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Lean Thinking: All About The Assets

Thu, 07/20/2006 - 8:22pm
Eric Luyer

     In the book, The Machine That Changed the World, by James. P. Comack, researchers described how Japanese companies gained a competitive edge over North American and European companies by pioneering lean manufacturing methods. But this pivotal book omitted one key area of lean manufacturing that turned companies like Toyota into super-manufacturers: a fanatical drive to achieve a “zero breakdown regime” on production lines by focusing on manufacturing equipment performance and proactive asset management.

Lean and waste removal

     Lean thinking is about the removal of waste from production. “Waste” is any activity which consumes resources but creates no value, such as mistakes which must be fixed or products produced with defects. Lean principles address waste by reorganizing the traditional departmental structure of manufacturing companies into lines of “value streams” in which work cells and assets are dedicated to performing certain tasks. This approach removes non-value-adding activities from the system, leading to more efficient processes.

     Toyota married this value stream approach with a single-minded focus on improving equipment performance to achieve a zero breakdown regime. Traditional manufacturers didn’t and instead continue to waste money on costly equipment upgrades and lost production time. In fact, Lean Six Sigma author Michael George estimates that as much as 50% of capital investment in new equipment is made to compensate for the under-performance of existing equipment due to low OEE (overall equipment effectiveness.)

Achieving zero downtime

     Today, achieving zero downtime in lean manufacturing organizations is easier with technologies that automate the management of assets, service and equipment performance. Enterprise asset management systems, such as MRO Software’s Maximo, maximize the performance and service of physical or capital assets that significantly impact lean manufacturing operations. They help achieve zero downtime of equipment and processes for the lowest total cost of ownership while at the same time managing the risk, safety and compliance issues inherent in managing those assets. 

     But technology alone is not a panacea. Manufacturing maintenance departments need to put in place programs that improve the reliability of critical assets. They must master the  core competencies related to each asset and establish frameworks for making decisions in relation to achieving lean manufacturing objectives.

Asset management and lean manufacturing

     With the help of enterprise asset management systems, manufacturers can deploy techniques such as Total Productive Maintenance (TPM) or Reliability Centered Maintenance (RCM) to increase asset reliability; Just-in-Time (JIT) or Vendor Managed Inventories (VMI) to manage their parts inventories; and Activity-Based Costing (ABC) or Zero-Based Budgeting (ZBB) to improve their understanding of costs.

     Asset management systems directly affect a manufacturer’s ability to achieve the benefits of lean production, including:
     • higher revenues through higher asset availability,
     • cost reductions by being able to “see” all maintenance activities across an enterprise,
     • risk mitigation and legal compliance by enforcing work processes and standards for safety and health-        related processes, and
     • a competitive advantage through better execution and lower manufacturing costs.

     Automating asset management goes far beyond improved planning and reduced maintenance costs. It imposes healthy regimes of predictive and preventative maintance. Without it, companies will be stuck with perpetual levels of low OEE. Even it they have downtime contingency measures in place, without automated systems to manage preventative maintenance and responsive service processes, such as workflow and escalation, they will continue to feel the pain of equipment shortcomings on speed of working, product quality and unnecessarily high inventory levels. 

Lean thinking and risk

     In traditional manufacturing, machine setup and product changeover times are lengthy and thus products are manufactured in large batches to minimize lost production time. These manufacturers must then incur the cost of large buffer stocks of raw materials, semi-finished and finished goods as an “insurance policy” to reduce the risk of a customer order that cannot be shipped.

     Lean manufacturing principles compel the companies to remove these buffer stocks, thus raising the risk. Consequently, companies need a different “insurance policy” in the form of more reliable assets to mitigate the risks. This is where enterprise asset management systems fit in. The technology helps companies implement better asset and service management programs to increase asset reliability.

     Consider the hypothetical example of a bicycle manufacturer: On a given morning, the operator of the tube-bending machine is scheduled to bend 100 aluminum tubes and finds that the motor of the machine does not start. The maintenance department was behind in their preventive maintenance program and the motor had missed a few needed revision tasks. Luckily, all of the tube-bending machines are located in one department. The operator informs the maintenance department of the problem and moves the batch to another machine and completes the job. Furthermore, these tubes are only necessary for the production run for the week after next, so even if the machine that broke down was the only one that could perform the required task, there was ample time for the operator to get the maintenance department to perform a rush job.

     With this traditional manufacturing model, the company suffers inefficiencies and extra costs due to its departmental structure and the need to have buffer stocks, but it does not lose a customer.

     Using lean bicycle manufacturing, the plant layout has been changed to a flow-oriented layout, which changes the impact of the breakdown significantly. The tube-bending machine is placed in-line of the aluminum bike production line. If it breaks down, it affects the production output of the entire line. More importantly, because the planning system has been changed from forecast-based production, with production of parts in advance, to pull-based production, based on demand signals, the impact of a breakdown is that customer demand cannot be fulfilled.

     The manufacturer can reap big rewards in manufacturing efficiency, productivity and profits with this lean approach. But the reliability of the tube-bending machine becomes a critical prerequisite for the performance of the entire production line for aluminum bikes.

     By removing waste from the value stream, the reliability of assets becomes an absolute prerequisite for running the business. Enterprise asset management systems provide a framework for improving the reliability of assets while working in a resource-constrained environment.

Eric Luyer is Industry & Solutions Manager, MRO Software

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