Intro: Welcome to the E6S-Methods podcast with Jacob and Aaron, brought to you by E6S Industries, your source for expert training, coaching, leadership, and consulting in continuous performance improvement methods like Lean and Six Sigma. In this episode number 73 we continue our "8 wastes" discussion with an in-depth look at Overproduction and Inventory. "Go the Extra MILE MR TOYOTA - Part 2. Here we go. http://bit.ly/E6S-073; http://bit.ly/E6S-iTunesRecall: Go the extra MILE: (Mitigate, Investigate, Litigate, Eliminate) ; MR TOYOTA (Motion, Reserves, Transport, Overproduction, Yield Problems, Over processing, Talents, Awaiting Availability)I Over Production – Making more than you needa. What it “looks” likei. Inventory-1. WIP2. Finished Goods – either stored in the warehouse or pushed onto the customer 3. Also includes over purchasing of materials b. Examples i. Manufacturing1. Producing 1000 Liters to fulfill a 100 Liter customer order, and stocking the rest expecting it to sell.2. Purchasing 10000 specialty fasteners to receive a bulk rate/lower price, but only 100 are used per week.3. Producing aircraft parts in 2 months in advance of their production schedule to achieve billable hours for the monthii. Service Industries or Back Office1. Monthly “TPS” reports that no one reads2. Hitting “Reply All” or needlessly copying others on emails3. Excessive meetings4. Meaningless, or bad metrics5. Too many ISO controlled procedures6. Hiring Process: Requiring full background, salary history and references before even interviewing a candidate for a jobc. Common Root Causes (May need 5 Why’s)i. Manufacturing1. Producing to forecast, rather than to order2. Minimum order quantities (MOQ) –a. large batch sizesb. Long lead times3. Economic Order Quantity (EOQ) calculationsa. Highly biased for overstock. Presumes running out of stock is much worse than being overstocked.4. Poor business practices, metrics that allow or promote bad behaviorsii. Service Industries or Back Office1. Business-as-usual. Processes and reports that were once necessary, but carried on after their usefulness. Failure to kill the work.a. Band-aid due to a business process failure, audit finding or regulatory issue2. Ineffective management, staying busy and “work creep”3. Perfectionismd. Potential Remedies i. Pull back on the RM orders. Test the reliability and risk of your supply chain. Balance carrying costs vs. cash flow requirements.ii. Training in best practices for meetings and emailsiii. Take a critical look at all reports1. Sometimes just stop doing them, and see who complains (plea for forgiveness rather than permission)iv. Move closer to Just-in-time (Pull), make to order rather than forecast1. Easier said than done. Requires cooperation throughout the supply chain and numerous internal creative solutions.II Inventory – Work-in-process, Queue, Backloga. What it “looks” likei. Manufacturing1. Work in Process (WIP)- piling up between work stations2. Raw material and finished goods stockii. Service Industries or Back Office1. WIP in paperwork, backlog2. Caller queuing, lines of people waiting, b. Examplesi. 1000 plastic parts stocking up between molding and paintingii. Patients in the waiting roomiii. Unprocessed emails and phone messagesiv. Expense reports in the queue for audit and completion c. Common Root Causes (May need 5 Why’s)i. Batching1. equipment constraints2. supply chain constraints3. long setup timesii. Push production and capacity constraints – making faster than a downstream process can handle, and still continuing to produce, regardless1. Belief that productivity is related to equipment uptime regardless of downstream demand. Often a result of capital ROI expectations.iii. Variable flow and demand surgesd. Potential Remedies i. Value-stream map, process load chart (plus brainstormed actions)ii. Kanban, visual management, start/stop signals, queuing systemsiii. Cellular designiv. Setup time reduction (SMED-Single minute exchange of die)v. Same as Over production1. Pull back on the RM orders. 2. Training in best practices for meetings and emails3. Take a critical look at all reports4. Move closer to Just-in-time (Pull), make to order rather than forecastOutro: Thanks for listening to episode 73 of the E6S-Methods Podcast. Stay tuned for episode number 74, Part 3 in this series on the 8 wastes, where we go into greater detail on Waiting and Skills. If you would like to be a guest on the podcast, contact us through our website. Join our mailing list! Subscribe to past and future episodes on iTunes or stream us live on-demand with Stitcher Radio. Find outlines and graphics for all shows and more at www.E6S-Methods.com. “Journey Through Success”
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