lean & 5S' in Construction #10 April 2006

***************** Inventory – Solutions to Causes

In the last newsletter we discussed some causes of inventory waste and possible solutions.  Here are some causes and solutions:

Cause: The farmer just-in-case thinking.  We hold on to returned parts and material just in case we might need it again. After all, it is already paid for!  Since we have the room we feel storing it is not a cost.

Solution: Get rid of the excess unless you can use it soon. Once material is stored, the only effective way to use it is to take inventory and maintain accurate records. This includes inventory counts, data entry and accounting for discrepancies in the counts. Even if you don’t count and keep records of it, there is still the foreman’s time shopping through the piles to find usable product.  Usually there is not enough product available to fill an order so more must be purchased anyway. The time spent by the foreman and others in picking through the inventory and still ordering more is usually more costly than just ordering all of the material from the supplier.  Free product isn’t really free. Keeping material just-in-case can also result in product becoming weather damaged. Many times the just-in-case never happens and we end up with obsolete product. I will never forget having to throw away seven values at a job site that had been exposed to weather because they were keep just in case the customer needed them. They were still in their original, but now weathered boxes.  The customer had changed its process and no longer used them but we had kept them around for years. I was told they were worth about $280 each. We didn’t have time to sell on e-bay so they went to the trash.  What a double waste!

Cause: Someone forgot to order some material once and it delayed the crew. So we keep inventory to avoid any delays.

Solution: The real cause is a lack of reliable detailed look-ahead planning. When look-ahead plans are used correctly we don’t often run short on material.  We may still need to keep inventory but how much? If we are serious we can minimize the amount and keep our cash flowing.

Cause: Because of a lack of trust in the rest of the company, stashes are maintained.

Possible Solutions: Look at the root causes for unreliable delivery of materials. Map out the process and identify where the breakdown is occurring.

• It could be because the field is not placing orders in a timely manner.  Of course ‘timely’ is always up for debate. The shop usually wants fabrication orders a week in advance and the field wants to send it in the same day it is needed.  Setting rules of release can help solve this as well as establishing agreements on how rush orders are to be handled.
• Unreliable delivery may result from field material requests are handwritten and are hard as doctor’s prescriptions to read. It might be that each foreman calls the same material by different terms causing confusion to those ordering and/or filling the orders. One company solved both the hand written and different names problems by setting up an excel spreadsheet with all the material specified for the specific job on it. The foremen had access to computers at the site trailer and could fill out the material request by filling in quantities.  This was faster than doing hand written forms since much of the base information was already filled in and it was emailed so it saved transit time.  The list of approved material was not as long as one might expect!
• Material deliveries may be unreliable due to incomplete orders being sent by the suppliers. While this is not entirely in the contractor’s control, improvement can be made by working with the supplier to determine why they are sending partial orders. Often the problem lies in the last minute ordering by the field and the failure to communicate in advance with the supplier about upcoming jobs needs and schedule.
• Once the reliability of material delivered to the site is improved then do a 5S sorting on all stashes at sites.

***************** Lean Code Talk

“Managers, engineers, support personnel and manufacturing workers at the Boston Scientific Corp., Wayne, N.J., plant often talk in code. You frequently will hear them mention "Core 5," and the numbers "40-20-25-50."

Combined, these code words help everyone at the facility stay focused on principles of the lean manufacturing programs that they have had in place since 2002. "Core 5" refers to five primary values at the heart of the facility's efficient manufacturing system. They are: management/leadership, metrics, productivity, yield and quality.

Each of these values holds equal weight in the facility's drive to hone its operations, and each has been the subject of specific improvement programs or kaizen events.

The numbers "40-20-25-50" have a similar role as reminders of the facility's goals. Boston Scientific Wayne annually has set targets to reduce manufacturing space by 40%; to lower labor costs in its products by 20%; to increase speed of production by 25% and to reduce scrap by 50%. The metrics are constantly reviewed, and results are reported back to everyone at the plant on a regular basis.”

Source IndustryWeek Best Practices 04/05/06

***************** A tip on Housekeeping

Mike Clark of Matherly Mechanical Contractors, Inc. in Oklahoma shared his guideline about housekeeping.

Housekeeping and job cleanliness are very critical to the overall success of a project. If you are working for a general contractor that has a history of dirty messy unorganized jobsites you might want to add a little extra in your estimate for working in this environment.

Padding the bid is a solution and can help recover the cost of housekeeping. Another solution is to try to work with the General Contractor to clean up the area. The Japanese say an unclear area is not only unsafe and limits productivity but it also hides problems. We want to see and eliminate problems. What problems may be hidden by poor housekeeping in our shops, in a service trucks or at a site?

***************** A Quick Thought

Many good American companies have respect for individuals, and practice kaizen and other TPS* tools. But what is important is having all the elements together as a system. It must be practiced every day in a very consistent manner – not in spurts – in a concrete way on the shop floor.  Fujio Cho, President, Toyota Motor Company

TPC = Toyota Production System or Lean.

*** Share your Lean successes – Let me know your Lean success stories and I may include them in future newsletters.

For more information about Lean applications to construction and especially the 5S’s contact Dennis Sowards at his office at 480-835-1185 or his cell at 602-740-7271 or at his web site: www.YourQSS.com