Increasing production flow

Presenting to a boss the numbers that prove production flow could be improved. (Business Forum) May 17, 2003

I work for a small business that produces moldings. I would like to exemplify to the President and Vice President that a streamlined flow is important and can directly improve or hurt our bottom line.

Right now we bring in our surfaced lumber through a door that is right next to the molder and cart it over to the rip saw for blanking near the loading dock. We then of course bring it back over to the molder, mold it and then haul it right by the ripsaw on to the loading dock. Does this make any sense at all?

I know that if I tell them that it would be effective to switch things around they would say that it wouldn't make any sense because they are too busy running moldings and ripping blanks to stop production for a couple of days. Is there a way that I could show them in the numbers that this can be very effective?

Forum Responses
(Business Forum)
From contributor J:
You can do a small "sensitivity analysis" to demonstrate the potential savings that exist if you were to streamline the production process. A sensitivity analysis is nothing more than a model or set of calculations that you run under several different scenarios. You can do a "most likely," "least or worse case scenario," and finally, "best case scenario." Your variable here would be the amount of time you could save in moving materials around.

I think you'll want to quantify the amount of time you are currently spending on moving materials on a per project or hours/day basis. So, if you are spending 2 hours moving materials around now, and you think streamlining would save an hour per day in moving the materials, you will effectively be saving 5 hours of labor a week. While this is probably a little drastic as intended for the sake of this argument, you can see where even saving 10 minutes a day will mount up over the course of a year (over 43 hours assuming a 260 day work year). In this scenario, if you would only have to stop production for under 40 hours, it would be economical to do so and you would improve your bottom line in year 1. Obviously, for an ongoing entity, it would increase profitability every year going forward by that amount. Other variables to factor in would be costs for moving equipment (electric outlets, dust collection, etc.).

Be careful when presenting to the management. It could be a sensitive topic as you don't want to tell them they are doing their job wrong, but try to suggest it in a friendly and non-confrontational manner. You may even want to volunteer to come in on the weekend to help move the equipment and reorganize the line to be ready for production during the regular week - thus, not holding up production time at all. It would be an excellent opportunity to prove your value and commitment to the company to your bosses. If they are alert managers, they would hopefully remember this come raise or bonus time.

From the original questioner:
Could you give me any pointers regarding how I could calculate the time moving things around? I'm thinking I could just take a couple of observations of the employees moving a load from one point to another in each stage of production. Then use our overhead as a multiplier? Am I on the right track?

From contributor J:
Without knowing or understanding your production process it would be difficult to say exactly. Observe the process in action and you should be able to get a sense of the time involved. There are probably countless ways to get an idea of the time involved… like how long it takes to wheel the stock between work stages multiplied by the usual number of production runs you make on an average day. Again, not seeing the operation, it's difficult to say.

Once you have figured out the time involved moving the material currently, you can make an assumption as to the amount of time a more streamlined process would consume, then you can quantify the amount of time you believe the company would save by comparing the two. The difference between the two is basically "downtime" in the production process. Your point to management is that this is inefficient use of this time and labor and it could be eliminated. In addition to the savings in labor and overhead costs for this time, you can consider the "opportunity cost." This is the cost to the company during this down time. The time you are now wasting in moving materials around is time that could actually be spent on additional jobs generating additional revenue and would increase your bottom line by your profit margin. You can use the shop rate as the multiplier to come up with the opportunity cost.

From contributor D:
Contributor J has it right. You can make the observations and figure it out. It sounds like you are the one that deals with it daily, so you are perhaps the best qualified to know. That said, be prepared to see no action on your observations. From what you say, these guys are too busy looking at trees to see any forest. Sometimes these folks will do the opposite if suggestions come from the floor. Their own narrow view will hurt them if it hasn't already. If they ignore you, make the best of it but then search out another shop that will value your contribution and open eyes. If you look around you will see that this business needs people like you.

There is something to keep in mind when working for small business; many small business owners became their own boss because they weren't able to accept having a boss... and this is a normal thing. The trouble is that some of these can't accept anything at all, feeling attacked, insecure or pushed when they feel someone could be better than them in any subject or when someone gives them "hints" or "tips." You also have to consider that often it is harder to run a small business than a big one because of the small structure and lack of resources. As a small business owner it is easy to be blinded by the work and the pressure as you can lose all you have in less time than you need to say goodbye.

That said, I have some hints for you. Try to calculate the time it takes to process one standard part, without manipulation, without setup, without everything. This is the synthetic productivity of your process, or you can call it your production sky's limit. It's going to give a reference point that you'll never reach but that indicates clearly how much you need to rework your process. Then, for that single part, add your manipulation time. After that, the difference will give you the addition of the parking time and the set-up time when compared to the real life process.

The work to be done afterward is to redo your plant layout, your working spaces layout and then redefine your operating techniques. The goal is to get rid or to hide all down time. You'll seek to find everything you can do while the machine is running; every manipulation that can be combined, etc.

This work looks huge but is not. Try it quickly and you'll see. The results are worth it and generally this is enough to convince everyone. Keep in mind that moving a machine may not take long but can have disastrous mid- and long-term effects on the machine. Modifying a layout can also disturb the productivity for a little while.

Your managers must also look at the whole picture. Your proposal to improve productivity in one area of a company may not help the bottom line. If you could shave one hour of production time a day, but loading and shipping can not keep up with the higher quantities, then nothing more is being sold. Men standing around is always bad for morale. If you have no raw material left because suppliers can not keep up with your new demand then your changes would have been for nothing. The owners may be privy to information that you are not aware of. Making your proposal or suggestions could only be good for the company and you, but try not to take it to heart if the owners don't accept it. They may have very legitimate reasons for not changing.

From contributor L:
Another factor to consider - if productivity increased, would sales match the increase or would men go home with a short week? Need the whole picture to make decisions. The whole picture includes your suggestions, though. I love suggestions from my men. Would feel bad if they stopped giving them just because I didn't always agree. Sometimes I do agree. If you want your boss' respect, offer your suggestions, back it up with data but don't demand he or she agree. It is shortsighted to think your boss doesn't have any more facts than you do to make decisions on.

From contributor D:
Not to take this off on a sidebar, but why all the excuses about other parts of the production puzzle not keeping up? Productivity is paramount - if suppliers, shippers, sales can't keep up, then it is time to reach into the backup files and get those plan B suppliers, shippers and sales people on line. A molding operation is an expensive and key facet to most shops - it needs to be as productive as possible to pay the way. Holding it back for any length of time than temporarily is moving in the wrong direction. Aren't we all trying to figure out how to be more productive?

From the original questioner:
I have looked into whether it would cause problems farther down the line; no, it would not. Right now, the people that are running the rip saw and molder are also the ones that are loading the truck and delivering it. So the limited time running back and forth all over the shop is creating some overtime. I also need to throw lead times out another week or so when we get backed up.

Might be too simple a solution, but is the door you are bringing the lumber through currently a door to the outside or just a lumber storage room? Could you just reverse the order and bring the wood in through the loading dock and finished work out the other door? Don't know the door sizes and how materials are being bundled to have any idea if this would work.

I would agree that production is paramount. If there is down time, that's maintenance time, cleaning, etc. You hate to have employees inactive, but that is no reason not to make production more efficient. Try to bring in more business. Maybe even have a part timer or outsource the deliveries to someone so the others can stay in the shop at the machines where the money is being made. That is the company's core competency.

From the original questioner:
I have thought of that. The loading dock is really meant for just that, though. We have a nice area where finished goods can wait to be loaded and we have a stairway where goods from our second floor come down and meet in this area. The "in door" is a means to outside, hence this is where we bring in our materials from a separate building where lumber is stored.

I always welcome ideas that will improve the business when they meet these qualifications:

1. It must save time without costing quality, or increase quality without taking more time.
2. The cost of all aspects of a changeover has to pay itself off in three years or less.

Any business owner who can't spend the time to listen to advice from any employee level to see if it makes the best financial sense is a fool. Even when the ideas don't pan out, you want to encourage worker participation into operations and setup. An employee who actually tries to help things run more efficiently is much more valuable than a clock watcher. As long as all parties involved understand that all ideas are based solely on the business running as efficiently as possible, feelings should not be hurt no matter what the final decision is. However, don't take too long making a decision on what to do - you don't want to take longer to read the map than to drive the car.

Strive for constant improvement. It takes effort but the rewards, both physiological and financial, are worth it. Material handling is often a major part of the time in production, the less of it the better. Will your customer pay you for spending more time to move product? If not, don't do it. Eliminate waste; anything that doesn't add value that the customer is willing to pay for is waste.

Contributor L, improved flow cuts out costs, therefore you are more competitive, which brings you more costumers. Another point is if you put your gained labor hours in areas where you are weak you can reduce lead time (overtime costs a lot) and so on. You don't have to send your workforce to the house early because of improving your production flow.

From contributor L:
I must not have been clear. My point was not negative, that work flow should not be improved because sales might not be able to keep up, but rather, consider sales... The amount of sales necessary may be impacted with improved work flow. Make it part of the equation. Don't ignore it, because if you do, there may not be enough work. The plan must be comprehensive to be truly successful. Where will the extra sales come from? Will an independent rep be hired? Will the current sales force be able to keep up? If not, something must be done to address that as well. That is not negative. It only means be smart about making changes.

I was driving to work the other day traveling about 60 on a long stretch of highway. It was rush hour and a lot of traffic. A little red sports car passed me going about 70. He was then slowed by a delivery truck. At my 60 miles an hour I passed him. He switched lanes and again went racing ahead. And if it wasn't for that traffic light he would have stayed ahead. But he found himself in the slow lane off the start and with some fancy maneuvering through the three lanes of traffic he managed to pass me again at about 70 mph. I stopped paying attention to him and don't remember seeing him again. I pulled up to the job 15 minutes later and started to unload my tools. I looked up to see that same red car pull up behind me coming to a screeching halt. A man jumped out and started ranting about "sorry I'm late and how terrible the traffic is." He then introduced himself as the door rep that I was supposed to meet.

If you haven't guessed it already, the point is he had a finely tuned sports car and was using it to its fullest, but what good did it do him? We both got the same task done but he worked a lot harder at it. If you can't change the whole environment, the end result (profit) will be the same. If making a business grow was as easy as improving production, then we all would have multi-billion dollar thriving corporations.

In my company manual I wrote these words to try to encourage ideas. "Change is imperative to success but expensive if frivolous."

The comments below were added after this Forum discussion was archived as a Knowledge Base article (add your comment).

Comment from contributor A:
First, no matter how you figure the savings, whether you're right or wrong, the way you make your pitch has a lot to do with how it's received.

Moving materials does not add to their value. So if you can figure out how much less time would be spent moving materials with a different layout, that should be sufficient to arouse some interest, which is your first goal.

Then try to arrange a chance to talk with the owners, and offer to do it outside your working hours. This avoids the perception that you are trying to avoid work.

Present yourself as wanting to learn more about the business when you make your pitch: "I've noticed we seem to spend a lot of time moving material instead of processing it. It seems to me that we could produce more in the same amount of time if we did "Y" instead of "X" In fact, I've done some calculations and it seems we could save this amount of labor." Then ask if they can see anything you have overlooked.

With this approach, you're asking to learn from them, rather than seeking validation. You may very well learn something by opening a dialogue, rather than simply making a pitch. And it may even be that the process will lead to some changes.

By not directly challenging the situation that now exists, you are less likely to get a defensive reaction, and far more likely to get a positive response.