Okay, I know I said I would write about batch sizes and measurement but I have to digress on this blog and come back to it next blog!
I recently spent a week in the beautiful country of Ireland, experiencing the culture and seeing family I hadn't seen in a long time. What a fantastic time! There were several things there though that I noticed that tie in with the theme of process improvement.
First, Poke Yoke! As many international travellers know, Ireland is one of the few places where the driver is on the right side of the car and drives on the left side of the road. Being a place with many tourists who drive the opposite, both the city of Dublin and the car rental agencies have tried to reduce the amount of accidents that happen. In Dublin, at the crosswalks, are reminders on the road to look the right for traffic. In my cousin's rental car were three!, yes three big stickers reminding him which side of the road to travel on! Simple things that many people are already aware of but not everyone is from around here! (plus I think my cousin still managed to go on the wrong side of the road at least once - only for about 5 seconds though!)
Second, Queing theory! Oh, boy but airports love queues. And the worst part is, you don't always know what they are for. Okay, my Canadianism kicked in when we hit Heathrow at 6am (1am back home). As we were switching airlines and terminals, we had to go through security, again, when we got to the new terminal. Once we were through there was a counter for the airlines we were now going on with a sign for transferring travellers. We didn't know what it was for, but being good Canadians, we lined up! Fortunately, after seeing another couple from Canada go to the desktop and leave without doing anything, we stopped them and discovered that since we already had our boarding pass we could skip the queue! But, there we were, Canadians in a line! Poor communication and signage though on the part of the airlines!
Customs is always the worst when it comes to queues. First of all, why have so few desks open when you know 10 international flights have all landed at basically the same time? Second, never jump queues - the line you are in will always be the slowest. Third, why is there a customs person at the front of the line looking at people's forms only to send us into lines? Last, have a floater or manager or someone around so that when a person passes out (not me!) due to the incredible heat in the queue, it does not take 3 customs officers to leave their lines for 10 minutes to deal with it!
Queues and roundabouts are flow streams. They need to allow people to move continuously to their objective with minimum interruption. When functioning well, it is a great experience, but when functioning/designed poorly, it is a nightmare!
Wednesday, October 21, 2009
Thursday, October 1, 2009
Batch sizes and Ice Cream
Two of my biggest issues with manufacturing are batch sizes and measurement. The next few blogs are going to be focused on these though I will try to only write about one at a time!
Let’s start with batch sizes. One of the first lessons about economics is the economies of scale. Bigger batch sizes mean fewer turnovers and therefore should mean less cost associated with the product. This is constantly upheld when purchasing raw materials. If larger batches are purchased, then you get a discount.
This logic of bigger batch size only works though IF you have someone to sell the product to. Otherwise you end up with big inventories in your warehouse, pressure on Sales staff to find ANY market, a reduction in price as you try to sell of the inventory and a cash flow issue. This becomes even more pronounced when you are in an industry which either has seasonality to it or has actual expiry dates of products.
Bigger batch sizes are often the result of “in case” thinking. We need to make sure we can produce enough in case we get that order with Customer X. Or, we need to make sure that we have inventory on hand in case the machine fails and we can’t produce. Or, what if our competitor has an issue and suddenly can’t produce, we need to have a product so we can get the sale immediately. How often do these things happen?
How do we get to this thinking? Being told you are getting discount can often override a practical look at the full impact of a decision. Have you ever gone to the grocery store and bought a 2L container of ice cream because it was on sale? Even though you weren’t too sure if you even liked the flavour and it was in the middle of winter? You end up throwing out the ice cream 3 months later because no one ever ate it. In the meantime, you have paid electricity to keep the ice cream cool, there is a huge amount of waste because you never get the true value of the product since you throw it out halfway through and, because you have ice cream in the freezer, you don’t buy what you really want since you know you have to finish off the first container still.
The flipside to throwing half the ice cream out is to either indulge, eating it all, or throw a party and have people come over and share it with them. In the first case, you feel disgusting and bloated, not able to function to the level you should as well as having extra fat know in the system (ie inventory!) which takes longer to get rid of. As for the second, you have the extra expenses associated with the party – sending out invitations, getting enough bowls and spoons for everyone and having to wash everyone’s’ dishes after. Plus, you really can’t just give them ice cream. You’ll have to get cones, strawberries, maybe even make dinner too. All because you have too much ice cream. It’s kind of like having a sale. You need to advertise it is going to happen and sometimes you have to bundle your one product with others. Then there is the energy costs associated with the party! I mean, production.
So was it really worth it to buy that 2L container of so-so ice cream? Sure you got it on sale and you don’t have the gas costs associated with driving to the store to get more, but did you really need the quality/characteristics of that ice cream?
Let’s start with batch sizes. One of the first lessons about economics is the economies of scale. Bigger batch sizes mean fewer turnovers and therefore should mean less cost associated with the product. This is constantly upheld when purchasing raw materials. If larger batches are purchased, then you get a discount.
This logic of bigger batch size only works though IF you have someone to sell the product to. Otherwise you end up with big inventories in your warehouse, pressure on Sales staff to find ANY market, a reduction in price as you try to sell of the inventory and a cash flow issue. This becomes even more pronounced when you are in an industry which either has seasonality to it or has actual expiry dates of products.
Bigger batch sizes are often the result of “in case” thinking. We need to make sure we can produce enough in case we get that order with Customer X. Or, we need to make sure that we have inventory on hand in case the machine fails and we can’t produce. Or, what if our competitor has an issue and suddenly can’t produce, we need to have a product so we can get the sale immediately. How often do these things happen?
How do we get to this thinking? Being told you are getting discount can often override a practical look at the full impact of a decision. Have you ever gone to the grocery store and bought a 2L container of ice cream because it was on sale? Even though you weren’t too sure if you even liked the flavour and it was in the middle of winter? You end up throwing out the ice cream 3 months later because no one ever ate it. In the meantime, you have paid electricity to keep the ice cream cool, there is a huge amount of waste because you never get the true value of the product since you throw it out halfway through and, because you have ice cream in the freezer, you don’t buy what you really want since you know you have to finish off the first container still.
The flipside to throwing half the ice cream out is to either indulge, eating it all, or throw a party and have people come over and share it with them. In the first case, you feel disgusting and bloated, not able to function to the level you should as well as having extra fat know in the system (ie inventory!) which takes longer to get rid of. As for the second, you have the extra expenses associated with the party – sending out invitations, getting enough bowls and spoons for everyone and having to wash everyone’s’ dishes after. Plus, you really can’t just give them ice cream. You’ll have to get cones, strawberries, maybe even make dinner too. All because you have too much ice cream. It’s kind of like having a sale. You need to advertise it is going to happen and sometimes you have to bundle your one product with others. Then there is the energy costs associated with the party! I mean, production.
So was it really worth it to buy that 2L container of so-so ice cream? Sure you got it on sale and you don’t have the gas costs associated with driving to the store to get more, but did you really need the quality/characteristics of that ice cream?
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