The Continuum Management Group, LLC
Achieving cause and effect results through education, communication, collaboration, and alignment.
Continuum Benchmarking

Why consider Continuum Benchmarking?

          Ponder the following question. Can you, in a brief (15 seconds or less) and meaningful manner answer - If you’re not Lean, Six Sigma, or Lean Six Sigma what are you? If the goal is to become Lean or operate at Six Sigma where do you begin if you can’t describe where you are? And how will you know the company as a whole is benefiting from Lean and Six Sigma projects?

            Now, imagine activity-based continuums which help owners, executives, functional managers, and all employees understand how their company measures up to a completely optimized "Lean" organization. More importantly, the continuums make self evident which departments and processes require the greatest amount of attention to progressively move toward becoming Lean – that's Continuum Benchmarking and Management!


Where to start?

           Continuum benchmarking utilizes activity-based continuums to describe day-to-day actions and behaviors of how a company, individual departments, and discrete processes perform. The activity-based continuums depict leading indicators from Stage I "Start up" to Stage IV "Lean." A company-wide continuum describes the overall performance of a company; additional continuums describe individual departments and processes.

           Utilizing lean and six sigma tools continuum management evaluates the performance of individual departments and processes and the interdependencies among them to optimize the whole. Within any given company the performance of a production department may appear lackluster. However, the true capability of the department may be near lean. Due to the dependency on accurate and timely information or specific quality or quantities of material the department's performance is largely controlled by upstream processes. Continuum benchmarking evaluates each department's day-to-day activities – uncovering processes that often appear robust, but in reality are root sources of company-wide performance variability.

           Continuum benchmarking and management subscribe to a modified weakest link philosophy - the overall performance of a company is determined by its least evolved process.


Study Results

           Although dated, here is something very thought provoking. In 1994 the federal government and the State of Wisconsin collaborated to survey and study Wisconsin manufacturers. Five areas of interest included:
  • The pressures faced by small- and medium-sized manufacturers.
  • What kinds of modernizing changes manufacturers had been making.
  • Barriers manufacturers had been encountering in making modernizing changes.
  • What types of services and assistance manufacturers would find most helpful in making modernizing changes.
  • What would be manufacturers preferred mode of accessing services to assist them in making modernization changes.
           One striking feedback element was where manufacturing CEOs placed their company along a four-level sophistication continuum.

           The following table describes where 1156 of 2500 manufacturers placed themselves:

11.6% Level I Start up - in business for less than five years and not a subsidiary of another firm.
50.3% Level II Established company with no modernization strategy in place.
12.6% Level III Established company with modern manufacturing strategy in place.
3.1% Level IV Cutting-edge company.
22.6% No Level Insufficient survey feedback.


          Nearly 10 years have past since the survey results were published. Millions upon millions of dollars have been spent by large OEMs, small- and medium-sized manufacturers, government, and higher education on improving manufacturers' capabilities and competitiveness. This begs the question - what has changed? If today the same manufacturers were surveyed where would they place themselves on the continuum?

          The Continuum Management Group, LLC, believes few manufacturers have made significant inroads toward becoming lean. Yes, lean manufacturing, six sigma, and lean six sigma management strategies have been popularized since 1994. However, where are the meaningful results? During the past decade, many manufacturers have reduced their inventories, as a percentage of sales, only to eclipse inventory carrying cost savings with additional logistics costs (air freight) and indirect labor (additional logistics, expediting, purchasing, and scheduling personnel) to deal with material stock outs and nonconformities.

For more information on the 1994 study of Wisconsin manufacturers contact The Continuum Management Group, LLC, at 608.604.9264 or info@tcmg.net


Lean Trends

           Most lean consultants, managers, and directors claim their activities have produced savings. To validate whether their 5S, kaizen, process mapping, visual scheduling, implementation of cellular manufacturing, etc. events and efforts have produced bottom-line savings trends need to be analyzed.

          Below are several trends which reveal whether a company is realizing desirable operational results synonymous with becoming lean. All of these trends need to improve simultaneously - optimizing one at the detriment of another will lead a company in the opposite direction of lean.

  • Finish Goods Produced to Direct Labor Payroll Hours

    Using a company's payroll period as a time interval and factoring in any changes to product sale price - calculate and plot the trend of total sale dollars produced (shipped or placed in finish goods inventory) to direct labor payroll hours.

    The direct labor classification includes: welders, painters, fabricators, assemblers, and machine operators. The direct labor classification does not include material handlers (including those individuals loading and unloading paint or plating lines), setup personnel, auditors, inspectors, maintenance, or individuals dedicated to completing warranty, rework, or repair.

    The finish goods produced to direct labor payroll hours trend should be positive with a reduction in variability. The ratio is expressed in dollars per direct labor payroll hour.

  • Order Fulfillment Cycle Time

    Order fulfillment cycle time is defined as the time from which a customer places an order until the time the order is ready to ship. Orders shipped from a forecasted finish goods inventory or expedited should not be included in the trend analysis.

    Order fulfillment cycle time should be expressed in production days or shifts and reveal a reduction in time and variability.

  • Manufacturing Cycle Time

    Manufacturing cycle time is the time from when the first setup operation begins associated with a sales order until the sales order is ready to ship.

    The manufacturing cycle time trend should reveal a reduction in time and variability. Manufacturing cycle time should be expressed in production days or shifts.

  • Raw, WIP, and Finish Goods Inventories Levels

    As a percentage of sales, all types of inventory should show a continuous reduction as a company evolves toward becoming lean.

For more information on metrics and methods to determine if a company is becoming lean contact The Continuum Management Group, LLC, at 608.604.9264 or info@tcmg.net
 
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