Read their full success story and check out their results, here:  http://www.velocityschedulingsystem.com/On_Time_Shops/Contour-Tool-VSS-success-story.pdf. 

This is not your typical drum buffer rope or Theory of Constraints success story.  Contour is a highly custom machine shop with lots of chaos, ever changing customer needs, a moving constraint and in short, an environment where job shop scheduling is tough.

To download and print this article, click here:  Job Shop Scheduling SECRET

By “Dr Lisa” Lang

There’s no question that scheduling a custom job shop has it challenges. And every time we encounter one of the many challenges, our schedule is out of date, and we need to update the schedule.
In fact, don’t we spend A LOT of time updating the schedule? Here are just a few of the common scheduling challenges that cause us to have to continually update the schedule:[1]

1. Clients change their mind
   
2. Vendors aren’t always reliable
   
3. Mix can vary wildly and so our constraint moves
   
4. Employees do not always have the right skill and their discipline is lacking
   
5. Processes are not reliable
   
6. Machines & tools break
   
7. Quality is not near perfect
   
8. Data is not readily available nor accurate nor communicated
   
9. Communication between silos is difficult
   

    

But there is also no question that scheduling plays a big role in our on time delivery performance and our lead time. And our on time delivery performance, along with our lead times, determine our competitive position within our industry.

This is particularly true, as more and more, the shops that have survived have very good quality and lead the pack in expertise.

Industry Week reported that its 25 finalists for the “Best Plants” award reported an average on time delivery rate of 98.7%. And it’s no surprise that on time delivery is a critical aspect in achieving customer satisfaction, loyalty and greater sales.

But Custom Job Shops are NOT 98.7% On time

Custom job shops usually don’t have the luxury of making the same parts over and over again. The mix of work and amount of repair/emergency work a shop has can change so dramatically week to week that their bottlenecks can move, making on time delivery a real challenge.

It’s no wonder NONE of the 25 finalists were custom job shops or machine shops.

So, unfortunately 1) it’s very difficult to schedule a custom job shop; and 2) it’s very important that we do it well to be 99%+ on time and to reduce our lead times.

That’s probably NOT new news. And I’m sure you’ve tried a number of things to improve your on time delivery and to reduce your lead times. You may have updated your ERP or scheduling software or used some Lean [2] techniques, or maybe you’ve hired an expeditor.

But, whatever you may have tried, my guess is that it may have helped some, but not substantially. And that’s because the typical solutions address the various symptoms, but don’t address the root cause.

So now you might be thinking – okay, so how do we address the root cause, what’s the secret? How can we dramatically improve our scheduling?

The Secret Is ….

to STOP focusing on efficiency.

And when you are willing to do that, and put a better scheduling system in place, you create a buffer to better absorb all those sources of variability (those 9 Challenges we talked about because we can’t totally remove them).

It sounds like heresy, I know – but that’s the secret. The cool thing is that if YOU’RE willing to give it a try and your competitors continue to cling to efficiency – you can create an incredible competitive advantage.

What does it mean to be efficient?

The definition from Dictionary.com is “performing or functioning in the best possible manner with the least waste of time and effort.” And I’d probably add money/cost to that.

One of the ways we typically apply efficiency in a job shop is by keeping all our equipment and/or people busy so that we don’t waste any capacity and have the highest possible utilization.[3]

Now, to keep our key resources busy they all have to have a job to work on. And to increase the likelihood that all resources have work, we typically make all jobs in house available to be worked on.

“Available to be worked on” means included in our work-in-process or WIP.

This max’s out your WIP and increases the pile of work at every work center. That way ALL key resources have a very high probability of having something to work on.

This is particularly relevant in job shops where the mix of work can change from week to week.

That’s one of the things we do in the name of efficiency. Now let’s talk about the negative effect from the actions that result from just this one thing we do in the name of efficiency.

The Negatives from “Being Efficient”

According to Little’s Law there is a direct correlation between the amount of work-in-process we have and our lead time. The higher our WIP, the longer our lead times.

Here’s an illustration showing the relationship between WIP and lead time:

High WIP = Long Lead Time

The more jobs that wait for their turn the longer the average queuing time, leading to longer production lead times. Example 1 has the most WIP and longest lead time. And, conversely Example 3 has the least WIP and the shortest lead time.

So, as you increase WIP, you are also increasing your lead time, not to mention the amount of cash you have tied up in raw materials.

But Wait, There’s More … On Time Delivery Decreases

The diagram does NOT include the effect of variability. But if it did, it would show that the variability of production lead time is increased as the queue grows.

So the effect of high WIP just gets more dramatic the more variability you have – the more you battle the 9 Challenges.

This directly reduces the on time delivery because it is more difficult to predict the exact production lead time and to confirm orders accordingly.

And … Quality Decreases

High WIP can also have an impact on quality. Many production failures occur early in the routing, but are detected much later in the production process (usually at final inspection).

If WIP is high, the average lead time is also high causing a long lag time between the production steps and the final inspection. That means that the final inspection step occurs a long time after the step that caused the failure.

And because so much time has passed, it can be difficult to determine and correct the root cause of the quality problem, making improvement very difficult.

Thus, the higher the WIP, the harder it is to detect and correct quality problems.

All of this brings me to the conclusion, that you must …

STOP Focusing on Efficiency

As you stop focusing on efficiency and reduce WIP, here’s what happens:

• Queue time reduces
  
• Lead time reduces
  
• Lead time predictability increases
  
• On time delivery increases
  
• Quality increases
  
• Cash flow increases
  

As a result of these improvements, your production lead-time becomes MUCH shorter (if you do it right) than your quoted lead-time. This difference can be used in 2 ways.

First, it creates a buffer allowing you to absorb a fair amount of variability and further enhancing your on time delivery performance. And second, the difference is so big that you can also afford to reduce the quoted lead time to customers.

The combination of these things – a shorter quoted lead-time AND 99%+ due date performance creates that competitive advantage I mentioned earlier.

That’s Counterintuitive!

Now, all of that is fairly easy to say and much harder to do. It’s not physically hard to do, but mentally challenging because we don’t have intuition around this approach.

I’ve only touched on one aspect of the negative effects an efficiency focus can have. There’s more to understand to have a HUGE impact on your shop scheduling.

So I’ve put together a 47 minute webinar that explains the whole process – of specifically HOW to do this — nothing is held back. It’s called How to Get More Jobs Done Faster and you can sign up at www.VelocitySchedulingSystem.com/webinar. There are 2 dates to choose from, so I’ll see you there!

Ooooh … and while you’re waiting for the webinar, why not go put some of this into practice right NOW?!

——————————————————————————-

“Dr. Lisa” Lang is the President of the Science of Business and has recently worked with Dr Goldratt who is the father of Theory of Constraints and author of The Goal.  Science of Business specializes in increasing profits of highly custom job shops by applying Theory of Constraints, Lean and Six Sigma to operations with Velocity Scheduling System and Project Velocity System and to marketing with Mafia Offers. Questions? Comments? Post them on this post.

[1] Taken from The 9 Challenges to Scheduling Your Job Shop and Why Your Schedule is Dead On Arrival, available at www.VelocitySchedulingSystem.com/ebook.

 [2] According to an industry study, most machine shops rely on Lean to “improve”.  But Lean Doesn’t Work for Many Shops.  According to Taiichi Ohno (inventor of the Toyota Production System from which Lean is based), for Lean to improve on-time delivery, the processes, products and load must be stable for a “considerable length of time”.  And while this is true in the car industry — who only allow model changes once a year – this is not the case in machine shops.

 [3] Some shops focus on keeping people busy, some on machines and some try to do both.  It doesn’t really matter which you tend to do. 

©2011 Science of Business, All Rights Reserved

Domestic manufacturing is an unexpected Cinderella story. As the United States clears the worst recession since the 1930′s, manufacturing has grown revenue for the 17th straight month. Once thought to be in severe decline, the industry seems poised to make a comeback. This is welcome news for an industry used to shedding jobs offshore.

Manufacturing, however, is not out of the woods. To continue on this growth track, and remain competitive, domestic manufacturers will need to adopt new business strategies. Toward that end, we have surveyed the manufacturing landscape and identified five strategies that companies are using to remain competitive. Here we profile each strategy and present case studies illustrating how real companies are putting those strategies to use.

1. Prepare for Re-shoring Production

More manufacturers are bringing production back to North America. We think the three main drivers of this trend are:

●     Increases in the cost of ocean freight transportation, which has increased by as much as 150% since the 2008 lows;

●     Longer product delivery cycles that make domestic manufacturers less responsive to consumer demand; and,

●     Poor production quality standards that have resulted in the delivery of defective goods.

In addition to these drawbacks, the rising cost of Chinese labor is prompting domestic manufacturers to reconsider their off-shoring habits. Last year, Chinese inflation rose to 5.1% – its highest level ever. Sure, Chinese manufacturing remains far less expensive, but a trend toward higher costs is clear.

These factors, including consumers’ growing environmental and patriotic concerns, are motivating US manufacturers to move their production facilities back to North America. An October survey of nearly 1,400 US manufacturers found that 19% brought production into or closer to North America in the last three months. Domestic labor costs may be more expensive, but manufacturers are finding ample motivation to re-shore. At the same time, these manufacturers are identifying innovative ways to reduce costs.

For example, Vaniman Manufacturing, a maker of dental parts, was initially drawn to China by the allure of labor costs 50% lower than domestic labor. However, Vaniman’s labor savings were quickly eaten up by shipping and storage costs. This prompted Vaniman to leave China and locate their production in San Diego. After the move, Vaniman realized cost savings from reduced transport and storage needs. Ultimately, Vaniman’s costs are still 5% higher than the cost of doing business in China, but the manufacturer feels the premium is well worth it.

2. Invest In Your Workforce

Sourcing labor domestically is a challenge as costs are still higher in the US than overseas. To overcome this barrier, domestic manufacturers should invest in workforce training to gain a skills advantage. Instead of focusing on competing on the basis of labor cost, domestic manufacturers should target productivity and skills. A skilled labor force will help push productivity much more than a relatively less productive labor force.

One company to see their workforce investment pay off is Aerofil Technology Incorporated (ATI). ATI recently invested in a lean training program that dramatically increased worker productivity. Workers were required to attend a full year of lean manufacturing training to improve worker efficiency. In training, workers were taught how to identify and eliminate waste. The work of ATI’s well-educated employees helped the company realize a 100% increase in productivity and double digit turns in inventory.

Domestic manufacturers should also offer workforce training to recent college graduates. Providing workforce training to this generation will help grow a skilled talent pool for the future. Caterpillar, the heavy equipment manufacturer, increases their labor pool by offering 2-3 years of training in human resources, engineering, logistics and more. After completing training, graduates are given professional placement in their division.

3. Design for the Developing World

Another opportunity for domestic manufacturers to realize growth in the coming years is to produce for the world’s emerging markets. Currently, 55% of US exports go to emerging markets. This trend is expected to remain strong, so domestic manufacturers should capitalize on the opportunity.

An area of potential for US manufacturing lies in industrial manufacturing. The US still enjoys a competitive advantage in manufacturing machinery such as earth moving equipment, drilling and mining equipment, and high technology. As developing countries seek to industrialize, these products will be in high demand. Domestic manufacturers should exploit this competitive advantage while it is still present.

In 2010, United Technologies, which makes everything from air conditioners to airplane engines, has seized the opportunity to sell products into markets undergoing rapid urbanization. This year, United Technologies reported that their new equipment orders from China increased 15%. Today, a full 60% of their revenue comes from foreign sales. As developing nations urbanize, there is real opportunity for sales growth.

4. Master Supply Chain Visibility

Domestic manufacturers need to update their supply chain management technologies in order to remain competitive. Too many domestic manufacturers currently rely on spreadsheets and manual processes to manage their supply chains. This is inefficient, expensive and error prone.

To better manage supply chain operations and gain visibility into production, domestic manufacturers should invest in supply chain software. Supply chain software can automate supply chain planning, manage supplier relationships, and provide supply chain execution automation. By automating the process, manufacturers are able to gain productivity, more accurately plan production and reduce cycle times.

Of course, productivity gains in the supply chain need to be matched with reduced lead times on the shop floor. To reduce lead times and improve on time delivery, manufacturers should look into Dr. Lisa’s Velocity Scheduling System, a great visual scheduling system for custom job shops.

Kildeer Mountain Manufacturing (KMM) has gained efficiency by combining radio frequency identification (RFID) technology with supply chain execution software to track incoming inventory and production. The real-time information provided by the software allowed KMM to cut their cycle times in half. The drop in cycle time increased output and allowed KMM to remain competitive.

5. Improve Environmental Responsibility

The final strategy for growth is to maintain a positive image by acting in a socially and environmentally responsible way. Why? First, consumers increasingly demand “green” products; this trend shows no sign of abating. Second, federal and state regulations are becoming more stringent. Third, it presents an opportunity for domestic manufacturers to reduce costs and potentially generate new sources of revenue. Let’s explore this last point.

Forty-five manufacturers in Wisconsin have formed the Profitable Sustainability Initiative (PSI) to demonstrate how companies can go “green” and save money. These manufacturers identified annual logistics savings of $1.8 million. The areas identified for cost savings also boast impressive environmental savings. In the next year, members of PSI will reduce:

●     fuel by 68,800 gallons;

●     CO2 emissions by 758 tons;

●     oxides of nitrogen by 18,944 lbs; and,

●     particulate matter by 680 lbs.

How did they do this? The Wisconsin Manufacturing Extension Partnership uses a structured process to optimize all aspects of plant production, from materials processing to energy use. For example, one Wisconsin manufacturing firm was able to save $360,000 in materials processing by reclassifying byproducts. Others were able to realize significant cost savings by retrofitting their facilities with energy efficient technologies (e.g. LED lighting). Domestic manufacturers that want an easy way to save should explore these options in their own facility.

In 2011 and beyond, we expect for more domestic manufacturers to implement “green” practices and realize cost savings along the way. Domestic manufacturers that put these strategies to use will be well suited for continued growth in the coming years.

The definition of Research and Development (R&D) is much broader than people realize.  Activities and costs associated with developing and/or improving a product or process can potentially generate R&D Tax Credits.

This means that your tuition for the Velocity Scheduling System Coaching Program may be covered — check with your accountant.

So learn a new way to run and schedule your shop, get on-time, get happy customers, get more customers — and then get a tax credit!  How cool is that!

And even if, for some reason, it doesn’t apply to you.  Velocity Scheduing System Coaching Program is so reasonably priced it may not be worth the effort to look for a writeoff or funding. 

Now, the only other question you may have is — Yes, but will Velocity Scheduling System work for me?  Will it work in my my shop with our unique situations and challenges?

I don’t know, because even though over a hundred highly custom job shops have had fantastic success, that doesn’t mean you will.  But I’m willing to investigate it with you.  So if you’d like a private strategy session to discuss your company, your unique scheduling challenges and how/if our scheduling solution will work for you, you can sign up here, there’s no charge:

http://www.VelocitySchedulingSystem.com/private

You’ll need to enter your name and phone number so that we can call you to schedule a time to talk.  I am personally doing these sessions and we will be going deep into YOUR scheduling challenges.  I will hold nothing back and give you my best advice, even if it is that you should NOT sign up for VSS.  Time slots are limited SO SIGN UP NOW!

Dr Lisa

President, Science of Business

That they could substancially improve on time delivery?  That they could substancially reduce the time it takes to get a job through their shop?  And to do it own their own, with just a little of the right guidance, and with a reduction in shop chaos?

They not only read The Goal (by Eliyahu M. Goldratt), they lived it.  They turned their shops around during the 14 week program.  Some had a long way to go (<40% DDP), some were already pretty good (~90% DDP) when we started , but all of them can be proud of what they accomplished.

They were all skepitical when we started, but the results speak for themselves.  Here are just some of the feedback and results from VSS clients:

• “We finished off our fiscal year end 10/31….. could have never turned things around w/out the VSS.!!!!!! We finished the year in the black because ‘the board’ helped us focus on FINISHING! The last 6 months also saw a serious improvement in on time delivery, and an increase in the volume of orders thru our building… No job gets lost in the shuffle no matter how longs its in the building… THANK YOU!” Tanya DiSalvo
•  “Dr. Lisa, Thanks to your program Velocity Scheduling System Gulf has improved Delivery times, reduced rework, improved team work, improved cash flow, and it has really impressed our customers with such a planning system they can actually follow the progress of their job as it progresses threw the shop. The reduction in chaos has to be one of the best benefits to the program.  No more putting out fires all the time. The proper planning and scheduling has really improved this aspect of our operation. This would be great for any shop to consider…….as long as it’s not my competition! Thanks again and we are looking forward to the Mafia Offer Program next Month.”  Vint Massimini Gulf Engineering Co. President
• “After trying different solutions, included expansive scheduling software with years of implementation required, we finally found a system which delivers what promised! We reduced dramatically (about 30%) our already good manufacturing lead times, have a stable and reliable schedule and everybody in the plant knows what to work on at any point in time. There are so many great things about the VSSC but the key is that it’s really fun and easy to implement because it engages the organization as a whole. Thanks Dr. Lisa!”  Alessandro Bernacchia Manufacturing Manager Guntert & Zimmerman
• “Since the introduction of your velocity concept, we’ve seen an average of 5 jobs ship per week, which was about 1 every two weeks prior to the VSS Coaching (that’s 10 X more job done). Our backlog has gone from an average of 55 jobs to around 20 (while sales remained constant). We’ve also reached 100% on-time performance for all new jobs booked since the VSS Coaching began.  Another benefit realized is a steadier invoicing outflow and cash inflow.”  Rick Lightcap
•  “Overtime has been reduced by 75% while increasing OTD to 95% through this period…”  Steve Fleissner
• “We decreased the time it takes to get a job to get thru the shop. Using the visual VSS board gives all the employees a chance to see what is going on.”  John Popescu
• “This is the best system for manufacturing that I’ve encountered… Trust me I have seen and implemented many JIT, Lean Six Sigma systems in the past and this is the best…. Dr. Lisa, the creator and facilitator of the program, is top notch.”   Luis Fernandez, Schlumberger
•  “The Velocity Scheduling System has become the centerpiece of our tool shop. The simplicity of administration and visual nature of the system has been received well by the shop. Jobs are finishing faster and deliveries are improving thanks to the VSS Coaching Program.”  Eric
•  “Before starting the Velocity Scheduling System our on time delivery was about 68%.  After implementation of the system we’re currently running at 100% OTD.  The velocity board has been a great tool that provides visibility not only to myself but everyone in the shop. Daily 5 minute meetings keep everyone informed of how jobs are running and if there any problems. This system has been a great help and we are very happy with the results.”  Richard Pothier
• “After completion of the course our on-time delivery has improved from 68% to 95%. Using the VSS principals our goal is 100% by year end!”  Tim Merrifield
• “Dr. Lisa has provided us with a flexible shop “Operating System” that has provided many benefits to both our engineering and production departments. Chaos is down; visibility and speed through the shop are up. This allows management to make clearer decisions for both product planning and overall corporate strategy. I would definitely recommend the Velocity Scheduling System to other shops that know that they should be doing better. Dr. Lisa has the experience to show you how.” Clinton
• “Identifying bottlenecks and decreasing work in process definitely helped improve throughput.”  Kirk
• “The program has helped reduce the chaos in our shop. The communication has dramatically improved to help the work flow through the shop.”  Overton Industries
• “Velocity Scheduling is an amazing program. It teaches you about your process, helps you find out what are the major issues and focuses on one common goal for everyone, improving flow.”  Luis
• “Our business has suffered from low sales for a number of months. A business review recommended that we install a visual job scheduling system that could be understood and implemented by the shop floor employees. The VSS system satisfied this admirably. The large display is very clear and it is obvious to see the jobs that are progressing, delayed, late, etc. It has changed the focus to completing jobs rather than starting jobs that then progress slowly because of the backlog of work in process. The supervisors were doubtful at first about whether this system would work but were willing to try it out to achieve some improvements. The reduction in time required to complete a job has now been translated into our quoting system so that I can quote a lower number of hours to complete the task, hence a lower price for the customer which gives more sales and a higher throughput. More improvements will happen as our sales increase. Do I want to give away my competitive advantage and tell other shops of how to achieve more work faster? – Not likely!” Rob Mantach
• “I have seen a serious improvement in the past two months for on Time Delivery, and less chaos thru out the Shop. We have cut our “Work In Process” by 40% as far as I can tell and no Job is getting lost in the shuffle no matter how long it’s on the floor. So as you can see we have a way to go, but I know we are on the right track.”  Ralph
• “Upon implementing the VSS, we noticed the following benefits: reduced WIP by more than 50%, learned we can do more with much less, and we increased visibility for project management and production that has led to a reduced cash flow cycle and happier customers! I recommend the VSS for any job shop that struggles with managing schedules, inventory, and chaos within the manufacturing environment. If you sign on with Dr. Lisa, she will give you the tools you need to get it under control and achieve outstanding results. Thank you, Dr. Lisa!”  Matt Groves

Want to find out if Velocity Scheduling System will work for you?  Sign up for a free private Strategy Session, where we will discuss your scheduling challenges and go deep to determine the best next step for you.  www.VelocitySchedulingSystem.com/private

These companies were successful because they weren’t satisfied with where they were.  It was not okay to be just okay.  So they did something about it.  And as a result they are more than okay, in fact, they are better than the competition and have created a competitive advantage!

If you’d like to sign up for this free Strategy Session go to http://www.VelocitySchedulingSystem.com/private

Or, if you haven’t yet attended the How to Get More Jobs Done Faster, you can sign up for that here: http://www.VelocitySchedulingSystem.com/webinar

• Reduce pipeline and surge inventory impacts on JIT operations;
• Improve the quality and consistency of inputs;
• Cluster manufacturing near R&D facilities, enhancing innovation;
• Reduce IP and regulatory compliance risk;
• And, most importantly to reduce Total Cost of Ownership (TCO).

All while staying cost competitive. To help the OEMs compare the true TCO of local vs. offshore sources, the TCO Estimator was introduced and several OEMs are now Beta testing the system. Reshoring Initiative Leader Harry Moser has presented the benefits of reshoring at webinars sponsored by the Fabricators and Manufacturers Association and the Association for Manufacturing Excellence/APQC Benchmarking Community of Practice.

The purpose of this NEW site is to consolodate the reshoring materials including: TCO Estimator, the webinars, the reports, and links.  Check it out: http://www.ReshoringMFG.com

It is my hope that not only will lots of reshoring occur, but that the OEMs will ask potential suppliers “Are you VSS Certified?”  Some of the big guys already know about the outstanding results our Velocity Scheduling System Coaching clients produce.  So it’s just a matter of time …

More about the reshoring effort:

The National Tooling and Machining Association (NTMA) and the Precision Metalforming Association’s (PMA) Re-Shoring Initiative is a non-protectionist way to reduce imports (and our trade deficit), increase our “net exports” and create jobs.  Re-shoring results in bringing lost manufacturing jobs back to the U.S. by uniting large manufacturers with competitive domestic suppliers.  Going local can reduce a company’s TCO (Total Cost of Ownership) and offer a host of other benefits while bringing U.S. manufacturing jobs back home.

This initiative documents for large manufacturers the benefits of sourcing in the United States.  A highlight of the campaign to date was the May 2010 NTMA/PMA Contract Manufacturing Purchasing Fair: Re-Shoring to Return Manufacturing Jobs to the United States where larger U.S. manufacturers (OEMs) found competitive job shops to manufacture parts and tooling.  More than 45 representatives from large manufacturers attended and learned about domestic sourcing opportunities from 113 custom U.S. manufacturers.  Sixty-four percent of the OEMs that participated in the Fair brought at least some work that was previously off-shored, while other companies brought new domestic sourcing opportunities to participants.  The next NTMA/PMA Fair will take place on October 29, 2010 at the MGM Grand/Foxwoods in Mashantucket, CT.

Check out all the articles and information on reshoring here:  http://www.ReshoringMFG.com

And these are the things that determine how much money we make.

This is true whether we are talking about new machines, a new ERP system or any other technology. Technology is necessary, but it is not always sufficient to help you make more money. Which is why we have a saying in Theory of Constraints — Technology is necessary but not sufficient. And of course Eliyahu M Goldratt also has a book by the title Necessary But Not Sufficient.

So read on and I will give you 4 questions to ask about any technology purchase your considering.

Technology can bring benefits, if and only if, it diminishes a limitation.

• This does NOT mean that if technology diminishes a limitation it necessarily brings benefits – only that it can or may bring them.
• Even if the limitation is NOT recognized (you aren’t aware of it), the statement holds true.

Long before the availability of a technology, we developed modes of behavior, policies, procedures, measures and rules to help us accommodate whatever limitations we have in our system. Our systems do a nice job of accommodating existing limitations.

So, what benefit will any technology bring if we neglect to change the rules? If we keep doing things the same way only faster – what benefit will there be? And sometimes, many times – the answer is none. If we obey the same rules, we are acting as if the limitation is still there and hence, still being limited.

• How many companies do you know that have implemented technology of some kind and as a result of this technology their profits have increased substantially?
• And, how many do you know that have implemented and have had no results?
• Which is more common?

If you want to make sure that your technology investments payoff, there are 4 questions we can ask to ensure that good technology – once implemented will bring bottom-line benefits?

1. What is the main power of the technology?
2. What limitation does this technology diminish?
3. What rules helped us to accommodate the limitation?
4. What rules should we use now (with this new technology)?

We must answer these 4 questions to fully understand and gain the potential benefit of any technology we are considering.
Let’s look at an example using Velocity Scheduling System as the technology. (Note – that as you read on, I’m being a little extreme in an attempt to add humor.)

1. What is the main power of the technology? (In this case the Velocity Scheduling System)

• It provides a system to reduce and control WIP which reduces time through the shop.
• It is a visual scheduling and priority system, so that at a glance we can see which jobs are the highest priority jobs and everyone knows what to work on.
• It provides a focus on flow which further reduces time through the shop.
• It teaches you how improve shop communications and the communications between manufacturing and sales.
• It includes a planning component to help us determine the release order of jobs and when we need to add capacity to ensure due date performance now and in the future.
• It includes a continuous improvement component so that our Velocity gets faster and faster and so that we know what 1 improvement project we should be doing.
• It includes key operational and financial metric monitoring (6 metrics total) to ensure that our Throughput is growing faster than our Operating Expenses while maintaining or improving our lead-times and due date performance.

2. What limitation does this technology diminish?

• The need to constantly update and redo our shop schedule and/or change our promised due dates.
• The need to add capacity before we have fully leveraged what we have because we don’t really know what we need.
• The need to call customers and change due dates or beg for forgiveness.
• The need to improve everywhere because we don’t know where to improve to have the biggest bottom-line effect.
• The need to have a ka-zillion key indicators.
• The need limit our profits by what we can get out the door. Or the need to limit the new business we go after because we can’t deliver what we’ve got on-time.
• The need to sound just like our competitors because we don’t really have a competitive advantage.

3. What rules helped us to accommodate the limitation?

• Just keep everyone and/or every machine busy all the time and that will maximize the use of our resources and our efficiencies. And if we are efficient – we’re doing the best we can.
• To increase the likelihood that everyone has something to do, make sure that all orders are available to be worked on.
• When an important customer calls or an important job is in jeopardy of being late – change priorities in the shop. Also run around and create lots of chaos and stress for everyone.
• Whenever we have a little cash – buy new machines. We like new machines. (I have been in a number of shops where if they get a little cash, they buy equipment. I’m not saying YOU do this, but it does happen.)
• Reduce waste (apply Lean) everywhere. Reduce variability (apply Six Sigma) everywhere. And/Or brainstorm a long list of improvement projects.
• Detail schedule. Schedule when every job will be on every piece of equipment, then reschedule and reschedule as you get hit with the reality and complexity of running a custom job shop.
• Measure as much as possible. Track time on every task on every job. Collect tons of bad data. (If we just had more data we could improve our scheduling and get more on-time.)
• Sell more by focusing on the quality of work we do.

4. What rules should we use now (with this new technology)?

• Reduce and control WIP. STOP releasing all the work to the floor to increase the likelihood that everyone has something to do.
• Work that is waiting its turn to be released – get “full kit” for it.
• Use the rules of the Velocity Scheduling System to deal with emergencies, customer changes, etc.
• Measure FLOW, not efficiencies and don’t worry about keeping every one busy.
• Green/Yellow/Red is our one and only priority system. The Velocity Board communicates what to do.
• We do NOT detail schedule (STOP adding detail).
• We focus on finishing what we have started rather than starting more stuff.
• We use buffers to absorb and manage the variability and mix changes that occur in complex job shops.
• We track the major disruptions to flow and use those to direct our continuous improvement so that we know what 1 improvement project we should be doing. STOP brainstorming lists or trying to improve everywhere – the system will tell you where to focus your continuous improvement efforts.
• We only add capacity (buy machines) at the place that is the #1 disruption to flow (or for strategic reasons). If it’s not disrupting flow – you don’t need more or better stuff.
• FOCUS and FLOW are the name of the game – NOT efficiencies and cost.
• Sell more by selling the competitive advantages we’ve created (along with quality).

The Velocity Scheduling System is about changing the rules. It’s about thinking differently regarding how to address those limitations. You don’t need new technology, new machines or to hire people to substantially reduce your lead-times, to substantially increase your due date performance or to substantially reduce your chaos.

Typical VSS clients reduces time through their shop by half, which means they can ship twice and much and make twice as much money — assuming they can sell twice as much. And that’s where the improved due date performance comes in. It’s much easier to gain new business when you can 1) say what you are going to do and 2) do what you said – when you really do have a competitive advantage. It also doesn’t hurt to be able to deliver a little faster than the competition either.

As part of the VSS Coaching Program I walk you through how to move away from the old rules and how to embrace and start using the new rules so that you will get a bottom-line impact. But for most technology you buy – your vendors don’t do that – that’s your job. So being clear on these 4 questions can help ensure you get a bottom-line result.

Remember, if a technology does not diminish a limitation (like a disruption to flow) you are not likely to get a bottom-line result.
So, I’m not against new technology. Velocity Scheduling System is a type of new technology. I’m against spending money on technology that does not lead to bottom-line results.

Next time I’ll give you another example for a different type of technology, so stay tuned for that.

Sign up for the next Velocity Scheduling System Coaching Program (August 16, 2010) and by the time IMTS rolls around – if you need new equipment or technology – VSS will help you to see where you can get the biggest bang for your buck. And I do recommend attending IMTS even if you don’t need anything because you can become aware of limitations that you did not know you had.

Wishing you success,

Dr Lisa

P.S. If you have something you’re considering buying and you want some help applying these 4 questions, just let me know and I’ll walk you through it.

P.P.S. Yes, you can start VSS a little later if you can’t swing Monday. (Assuming we have a spot open, we limit the number of companies per group to ensure you get all the coaching you need.)

copyright 2010 Dr Lisa, Inc.

Regarding this part of the article:

“Products that are labor-intensive and churned out in high volumes, such as apparel, textiles and TVs, will likely continue to be made overseas. So will those that are relatively inexpensive to ship but high-priced, such as laptops and cellphones, Ellis says. Goods are increasingly being made near customers, a trend that’s driving U.S. makers to build factories in fast-growing China.”

I did an RMTMA (Rocky Mountion Tooling and Machining Association) dinner presentation several years ago titled “China, India, Tawain … Oh My!” and my contention then was (and still is) that the more flexible and custom you are as a manufacturer the more likely your work will stay here.

The faster you can get highly custom work through your shop — the more secure your future is. I suggest taking a look at the work you hate to do — and figure out a way to make it easier, start loving it, and go get more of it because your competition hates it too!

The shops participating in our Velocity Scheduling System program are seeing their lead-times cut by more than 50%. If they can have something ready to ship while everyone else is still complaining about it — they are going to be extremely successful in the long run.

Each webinar covers  exactly how to get MORE Jobs Done Faster.  We cover how scheduling is traditionally done and then we cover the Velocity Scheduling System approach.  During the webinar you learn what to go do TOMORROW!

Sign up here: http://www.velocityschedulingsystem.com/webinar/

WARNING: The Velocity Scheduling System Coaching Program is NOT training. This is a go and do program. Only job shops ready to improve due date performance, cut lead-time through thier shop and who seriously want to reduce chaos should sign up.

Velocity Scheduling System is based on Goldratt Theory of Constraints Drum Buffer Rope and is for job shops looking for a better way to schedule their shop.