Eliminating waste through Lean principles means balancing tradeoffs.
Practitioners of Lean manufacturing are familiar with Taiichi Ohno’s seven deadly wastes: overproduction, waiting, transportation, inappropriate processing, unnecessary inventory, unnecessary or excessive motion and defects. While focusing on waste elimination in each of these areas is desirable, often dealing with production realities means tradeoffs must be made.
As a result, reducing costs by improving efficiency drives manufacturing and quality engineers to become combinations of risk analysts, strategic planners and coaches. This is because all wastes tie into one another and reducing one may fix others. So, the most effective Lean strategies look at the overall organization and the way each action impacts other actions. A robust Lean program emphasizes to each employee that customers include both the party receiving the product and the person who touches a product after they finish processing it. The result is an organizational culture that focuses on improvement, but also recognizes constraints.
Cause and effect. Nowhere are constraints more evident than in the electronics manufacturing services environment. Even when customers are targeted based on their maturity in Lean practices, variations in forecasting, processing and supply chain are introduced with every new customer. This month, we look at each of the seven wastes and likely tradeoffs that must be considered. We also look at practices EPIC has found successful in achieving balance between Lean best practices and the reality of serving a diverse customer base.
Overproduction is a waste typically driven by inefficient processes and as such, it often reflects elements of the other six wastes. Overproduction results when inefficient processes drive higher scrap levels or shortages, and production output is increased to ensure demand is met. Automation is one way to increase production efficiency and quality, but EMS automation strategy needs to be flexible to support likely variations in product configuration and demand. Higher levels of automation can also drive higher cost, so the “perfect” level of automation may never be achievable. Plus, automation is only half the equation. Preventive maintenance and calibration are important in ensuring repeatable processes, as equipment that fails or is out of spec will add bottlenecks or defects. Smaller lot sizes can help minimize overproduction, but every changeover introduces an opportunity for failure and decrease in operational efficiency.
EPIC’s model looks at automation strategy carefully. Equipment and process variation is minimized. The same platform is used in all facilities, so improvements made in one facility are easily transferred. Specialized wave solder equipment and vapor phase reflow are used to create a broader process window that either permits automated changeover or doesn’t require any change between products. All SMT lines are identical. There are no specialized topside or bottom-side lines.
Production personnel are cross-trained in multiple processes so they can move between processes based on demand patterns. Smaller lot sizes can be processed with minimal changeover impact, and demand variations driven by multiple customers are accommodated with minimal waste of resources or bottlenecks. Design for manufacturability/testability (DfM/DfT) recommendations help guide customers toward practices that better utilize production resources and minimize defects. The effect is minimized overproduction.
Waiting is a simple waste. Products in wait state at any point in production are essentially stagnant money merely sitting on the floor. Increasing throughput by processing in smaller batches converts waiting to free cash. However, elimination of waiting is achievable only if material is available. A single, inexpensive passive component delay can halt a production build, negatively impacting inventory turns and cash flow.
EPIC’s system typically processes product into finished goods within 48 to 72 hr. Material bonds are established and buyers are focused not on ordering to JIT demand, but on managing exceptions down the pipeline. The result is the ability to identify potential material shortages with long enough lead-time to address the issue. The DfM/DfT discipline, broader process windows and smaller lot size philosophy described above also contribute to reduced bottleneck potential and an overall reduction in wait time between processes. The net effect is improved inventory turns, increased cash flow, and improvements to on-time delivery.
Transporting is the waste of excessive movement. Transport waste can be created in many ways. A poorly laid out facility is often the biggest driver of transport waste. However, inefficient automation or too much process segregation can also drive this waste.
Our factories are designed to minimize transport by moving production in a synchronous manner according to general processing requirements. Where possible, multiple processes are combined both to eliminate transport waste and potential defects that can be introduced in isolated processes. For example, in some build-to-order projects’ final programming, test and packing are combined at the test station. This minimizes transport between workstations, eliminates the possibility that varying configurations will be mislabeled, and optimizes process takt times to improve product flow.
Inappropriate processing is waste driven both by lack of DfM/DfT discipline and by lack of sufficient documentation control. This can be a more difficult waste to control in the EMS environment because customers may reject DfM/DfT recommendations, and robust documentation requirements can create bottlenecks.
EPIC’s DfM/DfT system prioritizes recommendations to make it easier for customers to understand how critical each recommended design change is to overall product quality. Documentation control is centralized to make sure production only has access to the most current revision of work instructions. Design travelers accompany each work order to ensure that during shift changes or personnel changes there is a clear trail on what is being processed. Smaller batch sizes also contribute to minimizing this waste.
Unnecessary inventory is also a challenging waste to minimize in the EMS environment. Unnecessary inventory comprises raw material, work-in-process and finished goods inventory. While smaller lot sizes can minimize WIP, the relationships with customers found in EMS means forecasting and supply base choices are often a compromise between customer preferences and Lean best practices. Economy-driven variable demand further tests the system.
In the EPIC model, the program manager starts by developing the customer order replenishment methodology. The tool for determining visibility into the customer’s demand is defined (i.e., ERP, EDI, etc.), and replenishment “pull” signals are defined.
Once these issues are addressed, initial finished goods kanban bin sizes are established. Trends are analyzed and bins resized as appropriate with customer approval. Strategic suppliers produce to the MRP forecast and ship to EDI release signals. Consignment, in-house stores and vendor managed inventory programs are used with strategic suppliers to maintain buffers closest to the point of use.
Pipeline status or “bond” reports are regularly reviewed with supplier teams to ensure buffers and replenishment streams are able to support planned production within a range of variation based on past historical demand, current forecasts, customer service lead-time guarantees to their end-market, manufacturing lead-times and transit lead-times.
Like the wastes of transport and inappropriate processing, unnecessary or excessive motion costs money and slows throughput. And, as with the waste of inappropriate processing, customer reluctance to implement DfM/DfT recommendations can be a constraint in improving efficiency.
EPIC’s automation strategies, DfM/DfT process and focus on designing factories with sequential processes all help improve efficiency, but ultimately, the most success in reducing this waste comes when customers are willing to adopt DfM/DfT recommendations. Engaging the EMS provider during the design stage ensures optimal process efficiencies, translating to a successful and cost-effective product launch.
Excessive defects represent both the seventh waste and a byproduct of most of the other wastes. They drive unnecessary inventory and overproduction. However, completely eliminating defect opportunities carries a high cost, and most EMS providers make tradeoffs to minimize defects while aligning with customer cost goals. Other defect minimization practices include:
- Eliminating non-value-added activities.
- Minimizing touch labor.
- Maintaining a well-trained workforce.
- Using Six Sigma tools to analyze root cause of defects.
- There is no one right formula for eliminating any of these wastes. The best course is developing a strong production framework with processes that accommodate the bulk of customer requirements, and fine-tuning as required.