INDUSTRIAL SUPERSTITIONS — PART 4
Minish Umrani (Industrial Consultant)
Mobile: 9822390363 | minish@leansigmasolutions.in
[INCOMPLETE BOM]
Whether an OEM is small, medium or large, the broad production flow is similar. OEM products are generally assembly products such as generators, inverters, gearboxes, machines and electrical equipment.
When a sales order arrives, Planning or Production issues a production order. A material requisition is sent to Stores. Stores issues whatever material is available. Purchase orders are raised for the balance, and the Purchase Engineer promises that the missing material will arrive in two or four days.
Nobody usually believes the promise, but there appears to be no alternative. So assembly begins with whatever material is available.
Thus, before assembly starts, the complete BOM is often not available. Major parts may be present, but electronic components, actuators, solenoid valves, relays or other high-value/high-lead-time parts may be missing. Even special nuts and bolts, PTFE washers or oil seals may not be available.
The belief is: “Let us prepare the rest of the assembly while we wait. Once the missing parts arrive, we will fit them and dispatch immediately.”
This practice has continued for years in many factories. And of course, one may ask: what is wrong with that?
I have seen this belief protected almost religiously in production. In nearly every OEM—large or small—with which I have worked, I have seen engineers who strongly defend it.
It is as deeply rooted as a traditional ritual. Senior engineers pass this practice on to fresh engineers, and the next generation continues it.
The belief is extremely harmful. Yet it is deeply embedded from the owner and senior management down to the junior engineer. Assembly in this manner becomes standard practice, and nobody feels that anything is wrong.
The major disadvantages are:
• Manufacturing lead time increases.
• Large floor space is required.
• On-time deliveries fail.
• WIP increases and the interest cost on it keeps increasing.
• Manufacturing cost increases.
I have many examples where making 100% of the BOM available at one time created major benefits. Even this one change can drastically reduce assembly-on-floor, or actual manufacturing time.
If a takt-based assembly line is created as well, the company can respond to customer demand on time and achieve 100% on-time delivery. Reduced manufacturing lead time also increases workplace capacity and productivity.
About a year and a half ago, a large machine manufacturer in Ahmedabad invited me for a visit. It was a greenfield layout project. They had acquired about two acres and wanted to shift machine production from several existing locations.
In a greenfield Lean layout, the machinery, process flow and assembly stations are designed first, and then the architect designs the building around that layout. This is easier than building the factory first and then trying to fit the machinery into it.
Their existing manufacturing system worked like this:
They generally sold machines from stock. If an order contained three or four different machines and one was unavailable, they had to wait for the batch of that machine to be completed. A batch contained 20 machines and took 30 days.
Once the batch was complete, one or two machines from it were dispatched along with other machines already available. Therefore, even with stock in hand, timely delivery was difficult. Finished-machine stock kept increasing, and some machines remained unsold for two months.
Around 30 such batches of 20 machines each were running at the same time. They were completed on different dates and accumulated in finished-goods stock. Imagine the amount of WIP and finished inventory this system created.
The root cause was that the complete BOM could not be made available simultaneously. Some parts were imported and some had long lead times. Once 70–80% of the BOM was available, assembly started. As individual parts arrived, they were supplied to the batches. This had become a years-old practice.
Space was becoming insufficient, so they planned a new building. Their annual turnover was ₹150 crore, and they could potentially reach ₹400 crore within five years.
We assembled one machine using 100% BOM availability. The actual assembly time was only eight hours.
That meant there was no need to start a batch of 20 machines and run it for 30 days. One team could assemble 30 machines in 30 days. More importantly, there was no need to manufacture 20 machines and lock money into unnecessary stock. If the order required two, three or ten machines, only that quantity could be produced.
The takt time was two hours. Takt time is available time divided by average daily demand. So logically, one machine was required every two hours.
We divided the eight-hour total cycle time into four stations of two hours each and assigned the required operations to each station.
The first machine was ready after eight hours, and every subsequent machine was completed every two hours.
The only rule was: the line would not start unless 100% of the BOM was available.
Changing this mindset was difficult, but management was committed. Within two months they prepared the system and created a takt-based assembly line.
With 100% BOM availability, one machine began coming out every two hours. That meant five machines per day, or 150 machines of 30-day capacity. And importantly, they could make exactly the machines they needed.
Their current monthly sales of that machine type were only 50–60 units.
Even more importantly, the complete assembly line fitted on only one floor. The other two floors became completely free.
The company therefore did not need to spend several crore rupees on a new facility.
The 100% BOM rule and takt-based assembly line delivered enormous benefits: space saving, productivity and capacity improvement, and inventory control.
This technique is not new. It is used extensively in two-wheeler and three-wheeler manufacturing. That is why customers no longer have to pay an advance and wait six months for a motorcycle.
The belief that assembly should begin with whatever BOM is available and the remaining parts should be fitted later has been passed down through generations of production engineers.
It cannot be broken easily. It requires strong management conviction—and patience!
.... PART 4 ENDS
Minish Umrani (Industrial Consultant)
Mobile: 9822390363 | minish@leansigmasolutions.in
[INCOMPLETE BOM]
Whether an OEM is small, medium or large, the broad production flow is similar. OEM products are generally assembly products such as generators, inverters, gearboxes, machines and electrical equipment.
When a sales order arrives, Planning or Production issues a production order. A material requisition is sent to Stores. Stores issues whatever material is available. Purchase orders are raised for the balance, and the Purchase Engineer promises that the missing material will arrive in two or four days.
Nobody usually believes the promise, but there appears to be no alternative. So assembly begins with whatever material is available.
Thus, before assembly starts, the complete BOM is often not available. Major parts may be present, but electronic components, actuators, solenoid valves, relays or other high-value/high-lead-time parts may be missing. Even special nuts and bolts, PTFE washers or oil seals may not be available.
The belief is: “Let us prepare the rest of the assembly while we wait. Once the missing parts arrive, we will fit them and dispatch immediately.”
This practice has continued for years in many factories. And of course, one may ask: what is wrong with that?
I have seen this belief protected almost religiously in production. In nearly every OEM—large or small—with which I have worked, I have seen engineers who strongly defend it.
It is as deeply rooted as a traditional ritual. Senior engineers pass this practice on to fresh engineers, and the next generation continues it.
The belief is extremely harmful. Yet it is deeply embedded from the owner and senior management down to the junior engineer. Assembly in this manner becomes standard practice, and nobody feels that anything is wrong.
The major disadvantages are:
• Manufacturing lead time increases.
• Large floor space is required.
• On-time deliveries fail.
• WIP increases and the interest cost on it keeps increasing.
• Manufacturing cost increases.
I have many examples where making 100% of the BOM available at one time created major benefits. Even this one change can drastically reduce assembly-on-floor, or actual manufacturing time.
If a takt-based assembly line is created as well, the company can respond to customer demand on time and achieve 100% on-time delivery. Reduced manufacturing lead time also increases workplace capacity and productivity.
About a year and a half ago, a large machine manufacturer in Ahmedabad invited me for a visit. It was a greenfield layout project. They had acquired about two acres and wanted to shift machine production from several existing locations.
In a greenfield Lean layout, the machinery, process flow and assembly stations are designed first, and then the architect designs the building around that layout. This is easier than building the factory first and then trying to fit the machinery into it.
Their existing manufacturing system worked like this:
They generally sold machines from stock. If an order contained three or four different machines and one was unavailable, they had to wait for the batch of that machine to be completed. A batch contained 20 machines and took 30 days.
Once the batch was complete, one or two machines from it were dispatched along with other machines already available. Therefore, even with stock in hand, timely delivery was difficult. Finished-machine stock kept increasing, and some machines remained unsold for two months.
Around 30 such batches of 20 machines each were running at the same time. They were completed on different dates and accumulated in finished-goods stock. Imagine the amount of WIP and finished inventory this system created.
The root cause was that the complete BOM could not be made available simultaneously. Some parts were imported and some had long lead times. Once 70–80% of the BOM was available, assembly started. As individual parts arrived, they were supplied to the batches. This had become a years-old practice.
Space was becoming insufficient, so they planned a new building. Their annual turnover was ₹150 crore, and they could potentially reach ₹400 crore within five years.
We assembled one machine using 100% BOM availability. The actual assembly time was only eight hours.
That meant there was no need to start a batch of 20 machines and run it for 30 days. One team could assemble 30 machines in 30 days. More importantly, there was no need to manufacture 20 machines and lock money into unnecessary stock. If the order required two, three or ten machines, only that quantity could be produced.
The takt time was two hours. Takt time is available time divided by average daily demand. So logically, one machine was required every two hours.
We divided the eight-hour total cycle time into four stations of two hours each and assigned the required operations to each station.
The first machine was ready after eight hours, and every subsequent machine was completed every two hours.
The only rule was: the line would not start unless 100% of the BOM was available.
Changing this mindset was difficult, but management was committed. Within two months they prepared the system and created a takt-based assembly line.
With 100% BOM availability, one machine began coming out every two hours. That meant five machines per day, or 150 machines of 30-day capacity. And importantly, they could make exactly the machines they needed.
Their current monthly sales of that machine type were only 50–60 units.
Even more importantly, the complete assembly line fitted on only one floor. The other two floors became completely free.
The company therefore did not need to spend several crore rupees on a new facility.
The 100% BOM rule and takt-based assembly line delivered enormous benefits: space saving, productivity and capacity improvement, and inventory control.
This technique is not new. It is used extensively in two-wheeler and three-wheeler manufacturing. That is why customers no longer have to pay an advance and wait six months for a motorcycle.
The belief that assembly should begin with whatever BOM is available and the remaining parts should be fitted later has been passed down through generations of production engineers.
It cannot be broken easily. It requires strong management conviction—and patience!
.... PART 4 ENDS
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