Constraints and the Smaller Manufacturer

The Manufacturing Extension Partnership (MEP)

The MEP is an alliance between the National Institute for Standards and Technology (part of the U.S. Government’s Department of Commerce) and a fleet of local manufacturing assistance partner centers, located in all 50 states. Local MEP centers are organizationally diverse. Many are associated with educational institutions. All focus on serving smaller manufacturing businesses. [1]

The NIST monitors the performance of local MEP centers through surveys of MEP clients. For the governments FY 2014, NIST reports that the MEPs served 30,131 clients, helping those manufacturing firms reduce costs by $1.2 billion, create 18,789 new jobs and retain over twice as many more. [2]

NIST also surveys client firms about their business concerns (“challenges”). The latest survey garnered 6,069 responses from 8,166 client firms selected to participate. That survey presented a list of nine challenges. Those surveyed were asked to identify which three of the nine challenges they deemed most pressing for their firm over the next three years. Each of the nine challenges was “scored” by the percentage of the respondents that indentified that challenge with one of their three checkmarks. [3]

The Top Three Responses

#1 – Continuous Improvement (69.6%) – In my view, continuous improvement programs need be built on a sound operating environment. The quick gut check is to assess your accident rate, downtime, absentee rate and product quality incidents. If these factors aren’t where they ought to be, the operating environment in your firm isn’t “sound”, hence initiatives like Lean, Six Sigma or ISO will have little chance for success.

To correct an unsound operating environment, my usual recommendation is to start with safety. A good safety program is foundational to a sound operating environment. See On Safety and Sustainability: http://jerasustainabledevelopment.com/2013/10/24/on-safety-and-sustainability/

Equipment reliability usually comes next. This requires a structured maintenance program. See Structured Maintenance: http://jerasustainabledevelopment.com/2012/01/12/structured-maintenance/

Once the four “gut check” issues – accident rate, downtime, absentee rate and product quality incidents – compare well with other factories, then initiatives like the introduction of Lean concepts have a good probability of success. See Thriving with Lean: http://jerasustainabledevelopment.com/2013/09/05/thriving-with-lean/

#2 – Growth (53.4%) – In my view, it is necessary to formulate a working definition of “growth”: First, should top line growth (revenues) be emphasized, or should growth in profits be emphasized? Second, does the reason that your firm didn’t sell one more unit or earn one more dollar last year lie within the factory walls or without?

From here, actions can be taken to determine, address and correct whatever is currently constraining throughput (defined as goods and services invoiced). Once a constraint is relieved, the next constraint appears. (Otherwise, shipments would become infinite, wouldn’t they?). The process of identifying and removing active constraints continues indefinitely, within the factory walls, within the supply chain or in the market.

Theory of Constraints (TOC) provides insight as to locating constraints to growth. Lean manufacturing techniques, market analysis and value chain assessment are among the tools available for relieving constraints as they appear. Start with Creating and Capturing Value: http://jerasustainabledevelopment.com/2014/06/25/creating-and-capturing-value/ and Systems and Constraints: http://jerasustainabledevelopment.com/2013/09/26/systems-and-constraints/ [4]

#3 – Product Innovation (47.9%) – Management sage Peter Drucker said “If you don’t understand innovation, you don’t understand business.” Innovation is that important. But product innovation is only part of the picture. Innovation in other areas, including process innovation and, especially, business model innovation, also matter. Start with Three Modes of Innovation: http://jerasustainabledevelopment.com/2014/11/29/three-modes-of-innovation/ and On Transience and Innovation: http://jerasustainabledevelopment.com/2014/04/02/on-transcience-and-innovation/

For Smaller Manufacturers:

The NIST’s survey provides useful insight as to what manufacturing managers’ concerns and priorities are. Local MEP offices provide one avenue for addressing those priorities.

However, each manufacturer has its own set of concerns and priorities. My preference is to establish an individual plan for each manufacturer. That plan takes a systems approach by determining the firm’s current situation, establishing an operating system framework and formulating meaningful objectives. Then methods for identifying and tools for addressing the constraints to achieving those objectives are established. From my point of view, diagnosis comes before prescription. And the prescription – the tools for addressing the constraints as they arise – changes as one constraint follows another.

Chuck - Pacific 3Thoughtful comments and experience reports are always appreciated.

 

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

P.S: Contact me when your organization is serious about confronting 21st century realities.  — CH

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published weekly.


[1] Locate the MEP center nearest you at: http://ws680.nist.gov/mepmeis/FindYourLocalCenter.aspx

[2] The figures presented in this paragraph are from: http://www.nist.gov/mep/upload/MEP-PARTNERING-IMPACTS-2014-Final.pdf

[3] For more information on this survey, see: http://nistmep.blogs.govdelivery.com/keeps-night/

[4] Quality expert Bill Dettmer wrote an exceptional paper that introduces Theory of Constraints as a diagnostic tool used with Lean techniques as means to confront constraints. Bill’s paper is available at: http://www.goalsys.com/books/documents/TOCandLeanPaper-rev.1.pdf