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Six Ways Lean Operations Can Save You Money TODAY

Posted by Rock LaManna on Wed, Jul 24, 2013 @ 09:07 AM

Six Ways Lean Operations Can Save You Money Today resized 600Fact #1:  Lean operations involve a long-term commitment to quality.  Fact #2:  Lean operations can also add immediate dollars to your bottom line – and steer you down the road to achieving Fact #1.

I bring these two facts to your attention because many printing and converting owners can’t think long-term because they’re so busy putting out those short-term fires. So how do you keep one eye on the future and the other on today’s bottom line?  Our lean operations guru Ed Klaczak has assembled six high-impact areas where lean can help immediately.

1. Reduce your Yield Loss.  Yield loss is the amount of yield you lose due to defects, operator error, etc.  For example, if you need to print 100 signs, and a typical press run produces 95, your yield loss is 5.  

Most printers or converters will adjust their print start quantity to account for these types of loss, without thinking about how widespread the problem could be.  For example, what if a process is sequential and multi-step?  For example, let’s say you have a 7-step printing process, and your yield at each step is 95%.  That’s pretty good, right?

Wrong.  Overall, the yield is 69.8% (0.98 x 0.98 x 0.98 x 0.98 x 0.98 x 0.98 x 0.98), which means you basically have to start 144 signs to yield the 100 signs to fill the order. 

Reducing the yield loss can have a dramatic impact on your overall profitability.

2. Determine your Scrap Costs.  Everyone has scrap costs in the printing and converting business.  This could be from supplied materials to in-process losses.  Have you analyzed where your largest scrap costs might be?

Pinpoint the largest scrap costs for now – don’t worry about instituting some type of overall organizational change. Instituting an organization-wide effort to reduce your scrap costs might not be an efficient use of your time. My guess is 80% of the problem comes from 20% of your processes.  

3. Analyze value-add process steps and eliminate the unnecessary steps.  On a continuous line, if your cumulative time to produce a printed piece is 60 minutes, what would happen if you reduce it to 45 minutes?  That’s a 25 percent decrease in labor costs, or another way to think of it, an output increase of 25 percent.  It requires no additional people, machines, facilities, etc.  Define the process, and then look for improvements.  Starting/stopping a job to squeeze in a hot job or because your finished quantity won’t cover the order quantity are good examples of unnecessary stops. 

4. Find your Rework Costs.  When you priced out the costs of a job for your client, did you ever factor in reworking a botched job?  Usually not!  Many printers lose sight of this in the bidding process, but it’s critical.  How much time do you spend reworking defects?  Analyze that cost, as ALL rework costs are a direct hit to your bottom line.

As you estimate those rework costs, include excessive set-up time.  That’s a noteworthy non-value add that many owners overlook.

5. Apply lean to administrative functions.  Management is eager to apply lean to production lines, but have you ever considered applying it to your own decision-making processes? Think of all your management tasks – Estimating, Scheduling, Production, Shipping, etc.  Are these as streamlined as possible?  Starting/Restarting production because of scheduling errors definitely impacts the bottom line.

Much like you would with any type of manufacturing process, identify the steps in your decision-making process and look for ways to improve them.  Value-stream mapping can be a good tool to help you through this exercise.  

6. Prioritize issues that affect the customer first.  You may discover you have high scrap costs, but what if you also have a shipping boondoggle that delays shipments by two weeks and results in irate customers?  If you focus on the scrap costs but ignore the customer complaints, then your (wannabe) lean business will soon be out-of-business.

Prioritize the issues that cause customers to squawk the loudest.  Analyze your customer feedback and tackle the biggest customer issues first.   

Obviously all these exercises in lean work best if they’re under the auspices of a lean operations approach.  However, it’s uncommon for an organization to simply convert whole-heartedly to a quality approach.  

The incremental steps described here can be effective first steps towards integrating lean operations throughout the organization.  Start small.  Get immediate success.  Then build on the momentum and integrate lean throughout your organization.

Photo by: 401(K) 2013



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