to win over lean manufacturer doubters in metal fabrication

The proof is in value-added work and the financial statement for fab shops

Man on ladder installing gears on human head

Any continuous improvement project is likely to generate some skepticism and resistance. The best way to overcome that challenge is to make it clear to those involved how the improvements will help them to work smarter and how the changes will make the company financially stronger. rudall30/iStock/Getty Images Plus

You have that new quote opportunity. You are competing for a new contract. Your financial performance is unacceptable. Your margins have slipped away. Welcome to life in the manufacturing business!

What do these real and substantive issues have to do with lean and continuous improvement? The tools, methods, and concepts in the lean body of knowledge can help you to address these issues in a structured and disciplined manner. They can help to prevent you from flailing at the issues or seeming to play Whac-A-Mole at whatever pops up as the next distraction.

In essence, lean manufacturing principles can help you to sharpen your pencil! You can achieve results that are meaningful to all your stakeholders. Let’s explore.

You Should Expect Results

Investing in a lean initiative (or your lean journey) is an intentional decision. You’ll need to invest in training and education, tools and supplies, and travel to benchmark for best practice ideas. People will need to dedicate their time, and you’ll probably see people in new roles. People will ask a lot of questions about why, and there will be confusion or resistance from those who are perfectly happy with the status quo. In short, lean does not come without some consumption of resources.

You should absolutely expect a return on this investment. If you are facing challenges, you can target your lean efforts to make improvements that match your business needs.

Making the Connection to Financial Results

Sometimes it is hard to draw a direct connection to an improvement and a specific amount of impact on your profit-and-loss statement. That’s OK. Many small improvements ultimately will add up and make their way to financial statements. Let’s consider a few ways to use lean methods and tools and discuss how they might impact the financials.

A fundamental idea to set the stage for improvement is for everyone in your organization to understand value-added (VA) and nonvalue-added (NVA) work. VA work is that which changes the product (such as drilling a hole in a flange), is done right the first time (no need for rework), and the customer is willing to pay for it (no question in the customer’s mind that this work had to be done). NVA work is that which is the result of weak or ineffective processes. Moving the product long distances between operations, double- or triple-handling, or scrapping and remaking a component. To the untrained eye, these activities look like work, cause the employee to go home tired at end of day, and provide the satisfaction that something got done. But the customer isn’t paying for any of this. NVA work simply is a target for elimination, consolidation, or redesign.

You should spend the time to help each person see how VA and NVA apply to them. This personalizes the ideas and breaks down the barriers to doing their job differently. Think of the impact you could have if John the welder and Mary the assembler are trained to evaluate VA and NVA work content and then are empowered to study their own work to see the VA and NVA content. John and Mary might have a new appreciation for why their jobs are being modified. You are not asking John and Mary to work harder; instead, you are asking them to work on the right things that generate results and satisfy customers.

Practical Examples

Once you begin to see the NVA work and understand the tools and methods in the lean body of knowledge, you see your operations and processes as a fertile field of opportunity for improvements. Some opportunities are huge, and some are smaller. Some are easy to accomplish, and others are difficult. Some get immediate buy-in from employees, and others get immediate pushback. An early step is to acknowledge an obvious improvement opportunity and then take immediate action to improve it.

Consider a process where the product flows in and out of the plant, is transferred in and out of inventory locations, starts and stops multiple times, and is picked up and set down more times than you can count. This looks like an opportunity to concentrate on improving flow to reduce travel distance, reduce the throughput time, and increase the velocity.

How does that improvement affect the financial statement? If the process were designed for streamlined flow where the product can be handed to the next operation using one-piece (or at least very small batch) quantities, then you can reduce the manpower and equipment dedicated to moving things, free up space where material would have been stored (or simply set down because there was an open space), and get more aggressive recognizing defects and quality problems sooner because you are not wrestling with the production of large batches. The labor power, equipment, space, and resources that would have been used to address potential defects with these large production runs can be redeployed to VA work. It is hard to draw the direct line to the income statement, but the impact is there.

You have finite and limited resources to apply toward improvement, so where do you focus? One great approach is to focus on the constraint. That is, the operation that governs the throughput and velocity. If getting enough finished product out the door according to customer shipping schedules is your big issue, you can identify the constraint by using value stream mapping, process mapping, and cycle time/takt time analysis. By focusing on the constraint, you will have an impact on overall throughput. If you focus on a nonconstraint operation to try to address your throughput and velocity issue, you will be disappointed. Improving the nonconstraint operation might feel good, but that improvement will simply result in inventory buildup because the true constraint is still governing the overall flow. If you successfully address the real constraint, you have the potential to get increased output with the same previous inputs. You should expect an impact on your margins!

Another way to sharpen your pencil is to look for opportunities to better utilize your resources. Consider an example where you have a robotic welder that has a fixture with A and B sides. The idea is to be loading the B side of the fixture while the A side is under the robotic welding torch. This externalizes the fixture loading and unloading such that the welder should always be making product. If the A side finishes and the B side is not ready to go, you have a case of NVA time with the robotic welder.

Another example that illustrates the same point can be found in a CNC machine shop. If the cycle times are sufficiently long, you could have one operator tend two machines instead of one. Of course, this assumes close proximity of the two machines and that the operator has sufficient time to perform checks, make adjustments, and handle the parts in addition to unloading/loading the second machine during the first machine’s cycle time. In an environment where many manufacturers are struggling to hire employees, this may be a way to generate increased output with the same resources.

But what if the operator balks because he believes he only can run one machine? This is where you leverage the VA and NVA ideas to help him understand that simply standing and watching the one machine is NVA. You are trading NVA work for VA work. Of course, the pace needs to be reasonable, and the process has to remain safe.

Dig Deep

By critically evaluating your operations, identifying for NVA work, and using the methods and tools in the lean body of knowledge, you can have a positive influence on operations. This might drive you to consider alternative or additional performance measures to be able to have a good baseline and quantify the improvements. Measures of productivity and effectiveness, in addition to the heavily relied upon efficiency measures, will help you to make the connection between the physical improvement and the financial statement. In essence, you will see how sharp you made the pencil.

Be sure to dig deep. Don’t take the current state for granted. Be creative in how you seek and implement improvements. It is easy to overlook improvement opportunities because that is the way the work has always been done. NVA work and waste tend to get gristled into the process: It has been done that way for so long that nobody takes the time to challenge the status quo. If you have spent the time to help the workforce understand waste, VA and NVA work, and some of the basic lean tools (5 whys, spaghetti diagrams, and pareto charts), the whole workforce can help you dig deep and sharpen the pencil.

About the Author
Back2Basics  LLC

Jeff Sipes

Principal

9250 Eagle Meadow Dr.

Indianapolis, IN 46234

(317) 439-7960