How to ensure your IT adds value

Value stream mapping’: so central to ‘lean manufacturing’ thinking, but as a term, enough to turn almost anyone off. Yet among its most striking features are its sheer simplicity – you can do it on the back of an albeit large fag packet – and its power not only to find waste fast, but to prioritise remedial projects and investment against real business worth. You can get sophisticated and use graphical modelling tools, but fundamentally it’s about charting the ‘value’ of what you’re doing as seen through the eyes of your customers – and from that, making decisions about what to change, how and when, and also what to stop. And that absolutely includes IT. Why do it? Because unless you’re very unusual, you’re manufacturing business won’t be perfect: it will be packed with what are now wasteful and inefficient processes, evolved workarounds, ‘safety’ and ‘push’ systems and so forth at every level that on their own are hard to see, yet are costing you dear. And again, the same applies to your IT. As Ralph Woodhead of manufacturing consultancy Open Logistics says: “Quite often, people are simply looking at the wrong operations, or not viewing them as a whole.” Using the technique in the initial stages can help determine tactics for improvement that match the business need really very quickly. Woodhead again: “You can very quickly map a process – get a snapshot of what a manufacturing line, for example, looks like in a matter of hours… looking at inventory levels in a process, cycle times, changeover times, people on the lines, performance quality.” And encouragingly he adds: “when you first do a mapping exercise you tend to find very obvious gains.” Certainly that was Britax Aircraft’s experience. Graham Leake, systems director, says: “We got more value from the crude stuff than the detailed stuff, because you immediately saw the big problem. With some value stream mapping diagrams, you just can’t see the wood for the trees.” He says it boils down to revealing common sense. “Suddenly, with a group of people, the lights start to come on and they actually think about what they are doing as opposed to just do it. That’s where we started to get best benefit from the shop floor.” Lead from the top, but holistically The problem for him: “getting from the shop floor back to engineering and getting them to have the same view of life.” Fair point, and the lesson is if you’re going to do it, do so with a mandate from the top that involves all departments and departmental heads. As Clyde Bennett, support manager at Microsoft Business Solutions, says. “If you’re running a design shop, there are loads of methods of delivering, for example, a collaborative process faster than it was last month.” So best you assess how it’s being done now, and what would make best business sense from the customer’s point of view. Whatever, to get the best out of value stream mapping you also need control information – not just about material flows downstream but, for example, customer information (demand, lead times, quality, etc) and for that matter the detail of how ‘make’ and ‘buy’ instructions move upstream and into the supply chain. Some of it’s simple stuff, but you need to expose it so you can draw the current ‘state’, determine the required future state and how to get there. It’s all about determining priorities and required changes and additions – and that includes your IT, whatever it might be. As Steve Baker, process improvement practitioner at Manchester’s The Manufacturing Institute (which provides the DTI’s Manufacturing Advisory Service in the North West), says: “If you use value stream mapping to look at the information flow, the delays, [and ask] is it adding value to the business, then you can start to look at the kind of system you need to control it. Is it electronic, or a white board? It’s very much horses for courses.” “For example, with an MRP system, you can see what you did last time and how you are going to improve it,” says Woodhead. Similarly, you can use the technique to justify, say, a change to advanced planning and scheduling (APS), or adding or removing shop floor data collection between operations, or at key stages – and the nature, content and timing of that. Chris McKellen, director of lean consultancy Manufacturing Awareness, points out that there are invariably issues that have to do with inadequate systems, mostly due to so-called ‘vanilla’ standard implementations, subsequent changes in the business, or surpassed technologies. Value stream mapping and lean’s other big favourite, the ‘Five Ss’ methodologies applied to your ERP system to ‘clean’ it up, can make a difference that far outweighs the effort involved. “Doing Five Ss on your ERP system is something we should all remember: if we look at every parameter on MRP every company will start getting things better quicker,” says McKellen. And then your supply chain Is it worth extending this into the supply chain? Definitely. Value stream mapping across supply chains always quickly reveals the extent to which real time information (mostly exception and event data) can transform efficiencies. It’s not just about dealing with the classic ‘demand amplification’ phenomenon; it’s about being able to react in time to minimise cost and maximise profit and customer service without sacrificing overall efficiency. And mapping for value will provide an excellent steer to the kind of systems you need and can justify in business terms. The one key caveat: value stream mapping is indeed bound to lead to both process and IT fixes for obvious problems. However, it will also reveal, possibly lead to, other problems, or at least barriers. Richard Hinds, managing director of electronic component manufacturer Bulgin says his firm did the exercise and as a result introduced cell manufacturing, kanbans and the rest, and succeeded in reducing inventory and waste while improving efficiency – until it got to the downstream processes. Bulgin’s manufacturing involves a considerable investment in plastic injection moulding. And now in the mould shop, he says, “We are inefficient because we have family tools so I’ve got kanbans coming through asking for tools for all of the parts of the family and we just can’t make everything at the same time.” His solution – flying in the face of lean’s ‘pull’ systems and introducing a little bit of ‘push’ and ‘levelling’. Pragmatists would say ‘that’s fine’; purists, ‘there’s got to be a better way’ (like re-investigating changeover and set-up times). Both are right: you need to check your value stream map to find out what makes sense for continuous improvement, again in business terms. Essentially, you’re asking, ‘is it worth it?’. As Richard Sharp, sales manager with ERP developer SoftBrands (formerly Fourth Shift) says: “If that’s going to cost you £2 million and you’ve got to hold £40,000 of inventory if you don’t do it, it’s going to take a long while to pay for those new machines and new tools. There’s got to be some practicality here.” Against that, if tooling improvement can only go so far, it’s perhaps time to consider the mould shop as the controlling bottleneck in Theory of Constraints (TOC) ‘drum buffer rope’ (DBR) terms, and buffer WIP inventory accordingly. As for IT, the point remains that you get simultaneous top-down and bottom-up guided business and manufacturing improvement.