There are three cabinet manufacturers and one interior door manufacturer that I am currently working with. Their strategic objectives all have a number of things in common. First and foremost is that each CEO wants to transform his company to the lean business model to grow the business, improve productivity, enhance profits, and ensure a secure future for all of the stakeholders. Each of the companies employs varying levels of technology and automation, and the leadership team of each company will have to consider moving to the next level of automation and technology at some point when current resources have been maximized. How and when those decisions are made will be the subject of this and future articles.
Small shop thinks big
The recently completed series of articles featured Brad’s business, Signature Wood Systems of St. Thomas, Ont., Canada. Signature is a small cabinet manufacturer, but Brad has been thinking big for several years. The automation he has in place, comprised of an array of Holz-Her equipment including a beam saw, edgebander, and CNC machining center, has enabled his six-person production staff to achieve levels of output that wouldn’t be possible with more conventional equipment.
However, I want to clarify that Brad had all of that automation in place before he started the lean journey, so the automation alone was not the ultimate solution to achieving his growth and profit objectives. It was lean thinking that enabled the staff to better tap into the dynamics of the automation.
Even though Brad has achieved a success factor that many CEOs would envy, he still hasn’t reaped the full potential of his current resources. The beam saw and CNC machining center can be programmed from the engineering department during the order creation process, but Brad hasn’t upgraded to that capability yet. That means there is still waste in the set-up process while the equipment operator interpolates the drawings and programs the equipment for each job. You may be wondering, “If there is still untapped productivity improvement opportunity to be realized at Signature, when will Brad know when the magic threshold that maximizes his current resources has been reached?”
Using the OEE tool
The lean tool that will help him quantify the maximum productivity from key resources is Overall Equipment Effectiveness (OEE). I have written on OEE before so I won’t go into much detail in this article. If you are unable to find OEE articles in CabinetMaker+FDM archives, there is a vast library of information on the Internet. OEE is comprised of three factors – Availability, Performance to Standard, and Quality. Each factor is valuable in its own right, but OEE is a reflection of the interdependency of all of the factors.
Availability (A) is the ratio of actual machine running time to the maximum available time. The maximum available time is 24 hours or 1440 minutes. If you have no intention of operating beyond a single shift into the foreseeable future, then you can use your standard shift minutes of 480 minutes for an 8-hour shift, or 600 minutes for a 10-hour shift, etc. The equation for the Availability Factor is the net machine running time divided by the available time.
Net machine running time is the total shift time minus breaks, planned and unplanned maintenance, set-up, the lack of work due to absence of orders (no demand), waiting for missing materials/tools, lack of personnel, training, and meetings for example. Most of these detractors are controllable to a certain degree so they are all candidates for continuous improvement to capture lost available time. If a factory operates on a single 8-hour shift and the critical piece of equipment being measured had 120 minutes of total downtime the Availability Factor would be 480 – 120/480 or 75.0 percent.
The Performance Factor (P) is a measure of actual throughput time per piece versus the expectation established through time studies or Standard Work divided by the net machine running time. For example, suppose the average standard time for the pieces produced is 0.65 minutes and 450 pieces were produced during the shift. In that case the Performance Factor would be 450 x 0.65 = 292.5 earned or achieved minutes divided by the net machine running time of 360 minutes or 81.3 percent.
The Quality Factor (Q) is a relationship of total pieces produced to the total acceptable pieces. The formula is total pieces produced minus nonconforming pieces divided by the total number of pieces. Nonconforming parts include scrap, rework, rejects, and parts used in the set-up process. If a total of 500 pieces were run to generate the 450 acceptable parts in the above example the Quality Factor would be 500 – 50/500 or 90.0 percent.
As I mentioned earlier, each factor is valuable by itself and can be a source for continuous improvement activities, but together they create a measure that a manager can use to determine when additional resources may be needed to further increase output. The OEE percentage is the result of compounding all three factors (A x P x Q). Using the above examples, OEE would be 0.75 x 0.813 x 0.90 = 0.549 or 54.9 percent.
Achieving 100 percent OEE is unlikely for any business. Thecommonly accepted industry objective for OEE is 85.0 percent. That may seemlike a low objective, but remember that OEE is the result of compounding thethree factors so an OEE of 85.0 percent reflects a level of approximately 95.0percent for each individual factor. I can’t tell you where Signature WoodSystems is against that industry standard, but I will encourage Brad to beginmeasuring so I can share that with you as this series unfolds.
Lean at a door factory
Don’s interior door manufacturing company utilizes a wide variety of automation and technology including a Mereen-Johnson double-end tenoner system that sizes the door for width and height, CNC edge door mortising machines coupled with KVAL door and jamb machines, and a Northwood CNC router. Except for the Mereen-Johnson, all of the equipment can be programmed from the engineering office so the operator simply has to call up the job number at the machine, review the program, adjust as necessary, and run the job. However, like Signature Wood Systems, the equipment operators interpolate data from the drawings and program the machines job by job. They too have failed to exploit the full potential of their computer controlled work centers.
Early stages of lean
Don’s company is in the early stages of the lean transformation process. However, productivity improvements resulting from the implementation of the first 3Ss of Workplace Organization and a kaizen activity that focused on one of the constraint processes have been encouraging. The set-up reduction kaizen activity eliminated overtime at the constraint process and increased throughput 40 percent to meet daily demand.
One of the objectives of the application of Extreme 5S thinking is to eliminate reliance on finished goods to meet customer demand. That objective appears to be within reach. The elimination of finished goods will free up valuable floor space so the two separate plants that currently make up the enterprise can be combined under one roof. The next objective is the reduction in changeover time at the CNC machine centers where overtime is still a regular occurrence and flexibility to meet changing customer demand is challenging.
Like Signature, even though Don had automation in place for many years before beginning the lean journey, he was unable to achieve his growth, on-time performance, cost, and productivity objectives. Automation and technology may have allowed several processes to be combined into a single work center thus achieving some measure of success, but maximizing that automation and technology requires lean thinking.
I will introduce the last two companies in the next article as we continue to explore how to achieve the right balance of technology and automation in a lean transformation.
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