4 Strategies for Making Materials Flow

There is a little secret related to the Toyota Production System. Only after his retirement did Taiichi Ohno finally confess that much of what he shared with the West about the TPS was intentionally misleading. He was concerned that US and European companies would compete too strongly with Japanese companies by adapting TPS methods, and so he led them off-course by emphasizing elimination of waste as the key TPS focus. We still hear this today: “Lean is all about eliminating waste, and Six Sigma is all about improving quality”. But that’s not the full story.

So what is TPS really all about? Here is a quote from a 1977 paper written by the Production Control Department at Toyota:

“TPS is a total conveyor line production system connecting all the external and internal processes with invisible conveyor lines. …Toyota Production System is a scheme seeking realization of such an ideal conveyor line system…”

What we’re talking about here isn’t simply eliminating waste, it has to do with the way in which your processes (both internal and external) move materials towards a finished product.

This requires some Lean Industrial Engineering knowledge, and also the engagement of the entire workforce through “respect for people”. Of course, elimination of waste is not a bad thing, but the main focus stated by Toyota is to connect all processes as much as possible to radically reduce lead-time, inventory, resource investment, and defects. The generic term we sometimes use for this approach is Flow Manufacturing.

There are two wings that are necessary for the bird of Flow Manufacturing to fly:

1. Work Flow Design
2. Material Flow Design

Work Flow Design is fairly straight forward, and the subject of our workshops on Mixed Model Line Design. There is a formal methodology for designing optimal Value Streams, by “linking and balancing” work across interconnected processes. Toyota hosts our Mixed Model workshops, and what we teach is very similar to what they do.

Achieving optimal Material Flow is different, and potentially more difficult. While Work Flow is generally under your control and within the walls of your factory, Material Flow works within your walls PLUS external sister factories, outside domestic supplies, overseas suppliers, long distances, and organizations outside of your direct control. If the goal is to create an “invisible conveyor line” that includes all of these elements, it’s easy to appreciate the difficulty.

In this article I will review the major strategies being used to move materials in the direction of a totally interconnected system, including outside suppliers.

Strategy I: Internal Kitting

Think of the example of a surgeon. He/she extends a hand, and the correct instrument is placed into it by a surgical nurse. If you can give your workers exactly what they need, when they need it, then they no longer need to do part retrieval, make mistakes in item selection, or leave their stations. Providing materials in this way fulfills the TPS goal of “one-by-one production”. Productivity will improve, needed floor space will shrink, and quality will improve. Of course, the additional effort related to kitting would need to be more than off-set by these benefits.

In recent years, I have noticed a sea-change in the way that companies think about kitting. Not even a decade ago, kitting was a dirty word in Lean circles. However, now it has come into favor, largely because of the increased quality and operator productivity, as well as kitting’s ability to save valuable line-side space.

Strategy II: Kanban and Sequenced Delivery

These material delivery methods are well-known by Lean professionals and are in widespread use in Toyota factories today. These are the classic Pull methods, whereby materials are replenished based on actual physical consumption. Sequenced delivery would be the method of choice for larger items that would be hard to containerize. In both methods the quantities are small, and the cycle for replenishment is short. The frequency of delivery cycle that we have observed in Toyota factories is significantly shorter than in most other companies that we visit.

Strategy III: Domestic Supplier Network

The first two methods discussed above will do little to improve overall inventory turnover (a key metric to measure inventory flow) with addressing the issue of outside suppliers. Suppliers that are geographically close are highly preferable, since that will allow you to create an external Pull system or external Milk Run. Empty containers can flow back to the suppliers and full ones returned as a Kanban system. Good communication and coordination is a must, and these external networks can take years to develop. It will be difficult to make significant inventory turnover improvements without achieving this.

Strategy IV: Overseas Suppliers

This is potentially the toughest nut to crack. The manufacturing lead-time and transportation time is at least several weeks, and often longer. While create a Material Flow pipeline for the first three strategies is easy to understand, how can you accomplish something similar for material coming from far away? If the material is coming from the same part of the world, the strategy being used is to create a pipeline by mixing material in the same shipping container in small quantities combined with frequent shipments. The pipeline may be 50 days long, but each individual shipment contains a mix of items in small quantities. If this can be achieved, then the overall inventory levels can be kept low while still sourcing from long distances. Easy to say, but this is actually being done.

The premier example that I have seen for all of these strategies is at Toyota Material Handling (TMHU), where they are achieving low shortages, they have a daily external milk run system, and they have a pipeline of material flowing from Japan in daily shipping containers. Toyota will be hosting our Material Flow workshop in March, where we’ll be covering all of these strategies in detail. You can find out more at the link below:

Mixed Model Material Flow Workshop at Toyota Material Handling