Production leveling, also known as heijunka (平準化) or production smoothing, is one of the hottest topics in lean manufacturing. Successful leveling is considered one of the highest achievements in lean manufacturing. Unfortunately, if the production system is not ready for leveling, it also has lots of potential to make things worse. A lot worse! This is the first post in a longer series of post about leveling, where I will present different types of leveling and their advantages and disadvantages.
In a Perfect Manufacturing World…
In a perfect manufacturing world, there would be no fluctuation. Every day you would make exactly the same number of products, of the same product type. There would be no lack of material, no rush orders, no change in customer demand. The predicted demand would exactly match the true demand. There would be no absences, broken machines, or other problems. In short, nothing would disrupt the peace and calm that is your shop floor.
Back to Reality!
“The peace and calm that is your shop floor“… yeah…right…
In all likelihood, your shop floor is anything but peace and calm. It is more likely to be a constant source of trouble. If your shop floor is anything like the shop floors I have seen, then not a single day goes by without a minor crisis due to missing parts, broken machines, last-minute changes in customer demand, and many other things.
Dealing with all these issues costs you time. And it is not only you, but also a lot of other people, who are needed to fix these problems. Often, it leads to increase in material, while other products are out of stock. Even so, some orders may be missed. Other parts may be flown in by airplane or put on expensive express order. (There is a rumor that all airlines would go bust if industry would no longer ship urgently needed and often heavy parts by air mail.) Overall, these fluctuations are expensive. Very expensive.
Yes, Chaos Sucks! So What Now?
Having realized the enormous waste associated with fluctuations, it would be the logical step in lean manufacturing to address these issues to reduce fluctuation and to improve efficiency and ultimately profitability.
Sources of Fluctuation
There are different sources of fluctuations that mess up your shop floor. Different tools and methods are used to address these fluctuations. Leveling reduces the negative effect of fluctuations in demand. Hence let’s have a look at the sources of fluctuations.
One common sigh heard on the shop floor is that “life would be so easy if there would be no customers.” Well, yes, except that the customer is also your source of income. In any case, customers are a fickle bunch, and their demand varies.
If you win an award or receive good reviews, demand may go up. If you are in the news due to product failures, demand may go down. Even without such effects, customer demand fluctuates. Even if the total number of products sold are reasonably stable, demand by part type varies usually more widely.
Yet another source of fluctuation is your supplier. I think it is a safe guess that on your shop floor you have a lot of trouble with supply being overdue and late, quality problems, or even shipping the wrong product altogether. One of the worst cases are suppliers that ship the wrong goods in the right boxes or with the right labeling. You do not know that you have the wrong product until you open the box. Hence, suppliers are also a major source of fluctuation on the shop floor.
Your Own Shop Floor
It is easy to blame others, like your suppliers or customers, especially if they are not there to defend themselves. However, a major source of fluctuation, if not the largest, is your own shop floor. You may misplace parts, have unplanned absenteeism of key workers, have broken machines, or simply have a messy and uncoordinated planing.
Also, other departments may mess things up. Development may request time in your shop floor to do some testing (sometimes even with parts that they simply took out of your inventory without telling anyone 🙁 ), have ramp-ups of new products, and generally make life harder on the shop floor.
Often there seems to be the trend of Development to justify their existence by developing many new variants of existing products, not realizing that if you split the same total sales on more variants, your fluctuations and hence your cost will go up.
In any case, your own shop floor and its connected departments are a major source of the mess you are having (even though I would probably phrase it differently if my boss would ask me about it 😉 ).
Realize that These Sources of Fluctuation Are Connected
With the different sources of fluctuations, it is important to realize that they are connected. You receive the fluctuations from your customer. You also receive fluctuations from your supplier. However, you are the customer of your supplier, and they also receive fluctuations from you! Hence the fluctuations on your shop floor are not only a result of others, but also by itself a source of fluctuation.
Hence you have the ability to reduce the fluctuations at your suppliers, and in return receive better service and availability of parts.
How Not to Do It – The Bullwhip Effect
But before we go into how to do it, let’s illustrate it first by describing how NOT to do it. Assume you have a fluctuating demand. You struggle to produce the parts the customer needs. Your production plan is different every day. You expect your suppliers to deliver whenever and whatever you order – after all, you are their customer. Nevertheless, you miss deliveries to your customer much more often than you would like to.
Your suppliers, however, now struggle with your orders. Similar to your shop floor, their shop floor is a mess too. And, like you, they also push this mess toward their suppliers (which you probably don’t even know). And these suppliers again push the mess backward. Overall, these fluctuations of the end customer work their way backward through the value chain, making it hard for everybody.
And it gets worse! Not only do the fluctuations work backward, they also increase. Your production planning department probably tries to guess what your customer orders next. It is human nature to overestimate both growth and decline. Hence human nature amplifies these fluctuations.
Your suppliers do the same. So do their suppliers. These fluctuations not only propagate through the value chain, but they also amplify. The further back you are in the value chain, the worse it is. This effect is known as the bullwhip effect, as it is similar to a whip making wider swings the further you are from the hand.
I once had an extreme case during a project at a lithography manufacturer, producing machines to make computer chips. Now many computers go into industry, where the business goes up and down. These fluctuations are amplified within industry in general, amplified again in computer vendors, amplified again in computer manufacturers, then chip manufacturers, and finally in lithography tool makers. If the general stock market went up or down 1%, the impact on the lithography tool maker was amplified thirty times. Throughout their business cycle of roughly three years, demand went up and down by 300%, requiring enormous efforts to manage the work load of the employees.
Again, Why Leveling?
Hence, breaking this vicious cycle of fluctuations can yield great benefits throughout the value chain. Usually, these benefits materialize upstream where your parts come from. However, these can also be within your own system, where your workers can probably work more efficient if production is leveled. The benefit of leveling is probably least downstream, as the customer just orders whatever he wants. Yet, it may be beneficial if you have downstream processes in house where you push your produced goods (although you should not use push, and you should level the last process before the parts leave your system.
There are a lot of things you can do to reduce fluctuations. Obviously, the demand fluctuations are a big lever, and leveling usually means demand leveling. We will go into more detail in these in the next posts.
Some Other Measures Against Fluctuations
But do not forget other levers, such as, for example, your product portfolio. It is easy to let your product portfolio multiply, although actual sales usually have a harder time catching up. Hence selling the same quantity through more product types increases your fluctuations.
Similarly, quality problems and machine issues also cause fluctuations. Having consistently good-quality production at well-maintained machines also reduces fluctuation. Same goes for the qualification of your employees. If only a few of your people can do a certain task, then demand fluctuations may quickly exceed the ability of your small group of experts for a certain task. Cross training can do wonders here.
Also, you may be able to influence your customer behavior. For example, a Finnish ski pole manufacturer was facing very seasonal demand on ski poles. Lots of people bought ski poles in autumn, but nobody did in spring. Addressing this problem, the manufacturer invented a new sport: Nordic Walking. Now ski poles are also sold in spring and summer for walking and hiking.
Even if you are not inventing a new sport, you can influence your customer to a certain degree with special offers or promotions to increase sales during lull demand. Of course, if you do not coordinate this well, you may also make things worse. I have seen companies where, during peak season, the factory was stretched to the limit, and marketing started a promotional campaign to increase sales without telling anybody. Let’s just say that the result was not pretty.
However, with production leveling, production smoothing, or heijunka, usually the decoupling and smoothing of customer demand is met. There are different ways to do demand leveling.
- Capacity Leveling – Do not add more production orders into the system than what the system can handle. Try to produce the same total quantity every day. Doable for almost everybody, and one of my favorites. In fact, if you are using a pull system like kanban or Conwip, then you are already almost there.
- A pattern repeating every 1, 2, 3, or 4 weeks – This is what most people mean when they talk about leveling or heijunka. It is also known as Every Product Every Cycle (EPEC). In my experience, this is one of the biggest sources of chaos and waste in the name of lean. It can work, but it has very high requirements, and I usually advise against it. More rants about this in subsequent posts.
- One Piece Flow – Produce the same total number every day, trying to match customer demand as much as possible. However, produce in lot size one and distribute your part types evenly throughout the day. This is difficult, but can be done. In terms of leveling, this is the highest achievement of leveling.
I will talk in more details about how to do leveling – and more importantly how NOT to do leveling – in the subsequent posts. In any case, I hope you enjoyed this post, and I would love to hear from you. Now go out and organize your industry!
Overview of Posts in this Series about Leveling
- Why to do Leveling (Heijunka)
- An Introduction to Capacity Leveling
- Theory of Every Part Every Interval (EPEI) Leveling, Also Known as Heijunka
- The Folly of EPEI Leveling in Practice – Part 1
- The Folly of EPEI Leveling in Practice – Part 2
- Introduction to One-Piece Flow Leveling – Part 1 Theory
- Introduction to One-Piece Flow Leveling – Part 2 Implementation
Also, Michel Baudin wrote a post on Theories of Lean and Leveling/Heijunka on his blog with a review of my series on Leveling. Some of his comments helped me to update and improve the above post. Check his post out for further details on Leveling.
See also the good commentary on my posts by Rob van Stekelenborg: Using “Every Part, Every Interval” (EPEI) in Pull Flow .