Intelligent Manufacturing € May € 1995 € Vol. 1 € No. 5

Agile People for Agile Manufacturing

By Bob Turek

Today's agile manufacturing businesses require people whose middle name is "change" - not those who design and implement a new business process and then hesitate when their project needs upgrading. We need to wed ourselves to change instead of the created process or product; this is hard to do because we pride ourselves on a newly designed function or product feature instead of the change required to get results.

A "servant" mentality which focuses on the achievement of the team and the organization is required. These types of people are rare, but when properly positioned within a company, tend to breed agile attitudes. They are the key to becoming an "agile" manufacturer.

Change can be defined as alteration to job functions, business processes and products. All of these types of change are crucial to becoming agile. Agile is, in a few words, the ability to respond to internal innovation and external market opportunities in a high quality, timely and cost-effective manner. Agile people make agile businesses. Agile people are change agents, the "doers" or "can do" people. They like to resolve one issue and get on to the next one, sometimes at the risk of making the wrong decision; however, the typical fruit of their labor is a tremendous increase in productivity in a function that affects many people.

One simple example is designing an innovative use of the master schedule so that product groups, rather than individual products, are forecast. A more efficient function results, which leads to quicker reaction to change and increased impact of a key area. Think about the times when increases in productivity occurred and who was responsible. This is how you begin to identify your agile change agents.

Improvements resulting from redesign of functions are wonderful. The real power of an agile person is when they can become agile managers. The case study that follows reveals a situation where an agile change agent was utilized to facilitate change in a company. This example, while unusual, is a target for you to shoot for; it will encourage you to find and use agile change agents who can manage the kind of process change required in today's businesses.


The Agile Project Manager: A Case Study
Selecting a project manager is an important point in any implementation. A critical issue is what role that project manager plays after the project ends. The project manager in this case study is unusual in that he assumed new positions both during and after an implementation at a Southern California manufacturer of aerial refueling systems. This agile employee was involved with MIS, materials and manufacturing management at crucial points in the effort.

The results were dramatic: 75% reduction in work orders on the floor, 60% reduction in warehouse space, the shutdown of two buildings and reductions in lead times measured in months. A new cell-based plant layout, reorganization of warehouses and implementation of "visual" shop floor control systems were accomplished. Perhaps the most important result was the development of a respected, top-level manager with "company relevant" MIS, materials and manufacturing experience.


The Baseline Situation
In the four years prior to implementation, the company grew from $15 million to $100 million. Facilities included 120,000 square feet for government warehousing and 300,000 square feet for other manufacturing and administrative operations. You could travel up to three miles to get from a plant to a warehouse.

MRP systems were weak and archaic. Typical aerospace/defense requirements, such as actual cost, multi-warehouse/lot/project control and MRP by project, were not satisfied by software or systems. The software that was in place was batch-oriented without just-in-time (JIT) functionality. Material flows were terrible; in some cases, parts would travel 7-8 miles throughout the manufacturing facility. Inventory accuracy was unmeasurable and most of the bills of material were not in the system. There was no formal facilities planning function.


Project Management
Ray June was hired by this manufacturing company to perform the project management role. He quickly assumed MIS responsibilities after system selection. We will see later that Ray assumed materials management and manufacturing group management responsibilities. Throughout these roles Ray was directly responsible for virtually every major implementation activity.

Ray had experience implementing systems in a variety of environments and felt that one must have a firm grounding in MRP II principles before attacking JIT issues. Ray used the new MRP system as a tool to implement JIT. This was done through education and application of MRP II tools with an emphasis on how MRP complements JIT. The company began to realize that MRP goals of increasing customer service, reducing inventory and increasing productivity are also those of JIT.

The materials management function turned over every six months or so. This inconsistency led Ray to volunteer for the materials management position until he could groom a permanent replacement. This is a perfect example of the "servant" attitude of agile people. Ray was now in a position to continue the change process.


Consolidating Inventory
The system had become much too complicated to work with. Part lot sizes were reduced, along with the sheer number of different lot sizing techniques. Cheaper, smaller components were put on order point. The buying of these items was transferred to the warehouse to free up purchasing time for use of the MRP output. MRP was basically run product line by product line and used as the major input to purchasing.

Inventory was reduced overall and consolidated from remote facilities. Progress payments were a major stumbling block. The attitude that "we should buy it because we get paid for it" prevailed and was a difficult cultural change to make. The change to buy components only when needed was accomplished after a return-on-investment study was performed showing reduction of transport costs, utilities costs and the elimination of a 30,000 square foot building.

Project pegging of inventory was also eliminated where not required. The company was not reflecting transfers of inventory accurately anyway.

The implementation was starting to reap some benefits. Inventory accuracy reached an all-time high of 93% and on-time performance on customer orders had gone from 30% to 60%.


Cell-Based Manufacturing
The move to cell-based manufacturing was a critical point in the implementation. Ray June left the materials management position to become manufacturing group manager at the beginning of the phase. Work-in-process control on the shop floor was a problem. The simplification of routings and reduction of reporting points helped, but there were still too many people on the floor in a disorganized fashion. In his new position, Ray decided to consolidate all manufacturing into one plant. All assembly areas were set up adjacent to the component part warehouse and all fabrication areas were set up adjacent to the raw material warehouse.

Work centers, which had been haphazardly created and controlled, were reorganized into cells. A "new" and "clean" environment was essential to the success of cell-based manufacturing. The level of pride in the facility increased dramatically.

Manufacturing space was reduced by 60,000 square feet by eliminating two buildings. The large lot sizes and bad scheduling that had contributed to the manufacturing space problems were now a thing of the past.


Consolidating the Office
The office environment was dramatically changed from a widely dispersed, non-communicative environment far from the manufacturing floor to one where planners, manufacturing engineers and shop foremen worked side by side. This new approach facilitated communication and faster decision making, thereby supporting the more demanding information and support needs of the manufacturing facility.

The environment was now ripe for implementation of ideas that would improve performance, made by a team that was empowered to immediately apply them. An example of these ideas was a program that developed and monitored key tooling characteristics to better predict when tooling should be replaced or reworked.

Customer orders were now being shipped on time 80% of the time. Head count and overtime decreased. Expediters were eliminated, manufacturing personnel were reduced by 15%, overtime went from 13% to 3%, and planners and buyers were decreased 50%.


Finding Your Agile Change Agents
The key thread throughout the implementation was Ray June. While one might argue that Ray achieved some personal gain from the implementation process, that was not his focus. Indeed, there was a high risk of failure each time Ray assumed a new position. He could have stayed in the relative safety of the project management role, but realized that major decisions could not be made quickly at that level. "No fear" is another requirement of an agile change agent.

So where do you find a change agent? The Ray Junes of the world are rare. However, you will find change agents in specific functions covering a smaller scope of your business. As we discussed before, think about the times where increases in productivity occurred and who was responsible. Find those with a "can do" attitude that puts company results ahead of personal gain. Your search for and development of agile people must begin now. Your competition isn't waiting.

Bob Turek is a Los Angeles-based senior consultant for Visibility (Wilmington, Mass.), a developer of business information systems for agile manufacturers. He can be reached at (805) 268-8808.