How to Get Lean Scheduling Right
By: Jamie Bzdok
Lean manufacturing is not a scheduling-centric strategy or methodology, rather Lean concepts affect processes around scheduling and help make it more efficient and productive – hence, Lean scheduling. At its core, however, Lean manufacturing is all about eliminating waste in production, including:
- Work-in-process (WIP) and inventory
- Parts movement
The main reason manufacturers often struggle with Lean is because its implementation can expose issues in the production process such as gaps and bottlenecks. Many companies will address these issues with tweaks to production, but not process. For example, some manufacturers will labor under the common misconception that increasing production quantities will decrease costs, so they increase WIP and inventory which, of course, adds labor and materials costs.
What’s not being looked at are the hidden costs that occur by increasing batch sizes. As we just noted, increasing production requires the purchase of additional raw materials. This additional cash outlay may not be recouped for months, adding the risk of cash-strapping the company in addition to increasing expenses. It’s easy to see the potential for snowballing here.
And it doesn’t stop there. Increasing production batch sizes increases the load on production, which oftentimes leads to a misallocation of production capacity. This, in turn, leads to the added labor expense of overtime, further increasing costs. This is hardly Lean scheduling. To add insult to injury, increasing production adds the risk of over-producing and stockpiling too much inventory (more waste!). Instead of committing cash and resources to producing finished goods that ship and bring in revenue, unnecessary waste has been incurred for products that will sit, unsold, on shelves instead.
And we’re still not through. More waste is piled on in the form of added hidden costs such as managing all that additional inventory. This is how poor planning and unaccounted-for hidden costs can impact scheduling, production, and profitability.
Lean scheduling: Less is more
Just by reducing batch sizes to what will actually ship can reduce WIP, inventory, lead times, and cost. By minimizing and better controlling these processes, more effective, Lean scheduling can be implemented. Of course, there will be times when cost and complexity of set-up will warrant an increased batch size; however, it’s important to be aware of the costs this will add to the process.
The same concept applies to purchased components. Just because a price reduction on materials for a larger production batch size may be available does not automatically make buying it and bringing it into inventory the right decision. Instead, it’s more important to fully evaluate the true need for inventory items or safety stocks and set them at the correct levels.
Speaking of costs, it’s important to not focus strictly on the standard efficiencies that are typically associated with manufacturing. Consider the concepts of throughput accounting and realize that there may be excess capacity available to sell at lower costs once initial labor and burden are paid for. Look at different measurements such as throughput (sales minus materials and outside service costs), total spending, cycle time, quality, and on-time delivery.
Often when implementing Lean principles a manufacturer will find an increase in sales, a decrease in WIP/inventory costs, excess capacity, lead time reduction, and an increase in on-time delivery. The key reason is Lean scheduling – working on the right thing at the right time.
There are tools available, such as VISUAL Easylean/DBR schedule for example, that will help a company enforce these Lean principles in the manufacturing scheduling process. DBR (Drum-Buffer-Rope) focuses on scheduling constraints in the system and enforces the reduction in batch sizes. VISUAL will attempt to only have produced what is truly needed, as well as reduce the amount of time that Planning will typically spend on material planning efforts in an ERP system.
The real effort is to resist the urge to fight the system and instead let it do the work. If you can successfully do that, you’ll quickly see the benefits mentioned earlier, including a decrease in WIP/inventory costs and excess capacity, a reduction in lead-time, and an increase in on-time delivery. Lean will uncover issues in your manufacturing processes, enabling you to fix the underlying, fundamental problems and not just patch them up in production.