Tag: Shortages

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A Systematic Approach to Part Shortages – Part 3

The third element of this organization’s successful drive to eliminate part shortages was a systematic approach to problem solving. They made it a process, managed just like any other process, rather than something people did when they had time. Even though this is “Part 3” of this series, in reality they put this into place at the same time, and actually a little ahead, of kanban and leveling.

The Morning Market

The idea of the “morning market” came from a chapter in Imai’s book “Gemba Kaizen.” He describes a process where the previous day’s defects are physically set out on a table and reviewed first thing in the morning – “while they are fresh” hence the analogy to the morning markets.

This organization had been trying to practice the concept of a morning market for a few weeks, and was beginning to get it into an actual process. Because supplier problems constituted a major cause of disruption, they set up a separate morning market for defective purchased parts.

That process branched yet again into a morning market for part shortages. And this evolved into a bit of a mental breakthrough.

They started looking at process defects.

Every shortage, every day, was recorded on the board.

Each morning the previous day’s shortages were reviewed. They were grouped into three categories based on knowledge of the cause – just like outlined in the book.

  • “A” problems – they knew the cause, knew the countermeasure, but had some excuse reason why it could not be implemented right away.
  • “B” problems – they knew the cause, but did not have a good countermeasure yet.
  • “C” problems – knew the symptom (parts weren’t there) but didn’t know why.

The mental breakthrough was systematically investigating the reason each and every shortage occurred. What they found was that in the vast majority of cases it was an internal process breakdown, rather than some problem at the supplier, that caused the shortage. This was a bit of a revelation.

They began systematically fixing their processes, one problem at a time.

Over time things got better. Simultaneously they were implementing the kanban system. Kanban comes with its own set of possible problems, like cards getting lost. Once again, when they found problems they went into the morning market and were systematically addressed.

After a few months into their kanban implementation, for example, they started turning in card audits with far less than 2% irregularities, and then it was not unusual for a card audit to find no problems at all. Why? They had addressed the reasons why cards end up somewhere other than where they should be. Instead of blaming people, they looked for why people acting in good faith would not follow the process.

This was also an attitude shift – assume a flaw in the process itself, or in communication, before looking for “who did it.”

Eventually the warehouse team had their own morning market. As did the receiving team. As did the parts picking team. As did assembly. Each looked at any case where they were not able to deliver exactly what their downstream customer needed.

About 8 months into this, another group in an adjacent building, was trying to work through their own issues. They came over for a tour. One of the supervisors, visibly shaken, came to me and said

“Now I get it. These people work together in a fundamentally different way.”

And they did. They worked as a team, focusing on the problems, not on each other.

And that, readers, is the goal of “lean manufacturing.” If you aren’t working toward that, then you aren’t really implementing anything.

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A Systematic Approach to Part Shortages – Part 2

For kanban to work well, there has to be a solid foundation under it. That foundation is production leveling or heijunka.

Before I get to far into this, though, I would like to point something out: At the mention of leveling, people who are only just learning about kanban will point out all of the good reasons why leveling is difficult. Here is a key point: The problems caused by running kanban without good leveling pale in comparison to the total chaos that ensues if you try to run MRP without leveling. I’ll stay out of that little rabbit hole until another day though.

Production leveling has two parts.

  1. Leveling the production volume.
  2. Leveling the production mix.

The operation I described in Part 1 was relatively small, so it was a simple matter to set up a totally manual system to do this. By small I mean they had two major assembly lines running at a rates on the order of 10 units / day. The product was about the size and complexity of a medium to large-sized photocopier (though not a photocopier). The assembly lines had about half a dozen positions each. There were several hundred parts from about as many suppliers. (Different story.)

The objective in leveling volume is for the production line to see demand as an image of the takt time, and to protect that signal from variation in actual orders and shipping. At the same time, the shipping dock was to see deliveries to the finished goods buffer at takt time, regardless of minor and medium problems in production.

To accomplish this they separated the “big lump” of inventory that typically existed in shipping into two physically separate buffers.

The Withdrawal Loop

Customers, unfortunately, rarely order at takt time. The purpose of the buffer in shipping was to absorb this variation and make the actual demand appear as if it arrived exactly at takt. The organization also tried to take out some of the bigger spikes in customer orders by working with dealers to get more transparency into actual customer order patterns; as well as trying to level actual promise-to-ship dates at least weekly if they couldn’t get it to daily. That helped a lot. A more sophisticated order entry system would have worked better, but that luxury wasn’t in place yet.

Back to the buffers. Each unit in shipping had a withdrawal kanban card attached to it. As orders were released, a unit would be pulled from this buffer and shipped. The withdrawal card went back to the production control department. Those cards were placed in the inventory management box. This box had series of slots that indicated authorized inventory levels. A card in one of the slots indicated inventory we didn’t have, an empty slot indicated inventory on-hand.

There were limit markers at near each end of the row of slots. As long a the end of the row of cards stayed between those limit markers, everything was regarded as OK. They did not try to chase a particular level of inventory with production.

The scheduled production rate was 10 units / day.

Each morning Production Control would take 10 cards from their box and put them into the leveling box in shipping. That box had slots that corresponded to times of day. The cards were evenly distributed at the takt-time interval. As that time came up, shipping would take the withdrawal card from the box, go to the end of the production line, attach their card to a unit, and move it to the shipping buffer.

This seemed like a lot of trouble, but it served a purpose. It was to hide the irregularities of shipping schedules and actual order dates from assembly. They saw a clean, paced signal exactly at takt time. The process was designed so that assembly saw a perfect customer, even if the customers were far from perfect.

If management didn’t like the size of the shipping buffer, they knew exactly what problem(s) must be solved to reduce it – they needed to improve the dealer ordering and management processes so dealers would stop using deep reorder points and ordering weeks worth of product at once.

The Production Loop

When units were withdrawn from the end of the line, they were actual pulled from a FIFO buffer. In this case, the buffer held about 4 hours of production. Why? Most problems in production were cleared within that time. Only a bigger problem would starve the buffer and affect the withdrawal loop. Thus the purpose of this buffer was to make assembly appear as a perfect supplier to their perfect customer. They could supply exactly at the agreed-upon takt time.

Each of these units had a production kanban card attached to it. When shipping came to pull a unit, they would pull the production card and leave it in a kanban post. They would attach their withdrawal card and take the unit. Thus switching the cards transfers ownership of the product from one loop to the next. Since a kanban card authorizes a specific quantity to be in a specific location, if someone wants to take something somewhere else they need to attach a card authorizing them to do so. That was the case here.

The production cards went to the front of the assembly line. There were three slots there. One green, one yellow, one red. If everything was running smoothly, the card would go into the green slot, and when the next unit was started, the card would be pulled from the box and attached to the unit.

If the line were a little bit behind, there might still be a card in the green slot. Then the next card would go into the yellow slot. This would automatically signal the assembly manager that there was something that needed some attention.

The next card would end up in the red slot. This was the point when, if they weren’t already there for a known problem, they were in “line stop” mode. Anyone who could be helping to clear the problem should be helping to clear the problem. Why? The money machine has stopped running. Everyone is now being paid only because the shareholders are lending them money. The idea is to get the money machine running as quickly as possible, and it is the most important thing. This was a simple phased escalation process, and was part of their overall andon / escalation system.

Did it work?

All I can say is that it worked a hell of a lot better than what they were doing before. It took two or three serious tries to get this into place and keep it working, and they probably fell off the wagon a couple of times after that. There were always immense pressures to “reduce inventory” at the end of the quarter, for example, which would have management directing to starve out the shipping buffer, or push it out early. But, in general, when it was working, overtime was lower, things were more predictable, problems were identified very quickly.

But…

Yes, it looks like a lot of manual work involved. But I want to be really clear – the total time spent moving all of these cards around was a fraction of the time that had previously been spent investigating status, working action messages, making calls to find out what was happening, etc, etc. For some reason people seem to think that deliberate activities raise the total amount of labor involved, and that somehow, the time spent running after information and chasing problems is free.

Setting a standard and following it injects an element of stability and calm into an otherwise chaotic workplace. Once this basic foundation is in place it is far easier to improve overall efficiency because now there is an actual process to improve.

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A Systematic Approach to Part Shortages – Part 1

The short story of assembly problems is lack of parts. Part shortages drive all kinds of waste, including: juggling the schedule; expediting; bigger lots or batches – and all of these things end up causing shortages later on in a self-reinforcing death spiral.

So how did an assembly shop which built about 10 units / day, and suffered between a dozen and 20 line-stopping part shortages a day end up eliminating all but a few (3-5) a week?

Three things, more or less at the same time. This post talks about the first:

Implement a kanban system to replace MRP ordering. They systematically studied how kanban is supposed to work, and, over a few months, put in a kanban system which I am proud to say was really pretty good. The assembly line was fed by kit carts which were picked at takt time from a small supermarket on the shop floor. The supermarket held a day or two of parts. The parts with local suppliers were replenished right from the receiving dock. Parts which had to still be purchased in larger quantities were stored in a warehouse area, and the shop floor supermarket was replenished from the warehouse daily.

The daily warehouse replenishment established the concept of isolating the problem. Their daily replenishment allowed them to set up the shop floor supermarket as if all of their suppliers were delivering daily.

All parts in the shop-floor supermarket and the warehouse were under kanban control. This means they had kanban cards physically attached to the parts (if they were separate) or the containers.

Some things they learned over time:

  • The rules of kanban state that the card should be pulled and placed in the post when the first part is removed from the container. The quickly learned this was far more likely to happen if they secured the card in a place where it was in the way of either opening the container (over the folding lid, for example) or had to be moved (e.g. picked up) to get the first part out. At that point the card is in the person’s hand and he has to put it somewhere.
  • The number 1 reason for lost cards was that “put it somewhere” was a pocket.
  • The number 1 reason why the card ended up in a pocket was that the kanban post was more than a step away from the place where the card was pulled. That meant the person put it in the pocket “for a second” while he got the parts.

In the above case the countermeasure was simple. Put kanban collection points everywhere where parts are handled.

  • The first time they tried putting a pull system in for parts ordering they hadn’t put in heijunka (production volume and mix leveling) first. That was a problem, and “problem” is an understatement.

The countermeasure was (obviously) to simultaneously implement a schedule leveling system to drive the upstream system at takt. More about that in Part 2.

  • They invariably had some parts where they had more than they needed.

The countermeasure was “black cards” (though I would have preferred bright orange cards) that signified “excess inventory.” These cards allowed them to maintain kanban control of all inventory, but they did not signal replenishment.

When a card was pulled, the shop floor coordinator would scan a barcode on the card. This scan triggered an order release to the supplier, and authorized the supplier to ship the indicated quantity.

Actual card from this organization being scanned.
Actual card from this organization being scanned.

They had agreements with the suppliers that there would be an email acknowledgment of the order within 2 hours. When the card was scanned, it was placed in a slot labeled with the time when the acknowledgment was expected. When (if) that time passed and the acknowledgment had not been received, the card went to the buyer who phoned the supplier. “Did you get my order? I need the acknowledgment within 2 hours like we agreed.”

This served two purposes. First, it verified receipt of the order and eliminated a known cause of shortages. Second it “trained” the suppliers that this time the customer actually expected them to honor the agreement. They really didn’t want that call from the buyer who had better things to do.

Once the acknowledgment was received, the card went to the receiving dock. Here it was placed in a slot that indicated the day (and later on, the time window) when those parts were supposed to arrive.

Like the above case, if the time passed, the card went to our poor hapless buyer. He phoned the supplier with a simple question: “Where’s my parts?”

This reinforced that, once again, there was an expectation to honor agreements. They really didn’t care that much (at this point) what the supplier’s lead time was. Only that it was honored. The main objective when starting out was simple consistent execution.

When the parts came in, the card was retrieved, matched with the order to verify, then scanned again to trigger a receipt transaction. If there were exceptions – guess what – another phone call.

The card was then attached to the container. Since the card specified the storage location, put-away was fairly straight forward. No location lookups required.

The previous condition had been that there was no matching of receipts against expectations. Thus if parts were late, or didn’t show up at all, no one noticed until they ran out. Big problem. By trapping and surfacing problems at the two main failure points in the system, most of those problems went away after a few months.

For the purists who are reading – yes, this process has some compromises and probably is a bit obsessive on checks. Call those training wheels until there is a sense of balance. All I can say is that it worked and, in the long run, ended up to be a lot less work than chasing down and expediting shortages all day.