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What is lean? The majority of peoplewhen asked this question reply‘waste elimination’. This is true,however, Taiichi Ohno’s originaldefinition of lean was “the completeand thorough elimination of waste

to reduce the timeline from receipt of customer order todelivery”. To achieve this more complete definitionnecessitates the creation of product flow achieved throughthe implementation of levelled production. This is thefoundation of the Toyota Production System, the origin oflean. Levelled production is an essential enabler for movingto flow and to becoming truly lean.

Why do so many companies focus on the wasteelimination aspect of lean, while ignoring flow and levelledproduction? One reason is that when people come acrossterms like ‘every product every interval’ and ‘one piece flow’they seem to be impossible to apply in their business. Inaddition they think levelled production can only be achievedwhen there is stable demand – and who has that? Levelledproduction seems ridiculous for their business so it receives

little further thought. On the other hand, people easilyunderstand eliminating waste; it is something they havebeen doing for years. Now value stream maps show themlots of new waste to work on, which enables them to say theyare doing lean.

There is another reason, which is a lack of awarenessand therefore understanding of how Toyota originated andprogressively developed the implementation of productionlevelling. This helped them to achieve the final goal ofone-piece flow matched to market pull through Takt time.

ESTABLISHING PRODUCTION LEVELLINGOne way to begin the journey of levelling is to create a fixedproduction schedule that is rigidly followed. This meansmaking the same products, in the same sequence, in thesame volume, on the same equipment, at the same time, withthe same sequence, every cycle. This is where people start tosay “But that’s impossible for our business!” Actually it isnot as difficult as people think, if you start with just theproducts that drive the majority of the volume and put thoseinto a fixed cycle first.

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Flow IS TOO MUCH OF THE FOCUS IN LEANIMPLEMENTATIONS PUT ON WASTEELIMINATION AT THE EXPENSE OFESTABLISHING A LEVEL FLOW? by Ian Glenday

As this fixed cycle schedule is repeated, a phenomenon Icall ‘Economies of Repetition’ soon starts to emerge.Essentially it is about going down the learning curve andestablishing routines so that you can create standard workand continuous improvement. Quite simply, the more youdo the same things in the same sequence, the better andmore consistent you will naturally become. Economies ofrepetition is the magic that comes from fixed sequenceschedules, which delivers above expected improvements inquality and productivity with less overheads and stocks.These gains in capability and capacity are significantenough to enable more products to be progressivelyintroduced into the sequence, and to make the cycles faster,shorter and more flexible in order to progressively matchvolumes to actual market demands. The logical conclusionof this progression of levelling is one piece flow matched tomarket pull through Takt time.

A TOOL TO HELPA useful tool I have come to call the ‘Glenday Sieve’ separatesproducts (SKUs) into four groups based on sales volume (or

value if this is more appropriate). The results shown aretypical. Many people insist that it is impossible for such asmall percentage of the product range to account for 50% ofthe sales volume in their business. Yet when the analysis isdone, it is invariably found to be the case. These results areintuitive for some and genuinely shocking for others. Eitherway, the power is in the indisputable information it provides.

It is not difficult to develop a fixed sequenced cycle for just6% of the products, and then value stream mapping theseitems to help unravel the spaghetti pathways one usuallyfinds through the plant. The end result is a green stream forthese few high volume products, with shorter throughputtimes and continuous flow.

The yellow SKUs are where to direct your capability ➔

Cumulative Cumulative Colour% of Volume % of SKUs code

50% 6% green

95% 50% yellow

99% 70% blue

Last 1% 30% red

Fig 1:GlendaySieveAnalysis

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improvement efforts, with exercises such as changeoverreduction and smaller batch sizes making it easier tointroduce these products into the cycle. This typically resultsin a staggering 95% of the total volume yet only 50% of theproduct range now running in a fixed sequence ‘everyproduct every cycle’ schedule.

The blue SKUs are typically 20% of the product range,but just 4% of sales. There are opportunities here for theharmonisation of raw materials and packaging in order thatthe final product appears different to customers but makesthese SKUs easier to include in the cycle. For instance,differently coloured bottles with the same shape, or labelledrather than printed cartons. These may sound like simplethings but they can make a big difference in getting theseproducts into the cycle and making them flow.

The red SKUs will need to be reviewed carefully todetermine their real business cost versus their benefit. Theimpact of these products to the total supply chain and overallcompany costs, including overheads, must be understood tobe certain that the benefits of retailing them genuinelyoutweigh the costs. It is not uncommon for companies to

200%

150%

100%

50%

0%1 2 3 4 5 6

Percent variation of sales

Product B

Product A

Fig 2: Product variability over a six week period

PRODUCT A PRODUCT Bactual volume percent actual volume percent

Week sales variation variation sales variation variation

1 15745 472 103% 345 70 126%2 15785 512 103% 256 - 19 93%3 14230 -1043 93% 410 135 149%4 14896 - 377 97% 137 -138 50%5 16005 732 105% 335 60 122%6 14975 - 298 98% 167 -108 61%

Average 15273 275

2

Applying the Glenday sieve

A manufacturer of savoury snack productsproduced 285 SKUs on 15 packagingmachines, each engineered to runnumerous product types and pack sizes togive production flexibility. The sieve analysisshowed just 7% of the product range, 20 items, accounted for 50% of sales.Using these 20 green items to createproduct families based around producttypes and pack sizes resulted in a further96 SKUs becoming part of these 20 greenfamilies, totalling 41% of the range, yet astaggering 92% of the sales volume.

Fixed cycle schedules wereimplemented for these families on certainmachines each week – not too difficult atask with only 20 families to plan, ratherthan 116 individual products as before.However to be able to do more frequentchangeovers required faster throughputs.Analysis revealed the bottleneck was themain fryer, which had a capacity of 1.8T perhour, whereas the filling machines had acombined capacity far in excess of this. Arapid improvement workshop, kaizen blitz,was run on this yellow constraint. As istypical with a well run blitz, the teamachieved an amazing result through aseries of breakthrough and continuousimprovements, managing to get the

IEE Manufacturing Engineer | April/May 2005

throughput on the fryer up to 2.2T per hour– not to be able to produce more but tobe able to devote more time tochangeovers on the fillers.

What was more difficult at first – apartfrom stopping people interfering with thefixed cycles – was accepting that fixed cyclepacking machines needed very differentperformance measures to the othermachines. However, the accountantrealised this separation of the green stream(41% of the product range yet 92% of thesales) from the red items (8% of the salesyet 59% of the range) gave him a muchbetter opportunity to calculate the real costof producing these items. This made someof the decisions about whether to producethe red items much more objective, incontrast to the emotive and subjectivearguments inside the company wheneverthey tried to tackle reducing the productrange tail with sales and marketing.

Meanwhile amazing things werehappening as a result of the fixed cycles forthe 20 green families. No fire fighting,deliveries of raw and packaging materialsto match the cycle, changeovers becomingfaster and lower stocks with bettercustomer service. The operators also foundthe system a lot easier, less stressful and

they felt more empowered even thoughthey were producing more output per hourthan before.

At the same time people were workingon blue opportunities to make the wholesupply chain easier to manage and reducethe chances of things going wrong. Forinstance products were previously packedinto printed cardboard cases because theywere cheaper to buy than using stick-onlabels that could be applied on line.However what this simple costing did nottake into account was the complexity forplanning, ordering, stocking and handlingof over 200 different cases – and theproblems that caused with inventorychecking and errors in the data.

The company moved to naked casesthat were labelled online – even thoughthe simple purchasing costs looked on theface of it higher, the overall complexity wasmuch reduced. The combined effect ofblue improvements such as this was farless disruption to production, more spacein the warehouse and factory floor, lessfixed costs associated in the planning,ordering, stocking and handling ofmaterials, improved reliability throughoutthe supply chain, more flexibility and loweroverall costs.

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recognise through this analysis that they actually have twodistinct businesses. One is high volume with the sameproducts, for which the plant, business processes andperformance measurement systems were designed. Theother is a low volume customised job shop operation, whichis being managed through the same equipment, processesand systems for both green and red SKUs, to the detrimentof customer responsiveness and profit margins.

A FURTHER FACTOR TO CONSIDER An understanding of the Central Limit Theory is alsohelpful in creating levelled production and flow, especiallythe impact on demand variability. Put simply, bigger sellersusually have less percentage variability than smaller sellers.This is because, in general, the sales of the bigger volumeitems are coming from a larger number of customers, so thevariability in demand from individual customers is balancedout at the aggregate level. Correspondingly smaller sellerscome from fewer customers so don’t have as much of thisbalancing out, resulting in higher percentage variability.

Ironically, because people generally measureproduction and sales at the unit level, not percentage,many consider the bigger sellers to have the greatestvariability because the volume changes are large (fig 2).Whereas it is typically the smaller sellers that trigger shortterm plan changes and fire fighting, which then affects theproduction efficiency of the larger volume items. Thefigures shown are for actual sales over a six-week period

Cost reductionThrough

Eliminationof

MUDA(= Waste)

Just-in-time Autonomation

Levelled Production

Toyota Production System

World ClassProduction

To achieve lean necessitates thecreation of product flow achievedthrough the implementation oflevelled production

‘‘

’’

for a well known brand of yoghurt, comparing twoproducts with very different sales volumes.

This raises two points: With their higher level of demandvariability, what is the real cost impact on the business ofthe ‘red’ SKUs?; With the higher percentage stability ofdemand for the ‘green’ SKUs, how difficult is it in reality tocreate levelled production and fixed schedules for theseitems?

Implementing levelled production to help achieve movingto flow may not be as impossible or ridiculous as manypeople seem to think. Is it not worth a little moreconsideration? What indisputable information would theGlenday Sieve reveal for your company? ■

Ian Glenday is a senior fellow at the Lean EnterpriseAccademy – the advanced source for lean thinking in theUK. Various other features are available at www.leanuk.org

One Business or Two?A manufacturer of hydraulic pipes and couplings produced 2000 SKUs with a 48-hour lead time to customers, something they were finding costly and hard toconsistently achieve. Analysis showed that over 50% of sales came from only 92 products, or 5% of the range. The other products were ordered infrequently insmall quantities, even as single items.

Armed with this information, the company decided it needed two types offactory, a high volume repetitive facility and a flexible jobbing shop. It was not costeffective to build two factories or even to physically separate the equipment. Thecompany had to find another way. They worked out what equipment would beneeded for the high volume SKUs in a fixed cycle and the staff required. Thisequipment was painted green and all the employees were given green overalls.

The remaining equipment was painted beige with beige overalls for theemployees. Although the equipment and staff were totally intermingled on theshop floor, each business operated totally differently. The green factory had fixedhours of work, JIT deliveries and improvement activities focused on achieving fastercycle times and increased productivity. The beige factory had variable hoursaccording to the level of work each week from the variable demand of the smallsellers, purchasing of materials only when required and running improvementactivities focused on flexibility and responsiveness.

They had effectively created two businesses with policies, procedures andmeasures appropriate to each. However the added value, flow and what was seenas muda in each business was completely different. Although on paper the beigefactory looked a more expensive way to make products than the green factory,the reality was that it achieved the required customer service without causing short-term plan changes and fire fighting, as in the past. It enabled standard productsto be produced in a totally fixed and repetitive cycle, achieving levels of efficiency,throughput and lower stocks across the supply chain never thought possible,resulting in better customer service and margins while still maintaining the range.

A footnote illustrates the mind-set issues faced when moving to Lean. A visitorto the site congratulated the MD on what he had achieved and asked him howlong it would be before all the workers in green were sufficiently trained andexperienced to become flexible enough to be given beige overalls. The MD’sresponse was that would never happen and the visitor should try and answer forhimself why that was. Privately the MD shook his head, as he knew the visitor hadnot understood and probably never would!

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