Position Paper

Hitting the Continuous

Improvement Wall

Gregg Gordon
Senior Director, Manufacturing Practice

January 2013
 Hitting the Continuous Improvement Wall

Ask manufacturing engineers or production supervisors how long they have been under pressure to reduce costs and
improve productivity and they’ll most likely say since they started working.

Improvement methodologies such as Total Quality Management and Design for Manufacturability come on strong, and
manufacturers rally around them as a new approach to wringing incremental performance out of operations. And yet
decades later on the production floor, some weeks everything performs flawlessly and other weeks it seems that Murphy’s
extended family has come to visit.

Fatigue with the improvement projects can set in over the years because the big issues of a production line have
been managed. The machines are rarely down for more than an hour. Kanbans to manage and reduce WIP have been
implemented. As the teams move down the Pareto chart, the big gains have been achieved and each new effort seems to
return less gain. Eventually people move on to other issues and performance of the production line flattens out.

Exploring the Issues of Variability

Chasing down the biggest issues first is so ingrained in our minds that it seems almost like a law of nature. Invoking a
justification of Pareto analysis, commonly known as the 80/20 rule, brings nods of agreement in justifying the order of
how issues should be addressed.

But there is a follow-up question that should be asked that almost never is: “Even though we’ll solve our biggest issue,
how much variability will be left in our system based on the remaining issues?”

This is an important question because the process will suffer from the cumulative effects of the remaining variability. The
workforce can be a significant cause of variability. So as the number of employees who participate in the process increases,
there is going to be a cumulative effect of variability from each employee within the overall process.

This is supported by statistical analysis that will be described shortly, but for those not familiar with statistics, a more
familiar way of explaining this would be as follows:

Let’s say we wanted to meet a co-worker after work at a restaurant to celebrate an event. If we invite one person, we can be
fairly certain the invitee will be there on time. But as we increase the number of co-workers invited, it becomes increasingly
likely that some will be late. A few will have last-minute calls from customers; others will be stuck in meetings that run
over. And others will have emergencies at home that require their immediate attention.

The same happens in production; as the number of people increases within a process, the inevitable delays that occur
increase as the number of people increases. Without directly managing all the little issues that cause this delay for each
individual, there’s a limit to the amount of improvement that can be achieved in production.

But compared to a celebratory night out after work when only two people need to arrive to begin the party, in manufacturing
everyone has to show to begin working.

Statistical analysis can be used to describe this scenario and even predict the variability and delay. The cumulative effect
of the delays can be expressed by what is commonly referred to as the Sum of Independent Variables. Statistics show that
the means (average) and variances of multiple independent variables are cumulative.

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 Hitting the Continuous Improvement Wall

Disruption Happens
As each employee is an independent variable, employees’ effect in terms of delay on production is cumulative.
Bringing a process into control requires the management of all the independent variables affecting the process,
including the workforce.

This can be described through a manufacturing example as well. Disruptions are considered when an operation is completed
sooner or later than expected.

In this example, the process has been in place for years and the big issues causing disruptions have been resolved. For
the most part, the equipment is never down for more than a couple of hours and material quality and dimensional issues
have been ironed out. The labor standard that is used to measure, cost, and schedule the process is now a reflection of the
actual average time it takes to complete this process.

To begin with, the example starts out very simply. There is one person on the line. This defines N (N equals the number of
independent variables or people, in this case) as equal to 1.

Experience would tell us that most days the process goes as planned. Almost nothing happens out of the ordinary and
production runs as expected. Here are some examples of the disruptions that do occasionally occur in this process.

•  hile typically punctual, a couple of times a month an operator is late getting to work and production starts
W
behind schedule

• Skill levels vary between operators, and they complete an operation in slightly different amounts of time

• The operator is delayed by others such as a maintenance person or material handler

The curve below describes an example of the frequency and impact of those events; it’s a familiar shape and known in
statistics as a Gaussian distribution, or normal curve. For the purpose of this example, the average time (or labor standard)
to complete this operation is two hours for N = 1. The variance in production time in this example has been measured at
30 minutes, but the curve could apply to any cycle time and variance.

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 Hitting the Continuous Improvement Wall

N=1

IMAGE 1 Distribution of variance in time in a single operation where there is one operator.

N=5
Average (Mean) = μ = 2 hours

Variance = b2 = 30 minutes0.15
0.125 N = 10
To make the example more typical of an actual production scenario, 14 more operators and operations are added to the
process. Each one of these people
0.1 is considered
N= an15
independent variable. As stated above in the discussion of the Sum of
Independent Variables, the mean and variance of
N = 20delays that each person causes are cumulative. Now N (number of
the
0.075
independent variables) = 15. N = 25
0.05
The average production cycle time is:
0.025
Mean = N * μ = 15 * 2 = 30 hours

-15 = N-10
Variance * b2 = -5 5 hours
15 * 30 = 450 minutes = 7.5 10 15

When the independent variable (a production operator in this case) has a Gaussian distribution, the distribution of
the sum is also Gaussian. The graph below shows how the distribution broadens as N is increased. For convenience
of graphing, the mean is set to zero. Obviously with a nonzero mean, the distributions would also shift to the right of
the graph. In other words, the mean for one person is two hours, the mean for 15 people is 30 hours; in this case all
distributions are set at zero.

With N = 1 person, the variation in work time is relatively small, centered on the standard work interval of two hours. With
N = 10 or 15 people, it seems like almost every day there is some event occurring. Between machine jams, operators
calling in sick, temporary help on the line due to turnover, and maintenance mechanics who are busy working on other
equipment, the variations in performance add up over the course of a month. Every once in a great while, it seems like
nothing goes right and hours of production are lost. This cumulative effect is reflected in the Gaussian distribution with
N = 15 in the figure above. The variations in the total production time are significantly greater than one might expect by
intuitively extrapolating from one operator to 15.

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 Hitting the Continuous Improvement Wall

N=5

0.15

0.125 N = 10

0.1 N = 15
N = 20
0.075 N = 25
0.05

0.025

-15 -10 -5 5 10 15

IMAGE 2 Distribution of variance in time as the number of people and operations in a process changes
(N = 5, 10, 15, or 20 people)

Because these individual delays are typically small, it feels like they are unmanageable or that investing in solving all the
different causes would not justify the returns. However, there is a difference between managing production equipment
and individuals. Controlling each piece of capital equipment, while similar, requires a different approach due to the
equipment’s unique design of tooling, dies, and capacity. Individuals, while also unique, all respond well to equitable
and fair management. This means the investment required to decrease labor-related delays on production can be spread
across all operators and support staff on the line. Additionally, it affects the operators and support staff on all production
lines. The result is, instead of working down the workforce-related variables one person at a time, the workforce as a whole
improves, providing significant improvement. In this example, the improvements reduce delays.

To understand the return on investment possible, if the disruptions to the operation due to labor are reduced by 10
percent, the variance of the operation is reduced by 45 minutes.

Production schedule adherence improves and the need for overtime decreases, idle time in downstream operations is
reduced, and costs such as premium freight and inventory buffers are reduced as well.

As one of the three pillars of Lean, the workforce has long been recognized as critical to the success of operation. But in
practice, because an individual’s impact on an entire operation in terms of delay can be small, managing the individual is
often moved down in priority. Experienced Lean practitioners may suggest these small variances are why self-empowerment
is important. But viewing the cumulative impact of small variances across an entire production team and supporting staff
is something an individual can’t see. The value of the effort is found in identifying and systematically managing common,
small variances across the entire workforce.

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