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Material Management in a High-Mix Production Environment: Four Questions that Identify a Lean Operation

Sept. 25, 2012
With better management of materials, it is possible to show significant cost reduction, enhance delivery schedules and increase customer satisfaction.

A manufacturer who manufactures specialized machines for the automotive industry with a low-volume, high-variation manufacturing process (which recently has turned into high-volume, high-variation) has a peculiar lean opportunity. Due to the size of the machines, the “flow” in the manufacturing process centers around people and parts, not product. There is no “manufacturing line” because the machines are simply too large to move and if moved, would lose much of their calibrated characteristics. It is clear from watching the movement of material around the machine that there are four key questions that, if answered and analyzed, would yield a vastly improved workflow.

1. How is the material purchased?

Procurement strategy, supply chain management and economic order quantities have long been analyzed and optimum strategies theorized. When considering how to procure materials, think about the need to manage supplier risk (i.e. can they deliver what is ordered when needed, without being too early, too late or out of quality specification?). Compare and contrast with the cost variations from the supply base -- will the added cost from a highly reliable supplier be justified? Is the purchase too much from any one supplier, thus giving them far too much power in the supply chain?

2. How is the material received and stored?

Opening boxes of received materials never adds value. Yet, manufacturers will labor in their receiving departments, using multiple people to open boxes, count parts and verify contents of packages. This is much money lost on non-value-adding activity and is indeed the cost of poor supplier quality and unreliable delivery capabilities -- along with the basic cost of removing packaging from the material. Once the material is received, it (in many cases) moves to some form of warehouse, storage facility, storage rack or shelf.  Examine how the material is stored, how it is retrieved, and the impact to travel distance, time and cost for the material to be placed in storage.

3. How is the material moved?

When material is retrieved from storage (be it temporary or long-term storage) and moves to a build site, consider what equipment is needed to move the material, the path the material takes in movement and the amount of labor required. Movement of material within a production plant is always non-value-added activity. No customer pays more for a product because its constituent parts are moved around more within a plant. Consider build-site delivery of components and, if the procurement strategy allows, use vendor-managed inventory. At what point do we need to take ownership for material and thus pay for it?

4. How is the material presented to the assembler?

When the material arrives at the build site, how is it presented to the assembler? Does it arrive in a poorly repackaged cardboard box with little labeling other than the original shipping tag to identify the contents -- or is it clearly displayed in a tray or clear shelf with part numbering visible and easily identifiable by the assembler? The “acquisition time,” i.e. the time it takes the assembler to visually recognize the needed component, pick it up and prepare to install on the machine is non-value-added time. Clearly presented material where little thought or consideration is needed by the assembler is optimum. How can this task be made easier for assemblers to acquire the needed parts at the build site? How can the process be restructured for the build site to enhance flow of materials to the machine?

Material Management Means Better Performance

With better management of materials coming into, moving through and departing manufacturing facilities, it is possible to show significant cost reduction, enhance delivery schedules and increase customer satisfaction. An added side benefit of the program will be increased employee satisfaction. Noted time and again, there is decreased frustration on the part of assemblers (both union and non-union) when they can do their jobs without a frustrating search for the “right part at the right time.”

Let’s get moving!

Jason Piatt is president of Praestar Technology Corp., a provider of consulting and training services to manufacturers in the Mid-Atlantic region specializing in lean, Six Sigma & strategy formation.

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