Distribute the workload evenly – Heijunka

In a classroom, it is easy to assume that demand for products remains constant. All of the models for supply chain management work out very well and demand can be leveled and predicted when it happens at a constant and predictable rate. In reality, however, demand is anything but constant and predictable, and needs a system or practice that mitigates the fluctuations in demand so the manufacturing can process orders on the supply side at a more constant rate.

It should come as no surprise that a varying demand produces waste. By encountering peaks and valleys on the assembly line, large groups of parts are backed up and lead to downtime, idle workers, and excess inventory. The entire objective of all supply systems, led by heijunka, or work leveling, is to make sure that the assembly line produces a product in a constant, flowing manner.

The basis behind production leveling is to manufacture as small a batch as possible, so that fluctuations in demand do not affect the output very dramatically, and the production line may be given time to adapt to unexpected changes. This can be accomplished in a few ways, but one of the more prevalent ways is to set up an assembly line such that variation is accomplished inside of the line. By doing this, the same equipment will manufacture different models or different classes of products with the same machinery. Unless there is a major swing in demand that affects the entire industry, the line will be sheltered from fluctuations, more constant output will be achieved, and waste will be reduced dramatically.

Of course, heijunka cannot be made possible without the advent of modern machinery and processes that allow for one assembly line to be able to output multiple products. Henry Ford, when he revolutionized the manufacturing process, built his entire philosophy around the philosophy that an assembly line can be more efficient if one worker was able to perform their work as efficiently as possible and became an expert at one task. According to his system, this could only be accomplished by repetitive tasks that are accomplished by skilled employees repeatedly. As one can imagine, this was completely changed in the last two decades with the advent and industrialization of robots that can perform multiple tasks just as efficiently as it can a single task. This makes heijunka a much more viable possibility, as no time is lost when the production line shifts focus from one product to another.

This lean tool can be used in many situations. It does not have to be specifically geared towards manufacturing, but like most other lean tools, was created for it. Heijunka can also be used when involving paperwork reduction projects, project management, cost saving measures, and many other business related situations. Any time a company wants to streamline their processes such that an increase or reduction in demand for a product, whether that product is a service, a form, or a project output, they should be able to benefit from the process of production leveling.

The best way to demonstrate what is possible with heijunka is by illustrating with an example. A car manufacturer has 6 different car models that come out of the same plant. Up until now, there were 6 different assembly lines that put the cars together. The assembly workers were great at putting together their specific piece of the puzzle, and were always able to handle whatever was thrown their way.

About 7 years ago, demand for all cars, in general, dropped dramatically. The need for 6 assembly lines to be putting out cars is not necessary. However, in order to cut back in production, the car company had to close one of their production lines and stop making one of their models, something that they did not want to do strategically.

They employed heijunka to help them solve this problem. They closed two of their lines, and reprogrammed the other four so that they could each put out the 6 models that defined their business. This was evident when there was a large decrease in the demand for one of their models.

The company’s competitor came out with a new, more efficient model that is comparable to one of the models the company puts out. The senior leadership knew that demand for their model would be dramatically reduced, so they started producing less of that model. All they had to do in order to accomplish that was to tell the assembly line to skip that model every fifth time it came around. Their production of that one model was reduced by 20% and the production of the other 6 models was unaffected. They were able to immediately react to the shift in demand, one of heijunka’s end goals.

A Simplified Heijunka Example

This tool, while used frequently in the assembly line, can also be applied by middle to upper management in many different aspects of business. As stated before, there are plenty of processes that can benefit from heijunka, and it should always be a tool inside the box of a good, capable manager, that should be evaluated from time to time.

Pull System – A Key Lean Concept

It is common for many businesses to think that lean manufacturing ends on the manufacturing floor. There are way too many who also believe that lean manufacturing can only be used to maximize efficiency in production and reduce costs. Of course, as you can imagine, that is not true, as lean manufacturing can be used to manage the supply chain in conjunction with the manufacturing process.

With Just in Time Manufacturing, or JIT, the amount of inventory is reduced and a product is only manufactured when a product is necessary. By using Kaban and other lean tools, JIT can become the ideal supply chain system, greatly reducing costs for the business and making it easy for companies to react to demand signals with agility and speed. This is a great example of a “pull” system, which is the ideal way of running a supply chain., as compared to a “push” system.

Pull Vs Push System A lean Manufacturing perspectiveA pull system is exactly what it sounds like. The production of a product or system is varied depending strictly on the demand from the customer or the market, not from forecasts or previous performance. While most businesses strive to use a pull business model from end user to shop floor, it is rare for this to happen, as there are usually some aspects of the supply chain that are push systems.

A pull system is one in which the supply chain sends a product through the supply chain because there is a specific demand for that one product, as opposed to creating inventory and “pushing” the product out to distributors, wholesalers, vendors, or customers so they have to keep inventory, or worse, the production company has to keep inventory. A “push” supply chain is the exact opposite: they consist of many warehouses, retail stores, or other outlets in which large amounts of inventory are kept to satisfy customer demand on the spot.

As previously mentioned, it is very rare to see a system that is completely run on pull versus push methodologies. For example, one supply chain may be run on pull methodologies from the distributor to the customer. When the customer orders a product from the distributor, the distributor turns that order around immediately and orders that product from the manufacturer. The product is never sitting on the distributor’s shelves, and the supply chain from the distributor to the customer is strictly a pull system.

However, the manufacturer has been producing that product steadily for the last 6 months, whether there has been a demand or not. When a distributor orders the product, they pull it off their shelves and send it to the distributor (or possibly the customer). This is not based on demand from the customer, and is a great example of a push supply chain integrated with a pull supply chain.

When a business employs JIT and the pull model of business, they are taking on a few risks, but at the same time they are reducing costs dramatically. Because they do not have to stock inventory at that point in the supply chain, there is no risk of lost investment in that inventory, and they will not be scrambling when a demand signal changes based on seasonality, current events, publicity, or any of other reasons why customer demand and purchasing behaviors change.

On the downside, pull supply chains are much more complex and harder to manage. In order to meet the ever increasing demands of the customer with respect to customer service, and accurate, timely delivery of products, complex systems are necessary to track the status of orders and deliveries. While this has been made easier by modern technology, it is still a fight to maintain these systems in their ideal working order.

A perfect example of an almost ideal pull supply chain is the Dell business model. Michael Dell started manufacturing computers out of his dorm room while in college. The difference between him and his competitors is that he did not own a storefront or a manufacturing plant. He had to keep his inventory down to a minimum, if any at all, and did not have room for parts storage, no matter how small the components may have been.To counter these constraints, Dell created the ultimate business model: customers built their computer’s specifications on the internet, and using those specifications, the computer was built. Not a single spare part was left over, and Dell had no inventory, as each computer was shipped out the door as soon as it was manufactured.

There are many businesses that can benefit from the pull methodology of supply chain management, and it should be the goal of most businesses to make as many aspects of their supply chain pull systems instead of push systems as possible. The businesses that can most benefit from these strategies are manufacturing, more so than any other business. Because they run the greatest risk of losses when they have unsold inventory, they benefit the most from this incredible lean tool.

Kanban – Push to Pull Processing

Just in time manufacturing (JIT) is the practice of maintaining and manufacturing just enough inventory to fulfill the orders that have been placed, and not a single piece more. With the advent of next day shipping, modern tracking systems, and worldwide interconnectivity through the internet and satellites, JIT is not only possible, but some businesses could not run without it. Their margins are so razor thin that they would go out of business if they had to allocate any more money toward inventory than they already do.

If JIT is the entire system that defines the pull version of production and manufacturing, then Kanban is the signal that triggers the production. Kanban is the path toward JIT achievement, and consists of cards, balls, or other devices like markers or trolleys. It can also be an electronic signal, and many companies are using RFID’s as the signal in Kanban.

Developed by Toyota, Kanban is an integral part of Lean manufacturing and is best used alongside Kaizen and JIT. Unless the company that wants to use the Kanban tool is fully versed in lean manufacturing and all of the tools associated with it, it should not be used. To fully and properly implement the process, they have to coincide with each other and require a complete analysis of the manufacturing plant and all of the processes associated with it.

When the Kanban tool is properly used, the JIT manufacturing plan can effectively work. This means that a company can use all of its inventory to send to the end user, instead of stacking it on their shelves, freeing up capital for the company so they are able to expand and improve their bottom line.

The effective use of Kanban can be demonstrated with a simple example. An auto parts manufacturer wants to expand their product line to include brake pads, but they do not have the cash necessary to purchase the equipment needed to start manufacturing the quality brake pads they want to start building. Management then got together and decided they would try to slim down costs by implementing lean manufacturing processes.

After accomplishing a few other things, they turn toward JIT manufacturing to start producing some of their larger parts, one of them being pistons. They have accurate sales data for the previous year on their piston line of products. They decide to cut back on the manufacturing so they can get rid of their backlog and inventory and shift to the JIT system.

One of the company’s major customers has decided to help the company in employing their JIT system. They have agreed to help them use the Kanban system by keeping track of their inventory and using the company’s standardized Kanban cards. These cards contain all of the information about the pistons… their model number, their dimensions, weight, color, etc. There is one card for every 50 pistons.

When the customer runs out of pistons, they send the company one of their Kanban cards This triggers the manufacturing of more pistons and subsequently more pistons are made… 50 to be exact. The Kanban card represents a signal from the customer that more inventory is necessary in order to keep up with demand. The 50 pistons are not manufactured until the company that needs them is in need of them, and this is the epitome of JIT manufacturing.

It should be pointed out that a true JIT manufacturing system is an incredibly complex system that can quickly force complex issues that may turn out to show significant costs or losses to the company that they may not be able to handle.

A perfect example of this is the creation of a bar code, internet processing, and assembly line manufacturing system. When introducing the internet processing system, there is an entire system that is now being utilized by the company that requires upkeep, maintenance, and quality assurance. Without these, the system will quickly render itself ineffective. Of course, because of these requirements, additional costs are incurred and the costs saved by switching to a JIT system may not be realized. The bar code is represented by the yellow lightening in Figure (1), which portrays the signal that is generated anytime a customer requires an order. That signal, or The Kanban, goes straight to the supplier to order more material, as well as the fabricator to begin assembling additional product.

Kanban - From Push To Pull Manufacturing

Additionally, the timeliness and quality of the product may be effected when switching to a JIT system. Because they are waiting for an item to become depleted without ordering more of the inventory, the order will always be rushed and with that comes the hurried atmosphere that is the backdrop for errors and waste. The company may also lose its unique selling position if they are to fall behind their competitors in speed of delivery of a product, and they may lose the market share associated with those types of customers.

While it is not the answer to every problem a company faces with their supply chain, JIT manufacturing is a great tool that some businesses may find very useful to integrate into some, if not all, of their processes. It is strongly recommended that upper level management be the ones who decide the implementation strategy of this effective tool, and a complete redesign of the supply system be rethought.

JIT, if done properly, has the potential to save companies a substantial amount of money, particularly if they are involved with manufacturing and distribution. By reducing the inventory necessary to meet the demand of the customer, the company is investing in their own business through cost reduction.

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Kaizen – The Wheel Keeping Lean Running

When Tiger Woods won his first Master’s championship, what did he do the next day? Did he rest on his hands and take a few days off, congratulating himself because he officially was the best in the world at that very moment? No, instead, he was on the golf course, fixing the very few things that he noticed wrong with his swing during the 72 holes of golf he had just finished playing. Businesses can learn something from Tiger, and it probably isn’t what you think.

Instead of resting on his laurels, Tiger decided that he would constantly be improving his game. As you can probably guess, this is one of Tiger’s few secrets to becoming the absolute best at his sport. While businesses can learn from Tiger’s skill, perseverance, concentration, and focus, more importantly, businesses should learn to focus on Tiger’s example of constant improvement. Luckily, there is a process that already exists that systemizes the ability to constantly be improving one’s business. Enter the Kiazen business practices.

Kaizen, as you can imagine, got its first start in Japan, and can be directly traced back to account for a large portion of Japan’s success as a country in the days following World War II. It is now accepted as common culture within most places of business and is adopted by the most successful people and business without fail. It is also used in the self improvement area of development, but the main focus of this article is in the business management application.

Kaizen is the process of constant improvement in all processes, procedures, and methods that drive a business by focusing on small, continuous improvements in everything every single employee does in that company. While it is easy to chalk this up as a very helpful production tool and lean manufacturing tool, the reality is that Kaizen starts to truly come alive when it is incorporated into daily business practiced by every single member of the company, from the CEO all the way down to the most untrained, new line worker. As can be see

When taken on board, Kaizen teaches people to think about every single aspect of their business at all times. In this day of automation and consistent, repetitive tasks, this usually poses the biggest hurdle for the process to take effect. When the workers finally do decide to internalize the efficiency process, they are taught to keep an open mind about every single thing they do, and then use the scientific method to identify, deduce, troubleshoot, and improve any inefficiencies that they may see. the Kaizen Cycle

As demonstrated in Figure (1), Kaizen is a constant business process, with each stage in the cycle feeding and merging in with each other for a constant state of improvement, leading to the leanest company and processes possible with the most self propelled improvement culture allowed.

The end result of using this business practice is a more streamlined business that has employees that continue with the process of improvement almost automatically, whether you tell them to or not. In the following example, you’ll see how the Kaizen business practices can be incorporated into the everyday life of any business.

Frank works in an office cubicle in which he processes a 2 page claimant form for returns of a company’s product. This claim form is a document that is filled out by the customer, Frank himself, or the customer service representative that talks to the customer over the phone. Frank’s job is to review the claimant’s form, decide whether the claim is a valid claim for reimbursement, refund, or denial. A few forms even end up going to the legal department because either the customer is threatening legal action or there is a vulnerability in the legal policies of the company that may someday lead to a lawsuit.

Unfortunately, Frank’s job is very tedious and after reading over 100 claims per day, he quickly becomes tired, bored, and unhappy with the monotony. He then was ordered by his manager to attend Kaizen business training. When Frank came back, he realized there were quite a few problems with the way they were going about processing claims.

First, Frank noticed that he was finding that there was a lot of unnecessary information requested on the claim form. By restructuring the form, Frank got the size of the form down to one page, saving the company money on paper costs, as well as time needed to process the claim.

He also found that the decision to send a claim to legal was one that anybody could make, with a certain amount of training and guidance. He suggested to his manager that the customer services representatives, which accounted for over 80% of the forms, should be trained to decide whether a form goes to legal or him, and cut him out of the loop of reviewing the forms. This saved the company tens of thousands of dollars as well as cut about 2 days of processing time off of those applications.

As you can see, the process can be practiced by anyone in the workplace, not just CEO’s or lean managers. In fact, when Kaizen is internalized by a company, it will only become effective if every single member of the company jumps on board with the changes. Because of the small change nature of the practice, if this is not internalized by all, the company may only see small changes in their bottom line.

If practiced correctly, a business that employs Kaizen thinking will always have an improving bottom line. They will be constantly thinking of ways on the worker level to improve their own jobs, even if it is slightly and borderline immeasurable. After a short period of time, however, many small changes turn into big changes (for the better) to the bottom line.

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