[Jack B. ReVelle] Manufacturing Handbook of Best P(BookZZ.org)

ManufacturingHandbook of

Best PracticesAn Innovation, Productivity,

and Quality Focus

2002 by CRC Press LLC

Applying ManufacturingExecution Systemsby Michael McClellan

Back to Basics:Your Guide to

Manufacturing Excellenceby Steven A. Melnyk

and R.T. Chris Christensen

Enterprise ResourcesPlanning and Beyond:

Integrating Your EntireOrganization

by Gary A. Langenwalter

ERP: Tools, Techniques,and Applications for

Integrating the Supply Chainby Carol A. Ptak

with Eli Schragenheim

Integrated Learningfor ERP Success:

A Learning RequirementsPlanning Approach

by Karl M. Kapp,with William F. Latham

and Hester N. Ford-Latham

Integral Logistics Management:Planning and Control of

Comprehensive Business Processesby Paul Schnsleben

Inventory ClassificationInnovation: Paving the Way

for Electronic Commerce andVendor Managed Inventory

by Russell G. Broeckelmann

Lean Manufacturing:Tools, Techniques,

and How To Use Themby William M. Feld

Macrologistics Management:A Catalyst for

Organizational Changeby Martin Steinand Frank Voehl

Restructuring theManufacturing Process:

Applying the Matrix Methodby Gideon Halevi

Basics of Supply ChainManagement

by Lawrence D. Fredendalland Ed Hill

Supply Chain Management:The Basics and Beyond

by William C. Copacino

Handbook ofSupply Chain Management

by Jim Ayers

The St. Lucie Press/APICS Series on Resource Management

Titles in the Series


ST. LUCIE PRESSA CRC Press Company

Boca Raton London New York Washington, D.C.

ManufacturingHandbook of

Best PracticesAn Innovation, Productivity,

and Quality Focus

Edited byJack B. ReVelle, Ph.D.


This book contains information obtained from authentic and highly regarded sources. Reprinted materialis quoted with permission, and sources are indicated. A wide variety of references are listed. Reasonableefforts have been made to publish reliable data and information, but the authors and the publisher cannotassume responsibility for the validity of all materials or for the consequences of their use.

Neither this book nor any part may be reproduced or transmitted in any form or by any means, electronicor mechanical, including photocopying, microfilming, and recording, or by any information storage orretrieval system, without prior permission in writing from the publisher.

All rights reserved. Authorization to photocopy items for internal or personal use, or the personal orinternal use of specific clients, may be granted by CRC Press LLC, provided that $1.50 per pagephotocopied is paid directly to Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923USA. The fee code for users of the Transactional Reporting Service is ISBN 1-57444-300-3/02/$0.00+$1.50. The fee is subject to change without notice. For organizations that have been granted aphotocopy license by the CCC, a separate system of payment has been arranged.

The consent of CRC Press LLC does not extend to copying for general distribution, for promotion, forcreating new works, or for resale. Specific permission must be obtained in writing from CRC Press LLCfor such copying.

Direct all inquiries to CRC Press LLC, 2000 N.W. Corporate Blvd., Boca Raton, Florida 33431.

Trademark Notice:

Product or corporate names may be trademarks or registered trademarks, and areused only for identification and explanation, without intent to infringe.

Visit the CRC Press Web site at www.crcpress.com

2002 by CRC Press LLC St. Lucie Press is an imprint of CRC Press LLC

No claim to original U.S. Government worksInternational Standard Book Number 1-57444-300-3

Library of Congress Card Number 2001048504Printed in the United States of America 1 2 3 4 5 6 7 8 9 0

Printed on acid-free paper

Library of Congress Cataloging-in-Publication Data

Manufacturing handbook of best practices : an innovation, productivity, and qualityfocus / edited by Jack B. ReVelle

p. cm. -- (St. Lucie Press/APICS series on resource management)Includes bibliographical references and index.ISBN 1-57444-300-3 1. Technological innovations--Management. 2. Product management. 3. Qualitycontrol. I. ReVelle, Jack B. II. Series.

HD45 .M3295 2001658.5--dc21

2001048504

SL3003 FMFrame Page 4 Wednesday, November 14, 2001 3:02 PM


Table of Contents

Chapter 1

The Agile Enterprise ............................................................................1

1.1 Introduction ......................................................................................................11.2 Traditional Manufacturing ...............................................................................21.3 Evolution from Lean to Agile Enterprise ........................................................31.4 Agile Enterprise Foundation............................................................................5

1.4.1 Customer Focus....................................................................................51.4.2 Strategy Deployment............................................................................61.4.3 Focus on Work .....................................................................................7

1.5 Agile Manufacturing ........................................................................................81.5.1 Definition..............................................................................................81.5.2 Agile Manufacturing Challenges in the Automotive Industry ............8

1.6 Agile Enterprise Guiding Principles................................................................91.6.1 Benefits of Being Agile .......................................................................91.6.2 Whats New or Different?..................................................................10

1.7 Agile Enterprise Tools and Metrics...............................................................101.7.1 Transaction Analyses .........................................................................101.7.2 Activity/Cost Chains ..........................................................................111.7.3 Organization Maps .............................................................................111.7.4 Key Characteristics (KCs) .................................................................111.7.5 Contact Chains ...................................................................................11

1.8 Customer Orientation.....................................................................................121.9 Information System Design ...........................................................................131.10 Cooperation through Virtual Teams and Corporations..................................141.11 Highly Educated and Trained Workforce ......................................................15

1.11.1 The Rise of the Knowledge Worker ..................................................171.12 Agile Enterprise and the Internet ..................................................................17

1.12.1 Supply Chain Challenges...................................................................181.12.2 Growth and Value...............................................................................191.12.3 Impact of the Internet on Various Aspects of Agility .......................191.12.4 Customer Orientation The Rise of CRM

(Customer Relationship Management) ..............................................201.12.4.1 What Will It Take to Keep the Customer

in the Future?......................................................................211.12.4.2 A Value Chain Proposition .................................................21

1.12.4.2.1 Functional Requirements..................................221.12.4.2.2 Reaping Business Benefits from IT .................231.12.4.2.3 Setting the Stage for Success...........................24



1.12.5 The Future of the Agile Enterprise....................................................241.12.5.1 Idea-Centric Society ...........................................................241.12.5.2 The Agile Enterprises of the Future Will Have

Certain Defining Characteristics.........................................251.12.5.2.1 Management by Web........................................251.12.5.2.2 Information Management .................................251.12.5.2.3 Mass Customization .........................................25

1.12.5.3 Dependence on Intellectual Capital ...................................261.12.5.4 Global..................................................................................261.12.5.5 Speed...................................................................................26

1.12.6 Flexible Facilities and Virtual Organizations ....................................26

Chapter 2

Benefiting from Six Sigma Quality ...................................................272.1 A Brief History of Quality and Six Sigma ...................................................272.2 How Six Sigma Affects The Bottom Line ....................................................312.3 Characteristics of a Six Sigma Organization ................................................32

2.3.1 Customer Focus..................................................................................332.3.2 Everybody on the Same Page............................................................342.3.3 Extensive and Effective Data Usage..................................................342.3.4 Empowerment: Autonomy, Accountability, and Guidance ...............352.3.5 Reward Systems that Support Objectives..........................................352.3.6 Relentless Improvement.....................................................................36

2.4 Departmental Roles and Responsibilities ......................................................362.4.1 Top Management................................................................................372.4.2 Cost Accounting.................................................................................392.4.3 Information Technology.....................................................................392.4.4 Human Resources ..............................................................................392.4.5 Factory Management..........................................................................402.4.6 Sales and Marketing...........................................................................402.4.7 Engineering and Design.....................................................................402.4.8 Quality ................................................................................................412.4.9 Other Organizations ...........................................................................41

2.5 Individual Roles and Responsibilities ...........................................................412.5.1 Executive Staff ...................................................................................412.5.2 Coordinator.........................................................................................432.5.3 Champions..........................................................................................432.5.4 Problem-Solving Practitioners, Experts, and Masters.......................432.5.5 Team Members and Supervisors........................................................44

2.6 Six Sigma Implementation Strategies............................................................442.6.1 Assess Current Situation....................................................................452.6.2 Establish Accountability and Communication ..................................462.6.3 Identify and Sequence Tasks .............................................................462.6.4 Performance Metrics ..........................................................................46

2.7 Conclusion......................................................................................................47



Chapter 3

Design of Experiments.......................................................................49

3.1 Overview ........................................................................................................493.2 Background ....................................................................................................493.3 Glossary of Terms and Acronyms .................................................................503.4 Theory ............................................................................................................513.5 Example Applications and Practical Tips......................................................52

3.5.1 Using Structured DOEs to Optimize Process-Setting Targets ..........523.5.2 Using Structured DOEs to Establish Process Limits ........................533.5.3 Using Structured DOEs to Guide New Design Features

and Tolerances....................................................................................533.5.4 Planning for a DOE ...........................................................................533.5.5 Executing the DOE Efficiently ..........................................................563.5.6 Interpreting the DOE Results ............................................................563.5.7 Types of Experiments ........................................................................57

3.6 Before the Statistician Arrives .......................................................................613.7 Checklists for Industrial Experimentation.....................................................64References................................................................................................................68

Chapter 4

DFMA/DFSS......................................................................................69

4.1 Design for Manufacture and Assembly (DFMA) .........................................694.1.1 Simplicity ...........................................................................................704.1.2 Use of Standard Materials Components and Designs.......................714.1.3 Specify Tolerances .............................................................................714.1.4 Use of Common Materials.................................................................724.1.5 Concurrent Engineering Collaboration..............................................72

4.2 Design for Six Sigma (DFSS) .......................................................................734.2.1 Statistical Tolerance Analysis ............................................................734.2.2 Process Mapping ................................................................................734.2.3 Six Sigma Product Scorecard ............................................................764.2.4 Design to Unit Production Cost (DTUPC) .......................................824.2.5 Designed Experiments for Design Optimization ..............................84

Chapter 5

Integrated Product and Process Development ...................................87

5.1 Overview ........................................................................................................875.2 Background ....................................................................................................87

5.2.1 Design-Build-Test ..............................................................................875.2.2 Teams Outperform Individuals ..........................................................885.2.3 Types of Teams ..................................................................................885.2.4 Fad of the Early 1990s.......................................................................885.2.5 DoD Directive 5000.2-R (Mandatory Procedures for Major

Defense Acquisition Programs) .........................................................895.2.5.1 Benefits of IPPD.................................................................895.2.5.2 Why IPPD Benefits Employees..........................................90



5.2.5.3 Why IPPD Benefits the Customer......................................905.2.5.4 Why IPPD Benefits an Organization .................................91

5.3 Organizing an IPT..........................................................................................915.3.1 Initial Challenges What Are We Doing (Goals)?

Why Change? How Are We Going to Do It (Roles)? ......................915.3.1.1 Goals ...................................................................................915.3.1.2 Why Change?......................................................................925.3.1.3 Roles ...................................................................................92

5.3.2 Core Members (Generalists) vs. Specialists (Bit Players) ................925.3.3 Collocation and Communication Links.............................................935.3.4 Team Culture......................................................................................935.3.5 Picking the Right Team Leader .........................................................94

5.4 Building the Environment (Culture) for Successful IPPD............................945.4.1 Effective Change Management ..........................................................94

5.4.1.1 Fear and Jealousy of Change (from the Functional Managers View) .................................................................95

5.4.1.2 Organizational Issues Created by Change .........................955.5 The Tools that an IPT Will Require ..............................................................96

5.5.1 Technical Tools ..................................................................................965.5.2 Communication and Decision-Making Tools ....................................96

5.6 Probable Problem Areas, and Mitigations.....................................................965.6.1 Reduced Development Time = Less Time for Corrections

and Customer Review and Feedback ................................................965.6.1.1 Customer Inputs..................................................................975.6.1.2 Specification Errors ............................................................97

5.6.2 Silo and Group-Think Mentality ................................................975.6.3 Self-Sufficient vs. Too Large a Team ................................................975.6.4 Recruiting Internal (Why Were They Chosen?) vs. External ......985.6.5 Retention and Career Paths Following Project Completion .............985.6.6 Costs Associated with IPTs ...............................................................99

5.7 Methodologies of Simultaneous Product and Process Development .........1005.7.1 Concept and Prototyping .................................................................1005.7.2 Design and Development .................................................................100

5.7.2.1 CAD Databases.................................................................1015.7.2.2 Codevelopment .................................................................1015.7.2.3 Tooling (Molds and Dies) ................................................1015.7.2.4 Passive Assurance in Production......................................102

5.7.3 Qualification .....................................................................................1025.7.3.1 Tooling Qualification ........................................................1025.7.3.2 Design Verification First ...................................................1035.7.3.3 Assembly Qualification = Product Qualification .............103

5.7.4 Conclusion........................................................................................1045.8 Internet Sites ................................................................................................104References..............................................................................................................104



Chapter 6

ISO 9001:2000 Initiatives ................................................................107

6.1 Introduction ..................................................................................................1076.2 The Basic Changes.......................................................................................1086.3 Quality Management System.......................................................................110

6.3.1 Quality Management System Audit Checklist Based on ISO 9001:2000 Clause 4 ............................................................113

6.4 Management Responsibility.........................................................................1136.4.1 Management Responsibility Audit Checklist Based

on ISO 9001:2000 Clause 5 ............................................................1156.5 Resource Management.................................................................................115

6.5.1 Resources Management Audit Checklist Based on ISO 9001:2000 Clause 6 ............................................................115

6.6 Product Realization ......................................................................................1156.6.1 Product Realization Audit Checklist Based

on ISO 9001:2000 Clause 7 ............................................................1196.7 Measurement, Analysis, and Improvement .................................................119

6.7.1 Measurement Analysis and Improvement Audit Checklist Based on ISO 9001:2000 Clause 8 .................................................121

6.8 Disclaimer ....................................................................................................121Appendices.............................................................................................................122

Chapter 7

ISO 14001 and Best Industrial Practices.........................................141

7.1 Introduction ..................................................................................................1417.2 Energy Use ...................................................................................................142

7.2.1 Lighting ............................................................................................1427.2.1.1 Recommendations and Guidelines ...................................142

7.2.2 Ventilation ........................................................................................1437.2.2.1 Recommendations and Guidelines ...................................143

7.2.3 Electrical Equipment and Machinery ..............................................1447.2.3.1 Recommendations and Guidelines ...................................144

7.2.3.1.1 Computers and Printers ..................................1447.2.3.1.2 Photocopy Machines ......................................1447.2.3.1.3 Stand-Alone Refrigerators and Freezers ........1457.2.3.1.4 Dishwashers ....................................................1457.2.3.1.5 Point-of-Use Water Heating ...........................145

7.2.4 The Solar Option..............................................................................1457.3. Other Environmental Impacts ......................................................................145

7.3.1 Use of Water.....................................................................................1467.3.1.1 Recommendations and Guidelines ...................................146

7.3.1.1.1 Inside Buildings..............................................1467.3.2 Boilers ..............................................................................................148

7.3.2.1 Recommendations and Guidelines ...................................1487.3.2.1.1 Optimizers.......................................................148



7.3.3 Waste ................................................................................................1487.3.3.1 Recommendations and Guidelines ...................................148

7.3.3.1.1 Permits ............................................................1487.3.3.1.2 Waste Reduction Initiatives............................1497.3.3.1.3 Waste Water (See Also, Water Use)...............149

7.3.3.2 General ..............................................................................1507.3.4 Recycling..........................................................................................150

7.3.4.1 Recommendations.............................................................1507.3.5 Ozone-Depleting Substances ...........................................................152

7.3.5.1 Recommendations and Guidelines ...................................1527.3.5.1.1 Refrigeration and Air Conditioning ...............1537.3.5.1.2 Dry Cleaning ..................................................1537.3.5.1.3 Fire Protection Systems..................................154

7.3.6 Hazardous Substances......................................................................1547.3.6.1 Recommendations and Guidelines ...................................154

7.3.6.1.1 Acids ...............................................................1547.3.6.1.2 Alkalis.............................................................1547.3.6.1.3 Bleach .............................................................1547.3.6.1.4 Solvents...........................................................1557.3.6.1.5 Phosphates ......................................................155

7.3.7 Stationery and Office Supplies ........................................................1567.3.7.1 Recommendations and Guidelines ...................................157

7.3.8 Office Equipment Fixtures and Fittings .....................................1577.3.8.1 Recommendations and Guidelines ...................................157

7.3.9 Transport ..........................................................................................1587.3.9.1 Recommendations and Guidelines ...................................158

7.3.9.1.1 Servicing .........................................................1597.3.9.1.2 Training and Driving Style.............................1597.3.9.1.3 Vehicle Use.....................................................159

7.3.10 External Influences...........................................................................1607.3.10.1 Recommendations and Guidelines ...................................160

7.3.11 Miscellaneous...................................................................................1607.3.11.1 Recommendations and Guidelines ...................................160

7.4 Environmental Management Initiatives .......................................................1607.4.1 Energy Management Systems..........................................................160

7.4.1.1 Responsibility ...................................................................1607.4.1.2 Energy Audit .....................................................................1617.4.1.3 Action Plan .......................................................................1617.4.1.4 Involve Employees............................................................1617.4.1.5 Finance..............................................................................1627.4.1.6 Energy Monitoring............................................................1627.4.1.7 Yardsticks..........................................................................1627.4.1.8 Consumption Targets ........................................................163

7.4.2 Access to Legislative Information ...................................................1637.4.2.1 Recommendations and Guidelines ...................................163



7.4.3 Training, Awareness, and Responsibilities ......................................1637.4.3.1 Recommendations and Guidelines ...................................164

7.4.4 Purchasing: The Total Cost Approach .............................................1647.4.4.1 Recommendations and Guidelines ...................................165

7.5 Summary ......................................................................................................1667.6 Disclaimer ....................................................................................................167

Chapter 8

Lean Manufacturing .........................................................................1698.1 Lean Manufacturing Concepts and Tools....................................................170

8.1.1 Lean Objectives................................................................................1718.1.2 Define Value Principle .....................................................................1738.1.3 Identify Value Stream.......................................................................173

8.2 Elimination of Waste Principle ....................................................................1748.2.1 Definition of Waste ..........................................................................1748.2.2 Waste of Overproduction .................................................................1748.2.3 Waste of Inventory ...........................................................................1748.2.4 Waste of Correction .........................................................................1758.2.5 Waste of Movement .........................................................................1768.2.6 Waste of Motion...............................................................................1768.2.7 Waste of Waiting ..............................................................................1768.2.8 Waste of Overprocessing .................................................................1768.2.9 Impact of Waste ...............................................................................177

8.3 Support the Workers Principle....................................................................1778.4 Pull System Strategy....................................................................................179

8.4.1 Kanban Technique to Facilitate a Pull System Strategy .................1798.4.2 Level Scheduling (Heijunka) Technique .........................................1808.4.3 Takt Time .........................................................................................1828.4.4 Quick Changeover Technique..........................................................1828.4.5 Small-Lot Production.......................................................................183

8.5 Quality Assurance Strategy..........................................................................1838.5.1 Poka-Yoke Device (Mistake Proofing) ............................................1848.5.2 Visual Control and 5S Techniques ..................................................1848.5.3 Visual Controls.................................................................................1858.5.4 Preventive Maintenance Technique .................................................185

8.6 Plant Layout and Work Assignment Strategy..............................................1868.7 Continuous Improvement (Kaizen) Strategy ...............................................188

8.7.1 Standardized Work Technique to Support Kaizen ..........................1898.7.2 Standard Cycle Time........................................................................1898.7.3 Standard Work Sequence .................................................................1898.7.4 Standard WIP ...................................................................................190

8.8 Decision-Making Strategy ...........................................................................1908.9 Supplier Partnering Strategy in Lean Manufacturing .................................190

8.9.1 Small Supplier Network...................................................................1918.9.2 Short-Term Contract/Long-Term Commitment...............................1918.9.3 Supplier Assistance ..........................................................................191



8.9.4 Structure for Effective Communication...........................................1918.9.5 Supplier Selection and Evaluation...................................................1928.9.6 Supplier Kanban and Electronic Data Interchange .........................192

Appendices.............................................................................................................193

Chapter 9

Measurement System Analysis ........................................................203

9.1 Why Perform a Measurement System Analysis? ........................................2039.1.1 The Value of Measurement System Analysis ..................................203

9.2 The Basics of Measurement System Analysis ............................................2059.2.1 Data and Your Measurement System Whats It All About? ......2059.2.2 Properties of a Measurement System ..............................................2069.2.3 Variable Data Bias/Accuracy ......................................................2079.2.4 Variable Data Precision...............................................................2089.2.5 Why There Is Variability..................................................................2099.2.6 Variable Data Types of Variation for Measurement Systems ....2109.2.7 Attribute Data Types of Variation for Measured Systems .........211

9.3 Performing a Measurement System Analysis..............................................2139.3.1 Plan the Analysis..............................................................................2139.3.2 Which Inspection Processes to Analyze..........................................2139.3.3 Variable Measurement System Analysis Preparation.................2149.3.4 Variable Measurement System Analysis Analysis .....................2159.3.5 Variable Measurement System Analysis A Correction

Technique .........................................................................................2189.3.6 Attribute Measurement System Analysis Preparation................2199.3.7 Attribute Measurement System Analysis Analysis ....................2209.3.8 A Case History.................................................................................222

9.4 The Skills and Resources to Do the Analysis .............................................2239.4.1 Technical Skills ................................................................................2239.4.2 Measurement System Analysis Software ........................................224

Reference ...............................................................................................................225Journal....................................................................................................................225Glossary of Terms..................................................................................................225

Chapter 10

Process Analysis.............................................................................227

10.1 Definitions ....................................................................................................22710.2 Process Analysis...........................................................................................228

10.2.1 Process..............................................................................................22810.2.2 System ..............................................................................................22810.2.3 Process Flow Chart ..........................................................................22810.2.4 Process Map .....................................................................................229

10.3 Process Improvement ...................................................................................23110.3.1 As Is vs. Should Be ..................................................................23110.3.2 Annotation........................................................................................231



10.4 Process Analysis and Improvement Network (PAIN).................................23210.4.1 Reasons for PAIN ............................................................................23210.4.2 PAIN Main Model.......................................................................23210.4.3 PAIN Models A Through G........................................................23310.4.4 Phase 1 .............................................................................................23810.4.5 Phase 2 .............................................................................................23810.4.6 Phase 3 .............................................................................................23810.4.7 PAIN Model G ............................................................................239

Appendix................................................................................................................241

Chapter 11

Quality Function Deployment (QFD)............................................24511.1 Introduction ..................................................................................................24511.2 Risk Identification ........................................................................................24911.3 The Seven-Step Process ...............................................................................24911.4 Kano Model..................................................................................................25111.5 Voice of the Customer Table .......................................................................25211.6 House of Quality (HOQ) .............................................................................25411.7 Four-Phase Approach ...................................................................................25611.8 Matrix of Matrices Approach ......................................................................25711.9 Recommendations ........................................................................................257

11.9.1 Software............................................................................................25711.9.2 Books................................................................................................25711.9.3 Web Sites..........................................................................................258

Chapter 12

Manufacturing Controls Integration...............................................261

12.1 The Basic Premise of Inventory ..................................................................26112.2 Need for Inventory Identified by Definition................................................26212.3 Manufacturing Is Really Just a Balancing Act............................................264

12.3.1 The Balance......................................................................................26412.4 The Primary Controls for Inventory ............................................................26712.5 The Tools for Inventory Control..................................................................271

12.5.1 The ABC Inventory System.............................................................27212.5.2 Capacity Capability and the Effect on Inventory............................27912.5.3 Production Constraints .....................................................................280

Chapter 13

Robust Design ................................................................................285

13.1 The Significance of Robust Design .............................................................28613.2 Fundamental Principles of Robust Design The Taguchi Method ..........28913.3 The Robust Design Cycle ............................................................................290

13.3.1 A Robust Design Example: An Experimental Design to Improve Golf Scores ........................................................................29013.3.1.1 Identify the Main Function...............................................29013.3.1.2 Identify the Noise Factors ................................................290



13.3.1.3 Identify the Quality Characteristic to be Observed and the Objective Function to be Optimized ...................291

13.3.1.4 Identify the Control Factors and Alternative Levels........29113.3.1.5 Design the Matrix Experiment and Define the

Data Analysis Procedure...................................................29113.3.1.6 Conduct the Matrix Experiment.......................................29213.3.1.7 Analyze the Data to Determine the Optimum Levels

of Control Factors.............................................................293

Chapter 14

Six Sigma Problem Solving...........................................................295

14.1 Product, Process, and Money ......................................................................29714.1.1 Defects per Unit (DPU) ...................................................................29714.1.2 Throughput Yield (

Y

TP

),

K,

and

R

....................................................29714.1.3 An Example Calculation..................................................................29914.1.4 Escaping Defects..............................................................................30014.1.5 Final Comments on Defects and Money.........................................301

14.2 Basics of Problem Solving ..........................................................................30114.2.1 Basic Problem Solving.....................................................................30114.2.2 Comparison of Methodologies.........................................................303

14.2.2.1 Six Sigma DMAIC ...........................................................30514.2.2.2 Ford 8D TOPS ..................................................................30514.2.2.3 Lean Manufacturing..........................................................305

14.3 Selecting Tools and Techniques...................................................................30514.4 Managing for Effective Problem Solving....................................................307

14.4.1 Balancing Patience and Urgency .....................................................30714.4.2 Balancing Containment and Correction ..........................................31014.4.3 Balancing Hands On vs. Hands Off .........................................31014.4.4 Balancing Flexibility and Rigor ......................................................31114.4.5 Balancing Autonomy and Accountability........................................31214.4.6 From Distrust to WinWin ..............................................................313

14.5 Contributors Roles and Timing...................................................................31414.7.1 Upper Management..........................................................................31414.7.2 Champion and Coordinator..............................................................31514.7.3 Middle Management ........................................................................31614.7.4 Experts..............................................................................................31614.7.5 Team Members.................................................................................31614.7.6 Operators ..........................................................................................316

14.6 Conclusion....................................................................................................317

Chapter 15

Statistical Process Control .............................................................319

15.1 Describing Data............................................................................................31915.1.1 Histograms .......................................................................................319

15.2 Overview of SPC .........................................................................................32015.2.1 Control Chart Properties ..................................................................321



15.2.2 General Interpretation of Control Charts ........................................32315.2.3 Defining Control Limits...................................................................32415.2.4 Benefits of Control Charts ...............................................................324

15.3 Choosing a Control Chart ............................................................................32715.3.1 Attribute Control Charts ..................................................................32715.3.2 Variables Control Charts..................................................................32915.3.3 Selecting the Subgroup Size ............................................................33115.3.4 Run Tests ..........................................................................................33415.3.5 Short-Run Techniques......................................................................335

15.4 Process Capability and Performance Indices ..............................................33615.4.1 Interpretation of Capability Indices.................................................338

15.5 Autocorrelation.............................................................................................33915.5.1 Detecting Autocorrelation ................................................................34015.5.2 Dealing with Autocorrelation...........................................................343

References..............................................................................................................344

Chapter 16

Supply Chain Management............................................................345

16.1 Introduction ..................................................................................................34516.2 Defining the Manufacturing Supply Chain .................................................34616.3 Defining Supply Chain Management ..........................................................34816.4 Critical Issues in Supply Chain Management .............................................349

16.4.1 Supply Chain Integration .................................................................35016.4.1.1 Information Technology ...................................................35116.4.1.2 Information Access ...........................................................35116.4.1.3 Centralized Information....................................................35216.4.1.4 IT Development and Strategic Planning ..........................353

16.4.2 Strategic Partnering..........................................................................35316.4.2.1 Supplier Partnerships ........................................................35416.4.2.2 Logistics Partnerships .......................................................354

16.4.3 Logistics Configuration....................................................................35516.4.3.1 Data Gathering..................................................................35616.4.3.2 Estimating Costs ...............................................................35616.4.3.3 Logistics Network Modeling............................................358

16.5 Inventory Management ................................................................................36016.5.1 Forecasting Customer Demand........................................................36016.5.2 Inventory Ordering Policy ...............................................................362

16.6 Synchronizing Supply to Demand...............................................................365References..............................................................................................................366

Chapter 17

Supply Chain Management Applications .................................369

17.1 Optimum Reorder Case Study.....................................................................36917.2 Basic Partnering Case Study........................................................................37117.3 Advanced Partnering Case Study ................................................................37517.4 SCM Improvement Case Study ...................................................................378



Chapter 18

The Theory of Constraints .............................................................383

18.1 From Functional to Flow .............................................................................38318.1.1 The Value Chain...............................................................................38418.1.2 The Constraint Approach to Analyzing Performance .....................38518.1.3 Two Important Prerequisites ............................................................386

18.1.3.1 Define the System and Its Purpose (Goal).......................38618.1.3.2 Determine How to Measure the Systems Purpose .........387

18.2 Understanding Constraints ...........................................................................38818.2.1 Physical Constraints .........................................................................388

18.2.1.1 The Five Focusing Steps ..................................................38918.2.2 Policy Constraints ............................................................................39318.2.3 Paradigm Constraints .......................................................................39418.2.4 A Hi-Tech Tale.................................................................................395

18.3 Conclusion....................................................................................................397References..............................................................................................................397

Chapter 19

TRIZ ...............................................................................................399

19.1 What Is TRIZ? .............................................................................................39919.2 The Origins of TRIZ....................................................................................399

19.2.1 Altshullers First Discovery .............................................................40019.2.2 Altshullers Second Discovery.........................................................40019.2.3 Altshullers Third Discovery............................................................40019.2.4 Altshullers Levels of Inventiveness ................................................401

19.2.4.1 Level 1: Parametric Solution............................................40119.2.4.2 Level 2: Significant Improvement in the

Technology Paradigm .......................................................40119.2.4.3 Level 3: Invention within the Paradigm...........................40119.2.4.4 Level 4: Invention outside the Paradigm .........................40219.2.4.5 Level 5: True Discovery ...................................................402

19.3 Basic Foundational Principles .....................................................................40219.3.1 Ideality..............................................................................................40219.3.2 Contradictions ..................................................................................404

19.3.2.1 Technical Contradictions ..................................................40419.3.2.2 Physical Contradictions ....................................................404

19.3.3 Resources .........................................................................................40519.4 A Scientific Approach..................................................................................405

19.4.1 How TRIZ Works.............................................................................40719.4.2 Five Requirements for a Solution to be Inventive ..........................409

19.5 Classical and Modern TRIZ Tools ..............................................................41019.5.1 Classical TRIZ Knowledge-Based Tools .....................................410

19.5.1.1 The Contradiction Matrix .................................................41019.5.1.2 Physical Contradictions ....................................................412

19.5.1.2.1 Formulating and Solving Physical Contradictions ..................................413

19.5.1.2.2 An Example ....................................................413



19.5.1.3 The Laws of Systems Evolution ......................................41319.5.2 Analytical Tools ...............................................................................415

19.5.2.1 Sufield ...............................................................................41619.5.2.2 Algorithm for Inventive Problem Solving (ARIZ) ..........418

19.5.2.2.1 The Steps in ARIZ .........................................41919.5.2.2.2 Problem Analysis............................................42019.5.2.2.3 Resource Analysis ..........................................42219.5.2.2.4 Model of Ideal Solution .................................423

19.6 Caveat ...........................................................................................................42419.7 Conclusion....................................................................................................425References..............................................................................................................425



Preface

By Jack B. ReVelle

Sometimes it seems as though there is no end to the number of new or nearly newmanufacturing methods that are now available. The primary objective for bringingtogether this book is for it to become your single-source reference to whats currentlyhappening in modern manufacturing.

Whether your goal is to improve organizational responsiveness, product quality,production scheduling, or sensitivity to customer expectations, or to reduce processcycle time, cost of quality, or variation in products or processes, there is a method-ology waiting to be discovered and introduced to enhance your operations.

In an effort to facilitate your use of this book, it has been organized in two ways:alphabetically, to ease the location of a specific topic; and by application, to indicateprimary usage. No matter how the topics are enumerated or organized, there isseemingly no end to the scope of tools and techniques available to the well-informedmanufacturing manager. The topics addressed in this book have been classified andthen subclassified according to their major applications in Table 1.

The next few pages are dedicated to briefly describing each of these topics. An

agile enterprise

is adept at rapidly reorganizing its people, management,physical facilities, and operating philosophy to be able to produce highlycustomized products and services that satisfy a new customer or a new market.

Design for manufacture and assembly (DFMA) and design for six sigma(DFSS)

are complementary approaches to achieve a superior product line thatmaximizes quality while minimizing cost and cycle time in a manufacturingenvironment. DFMA stresses the achievement of the simplest design configura-tion. DFSS applies statistical analysis to achieve nearly defect-free products.

Design of experiments (DOE)

is the statistical superstructure upon whichDFMA and DFSS are based. By analyzing the results of a predeterminedseries of trial runs, the optimal levels or settings for each critical parameteror factor are established.

Integrated product and process development (IPPD)

is a cross-functional,team-oriented approach to maximize concurrent development of both a prod-uct design and the means to produce the design.

ISO 9000:2000

is the most recent version of the international standard forquality management systems (QMS). Originally approved in 1987 and revisedin 1994, this is the most recent version of ISO 9000. Because of substantialchanges, even persons familiar with earlier versions of this standard needadditional training.

ISO 14001

is the international standard for environmental management sys-tems (EMS) and their integration into overall management structures.

SL3003 FMFrame Page 19 Monday, November 19, 2001 10:15 AM


Lean manufacturing

is an integrated collection of tools and techniques, trace-able back to the Toyota production system, that focuses on the elimination ofwaste from the production process.

Manufacturing controls integration

brings together a collection of relatedsystems such as enterprise resource planning (ERP) and manufacturingresource planning (MRP) to manage their internal operations and establishthe demands of their supply chains.

Measurement systems analysis (MSA)

is the examination and understandingof the entire measurement process as well as its impact on the data it generates.The process includes procedures, gauges, software, personnel, and documen-tation.

Process analysis

is the mapping, inputoutput analysis, and detailed exami-nation of a process including each of its sequential steps.

Quality function deployment (QFD)

is a matrix-based approach to acquisitionand deployment of the voice of the customer throughout an organization toensure that customer expectations, demands, and desires are thoroughly inte-grated into products and services. The initial QFD matrix is widely knownas the House of Quality (HOQ).

Robust design

of a product or a process is the logical search for its optimaldesign (the levels or settings for each controllable parameter or factor) whenconsidering the negative effect of the most critical uncontrollable/noise fac-tors.

Six sigma

is a financially focused, highly structured approach to advancingthe objectives of continuous improvement. The first of two chapters addressesthe benefits resulting from the application of Six Sigma quality, while thesecond chapter focuses on the Six Sigma problem-solving methodology.

Statistical quality/process control (SQC/SPC)

was initially developed in the1920s, but was substantially enhanced in the 1970s and 1980s by W. EdwardsDeming and Joseph Juran and in the 1990s through the use of personalcomputers. This chapter emphasizes when and how to use SQC/SPC toimprove products and processes as well as how this collection of tools differsfrom other statistical techniques.

Supply chain management (SCM)

is the control of the network used to deliverproducts and services from raw materials to end consumers through an engi-neered flow of information, physical distribution, and cash. The first of twochapters addresses the basics of SCM, while the second chapter focuses onSCM applications.

The concepts known as the

theory of constraints (TOC)

and the

critical chain

were developed by Eli Goldratt. They represent a major expansion of theexisting methodology known as critical path planning or the activity networkdiagram.

TRIZ

(a Russian acronym also known as

the theory of innovative problemsolving [TIPS])

is a highly integrated collection of facts regarding physical,chemical, electrical, and biological principles that are used to predict wherefuture breakthroughs are likely to occur and what they are likely to be.



Our contributing authors are all seasoned manufacturing veterans who have aparticular interest in and extensive understanding of the topics about which theyhave written. In many cases the editor has worked directly with these authors at onepoint or another in their careers, so he can attest to their knowledge and willingnessto share this knowledge with those who want to learn more about their profession.However, the idea to create this book, the choice of topics, and the selection ofcontributing authors are all mine and so, as editor, I accept full responsibility forany shortcomings you may find.

At this point it should be evident that this book is intended to provide informationfor both novice and experienced manufacturing managers. If a particular topic is ofspecial interest to you for purposes of review or to initiate your understanding ofits fit within the broad spectrum of tools and techniques that are a regular part oftodays manufacturing venue, you will have immediate access to the basics as wellas a bridge to more advanced information regarding that topic.

Remember, this is a handbook, not a textbook. Although you may wish to readthe entire book from front to back, it is not necessary to do so. Simply search outthe topic(s) of interest to you and begin your journey into the future of manufacturing.

TABLE 1Topical Classification by Major Usage

Design

Operations

Topic Product Process Produce Support

Agile Enterprises xDesign for Manufacture & Assembly/Design for xSix Sigma (DFMA/DFSS)

Design of Experiments (DOE) xIntegrated Product and Process Development (IPPD) x xISO 9000:2000 xISO 14000 xLean Manufacturing xManufacturing Controls Integration xMeasurement Systems Analysis (MSA) xProcess Analysis xQuality Function Deployment (QFD) xRobust Design x xSix Sigma Benefits Resulting from Six Sigma Quality xSix Sigma Problem Solving x xStatistical Quality/Process Control (SQC/SPC) xSupply Chain Management Basics xSupply Chain Management Applications xTheory of Constraints/Critical Chain xTRIZ/Theory of Innovative Problem xSolving (TIPS) x



Acknowledgments

The team of authors, editor, and publisher that helped us to convert the originalconcept for a highly focused manufacturing handbook into this final product deservespublic recognition. My thanks are extended to all the contributing authors whoproduced their respective chapters. Special thanks and appreciation are due to DrewGierman, our publisher at St. Lucie Press, who pushed and pulled us to ensure thatthis handbook would eventually become a reality. Maria Muto of Muto ManagementAssociates, our Phoenix-based editor, deserves more than thanks and appreciation:she has earned our enduring respect for her tenacity and professionalism. Withouther intervention and involvement, we would still be running the race trying to bringeverything together for you, our readers. And of course, her check is in the mail.



Editor

Dr. Jack B. ReVelle,

The Wizard of Odds, provides his advice and assistance to hisclients located throughout North America. In this capacity, he helps his clients tobetter understand and continuously improve their processes through the use of abroad range of Six Sigma, Total Quality Management, and continuous improvement(Kaizen) tools and techniques. These include process mapping, cycle time manage-ment, quality function deployment, statistical quality control, the seven managementand planning tools, design of experiments, strategic planning (policy deployment),and integrated product and process development. In May 2001, Dr. ReVelle com-pleted instructing An Introduction to Six Sigma, a Web-based graduate course onbehalf of California State University, Dominguez Hills.

Previously, he was Director of the Center for Process Improvement for GenCorpAerojet in Azusa and Sacramento, CA, where he provided technical leadership forthe Operational Excellence program. This included support for all the Six Sigma,Lean/Agile Enterprise, Supply Chain Management, and High Performance Work-place activities. Prior to this, Dr. ReVelle was the leader of Continuous Improvementfor Raytheon (formerly Hughes) Missile Systems Company in Tucson, AZ. Duringthis period, he led the Hughes teams that won the 1994 Arizona Pioneer Award forQuality and the 1997 Arizona Governors Award for Quality. He also establishedthe Hughes team responsible for obtaining ISO 9001 registration in 1996. On behalfof Hughes, Dr. ReVelle worked with the Joint Arizona Consortium-Manufacturingand Engineering Education for Tomorrow (JACME

2

T) as the leader of the QualityCurriculum Development Group and as the lead TQM trainer.

Dr. ReVelles previous assignments with Hughes Electronics were at the corpo-rate offices as Manager, Statistical and Process Improvement Methods, and as Man-ager, Employee Opinion Research and Training Program Development. Prior tojoining Hughes, he was the Founding Dean of the School of Business and Manage-ment at Chapman University in Orange, CA.

Currently, Dr. ReVelle is a member of the Board of Directors, Arizona Gover-nors Award for Quality (19992000). Previously, he was a member of the Boardof Examiners for the Malcolm Baldrige National Quality Award (1990 and 1993),a judge for the Arizona Governors Award for Quality (19941996), a member ofthe Awards Council for the California Governors Award for Quality (19981999),and a judge for the RIT

USA Today

Quality Cup (19942001).Following publication of his books,

Quantitative Methods for Managerial Deci-sions

(1978) and

Safety Training Methods

(1980, revised 1995), Dr. ReVelle authoredchapters for

Handbook of Mechanical Engineering

(1986, revised 1998),

ProductionHandbook

(1987),

Handbook of Occupational Safety and Health

(1987), and

QualityEngineering Handbook

(1991). His most recent texts are

From Concept to Customer

:

The Practical Guide to Integrated Product and Process Development and Business



Process Reengineering

(1995) and

The QFD Handbook

(1998). Dr. ReVelle led thedevelopment of two innovative, expert-system software packages,

TQM ToolSchool

(1995) and

QFD/Pathway

(1998). His latest text is

What Your Quality Guru NeverTold You

(2000).Dr. ReVelle is a fellow of the American Society for Quality, the Institute of

Industrial Engineers, and the Institute for the Advancement of Engineering. He islisted in

Whos Who in Science and Engineering, Whos Who in America, WhosWho in the World,

and as an outstanding educator in

The International Whos Whoin Quality

.

Dr. ReVelle is a recipient of the Distinguished Economics Development Pro-grams Award from the Society of Manufacturing Engineers 1990, the Taguchi Rec-ognition Award from the American Supplier Institute 1991, the Akao Prize from theQFD Institute 1999, and the Lifetime Achievement Award from The National Grad-uate School of Quality Management 1999. He is one of only two persons ever toreceive both the Taguchi Recognition Award (for his successful application of RobustDesign) and the Akao Prize (for his outstanding contribution to the advancement ofquality function deployment).

Dr. ReVelles award-winning articles have been published in

QUALITYPROGRESS, INDUSTRIAL ENGINEERING, INDUSTRIAL MANAGEMENT,

and

PROFESSIONAL SAFETY

magazines. During 1994 and 1995, Dr. ReVelle createdand hosted a series of monthly satellite telecasts,

Continuous Improvement Televi-sion (CITV)

, for the National Technological University.Dr. ReVelle received his B.S. in chemical engineering from Purdue University

and both his M.S. and Ph.D. in industrial engineering and management from Okla-homa State University. Prior to receiving his Ph.D., he served 12 years in the U.S.Air Force. During that time, he was promoted to the rank of major and was awardedthe Bronze Star Medal while stationed in the Republic of Vietnam as well as theJoint Services Commendation Medal for his work in quality assurance with theNuclear Defense Agency.

Dr. ReVelle was a Senior Vice President and Treasurer of the Institute of Indus-trial Engineers (IIE), Director of the Aerospace and Defense Division of the IIE, aCo-Chair of the Total Quality Management (TQM) Committee of the AmericanSociety for Quality (ASQ), and a member of the Board of Directors of the Associ-ation for Quality and Participation (AQP).

Other professional memberships include the American Statistical Association(ASA) and the American Society of Safety Engineers (ASSE). Dr. ReVelles nationalhonor society memberships include Sigma Tau (all engineering), Alpha Pi Mu(industrial engineering), Alpha Iota Delta (decision sciences), and Beta GammaSigma (business administration).



Contributors

Jonathon L. Andell

Andell AssociatesPhoenix, AZ

Douglas Burke

General ElectricGilbert, AZ

Adi Choudri

GenCorp AerojetFolsom, CA

R.T. "Chris" Christensen

University of WisconsinMadison, WI

Charles A. Cox

Compass Organization, Inc.Gilbert, AZ

Syed Imtiaz Haider

Gulf Pharmaceutical IndustriesUnited Arab Emirates

John W. Hidahl

GenCorp AerojetRancho Cordova, CA

Robert Hughes

EthiconCincinnati, OH

Paul A. Keller

Quality America/Quality PublishingTucson, AZ

Edward A. Peterson

GenCorp AerojetAuburn, CA

Jack B. ReVelle

ReVelle Solutions, LLCTustin, CA

Lisa J. Scheinkopf

Chesapeake Consulting, Inc.Tempe, AZ

Steven F. Ungvari

ConsultantBrighton, MI



Dedication

This handbook is dedicated to

Bren, my wife of 33 years and the love of my life. No significant decisioncan or should be made without her counsel.

Karen, our daughter who has become a lovely young lady and an excep-tional commercial artist.

Manufacturing vice presidents, directors, managers, engineers, specialists,and technicians around the world. This is your book; let it help you focuson innovation, productivity, and quality in manufacturing.



About APICS

APICS, The Educational Society for Resource Management, is an inter-national, not-for-profit organization offering a full range of programs andmaterials focusing on individual and organizational education, standards ofexcellence, and integrated resource management topics. These resources,developed under the direction of integrated resource management experts,are available at local, regional, and national levels. Since 1957, hundreds ofthousands of professionals have relied on APICS as a source for educationalproducts and services.

APICS Certification Programs

APICS offers two internationallyrecognized certification programs, Certified in Production andInventory Management (CPIM) and Certified in IntegratedResource Management (CIRM), known around the world as stan-dards of professional competence in business and manufacturing.

APICS Educational Materials Catalog

This catalog contains books,courseware, proceedings, reprints, training materials, and videosdeveloped by industry experts and available to members at a discount.

APICS

The Performance Advantage

This monthly, four-colormagazine addresses the educational and resource management needsof manufacturing professionals.

APICS Business Outlook IndexDesigned to take economic analysisa step beyond current surveys, the index is a monthly manufacturing-based survey report based on confidential production, sales, andinventory data from APICS-related companies.

ChaptersAPICS more than 270 chapters provide leadership, learn-ing, and networking opportunities at the local level.

Educational OpportunitiesHeld around the country, APICS Inter-national Conference and Exhibition, workshops, and symposia offeryou numerous opportunities to learn from your peers and manage-ment experts.

Employment Referral ProgramA cost-effective way to reach a tar-geted network of resource management professionals, this programpairs qualified job candidates with interested companies.

SIGsThese member groups develop specialized educational pro-grams and resources for seven specific industry and interest areas.



Web SiteThe APICS Web site at http://www.apics.org enables youto explore the wide range of information available on APICS mem-bership, certification, and educational offerings.

Member ServicesMembers enjoy a dedicated inquiry service, insur-ance, a retirement plan, and more.

For more information on APICS programs, services, or membership, callAPICS Customer Service at (800) 444-2742 or (703) 354-8851 or visithttp://www.apics.org on the World Wide Web.



1

1

The Agile Enterprise

Adi Choudri

1.1 INTRODUCTION

An agile enterprise is adept at reorganizing its people, management, physical facil-ities, and operating philosophy very quickly to produce highly customized productsand services to satisfy a new customer or a new market. Agility is the deliberate,strategic response for survival in todays market conditions.

A company that knows how to be agile:

Strategizes

to fragment mass markets into niche markets

Competes

on the basis of customer-perceived value

Produces

multiple products and services in market-determined quantities

Designs

solutions interactively with customers

Organizes

for proficiency at change and rapid response

Manages

through leadership, motivation, support, and trust

Exploits

information and communication technologies to the fullest

Leverages

all its capabilities, resources, and assets regardless of location

Works

through entrepreneurial and empowered teams

Partners

with other companies as a strategy of choice, not of last resort

Thrives

and is widely

imitated

As we transition into the 21st century, radical changes are taking place that arereshaping every aspect of a business, including the way we produce goods andservices. With the advent of Internet and high-speed communication, the marketplacehas truly become global and fragmented. Customers are requiring smaller quantitiesand more customized products quickly. Traditional manufacturing, with its largebatch approach, extensive inventories, and static organizational style, simply cannotcompete in this marketplace. The notion of economies of scale becomes almostobsolete in such a changing and fragmented market. In the 1980s and 90s we learnedlean manufacturing techniques, reduced cycle time and cost, and strived to becomeworld-class. We introduced just-in-time (JIT) techniques such as one-piece part flowand quick changeover, and practiced team-based continuous improvement. Yet ourcustomers pressed for even more flexibility, shorter lead times, and more variedproducts and services. Lean manufacturing is about being very good at doing thingswe can control. Agility of an enterprise gives the ability to deal with things it cannotcontrol. Agility means not only accommodating change but also relishing the oppor-tunities inherent within a turbulent environment.

Here are some of the axioms of agile manufacturing: Mass production is mori-bund. Mass customization requires that each customer be treated as an individual.

SL3003Ch01Frame Page 1 Tuesday, November 6, 2001 6:12 PM


2

The Manufacturing Handbook of Best Practices

This leads to a people-intensive, relationship-driven operation. Increasingly, a com-pany ceases to sell products but rather sells its ability to fulfill customers needs,utilizing its information and people skills. New information technology such as theability to leverage the Internet and a highly educated, skilled workforce becomesthe real asset base for the corporation. This allows local decision-making by peoplewho understand the companys vision, principles, customer requirements, and prod-ucts and services. They must know how to create cooperative alliances across thesupply chain, how to reconfigure products and production facilities, and how tocombine expertise to satisfy the changing marketplace. Agile companies put enor-mous emphasis on training and developing their people. For example, Saturn Cor-poration requires their employees to take no less than 96 hours of training everyyear. The latest information technology such as Internet and object-oriented pro-gramming can provide a tremendous amount of information and computer systemflexibility in the hands of a highly trained workforce. Forming virtual teams withinthe supply chain (sometimes even with a competitor) to satisfy a customer needbecomes commonplace with agile enterprises. Internet and information technologybecome key enablers.

Many industries and markets are increasingly requiring much greater flexibilityand timeliness from their manufacturers and service providers. These changes aretaking place very fast in some industries and more slowly in others. But the com-panies that will meet the challenges of the ever-changing global marketplace of the21st century must go beyond lean and become agile in every aspect of their business.Agility is not a magic wand to solve all ills. But without agility, survivability in the21st century will be questionable for many corporations. However, agility must bebuilt on the firm foundation of world-class or lean manufacturing methods and high-quality Six Sigma processes, coupled with an organization that is physically, tech-nologically, and managerially and culturally flexible enough to capitalize on rapidand unpredictable change.

1.2 TRADITIONAL MANUFACTURING

Why does traditional batch-and-queue manufacturing seem right intuitively, yet carryso much waste? We human beings are into a mental world of functions anddepartments and have a commonsense conviction that activities ought to begrouped by type so they can be performed more efficiently and managed more easily.Intuitively, this makes sense if the activity contains some form of set-up activity.For example, making numerous trips to the supermarket to get groceries one itemat a time would be tremendously wasteful, and our intuition would be right in thiscase. So it is natural for us to take this intuitive sense of efficiency and extend it toan enterprise where processes are not independent, and we start thinking that to gettasks done more efficiently within departments we must perform like activities inbatches. In the paint department we tend to paint all the cars green and then shiftto red, then to white, in between creating as large a batch size as possible regardlessof the need. Batches, it turns out, always mean long delays as the product sitspatiently awaiting the departments changeover to the type of activity the product




3

needs next. But this approach keeps the department and its people and equipmentbusy and gives a sense of efficiency because everyone and everything is workinghard. This comes from our lack of systems thinking that is actually counter-intuitive. We must see this from the perspective of the part flowing through thesystem rather than the viewpoint of the individual process. Taiichi Ohno, the fatherof the Toyota production system, blamed this batch-and-queue mode of thinking oncivilizations first farmers, who he claimed lost the one-thing-at-a-time wisdom ofthe hunter as they became obsessed with batches (once-a-year harvest) and inventory(the grain depository). Or perhaps we are simply born with batch thinking in ourheads, along with many other commonsense illusions. For example, time seemsconstant rather than relative or the sun seems to revolve around Earth and not theother way around. But we all need to fight departmentalized batch thinking becausetasks can almost always be accomplished more efficiently and accurately when theproduct is worked continuously from raw materials to finished goods. In short, thingswork better when you focus on the product and its needs rather than the organization,the equipment, or the people, so that all the activities needed to design, manufacture,and ship a product occur in a continuous flow.

Henry Ford and his associates were the first people to fully realize the benefitof flow thinking. Ford reduced the amount of effort required to assemble a ModelT Ford by 90% during the fall of 1913 by switching to continuous flow in finalassembly. Subsequently, he lined up all the machines needed to produce the partsfor the Model T in the correct sequence and tried to achieve flow all the way fromraw materials to shipment of the finished car, achieving a similar productivity leap.But he discovered only the special case. His method worked only when productionvolumes were high enough to justify high-speed assembly lines, when every productused exactly the same parts and when the same model was produced for many years.

After World War II, Taiichi Ohno and his technical collaborators, includingShigeo Shingo, concluded that the real challenge was to create continuous flow insmall-lot production, when dozens or hundreds of copies of a product were needed not millions. They achieved continuous flow by learning to quickly change overtools from one product to the next and by rightsizing the machines so that processingsteps of different types could be conducted immediately adjacent to each other withthe product being kept in continuous flow. These concepts led to what is now knownas lean manufacturing.

1.3 EVOLUTION FROM LEAN TO AGILE ENTERPRISE

When change is discontinuous, the success stories of yesterday have little relevanceto the problems of tomorrow; they might even be damaging. The world at every levelhas to be reinvented to some extent.

Charles Handy,

Beyond Certainty,

Arrow Business Books, 1996

As we approached the new millennium, companies started to build upon those improve-ments gained through application of lean manufacturing principles.



4

The Manufacturing Handbook of Best Practices

Most of the things presented as agile practices are in fact lean productionpractices. The agile enterprise is concerned with a post-lean production paradigm.Lean production is one of yesterdays success stories, although because ideas diffusevery slowly, many companies are still in the process of implementing it. And becauselean is so popular and easy to understand, its a common mistake to assume thatlean and agile are the same. They are not.

With the emerging collapse of mass/lean production-oriented competitive con-ditions, a need has arisen to develop new types of enterprises capable of dealingwith and thriving in a complex and ever-changing business environment enter-prises that can continually reinvent themselves. The strategic vision is therefore thedevelopment of enterprises totally committed to embracing the emerging businessenvironment. This involves creating a strategy that moves enterprises forward inthree interrelated areas:

The niche enterprise

develops and exploits capabilities to thrive and pros-per in the face of increasing diversity (arising from individual customersas well as different markets) and to deal with the wider issues of a frag-menting and diverse world.

The knowledge-based enterprise

develops and exploits capabilities to useknowledge and information for sustainable competitive advantage (in effectacknowledging information and knowledge as a source of wealth).

The agile (or adaptive) enterprise

develops and exploits capabilities tothrive and prosper in a changing, nonlinear, uncertain, and unpredictablebusiness environment.

Agile manufacturing takes its name from the last of these three interrelated areas.However, agility is just one component of a 21st century manufacturing enterprisestrategy. The issues of knowledge-based and niche enterprises need to be consideredand, most importantly, the interrelationships among the three elements should beaddressed.

Many companies have moved forward in the area of niche enterprise, usingconcepts and strategies linked to what is called mass customization (individuallycustomized products at mass production prices). However, many have not activelyexplored the issue of knowledge enterprising, although more and more companiesare starting to explore this area and to better define and further develop the concepts.Few companies have fully understood, let alone implemented, agile attributes (mean-ing that capability to deal with change, uncertainty, and unpredictability). None haslinked the three elements together.

Therefore, although much is now known about how to mass customize, verylittle is known about what creates agile attributes. When companies involved in masscustomization are analyzed, the lack of agility is often very apparent, since most ofthe mass customization techniques assume only limited uncertainty and unpredict-ability in the business environment. Agility is therefore truly a frontier activity,challenging many of todays best practices.

The key points to understand are as follows:




5

Agile manufacturing is a strategy aimed at developing capabilities (the enter-prise platform) to prosper in the next century. In this respect it is similarto a manufacturing strategy in that it should support business and marketingstrategies. However, these strategies also need to be modified to take advan-tage of agile manufacturing capabilities.

As a strategy, agile manufacturing is concerned with objectives, structures,processes, and resources and not with individual point solutions, particulartechnologies, methods, etc. considered in isolation.

The emphasis is on designing the enterprise as a whole so that certain char-acteristics are achieved and not on the piecemeal adoption of quick fixes,prescriptions, and panaceas.

Agile manufacturing may require some current best practices, lean productionconcepts, technologies, and taken-for-granted assumptions to be re-evalu-ated, modified, or even abandoned.

In the same way that mass production resulted in the demise of many craft-based firms, agile manufacturing is likely to lead to the eli

Documents

[Jack B. ReVelle] Manufacturing Handbook of Best P(BookZZ.org)