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Are You "Leaving Money on the Table" in Mexico?

kaizen Activity Leads to
47% Increase in Productivity

If you hold a winning hand in poker yet fold your cards due to someone's bluff, the players call it "leaving money on the table", because you could have won the pot. In other words, had you played your cards right, the ones you already had in your hand, all of the money in the pot would be yours.

Many manufacturers are "leaving money on the table" by failing to implement Lean Manufacturing principles in low labor rate areas. However, the really smart players utilize Lean to reduce their waste and maximize their profits.

A recent example: a large remanufacturing company relocated much of their operations to Mexico a few years ago. Many other companies may have decided this activity alone provided enough cost savings for the decade and simply rested on their laurels. But the senior management at this firm knew that implementing Lean principles in the Mexican operation would provide even further cost savings and they weren't content to leave that "money on the table."

Continental Design & Engineering had been very instrumental in implementing Lean principles in the firm's US operations, so were again called in to assist in the Mexico plant. The first task was to select a Change Agent. The recently promoted Plant Manager was the obvious choice. The next task was to form Lean teams and select a Sensei. The teams were easy, but it was obvious there was no qualified Sensei on the staff. However, Dolores, a young, relatively inexperienced engineer, was willing to learn and also enjoyed the respect of the teams. She stepped up to the plate and volunteered to become an apprentice Sensei. Randy Dunn, Continental's Sensei, agreed to take her under his wing and train her as they proceeded with the kaizen events.

Five separate kaizen teams were formed for five different product lines. Each included the Production Supervisor, the Quality Engineer, the Process or Tool Engineer, the Maintenance Supervisor and the apprentice Sensei, led by Randy Dunn. Each kaizen activity would start on a Monday morning and be completed by the end of work on Friday. With a break in the middle of the kaizen events, the entire process was scheduled to take six weeks.

On Monday the first team started off by studying the current state. The team observed the time it took each operator to perform their job, which included both the machine time and the operator time. The team then calculated the Takt time based on the requirements of the customer. The team graphed their findings as shown below.

Takt Time - Before

From the graph, the team quickly realized that of the 23 operators, some were performing little or even zero work while several were unduly burdened with more work than could be accomplished within the takt time. They also knew from past experience that this line was not able to meet customer demands. Clearly some change was needed.

Now the team really went to work; relocating equipment, rebalancing jobs and removing stockpiles of parts between operators. The smaller equipment was easily relocated during the day shift. The off-shift hours were used to move the heavier equipment so as not to disrupt current production. Day by day the area looked more and more like the Lean Cell envisioned by the team.

Surprisingly, there was more resistance to removing the piles of stock between operators than there was to relocating equipment. But by Thursday the operators were very comfortable with both the prearrangement and the one piece flow.

The chart below demonstrates clearly the results of their hard work.

Takt Time - After

The amazing part of this story is the fact that before the kaizen, 23 operators could not meet customer's demands. After the kaizen, which involved only a handful of staff personnel and two engineers from Continental, 15 operators could now make takt time and easily meet the customer's requirements.

Work in Process Inventory (WIP) went from 174 pieces to 21 pieces. With only 15 operators, that is very near perfect one-piece flow.

The other kaizens occured in subsequent weeks and achieved similar results, which will be detailed in further newsletters.

This company proved that the principles of Lean Manufacturing know no country borders. Waste is waste whether in a high labor rate area or a low labor rate area. So the question one must ask is "Am I leaving money on the table?"

Contact Tom Epply, President and Director of Lean Manufacturing Engineer, by telephone or by filling in the email form below -- or visit our Lean Manufacturing section to find out more about how you can implement Lean in your plant.

How to Use Lean Manufacturing to
Dramatically Cut Waste and Increase Your Profits

Continental's Lean Manufacturing Implementation moves lean manufacturing from a business philosophy to a money-saving reality.

In the global race to compete, Lean Manufacturing is the essential method of removing "fat" or waste from the manufacturing process. Waste can be defined as ... Read more.

Glossary*

Change Agent: Someone who will lead the company from the traditional manufacturing mentality to becoming a Lean organization. This person may come from within or outside the company.

kaizen: The Japanese word for continuous improvement to eliminate waste. As the name implies, with continuous improvement you are never done; even the improvement can be improved.

Operator/Machine Balance Charts: A systemic method of measuring the work being done within the cycle time of the operation. The work is then divided into:

  • Value Added Time
  • Incidental Work
  • Waste (MUDA)

Then a conscious effort is made to eliminate the waste and reduce incidental work.

Sensei: The Japanese word for teacher. In acquiring Lean Knowledge the Sensei often is personally involved with the student.

Takt: The German word for Pace or Rhythm. Used in Lean as the rhythm of the plant. I.E., if the customer wants a part every 30 seconds, the plant (or the Lean Cell) should feel the heart beat of producing a part every 30 seconds.

Takt Time: Total available production time divided by the customer & requirement. Note: Include all planned activities such as cleanup, safety meetings, etc.

Takt Time

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