September, 2009

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Coon Rapids firm takes day off for charity
A medical technology company based in Coon Rapids gave more than 200 of its employees a paid day off today to volunteer for the United Way. Medrad Interventional/Possis, suspended operations today for its first annual Day of Caring event. The company expects it to generate 1,200 man hours of service. Employees are volunteering at 10 local Greater Twin Cities United Way community partners on projects such as painting, landscaping, improving child care centers, distributing goods to area food shelves and cleaning a domestic abuse shelter. The day long event was coordinated by a small group of Medrad and United Way employees, according to a Medrad press release. Pittsburgh-based Medrad Inc. recently merged with Possis Medical. Medrad is a unit of Bayer AG, based in Leverkusen, Germany.

Article Index

MN Economic Report
Article by: Dr. Ernest Goss

For the month of August 2009, reported September 1, 2009. Minnesota’s Business Conditions Index soared to its highest level since June 2007.


Lean Champions Corner: What is FMEA?
Article by: Jim McCarthy

Today’s Chat:  What in the World is a FMEA? We were just audited by one of our best and most critical customers. They said we should be using an FMEA for our manufacturing and office processes, and if we did this FMEA we would have less undesirable surprises and delays when we implement a process or start production. 


Long Term Planning
Article by: Brad Theisen

As if you don’t have enough to do already…. Today, Minnesota manufacturers are facing challenges that make issues from five years ago seem like a piece of cake.


Book Review: Story of a Lean Journey
Article by: John Hehre

Typically, Lean books are long on theory and short on practical implementation. They rarely discuss the length of time it takes to really implement the changes required. In addition, they tend to focus on high volume, low mix product lines – much easier to change than low volume, high mix operations.


Lean & Green: Ultra Image Powder Coating
Article by: MnTAP

Ultra Image Powder Coating was interested in reducing the amount of powder being wasted in the coating process. Ultra Image was spraying an average of 55,000 lbs. of powder every year, and almost 32,000 lbs. of that was being wasted. That means waste comprised 58% of the company’s powder usage.


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MN Economic Report

For the month of August 2009, reported September 1, 2009. Minnesota’s Business Conditions Index soared to its highest level since June 2007.

The leading economic indicator, based on a survey of supply managers, climbed to 58.0, a regional high, from July’s 45.2 and June’s 43.9. Components of the overall index for August were new orders at 65.0, production at 60.0, delivery lead time at 65.0, inventories at 55.0, and employment at 45.0. “Upturns among nondurable goods firms more than offset weakness in the state’s durable goods sector.  Telecommunications firms continue to report weaker economic activity.  Supply managers were very positive with an August business confidence index of 70.0,” said Goss.

Dr. Ernest Goss of Creighton University, used the same methodology as The National Association of Purchasing Management to compile this information. An index number greater than 50 percent indicates an expansionary economy, and an index under 50 percent forecast a sluggish economy, for the next three to six months.

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Lean Champions Corner: What is FMEA?

Today’s Chat:  What in the World is a FMEA? We were just audited by one of our best and most critical customers. They said we should be using an FMEA for our manufacturing and office processes, and if we did this FMEA we would have less undesirable surprises and delays when we implement a process or start production. 

I am confused- this seems like a lot of bureaucratic red tape to go through just to get a process going.  On the other hand, just last month I saw a process hit the floor - clearly not ready for implementation, and it cost us a lot of time and money to get it right.  The product was several weeks late to the customer and "we wrapped about six $20 bills around each part shipped". This lack of preparedness resulted in over $35K in additional costs.  Could you give me a quick run through on FMEA? – maybe it will help us comply with the audit recommendations and improve our production readiness to boot.

Lean Champion’s Answer: Although Lean often uses trial & error methods, Lean is not intended to disappoint customers or lose money in the process.  Your customer’s audit request is quite reasonable, as are your concerns about slow and costly process implementation.  Maybe we can kill two birds with one stone.

FMEA stands for “Failure Mode and Effect Analysis”. 

FMEA is an attempt to:

  • Delineate all possible failures
  • Evaluate the effects of failures on the system
  • Determine the likelihood of occurrence
  • Determine the probability that the failure will go undetected

FMEA came into existence on the space program in the 1960s, and was later incorporated into military standards, specifically Mil-Std-1629A

FMEA's can be used in both process and design situations to minimize the effects and probability of something going wrong “the day of the game”.  So essentially, what the FMEA is doing is making a written assessment of what could go wrong and what you are going to do about, before it happens.  This sounds fairly complicated, but FMEA's are typically done in chart form and can usually be completed on one sheet (if there are not too many items of concern).

 

Preparation steps for an FMEA could be:

  1. Define the system, product or process to be analyzed.
  2. Complete process maps showing the operations, interrelationships, interdependencies, and flow.
  3. Show suppliers, inputs, outputs, controls, and customers (internal & external) for all steps and materials of the process.
  4. Analyze required production quantities against projected plant capacity.
  5. Do physical scale layouts for the intended process
  6. Identify tools, equipment, software, and methods for availability and capabilities for safe, quality, and profitable production against drawing requirements, standards, and regulatory requirements.
  7. Identify logistic requirements from a “time” and “sequence” standpoint to ensure all things come together at the required times.  (A project plan or Gantt chart helps with this)

 

Now draft the FMEA

  1. List the intended function of each step in the process or sub process
  2. For each process step identify potential item for failure and define the effect on the output
  3. Determine the severity (potential consequence/s) of each failure mode and assign a severity rating (SEV)
  4. Determine the likelihood of the failure mode happening and assign an occurrence risk rating (OCC)
  5. Identify how detectable the failure mode is and assign a delectability (DET) rating

 

The FMEA then develops a RPN or Risk priority number by multiplying the SEV, OCC, and DET rating by each other:  (Individual ratings are often set-up on a 1-10 basis with 10 being the worst rating).

For example let’s assume: SEV=8, OCC=7, & DET=4

Calculating the RPN number: 8 x 7 x 4 = 224 (pretty high! - the higher the number, the higher the risk)

The RPN number of 224 will require some countermeasures to be put in place in order to mitigate the risk. There are formal guidelines which dictate “action thresholds” for RPN numbers.  Once the countermeasures are put in place, the RPN is then re-calculated to show the effect of risk mitigation

So, the FMEA is a way to minimize the risk of a “train wreck” in your process implementation. The formal FMEA can be greatly simplified for internal use by using just high, medium, and low severity ratings.  Remember that these techniques are useful in office, design and service processes.  FMEA's are a great step toward world class operation in any industry where some type of process is required.

This was just a quick overview of the FMEA process, but if you want to further explore this process and get a deeper understanding of how to save money, achieve customer commitments, and systematically reduce internal chaos in the process, the Manufacturers Alliance is holding a FMEA seminar on October 8, 2009.  See www.mfrall.com for seminar details

Maybe I will see you there! 

Jim McCarthy is President and Owner of Product Ventures, Inc., a consulting company for World Class office & manufacturing improvement. He is a certified Lean master, 6 Sigma Black Belt, Lean/Six Sigma Practitioner, Lean Office practitioner, and Quick response Manufacturing (QRM) Implementer. mccarjfm@aol.com - See also www.linkedin.com for James F. McCarthy

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Long Term Planning

As if you don’t have enough to do already…. Today, Minnesota manufacturers are facing challenges that make issues from five years ago seem like a piece of cake.

Almost daily, manufacturers must address issues related to changes in the credit market, the potential impact (positive or negative) of the stimulus package on your business, continual assessment of your existing workforce and the changing financial condition of your best customers and suppliers, just to name a few. These challenges are enough to keep manufacturing company owners and management awake through most of the night. However, they are just a starting point for the issues where manufacturers should really be focused.

Manufacturing companies positioning themselves for long-term growth are looking past the next several years and determining what they’d like the future to be. Robert Crandall, former CEO of AMR Holdings (American Airlines) noted, “Half the job of management is trying to figure out where the company is going to be five to ten years down the road, and the second half is execution.” This article will focus on recommendations for how manufacturers can address the “five to ten years down the road.”

The SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis is a valuable tool many companies have used successfully for many years.  This analysis serves as a good starting point for conducting an examination of the company’s future strategy and direction. If your company has a current SWOT Analysis, great – pull it out and use it as a cornerstone of your strategy. If your SWOT Analysis hasn’t been updated since January, now is the time to do so. 

It is also important to do a thorough analysis of your significant competitors–those you are aware of today and those that may be “hidden” competitors in the future. Hidden competitors include companies that may begin offering products comparable to yours, as well as those that offer different products with a potential to take away your market share. Case in point–five years ago, could Sony have known that in 2009 iTunes would sell more music than they do? If so, what steps did they take to prepare the company for this change? If not, are they left to scramble to compete with a company that was not considered a “Threat” in their SWOT Analysis?

What are some actions you can start taking today to avoid scrambling in the future? Keep in mind that none of these recommendations can be implemented overnight and that’s where Robert Crandall’s “second half is execution” comes into play. However, implementing some or all of these recommendations will help prepare your company for the challenges faced in the next five to ten years.

  • What current and proposed regulation and societal movements could impact your company in the next five to ten years? Analyze some of the current social issues impacting our country–i.e., the green movement, immigration policies and changes in consumer spending–to determine what impact these could have on your business in the next few years and how you will respond.

 

  • Do you know your competitors’ “blind spots”? Find the CEOs’ pet projects and monitor the effectiveness and results of these projects. A CEO or owner is unlikely to give up on their pet project, even if all indications are that the project is not doing well. In this situation, the demise of a pet project could contribute to hard times for the company. Conversely, if this project takes off–watch out!

 

  • Who, in your company, is responsible for monitoring what the competition is doing? If you answer “everyone,” then the answer is really “no one.” Start by assigning this function to one or two people and provide clear guidelines about what you expect them to do. Simply reviewing existing competitors’ websites isn’t sufficient. Information that allows you to anticipate, rather than just react to, competitors’ actions is needed. By the time information is on the website, all you can do is react.

 

  • How frequently do you leave the office and your manufacturing facility? Yes, you need to be on-site, interacting with employees and paying attention to the business. If you are spending all your time looking at spreadsheets and other reports, know that others are taking a broader look and will likely start eating away at your market share, employees or both. Get involved with professional organizations (like the Manufacturers Alliance), spend time talking with elected officials, hear what the economists and bankers expect for the future and even spend time with your competitors. This time outside the office can provide significant insight and perspective as you plan for the company future–use it wisely.

 

  • How will future technologies impact your business? This question is especially difficult, as many of today’s most prevalent technologies were barely in existence three years ago. Additionally, technology changes can be very expensive to implement or adapt to. Manufacturing companies need to understand the future technologies that will impact their operations and their customer base, and then plan accordingly for these technologies.

 

This article started by noting “as if you don’t have enough to do already.” In these challenging times, manufacturers must find the time for taking a long-term view of their companies’ strategy.  If you don’t, you may find yourself with more time on your hands than you’d like.

Going green is not only good for the environment it is also good for your bottom line! If you would like more information please contact Brad Theisen at 952.918.3539 or btheisen@eidebailly.com.

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Book Review: Story of a Lean Journey

Typically, Lean books are long on theory and short on practical implementation. They rarely discuss the length of time it takes to really implement the changes required. In addition, they tend to focus on high volume, low mix product lines – much easier to change than low volume, high mix operations.

Lewis’ book Story of a Lean Journey addresses these issues by looking at the implementation of Lean in a fictitious but typical small company facing stiff competition from overseas manufacturers. The company hires an experienced executive to come in and improve operations. The book is part primer on Lean practices and part illustration of the struggles organizations must address in order to be successful. A short, easy read, the book is not really a novel in the form of The Goal or The Gold Mine; the dialogue is included more to illustrate the softer issues encountered.

The book does a good job exploring several key topics. Performance measures must be part of any successful improvement efforts and the book does a good job explaining the importance of measures that are meaningful to the folks on the floor. High level measures that show overall company performance are useless for identifying specific action items for improvement. Productivity and on time delivery are two examples used to show value of detailed measures at a department or cell level compared to general company wide measures. Several approaches to these measures are illustrated.

Value Stream Mapping is an important tool for analyzing and improving operations. Lewis offers a few useful suggestions for what kind of information to collect before creating the maps. He also addresses a common problem around scope and the level of detail – when to use a high level map and when to create a more detailed view of the operation.

One way to address high mix, low volume operations is to develop what is usually referred to as a “product – process” matrix. Lewis devotes a chapter to the development and application of this to a department with a lot of variation in products and processes. Another example of process improvement is illustrated with a setup time reduction project. The tasks are video-taped, discussed and documented and the results of the project are presented.

This short book covers a lot of areas; the tradeoff is the lack of depth for any given topic. Enough information is provided to illustrate the concepts and there are many references provided for further reading. There is also an excellent summary of the keys to success for any Lean project in last chapter. This book would be a useful primer for supervisors and managers in an organization working through the issues discussed as long as it is used in conjunction with more in-depth training materials and seminars for the details.

John Hehre is a senior operations executive and provides interim management and project based consulting to mid-sized private companies in need of transformative change. He can be reached at jhehre@cprocess.com.

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Lean & Green: Ultra Image Powder Coating

Ultra Image Powder Coating was interested in reducing the amount of powder being wasted in the coating process. Ultra Image was spraying an average of 55,000 lbs. of powder every year, and almost 32,000 lbs. of that was being wasted. That means waste comprised 58% of the company’s powder usage.

The company, located in Big Lake, Minnesota, is a powder coating company that provides finishing for metal parts for a multitude of companies. Much of the powder application done at Ultra Image is sprayed by machine, but some complex parts require that they be sprayed by hand.

Ultra Image used an intern from MnTAP to help design changes in the company’s operation that could reduce the amount of waste being generated. Ultra Image determined that its current dust collection system was too large for the space being used. This was detrimental to the airflow around the powder coat spraying area. In addition, the company was using an older powder coating system, and the combination was contributing to the poor transfer efficiency.

Ultra Image took on an intern from the Minnesota Technical Assistance Program in order to help improve the situation. The intern identified two major causes of the low efficiency of powder application. First, the presence of high airflow was sucking too much powder away from the parts that were being coated, and the powder was irretrievably lost, and secondly, the machinery operators were not sufficiently trained. The intern proposed several options to address the problem, including adjustments to airflow control, room pressurization, and operator training.

First, the airflow was reversed in the room to create positive pressure. This was intended to reduce the stress on the air conditioner filters and result in less frequent changing. The company also installed deflector plates on the air ducts to change the way the air moved around the room. This would also prevent powder from being collected before it could be applied to the parts.

The second part of reforming the powder coating process involved additional training for the operators. Small details such as spray techniques, proper equipment set-up, and maintenance can have a large impact on the efficiency of the spray. The MnTAP intern recommended that Ultra Image invest in additional training for operators to ensure that all operators were getting the most out of the machines. Ultra Image collaborated with its spray equipment supplier to host classes for operators at the Ultra Image facility. The hands-on class gave operators the chance to practice and ask questions about the equipment they use for their work.

Based on a recommendation from the MnTAP intern, Ultra Image also purchased a new powder booth to further enhance transfer efficiency. The new custom booth allowed Ultra Image to reduce its powder waste.

Ultimately, Ultra Image was able to reduce its waste by 15,000 lbs annually and will save $63,000 annually.

MnTAP has a variety of technical assistance services available to help Minnesota businesses implement industry-tailored solutions that maximize resource efficiency, prevent pollution, increase energy efficiency, and reduce costs. Contact MnTAP at 612.624.1300 or mntap@umn.edu for more information.

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