Software OR Creating flow in your organization – which will improve customer delivery reliability sooner? 

You’re trying to improve your customer delivery and eliminate headaches throughout your process. You’ve tried some consulting in the past, maybe even a few lean tools, but everything feels a little soft.   

You’re considering another more robust push for a new software solution to make things flow a little better. After all, there’s something appealing about software: it serves to make your job more efficient – right? 

Yet, time after time, software implementations fail to meet expectations and rarely help deliver the outcomes your clients expect. 

Some of the most commonly asked questions we get centers around software: 

  • When should we implement our software – before or after Duggan’s work? 
  • Which solution should we consider? 
  • How can we ensure it’s actually going to work for us this time? 

In this post we’re going to discuss software’s role in improving your customer delivery and how to answer some of the critical questions about selecting the right solution for your business. 

Setting up a new software

There are so many options out there, and so many configurations, so it can be difficult to know which one is right for you. The key idea is that the software should be a tool that brings your value stream design to life. You don’t want to have to compromise a best practice value-stream to fit the software. You would be better off knowing what the value stream needs from the software, and then having it configured to deliver that from day one.

As you are installing a new software for your company, you will have a lot of configuration decisions to make which will influence how you use it, what it looks like, and how team members interact with it. 

Ideally, you as the CFO or CEO would hire software professionals to train your staff on the upcoming technology, as well as model the way you want the software to run. The value stream design can serve as the blueprint for how the software needs to support your operation. It is a great tool for engaging the software engineers with, and ensuring they truly understand how work should flow through your business. With this approach, you are far more likely to get the software installed right the first time, as well as no significant changes to the cost of either project. It is worth noting that the two initiatives can be run in parallel; have your software engineers participate in the value stream design process so they truly understand how things should flow and how best to support that with the software. 

Having too much faith in the Software

Whether you’re working in an office based flow such as Engineering or I.T., or out on the production floor, you have many amazing software packages to choose from. For example, we work with a lot of clients who are applying Agile concepts, probably associated with a deployment of the Jira platform for workflow. 

Software such as Jira does an amazing job of visualizing workflows, organizing tasks, keeping track of the timing and progress of tasks etc. It is a great package. And it can be beautifully configured to support lean and Operational Excellence. But the thing that we often see missing from such a deployment is a design for how people will interact with the software

Organizations place too much faith in automated emails that tell the user they have something waiting for them to work on (check your email right now… how many such notifications are you currently ignoring?). If you truly want to reap the benefit of this, or any other software package, even something as simple as email, you should have a value stream design that tells team members when to interact with the program, for how long, to what end, at what interval etc. OpEx and lean bring this discipline to your deployment and enable you to realize genuinely impressive results. 

In the case of Jira, it can easily be configured to be a visual FIFO system that clearly shows whether the flow or workload is in a normal or abnormal condition, which in turn triggers a management-free reaction from the team. A hugely valuable addition to a Jira deployment that is very simple to achieve. 

Duggan’s personalized approach to streamlining operations 

There are so many options out there, and so many configurations to choose from. At Duggan Associates, we are happy to work with any system. That being said, our advice to you would be to start at least some Opex training prior to configuring any software.

During this transformation we will run formal education at all levels of the organization, teaching leaders how to successfully guide the business through the transformation, and teaching team members the skills to make it happen. This will set you up for success when it comes time to update your software and streamline operations. 

The concepts we teach at Duggan work very well with most project management, people management, work-flow programs, etc., but some of these concepts may drastically change how you want to set up your software. 

It’s also worth mentioning that we will work other systems into the future state designs as needed too. Whether it’s Slack, Jira, Office365, Smartsheets etc, they all have the capability of working within an Opex environment.

Simple concepts from our Opex model such as Work-Flow Cycles can be easily created through a system like Igrafx, our operations software. We have designed Igrafx to give our clients customizability in order to make any process automated to meet the needs of their company. 

We so often see work-flow software being used haphazardly and with such little discipline that the productivity hit is quite significant. One of the concepts we teach our clients when they’re looking at digital is: If you can entirely automate a process then that’s easy, but as soon as there is a human interaction with the software, that interaction must be designed. 

That is exactly what we do here at Duggan. To learn more about how we can help your company implement operations software, reach out to us today! 

The Duggan Difference: How To Build High Performance Operations In Your Company

Operational Excellence is a desirable state to reach for any company, and it’s not out of reach for any company, even those manufacturing large, expensive, time-consuming products with a complicated mix.

But what does it take to achieve Operational Excellence? Chances are you have tried a few different ways before, but things always seem to revert to their original state. 

Management consultancies tend to share information about your organization that you already seem to know, and don’t offer very specific help to implement their grand ideas. 

Lean consultants may help to improve an isolated part of a process but when your outcomes don’t improve, what’s the point? Being “leaner” doesn’t matter if it’s not improving your performance in the eyes of the customer. 

You need a way to design a system that allows your team to consistently deliver as promised to customers, without the need for management intervention. A system that sustains long after the ‘consultants’ have gone. You need a reliable and autonomous Customer Delivery System based on the principles of Operational Excellence.

The Right OpEx Deployment Feels Like Learning – Not Consulting

Instead of the endless journey of Continuous Improvement popular among many consulting firms, we’ll teach you how to define the destination for your efforts, and the design and implementation process to get there

You’ll understand where your improvement efforts will take you, how the operation will behave each day, and what each employee’s role will be. 

Then we’ll formally teach you the step-by-step process for designing seamless flow in the office or in the factory, from the supply chain to shipping and receiving, that gets you to your destination and results in a high-performance operation.  

We firmly believe that transformation depends upon formal education, so we provide training on how the concepts of flow apply in your specific environment. 

Whether you’re in the complex world of aerospace, shipbuilding, oil and gas, construction, consumer products, industrial products, pharmaceuticals or run business processes without any manufacturing, we customize our training to your products and processes. 

To achieve Operational Excellence, your team needs training that:

  • provides a destination for your efforts and a road map to get there without costly assessments and presentations
  • is based on a process and formal advanced education, and not on consultant recommendations and endless continuous improvement efforts through and Kaizen and facilitation
  • teaches design principles that can be clearly understood, applied and then applied again. The trainer should not be there to bank on the client’s ability to brainstorm. 
  • focuses on business growth and market share by implementing seamless delivery to the customer through the 8 Principles of Operational Excellence

Teaching
Consulting

At Duggan Associates, we’ve upended consulting. Our consultants work with clients to achieve a defined end state in practical terms that each associate (both in the office and in manufacturing) can understand and achieve in their environment. Unlike the typical approach, we don’t look to continuously improve your operation by eliminating waste and running brainstorming or Kaizen events.

Instead, we teach you an end-to-end design for material, people, and information flow using principles and guidelines that will achieve Operational Excellence – where “Each and every employee can see the flow of value to the customer and fix that flow before it breaks down.” 

The result of our consulting process? A high-performance operation that seamlessly delivers products to customers day in and day out without the need for management intervention.

This type of transformation is not dependent on good management or leadership heroics. It’s based on having a robust end-to-end process that delivers products each day seamlessly, even in the most complex environments. (Note: none of this requires any new software, nor do we sell software). 

We will teach you how to design, implement, and engage all employees to create a Customer Delivery System that will serve as the foundation for you to become a solution provider, a preferred supplier, and an innovator with your customers so you can grab market share and enable business growth.

The Result: Your Business is Designed for Operational Excellence

The result of our consulting process? A high-performance operation that seamlessly delivers products to customers day in and day out without the need for constant reactive responses from management.  Management can then devote more time to strategy and revenue generating activities!

What is Operational Excellence?

Operational Excellence is not easy to define. Some descriptions are too broad. Others set parameters so narrow that the ultimate definition seems too focused in scope. Often, we end up with definitions that seem plausible in an academic sense, such as “Being world class,” “Being the best globally,” or, “Excellence in everything we do,” but are difficult to translate into practical actions. Worse yet, we end up with so many different interpretations of what “Operational Excellence” is that the organization as a whole lacks a precise definition and a roadmap to follow for achieving it.

To properly define Operational Excellence, we first need to ask some tough, fundamental questions about the nature of continuous improvement, the most important of which centers around a misconception regarding the purpose of continuous improvement itself.

We often hear that continuous improvement is a never-ending journey, and that by embracing the journey in and of itself, we will improve the operation forever. However, by setting the goal of perpetual improvement to make the operation more efficient, we may incrementally reduce cost, but there is no guarantee that our business will grow.  What good is an efficient factory if the customer no longer needs our product?

To leverage operations to achieve business growth, the first step is to understand what Operational Excellence really is, and then how we achieve it.  Think of it as answering the question: “Where will our journey of continuous improvement take us?” A good answer is that our journey will take us to Operational Excellence, or the point at which

Each and every employee can see the flow of value to the customer, and fix that flow before it breaks down.SM

While this definition may seem simple, it is in this simplicity that the magic lies.

By defining Operational Excellence in this way, it applies to every level and every person in the organization, from executives all the way down to the employees producing the product. It’s clear, concise, practical and, most importantly, actionable and teachable.  Everyone in the organization “gets it.”  They know that, in their respective areas, there should be a visible flow of product or information. They should be able to recognize if that flow is normal or abnormal and what to do if it is abnormal, all without requiring the assistance of management.

With this definition of Operational Excellence, we can begin to teach the true power of lean value streams by taking them a step further.  We can now create value streams that not only flow at the rate of customer demand, but are made visual in such a way and to such a degree that every employee in the organization can physically see that flow.

We have all heard of the visual factory, but this is different. We are not talking about identifying where tools, equipment, processes, and departments are located. Rather, in Operational Excellence, visuals are strictly for the timing of flow. And these visuals are easy to understand by anyone, to the point where a visitor can come into our operation and tell us if we are on-time without asking any questions, requesting any reports, or looking at any computer printouts. The intent is to make the operation so visual that every employee can see the flow of value to the customer and tell if this flow is normal or abnormal.

Once everyone can see normal and abnormal flow, the next step is to create what’s known as standard work for abnormal flow. In this phase, we create standard work that corrects when abnormal conditions in the flow begin to occur. This means that the people working in the flow (either on the manufacturing floor or in the office) have a standard methodology for correcting things when they go wrong.  The end result is something called “self-healing” value streams, which means that when flow breaks down somewhere in the operation, the employees working in the flow are able to fix it without the need for management intervention.

This last phrase is a critical feature, since once we achieve Operational Excellence, we won’t need management involvement in the day-to-day happenings of the operation.  Instead, operations leadership can spend their time working with sales and the innovation process to develop new products that customers want and that fit the operation’s capabilities. The result is time spent on activities that generate top-line growth.

The key to success in achieving Operational Excellence starts with the right definition, one that everyone, at all levels of the operation, can understand and know how to achieve. That way, each employee will see that our continuous improvement efforts are not about eliminating waste or lowering cost. Rather, the end goal is to have operations be a key player in creating and delivering products that customers want in order to establish perpetual business growth.

What are the Benefits of Operational Excellence?

This may seem like a fairly straightforward question, but it’s not that easy to answer since how we describe the benefits of Operational Excellence cuts to the heart of how we think about our manufacturing operations and their relationship to business growth.

All the operational benefits we normally associate with continuous improvement dramatically improve once we achieve Operational Excellence. These include:

  • enhanced on-time delivery
  • inventory turns
  • lead time
  • performance
  • budget
  • quality

However, the true impact of Operational Excellence on an organization is much deeper and far more profound:

Remarkable business results in a short amount of time.

Once an operation has achieved Operational Excellence, it will require very little (if any) management intervention. The employees who work directly in the flow will be capable of not only of getting the product to the customer, but also of recognizing problems with the flow before they happen and fixing them on their own using pre-established standard work.

Management’s Time is Focused on Business Growth, Not Putting Out Fires

In an environment like this, when an organization’s managers and leaders are not chasing parts and people, putting out fires and going to meetings, how will they spend their time? They will be working on offense, or growing the business in areas like:

  • meeting with new customers
  • interfacing with existing clients
  • developing new products
  • breaking into emerging markets

By extension, we can also reapply the time, capital, and personnel once allocated to operations to other areas of the business.

With Operational Excellence, we move from an environment where operations simply produces the product to one in which the operational side of the organization becomes capable of contributing to the overall growth of the business. And that’s the true power and benefit of Operational Excellence, because we can’t grow the business if we don’t have the time we need to do it.

All the other benefits we’ve come to expect from a journey of continuous improvement will be realized once we achieve Operational Excellence. But its true benefit is not so much what it will do for the operation, but what it will enable the operation to do for the rest of the business.

Case Studies

Below is a sampling of the benefits some companies have seen as a result of implementing and achieving Operational Excellence —

Parker Instrumentation Products Division Europe

Parker Instrumentation Products Division Europe makes fittings, valves, and manifolds for the oil, gas, and petrochemical industries. After following the principles of Operational Excellence, the operations side of the business now runs using “self-healing flow” where the employees fix flow when it breaks down. The company was able to reallocate time, capital, and additional resources from production to other areas of the company to drive innovation and growth. The results?

  • Parker IPDE launched three products in the span of one year – something it took their competition ten years to do
  • The company grew its manifold line from something that was essentially a non-factor in its business model in 2003 to 18% of its business as of 2008
  • Employees who once worked in production now contribute to business growth in a more powerful way. For example, an employee who used to work in production control was converted to a pricing analyst to make sure “the company was winning business through its strategic pricing initiatives.”
  • Parker IPDE can now process 30% more quotes per day, in 25% percent of the time, and is “achieving 23 percent more value from quoted items”

IDEX Health & Science

At IDEX Health & Sciences (IH&S), a business unit that produces fluid handling equipment for analytic and diagnostic systems, growth soared after the company achieved Operational Excellence.

  • In 2010, IH&S grew at a rate about three times that of the market average
  • That same year, 35% of its sales came from new products and systems
  • The general manager spends roughly 60-70% of his time on offense, meeting with customers, evaluating new products, and breaking into new markets

MicroPump

At Micropump, another IDEX-owned business, the company also runs according to the principles of Operational Excellence, freeing up time and resources to devote to innovation.

  • Micropump grew at a rate about four times that of the market average in 2010
  • In 2010, “revenue from new products increased 162% from 2009 to 2010”
  • That same year, time spent on innovation increased 125% from the previous year, and dollars in their innovation process experienced a 240% gain from 2009 to 2010

Hypertherm

At Hypertherm, a small, privately held company located in Hanover, New Hampshire, Operational Excellence is simply the way they do business.  There is virtually no management for a 600-plus associate production staff who work off of visual indicators that tell them when to produce and when to reorder raw materials, essentially eliminating the need for a production control department. With so many resources freed up by Operational Excellence, Hypertherm has focused its efforts almost entirely on business growth.

  • After the recession of 2009, Hypertherm’s sales were back to prerecession levels roughly one year sooner than they expected
  • From its facility in Hanover, New Hampshire, Hypertherm sells and delivers nearly 25% of its products to Asia and almost 30% to Europe
  • According to the company’s vice president of manufacturing: “Operations aren’t a fundamental business problem. They’re not an issue. What amazes me when I sit through our planning, relative to other firms I’ve been with, is how very little time we spend discussing Operations-related things. It’s really focused on customers; it’s focused on markets; it’s focused on strategy. Operations gets time; it’s not ignored.  It’s not like we don’t want to talk about it. It’s that we don’t have to talk about it.”

Key Takeaways

These gains in market share and top line growth did not come from improvement efforts focused on eliminating waste; they came from the companies setting a destination where “Each and every employee can see  the flow of value to the customer, and fix that flow before it breaks down.”SM  By creating self-healing flow and removing the need for management intervention in the operation, these companies have freed up their leadership to unleash the power of their organizations to grow.

Your Mix Is Your Competitive Advantage: How to Leverage Product Families To Establish Flow In Your Production Process

The point of embarking on a lean or Operational Excellence initiative is to grow the business and sell more products at a lower cost. To accomplish this, we focus our efforts on flowing value to the customer with as little waste as possible. Here, think of waste as anything that disrupts flow. In other words, if we have waste present in our value stream (or things that disrupt flow), then by definition we will not be able to create a flow of value to the customer.  

If creating a flow of value to the customer is the goal, then what is the first step in creating flow? Conceptually, the first thing to understand is that flow through a value stream must be designed using principles, guidelines, and math. 

This is very similar to how engineers design a bridge to cross a certain distance while bearing a certain load: they use principles, guidelines, and math (i.e., the laws of physics, statics, dynamics, and so on). In other words, what they don’t do is sit around a conference room table and offer opinions on how much load the bridge will bear, and we don’t want to do this either when it comes to designing value stream flow in our operations. 

 

Designing Flow

Knowing that flow must be designed using principles and guidelines has a few ramifications for how we think about our lean activities. While going around the shop or facility and eliminating waste is a good thing to do, as customers don’t want to pay for our waste, eliminating waste will not, by itself, create a flow of value to the customer. In other words, flow is not something that will just “happen” on its own unless we design our value streams to flow. 

So, what is the first step in designing a flow of value to the customer? Determining product families. We do not attempt to create flow for the whole shop or plant all at once but rather we group together the products we make (or services we offer) into more manageable buckets and then tackle those one at a time. 

Creating product families is one of the most important steps in designing value stream flow because all the steps that follow are applied on a per-product family basis. If we get this initial step wrong in determining product families, it’s very hard to recover from because our design efforts will have started pointing in the wrong direction from the beginning. 

Remember that the reason we are looking to design flow for each value stream is so we can tell when the flow in any value stream has stopped, and this tells us something has gone wrong in the flow of product to the customer. Note that the typical benefits associated with creating flow are all good (decreased lead time, increased throughput, increased efficiency, and much more) but the reason we create flow is to be able to see when it stops. 

If the design of value stream flow does not follow the proper methodology, with the first step being to define product families, then the following is likely to result:

  1. Flow will be difficult to achieve in each value stream 
  2. It will be very challenging to understand if the value stream is operating normally (because we do not have flow)
  3. Management will need to continuously be involved in the day-to-day running of each value stream, leaving less time to focus on growth activities

 

Product Family Do’s and Don’ts

In Operational Excellence, when we talk about product families, we are referring to how products are made on the shop floor and are thinking of our products in this way in order to understand how best to flow them to the customer. Again, though, we are considering our products purely in terms of how we make them in our facility. 

Product families in Operational Excellence have nothing to do with the customers to which the products are sold or how the products are grouped together on the website because these considerations have nothing to do with how the products are made in the facility. 

In the examples that follows, we’ll look at how to determine product families in production manufacturing, where discrete parts or products are being made. The following scenarios will be examined later on:

  • Service operations (meaning nothing is manufactured on-site)
  • Office work
  • Operations that make many products (think >1,000 or >10,000)
  • Operations that make many products (think >1,000 or >10,000) but where the timing data on the products is largely unknown
  • Job shop environments (e.g., we can custom make anything you want, but we might never make the same product twice)

To begin determining products families, start with your active part numbers. Do you have some part numbers that haven’t been made in 5 years? Don’t include them for now, but don’t forget about them either. We still need to account for where they fit at the end of this process, but we do not want them to drive this process either. 

Next, take the active part numbers and arrange them in a grid (note that the grid below is a simple example for teaching the basic concepts about how to create product families).

process steps and equipment

In the column headings across the top, list the processes or equipment in the plant (these are the peach-colored boxes in the image). Note that if you have similar processes with different capabilities, then list them out in separate columns. For example, if you have two CNC lathes, but one of them is dual-spindle lathe and the other is not, then list out both lathes separately. 

Down the left side, list the active part numbers (these are the blue-colored boxes in the image). Wherever a part goes through a process, put an “X” in the grid square where the two intersect. 

Next, looking at the column headings, and moving from left to right across them, typically there is natural break at some point between upstream or shared processes and the processes that come after the shared processes. In the image, this is represented by the vertical red line (note that this line is seldom perfectly vertical, and this is okay). 

Going forward for the rest of our processes used to determine product families, we are only going to look at the processes to the right of the red line, the downstream processes. For now, ignore any processes to the left of the line. 

process steps and equipment

Looking only at the downstream processes, the first criterion we use is to group products together based on a minimum 80% commonality in the processes through which they go. So, for example, if two parts have 80% process commonality, they are potentially in a family. We do this with all the part numbers in our grid, but keep in mind that this is only the first step in determining product families.

Once this step is completed, we get the image below.

process steps and equipment

Here, we can see that we have three potential families: one group of parts circled in green, one group of parts circled in purple, and also the radon detector in its own family. 

Remember why we are creating product families – as the first step to being able to flow value to the customer. To do this, we need to understand where commonality exists in how we produce our part numbers. 

With this in mind, we can see that there is not enough commonality between (for example) the radon detector and the parts circled in green to warrant including all five of them together. Trying to flow these parts together would be challenging since they don’t go through enough of the same processes. The design we would create for such a hypothetical product family would only cover some of the products or some of the processes, and we want the design to cover as much of both as possible. 

We mentioned before that the products circled are potentially in a family. This is because we are not yet done with our product family analysis. 

The next step is to understand how long it takes to produce each part. To do this, we replace each “X” with the time it takes to produce the part at that process, then add up the rows (see image below).

process steps and equipment

What do we do with this information? Up to this point, we have ensured that our potential families have commonality in the processes through which they pass. In order to still be considered a product family, within the potential family, the time variation between the longest product and shortest product should not exceed 30%.

Calculate this by subtracting the lowest time in the potential family from the highest time in the family potential family, the dividing the difference by the highest time in the family. For example, within the “green” family, we get (68 – 33) / 68 = 51% variation between the longest and shortest product in the potential family. This is too much variation for all these products to remain in the same family. 

Remember that we are doing this product family analysis to determine how best to flow our products to the customer. If there is too much time variation in how we make the products in the same product family, the flow will be choppy at best or otherwise impossible to create. 

So, even though it looked like we had one family circled in green, in fact we have two. 

process steps and equipment

At this point, there might be a question as to why we can’t combine the products in the purple family and orange family into one family. After all, their times are very close together: (68 – 65) / 68 = 4% variation between the longest and shortest product, well within our target of 30%. 

The reason we cannot do this is because we only look within a potential family when considering how long it takes to make the products. In other words, this step comes after the first step where we look to process commonality, and this is why we can’t combine the purple family with the orange family. If we don’t have at least 80% process commonality, then it doesn’t matter if the total times are close to each other because there is not enough overlap in terms of how the products are made on the shop floor. 

After this, the final step is to bring in product experts to determine if we have unintentionally created any untenable manufacturing scenarios. For example, what if the “Motion Activated Arm” needs to be made in a clean room, and the “Manual Activated Arm” needs to be made on a line with grease and other lubricants present? We would not be able to tolerate the risk of contamination, so these two products would need to be in different families even though “the math” says they could go together. Bear in mind that this final step comes at the very end (don’t begin with this step, in other words, as we run the risk of inadvertently excluding products from families where they otherwise belong). 

 

The Next Step

So, we’ve created product families…now what? 

Recall that to create a flow of value to the customer, the first step is to determine product families. Why? Because each product family becomes one value stream. 

Value streams are defined as the flow of products in one product family. In other words, value streams do not have some ambiguous definition (or worse, are defined dependent on where you work or who you ask). The flow of value through a value stream is all about flowing the products in a product family through that value stream. 

Once product families are determined, we then create a current state map and apply a series of guidelines to that current state to design the future state. For example, in production manufacturing, the eight lean guidelines1 used to design a future state are as follows (you might have seen them before):

  1. Takt
  2. Finished goods strategy
  3. Continuous flow
  4. FIFO
  5. Pull (Supermarkets)
  6. Try to schedule only one point
  7. Interval
  8. Pitch

What do we apply these guidelines to? The guidelines are applied independently to each value stream in the facility. And how do we define a value stream? As the flow of products in a product family. 

This is why creating product families using the correct methodology is so important. Product families become value streams, and then the way we design a future state flow for the value stream is by applying the guidelines to each value stream independently. If our products families (and, therefore, our value streams) are not founded on this rigorous analysis that considers how the products are made in the facility and how long they take to make, then applying the design guidelines becomes very challenging to do, as there will be very little commonality in the products we’re trying to work with. 

As you review your current product families, consider whether they have been constructed using the following methodology below:

  1. Only active part numbers have been considered as part of the product family analysis. 
  2. There is a minimum 80% commonality in the process steps or activities each product in a family goes through.
  3. Within each family, there is no more than a 30% difference between the time it takes to complete the longest product and the time it takes to complete the shortest product .
  4. Product experts have been brought in to ensure there are no untenable manufacturing scenarios. 

Follow these steps, and you will be well on your way to creating flow in your operation. 

_____________________

References: 

1. Rother, Mike and John Shook. Learning to See: Value Stream Mapping to Create Value and Eliminate Muda. Lean Enterprise Institute. Cambridge, MA. 1998.

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