Workspaces Design -
Read a Plant—Fast - Sun and Planets Spirituality AYINRIN
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Author:His Magnificence the Crown, Kabiesi Ebo Afin! Oloja Elejio Oba Olofin Pele Joshua Obasa De Medici Osangangan Broadaylight.
In
the early 1980s, when I was heading up the automotive seating
operations at Hoover Universal (later acquired by Johnson Controls),
managers from a Japanese competitor that supplied parts to Toyota asked
permission to visit our plant. We agreed, on the condition that they
reciprocate and because we believed they would learn little from a brief
tour. The visitors spent less than an hour in one of our best plants,
taking no notes. Eventually, we got to read their tour report, and we
were shocked at the detail with which they had described our plant and
our technology, right down to an accurate estimate of our cost of sales.
Meanwhile, our senior managers had visited their Japanese plants and
learned next to nothing.
After
that experience, I resolved to train our managers—and myself—to
approach a plant tour with an educated eye, one that could discern a
plant’s strengths and weaknesses as accurately as the Japanese managers
had read ours. The Rapid Plant Assessment (RPA) process, the tool I’ve
developed over the years to accomplish this task, has been used in more
than 400 tours of over 150 operations since 1998. The information this
tool has given us has influenced activities and decisions ranging from
benchmarking to competitor analysis to strategic acquisitions. And the
results of a tour are available in a day or less, whereas most rating
systems typically take weeks to complete.
Let
me give you an example of how powerful the tool can be. When I was the
CEO of Oshkosh Truck, we were engaged in a highly competitive auction
for Pierce Manufacturing, a leading U.S. fire truck maker. Pierce’s
executives didn’t favor Oshkosh as the acquirer, so they only permitted
us one 30-minute tour, after hours, of each of their three plants. But
we learned so much about their operations in those short tours that we
were sure we could cut costs by a few million dollars per year—for
example, by eliminating materials-handling bottlenecks, consolidating
plants, reducing inventories, and running the paint shop on one shift
instead of three. As a result, we offered a higher price than the
company’s financials would have indicated and won the auction.
To
be sure, the RPA process is not a substitute for due diligence when
you’re making an acquisition, and likewise, you’ll consider a wide range
of factors when choosing a supplier. But managers all too often ignore
visual information in favor of the numbers, and as a result, you might
miss vital cues about an operation’s strengths and weaknesses. This may
cause you to miss out on a highly desirable opportunity or to enter into
a relationship that sounds promising only to discover a performance
problem later. You can also apply the tool to your own operations to
learn what your plant is telling visitors and where you might find
opportunities for improvement. Donnelly Electronics, Eaton Corporation’s
Aeroquip Group, Haworth’s office furniture plants, a Lockheed Martin
division, and Seagate Technology are just a few of the organizations I
know of currently using the RPA process in their own lean transformation
journeys. I’ll lay out the tool below, along with two work sheets that
will help you codify and analyze the results of the tour.
A Tool for the Tour
At
the heart of the RPA process are two assessment tools for teams
performing plant tours. The RPA rating sheet presents 11 categories for
assessing the leanness of a plant, and the RPA questionnaire provides 20
associated yes-or-no questions to determine if the plant uses best
practices in these categories. Following a tour, team members will
capture their observations in work sheets like the two shown on the next
pages. There are many quantifiable factors by which to assess
performance in the rating sheet’s 11 categories; an exhaustive list of
elements to consider in conjunction with them is located on the Web at www.bus.umich.edu/rpa along with other advanced assessment tools mentioned in the last sidebar in this article.
During
a tour, team members will be observing all aspects of a plant’s
environment, talking with the workforce and managers, and looking for
evidence that the plant adheres to best practices. It’s important that
team members not take notes during a tour, because note taking detracts
from picking up visual cues and impedes communication with employees on
the plant floor. Instead, each member of the team is assigned primary
responsibility for a few categories, and the team should meet
immediately after the tour to share impressions and fill out the work
sheets. We also recommend that everyone on the team answer the last
question, “Would you buy the products this operation produces?” (See the
sidebar “Team Composition and Training” for a discussion of who should
be on the tour team and how to prepare for it.)
Team Composition and Training
Let’s take a look at each of the categories in turn.
Category 1
Customer Satisfaction
Workers
in the best plants clearly know who their customers are—both internal
and external—and make customer satisfaction their primary goal. What’s
more, they understand that it’s their job to make tours exceptional
experiences so visitors leave with resoundingly positive feelings about
the facility. Such care for customers, or lack thereof, is readily
apparent in a brief plant tour. You should be welcomed to the plant and
given an overview of its layout, work-force, customers, and products.
Quality and customer satisfaction ratings should be prominently posted.
And try asking an employee, “Where does your product go next?” If you
hear, “Ford” or “John, over on line 6,” you can rate the plant higher on
this measure than if you hear, “I put it in this bucket and I don’t
know what happens to it after that.” (Questions 1, 2, and 20 on the RPA
questionnaire relate to this measure.)
Category 2
Safety, Environment Cleanliness, and Order
In
a clean and orderly plant, parts are easy to find, inventory is easy to
count or estimate, and products move safely and efficiently. The plant
should be well lit, the air quality good, and noise levels low. A visual
labeling system should clearly mark inventory, tools, processes, and
flow. A short plant tour will readily reveal how successfully the
company attends to all these factors.
All
component parts should be treated with equal care. Many companies go to
great lengths to keep expensive parts in order while giving short
shrift to low-cost ones like labels or fasteners. That habit can be
costly. Indeed, when we were making seats at Johnson Controls, we never
lost a seat back or cushion, but occasionally the bolts that joined the
recliner mechanisms to the back and cushions were left off or not
available. We couldn’t ship a seat that was missing a bolt (or collect
payment on it, naturally), so a single bolt was essentially as valuable
as a larger, more expensive part. (Questions 3–5 and 20)
Category 3
Visual Management System
Tools
that provide visual cues and directions are readily apparent in
well-functioning plants. Such signage, clearly guiding employees to
appropriate locations and tasks, can greatly enhance productivity. Look
for organizational tools such as kanban scheduling and color-coded
production lines as well as plainly posted work instructions, quality
and productivity charts, and maintenance records. Other indicators of
good visual management include kiosks displaying information like the
names of team members, productivity measures, and vacation schedules, as
well as a central location such as a control room or status board from
which you can see the current state of the overall operation. Chemical
and other process-industry plants typically have strong visual
management practices (as opposed to multiple, fragmented displays); even
the largest plants tend to display product line flows, plant layouts,
and other key information on a single display. (Questions 2, 4, 6–10,
and 20)
The next three categories are intertwined. Rating a plant quickly on these three is straightforward from obvious visual clues.
Category 4
Scheduling System
The
best plants rely on a single “pacing process” for each product line and
its suppliers. This process, usually at the end of the line, controls
speed and production for all the upstream activities, much as a pace car
sets the speed at a racetrack. Demand for product at each work center
is triggered by demand at the next. This keeps inventory from building
up, improves quality, and reduces downtime because production lines
aren’t kept waiting for parts.
Plants
that use a central scheduling system nearly always over- or
under-produce some parts at some point in the process because
instructions come to each line from a central computer, not from the
production line that actually uses the part. I saw the downside of
central scheduling in the extreme when I visited a tractor factory in
the Soviet Union. The plant was diligently producing according to its
centralized schedule, but the engine plant wasn’t shipping enough
engines, so each incomplete tractor was towed out to the yard. I counted
a full six months’ supply of lifeless tractors, each waiting for its
final, all-important, part.
Rating Leanness RPA
Rating SheetTeam members use the RPA rating sheet to assess a plant in
11 categories on a scale from “poor” (1) to “excellent” (9) to “best in
class” (11). The total score for all categories will fall between 11
(poor in all categories) and 121 (the best in the world in all
categories), with an average score of 55. Factors to consider to rate a
plant in each category are described in this article; a more detailed
list of evaluative factors appears on the Web at www.bus.umich.edu/rpa.
The rating sheet also guides team members to questions in the RPA
questionnaire (opposite) that relate specifically to each category. When
plants are rated every year, the ratings for most tend to improve.
Ratings are usually shared with plants, and motivated managers first
improve their plants in the categories that receive the lowest ratings.
You
can find out how the plant schedules its lines by asking workers but
also by looking at inventory levels. If inventory piles up at one work
center, then the scheduling systems are likely independent of each other
or the process is inadequately paced. Also, if processes are scheduled
from a central MRP system, you’ll see computer screens or stacks of work
orders at the line.
What’s
more, you can watch for visual and verbal communication between process
operators on the same line: People should be close enough to speak to
one another and to see another’s inventory. Operators can and do
override central scheduling and respond to visual cues; for example,
they might slow production if they see inventory piling up down the
line. (Questions 11 and 20)
Category 5
Use of Space, Movement of Materials, and Product Line Flow
The
best plants use space efficiently. Ideally, materials are moved only
once, over as short a distance as possible, in efficient containers.
Production materials should be stored at line side, not in separate
inventory storage areas. Tools and setup equipment should be kept near
the machines. And the plant should be laid out in continuous product
line flows rather than in “shops” dedicated to particular types of
machines. On my first visit in the mid-1990s to Austria-based
Rosenbauer, one of Europe’s largest fire truck and equipment makers, I
gave the plant excellent ratings except on its pump and truck
assemblies, which were done in traditional cells. By the time I visited
two years later, the company had converted pump and truck assemblies to
lean product lines, and managers reported that both productivity and
quality had improved.
Counting
forklifts is an easy way to get a sense of a plant’s use of space.
Forklifts require wide aisles, are expensive to operate, increase
pollution, and encourage unnecessary movement of materials. In the best
plants, if materials need to be moved a short distance, employees use
hand-propelled roll carts; if the materials are too heavy to move by
hand, garden tractors pull the carts in linked trains.
Space
is a valuable commodity in any plant, and some companies make
generating new space a productivity objective. One of our plant managers
elevated this concept to an art form. He would regularly free up
manufacturing space, polish the floor, cordon it off with stanchions,
and then challenge our sales group to find new business to fill the
space. (Questions 7, 12, 13, and 20)
Category 6
Levels of Inventory and Work in Process
Internal
operations seldom require high inventories, so the observable number of
any component part is a good measure of a plant’s leanness. You can get
a quick read on inventory by watching a production line and counting
the inventory at each work center. For example, if one widget comes off
the line per minute, you know the line produces 60 per hour. If you
count approximately 500 widgets by the work center, then you know that
over eight hours of output is just sitting there. In most cases, you
want no more than a few minutes’ worth of inventory by a work center at
one time; each part should go directly to the next process to be used
fairly quickly. (Questions 7, 11, and 20)
Category 7
Teamwork and Motivation
In
the best plants, people consistently focus on the plant’s goals for
productivity and quality, know their jobs well, and are eager to share
their knowledge with customers and visitors. Motivated employees are
easily discerned during a brief tour, as are surly, unkempt, or
indifferent ones; even a short talk with an operator tells you a lot.
See
if there are clearly posted safety and environmental measures, pictures
of the plant’s softball team, posters boasting of quality and
productivity improvements, charts showing contributions to charitable
organizations. You might also look for posters or charts that describe
problem-solving and employee empowerment procedures. These are visible
indicators of teamwork—and if you can’t spot such signs, chances are the
plant hasn’t truly embraced team-work. But you can supplement your
observations with questions to the manager and plant staff about these
activities as you tour. (Questions 6, 9, 14, 15, and 20)
Category 8
Condition and Maintenance of Equipment and Tools
In
the best plants, equipment is clean and well maintained. The purchase
dates and costs are stenciled prominently on the side of machinery, and
maintenance records are posted. Such details ensure that workers know as
much as possible about the machines and can plan for preventive
maintenance. But perhaps more important, by posting cost and maintenance
records, the company signals to employees that management cares about
the product, that they’ve invested in keeping the plant running
smoothly, and that they care about the work people do. Those are
important factors in maintaining morale.
You
can also learn a great deal by asking people on the factory floor how
things are working. When some of my students toured a new production
line at an automotive supplier, one of them asked a worker how things
were going. “Pretty well,” he said but pointed to one critical sensor
that wasn’t performing consistently or accurately so that manual, not
automatic, inspection of a part was required. Thus, a significant
investment in technology was undermined by an increase in person-hours
to perform this task by hand when the sensor malfunctioned—a source of
waste uncovered by a simple question.
Another
question to ask employees is whether operators and product development
personnel are involved in purchasing tools and equipment. People on the
factory floor and others directly involved with the product are in the
best positions to understand the strengths and weaknesses of new
equipment and the needs of the line.
Finally,
look at the equipment yourself. Machines don’t have to be new, but a
recently purchased machine that’s dirty and falling out of repair is a
signal of poor preventive maintenance. Conversely, if a machine looks
new but was purchased long ago, you know the plant’s taking care of its
investments. And many problems are easily visible to the naked eye—if
you know to look. When I visited a petroleum refinery in Haifa, Israel,
in 1970, plant managers told me about a problem with two of four
temperature charts, one at each end of two pipes carrying raw petroleum.
The two “problem” charts displayed significant temperature variations
while the other two were flat, leading managers to assume the latter
were under control. I asked to climb to the top of the furnace to take a
look and discovered that only two of the temperature sensor cables were
connected—the two with significant variations. The other two charts
were flat because the sensors that led to those charts had been cut.
(Questions 16 and 20)
Category 9
Management of Complexity and Variability
This
category judges how the operation manages, controls, and reduces the
complexity and variability it faces in its industry. It can be difficult
during a tour to judge how a plant performs in this category, but you
can watch for certain indicators. For instance, many companies collect
(and then must process) much more data about their operations than they
need; if you observe many people manually recording data and a large
number of keyboards for data entry, the company may be doing a poor job
of handling complexity, especially if the data collection is done by
hand.
In
addition, since the product in lean plants flows through quickly and
inventory is kept to a minimum, workers don’t need to keep track of a
lot of parts. Furthermore, the best plants are able to use the same
types of parts in the manufacture of different products. And finally,
some companies—Toyota and Dell, to name two—build complexity handling
into their production processes, designing systems that aid operators in
picking the right parts out of a broad selection. If a worker reaches
for the wrong valve, for instance, he or she might break an electronic
beam, which would turn on red lights and possibly trigger an audible
signal. Ask workers if such systems are in place. (Questions 8, 17, and
20)
RPA Data for Plants with at Least 10 Tour Reports Each Categories
4, 5, and 6 (scheduling; space, materials movement, and product flow;
and inventory) in the rating sheet consistently receive the lowest
ratings. Few plants have a discernible strategy for how they move
materials, for example, and it’s not unusual to see forklifts trundling
large containers with small parts—an inefficient use of space and
equipment. Manufacturing plants also make poor or infrequent use of
visual management systems; managers underestimate the power of such
tools. The associated questions for categories 4 and 5 generally receive
noes in average manufacturing plants.
Category 10
Supply Chain Integration
The
best operations keep costs low and quality high by working closely with
a relatively small number of dedicated and supportive suppliers. You
can get a rough estimate of the number of suppliers by looking at
container labels: Which supplier names appear on containers? Do the
containers appear to be designed and labeled specifically for customized
parts shipped to this plant? If a company uses multiple suppliers for
the same part or family of parts, it’s unlikely that the suppliers were
directly involved in the development process.
A
best practice for plants is to pay suppliers based on completed,
shippable product: Payment is made automatically when the product comes
off the line. This cuts down on paperwork and reduces the number of
people involved in settling accounts. Ask plant personnel how suppliers
are paid; it seems like an innocuous question, so people are often
forthcoming with the answer. The presence of lots of paperwork on the
receiving dock is another indication of high costs in the supply chain.
The best plants pull the materials from their suppliers as just another
link in the pull system for each product line. (Questions 18 and 20)
Category 11
Commitment to Quality
The
best plants are always striving to improve quality and productivity,
and it shows. Remember that initial tour of the Hoover Universal plant
by Japanese executives in the early 1980s? After we received the report
from that tour, our managers came to clearly understand what Toyota
expected from its suppliers and began to make changes accordingly. In
1985, Hoover Universal won the contract to supply Camry seats for
Toyota’s new Georgetown plant, based not on the quality or productivity
in Hoover’s plants but on our highly visible commitment to continuous
improvement.
Attention
to quality is usually easy to spot. If employees are proud of their
quality program, they usually give it a name and post banners displaying
the plant’s vision or mission statement, business objectives, and
metrics showing achievements to date. Both short- and long-term goals
for the plant and team—as well as statements about internal and external
customer requirements, production schedules, work instructions,
productivity levels, incoming and outgoing quality, scrap and rework
levels, attendance, vacation schedules, safety, and levels of employee
training—should be displayed at each work center. (This overlaps with
category 3.)
You
should also find out what the plant does with scrap. Better plants call
attention to scrap rather than hide it—by shining a light on it, for
example, or marking it with red tape—because they want to know right
away if scrap is building up or if a portion of the process is producing
defective parts. One way to find out: Ask people what they do when a
faulty part comes off the line. Discarding it or discreetly putting it
out of the way is a sign of inefficiency. Finally, ask about product
development. Are cost and timing goals set during development? Are
start-ups well managed and low in cost? (Questions 15, 17, 19, and 20)
Rating the Plant
Immediately
following the tour, team members should meet to share their
observations and impressions and to develop a report assessing the
plant’s leanness and estimating its cost of sales. This meeting should
happen right away, since visual data leave a vivid, but fleeting,
impression.
The
team should use both the RPA rating sheet and the RPA questionnaire to
rate leanness. Rate each of the 11 categories on a scale from “poor” (1)
to “excellent” (9) to “best in class” (11). “Best in class” is meant
literally: Only one plant in each industry, worldwide, deserves this
rating. Then total the ratings; the sum will be between 11 and 121, with
an average plant scoring 55. The questionnaire is completed at the same
time. (The sidebar “The RPA Process Database” explains the scores for
some of the plants toured by my students.)
The RPA Process Database
The
plant’s total score on the rating sheet and the number of yeses on the
questionnaire give you a fairly accurate assessment of a plant’s
efficiency: It’s almost impossible to fake a lean operation. Scores in
six of the 11 categories and 16 of the 20 associated questions are based
almost solely on highly visible elements in a plant’s environment. The
assessments on the rating sheet may be particularly useful because the
11 categories highlight broad areas of strength and weakness. Categories
with low ratings are instantly visible opportunities for improvement
and should be the first steps on a company’s journey to leanness.
By
the way, the RPA tool also includes a template for gauging a plant’s
cost of sales (COS), as well as a set of typical operations measures
ranging from yearly sales per employee to overhead to the number of
hours needed to assemble a personal computer. However, measuring COS
generally requires more experience than judging leanness, so I have
omitted this computation in this article. For an overview of this aspect
of the tool, please see the sidebar “Estimating Cost of Sales.”
Estimating Cost of Sales
• • •
The
fact is, if an operation looks good to the trained eye, it usually is.
I’ve used this tool many times in conjunction with due diligence when
evaluating an acquisition target. I’ve often made substantial
improvements to my own operations after brief tours of my competitors’
plants. And I’ve taught the RPA process to several hundred students and
managers, who have in turn looked anew at their own operations and those
of their competitors. The tool is pretty simple—easy to learn, quick to
put into practice—but it’s proved very powerful in application.
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