Lean manufacturers have a leg up on speeding products to market, reducing costs and keeping customers happy. In this overview, I’ll share how to engineer, set up and manage the project for a lean factory that works for your specific requirements.
Why set up a lean factory?
A lean factory, or lean-oriented production layout, creates a seamless flow of people, material and information. Well-designed lean factories prevent the build-up of inventory and excess equipment. Lean layouts facilitate visual management. They provide a safe, clean environment to expedite work, regardless of the finished goods being produced. Lean environments can have a positive effect on workforce morale. And it’s all about effective use of time. It is easier to clean and straighten the worksite when there’s little in the way of excess equipment, tooling, and inventory. A well-designed layout will contribute to the ease of maintaining a safe and effective workplace. And, if it’s easier to maintain, it will be maintained!
Two approaches, similar issues
Some companies choose to align operations into a value-stream layout within the same facility. This is called a brownfield approach. Others choose to move into a completely new facility, a greenfield approach. While the greenfield approach is preferable to most everyone, it’s not always practical or affordable. Greenfields have their own series of pitfalls. While it is almost easier to have new machinery installed in a new plant, that’s rarely the case. Can you accelerate the production process to create a window of down time to move equipment? Can you outsource some of the production to another facility or supplier?
Here we’ll discuss the brownfield approach, as it’s more typical and can be more challenging.
Regardless of the location and goals, your lean factory team must consider important operational and policy issues. They must establish and follow concepts that are relevant to your situation. And they must use the right implementation tools.
1. Get the right people
The project team will be tasked to re-engineer one or more facilities to support your company’s vision of a lean enterprise. The project team should be led by your lean leader. There are three ‘sub teams’ for the effective lean factory initiative:
1. The core team your company selects for the lean factory transformation must be able to dedicate themselves full time to the project. They will be responsible for completing several team based activities, such as value stream maps, collecting and compiling machine and equipment information, and constructing the product quantity process routings (PQPR) for each value stream. The typical team members for the core re-engineering team are the lean leader, the production or manufacturing engineer, a working leader or supervisor, a senior level machine operator or assembler, a representative from the quality organization (inspector or quality engineer), and a representative from the materials/logistics organization.
2. The support team should include critical personnel who can’t be dedicated full time, such as the facilities manager, cognizant value stream manager, the value stream accountant and the union representative (if your plant has a represented workforce.) Support team membership will evolve throughout the project, as requirements for each phase are different. But when nominated for the support team, all members should expect to meet daily with the core team.
3. Senior leadership must clearly communicate why and how the facility layout must be re-engineered or moved. Setting clear objectives such as milestone dates, can’t-miss requirements and budgets for expense and capital are essential for complete and thorough planning. The project manager – your lean leader – must remain in the forefront of managing these activities. The lean leader must be able to communicate all planning and implementation elements to the core team and the support team. As the task unfolds, budgets will be refined and expenditures will need to be measured against progress.
It’s critical to schedule production around facility preparation and machine moves. Sub-contractors may have to be secured to keep production from missing customer due dates. This is often overlooked and is not considered until the first phone call from a customer looking for product. By then, it’s too late to plan – you can only hit the panic button and react, stalling the entire effort. Sales needs to be aware of the impending upheaval and should provide guidance and assistance on scheduling changes.
It’s also important to keep an eye on future business. You don’t want to be limiting the resources dedicated to a value stream where the products or services will outstrip capacity in the near term.
The project’s lean leader should understand the lean principles relevant to factory layouts. Project planning is important, as milestone dates get pulled in or pushed out. Awareness of budgets and financial planning is essential to effective management of the project, internal resources and contractors. The lean leader will also be the intermediary between senior management’s weekly updates and the daily work of the plant layout team. The senior leadership team may want to bolster this role with the use of a consultant with experience in facilitating factory re-engineering projects.
In the initial phase, the project team (comprised of the core team and the support team) focuses on preparatory and planning work. This team can then disperse, with intermittent involvement at key milestones in the project (these will be the “tollgates”). To reinforce the lean concepts and goals driving the project, regular lean training and refresher sessions should be scheduled.
Training should be conducted for all team members, including the executive sub-team. While training may seem redundant to organizations that recognize the need to re-engineer a layout, it can provide a refresher that gets everyone thinking of how the project ahead will need to be completed. More importantly, training can help everyone focus on how to make the project itself ‘lean’. The training should include a lean overview, value stream mapping, visual factory and 5S, standardized work and total productive maintenance. Interactive exercises to reinforce those concepts can help to initiate the project. The training may include other topics, but it should be task-focused and relevant. Other training in team building and problem solving should be included as the project rolls out.
In planning a brownfield plant layout, avoid the creation of what are known as “roots and vines.” These are structures, such as machine foundations or overhead cranes, which would make it prohibitively expensive to move an operation or machine should the process change. Sometimes roots and vines are unavoidable. For example, specific foundations are often required for heat-treat furnaces or chemical processing equipment. For every piece of equipment, the team should seek options that will meet requirements, are compact and can be logically co-located within the business unit or profit center.
2. Develop a tollgate process for the project
Many lean companies use the tollgate method. It focuses on a specific, standardized approach to project management, such as new product design, or in our case, a significant re-structuring of operations.
While a comprehensive discussion could be initiated regarding the tollgate process, let’s take a “learn as we go” approach for this article. I’ve provided examples below of how a tollgate process works. Customize each of the tollgates to meet your specific facility or process requirements.
A minimum recommended list of tasks will need to be completed for each tollgate, with descriptions of those tasks. You may find it’s necessary to add tasks specific to your company’s operations. Be sure to include an element of safety in all tollgates. What’s a safe practice on a machine shop floor would be unnecessary in an administrative office.
The tollgates are milestones, with prescribed elements that must be complete by the tollgate meeting date. If any task is not complete, then the project is delayed until that task is complete and ready for review.
Tollgate meetings may overlap – one project may be at tollgate 2, but another might be nearing completion and the review for a tollgate 5 might take place at the same review meeting. Full attendance of the review team is essential for tollgate meetings. There’s no ‘catch-me-up later’ opportunities for the project’s successful on-time, on-budget completion.
Tollgate meetings are a great way to ping the C-suite and stay in touch with senior management. Are there any plans for growth or product expansion? Does the team have enough substantial direction to undertake a continuous flow assembly process, or will the company want to retain the stepped or phased assembly process? Will the company be in-sourcing any processes? Will any insourced process be outsourced? This two-way information exchange is essential to the tollgate meeting.
The tollgate method is the disciplined approach to a project plan. This plan must have dates and milestones for the production surge; the infrastructure upgrades and improvements, and a sequence for the machinery moves. Training, orientation and familiarization for the workforce that has not yet participated in the process is important – and now, timely.
Work resolutely to the plan. If something is delayed, can you work around it? Should the plan be revised for another series of equipment moves? Or, is the delay a showstopper? Risks need to be identified up front so when a situation arises, the plan proceeds seamlessly with little time lost. Each task within the tollgate checklist should be assessed for risk, whether it’s a schedule, cost or technical element. Questions should be anticipated and alternatives should be prepared in advance of each tollgate meeting.
Three rules for a successful tollgate process
- A “no-go” on only one task will cause the entire tollgate to be a “no-go.” If a budget line item is expected to be exceeded and the budget is not approved, then the entire team is sent back to their respective activities to refine their tasks and prepare alternatives or justify the additional expenditure. If the technical/engineering team didn’t provide solutions adequate to the executive team, then back everyone goes to the drawing board.
- Once a tollgate is reviewed and accepted, the “go” decision is made. There’s no revisit of a task at the next tollgate. For example, if a decision to go “greenfield” is made at Tollgate 0, the executive review team will not be able to second-guess the decision at Tollgate 1.
- If a project is deemed too risky or too expensive at a tollgate meeting, the entire project should be immediately tabled at that tollgate. Why? When the project becomes relevant or is able to be taken up again, all the work that brought the project to a particular tollgate is already complete. If run correctly, the preparatory work and the go-no go decision usually happen within the first three tollgates, before the real work and corresponding expenditures begin.
Part 2 of the lean factory series of articles will share a sample tollgate path for reworking your facility's layout or setting it up from scratch.
About the author: Daniel Penn Associates Senior Consultant Tom Voss has developed and implemented lean enterprise solutions for more than 25 years. Trained and mentored in Lean concepts by the founders of Shingijitsu Company, Ltd., renowned experts of the Toyota Production System, Tom held engineering, operations, finance, human resources and new business development positions at General Dynamics, United Technologies-Pratt & Whitney, JDS Uniphase and Franklin Products. His experience spans chemical, industrial, aerospace, automotive and telecommunications industries as well as insurance, banking and public sector services.
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