LEAN LAYOUT: GETTING IT RIGHT

By David Dixon (as printed in Fabricating and Metalworking)
Our last three columns have attempted to first convince the job shop owner that lean principles and techniques do, in fact, have applications in a low volume, high variety manufacturing environment. Second, we offered some ideas on how to lead your organization along the continuous-improvement path. And last month, we suggested an approach to dealing with the ever-present resistance to change that accompanies every lean implementation.

With this background, this month's article will take a deeper dive into the detail of developing world-class/lean capabilities. Specifically, we will discuss the importance of organizing factory layouts to support lean objectives and outline an approach to creating an optimal facilities plan.

How Layout Supports Lean

The job-shop owner or manager who embraces lean has learned that the lean tool kit and culture enables the most effective response to the growing demand for more frequent deliveries of very small lots of high-quality parts at lower cost.

The hierarchy the diagram indicates is somewhat (but not exactly) related to the order in which the tools are applied. Certainly the identification and mapping of the company's value streams is a vital first step. Analysis of the value streams helps to identify pockets of waste and suggests opportunities for focused improvement activities. And as understanding of all of the value streams, and their interrelationships, increases, the need to physically reorganize the facility to "lean out" our processes becomes evident.

At the same time, growth capability will be tied to the capacities designed into the value streams, as determined by market-driven takt times. This may require new equipment and space, which must be strategically located.

Eventually, opportunities to better rationalize process flows and the need to position new capacity to support growth expectations compels a rethinking of the macro-layout plan. Only when the layout is optimized do we see the full benefits of lean—we have to get it right.

One reason for this is that a properly designed layout is the means by which we physically isolate our value streams. In other words, we co-locate elements of a process that allow us to better meet the demands of a market segment (or customer group). This, in turn, allows us to focus a group of people on more perfectly meeting the needs of a sub-set of the customer base. We often refer to this action as recreating the "Mom and Pop shop" or setting up the "shop within the shop" with all of their respective advantages.

Another benefit of the "shop within the shop" is that it fosters a climate of high performance and continuous improvement. People in close proximity to one another are better able to schedule and balance work loads, measure performance, prevent or solve problems and make decisions. At its best, this is the epitome of a lean culture.

Finally, a fully rationalized layout, along with an aggressive 5S program, provides the "look and feel" of a world-class facility. It can be a tremendous marketing tool.

Developing the Lean Layout

Before plunging into the technical aspects of a facilities design, it is very important to examine and document the strategic needs of the business. Critical questions will include:

What markets, customer groups or accounts will we sell to? What services will we sell? What quality, deliver, flexibility and cost targets will we have to meet? What rate of growth do we expect? The answers to these questions will precipitate another round of inquiry: What new process or information technology will we need? How much capacity must we add and where? What new skill sets will be required? What will we make and what will we buy?

Documenting the answers to these and probably many other strategic questions provides the foundation for a successful layout project. Rearrangement, space additions and relocations entail large capital investments. Careful attention to the direction given to the layout team will ensure that the facility supports the needs of the business while minimizing the cost of implementation.

Layout Approach. Creating the layout is a complex task involving multiple and often iterative steps. Here, we offer a brief outline of the approach.

Step 1. Identify and map the value streams. This will involve an analysis of products, parts, quantities (takt times) and routings. From this analysis we group parts or products into families that are similar with respect to the processes that are required to produce them. Some steps in the manufacturing process may have to be done on a shared resource, which is considered a part of multiple value streams. We then map all of the value streams, including the shared resources, as a primary input to the layout process.

Step 2. Identify alternative process technologies. At this stage, we incorporate new process technology or equipment that is required for added capacity. We also seek "right sized" equipment alternatives that will make the value streams more independent or flexible. The value streams are finalized at this point.

Step 3. Develop the block layout. Now, we attach space requirements to the value streams—cells, shared resources and support areas (e.g., maintenance, Q.C., shipping and receiving). We then do a quantitative analysis of material-flow intensity and other factors that drive "closeness" requirements between activity areas. We use relationship diagrams and other techniques to generate multiple alternatives for a block-level (macro) layout plan. The alternatives are evaluated and the preferred plan is selected for detailing. All this ensures that the macro-layout is optimal.

Step 4. Detail the layout. We are now prepared to position equipment, workstations and other details on the layout. Engaging operators, lead people and supervisors in this process is important. If we are just relocating an area, they will help to get everything in the right place. If we are creating a new process area (e.g., a first-time cell), they will come to understand the purpose of the change and assist in making the experiment a success.

Conclusion

The importance of the layout in achieving lean, small-lot production cannot be overemphasized. By minimizing transportation and lost motion, productivity is greatly improved, and we facilitate the continuous-improvement culture at the same time. But as with many lean tools, successful application depends on a good understanding of the techniques and careful use of the layout planning methodology. Because of the costs involved, we cannot afford to ricochet off of the layout-planning task.

One final benefit: A well-engineered and well-documented layout can be a vital part of the future vision for the company.

Posted up for everyone to see, it becomes a guidepost for sequencing and timing the execution of value-stream implementation and many associated improvement activities.