Flow Manufacturing

Software, jigs and fixtures, neat stacks of crisply machined parts, and above all, the numbers. The journey towards manufacturing efficiency has led me to some interesting conclusions about product and process design, but without a doubt the most important has been the concept of flow manufacturing.

Michael Dresdner introduced me to flow manufacturing in 1995, and gave me a copy of The Goal, by Eliahu Goldratt; written in novel form, it is a very good introduction to the subject. I was thinking about building guitars on a larger scale, and started reading more about the basic concepts of manufacturing. One particularly interesting book is Toyota Production System, by Yasuhiro Monden, with a forward by Taicho Ohno, former Vice President of Toyota Motor Corporation, and generally recognized as the father of flow, or 'just in time' manufacturing. Dr. Monden's book coherently defines the flow manufacturing philosophy and the production reality from which it evolved. While both these books deal with large scale production, you can learn a lot from them if you are willing to spend time analyzing your process, and developing an implementation strategy.

The basic idea of flow manufacturing is that individual work centers should make only what is actually needed by subsequent or downstream operations, without making any extra parts, and that manufactured and purchased parts should be delivered to downstream operations as close as possible to the time that they will actually be needed. Instead of pushing large uniform production batches through the factory with a centralized scheduling process, in flow manufacturing sales generate work and material orders which pull individual units of product through the factory to customer delivery.

This flexible, demand driven system has many benefits. First of all, it minimizes the amount of inventoried work held in the shop, called 'work in process', which releases valuable cash resources for more productive use. For example, let's say you batch make 100 steel string bridges at a time, at a cost per bridge in labor and material of $10. At 4 guitars per day you will need to start making bridges about every 25 workdays. In practice you would set a bridge reorder point based on your bridge making response time. Say that based on your level of tooling and available labor it takes about 2 days for that 100 piece bridge order to complete in your shop, and let's say you want 3 days advance notice before you have to start making bridges. This now means that you have to hold an additional 5 day supply of bridges so you won't run out. 3 days notice is very optimistic if you have lots of batch made parts to schedule, but lets assume you have good tooling and plenty of extra time available to get right on the job. Now we have 20 bridges held as a reorder point and a reorder quantity of 100 bridges for a total of 120 bridges. This is equivalent to taking $1,200 in cash and putting it in a jar, taking out $40 per day until you have $200 left, then over the next 5 days putting $1,000 dollars in again. If you can cut the bridge making batch runs down to 4 bridges at a time, and make bridges every day, you can write yourself a pretty substantial check, cash it and use that money to buy a small shaper.

But that's only the beginning. Bridges are pretty small, and you probably only make a few options; how about necks? If you have 5 different necks available, and you batch manufacture, you have to hold enough inventory to be able to respond to demand for all 5 options. Necks are more expensive than bridges, plus you have to dedicate more climate controlled space in your shop for storage.

It gets worse. I bet you you've got necks lying around your shop that you will never use. I'm not talking about mistakes that should be scrapped, or marginal quality that could be 'repaired'; these are useable necks that you have invested labor and materials in and could be perfectly good necks. If you are batch making parts to forecasted sales you will probably generate dead inventory on top of your working inventory (put a little more $ in that jar).

Let's say you are a 1 man shop, and you have figured out that you need to produce somewhat less than 1 guitar per week to meet your expenses plus make some margin of profit. You draw from your inventory of parts for 10 weeks, then you take out 2 weeks to make the parts you need for the next batch of instruments. As long as you can cover the time and materials consumed in the batch making process with your 1 guitar per week shipping schedule while you are actually shipping and not making parts, you will be profitable.

Start increasing your production rate and hiring some employees. You will quickly find out that paying overhead and payroll and not shipping is a very bad idea. Think in terms of driving on a highway. At 25 mph you can get by with a closer following distance than you can at 75 mph. If you have to shut down daily production to make parts this means that you will have to keep a large inventoried cushion of cash so you can make essential payments with no money coming in. Better get a bigger $ jar. You will need that 'bigger jar' at higher production rates anyway, but there are certainly better ways to use it.

So now in addition to managing the daily production which uses up batch manufactured parts, you want to move towards concurrently keeping all the batch manufactured part bins adequately full. In order to meet the demand within required response times, you will start increasing the number of parts held in inventory before generating that reorder. This will give you the cushion you need to keep your daily production line shipping. BIG JAR. But at least by shifting the required cushion or following distance from cash (to pay bills when you are not shipping) to work in process (for uninterrupted shipping) you can generate the consistent cash flow you need pay for that cushion in smaller increments. Better yet, replace the specific batch making operation with a daily occurring process so that the work in process cushion is limited to the minimum required for reliable productivity.

Let's talk about that daily routine in the shop. If you have dedicated batch part making 'bin fillers' working in a 'millroom', you will need some excess labor capacity to ensure adequate response time (easiest way is to work overtime when necessary). If workers with consistent daily routine production tasks are asked to also fill the batch part bins, setup machinery will take longer to complete the batch runs, increasing response time and inventory reorder levels. In addition, the shop manager will have to direct workers who don't have clearly defined production jobs all the time, which adds considerably to the management load. This is just as true when you, the shop manager, are directing your only worker, yourself. Flow manufacturing moves all your labor hours towards consistent efficiency.

Finally consider sales. Our ability to fill our dealer's orders in a timely way helps them sell our guitars. If we just finished our neck run and a dealer orders a "special", we either have to set up the tooling for a single neck (plus a few extra for dead inventory), wait until we run necks again, or make the neck by hand.

Still with me? Everyone wants to talk about nifty jigs and fixtures, but I can tell you that for all the considerable investment we have made in jigs and fixtures, flow manufacturing has moved us farthest towards increased production efficiency. Does this mean that we don't batch make any parts or hold any inventory? Actually we try to hold a controlled cushion of work in process to smooth our production. Developing a fully mature flow manufacturing system is an evolutionary process, in which you will move through stages or plateaus. Just keep that goal clearly in sight.

Abe Wechter