Efficient Manufacturing - July 2015

Efficient ManufacturingDriving productivity on the shop floor

These days, manufacturing units need to take a hard look at implementing programs for constant productivity increase. Productivity improvement can come from labour productivity and resource productivity, which includes asset productivity and yield. The article briefs on the areas targeted in driving productivity and waste elimination

Indian companies are witnessing the benefits of increased productivity in the shop floor. There is merit in moving away from the low-cost, low-productivity cycle. Market forces are expecting higher quality standards and competition is resulting in shorter product life cycles. Thus, there are always changes on the shop floor. Constant change makes it difficult to continue a model where people slowly learn from “experience”.

 Driving productivity on the shop floor

At the same time, labour market is undergoing a substantial change. Labour is getting harder to find and attrition levels are high. In future, the cost of labour is likely to increase more rapidly, as the service sector starts making inroads out of the metro centres and costs rise across the board.

Increasing Productivity

In such a situation, manufacturing units need to take a hard look at implementing programs for constant productivity increase. When one looks at individual lines in the profit & loss statement, productivity increase programs often seem to increase each line item. However, the overall effect is for unit costs to decrease, as volumes more than offset the individual cost increases. This is a much healthier way for a manufacturing unit to stay fit, than it is to conduct a deep cost cutting program. Increasing productivity is equal to reducing cost.

Productivity quoteA severe cost cutting program sometimes cannot be sustained as it expects too much from the people and equipment, without giving them the support needed to sustain it. Also, cost cutting sometimes moves costs from obvious areas to other areas that are less obvious. For example, controlling the cost of manpower can lead to a drop in skills. This could lead to a drop in quality levels and increased rework. Productivity increase, on the other hand, is a virtuous cycle. The increased output per person lowers unit costs. The focus on skilling and the value of each worker leads to a more positive work environment and individual respect, often valued higher than marginal increase in salary.

 Opportunities

So, where exactly are the main opportunities that can be used to drive up productivity and eliminate waste? What are the kinds of tools that are needed? The first question is an easy one: there are so many areas to improve upon and any experienced manufacturing person knows what these are. Productivity improvement can come from labour productivity and resource productivity, which includes asset productivity and yield. The areas typically targeted in driving productivity and waste elimination are design improvements, process capability improvements and people management.

Design Improvements

Many shop floors have grown organically, adding equipment when required, where space is available. In factories, it was found that layout redesign can help reduce material movement; in one case reducing indirect manpower requirements by 30%. There was also a spin off reduction in inventory and handling trolleys. The exercise required an industrial engineering study and some simulation to understand loading patterns. The outcome was a very quick return on investment.

Machine settings were another area of opportunity. However, a quick design of experiments done on the shop floor shows how these settings can be modified to reduce cycle time, leading to increased capacity, reduced inventories and better supply chain response time.

Process Capability Improvements

Process capability improvements make things more predictable. If the production process is highly predictable, schedules can be made tighter, freeing up more capacity. Work plans can be prepared, ensuring material and labour is correctly available, without waste. There is a lot that can be done to increase process capability in the shop floor today. The machine settings discussed earlier help tremendously. Also, ensuring machine uptime is critical. Many machines that are poorly maintained, or have been bought second hand, require high levels of skill to ensure their availability is good. A good maintenance plan involves not just preventive maintenance, but also a good root cause analysis and control mechanism implementation.

Finally, planning plays a huge role in impacting process capability. Unfortunately, this is often ignored. As a result, machines idle because all the material required for a job is not available. The quality of planning in our factories is very poor. The outcome has been goods produced that are not required just then. They sit in finished goods stores.

People Management

Both the topics covered so far require superior skills. They require design & processes, but to operate them, better skilled people on the shop floor and in support functions are essential. This is not necessarily about a whole lot of training. To start with, we need to have people available. Today, in larger manufacturing hubs, labour attrition is a concern. Also, contract labour percentages tend to be high, lowering the interest in investing in people.

Productivity Image 2When people are treated as commodity resources, they, too, tend to have a similar attitude towards employers. Often, there is a poor understanding of the reasons for absenteeism and a poor system of retaining people. Absenteeism, of course, strikes back as increased overtime and lowered productivity. It is not uncommon for workers to be earning 10-15% of their total wages from overtime. The HR department conducting a survey and a root cause analysis of absenteeism can trigger small but important management actions. These, in turn, can lower absenteeism and reduce churn.

Increasing the percentage of permanent labour usually results in higher skilled people for continuous investment in them to upgrade their skills. However, individual skill is not enough to meet the requirements. There have to be the correct metrics to govern the shop floor and a review mechanism that has the discipline to lock in the new practices. For example, with superior planning methods, it is more important for a line supervisor to review shift-wise plan versus actual production for each machine and line than it is to look at that day’s customer order fulfilment by the plant.

Supervisors and managers have to learn to ask the “right” questions to drive the right behaviours. The metrics need to be supported by a governance mechanism that helps the people on the line spot errors and to correct them. Simply doing the first is not enough. The biggest changes happen, when the people change.

Conclusion

Under the ‘Make in India’ initiative, the National Manufacturing Policy has several goals, one of which is to enhance the global competitiveness of Indian manufacturing. All goals can be substantially helped by changes in Government policy and procedures. However, it cannot only be done by the Government. There is much to change in our shop floors. Driving productivity and eliminating waste is a good place to start.

The author is Partner & Managing Director – Indian Operations, CGN & Associates India Pvt Ltd