Bruce Gladwin – Vice President, Consulting

The past 30 years has seen some dramatic changes in the ways we consumers purchase everything from books to batteries, cameras to clothing and TV’s to trampolines. The changes are not only in the products themselves, but in the channels of delivery. For example, when I was growing up in the 70’s and 80’s the only chain businesses that I can remember were Sears and McDonald’s. Even then, you had to live in a fairly good sized town to have either of these stores. Today, any town of any size in America has not only a McDonald’s, but a Wal-Mart, Home Depot, Starbucks, Olive Garden, etc., etc. Yes, the chain stores have certainly replaced the mom and pop shops that were so prevalent just a generation ago. This change has led to an explosion in the number and size of distribution centers around the country and the folks running these DC’s are constantly looking for ways to get more product through their systems in less time and for lower cost.

I recently had the chance to work with one of our customers who was modeling a proposed layout change to their DC floor plan. The change was already being piloted in a particular DC, and a model was being developed to test the merits of the new layout under various product demand and mix scenarios. The early results from the real-life pilot were promising, showing that relieving forklift congestion could increase the throughput of the system, even if the forklifts had to travel longer distances to avoid congestion. As such, a change was about to be implemented in each of this customer’s DC’s across the US, at the cost of over $2 million.

My contact had the opportunity to use simulation to determine the expected improvement of the new floor layout in other DC’s throughout their network. To his surprise, the model predicted exactly the opposite results! Not only would the new layout actually reduce throughput, it would increase the operating cost of the system by requiring more forklifts and, hence, more drivers to maintain the previous level of productivity. How could this be since the real-life pilot was showing moderate (but not stellar) improvements? Enter something called the Hawthorne effect…

Stated simply, the Hawthorne effect is a temporary improvement in productivity that results when management pays greater attention to an established process. In other words, what gets measured gets done better and faster than it was before. In this case, the fact that the pilot area was the focus of management attention at this DC meant that the workers were unconsciously improving their performance. The simulation, on the other hand, was completely unbiased and used the same assumptions regarding forklift travel speeds, put and pick times, and operator work habits across both scenarios.

In the end, the existing system proved to be more efficient because the frequency and duration of forklift congestion events was less detrimental than the additional travel distance in the new layout that was required to eliminate those events.

In summary, whenever human operations are a significant part of a production process, consideration must be given to the methods in which physical simulations, i.e. pilot tests are performed on the floor. Otherwise, the Hawthorne effect just may result in a wrong (and costly) change to procedures.

Bruce Gladwin – VP ProModel Consulting Services

Road Works! Will they ever end? I have often wondered if and how the principles of Lean production could be applied to the never ending series of road works that seem to plague the otherwise beautiful environment that we enjoy here in Utah. Lately, I’ve had the chance to watch a full blown road-work-like project unfold outside my office window. There is (or used to be) an irrigation canal running through the middle of our office complex. I used to enjoy walking along the canal for a quick respite from the phones at lunchtime. This all came to a halt when the county decided to bury the canal and put a nice multi-use recreational path in its place.  Now, I’m sure that the pathway will be a wonderful addition to the community when (if?) it is finished, but it sure has been frustrating having to navigate the traffic disruptions throughout the construction process.

If you think about it, why couldn’t road works, or in this case canal works, be performed in a Lean manner? Do they really need to tear up miles of roadway all at once, and then lay all of the cables or pipe at one time, and then cover it all back up again. I think not. In fact, I believe this current “batch process” could be transformed into more of a “single-piece-flow” and thus, avoid a lot of headaches for everyone. Here’s the idea: take a small section of roadway and begin to dig the trench, all the while having a second team of workers right behind laying cable or pipe, followed by a third team of workers covering it all up. Is it unreasonable to think that all of this work could be done within the span of a single city block? The principles of Lean production would say that it can and should be done that way. The work just needs to be balanced such that the rate of trench digging equals the rate of cable or pipe laying, which also equals the rate of trench filling and repaving. I’m confident that this could be done and, in so thinking, I have just challenged myself to create a simulation model in ProModel that shows just how it all could work. In the end, wouldn’t it be nice in your locale if only one block of the city could be under construction at a time? Can anyone out there point me to a good example of road works that were finished on time, with minimal disruption to traffic? What were the success factors?

A recent article highlighting the top ten manufacturing trends for 2012 projected by the International Data Corporation (IDC) stated that “success in the intelligent economy will be achieved through engaged corporations.” The article goes on to specify that engaged corporations are those “that will master complexity.” Bob Parker, group vice president of IDC said that “If you are better at mastering complexity, you’ll have a competitive advantage.” So how does a company excel at mastering complexity?

Part of my experience dealing with complexity comes from having invested over 20 years working on the Space Shuttle Program. The Space Shuttle is the most complex aircraft in the world. And until recently, the Shuttle fleet served as the primary launch vehicles for sending American astronauts into space. The Space Program is full of complexity not unlike manufacturing and most other businesses. Through hundreds of improvement projects spanning across two decades, I had the privilege of assisting many dedicated aerospace workers that were eager to streamline and improve cumbersome processes.

In order to ensure success and remove complexity, I saw that teams and successful companies needed several things:

1. A focus on instilling simplicity
2. Champions that provide guidance
3. Robust tools that assist with analysis
4. Innovative ideas and the power to implement them

Today the focus on instilling simplicity is called “Lean.” One of its basic tenets is to identify and eliminate waste within a process. You can’t get any simpler than that. And while there are many Lean concepts and techniques, my experience is that they all come back to that very basic concept: get rid of stuff in your processes you do not need — remove the waste!

It is a given that some improvement Champions are needed in Senior Management within a company. Without at least one high level Executive leading the way towards process improvement, many “bottom-up” programs quickly die when pushed only by “front-line” employees frustrated with the lack of change. Besides Senior Champions, companies successful at process improvement also provide specially trained staff to assist project efforts throughout the organization. Some companies call these professionals various titles including: Improvement Coordinators, Process Specialists, Black Belts, Master Black Belts, Master Champions, etc.

The third requirement to master complexity and be successful is to have robust tools for data analysis. As a process improvement professional with over 30 years’ overall experience, I can honestly say that the most impressive tools I have used for process improvement are discrete-event simulation applications. These tools allow the user to create a “model” of a process that simulates a real process using a personal computer. The model is loaded with actual process data and once validated, it provides a vehicle for the user to run various “what if” scenarios and help determine the best actions to make improvement. This has been called “predictive analytics.” Simulation tools are appealing because frankly it is much cheaper and easier to try out ideas on a computer than in the real world.

A fourth thing companies need to master complexity is innovative ideas and the power to implement them. In my experience, every employee already knows a lot of ways to improve their key processes and streamline their job. We have very smart workers in U. S. businesses today. The challenge is getting their management to listen to them and empower them to make change.

Organizations that learn how to reduce and master complexity in 2012 will likely find themselves prosperous and successful for many years. As Mr. Parker at IDC has said “We are changing to the engaged organization.” Will your company make the change?