By Jake Snyder
These are the men who, being little committed by prior practice to the traditional rules of normal science, are particularly likely to see that those rules no longer define a playable game and to conceive another set that can replace them."
In 1962, Thomas S. Kuhn’s work, The Structure of Scientific Revolutions, stated that most scientists are conservative who accept what they were taught, and that throughout history major change has resulted from a few revolutionary scientists. He describes these revolutionary scientists as driving a "paradigm shift" or the abandonment of commonly accepted theories and beliefs.
For the last few months Gus has been working on ways to improve the flow of work through the shop. We began in January by identifying and reporting on defects and warrantee claims. In February and March, we discussed staging and visual control devices for heavy hits that reduce WIP delays and improve communications. Last month, we introduced how the customer’s needs and demands have a certain rhythm or beat (Takt-time) as an important factor in the way overall operations are viewed. For this month, we continue looking at customer factors and how Gus’s operations can be more responsive to the demands of his customers.
Gus understands a competitive business is one that is customer based, but in order to deliver a true customer based product he needs to align his staff and their daily activities in a way that maximizes his customer value adding activities and processes.
Manufacturers use operating strategies like total quality management (TQM), Six Sigma, and lean manufacturing, to generate a total employee and management commitment that focuses daily activities on satisfying customer expectations. These contemporary operating philosophies advocate teamwork, have good communication and feedback systems, constantly strive to maximize resources and eliminate waste, and are always finding ways to make improvements. I am not talking about new operating policies like store hours that are passed out to employees, but an organizational commitment that affects every strategy, design, decision, investment, and work action within the company.
In Gus’s Garage, Gus is struggling to make a breakthrough change in his operating system that will result in some relief from the grind of having to repeatedly "micro-manage" the daily barrage of operating issues and problems in order to satisfactorily meet his customer’s expectations. He understands that he has to continue to grow his business as customer demand increases, but on the other hand, he fears that a bigger organization and more customers will increase the onslaught of problems and headaches.
Effective management and resource utilization throughout the whole system of multiple processing steps in the shop are the biggest challenges for Gus and all managers in autobody facilities. The ultimate goal is to get one process to make only what the next process needs when it needs it.
Gus’s current "paradigm" or operating system is pushing work from process to process instead of pulling work at a pace in which the customer demands it. Employees have an inventory or "pile of work" that they process and push onto the next process’s pile of inventory. When the piles get too high or the customers start screaming, or quality begins to suffer, resources are diverted from other processing areas as a quick fix.
Last month Gus had to think about "sprinters" competing in a long distance race, and how that might compare to autobody operations. He was able to identify with this as both a manager and employee. Gus feels he is rushing around from one task to another and that customer priorities seem to be constantly changing the workflow. He also noted that he thinks he has a disproportionate mix of higher skilled (higher paid) technicians in relation to the actual number of complex jobs his customers are demanding to be repaired.
Both observations were on target. First, customer priorities seem to be constantly changing because Gus’s operations are made up of multiple processing points that accumulate inventory. Each of these inventory points requires a constant re-assessment of work and hand-off priorities. Secondly, he is also right about his allocation of labor resources. They are not being used effectively and as a result Gus’s has low labor margins.
We decided to compare Gus’s autobody operations to a manufacturing facility that has embraced "lean manufacturing" principles. Lean manufacturing is a way to link processing steps from the final product delivery back to the initial customer sale with the shortest lead-time, highest quality, and lowest cost. I want Gus to shift his current operating point of view from a "push" strategy that seeks to maximize each individual repair process as a stand-alone activity, towards more of a system approach.
I calculated from 12 months of Gus’s repair orders that he averages 4.5 cars a day or one car demanded by customers every 1.6 hours (7 hrs of available working time each day). I emphasized to Gus that this "takt-time" is not a measurable activity or performance measure, but a calculated value based on his customer’s demands. Takt-time is an appreciation of his customer’s needs that is used to guide workflow design and resource utilization. All processes including scheduling, staffing, vehicle inventory management, continuous improvement systems, and training strategies are driven by this rate at which Gus’s customers demand his products.
In lean manufacturing, Takt-times and subsequent improvement strategies have to be addressed incrementally or by product family. Product families are groupings based on similar or shared processing steps. It is too complex an effort to try and figure out the whole shop at once. In autobody repair we identify different products by "job categories". The table below is the calculated takt-time for Gus’s Garage customers based on three job categories or types of products.
As a practical matter for Gus, we looked at the Heavy category of jobs that are handled by Jose (for severe damages) and secondly by Pete. If we examined the average processing time to complete a job using the total sold labor hours on a $5,000 job (61 hrs) and 7hrs of available daily processing time and 5-day workweeks, we see that 9 working days are required to complete each job. Furthermore, we understand from the takt-time that 1 heavy job has to be delivered every 13 hrs or about 1 every 2 working days. This pace allows Gus’s to delivery his monthly average of 11 heavy hits a month (derived from a 12-month average and logic checked by Gus).
First it was relatively simple to determine that both Jose and Pete had more than enough labor capacity to meet the quantity of heavy jobs demanded. Based on Gus’s average labor ratio of 60:40 we figured each job has about 32 or so labor hours of work that is performed by Jose and Pete. For 2.7 jobs weekly, the 86 hours of work on the average heavy jobs gave sufficient leeway for weekly demand changes in the job mix or job sizes.
Gus began to understand unless his job category mix changes dramatically, he should be entering (scheduling) a heavy hit into work-in-process every 2 days, painting one every 2 days and delivery one heavy hit every 2 days. And that if he isn’t, there is some type of breakdown in the workflow. Although overly simplified, he pretty much got the main point, and that is "if he isn’t, there is some type of break-down!"
Next month we will continue looking at how lean manufacturing principles apply to Gus’s autobody operations, as well as examine an opportunity Gus has to take over an OE dealer shop on a contract basis.
Jake Snyder, creator of the popular Gus’s Garage series, is interested in hearing from shop owners with real-life questions.
E-mail JJ the Remote Pro, Gus’s intrepid consultant.
Read Part 1
and Part 10 of Gus's Garage.