Improving Operational Performance
Yaron Lew

As the state of the economy is still depressed, and companies are vigorously pursuing cost reductions, it is crucial to ensure that these efforts are not hurting operational efficiency. To be successful in today's economic climate, it is vitally important that while a company is carrying out cost reduction efforts, it simultaneously undertakes improvement efforts that will enable it to improve productivity from existing resources.  However, many companies tend to question the need for improvement efforts. The most common question being asked is - why should a company push continuous improvement efforts if demand is falling and it can now be satisfied even with a less efficient operation? The answer, of course, is that productivity gains enable companies to meet market demand while operating resources less, thus reducing cost, increasing asset utilization and improving profitability. The best way to improve an operation and ensure that improvement efforts translate to increased overall business performance is by using a methodology called Flow Management Technology (FMT).

Flow Management Technology views organizations as flow systems and product flow as fluid flow through pipes. In a manufacturing organization it views development, marketing, sales, order receipt, manufacturing and all the way through to shipping as a series of interconnected processes. These interconnected processes form a piping system that needs to flow the product from beginning to end in the fastest, smoothest and most profitable way.

One of the key elements of Flow Management Technology is the examination, analysis and understanding of process disruptions. Every individual processes, as well as the total system, is subject to chaotic behavior due to disruptions and the presence of Murphy as in Murphy’s Law. Disruptions are caused by the absence of any of the dependencies needed by a resource to convert its input into output. By their nature, disruptions are random and dynamic, or in other words - chaotic.  The first step towards overcoming the adverse, cumulative effect of this chaotic phenomenon is an analysis of the process, its interfaces and the resources’ capacities.

            From the analysis of the flow process, the resources capacity and disruptions, a Flow Model is designed to provide the tools, the measurements and the focus for managing the overall flow. In developing the Flow Model, disruptions are accounted for in two fashions. For every day, frequent disruptions, Protective Capacity is reserved. Think of Protective Capacity as a provision for catching up after a disruption occurs. The amount reserved is a function of how much time disruptions consume from each resource on a shift or daily basis. Since every resource is subject to shift/daily disruptions, every resource needs to have Protective Capacity. In most cases, Protective Capacity can be obtained by conducting improvement activities to reduce resource’s disruptions. The implementation of designed Protective Capacity will lead to rapid process flow without any excess inventory. If Protective Capacity is not reserved, every process disruption will be transferred from one resource to the other, get magnified and eventually translate to poor and inconsistent performance of the entire business.   

          The other types of disruptions are ones that happen less frequently, but when they occur, they last a long time. Because the cost of reserving capacity for these infrequent disruptions can be prohibitive, they are accounted for by adding time buffers at strategic points in the flow. These time buffers need to be sufficient so that when severe “Murphy's” occur, on time performance is still achieved.

           Another key element in the Flow Model design is determining which few processes will be Flow Valves.  The Valves are strategic scheduling points to synchronize the flow to meet on time demand and to gear up the system efficiency. Typically, their location is designated taking into account and understanding the parameters that influence the system’s flow such as assembly, disassembly or outside processing.

All of the elements of the Flow Model allow the system to perform reliably in terms of on time delivery, increased throughput capability, lower throughput cost, no excess in process inventory and the shortest lead-time.  Overall process measurements act as high frequency feedback loops to monitor performance and point out, in real time, where disruptions are starting to hurt system performance and where improvement efforts should be directed.

Flow Management Technology determines the best way to flow product to the customer, on time, with the least cost and with the maximum utilization of people and equipment. By looking at the operation as a flow system and constantly measuring performance, Flow Management Technology monitors the business in real time and ensures that we get the most out of the system.

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