Page 300 - How To Implement Lean Manufacturing

The Pr ecursors to Lean Not Handled Well 277

work day. Line OEE would need to be at 90 percent, and these levels had not been previ-
ously achieved.
We asked for the background on the recent increase to 36 units per day. We were
told the customer had demanded a 15 percent price reduction over two years and would
then give the plant additional demand. According to Miguel, the line was very profit-
able and management jumped at the chance with very little review, not even an update
of the Process Failure Mode Effects Analysis (PFMEA). Management was very confi-
dent the line would perform. Prior to the ramp-up, the customer returns were less than
500 PPM, on-time delivery was practically 100 percent, and the line name plate capacity
was adequate. It appeared to be a win-win situation, until they could not meet demand.
That problem cropped up almost immediately. In addition, with all the weekend over-
time and expediting, profits had eroded to practically zero and Miguel was convinced
they were not on the correct path to return to profitability.

We Investigate More, and Fix the Welding Machine, the First Problem
With this background, we did some digging and discovered the following. The welding
machine had numerous previous problems, but those problems were masked by excess
capacity in the line and the inventory situation, specifically the weekly pickups. Earlier,
they could have an off day or two and still be able to make up volume with the excess
capacity and even a little overtime. Also, it was only recently that they achieved the low
inventory levels. At higher inventory levels, this also helped mask the problem of the
welder’s poor reliability. We asked the technician in charge of solving this problem to
bring in the manufacturer’s rep for the welder. The welder’s rep readily confirmed that
the machine was probably capable of 30 units per day, but would surely overheat at
36 units per day. He suggested a minor upgrade to the cooling system, and for $1500 he
would expect greater than 99 percent reliability at our needed cycle times. The equip-
ment was ordered and installed. Table 17-2 shows the next 25 days of production.
In this five-week period, significant progress had been made. The welder did not
fail once. In addition:
• Only one shipment was missed.
• Production had improved by over three units per day.
• The production variation shrank from 10.7 to 7.6 units.
• Weekend work was significantly reduced.

The Second Problem, Sensor Stock Outs
Is Addressed
Point of Clarity The only
The second problem, the sensor stock outs, proved
purpose of inventory is to
to be a little more slippery. The supplier was con-
tacted and he was doing all he could but was severely protect sales, not production,
but sales. So where should
stretched. His production facility was at capacity
and earlier he had informed the buyer, who did not the inventory be located?
pass on this information. They had plans to increase Inventory is a waste, so mini-
capacity, but any future increases were six months mize the inventory cost, be it
away. It seemed the only viable short-term solution in raw materials or finished
was to increase inventory levels to account for the goods.
supplier’s variation. No one wanted to hear that.