Reducing inventory is one of the goals of lean manufacturing. In my last post I described why we need inventory in the first place, and why too much inventory is bad for you. Now let’s look at how we can achieve a good inventory level. First, an important statement: Inventory is not a lever that you can pull. It is more the result of other good lean improvements. In fact, merely pulling this lever and reducing inventory will actually make things worse. To gain the true benefits of lower inventory, other measures have to be taken. In this post I would like to describe what happens if you simply reduce inventory, and how to do it to achieve a lower inventory without causing mayhem in the process.
Leveling
Why Do We Have Inventory?
Inventory is expensive. Depending on your environment, inventory will cost you between 30% and 65% of its value. Toyota is known for (among other things) small inventories. Whereas Western companies often have weeks’ or even months’ worth of inventory, Toyota’s inventory is measured in hours.
It is no surprise that inventory reduction is high on the list for many companies. In fact, the term “lean” by itself implies lower inventories. But why do we have inventory in the first place? And why is (too much) inventory considered evil in lean manufacturing? In this post I would like to tell you the reasons why we have inventory in the first place, and why too much is bad. In my next post I will explain what happens if you simply reduce inventory, and discuss in more detail better approaches on how to reduce inventory.
The Three Fundamental Ways to Decouple Fluctuations
Manufacturing systems have fluctuations. Material may arrive sooner or later. Production may be fast or not. The customer may order more or less. Generally, the less fluctuations you have, the more efficiently you can produce. Toyota puts in an enormous effort to control fluctuation, but even they have fluctuation. In this post I would like to show you the three basic ways how you can decouple fluctuations: inventory, capacity, and time.
Introduction to One-Piece Flow Leveling – Part 2 Implementation
One successful approach to leveling is one-piece flow leveling (also known as single-piece flow or continuous flow). Last week I described the theory. This week I talk about implementation, and its combination with capacity leveling. I also look at what else there is in leveling.
Introduction to One-Piece Flow Leveling – Part 1 Theory
One successful approach to leveling is one-piece flow leveling, which I would like to talk about today. Another successful approach is capacity leveling. These can also be combined. (But please do yourself a favor and stay a way from a longer fixed repeating schedule EPEI leveling.) As the name already says, you should drive your lot size toward one. In addition to one-piece flow, this approach is also known as single-piece flow or continuous flow.
The Folly of EPEI Leveling in Practice – Part 2
In my last post, I started to show the main reasons why EPEI leveling with a fixed repeating schedule so often fails (for details on EPEI leveling, see Theory of Every Part Every Interval (EPEI) Leveling). This post continues with more reasons and also gives some advice on how to reduce the damage or even increase its chances of success. It also has a suggestion for a test to determine if your system is ready for leveling.
Again, there seems to be a lean religion that claims that putting up a leveling box will lead to salvation. Well, Lean is not a religion or magic. Lean is hard work, and you actually need to understand what you are doing. Just copying something without understanding is a good way to fail, especially with leveling.
The Folly of EPEI Leveling in Practice – Part 1
In my last post I presented the EPEI leveling pattern (also known as EPEC, EPEx, Heijunka, fixed repeating pattern, or simply leveling). While in theory this approach looks pretty solid, in my experience it rarely works in practice. In fact, most of these types of leveling that I have seen were complete rubbish. They were a dog-and-pony-show to please management at the expense of performance and shop floor efficiency.
Furthermore, lean manufacturing seems often to be confused with a religion. People believe that if you put up a leveling box your manufacturing system will have salvation. Well, Lean is not a religion. Lean is hard work, and you actually need to understand what you are doing. Just copying something without understanding is a good way to fail, especially with leveling.
Theory of Every Part Every Interval (EPEI) Leveling & Heijunka
Probably among the most popular leveling approaches is Every Part Every Interval (EPEI). Often, this is the method people mean when they talk about leveling (also known as heijunka [平準化]).
The theory about this type of leveling is not very difficult. Unfortunately, hard facts of reality often nullify any possible advantage of this type of leveling. In fact, most of these types of leveling that I have seen were complete rubbish. They were a dog-and-pony-show to please management at the expense of performance and shop floor efficiency. In this post I will explain to you how it is supposed to work in theory. In the next post I will explain why it rarely works in practice .