Powered by ZigaForm version 4.0

Mistake #3

In this lesson we’ll tackle the third massive mistake: a failure to create a “Plan For Every Part”. This requirement is pretty much what the title says it is: the creation of a detailed plan for every item that you will need to manage within your Target Area. The Target Area could be the entire factory, which of course is your long-term goal, but it could also be an implementation project that you’re working on, like a new production line or even a small production cell.

We’ll go over the different types of plans that you’ll need to develop in a minute, but first let’s answer the question you may have: aren’t we already doing this? Why is this a “Massive Mistake”? Let’s clarify the difference between ordinary planning, and what we’re talking about here.

I’m going to assume that your company already has a manufacturing system of some kind. There are a lot of software choices for ERP or MRP systems. The bigger players include SAP and Oracle, but there are dozens, maybe hundreds of systems. At heart, they all include some basic functionality related to materials, including the following modules: an Item Master module where you define and store characteristics of parts, a Purchasing Module to manage supplier-related information, an Inventory Control Module to track quantities and locations, a Master Schedule Module to capture demand-related information, and many other sub-modules that perform various manufacturing-related functions. So you have everything that you need, right? Use your system and have automatically have a Plan For Every Part.

Not exactly, and here are the problems. First, there may be data elements that you do want to track, but they are not in your legacy manufacturing system. You may, for example, want to analyze materials based on a Kanban strategy, and that functionality isn’t included.

Second, and more importantly, the data that you need in a legacy ERP system is scattered all over the place, within the various modules that we just discussed. Even if it’s all there, it’s hard to find, and even harder to manipulate, sort, filter and organize in one place.

Could a large ERP system provide this kind of flexibility? Maybe, and if yours does, congratulations. You can move directly to Go and collect $200. But chances are good that it does not, and you are going to need a different tool.

Let me say up-front that we’re not big fans of running large companies with spreadsheets. Data is not as secure, it’s harder to share, files can get lost, data validation is not as good. But the spreadsheet tool is the most flexible for what we need for a Plan For Every Part: a data repository where you can see everything in one place, that is easy to filter, easy to sort, and easy to add additional columns as needed.

Step One:  Define the information needed for export into a spreadsheet. This data falls into several logical categories, and you’ll probably need some IT help to locate it and create a download file. In order to not get totally overwhelmed with data, let’s focus on retrieving those items you will definitely need. Here are the basic categories.

Part Related Data. This information will come primarily from the Item Master table, and includes all active part numbers and descriptions. Other characteristics of a part will include the commodity code, ABC code, the container type, the weight, key dimensions, special handling codes, nesting characteristics, and unit cost. Feel free to add to this list, as long as it is data that you will use.

Supplier Related Data. Supplier information may not be a 1-to-1 relationship to a part, since you could have multiple suppliers for the same item. Nonetheless, capture here your key supplier(s), their physical distance from the place of use, their standard package quantity, carrier information, their supplier certification status, on-time delivery score, ability to respond to Pull signals, etc.

Inventory Related Data. In this section you will want to retrieve data regarding on-hand inventory quantities, as well as your current storage locations. Being able to compare current-state inventory quantities with future planned quantities can be a great way to justify the project effort, assuming of course that the inventory goes down. Current storage locations may also change in the future, but this is a good starting point. Capture here current usage data: consumption in units per day, per week or per month.

That’s a good start, but add any data that will be useful in your analysis and planning efforts. Once you have the data, you can start planning. This may sound a bit daunting if you have thousands of part numbers, but fortunately parts fall into logical groupings, and if you plan well for one item in a group (like fasteners), then the remaining items will be very similar or identical.

So what do you do when you “Plan”? You need to complete the blank columns in your Plan For Every Part spreadsheet, with the following types of information:

  • Container types and quantities
  • Inventory levels at each storage location and Supermarket
  • Standard Pack quantities
  • Delivery methods and strategies
  • Replenishment signal method
  • Conveyance method
  • Line Ready status

Our recommendation is to start with a controlled area, do a 100% job of Planning For Every Part, and then continue to the next logical area. Don’t jump around, especially if you have a lot of parts to plan for.

Three final suggestions: Point 1: Put someone in charge of your PFEP database or spreadsheet, and run all changes through that person. Allowing different people to actually make changes is a recipe for disaster. People can use the file in “read only” mode, but have a single point of responsibility for actually making changes. Point 2: Use the PFEP database for continuous improvement, not just for a new project. This should not be a one-time only effort. Use it to continually refine and improve your Material Flow system. And Point 3: upload important information back to your main ERP system. The ERP system is the “real” data, and you don’t want it to be out of sync with your PFEP database.

OK, that was a whirlwind tour of the subject of Plan For Every Part, and some of you might be thinking “that was pretty basic”. In fact we often get feedback alone the lines of “Thank you for your simple introduction to the subject of xyz”. Of course there’s more to say about PFEP, but also appreciate the fact that Lean actually is pretty simple. Pig-headed determination and discipline are more important than a complicated and “sophisticated” methodology. And maybe that’s why it is rare, at least for us, to find companies that are using the PFEP process fully.

Where to go from here? The next step is to get educated, beyond this short report. We (Leonardo Group) have partnered with arguably the world leader in material management, Toyota Material Handling, to present a three-day intensive workshop on this subject. Check out the Lean Design Studio calendar for upcoming dates.