Inventory, Lean
Many logistics teams, irrespective of industry, are realizing the benefits of introducing a lean material-handling system to their business. The inability to maintain control of inventory and production line downtime due to delayed part delivery are issues that haunt many logistics departments. It’s a daunting task, making the transition to lean, but knowing where to start will make the process a lot more palatable. Building a Plan For Every Part (PFEP) is the first stop on the way to an efficient, lean warehouse.
What is a PFEP?
A PFEP is a living, breathing document (typically an Excel spreadsheet) that consolidates all pertinent information regarding parts used in the assembly process.
What information should be included in a PFEP?
These documents are meant to be flexible. You can define what information is important to ensure streamlined part flow throughout the value stream and then easily adjust as you go.
And like any major undertaking, you should launch a pilot PFEP first. Base it on one product or one production line and adjust the information captured in the document as required.
Once your PFEP template is refined, you’re ready to implement it facility-wide. To maintain the integrity of your PFEP, a “PFEP owner” should be appointed. This individual is typically a logistics engineer.
All employees should have access to view the information in the PFEP, but all changes should flow through the owner. Changes to the PFEP can be suggested through a standard form that requires a series of approvals before the PFEP owner updates the document. With this process in place, your PFEP will remain updated.
With your PFEP established and properly maintained, the real transition to lean begins. Component supermarkets, material delivery routes, and Kanban signals can now all be established with the information you’ve gathered in your newly created PFEP. Additionally, you’ll have all critical data regarding parts in one central location, making sorting parts by supplier or storage location a breeze. If you’re thinking about overhauling your warehouse and don’t know where to start, reach out to us at Allied Logistics. We’d love the opportunity to help guide you and your team.
Inventory, Lean, Vision Mission Strategy
What is the standard?
It may seem simple, but I challenge you to ask that question about a process that is causing friction in your organization.
Was the answer as simple as the question?
Let’s take it one step further. If there is a standard, is it understood by everyone involved in the process?
It is my firm belief that that simple question can alleviate many problems in day-to-day operations.
Is There a Standard?
There I was, a young officer in the United States Army sitting in my Platoon office trying to make sense of our latest maintenance status reports. Only 40% of our fleet was operational two weeks ago, but now suddenly 85% of our vehicles are ready for a field training exercise that is coming up in a few weeks, and I assured everyone that we were “good-to-go”.
The day we were supposed to head out for training, half of my vehicles either didn’t start or had a fault that was severe enough to prevent us from taking it to the training area. This left us scrambling to figure out how to transport my platoon plus our equipment with half of the operational vehicles required.
This obviously didn’t go over well with the boss.
Oh, and did I mention we missed our planned movement time by THREE hours?
A Noticeable Trend
Since I had taken over the platoon, our maintenance readiness had become inconsistent with no discernable causes to justify the fluctuation.
The maintenance readiness reports were getting filled out. However, the information contained with varied significantly depending on which of my team members had completed them.
Many of reports didn’t have the proper signatures from their first-line supervisor. They also failed to document the necessary details required to address issues. And if a team member didn’t put their name on the sheet, I had no idea who to ask about the equipment’s status.
Identifying Where Standards are Needed
After getting ripped apart in the maintenance meeting for another week as our next field exercise approached, I finally decided I had had enough of these maintenance issues. I sat down to map out the entire maintenance process with a counterpart to find our deficiencies… and there were many!
First and foremost, there was no standard operating procedure (SOP) for the maintenance process, only for the required checks and preventive maintenance of the equipment.
Secondly, we didn’t have our vehicles assigned to anyone. It was first-come-first-serve on preventive maintenance.
We also had no one responsible for overseeing the maintenance program to ensure that all maintenance activities were being performed properly, get status updates, or check the reports to ensure they were filled out correctly.
In addition, many of our team members could identify issues but they couldn’t describe it in a way that made sense to someone with minimal mechanical knowledge, nor did they know they needed that amount of detail.
Implementing a Standard
After we realized the issues, there were three easy actions that solved nearly all our problems.
First, we assigned different pieces of equipment to different sections of our team so there would never be a question on who is responsible. We also ensured that each section had every type of equipment under its area of responsibility to ensure that every individual in that section would get experience performing preventative maintenance on all our equipment. Most importantly, equipment assignments were posted on our maintenance board in our office and distributed electronically every week to ensure all team members knew what vehicles they were assigned.
Second, we assigned a maintenance manager to oversee the maintenance program within our team. We tasked the maintenance manager with submitting an SOP for the entire process as well as a process map to visually demonstrate all the steps within the process for approval. When there were deficiencies with our maintenance program, I didn’t have to run around looking for answers anymore. I simply asked the maintenance manager.
Lastly, each section of the team would go through training to ensure they understood the standard. They would also demonstrate understanding of the process by doing a walk-through, creating a process map, or a combination of the two that would be evaluated by myself or the maintenance manager every quarter.
Similarities Between Military and Business
At this point you may be saying to yourself, “This all sounds great, but how does this relate to the business world?”
The reality is that, in the military, we did many of the same things that people do in business. We may have used different verbiage to describe it and key performance indicators (KPIs) to assess it, but the process map that we created in the scenario above is very similar to a value stream map (VSM) that you may create for your process.
We identified “True North” and examined the requirements we needed to meet within our operating environment.
A current state map was created that helped us determine our bottlenecks and constraints within the maintenance program.
We created a detailed SOP that not only explained the process but also described the expectations for how the program would run in the future.
We created metrics, otherwise known as KPIs, that would help us understand if our maintenance program was operating as it should. We also added standard escalation procedures to help team members decide when to escalate maintenance concerns to different levels of management.
We even executed process validation and process sustainability steps to keep the maintenance program up to standard.
We included our maintenance managers in all of our operations planning meetings. Our daily leadership meetings were more effective because the uncertainties of our maintenance statuses were able to be addressed immediately by the manager.
What Standards can do for You
Within six months of implementation, we were had achievd over 80% equipment readiness – the highest in our Company and more than double our initial 40%.
We were getting our maintenance issues resolved more quickly because our maintenance reports were consistent and detailed enough to create action items for our operators.
The military is predicated on maintaining readiness of people, equipment, and organizations to react to whatever threat presents itself at any given moment.
Sounds like operating in today’s business environment, doesn’t it?
Unexpected market demand, supply chain disruptions, an inconsistent labor market are all threats that can impact your company’s readiness, and without the proper standards in place, you may be struggling to react to these challenges.
If you are having difficulty with creating, maintaining, or evaluating standards within your organization, reach out to us at Allied Logistics. We have a proven track record of experience that can help you create a standards-based culture, strengthen daily leadership routines, and move away from firefighting and stagnation.
Industry 4.0, Inventory
Way back in 2013, my team was tasked with implementing RFID for the systemic transfer of all raw components from the warehouse to the production lines. With ~10,000 kanbans delivered each day across 3 shifts, this “cutting-edge” solution would allow us to transfer parts 1 kanban at a time instead of 1 pallet at a time ushering in a new epoch of inventory control.
That was the plan at least.
Fast forward to November 2017. I’ve just been promoted to the department group leader, and my first task was to increase RFID penetration from an anemic 25% to 100% across the entire plant. The company had even given me a full-time resource to help address the issue.
But why? Why had it taken 4 years for RFID based Kanban delivery to be implemented across only 25% of all value streams?
To understand that requires that you understand a bit about how RFID works in relation to a WMS system.
How Does RFID Work with a WMS?
WMS transactions are traditionally executed using RF barcode scanners. In a typical warehouse, associates sign into the WMS system using an RF scanner and, using a standardized barcode label applied to each unique SKU, scan and click their way through a series of screens to book, put-away, and issue material to the production lines.
This process requires associates to be trained on the use of both the WMS system and the RF scanner. They are also dependent on the WIFI signal. Any interruption in WIFI brings all warehouse related activities to an abrupt and grinding halt.
In this system, new associates become a liability for inventory accuracy and WIFI a prerequisite to function.
Forget to press the last button on the scanner to confirm the order? Inventory is wrong.
Lose WIFI signal in the middle of a transaction because you accidentally walked in a “dead zone”? Inventory is wrong.
Get a bad label with a barcode that can’t be scanned? You can manually enter the data, but if you accidentally “fat-finger” it… you guessed it, inventory is wrong.
RFID works by eliminating these weak points. Instead of inputting the information via an RF scanner, the information is “written” to the RFID tag and attached to the corresponding item.
These tags are then scanned using RFID readers or gates which are connected to the network via POE (power over ethernet) and programmed to do a specific task, i.e. move material from one bin to another, log a movement, issue parts to production, etc..
But contrary to what the salesman told you, RFID is not a miracle cure-all for all your inventory ailments. It has weak points of its own that must be mitigated to be successful.
RFID Gates
For those unfamiliar, an RFID gate, sometimes called an RFID portal, automatically registers all passing RFID tags. When most people think of RFID, this is the scenario they have envisioned.
RFID tags are seamlessly scanned, read, and processed as they pass through each gate within a facility. No muss, no fuss. Just slap on a tag and away you go.
What could be easier?
Nothing… if it worked like this.
Unfortunately, the reality of the situation is that RFID gates rarely ever read 100% of the tags passed through them. This becomes especially true if the tags are placed on or near metal. Based on my experience, a well-tuned RFID gate with tags applied to an appropriate medium will read ~95% of all tags passed.
To get read rates higher than 95%, again, in my experience, requires the addition of another gate to “catch” the tags that the 1st gate misses.
But wait, you say. 95% read rates sound pretty good. Can’t you manually correct the missing 5%?
And the answer is… it depends. 5% of what?
In our case, 5% of 10,000 kanbans meant that we would need to troubleshoot ~500 inventory discrepancies per day or ~165 per shift with only 1 inventory control specialist.
Anybody that has ever performed a cycle count can tell you that, in most cases, it would be impossible to count this many part numbers in a single shift every day.
Instead, inventory errors just pile up until either: A) the production line is shut down due to inventory-related issues forcing someone to finally investigate and correct them or B) the inventory is corrected at the annual year-end inventory.
Either way, someone eventually must manually adjust inventory levels and reset the system.
And here’s another fun fact: this process continuously repeats itself because the gates continue to miss passing RFID tags …
RFID Point-of-Use Readers
The other option is to employ point of use readers where the operator scans each RFID tag one-at-a-time using a reader mounted at the point-of-use to “fill” the kanban and then again once the parts are consumed to “empty” the kanban.
In other words, before each kanban is delivered, the warehouse operator will remove the kanban card containing the RFID tag and hold it in front of the reader to scan it and then return it to the corresponding parts bin.
There is even a light that will flash green if the scan processes properly and red if there is an error.
Sounds simple
What could possibly go wrong?
Well… a lot.
It turns out that it is very difficult to get multiple people across multiple shifts and in multiple areas to do anything 100% correctly, 100% of the time.
People get tired of scanning kanbans one-at-a-time, so they hold 5 kanbans up and once. Unfortunately, the reader can’t process 5 kanbans at once so some just don’t get scanned.
Or folks don’t feel like escalating a failed scan as indicated by the red light, so they just pass it along and keep going and leave the problem to fester.
Or, they just plain ol’ forget to scan.
Experience has taught me one thing: if a process can be screwed up, someone will screw it up more than you think.
So, what happened?
So, as I mentioned when I took over as group leader, RFID had been a major thorn in our side for 4 years. The problems were simple, but permanent solutions weren’t easy to achieve.
We used point of use scanners, not gates. Almost all of our problems stemmed from kanbans not being scanned in the proper sequence. If we could train the logistics operators to scan the Kanban when they delivered parts and the production operator to scan the Kanban before they ordered parts, almost all our problems would be solved.
We knew that both logistics and production operators weren’t scanning cards, but it was almost impossible to determine which operators were failing to scan.
That was until we found a tool that could help provide the transparency we desperately needed…Tableau.
Tableau is a business analytics software that can create graphic interpretations of very large data sets.
Once we established a data flow out of SAP, our ERP system, and into a Tableau worksheet, we could then analyze it to see where the scans were being missed and have it automatically refreshed as often as the data was updated.
After this was understood, we created a daily shopfloor leadership meeting that consisted of supervisors from each of the production areas along with the warehouse to review the previous day’s results, create action items, and follow up on the previous day’s tasks.
Within a year, we had managed to keep errors to a manageable level and finally achieved 100% penetration of RFID for the delivery of all raw components!
This turned out to be a boon for the logistics department. Because we now had RFID for all component deliveries, we were able to implement additional Industry 4.0 tools like Nexeed Transport Management, a software system that connects to SAP and uses the transfer order data to populate a tablet mounted to a tugger to direct the operator’s activities and allow them to confirm delivery of kanbans from the tablet – eliminating the need to scan the kanban for each delivery.
Now, if the operator could drive the tugger and knew where the markets were located, the tablet would direct them on everything else. This cut training time down from weeks to days and helped improve inventory accuracy by all but guaranteeing that scans were performed accurately.
So What’s the Verdict?
Would I recommend RFID or not?
Of course, I would.
RFID allows warehouse operators to conduct more inventory transactions with the same or less labor input. This allows for improved inventory visibility and optimization.
However, like everything else in life, it comes at a cost. If you’re planning to implement RFID, it should be part of a long-term vision that takes advantage of the improved inventory transparency and accompanied with a commitment to the resources necessary for its successful implementation.
Otherwise, you are setting yourself and your team up for failure.
If you’re interested in implementing RFID or contemplating if it’s the right solution for you, give us a call. We’d love to work with you and your management team to help plot your digitalization course and develop a roadmap for its successful implementation.
Send us an email at info@allied-log.com or reach out to us on LinkedIn for more information.
Inventory
In a time where no one can agree on anything, it’s nice that at least those of us who make our living making things can be united on one thing: we all share a deep and abiding hatred for the annual year-end inventory.
You want me to forever question your moral compass?
Tell me you don’t mind doing year-end inventory.
Tell me that the thought of 12-hour days endlessly counting and re-counting doesn’t send a cold shiver down your spine, and I’ll show you a person who has lost all ability to tell the truth, even to themselves!
Nobody likes doing inventory. From the people doing the counts to the accounting group tasked with pulling the reports and reconciling the results to the management team that knows there will be a reckoning – as there is every year – once the final, disastrous results are tallied, everybody views the days set aside for inventory with a shared sense of dread!
But, there is good news!
While the year-end inventory will likely never be looked upon with a smile by those of us tasked with its execution, it doesn’t have to be the Armageddon-style doomsday scenario that we have all come to know.
By developing a culture steeped in lean with an almost religious zeal for working according to standards, year-end inventory can come to be seen as an opportunity to assess your material handling weak spots instead of a giant microscope highlighting your complete lack of process control.
Here are a few suggestions for putting your company on the road to competent inventory control.
Develop a PFEP
A Plan for Every Part (PFEP) is the baseline for understanding how each component is to be handled once it arrives at your facility. It should answer questions like:
- What is the supplier’s standard packaging configuration?
- Are they shipped in returnable or expendable packaging?
- Do they need to be repacked? If so, how should this be done?
- Where should the parts be staged for delivery to production?
- Which production area should they be delivered to? How often are they delivered?
By taking the time to define these important characteristics up front, you provide a standard for warehouse associates to execute and for leadership to compare against.
Without a PFEP, warehouse personnel are left to make it up as they go and the production teams can only hope they get the parts on time.
As you can well imagine, this often results in line operators coming into the warehouse to retrieve their own parts (and who can blame them?), often without telling anyone or performing the necessary WMS inventory transactions.
Operate like this for a year and it’s easy to see why the year-end inventory results are so atrocious.
Develop Material Handling Standards and Train Folks to Them
How are new warehouse associates trained at your plant?
If your facility is like a lot of others, new associates are told, “Go stand next to Ralph. Ralph will train you to work in receiving!”
What are Ralph’s qualifications to train new, would-be receivers you ask? Well, he’s worked in receiving for the last 16 months. What else do you want to know?
As it turns out, not much.
Too many warehouse managers are more than comfortable using the “stand by Ralph” method for training, and why shouldn’t they be? If the new associate makes a mistake and incorrectly processes an inbound delivery, they can always blame it on the associates’ shortcomings instead of having to shoulder the blame themselves for an inadequate or, worse yet, non-existent written standard.
And this type of “training program” causes more problems than just some lost inventory. It also leads to high associate turnover.
No one likes working in an unproductive, chaotic environment without the necessary tools and skills to do the job. And managing this type of process is not much better. After all, the warehouse manager is the one having to explain to senior leadership why they have allowed thousands or sometimes millions of dollars in material to be lost and written off on their watch.
And who ends up footing the bill for such poor process development? The customer, of course!
To avoid this pain and almost certain loss of profits, take the time upfront to document how the process should work and then train the associates to the new written standard. Have them sign-off that they understand the process and sign-off again any time that there are changes.
And this brings me to my next point…
Trust, but Verify!!
It’s great that you have taken the time to develop a PFEP and to correctly document each of your processes, but how do you know that associates are following the processes that you have painstakingly written?
You don’t!
Unless you have implemented a system for regularly auditing your standards, you don’t really know that they are being followed as designed. You must make the time to watch your team execute the process.
Are they performing the standard exactly as written? No? Why not?
Has something changed in the process? Is there a variable that you failed to notice or capture?
The shopfloor is constantly changing, and to maintain accurate and adequate standards you must update them accordingly. If you don’t, then you no longer have a standard. You have a piece of paper that represents how they used to do it or how you wished they did it.
Conclusion
If you want this year’s annual inventory to be different from the last dozen, then it’s important to develop a plan for how material should be handled inside your facility. Next, you must train the team to execute the plan and check to make sure they are executing it correctly. If you notice deviations, take action! Update the standard or retrain the associate.
Do this consistently and you will begin to reduce the amount of variation in the process which will in turn give you consistent results, i.e. more accurate inventories.
Don’t misunderstand me, starting this from nothing is a TON of work, but it will pay dividends down the road. And if you’re unsure where to start or how to implement the processes and audits we’ve discussed, give us a call. We would love the opportunity to help you and your team establish a culture of standardization and continuous improvement at your company!
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