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Kaikaku or Kaizen – Questions you need to answer before you change the layout

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Operations Excellence by Sepp Gmeiner
Sepp Gmeiner is a partner with Lignum Consulting. For feedback, questions and/or suggestions please email s.gmeiner@lignum-consulting.com

Most of us have heard about Kaizen – the change for the better. A method out of the Toyota Manufacturing System (Lean manufacturing) mostly referred to the method of changes in small steps. There is also Kaikaku, Japanese for ‘radical change,’ which is often used for major game-changing improvement projects.
Changing the layout of the plant is commonly suggested as the solution for operational problems. However, it is not always the solution and other improvement projects, if properly selected, bring a higher return for the effort. Therefore, before going to the expense and interruption of a layout changeover, look around the organization and ask yourself some questions.

1. Sales and marketing
Is distribution appropriate and is marketing in line with overall goals?
Since we are focusing more on operational issues, we will go no further on this point, other than to point out that shortcomings in this major area of the organization cannot be compensated even by the best layout. If major changes are expected on the sales side of the organization they should at least be defined before changing the layout. Operations should follow sales. 

2. Management team
Is the management team complete? Does it have the required competence and the right motivation?
Having gaps in this most-important category has a much bigger impact on the bottom line and the long-term survival of the company than, for example, reducing the transport distance between machines. Of course if you have a bad layout and material flow as well as big gaps in your management team, you should address both.
In the case of smaller owner-operated companies where you cannot do both at the same time, addressing the gaps in the management team should be addressed first.

3. Procurement
Is your procurement strategy coordinated?
Efficient procurement is more than ‘a dollar saved is a dollar earned.’ All the savings go right to the bottom line, so your procurement strategy needs to be in line with your overall operations strategy. In a time of ever-increasing outsourcing, you need to pick the right items to outsource. Having an efficient costing model and accurate costing data will guide you into the right decision-making. 

4. Product engineering
Are your products engineered for ease of manufacturing?
It is not enough to have a product developed for marketing and sales. It also needs to fit into the process chain and organization of your factory. Products with no commonality to the rest of the product offering might cause unexpected problems and extra cost. Producing products with significantly different quality requirements in the same production facility will cause confusion and, in the end, extra cost. Increasing the raw material variety or increasing design details might not show up in the standard product costing, however it will create additional ‘headaches.’ I am not saying that you should produce only what is simple to achieve. I am, however, saying to be aware of every increase in difficulty you are implementing. If your plant can master it and your competition cannot, you have the advantage.

5. Support systems
Are you bringing the right information efficiently and quickly to the right place?
Too often we see that the order book is sufficiently full, but there are no orders ready for manufacturing. The orders have been commercially accepted. However, operationally/technically, they are incomplete. They are stuck in engineering. Improving the layout in this situation would not provide a real benefit. The production processes would be done quicker, however, the ‘waiting-for-information-time’ would increase accordingly. Cleaning up the front-end processes and implementing or fine-tuning order entry software are the types of projects with a high potential return and impact. Sometimes, relatively simple projects such as fixing inaccurate bill of materials can make the operation run much smoother. 

6. Manufacturing model
Do you use the appropriate manufacturing model?
Not having the parts ready for assembly/packing when required is a typical symptom of using the wrong model. For example, orders are often grouped in batches for higher machine efficiency. If the batches are too big (and too big could mean one week or twice per week batches, depending on your facility), the parts will not arrive in a timely manner in the pre-assembly buffer. Then rush orders for late and missed parts will interrupt the planned sequence and add to the storage at the assembly/packing process. The possible productivity gains by having all parts available, on time and at the right place are, in most cases, much higher than layout change could bring. 

7. Technology
Are there gaps in the currently installed technology? Would one or a few simple, specific machines bring a positive impact to the overall performance?
Based on our experience, some flexible equipment (CNC machines) often has significant overall impact. Asking the machine suppliers to propose improvements, visiting tradeshows or networking with friendly industry colleagues will give you solutions.

8. Machine maintenance
Is the machine up time at an acceptable level?
We are all striving toward lower inventory levels and less work-in-progress. However, as we fine-tune, some of the operations become more sensitive to machine breakdowns. A systematic approach to preventive maintenance, predictive maintenance, or total equipment maintenance will have a big influence on the operations performance. The investment strategy needs to include securing machine up-time.

9. Workplace design
Are the individual workplaces trimmed for efficiency and safety?
Even when it is not time for a major overhaul of the plant layout, a number of details can be improved. This includes ergonomics (workplace dimensions such as table height), availability of tools and set-up plans, to scissor lifts and in-feed tables.

10. Human capital
Are we using all our people to the fullest possible extent?
The Lean Manufacturing philosophy, Continuous Improvement Method, and quality systems such as ISO 9000, and WOODMark®, Six Sigma, and my favorite, 5S, are all methods to use existing resources within the operation and to bring positive change. The 5S method, for example, is a systematic approach to housekeeping and, in my opinion, a prerequisite to any higher level of change. You do not need capital or extensive training for your staff to clean up! What is needed is management commitment and discipline. Once the organization realizes how much easier everything goes with management commitment and discipline, every other improvement project will flow more easily. There are many improvement projects available in each operation. In a world of limited resources you need to select the most urgent ones and those with highest impact (Theory of Constraints), and then somewhere in the list of priorities there might also be a layout change.

Layout change
Once the above questions have been addressed, you may decide that a layout change is not yet required. If the facts confirm the need for a change, an appropriate layout can be designed and machines can be moved. 

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