Crash Course In Mixed Model Material Management (MMMM)

Part I: The Why of MMMM

What is a crash course? It's a course that communicates a lot of information in a short amount of time. We’re all busy, so this post is a quick overview of the subject of Mixed Model Material Management. I'm keeping this short and sweet, so don't expect to learn everything you need to know on the subject! It might be an inspiration to investigate further. Take advantage of the downloads also available below, which will provide a lot of corroborative detail.

Definition of Mixed Model

A mixed model manufacturing environment is one that manages a large number of different (but similar) models, and/or produces products with a high number of configurations and options. There are many challenges to doing this well, and the acquisition and delivery of materials to the various Points of Use may be the hardest. Typical examples of mixed model industries include automotive, agricultural machinery, industrial equipment, aerospace, and a host of others.

Definition of Material Management

For purposes of this article, material management mainly refers to the processes of delivering material to the many Points of Use on a factory floor, from the receiving dock to the workstations or "Points of Use". The process of managing external suppliers is critically important, of course, but that is a different area of expertise and focus.

What Happens When You Don't Get This Right

Challenge: doing this right. Here’s what will happen if you don’t:

1. Shortages, Running Out. Remember that usage is inherently variable in a mixed model line, for a variety of reasons. The risk of shortages is the most serious issue, since a shortage can impact the entire line. Your Material Delivery system need to achieve the 7 Rights: the Right Part, Right Location, Right Container, Right Quantity, Right Sequence, Right Time, Right Total Cost.
2. Inefficiency in Material Handling. Too many people, fighting too many fires. The staffing of your material delivery system needs to be calculated and managed, just like you would calculate and manage the number of Operators that you have.
3. Excess Inventory. As you will see in the following section, the only way to maintain low inventories is to replenish more often, in smaller quantities. This recommendation seems to run contrary to the idea of reducing "touches" and material handling, but the world's best companies are able to achieve low inventories, high efficiency, and close-to-zero shortages.
4. Too much factory storage space needed. This becomes more and more of a problem as a company grows, and adds more models to the production mix. It is directly related to item #3 above.

Assess The Current State

Before discussing the essential elements of a Mixed Model Material Management system, it is important to assess your Current State. You can download a MMMM assessment tool, and get access to a video version of this crash course, by clicking here. It will take about 15 minutes to complete the self-assessment, and you’ll get a lot more out of this crash course if you take the time to do that.

Part II: The What of MMMM

Since we are moving fast in this crash course, here are the main elements of a Mixed Model Material Management system, presented in the order that you will want to apply them.

1. Plan For Every Part. Picture an Excel spreadsheet with a column for every data element related to a specific item or part number, both manufactured and purchased. It doesn’t need to be a spreadsheet, but it does need to be electronic, user-friendly and flexible. Most ERP/MRP systems are not that, but this is where most of this information currently resides.
2. Calculate Quantities for Every Item, based on a target number of hours of usage. You’ll need to have some idea of usage, and that’s a column in your PFEP database. The basic Kanban formula is: Daily Usage * Target Hours of Usage * Safety %. The Target Hours of Usage is up to you, but it should be measured in hours, and not in days.
3. Design a Pull System for most (not all) materials. Keep in mind that some of the items are going to end up being managed via a Kanban system, others may be kitted, others may be delivered sequentially, others may be delivered via MRP and a pick list. Go back to your PFEP database to document your delivery strategy for each item. Most items, especially "C" parts that are low-cost (like fasteners) will be managed with the Kanban system.
4. Establish a Containerization Strategy. Select a range of standard containers to be used in the facility, which is a plant-level decision. This will also impact outside suppliers, so that they can potentially deliver in those same containers. Divide your calculated quantity (Step 2) by the container quantity to determine the number of containers that you'll need for each item at each location.
5. Design Delivery Routes. “Move quickly and carry a light load.” The design goals require standard times, standard tasks, and most importantly high frequency of delivery. This is the golden key to achieving low inventories and low risk of running out.
6. Design Kanban Supermarkets. The supermarket strategy is a key element of a successful delivery route strategy. In order to support frequent deliveries to the various Points of Use, you will need to reduce transactions, part picking times, and transportation distances, through the use of Kanban Supermarkets. This strategy applies to sequenced items and kits as well as Kanban parts. Calculate the target supermarket quantities in the PFEP database.
7. Determine Conveyance Methods. The conveyance method will vary depending on the item (weight, size, etc.) but a tugger is the conveyance method for most items. Add the conveyance method to the PFEP database.

There are many more details to consider, but that’s a good “Crash Course” start on describing the design elements that you’ll need to consider. Everything is documented in the PFEP database, so go back to that as a primary tool.

There’s a lot to keep track of, so I’m going to offer you some additional help. You can download the Mixed Model Material Management Roadmap. This is a multi-page flow-chart that will give you a much more complete checklist of what we just quickly covered.

In the final part of this Crash Course, I’ll cover some of the key issues and best practices related to actually running a Mixed Model Material Management system, including topics like engaging operators in the process, the need to calculate staffing, and the importance of mistake-proofing the material delivery system.

Part III: The How of MMMM

If you had a chance to download and look at the MMMM Roadmap mentioned above, you’ll see the large number of actions that will need to be considered and implemented. In Part III of this crash course I wanted to share with you some of the “How” aspects of this strategy, including the cultural aspects of a Mixed Model Material Management system, based on our experience inside some of the world’s best companies.

1. Engage the material staff and operations in the material replenishment process. Autonomation in this case means combining the use of technology (when it makes sense) with manual methods. For example, consider the use of paper Kanban cards, as opposed to fully automating the replenishment signals. Require the operators to play a role in the replenishment system, and to pay attention. Sure, there is technology that can completely automate the signaling process, but beware of systems that don't require any human engagement.
2. Error-proof the replenishment process. For example, what happens when Kanban cards are not collected and picked up during a routine delivery cycle? What happens if a card should get lost? What is the process for detecting this error, and responding to it? What happens when demand changes, either up or down? Is there a process to make adjustments to the material quantities if necessary? Apply the FMEA philosophy to the material delivery system, and come up with preventive and detection processes.
3. Automate where it makes sense. An MRP system calculates future demand on an item-by-item basis. Use this information to make adjustments to the number of bins and cards in the system, every time a Kanban card is scanned in real-time. By serializing each Kanban card, use the computer system to identify cards that have not been scanned within an expected amount of time, and put in place an audit function.
4. Adapt as a goal the quote from Taiichi Ohno: "Move quickly and carry a light load". Establish a ratio of 6-1 or 8-1 between the amount of inventory at the Points of Use, and the frequency of delivery. This is the Golden Key to shortage proofing the material delivery system, while at the same time maintaining low inventory levels on the factory floor.

There is a lot to know and talk about, but I hope that this gets the wheels turning. You have an opportunity to learn, discuss, and see all of these topics in detail, at one of North America’s best factories. On May 9-11 we’ll be at Toyota Material Handling in Columbus Indiana for a 3-day workshop, including 2 plant tours. This is the best way to understand the Mixed Model Material Management approach in detail, and see with your own eyes what this system looks like in action. Find out more here.