Lean Schedulng Case Study Providence Oct 09

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An in depth review of Graphicast's successful adoption of VISUAL Lean Scheduling and Theory of Constraints

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Lean Schedulng Case Study Providence Oct 09

  1. 1. Lean Scheduling – Shorter lead times, increased capacity, less inventory, lower costs
  2. 2. Val Zanchuk <ul><li>President, Graphicast, Inc. </li></ul><ul><li>Background </li></ul><ul><ul><li>President, TAFA, Inc. - 1987/2000 </li></ul></ul><ul><ul><li>Product Manager, Air Products – 1975/1987 </li></ul></ul><ul><ul><li>Engineer – New Jersey Zinc – 1973/1975 </li></ul></ul><ul><ul><li>Engineer – Phelps Dodge – 1972/1973 </li></ul></ul><ul><li>Education </li></ul><ul><ul><li>BS, M.Engr in Metallurgy – Lehigh University </li></ul></ul><ul><ul><li>Registered PE </li></ul></ul><ul><ul><li>Two US Patents </li></ul></ul>VISUAL User Conference 2009
  3. 3. Graphicast, Inc. <ul><li>Founded in 1978 </li></ul><ul><li>Located in Jaffrey, NH </li></ul><ul><li>Contract manufacturer of machined, zinc alloy castings </li></ul><ul><ul><li>In-house design, mold making, casting, machining capabilities </li></ul></ul><ul><ul><li>Proprietary, graphite mold casting process creates high density castings with exceptional surface finish </li></ul></ul><ul><ul><li>Most applications are high valued added machine components </li></ul></ul><ul><ul><ul><li>Laboratory analysis equipment </li></ul></ul></ul><ul><ul><ul><li>Printing presses </li></ul></ul></ul><ul><ul><ul><li>Automation equipment </li></ul></ul></ul>
  4. 4. Graphicast, Inc. - continued <ul><li>Customers range from Fortune 500 to small, family owned companies </li></ul><ul><li>Company characteristics </li></ul><ul><ul><li>High degree of employee involvement – an ESOP company </li></ul></ul><ul><ul><li>High degree of customer interaction and collaboration </li></ul></ul><ul><ul><li>High degree of operations and financial analysis </li></ul></ul>
  5. 5. A Long Time VISUAL User <ul><li>Implemented VISUAL in July 1999 </li></ul><ul><li>The impetus for selecting VISUAL was the scheduling capability </li></ul><ul><ul><li>Previous scheduling system was semi-automated with lots of anguish </li></ul></ul><ul><ul><ul><li>Scheduling had become the focal point of company activity </li></ul></ul></ul><ul><ul><li>The VISUAL Concurrent Scheduler greatly reduced scheduling time and manual intervention </li></ul></ul>
  6. 6. A Long Time VISUAL User - continued <ul><li>VISUAL consolidated all operational and financial activity </li></ul><ul><li>We developed numerous Crystal reports running off the VISUAL database </li></ul><ul><ul><li>Provided detailed analysis of sales, financial, and operational information for fine tuning the business </li></ul></ul>
  7. 7. Some Scheduling Problems Persisted <ul><li>The machine shop was booked solid 8 weeks in advance </li></ul><ul><ul><li>More late shipments cropped up as overall lead times went out to 16 weeks </li></ul></ul><ul><li>Normal shop floor issues wreaked havoc with the schedule </li></ul><ul><ul><li>Set up problems, machines down, etc. </li></ul></ul><ul><ul><li>The floor and the schedule would not match after time, requiring frequent adjustments and reruns of the schedule </li></ul></ul><ul><li>The schedule wasn’t pulling jobs in if previous jobs finished early </li></ul>
  8. 8. Some Scheduling Problems Persisted - continued <ul><li>Rush orders were very disruptive to the schedule and caused late shipments </li></ul><ul><ul><li>Forward scheduling was better than backward scheduling, but not by much </li></ul></ul><ul><li>The schedule tried to break into jobs to improve lead times </li></ul><ul><ul><li>Not feasible with our parts due to complex and lengthy set ups </li></ul></ul><ul><li>Ultimately, the schedule was not able to efficiently reflect the nature of our business </li></ul>
  9. 9. What’s behind Lean Scheduling <ul><li>Lean scheduling is based on Goldratt’s Theory of Constraints (TOC) </li></ul><ul><ul><li>Introduced in the business novel, “The Goal” </li></ul></ul><ul><ul><li>Utilizing TOC in production </li></ul></ul><ul><ul><ul><li>Identify the constraint that limits the throughput of the system </li></ul></ul></ul><ul><ul><ul><li>Relieve or eliminate the constraint to free the system to operate at its peak level </li></ul></ul></ul><ul><ul><ul><ul><li>Add extra shifts </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Add a second machine </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Use other (unconstrained) machines to produce the same part </li></ul></ul></ul></ul>
  10. 10. What’s behind Lean Scheduling - continued <ul><li>TOC scheduling relies on three components </li></ul><ul><ul><li>“ Drum” – The pace of the “constraint” </li></ul></ul><ul><ul><li>“ Buffer” – Some amount of WIP or time that protects the constrained component </li></ul></ul><ul><ul><li>“ Rope” – A signal to upstream operations to release work into the system </li></ul></ul><ul><li>TOC thinking is consistent with Lean and Six Sigma </li></ul><ul><ul><li>Use TOC to focus on constraints </li></ul></ul><ul><ul><li>Use Lean or Six Sigma techniques to improve and stabilize operations </li></ul></ul>
  11. 11. System With an Internal Constraint Constraint WIP DRUM BUFFER ROPE Work Order Release
  12. 12. System With an External Constraint Market too small for your capacity – the constraint DRUM ROPE Work Order Release SHIPPING BUFFER - TIME
  13. 13. Getting Ready <ul><li>“The Goal” – </li></ul><ul><ul><li>Employees read the book or watched the video </li></ul></ul><ul><ul><li>Created TOC awareness </li></ul></ul><ul><ul><li>Provoked thought </li></ul></ul><ul><li>We sent a copy of our VISUAL database to Synergy Resources </li></ul><ul><ul><li>Evaluate database for consistency and integrity </li></ul></ul><ul><ul><li>Simulate DBR scheduling </li></ul></ul><ul><ul><li>Determine starting point for Lean Scheduling </li></ul></ul>
  14. 14. Getting Ready - continued <ul><li>We started to restrict work order releases to reduce WIP </li></ul><ul><ul><li>We weren’t concerned about orders being late, as we expected an improvement in throughput with Lean Scheduling </li></ul></ul><ul><li>We cut back on overtime </li></ul><ul><ul><li>Gradually reduced overtime to minimize the impact of potentially eliminating overtime with Lean Scheduling </li></ul></ul><ul><li>We wanted to create a fresh start environment for the implementation </li></ul>
  15. 15. Getting Started <ul><li>Five days of consulting time during the implementation </li></ul><ul><ul><li>Training </li></ul></ul><ul><ul><li>Customizing reports </li></ul></ul><ul><ul><li>Debugging </li></ul></ul><ul><li>No internal constraint </li></ul><ul><li>Market constraint </li></ul><ul><ul><li>Started day 1 with a time buffer of 8 weeks – half our existing lead time </li></ul></ul>
  16. 16. Getting Started - continued <ul><li>Work order flow and close outs moved quickly </li></ul><ul><ul><li>WIP shifted on the floor toward the shipping dock </li></ul></ul><ul><ul><li>Reduced time buffer to 6 weeks on day 2 </li></ul></ul><ul><li>A rush order came in on day 2 </li></ul><ul><ul><li>Left the buffer alone and watched the system response </li></ul></ul><ul><ul><li>Rush order finished in two days </li></ul></ul><ul><li>Rush order did not affect quick work order flow </li></ul><ul><ul><li>Dropped time buffer to 5 weeks on day 4 </li></ul></ul><ul><li>Sent consultant home a day early </li></ul>
  17. 17. The Impact of Lean Scheduling <ul><li>Reduced time buffer to 4 weeks after the first month </li></ul><ul><li>Practically eliminated overtime </li></ul><ul><ul><li>Savings of about $100,000 per year </li></ul></ul><ul><li>Went to four day work week </li></ul><ul><ul><li>Bonus to employees for losing overtime </li></ul></ul><ul><ul><li>Reduced electric bill by 15% </li></ul></ul>
  18. 18. The Impact of Lean Scheduling - continued <ul><li>Reduced Inventory by 30% </li></ul><ul><ul><li>Freed up about $100,000 of cash </li></ul></ul><ul><li>Effectively doubled plant capacity </li></ul><ul><ul><li>Overall plant buffer is about 50% </li></ul></ul><ul><ul><li>Plenty of capacity to handle rush orders without impacting on-time deliveries </li></ul></ul><ul><ul><li>No increase in equipment or employees needed to grow </li></ul></ul><ul><li>Major issue is now increasing throughput </li></ul>
  19. 19. Interesting Challenges <ul><li>Throughput Accounting </li></ul><ul><ul><li>Throughput = Revenue – Totally Variable Costs </li></ul></ul><ul><ul><li>Inventory = WIP, Finished Good, and Capital </li></ul></ul><ul><ul><li>Operating Expenses = Costs to turn inventory into throughput </li></ul></ul><ul><ul><ul><li>Includes labor </li></ul></ul></ul><ul><li>From a system overview, treat labor as a fixed expense </li></ul><ul><ul><li>Contrary to conventional thinking </li></ul></ul><ul><ul><li>Opens up opportunities when applied to the new increased capacity </li></ul></ul><ul><ul><li>Add it to your managerial bag of tricks </li></ul></ul>
  20. 20. Interesting Challenges - continued <ul><li>Employees grappled with Throughput Accounting </li></ul><ul><ul><li>In TOC, the focus is throughput </li></ul></ul><ul><ul><ul><li>Short runs </li></ul></ul></ul><ul><ul><ul><li>Move the product through the plant as quickly as possible </li></ul></ul></ul><ul><ul><li>Employees comfortable running larger lots to reduce unit costs </li></ul></ul><ul><ul><ul><li>Large lots not consistent with TOC or Lean principals </li></ul></ul></ul><ul><ul><li>This has been the area of greatest message reinforcement </li></ul></ul><ul><ul><ul><li>They understand the schedule </li></ul></ul></ul><ul><ul><ul><ul><li>Simple and it works </li></ul></ul></ul></ul><ul><ul><ul><li>Beginning to become more comfortable with the correlation between throughput, inventory, and lot size </li></ul></ul></ul>
  21. 21. A minimal amount of oversight day to day <ul><li>Simple reports </li></ul><ul><ul><li>VISUAL Planned Load </li></ul></ul><ul><ul><li>VISUAL Resource Operations Buffer Status </li></ul></ul><ul><ul><li>Plant Wide Buffer Status - Crystal </li></ul></ul><ul><li>Simple scheduling </li></ul><ul><ul><li>Floor supervisors decide where to run jobs </li></ul></ul><ul><ul><li>Minimal management involvement </li></ul></ul>
  22. 22. Daily Schedule Output by Shop Resource
  23. 23. Looking at the System
  24. 24. A minimal amount of oversight day to day - continued <ul><li>Lean Scheduling efficiently reflects our day to day operations </li></ul><ul><ul><li>Rapid changes </li></ul></ul><ul><ul><li>Rush orders </li></ul></ul><ul><ul><li>Capacity planning </li></ul></ul><ul><li>Very quick “what-if” analysis </li></ul><ul><ul><li>Increasing or decreasing bookings </li></ul></ul><ul><ul><li>Impact of overtime, personnel levels, vacations or absences </li></ul></ul><ul><li>We do not have a scheduling person </li></ul>
  25. 25. “ Driving Business Innovation to Improve Business Performance” <ul><li>Savings </li></ul><ul><ul><li>From day one of the Lean Scheduling transformation </li></ul></ul><ul><li>Payback </li></ul><ul><ul><li>2 ½ months for the entire investment in Lean Scheduling </li></ul></ul><ul><li>Fingertip Information </li></ul><ul><ul><li>Lean Scheduling gave us a rapid and efficient response tool to the current economic chaos </li></ul></ul><ul><li>Recognition </li></ul><ul><ul><li>Graphicast received a 2009 PM100 award from Managing Automation Media for the Lean Scheduling project </li></ul></ul><ul><ul><ul><li>“ Progressive Manufacturing” awards were bestowed on the 100 companies deemed to have most effectively used innovative methods to improve business performance. </li></ul></ul></ul>

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