What does one do?

One of the things I ought to write down is an account of what I would typically do on a project. In the last few years I was busy with manufacturing and supply chain projects. When looking at those subjects below I would normally check first if these exist and if, if they are effective and efficient.

ORGANISATION:
The organisation is lean
Frontline supervision exists
Separation between Planning and Operations
Training plans for workers and management are in place
Flexibility charts exist, are up to date and used

PLANNING:
Independent Planning department
Planning tools installed based on production standards
Plans are fixed and adhered to
Production standard hours for each product or product group
Communication link between Planning and Production, Procurement and Sales
Reports to measure planning attainment
Procurement arranges JIT deliveries to meet production plan
Planning reviews and manages stock
Obsolete stock is managed (and prevented from existing), scrap and rework are dealt with
There are regular stock reports with action plans

MANUFACTURING:
The shift system is effective
The factory is clean and cleaning plans exist
Production standard hours are known and used
A production plan is agreed upon and followed regularly
KPIs and reports are sufficient and effectively used, also communicated
Daily Planning and Review Meetings with frontline supervision exist
Weekly Planning and Review Meetings among management exist
An agenda for both meetings is in place, also an Action Plan which is used religiously
There are tools for Active Supervision on the shop floor (such as short interval controls)
Machines are used and capacity is known
Scrap is dealt with and hopefully avoided
There are breakdown registers at each machine which would then go into the daily report
Link between Production, Maintenance, Planning, Logistics
Change over procedures are in place (SMED)

MAINTENANCE:
Plans for regular and preventative maintenance are in place and managed
Maintenance reaction time to breakdowns is quick
There are KPIs which show how much time was used for preventative and breakdown maintenance
Machines have a repair history and are assigned with work orders
There is an effective meeting structure in place within Maintenance and to other departments
Engineers are trained and cross-trained

QUALITY:
Quality procedures are in place
Quality is a strong department and independent
Quality processes are well embedded within the production processes
Sampling is done according to plan, tests are undertaken timely
Regular communication to Production and Planning, also to R&D
Quality is not only a topic for the Q department, but Production should feel the need for quality too
Effective internal review meetings are in place, with agenda and action plans

This was just me thinking out loud. There are of course many more subjects within a usual project. I can only think of "new article development" and "article deletion" which have both a tremendous effect on manufacturing and planning. And the list goes on and on. 

All in all, I know what's going on in any operations department, where to look at and what do to do fix problems and implement an ideal organisation and processes.

Organisation for an Operations Department

I just passed the 1000 visitors threshold on this blog; motivation enough to write something I feel very strongly about - the organisational structure for any operations department. Once I have done that I can talk about KPIs. When I say operations I mean mainly production and manufacturing. 


The biggest ever "no go" is something I tend to find in most production departments - production planning is reporting to the production manager. What a blunder! 


Generally, there is not a single positive result when having this structure in place. The main reason for this is that production managers usually think in terms of fix cost degression, which means, the more material runs through a machine the cheaper the product becomes since fix costs tend to zero out with rising volume. 


The problems with this way of thinking are: 

1. Batch sizes are bigger than the market need, which means rising stock levels, full warehouses, old stock which might get out of date, hence cannot be sold anymore. The cost implication of this is: rising working capital (stock value), rising warehouse costs, rework and obsolescence.  
2. The factory is more likely to run under capacity constraints, as bigger batches bind capacity. This is a cost factor, as widening capacity is linked to further costs (overtime, more working hours, etc).
3. Bound capacity can result in lack or loss of customer satisfaction, as promised time lines for delivery might not be hit. 
4. A blown up organisation which is not reflected by real customer demand. 

So, what's the way out? In order to get away from this "batch size dictatorship" by the production department, a separate planning department must be established which does not report to the production manager but is independent. 

The planning department fixes the production plan and forces production to produce what's really needed. 

I have implemented loads and loads of organisations like these and will explain more in further blog entries. Obviously, I will talk about KPIs for both departments (planning and production), too. It is just too much for a single blog entry as I just realised, and, on a more practical note, as author of this blog, I need a few more topics to write about anyway.  ;-) 

Otto Bock - Production (3)

In the end, and as far as I remember, we managed to split planning from production, and also got the disciplines installed. Bernd was hired as production manager and the old one sent into his pension.

What we did not manage was to lay off the surplus workers. But this was due to political reasons.

With the management system we implemented they finally could talk about real issues and take actions accordingly.

On the photo is Edgar and myself. In those days we got a web-cam as the latest thing to have. We were supposed to talk to headquarters with it from then on. We installed it, but in fact, never used it.

Otto Bock - Production (2)

The production director was not overly cooperative, especially when it came to segregating planning from production. He saw that would be a loss of power. I always had the feeling he was "sitting it out", hence waiting till the project was over and then go back to the old ways.

The Otto Bock production process was extremely difficult and I have never ever seen anything like that again. In the usual scenario there are 2 or so production steps (imagine, food and chemical industry with mixing and filling as those 2 steps), but talking artificial limbs, those steps are enormous. There were workshops for wood, metal, and when talking metal, there was a smith, welding, etc, then there was a rubber part (the the fake skin), etc. So, the logistics within production alone was a nightmare for planning. Bear in mind, standards were not defined.

We implemented a management control system, supervisory shop-floor tours, action corners in order to display and discuss daily results and action variances, etc.

On the photo one can see our consultant Bernd who was responsible for production after Thomas left the team.

Otto Bock - Production (1)

The main 2 problems production had were:
i) the production department was also responsible for planning,
ii) SAP standard hours were missing or wrong.

These 2 are the main 2 production problems which I have found in my career so far. Production is like a monster, it is always hungry and wants big portions, hence the batch sizes tend to get bigger and bigger and measurement is only done in kg, as this shows a good productivity. Productivity is a measure of volume/hours.

And talking about SAP standards, whenever SAP is being introduced, standard hours seem to be estimated rather than thoroughly measured. Of course, once one puts estimates in it, the planning function of SAP and any other production planning tool is completely out of order.

On the photo is Edgar. He was part of the production team and dealt with the master schedule and trained consultants and task forces.