MOST Analysis

Mission Statement

Mission Statement

The mission for this workshop # 3 is to introduce and explore the Pareto Principle and Waste Reduction, also stated as priorities and non-value-added activity.

Objectives

Early in this program, bring forth two of the most important elements of manufacturing productivity. Demonstrate how these two concepts are linked and should be considered with each subsequent element of productivity. Explore the applications which each topic contributes to Manufacturing Productivity.

Strategy

Explain the history of the Pareto Principle, and of Waste Reduction. Provide the theories behind each, and how they individually and collectively benefit Total Productivity.

Tasks

There is extensive opportunity to apply the Pareto Principle and Waste Reduction in manufacturing operations.
Point out the particular ways in which both the Pareto Principle and Waste Reduction may be utilized, and detail them.

Explain how to implement improvement opportunities. Specify, by area of the organization, examples of productivity improvement which can be realized, how they can be found and achieved, and what relationships with other topics will pertain.

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Objectives

01. Pareto and Priority: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
02. Different Strategy And Priority For The Boardroom And For The Manufacturing Floor
: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
03. This Year, Right Now: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
04. Total Productivity Is The Target: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
05. Reduce Waste, Executive Level Strategy And Actions: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
06. Reduce Waste, Manufacturing Floor Strategy And Actions: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
07. Waste Possible In Facility Planning, Layout, And Flow: departmental SWOT analysis; strategy research & development. 1 Month
08. Waste Can Occur Throughout Many Activities: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month

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Strategies

01. Pareto and Priority: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
02. Different Strategy And Priority For The Boardroom And For The Manufacturing Floor
: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
03. This Year, Right Now: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
04. Total Productivity Is The Target: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
05. Reduce Waste, Executive Level Strategy And Actions: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
06. Reduce Waste, Manufacturing Floor Strategy And Actions: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
07. Waste Possible In Facility Planning, Layout, And Flow: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
08. Waste Can Occur Throughout Many Activities: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

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Tasks

01. Create a task on your calendar, to be completed within the next month, to analyze Pareto and Priority.
02. Create a task on your calendar, to be completed within the next month, to analyze Different Strategy And Priority For The Boardroom And For The Manufacturing Floor.
03. Create a task on your calendar, to be completed within the next month, to analyze This Year, Right Now.
04. Create a task on your calendar, to be completed within the next month, to analyze Total Productivity Is The Target.
05. Create a task on your calendar, to be completed within the next month, to analyze Reduce Waste, Executive Level Strategy And Actions.
06. Create a task on your calendar, to be completed within the next month, to analyze Reduce Waste, Manufacturing Floor Strategy And Actions.
07. Create a task on your calendar, to be completed within the next month, to analyze Waste Possible In Facility Planning, Layout, And Flow.
08. Create a task on your calendar, to be completed within the next month, to analyze Waste Can Occur Throughout Many Activities.

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Introduction

Welcome to Workshop # 3 in the Manufacturing Productivity series.

We appreciate that you have found the time to fit this learning experience into your schedule, and that the company thinks well enough of your talents and capabilities to include you in the participants.

Manufacturing Productivity is a one-year leadership program with monthly workshops that will focus on specific subjects each month. This month, those subjects are the Pareto Principle and the urgency to cut out non-value-added activity.

Cut waste, and Pareto, work well in parallel.

Many facets of productivity improvement can be practiced alone, and may or may not relate to other productivity tools. That is definitely not true however for Pareto and non-value-added activity. When you become familiar with these two, you will see that they apply to every subsequent productivity process. As you choose to practice any other productivity improvement opportunity, very early you will want to determine if non-value-added activities exist; then using Pareto, determine the priority that the situation deserves, to resolve it.

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Pareto

For “Pareto”, you may substitute Priority, if you aren’t up to date on Italian history of the late 19th century. Vilfredo Pareto performed research, which allowed him to state that about 80% of Italian land was owned by about 20% of the population. There are reference sources that state the findings were published in 1906; there are those that state, starting in 1896. Pareto as a sociologist was prone to put words with his data as well, and modern sources give them a modern-day hearing. The Pareto Principle is based on the research findings.

Manufacturing Productivity is concerned with only the numbers, however. Particularly the Pareto distribution, which is a power-law distribution, used to describe characteristics in a wide variety of financial, social, actuarial, geopolitical phenomena. Thanks to Joseph Juran, who understood that the Pareto Principle defined quality issues as well, for instance that 80% of quality problems are caused by a small number, perhaps the 20% of the possible causes. Juran himself, and others, also realized that Pareto would apply to management practices in general, with the belief that attention to only a few issues will control a large number of results.

Count this Manufacturing Productivity program among those who believe and practice what Pareto preached. However, along with Joseph Juran, we realize that the 80% cannot be forever ignored. The old proverb tells us, “For want of a nail, a shoe was lost” then a horse and a rider and a battle.

Other modern names for Pareto are the 80-20 rule and ABC inventory. A recurring tenant of this series then will be the Pareto principle because we will routinely direct attention to the A items, the more important few topics that have the most impact, in your particular situation.

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Cut Waste, Or Non-Value-Added Activity

As for cut out non-value-added activity, the concept has had many manifestations.

The most well known at the moment is that one of the two pillars of the Toyota Production System is the command, to Cut Waste. In earlier lives, mid-20th Century, this concept was called Value Engineering, or Value Analysis, or Work Simplification. Earlier than that, two of the first practitioners of modern productivity, Frederick Taylor and Frank Gilbreth, made the elimination of waste at the workplace a primary component of their initial teachings. As early as the late 1800’s, it was a basic element of Taylor’s “Scientific Management”. At that time, the phrase used was “inefficiency”, as Taylor said, “in almost all of our daily acts.”

Whatever the name, waste elimination is a superior practice. Don’t improve, remove.

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Total Productivity

Frederick Taylor, Frank Gilbreth, and long after he died his wife Lillian Gilbreth, researched and wrote prolifically on the workplace. Value Analysis and Toyota expanded the application, to remove waste from other aspects of the business, effectively building the Pareto Principle into the equation. Manufacturing Productivity follows that lead; show me the money.

Actions taken for one purpose can cause results in another sector; the dreaded law of unintended consequences; collateral damage. In productivity improvement, we find that such relationships occur, and frequently.

Corporate productivity improvement is generally looking for the best overall results, to improve Total Productivity. After a particular action it is quite possible that cost reductions in one sector may be offset by increases elsewhere. Quite frequently during this workshop the contradictions and offsets, advantages and disadvantages, which occur will be explained.

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The Present Day

In this workshop, which concentrates on Pareto, we will endeavor to mention a large number of typical manufacturing issues. We will then correlate these ”usual suspects” with what seems to be particularly relevant in our present situations. It is obvious, isn’t it, that in any discussion of importance there must be a time element. What is significant, today. The participants in the workshops will be encouraged to identify, in the Pareto fashion, those current issues which are most meaningful in your circumstances. Those which will get you the biggest bang for your buck. Show me the money.

This workshop will discuss the concept of removing waste. We will of course relate that to what happens on the shop floor. But as we know this attention to productivity does not concentrate entirely on the shop floor. There are many opportunities throughout an entire organization, across all areas of the organization chart, which present fruitful opportunities to find and remove non-value-added activity. We will go there.

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The Best Answer

And we must start by qualifying that the best answer Is limited to a single organization, at a certain point in time. Different situations result in a different best answer. Company A’s best answer may not be the same as company B’s choice.

Today’s one best answer, for your organization, in the interests of total productivity, can come about in a variety of ways. Initially, describe the question carefully.

Then, an organization can consciously seek out the best answer, from the information available. Another organization may search for information relating to one subject, and as a byproduct, develop information that leads to another beneficial result. In any case, there are likely to be several possible answers, involving different technical solutions, costs, and timelines.

In the search for the one best answer for your organization, please be alert to existing instances of waste in all its forms. Find the serious waste, and prioritize depending on what your potential benefits will be a likelihood of success.

The businesses in these examples were alert to the existence of waste, and when they detected it, even in unexpected locations, were able to remove significant amounts.

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Case Study

A modern construction company initiated a work measurement project whose primary purpose was to develop an incentive system for masons building residential homes of concrete block, pouring slabs and walks.

The first sequence of events then was to employ work measurement, both as time study and as work sampling, to document what happened and to quantify just how long actions took. That process is quite standard for the objectives, and proceeded normally.

The results of the work measurement to management were received in two ways. The objective times quantified for the masonry work itself did not vary much from what management, experienced in masonry, had expected.

But management was very surprised, perhaps astounded is a better word, at the amount of delay and waste that was documented by the direct observation of multiple worksites. As a result, the first major change was an installation of a formal reporting system from each side for the periods of waste and delay that were large enough to be recorded. The reports rightfully received attention, and delay declined

An incentive program was in fact developed, but it initially rewarded site managers rather than masons. Site managers had control over the non-productive activity, and delay, as well as that of the tradesmen. A modern construction site has quite a bit of organization and structure to it, but never as much as that of a production plant line or plant floor, so there is a lot to manage.

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Case Study

A large medical billing company had installed work measurement previously, but had not maintained it very well. By utilizing employees with a training background as work measurement observers, the operation quickly started to review and update rates.

The observers employed a sophisticated practice of work measurement, and observed different people in different sections om different shifts performing the same transactions. This technique allows the objective standard to be representative. but it also indicated the different sections were employing somewhat different technique.

For this company the findings pointed out inconsistency in results, a waste which they immediately started to correct.

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Case Study

A section of a textile company created an automotive product on a line of linked machinery. Output routinely was insufficient to cover production demand. After no solution had been found nor corrective measures taken, the product director of sales contacted a consultant. Together they worked with the line, considering all the factors.

Various relatively small issues were found incorrectly, but the major problem was found to be an omission. It was determined that the preventative maintenance program for the primary piece of equipment in the production line was not being followed, and the equipment downtime was the essential cause of the low production record. When PM was restored, the waste which came from machine and line downtime were dramatically reduced production increased.

The emphasis was on restoring proper maintenance, rather than determining why it was discontinued. Perhaps someone in good faith believed that preventive maintenance itself took a machine out of production for a while, so it was better not to do it.

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Case Study

A cosmetics producer in Central America studied its cost picture and realized that a raw material, in this case inexpensive bottles, was inordinately costly in total. No local supplier of the parts was available, so they had to buy in large batch sizes on another continent, and much of the facility was dedicated to storage of the containers before filling.

The supply strategy is being reviewed, with a plan to create a local bottle source, independently or in conjunction with other users of similar parts, or invest in blow molding equipment on their own, or change containers to a component which is more available locally.

Production price may well be higher but when all the transportation and storage costs are added, local production will be less expensiv