FMT New Dimension To Lean Thinking


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Business Technology Management, Inc. (BTM) was founded in 1987, and over the years has taught and implemented its proprietary business improvement methodology called Flow Management Technology (FMT) for businesses worldwide. FMT is a powerful and well-proven methodology that has helped small and large organizations to dramatically increase resources' output, assets utilization and overall throughput while simultaneously reducing inventory, lead time, and cost; all without the need for capital expenditure. FMT can be implemented in any organization regardless of type, size, product or service provided and will lead to improved business performance by 30% to 50% within less than a year. BTM has implemented FMT at a broad spectrum of industries including automotive, electronics, apparel, aerospace, tools & equipment, as well as Engineering processes, Product Development, Purchasing, Project Management, Logistics, Distribution and various service industries.

The basis of FMT is viewing the entire organization as a flow system and addressing the fact that every organization is an extremely dynamic environment where chaos constantly appears, and causes moving bottlenecks, fire fighting, late deliveries, excess inventories, etc. In order to overcome the cumulative effect of chaos, FMT analyzes processes in the organization using Pareto principles and statistical techniques, and as in hydraulic systems, builds key control mechanisms into the process to control the flow through the pipeline and to act as shock absorbers and flow accelerators. In addition, a variety of feedback control loops are installed to monitor lead times, inventories, and customer deliveries. This allows focused process improvement that dramatically increases resources' output and asset utilization. As a result, performance is shifted to a new dimension—throughput increases in order of magnitude while inventory, lead times, and cost are reduced simultaneously without investment in capital equipment. Bottlenecks are eliminated, their associated fire fighting disappears, and a new level of flexibility and customer service is achieved. FMT applies to all organizations regardless of type, size, product or service. In addition, by understanding product velocity and the organization's hidden capacities, a new business decision-making tool is introduced to identify profitable opportunities that are overlooked by current accounting systems.

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FMT New Dimension To Lean Thinking

  1. 1. Flow Management Technology a whole new dimension to “Lean” thinking BTM Business Technology Management, Inc. 50 Robert Treat Parkway Milford, CT 06460 Phone: (203) 877-2261 Fax: (203) 874-4242 Email: Web:
  2. 2. Over the past 10 + years “Lean” principles, based on the Toyota Production System, have been taught and implemented as the answer for achieving long term profitability. With all the time, energy, money and effort invested, are you dissatisfied with the bottom line profits?
  3. 3. “ Despite the huge influence of the Lean movement … most attempts to implement Lean have been fairly superficial. The reason is that most companies have focused too heavily on tools such as 5S and just-in-time, without understanding Lean as an entire system …” The Toyota Way , McGraw Hill Jeffrey K. Liker, Ph.D. Professor of Industrial and Operations Engineering University of Michigan
  4. 4. In most cases, improvement initiatives turned into Islands of success not translating into equal success for the whole business JIT 5S CELLS Lean Principles TOC 6 SIGMA Kaizen Events
  5. 5. <ul><li>Why is that? </li></ul><ul><ul><li>Because of working on local improvement initiatives instead of a Global Process that encompasses the entire organization </li></ul></ul><ul><ul><li>The existence of “Chaos” and the Wave Phenomenon in every process </li></ul></ul>Let’s explore how these may affect your business
  6. 6. Every flow process can be depicted as a series of interconnected resources - each acting as an Input/Output device This view applies to the flow through machines, departments, sections, divisions and every part of the company Computer Specifications Software Tools People Computers & Programs Tools & Supplies Electricity Dependencies Dependencies Resource B Resource A Dependencies Dependencies
  7. 7. Improving the output of one Resource may create a bottleneck at the next one. While local indicators show improvement at Resource A, the whole business may see marginal or no improvement. Work Build-up Resource B Resource A Local or Global? In other words, dealing with a subset of the business may not yield improvements for the whole Computer Specifications Software Tools People Computers & Programs Tools & Supplies Electricity
  8. 8. <ul><li>Therefore, in Manufacturing - </li></ul><ul><ul><li>When you see a bottleneck, is it a symptom or a root cause ? </li></ul></ul><ul><ul><li>When you see a problem area, is it clear whether the source of disruption originates there or else where? And, </li></ul></ul><ul><ul><li>When you eliminate a bottleneck , does it appear somewhere else? </li></ul></ul>Many improvement initiatives focus on the Manufacturing process where things are most visible. However, it is only part of the entire business flow. Local or Global? Sales Marketing Engineering Subcontracting Purchasing Logistics Vendors Distribution Warehousing Customer service Receivables Invoicing WIP Finished Goods M a n u f a c t u r i n g Raw Materials D C B A
  9. 9. <ul><li>Not synchronizing the whole process and its interdependencies is the reason why </li></ul><ul><ul><li>More often than not, improvement efforts deal with the symptoms </li></ul></ul><ul><ul><li>Root causes are not properly identified </li></ul></ul><ul><ul><li>The real sources of disruptions are not exposed </li></ul></ul><ul><ul><li>Bottlenecks move from place to place </li></ul></ul>
  10. 10. Let’s move now to addressing the other major obstacle that plagues every organization - the Wave Phenomenon
  11. 11. A small disruption somewhere at the beginning of the process will intensify into a huge wave at the end of the chain due to random disruptions coupled with Murphy’s Law Internal and External disruptions cause random waves which disrupt every business flow The Wave Phenomenon
  12. 12. Random Dynamics The Chaotic Behavior Of A Flow System INPUT A B Erratic Internal Disruptions Associated With Each Resource PLANNED OUTPUT Intensified Random Fluctuations ACTUAL OUTPUT
  13. 13. <ul><li>Moving Bottlenecks </li></ul><ul><li>Constant Fire Fighting </li></ul><ul><li>Frequent Late Shipments </li></ul><ul><li>Unsatisfied customers </li></ul><ul><li>Higher Costs </li></ul><ul><li>Long Lead Times </li></ul><ul><li>End-of-the-Month Syndrome </li></ul><ul><li>Vendors Lateness </li></ul>The impact of the Wave Phenomenon leads to the following problems: <ul><li>Excess Inventory </li></ul><ul><li>High Rework/Scrap </li></ul><ul><li>Lower Output </li></ul><ul><li>Uneven Workflow </li></ul><ul><li>Lower Profits </li></ul>
  14. 14. What’s needed is a methodology that encompasses the entire organization end-to-end, overcomes the impact of the Wave Phenomenon and a simple way to optimize the flow for profit maximization Sales & Marketing Engineering Logistics and Purchasing Production Line A Production Line B Subcontracting Warehousing Distribution Customer Service Receivables Invoicing Manufacturing Information Systems C u s t o m e r s C u s t o m e r s Flow Management Technology does just that!
  15. 15. By viewing the organization as a total flow system, analyzing disruptions, the effects of Murphy's Law, and applying the principles of fluid dynamics and systems control (as in hydraulic systems), Flow Management Technology breaks boundaries as well as bottom line performance! Let’s look at key concepts and building blocks of Flow Management Technology (FMT) and how it can help achieve long-term success. A B C D Feedback Loop Input Valve Middle Valve vacuum effect vacuum effect Valve Resource Valve Resource Strategic Buffer DEPARTMENT RESOURCE MACHINE DEPARTMENT Customer Orders Throughput Sales Manufacturing Lead Time Overall Lead Time THROUGHPUT Reserved Capacity Reserved Capacity
  16. 16. It is a methodology to analyze the entire process by viewing resources as Input-Output devices and their interdependencies. It uses a Flow Tube Analogy to develop a simple Business Flow Model for achieving tight control, quick reaction and robust performance A B C D Output Tube Length = Lead Time Input Tube Diameter = Flow Rate A B C D
  17. 17. <ul><li>The implementation of FMT Building Blocks will improve business performance in a matter of months. </li></ul><ul><li>The Building Blocks </li></ul><ul><ul><li>Identify the weak links in the process </li></ul></ul><ul><ul><li>Determine the main sources of disruptions </li></ul></ul><ul><ul><li>Use Pareto’s principle (80/20 Rule) to quickly focus improvement activities to </li></ul></ul><ul><ul><ul><li>reduce/eliminate the causes for disruptions </li></ul></ul></ul><ul><ul><ul><li>dramatically increase key resources’ output </li></ul></ul></ul><ul><ul><ul><li>increase assets utilization </li></ul></ul></ul>
  18. 18. <ul><li>Define a few control points as Valves to regulate, schedule and balance the system’s flow </li></ul><ul><li>Determine Strategic Buffers in a few critical areas to dampen the cumulative effect of the waves and enhance on time delivery </li></ul><ul><li>Develop Protective Capacity by using improved asset utilization, to overcome day-to-day disruptions and maintain a smooth and fast flow. </li></ul>Valve Resource A B Input Throughput Strategic Time Buffer Strategic Buffer Max Min
  19. 19. <ul><li>Implement Feedback Loops - constantly monitor Strategic Buffers, outputs, inventory and lead time to control the system’s performance and trigger frequent corrective actions </li></ul><ul><li>Vacuuming – using Protective Capacity, Vacuum Resources are oriented to eliminate any inventory build-up and thus create a fast and highly efficient flow </li></ul>Strategic Buffer Valve Resource A B Strategic Buffer Valve Resource Measure Output Measure Output Measure Inventory & Lead Time Feedback Loop Market Demand
  20. 20. Business Flow Model Example Lead Time 2 2 Weeks LT Buffer 1 Day Lead Time 3 1.5 Weeks LT Buffer 2 Days Lead Time 1 3 Days A B C D Finish Ship Pack Main Valve Valve Strategic Buffer Customer Orders Order Processing RM Strategic Buffer Orders Shipping Strategic Buffer H Max Min Release Valve Raw Materials E F G #1 #2 #3
  21. 21. Pre- Production Processes Raw Material Manufacturing Finished Goods Customer Orders Delivery Lead Time Pre- Prod. Proc. RM Mfg FG Customer Orders Delivery Lead Time The results of Continuous Improvement using FMT Pre- Prod. Proc. RM Mfg FG Customer Orders Delivery Lead Time Shorter Lead Time Lower Inventory Higher Throughput Lower Cost Better Quality Higher Profitability
  22. 22. It is not another copycat of Japanese techniques. It doesn’t require years and years of restructuring American jobs, careers, functions and firms along product value streams. It doesn’t require adopting Japanese terms and tools like Kaizen, Haijunka, Muda, Poke Yoke, Kan Ban, Judoka, Andon, etc. Flow Management Technology was created for the American free enterprise system to generate short and long term profitability. In summary, implementing Flow Management Technology is a low cost, down to earth, simple and quick process. It will bring your company substantially better performance from your current resources. It will make your business leaner than “Lean” Regardless of where you are, Flow Management Technology will move you forward Unprofitable Marginally Profitable Profitable Highly Profitable
  23. 23. “ For better bottom-line performance, you should have a new perspective of your business as a flow mechanism.” “ FMT users report that they achieve results of 75% net profit increase, 50% plant throughput boost, and 70% lead-time reduction in a matter of months.” “ Our throughput rate on a three-shift operation was around 35 million lb/month; now it’s up to 50 million lb/month. We get more out, and more on time.&quot; Per the VP and General Manager Commonwealth Aluminum Paul C. Miller Editor of Metalfax Magazine “ The effectiveness of FMT can be shown in many ways, such as reduced inventory levels, improved cash flow, shorter manufacturing leadtimes, better customer service, and less overtime. But the single most important sign that the system is working is profit generation.” “ FMT produced a 50% reduction in raw-material inventory, reduction in lead times from eight weeks to eight days, an increase in throughput of 142%, and the total elimination of late deliveries. Moreover, FMT is credited with doubling corporate profits in the first year.” Per The Chairman of North American Products Robert Eade Contributing Writer, Tooling and Production Magazine Testimonials
  24. 24. “ In the area of product, throughput has increased by 70 percent without a change in inventory. 205 past-due orders… have been taken down to zero in four months. Further, quality has improved: Customer complaints dropped from one a day to one a month.” Per Black & Decker’s General Manager Robin P. Bergstrom, Editor-at-Large Production Magazine “ Flow Management Technology has helped countless companies replace chaos with order in directing their manufacturing processes, from order entry and raw material inventory through in-process production planning to shipping finished goods on time.” Stanley J. Modic, Editor-in-Chief Tooling and Production Magazine Testimonials
  25. 25. Business Technology Management, Inc. (BTM) was founded in 1987, in Milford, Connecticut. BTM is the company that developed Flow Management Technology. Over the years, BTM’s highly experienced group of professionals have taught, coached and assisted in Flow Management Technology implementations at a broad spectrum of industries, leading to one success story after another. Such industries include automotive, electronics, apparel, aerospace, tools & equipment, as well as service industries. Other applications include Logistics Supply Chain, Purchasing, Product Development, Project Management, etc. BTM’s founder, Mr. Itzik Kostika, is the author of the training book Breaking Out of the Box , as well as a series of articles published in a leading Trade Magazine. Mr. Yaron Lew, BTM’s General Manager, is the author of several articles on Operations Improvement and his White Papers on Reducing Cost and Increasing Profitability as well as Focusing Lean Efforts in a Down Economy were published in IndustryWeek’s website. BTM
  26. 26. BTM Business Technology Management, Inc. 50 Robert Treat Parkway Milford, CT 06460 Phone: (203) 877-2261 Fax: (203) 874-4242 E-mail : [email_address] Website: For further information and to explore the potential for your company, please contact us