How to reduce lead time in machine shops?
In my previous article, I explained how and to what extent, having shorter lead times was a competitive advantage for most machine shops. We will now see the type of tools used to achieve this reduction in lead time. They are ranked in an increasing order by their difficulty of implementation and the magnitude of change in mindset that is required. I have also added links to a few extra resources if you want to go deeper into these topics.
The first thing you should consider is reducing your set up times. This may seem obvious, but if you’re still in the process of shifting your production towards High-Mix Low-Volume (HMLV), you may be focusing more on optimizing cycle time than set up time. Moreover, long setup times drive people to not respect scheduling because it seems more efficient to group jobs that have the same setup even if their due dates are very different. The problem is that jobs will be completed too late or too early but never on time.
The most common way to achieve a reduction in the duration of changeovers is to use Single-Minute Exchange of Die (SMED) techniques. This is a basic tool of Lean Manufacturing and it can be very powerful if applied properly. The first step is to document your current process. Follow operators and record exactly what they do during setups. Film several operators doing the same setup and discuss with them what they did differently and how they can learn from one another. Also share best practices to help them perform changeovers more efficiently. The goal is to keep the machine running as much as possible. List all the activities that are done when the machine is stopped and think about how they could be done or prepared while the machine is running. For further improvements, consider developing standardized procedures and fixtures. SMED is a relatively easy way to reduce lead time because the risk is really low and the first results can be achieved with little investment.
To help you with this, we have compiled a comprehensive guide on how to reduce setup times through SMED.
An additional way for machining companies to reduce lead time is to limit the amount of work in process (WIP) at any given time. This can be done by implementing a pull system where jobs are released for production only where and when there is enough capacity, i.e. when previous jobs have been completed. This means that you only have one queue of orders waiting to be released, instead of having many queues in front of every machine if you were to push jobs to the shop floor as soon as they are ready. By doing so, not only do you free up cash that was tied up in WIP, but you also dramatically impact your lead time. The more queues there are, the more likely that jobs will have to wait longer than they need to due to reprioritization and cherry-picking (people tend to choose the easiest job instead of the most urgent one).
Limiting WIP is tricky to achieve because it requires you to change the way you plan and schedule orders. To make this easier, you can use a tool from the Theory of Constraints: Drum-Buffer-Rope. Basically, this means that you release a job only when your bottleneck is done with another. New jobs (input) and bottleneck (output) are tied by a rope. The buffer is there to make sure that the bottleneck doesn’t run out of parts to process in case there is a slowdown ahead of it. The drum represents the pace of the bottleneck. Other machines have no need to run faster because any gain would be wasted as the limiting factor will always be the slowest machine in the process.
If you want to know more about Drum-Buffer-Rope and how it was used to reduce WIP in supermarkets during the Covid-19 crisis, you should definitely check out this post.
If you always plan at 100% capacity, any breakdown or unforeseen difficulty will lead to delays and broken promises. This is a reality that you experience every day in your production and it is very well explained by mathematical models. The Kingman Formula states that waiting times rise with the duration and the variability of your process, and increase exponentially with utilization:
where u is the utilization between 0 and 100%, Va and Vp represent the variability of the time of arrival and of the processing time respectively, and tp the processing time itself. For a given variability and processing time, the waiting time will look like this when utilization increases:
Here is a video that explains what happens if you want to utilize 100% of the capacity. The most important benefit of extra capacity though is not giving yourself that little margin for error. True impact is seen when it is not being used, i.e. when your people don’t have jobs that they need to do right now. This means that they can focus on long term activities, for example learning new skills, cross training so they can operate on more machines or finding things that could be improved in the way they work.
A good way to promote continuous improvement – also called Kaizen – in your company is to actually dedicate time for it instead of treating it as a “if there’s time left” kind of thing. In practice, planning at around 80% capacity is enough to absorb breakdowns while allowing some time for training and improvement projects.
This tip is the hardest to implement because it is the hardest to justify to business controllers. Our tendency is to always fully load our machines, and you can more easily measure the cost of an unused workforce than the results of improvements that they will come up with. But companies that want to drop their lead times in a sustainable way in a HMLV environment do invest in spare capacity.
Lead time reduction principles are easy enough to understand but applying them often proves to be challenging. A good approach would be to:
- Recognize how important a shorter lead time is! You should shift your mindset to stop thinking about how much you cost but rather realize how much value you provide.
- Ask yourself, what is the cost of one day of lead time?
- Have courage to take action and possibly invest to get your company to change the way it works and focus on lead time. In the end, change management and leadership are essential for such projects to be successful.
Please share your thoughts in the comments! What are your best tips to reduce lead time?