INDUSTRIAL SUPERSTITIONS — PART 2
Minish Umrani (Industrial Consultant)
Mobile: 9822390363 | minish@leansigmasolutions.in
[THE INCOMPLETE BOM]
Whether an OEM—Original Equipment Manufacturing—company is small, medium or large, the broad process flow is usually similar. OEM products are generally assembly products: generators, inverters, gearboxes, machines, electrical equipment and so on.
When a sales order arrives, Planning or the Production Engineer issues a production order. Based on that, a Material Requisition Note is sent to Stores. Stores issues whatever material is available. Purchase Orders are raised for the balance, and the Purchase Engineer assures everyone that the remaining material will arrive in two or four days.
Usually nobody really believes that assurance. But there seems to be no alternative, so assembly starts with whatever material is available.
As a result, the complete BOM—Bill of Material—is often not available before assembly begins. Most major parts may be available, but a typical electronic part, actuator, solenoid valve, relay or other high-value/high-lead-time component may be missing. Hardware such as special nuts and bolts, PTFE washers or oil seals may also be unavailable.
The usual belief is: “Let us prepare the rest of the assembly while waiting. Once the missing parts arrive, we will fit them and dispatch immediately.” This practice has continued in many factories for years. And of course, someone will ask: “What is wrong with that?”
I have watched this particular superstition being protected almost religiously in production for years. In almost every small or large OEM I have worked with, I have seen engineers who strongly believe in it. The belief in this practice can be as strong as the devotion with which people observe traditional religious rituals.
Senior engineers pass this “tradition” on to fresh engineers with the same conviction, and the next generation continues the practice.
This belief is extremely harmful to factories. Yet it becomes deeply embedded—from the owner and senior management right down to junior engineers. Assembly simply becomes “the way we do things,” and nobody from top to bottom feels that anything is wrong.
The major disadvantages are:
• Manufacturing lead time increases.
• Large amounts of floor space are required.
• On-time delivery commitments fail.
• WIP increases and the interest cost on it keeps increasing.
• Manufacturing cost also rises.
I have many examples where making 100% of the BOM available at the same time has produced dramatic benefits. Merely doing this can drastically reduce assembly-on-floor, or actual manufacturing time.
If, along with this, a takt-based assembly line is created, the company can respond to customer demand on time and achieve 100% on-time delivery. Lower manufacturing lead time also increases workplace capacity and productivity.
About a year or so ago, a large machine manufacturer in Ahmedabad invited me for a visit. They were planning a greenfield layout. They had acquired about two acres and wanted to shift their machine production, which was then spread across several locations.
In a greenfield Lean layout project, the machinery, process flow and assembly stations are laid out first. The architect then designs the building and civil construction around that layout. This is simpler than constructing a factory first and then trying to fit the machinery into it. Many entrepreneurs now follow this approach.
When I first visited, their manufacturing system worked roughly like this:
They generally sold machines from available stock. If an order came for three or four different machines and one of those machines was not available, they had to wait until the unavailable machine's batch was completed. A batch consisted of 20 machines and took 30 days to complete.
Once the batch was complete, one or two machines from it, along with other available machines, would be dispatched. So even though stock existed, timely delivery was difficult. This happened month after month, and finished-machine inventory kept increasing. Some machines remained unsold for two months or more.
About 30 batches of 20 machines each were running simultaneously. They were completed on different dates and added to finished-goods stock. You can imagine the amount of WIP and finished stock created by such a system.
The fundamental reason given to me was that the complete BOM could not be made available at one time. Some parts were imported and others had long lead times. Once roughly 70–80% of the BOM was available, they started assembly. As more parts arrived, they were supplied batch by batch. This had been their practice for years.
Space was obviously becoming insufficient, which was why they wanted a new building. Their annual turnover at the time was ₹150 crore, and even on a five-year horizon they could easily reach ₹400 crore. Imagine how much space, manpower and raw-material stock such a manufacturing system would require.
We then assembled one machine using 100% BOM availability. We discovered that the actual assembly time was only eight hours.
That meant one machine could be assembled whenever the complete BOM was available. There was no need to start a batch of 20 machines and keep it running for 30 days.
One team could assemble 30 machines in 30 days. More importantly, there was no need to build 20 machines unnecessarily and lock money into them. If the order required two machines, three machines or ten machines, only that quantity could be built, while the team could use the remaining time for other orders. This flexibility was equally important.
The takt time for these machines was two hours. Takt time means available time per day divided by average daily demand. Logically, this meant that an order effectively needed one machine every two hours. If we could not produce one machine every two hours, we could potentially lose the order.
We divided the eight-hour total cycle time into four stations, each with a two-hour cycle time, and assigned the appropriate operations to each station.
The first machine was completed after eight hours, and every subsequent machine was completed every two hours.
But there was one non-negotiable rule: the line would not start unless 100% of the BOM was available.
Changing this mindset was genuinely difficult. Fortunately, management was committed. Within two months they prepared the system and created a takt-based assembly line.
With 100% BOM availability, the line actually began producing one machine every two hours. That meant five machines per day, or a 30-day capacity of 150 machines—with the flexibility to produce exactly what was required.
Their current monthly sales of this type of machine were only around 50–60 units.
Even more importantly, the entire assembly line fit on only one floor. The other two floors became completely free.
And yes, the company no longer needed to spend several crore rupees on a new facility.
The 100% BOM rule and takt-based assembly line delivered enormous benefits: space saving, productivity improvement, capacity increase and inventory control.
This technique is not new. It is widely used in two-wheeler and three-wheeler manufacturing. That is one reason customers do not have to pay an advance and wait six months for a motorcycle as they once did.
The belief that “we should start assembly with whatever BOM is available and wait for the remaining parts” has been passed down from generation to generation of production engineers.
It cannot be broken easily. It requires equally strong management conviction—and patience!
.... PART 2 ENDS
Minish Umrani (Industrial Consultant)
Mobile: 9822390363 | minish@leansigmasolutions.in
[THE INCOMPLETE BOM]
Whether an OEM—Original Equipment Manufacturing—company is small, medium or large, the broad process flow is usually similar. OEM products are generally assembly products: generators, inverters, gearboxes, machines, electrical equipment and so on.
When a sales order arrives, Planning or the Production Engineer issues a production order. Based on that, a Material Requisition Note is sent to Stores. Stores issues whatever material is available. Purchase Orders are raised for the balance, and the Purchase Engineer assures everyone that the remaining material will arrive in two or four days.
Usually nobody really believes that assurance. But there seems to be no alternative, so assembly starts with whatever material is available.
As a result, the complete BOM—Bill of Material—is often not available before assembly begins. Most major parts may be available, but a typical electronic part, actuator, solenoid valve, relay or other high-value/high-lead-time component may be missing. Hardware such as special nuts and bolts, PTFE washers or oil seals may also be unavailable.
The usual belief is: “Let us prepare the rest of the assembly while waiting. Once the missing parts arrive, we will fit them and dispatch immediately.” This practice has continued in many factories for years. And of course, someone will ask: “What is wrong with that?”
I have watched this particular superstition being protected almost religiously in production for years. In almost every small or large OEM I have worked with, I have seen engineers who strongly believe in it. The belief in this practice can be as strong as the devotion with which people observe traditional religious rituals.
Senior engineers pass this “tradition” on to fresh engineers with the same conviction, and the next generation continues the practice.
This belief is extremely harmful to factories. Yet it becomes deeply embedded—from the owner and senior management right down to junior engineers. Assembly simply becomes “the way we do things,” and nobody from top to bottom feels that anything is wrong.
The major disadvantages are:
• Manufacturing lead time increases.
• Large amounts of floor space are required.
• On-time delivery commitments fail.
• WIP increases and the interest cost on it keeps increasing.
• Manufacturing cost also rises.
I have many examples where making 100% of the BOM available at the same time has produced dramatic benefits. Merely doing this can drastically reduce assembly-on-floor, or actual manufacturing time.
If, along with this, a takt-based assembly line is created, the company can respond to customer demand on time and achieve 100% on-time delivery. Lower manufacturing lead time also increases workplace capacity and productivity.
About a year or so ago, a large machine manufacturer in Ahmedabad invited me for a visit. They were planning a greenfield layout. They had acquired about two acres and wanted to shift their machine production, which was then spread across several locations.
In a greenfield Lean layout project, the machinery, process flow and assembly stations are laid out first. The architect then designs the building and civil construction around that layout. This is simpler than constructing a factory first and then trying to fit the machinery into it. Many entrepreneurs now follow this approach.
When I first visited, their manufacturing system worked roughly like this:
They generally sold machines from available stock. If an order came for three or four different machines and one of those machines was not available, they had to wait until the unavailable machine's batch was completed. A batch consisted of 20 machines and took 30 days to complete.
Once the batch was complete, one or two machines from it, along with other available machines, would be dispatched. So even though stock existed, timely delivery was difficult. This happened month after month, and finished-machine inventory kept increasing. Some machines remained unsold for two months or more.
About 30 batches of 20 machines each were running simultaneously. They were completed on different dates and added to finished-goods stock. You can imagine the amount of WIP and finished stock created by such a system.
The fundamental reason given to me was that the complete BOM could not be made available at one time. Some parts were imported and others had long lead times. Once roughly 70–80% of the BOM was available, they started assembly. As more parts arrived, they were supplied batch by batch. This had been their practice for years.
Space was obviously becoming insufficient, which was why they wanted a new building. Their annual turnover at the time was ₹150 crore, and even on a five-year horizon they could easily reach ₹400 crore. Imagine how much space, manpower and raw-material stock such a manufacturing system would require.
We then assembled one machine using 100% BOM availability. We discovered that the actual assembly time was only eight hours.
That meant one machine could be assembled whenever the complete BOM was available. There was no need to start a batch of 20 machines and keep it running for 30 days.
One team could assemble 30 machines in 30 days. More importantly, there was no need to build 20 machines unnecessarily and lock money into them. If the order required two machines, three machines or ten machines, only that quantity could be built, while the team could use the remaining time for other orders. This flexibility was equally important.
The takt time for these machines was two hours. Takt time means available time per day divided by average daily demand. Logically, this meant that an order effectively needed one machine every two hours. If we could not produce one machine every two hours, we could potentially lose the order.
We divided the eight-hour total cycle time into four stations, each with a two-hour cycle time, and assigned the appropriate operations to each station.
The first machine was completed after eight hours, and every subsequent machine was completed every two hours.
But there was one non-negotiable rule: the line would not start unless 100% of the BOM was available.
Changing this mindset was genuinely difficult. Fortunately, management was committed. Within two months they prepared the system and created a takt-based assembly line.
With 100% BOM availability, the line actually began producing one machine every two hours. That meant five machines per day, or a 30-day capacity of 150 machines—with the flexibility to produce exactly what was required.
Their current monthly sales of this type of machine were only around 50–60 units.
Even more importantly, the entire assembly line fit on only one floor. The other two floors became completely free.
And yes, the company no longer needed to spend several crore rupees on a new facility.
The 100% BOM rule and takt-based assembly line delivered enormous benefits: space saving, productivity improvement, capacity increase and inventory control.
This technique is not new. It is widely used in two-wheeler and three-wheeler manufacturing. That is one reason customers do not have to pay an advance and wait six months for a motorcycle as they once did.
The belief that “we should start assembly with whatever BOM is available and wait for the remaining parts” has been passed down from generation to generation of production engineers.
It cannot be broken easily. It requires equally strong management conviction—and patience!
.... PART 2 ENDS
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