Question
I work for a small business that produces moldings. I would like to exemplify to the President and Vice President that a streamlined flow is important and can directly improve or hurt our bottom line.
Right now we bring in our surfaced lumber through a door that is right next to the molder and cart it over to the rip saw for blanking near the loading dock. We then of course bring it back over to the molder, mold it and then haul it right by the ripsaw on to the loading dock. Does this make any sense at all?
I know that if I tell them that it would be effective to switch things around they would say that it wouldn't make any sense because they are too busy running moldings and ripping blanks to stop production for a couple of days. Is there a way that I could show them in the numbers that this can be very effective?
Forum Responses
(Business Forum)
From contributor J:
You can do a small "sensitivity analysis" to demonstrate the potential savings that exist if you were to streamline the production process. A sensitivity analysis is nothing more than a model or set of calculations that you run under several different scenarios. You can do a "most likely," "least or worse case scenario," and finally, "best case scenario." Your variable here would be the amount of time you could save in moving materials around.
I think you'll want to quantify the amount of time you are currently spending on moving materials on a per project or hours/day basis. So, if you are spending 2 hours moving materials around now, and you think streamlining would save an hour per day in moving the materials, you will effectively be saving 5 hours of labor a week. While this is probably a little drastic as intended for the sake of this argument, you can see where even saving 10 minutes a day will mount up over the course of a year (over 43 hours assuming a 260 day work year). In this scenario, if you would only have to stop production for under 40 hours, it would be economical to do so and you would improve your bottom line in year 1. Obviously, for an ongoing entity, it would increase profitability every year going forward by that amount. Other variables to factor in would be costs for moving equipment (electric outlets, dust collection, etc.).
Be careful when presenting to the management. It could be a sensitive topic as you don't want to tell them they are doing their job wrong, but try to suggest it in a friendly and non-confrontational manner. You may even want to volunteer to come in on the weekend to help move the equipment and reorganize the line to be ready for production during the regular week - thus, not holding up production time at all. It would be an excellent opportunity to prove your value and commitment to the company to your bosses. If they are alert managers, they would hopefully remember this come raise or bonus time.
Once you have figured out the time involved moving the material currently, you can make an assumption as to the amount of time a more streamlined process would consume, then you can quantify the amount of time you believe the company would save by comparing the two. The difference between the two is basically "downtime" in the production process. Your point to management is that this is inefficient use of this time and labor and it could be eliminated. In addition to the savings in labor and overhead costs for this time, you can consider the "opportunity cost." This is the cost to the company during this down time. The time you are now wasting in moving materials around is time that could actually be spent on additional jobs generating additional revenue and would increase your bottom line by your profit margin. You can use the shop rate as the multiplier to come up with the opportunity cost.
That said, I have some hints for you. Try to calculate the time it takes to process one standard part, without manipulation, without setup, without everything. This is the synthetic productivity of your process, or you can call it your production sky's limit. It's going to give a reference point that you'll never reach but that indicates clearly how much you need to rework your process. Then, for that single part, add your manipulation time. After that, the difference will give you the addition of the parking time and the set-up time when compared to the real life process.
The work to be done afterward is to redo your plant layout, your working spaces layout and then redefine your operating techniques. The goal is to get rid or to hide all down time. You'll seek to find everything you can do while the machine is running; every manipulation that can be combined, etc.
This work looks huge but is not. Try it quickly and you'll see. The results are worth it and generally this is enough to convince everyone. Keep in mind that moving a machine may not take long but can have disastrous mid- and long-term effects on the machine. Modifying a layout can also disturb the productivity for a little while.
I would agree that production is paramount. If there is down time, that's maintenance time, cleaning, etc. You hate to have employees inactive, but that is no reason not to make production more efficient. Try to bring in more business. Maybe even have a part timer or outsource the deliveries to someone so the others can stay in the shop at the machines where the money is being made. That is the company's core competency.
1. It must save time without costing quality, or increase quality without taking more time.
2. The cost of all aspects of a changeover has to pay itself off in three years or less.
Any business owner who can't spend the time to listen to advice from any employee level to see if it makes the best financial sense is a fool. Even when the ideas don't pan out, you want to encourage worker participation into operations and setup. An employee who actually tries to help things run more efficiently is much more valuable than a clock watcher. As long as all parties involved understand that all ideas are based solely on the business running as efficiently as possible, feelings should not be hurt no matter what the final decision is. However, don't take too long making a decision on what to do - you don't want to take longer to read the map than to drive the car.
If you haven't guessed it already, the point is he had a finely tuned sports car and was using it to its fullest, but what good did it do him? We both got the same task done but he worked a lot harder at it. If you can't change the whole environment, the end result (profit) will be the same. If making a business grow was as easy as improving production, then we all would have multi-billion dollar thriving corporations.
In my company manual I wrote these words to try to encourage ideas. "Change is imperative to success but expensive if frivolous."
Comment from contributor A:
First, no matter how you figure the savings, whether you're right or wrong, the way you make your pitch has a lot to do with how it's received.
Moving materials does not add to their value. So if you can figure out how much less time would be spent moving materials with a different layout, that should be sufficient to arouse some interest, which is your first goal.
Then try to arrange a chance to talk with the owners, and offer to do it outside your working hours. This avoids the perception that you are trying to avoid work.
Present yourself as wanting to learn more about the business when you make your pitch: "I've noticed we seem to spend a lot of time moving material instead of processing it. It seems to me that we could produce more in the same amount of time if we did "Y" instead of "X" In fact, I've done some calculations and it seems we could save this amount of labor." Then ask if they can see anything you have overlooked.
With this approach, you're asking to learn from them, rather than seeking validation. You may very well learn something by opening a dialogue, rather than simply making a pitch. And it may even be that the process will lead to some changes.
By not directly challenging the situation that now exists, you are less likely to get a defensive reaction, and far more likely to get a positive response.
