Flow manufacturing can help manufacturers achieve significant cost savings and boost revenue by enabling a deeper understanding of customer demand and production cycles.

1. • Cognizant 20-20 Insights
Flow Manufacturing: How to Achieve
Superior Customer Response
Flow manufacturing not only helps manufacturers achieve significant
cost savings; it also helps boost revenue by enabling a deeper
understanding of demand signals and customer response to tighter
production cycles and on-time deliveries.
Executive Summary tion has extended the supply chain — and the dual
focus of business growth and cost reduction has
In today’s globally-leveled playing field, forces
led manufacturers to seek increased operational
such as consumer activism, demographic change
efficiency — numerous questions have emerged:
and technological evolution are forcing industry
leaders to continuously evaluate their strategies
to achieve or retain competitive advantage.
• How can we become faster and more nimble
while being the low-cost producer?
These forces are even stronger in the manufac-
turing industry, and they are exacerbated by the • How can we satisfy the ever-changing expecta-
unintended consequences of accelerating global- tions of customers for customized ordering and
ization. For instance, as manufacturers work to real-time tracking delivery at “Web speed?”
improve performance in contextual areas such as • How can we implement high-velocity, quick-
marketing, service and technology, they inadver- response “order-to-delivery” processes to
tently overlook the core function of their business avoid losing business to faster-performing
— manufacturing — where competitors the world global competitors?
over are continuously making strides to increase
capacity, cost efficiency, quality or some combi- Typical answers to the above questions have
nation thereof. focused on keeping finished goods inventory in
stock and increasing distribution channel efficien-
In the context of this white paper, “manufactur- cy. By having products at the ready, shipment to
ing” refers to the processes and entities that customers can accelerate. However, the downside
create and support products for customers. of finished goods inventory is the large amount of
Manufacturing encompasses product develop- working capital required to establish it, the risk
ment, design, production, production support and of obsolescence or non-moving products and the
delivery. cost of storage and logistics. In many cases, even
with a large inventory of finished goods, indus-
Manufacturing has changed radically over the try leaders don’t always have what the customer
last 20 years, and rapid changes are certain to really wants.
continue for the foreseeable future. As globaliza-
cognizant 20-20 insights | february 2013

2. As a result, more manufacturers are turning to During the 1980s, TQM and just-in-time became
demand-driven flow manufacturing techniques the manufacturing strategies of the decade, and
(see definition below) as a way to dramatically from these concepts evolved flow manufactur-
improve cycle time and delivery. Flow manufac- ing, synchronous manufacturing, continuous
turing can achieve significant cost savings in the flow manufacturing and lean manufacturing.
form of reduced inventory The common driver for these new strategies is
costs and improved pro- the imperative to reduce cycle time, eliminate
Unlike traditional ductivity, but its more sig- waste and replace independent demand-driven
manufacturing, flow nificant strategic advantage scheduling with dependent-demand scheduling.
manufacturing is is derived from revenue-
building opportunities as Flow Manufacturing Defined
characterized by customers respond more Flow manufacturing is a methodology in which
close alignment with favorably to short cycles parts are pulled through the manufacturing
process to produce a product that has a firm
actual customer and on-time manufacturers
such, flow
deliveries. As
customer demand. Demand-driven “pull” of
demand, single unit prefer to minimize manu- material through production contrasts with
flow, low WIP, facturing lead times and the traditional “push” production process that
stocks inventory in locations that may not reflect
low defects and build to customer orders
directly, eliminating the customer requirements. Unlike discrete manufac-
shorter lead time. need for finished goods. turing, where goods are manufactured in batch
production mode, flow manufacturing is usually
As this white paper will demonstrate, almost based on a single-unit production philosophy.
every type of manufacturer can benefit from
flow manufacturing methods; already, many are Flow manufacturing is in direct opposition to tra-
reaping significant benefits on several levels — ditional mass or batch production approaches,
financial, behavioral, strategic and tactical. While which are characterized by the use of economic
there are subtle differences in how flow manufac- order quantities (EOQ), high-capacity utilization,
turing is applied to discrete and process manufac- high-resource utilization, efficiency, zero idle time
turing, both types of manufacturers can benefit and high inventory. On the other hand, pure flow
from these techniques. A host of benefits, such as manufacturing is primarily (often solely) driven
accelerated response time, minimized inventory, by customer demand and is characterized by
increased productivity, improved quality, elevated single unit flow, low work in progress (WIP), low
employee morale and reduced capital investment, defects and shorter lead time. As such, applying
have been realized by companies that adopt flow flow manufacturing techniques helps manufac-
manufacturing techniques. turers adhere to a “build-to-ship” philosophy,
with a focus on high on-time delivery and quick
Flow Manufacturing Overview customer fulfillment rates.
Flow manufacturing is a strategy with roots dating
Flow manufacturers may choose to regulate
to the early 1980s; it came of age in the U.S. with
production line output to closely match the
the advent of just-in-time production concepts.
current mix and volume of customer demand.
Throughout the early 1980s, U.S. manufactur-
With a flow line designed to build product at a
ers in major industries were in a state of panic
formulated TAKT time (or the frequency with
over the loss of world market share to foreign
which products need to move down the line in
companies, primarily those based in Japan. Steel,
order to meet the demand at capacity), the flow
electronics and automobiles were the most visible
manufacturer can regulate the rate of the line. The
industries suffering losses, sometimes declining
desired rate is identified each day based on that
25% to 35% from historical heights. Such pre-
day’s customer orders. The rate of production is
cipitous losses resulted in a surge of U.S. business
adjusted by changing labor resources on the line
leaders visiting Japan to learn about flat organi-
(i.e., adding or removing people), not by changing
zation structures, dependent-demand scheduling,
the physical design of the line itself. The ability
Kaizen, use of teams and a quality discipline that
to change output rate daily, driven by changes
transformed into total quality control (TQC) and,
in customer order requirements, is a powerful
later, total quality management (TQM) in the U.S.2
tool for managing productivity, WIP and finished
goods inventories.
cognizant 20-20 insights 2

3. Top Manufacturing Operational Pressure Points
14%
New product introduction
28%
30%
Product quality
28%
39%
Increasing operational costs
34%
Customer demand for on-time 37% All others
and complete delivery 38%
Best in class
Globalization of MFG plant network 20%
41%
0 10 20 30 40 50
Percent of respondents
Base: 150
Source: Aberdeen Group, 2011
Figure 1
Flow Manufacturing’s provides an easy way to visualize how flow
Business Benefits process enables faster response to custom-
er orders.
Manufacturing business leaders are under
increasing pressure on multiple fronts to keep • Reduced inventory requirements: Flow practi-
their companies in customers’ good graces. This tioners have achieved up to a 90% reduction in
is true for industry leaders and laggards across all inventory.2 By reducing WIP and finished goods
sectors (see Figure 1). (FG) inventory, businesses receive associated
benefits by avoiding obsolescence, damage,
Companies have implemented flow manufactur- warehouse space, cost of capital, interest, etc.
ing to achieve the benefits of higher productivity,
operating cost reductions and quicker customer >> Flow processes impact WIP and FG inven-
tory in the following ways:
response in terms of order fulfillment (see
Figure 2). »» WIP inventory declines are due primarily
to shortened manufacturing cycle time
Primary Benefits and the result of a process layout that
• Faster customer delivery: In its purest form, avoids material clogging, waiting, etc.
the flow environment is nothing but a single
piece flow. When a product is built one at a
time, without any wait time between operations Projected Improvements
or processes, the total time required for the Due to Flow
product to flow through the manufacturing
cycle will always be less than the time required
to complete a product that is part of the batch
process. While the time per operation is the Customer Up to 50%
same in both the flow and batch processes, the
response
total elapsed time in a batch process is higher
Quality Up to 50%
by a factor that is directly proportional to the
batch size. So, the end result is a much shorter
WIP Up to 90%
completion time for an individual order, which
is the only way to earn competitive advantage
for many businesses. 0 20% 40% 60% 80% 100%
Percent improvement
>> Studies have shown that businesses have
gained as much as a 50% improvement in
order fulfillment time. Figure 3 (next page) Figure 2
cognizant 20-20 insights 3

4. »» FG inventory reduction occurs because
flow manufacturing works on a pull basis.
Quick Take
»» Subassembly stock is also eliminated be- Flow Manufacturing:
cause of the feeder design. Key Things to Remember
• Quality improvements: Quality benefits are
• Flow scheduling: Activities that convert actual
the most important byproduct of flow imple- customer demand (SO demand) into a signal for
mentations. Quality costs are due to not only manufacturing to inform production and fulfill
product defects but also scrap, rework and demand.
warranty costs. Initiatives such as TQM, Kaizen
and rapid improvement initiatives (RII) are • Flow execution: Activities that involve physically
typically integral to flow implementations. producing the product and shipping it to the end
These approaches help improve process quality, customer.
process discipline, active ownership and col- • TAKT time: The frequency with which products
laboration among workers on the production need to move down the line in order to meet the
line, resulting in a significant improvement demand at capacity.
in product and process quality. This directly
results in a higher first-pass rate and lower • TAKT time for a flow line: (Time available in a
given day) / (projected daily average demand for
rework and scrap costs, thereby reducing
the products in that line).
warranty cash outflow. Another important
factor that contributes to quality improve- • Resources required: (ST) / (TAKT) time (where ST
ment is the robust “measurement-review- is standard time required for the process and TAKT
correct” feedback loop that is followed in a is the frequency with which products need to move
flow environment. down the line to meet demand at capacity).
• Operating cost reduction: An important
advantage that is often overlooked is operating
cost reduction. Flow manufacturing results in
reduced lead time, lower inventory, simplifica-
number of people). Flow manufacturing, by
tion of material flow and material movement,
its nature, balances the work to be performed
fewer manual and system transactions,
and eliminates waste, queue time, move time,
decreased waste, etc., which positively impacts
wait time, etc. Hence, operators can spend
the operating costs required to run a manufac-
more time building good products and adding
turing operation.
value and spend less time on non-value-added
Secondary Benefits activities, such as rework and delays.
• Improved labor productivity: A simple • Simplified production planning and sequenc-
definition of labor productivity is (the number ing: In its purest sense, the flow environment
of units produced for a unit time) / (the operates on a single-piece basis. Even when
Flow Impact on Customer Order Completion Time
Nonflow Environment in Discrete World
Single-Piece Batch
Customer Process Queue Material
Delivery Times Wait Time Movement
Time
Batch Size Time
Single
Customer Single Piece
Piece Queue
Delivery Process Wait Time Movement
Time
Time Time
Flow Environment in Discrete World
Figure 3
cognizant 20-20 insights 4

5. Quick Take
Techniques Complementary to Flow Manufacturing
• Kanban, a material replenishment technique service- or event-focused and aimed at
that works on the “pull” philosophy and achieving a real, immediate step change in per-
perfectly complements flow manufacturing. formance through the practical implementation
Kanban can be implemented in many ways, of change. It is highly structured and coached,
ranging from physical cards to electronic light with an aim of eliminating waste in processes
indicators. One of the main benefits of Kanban or work areas by involving a small cross-func-
is that it limits the inventory build. By limiting tional team of employees for a short duration
inventory, less cash is tied up, less space is of time. RII events can generate tremendous
used, and WIP is significantly reduced, thereby savings in labor, cycle time and quality.
reducing product lead time.
• TQM, another operational performance
• Kaizen, which means “improvement” in improvement philosophy to improve quality
Japanese. Anybody who has implemented and performance of processes and products
flow manufacturing can vouch for the fact that, that will meet or exceed customer expec-
even with effective planning tools, a stable flow tations. TQM looks at the overall quality
environment is usually the result of many small measures used by a company, including
incremental improvements made during the managing quality design and development,
first few years of implementation. With Kaizen, quality control and maintenance, quality
businesses undertake incremental quality improvement, and quality assurance. TQM
improvements and waste reduction by listening takes into account all quality measures taken at
to people with the best insights: the production all levels and involving all company employees.
workers on the front line.
• Total predictive maintenance (TPM)
• RII, another lean tool very similar to Kaizen programs, which can result in dramatic
but with a much faster pace and shorter improvements in equipment uptime, quality,
time duration. It can be defined as hands-on, change over time and capital expenditures.
businesses do not follow the purest flow the flow manufacturer can become an element
concepts, demand is still driven by the final of the overhead that is applied proportionally
end-product, and in many cases, subassem- to each product.
bly planning is eliminated by linking the pro-
cesses together and creating feeder lines. This
• Better floor space utilization: By linking and
balancing manufacturing processes into flow
makes production planning much simpler and lines or cells — and the related reduction in WIP
direct. Also, in many cases, the number of sub- inventory and a thorough housekeeping effort
assembly levels in the bill of materials (BOM) — manufacturers can reduce factory floor space
could be made “phantom,” as there is no need by 20%-plus, in our experience.
to transact at every BOM level (depending
on the level of tracking/accounting that the Characteristics of Successful Flow
business needs). This results in the elimination Implementation
of planning for those subassemblies. The net
The following eight characteristics are common
result is highly simplified production planning
to successful manufacturing flow adoption, inde-
and sequencing.
pendent of the type and nature of the business:
• Effective cost accounting: Cost-accounting
methods can be simplified with flow manu- 1. Top-management commitment and involve-
facturing. Because the lead time through a ment: Flow manufacturing is transformational
flow facility is consistent, repeatable and not on many levels and can lead to fundamental
volume sensitive, activity-based costing (ABC) changes in the way success is measured (KPIs
can be more easily introduced. Labor costs for or metric changes). However, it is often difficult
cognizant 20-20 insights 5

6. to convince key members of the organization 5. The right enablers: An important enabler
that an initiative can deliver transformative is the availability of information/ data to
change unless it has the complete backing and allow manufacturing to respond to customer
involvement of top management. Ideally, a top demand changes as they happen. This calls for
executive in the C-suite, such as COO, CFO or complete visibility among order management,
CEO, will act as owner or sponsor of the flow engineering, manufacturing and shipping
manufacturing initiative. functions. This is why availability of a proper
decision-making and information system is an
A fundamental reason for failed flow manufac-
essential prerequisite for implementing flow
turing implementations is lack of buy-in from
manufacturing. Enterprise resource planning
top management. Many times, top management
(ERP) systems offer one approach because
buys into the buzz associated with flow manu-
most off-the-shelf ERP systems already include
facturing without completely understanding its
transactions, analytical features and functions
business value/fit. Hence, a clear understand-
to support flow implementation. It is incumbent
ing of the ROI and business case is crucial.
on any company to conduct a thorough fit
2. A flow champion: The champion is someone analysis of their ERP systems to make sure the
who believes in flow and is passionate about functions and features meet business needs to
its success. This individual needs to be the avoid massive customization in the future.
lynchpin of the flow project and can typically
6. An understanding that software cannot
be found playing the role of launch coordinator
implement flow: One of the main differences
or launch manager.
between businesses that implement flow suc-
3. Involvement of the entire team: Successful cessfully and those that do not is the approach
flow implementations invariably reveal that to the implementation. Based on our obser-
teamwork and ownership by multiple stake- vations of industry practice and empirical
holders leads to tangible research, two approaches stood out in the case
business value. At the end of of unsuccessful flow implementations:
Successful flow the day, the people in the line
implementations decide the success or failure >> They approached it as a software imple-
mentation.
of the implementation. Indi-
invariably reveal viduals who operate the >> It was led by IT instead of the shop floor
that teamwork machines, move materials, manager.
and ownership by measure and check and While there is no doubt that software is an
manage the lines will decide
multiple stakeholders how well flow will be adopted important enabler in successful flow imple-
mentations, more important are the people
leads to tangible on a daily basis. Therefore, who understand key manufacturing processes
business value. it is important that they are and products and, moreover, exercise the
involved from day one and be required discipline and controls to execute
part of all communications. effective flow design. It is these people who
4. Culture: Shop floor culture can single-hand- need to adjust their behavior and change
edly lead to flow adoption success or failure. their mindset with new measurements and
Cultural factors critical to successful flow incentives that are key to flow manufacturing’s
adoptions include: success.
>> Non-hierarchical decision-making: The 7. The right measurements: While the specific
work culture fosters both bottom-up and measurements used may vary from one
top-down collaboration. Individuals in the operation to the other, one characteristic that
line, both workers and supervisors, are em- is common to all successful flow adopters is
powered to make decisions. Communica- institutionalizing the right metrics.
tion is open and transparent.
>> Supplement monthly metrics with daily
>> Multi-skilled line workers: Workers are operational ones.
also willing to be trained on new skills, as
required.
>> Create a dashboard of key performance
indicators and track them.
Hence, a clear change management program 8. A proper physical layout: Another basic, but
is also critical for successful implementation of often ignored, characteristic of a successful
flow manufacturing. flow implementation is the physical work
cognizant 20-20 insights 6

7. environment. Very similar to smooth traffic There are various tools and systems that support
patterns, a successful flow process should and enable successful flow manufacturing
minimize clutter that waylays effective func- adoption. These vary from a specific manufac-
tioning. This requires orderliness and neatness turing system to all-encompassing ERP systems
in and around flow lines. For example, all and everything in between. While every business
inventory and subinventory locations should be must decide the right technology enabler for
clearly designated and marked, and necessary its situation, empirical evidence points to ERP.
tools, fixtures, gauges and other resources As ERP systems provide much more than flow
should be present at workstations and properly manufacturing functions, the decision to use ERP
organized. Successful flow implementers pay must consider the overall system needs across
special attention to the housekeeping disci- the enterprise. Almost all top-tier ERP systems
plines of “sort, set in order, shine, standardize provide fairly well-developed flow manufacturing
and sustain.” modules and functions. (See sidebar below for a
list of important criteria to be considered when
Technology Enablers selecting the right technology enabler.)
As all flow manufacturing practitioners under-
stand, the fundamental feature of this approach Beyond the general flow modules and functions
is its ability to react to actual customer demand, that are provided by ERP, manufacturing
which can happen only when real-time (or very execution systems (MES) or advance planning
close to real-time) information integration exists systems (APS), additional features and function-
between demand (orders) and supply (stock, alities are essential for creating actionable intel-
schedules and WIP). Activities such as inventory ligence for production personnel to act upon.
management of intermediate-stage subassem- Automated KPI dashboards, ad hoc broadcast
blies, configuration management of finished systems, workflows and non-conformance alerts
goods, and production order management tied can provide decision-makers with the right
to actual customer orders cannot be efficiently information at the right time to make informed
executed without proper technology enablement. decisions that improve operational execution.
Equally important is the accuracy or quality of the
Transitioning to Flow Manufacturing
data. These informational expectations require
technological help. While there is no cookie-cutter approach for
successful implementation of flow manufactur-
Quick Take
Tips for Selecting Technology Enablers
• Conduct an internal study to understand the >> Engage third-party product-agnostic con-
gap between what you have and what you need sultants if resources are available.
for flow manufacturing:
• Don’t buy products based on future promises.
>> Features and functions. The industry is too dynamic for predictions to
>> Integration needs. be accurate.
• Compare multiple products: • Estimate the level of customization needed.
Every product will need some customization to
>> Use industry reports from Gartner, suit your specific business needs.
Aberdeen, Forrester, IDC, etc.
>> Talk to customers using these products in • Develop insights into product support and ease
of use.
a flow manufacturing setting.
• Ask the product vendor to conduct a pilot dem-
• Perform fit analysis between your needs and onstration using your organization’s data.
the product‘s out-of-the box features:
>> Leverage vendor functional experts but
develop a custom decision matrix.
cognizant 20-20 insights 7

8. Approach to Flow Manufacturing Implementation
• Assess need
• Develop business case • Select line for pilot implementation
• Rationalize • Train workers
• Select technology enablers
ionalize
Rat Se
• Roll out to entire 1 le
manufacturing shop 2
ct
ut
lemen
lO
mp
Rol
7
ta
I
• Change line setup
Flow
tion
3 • Establish new KPIs/metrics
Set Up
• Set up the system
B u y-
6
In
• Get buy-in from 4
management 5 ot
Re
and shopfloor vie w Pil
• Launch pilot (3-6 months)
• Review process and Repeat Step 4 • Record results
measure output if review is not • Redo, based on findings
• Review KPIs/metrics satisfactory from the review step
Figure 4
ing, the following recommended sequence and with current manufacturing operations that
steps have been found to be critical success inhibit success. Develop a clear matrix (see
factors (see Figure 4): Figure 5) to verify whether flow answers
each of those issues, both individually and
• Rationalize: Case studies point to a common as a whole.
reason why flow manufacturing projects
fail. Typically, it is a lack of conviction (i.e., >> Create a business case: Develop a busi-
ness rationale that clearly lays out the cost
the business is not really sure why it needs
and benefits in terms of dollar value, time
flow manufacturing but still makes a case for
and resources. Also, lay out the intangible
its adoption). Flow manufacturing adoption
costs and benefits of adoption. Wherever
cannot be based on an executive’s excitement
possible, try to assign a dollar value to the
about a popular buzzword or a strategy of
intangibles so emotions and perceptions
“management by imitation.” At minimum, man-
can be eliminated from the decision-making
ufacturers must perform the following checks
process.
before deciding to adopt flow manufacturing:
>> Determine the need for flow: Make an hon- >> Rationalize and decide: Review the busi-
ness case with company leadership, as well
est assessment of the goals that your com-
as with the other functional groups that
pany wants to achieve and identify the gaps
Illustrative Flow Suitability Evaluation Matrix
Current Issues Flow Solution Comments
Can Flow Help? How Flow Will Help
Low labor
utilization
High WIP
Big batch
Finished inventory
Capacity
constraints
High rework
Figure 5
cognizant 20-20 insights 8

9. will be impacted and make a collective de- • Setup: The degree of preparation will
cision. Most often, the affected functional determine how smooth the flow manufacturing
groups include finance, order management launch will be. Multiple prerequisites need to be
(OM), shop floor management, material in place for an effective launch.
planning, etc. Depending on product type, whether your
• Select scope: The next step is to select the organization is a job or made-to-order shop,
scope of the flow implementation. While an the extent of the line setup will vary. In a job
organization can attempt a big bang adoption shop world, machines performing the same
covering the entire manufacturing operation, process would have been located together
an incremental approach is often better. to maximize productivity. However, in a flow
Companies should select a specific product line world, machines should be arranged to enable
rather than a specific production line (unless a continuous product flow; hence, they need to
they are the same) and use this initial learning be positioned next to each other in a manner
to iron out wrinkles before converting the that resembles the process hand-off.
entire manufacturing operation to flow. The As an example, instead of having each drilling,
following steps are recommended for selecting grinding and assembly machine in a line of its
the pilot candidate: own (characteristic of a batch shop), the flow
>> Identify the product. The selected product line should place drilling, grinding, burnishing
should exhibit fairly stable demand. (Avoid and assembly operations in the same line
the cash cow and the dog of the company to to facilitate minimum material movement,
avoid extra pressure or the “nobody cares” minimum WIP accumulation, etc.
scenario.)
>> At minimum, pay particular attention to
>> Document the manufacturing process- verifying the following flow line character-
es that produce the product, from start to istics:
finish.
»» Are the processes and machines in the
>> Calculate total throughput volume, re- line flexible and responsive?
sources required and TAKT time to achieve
the sales volume for the selected product.
»» Are the work cells set up to provide con-
tinuous flow?
>> Create the flow line layout and use this as »» Are the machines and equipment re-
the reference point for making any TAKT quired to complete the entire process
time adjustments or line balancing. collocated?
Two other important considerations must be
applied at this juncture:
»» Is the staff multi-skilled?
If the targeted product line has character-
>> Select the right technology enabler:
istics that are completely opposite to what
Whether it is an ERP or a specific flow
has been described above, the line should be
manufacturing package, it is essential to
reexamined and changes introduced to more
have the right system before adopting flow
easily transition to a flow environment.
manufacturing. In today’s world, quality,
accuracy and speed of information are >> Metrics/KPIs setup: Incentives and mea-
absolutely essential, and this can’t be surements drive expected behavior, and
achieved without the right system to sup- this applies to the shop floor, too. As flow
port the process. manufacturing objectives are much dif-
ferent from traditional discrete batch job
>> Education: An important factor in a suc- manufacturing or process manufacturing
cessful adoption of flow manufacturing is
requirements, organizations cannot main-
the level of awareness and acceptance by
tain the same KPIs and metrics to measure
shopfloor personnel. More than anything,
the performance of flow lines. For example:
flow manufacturing requires mindset and
Instead of using conventional metrics such
cultural changes across all levels in the
as machine utilization or total productivity,
organization. Classroom pilot or challenge
create metrics around ‘‘on-time delivery”
workshop sessions are the best way to ac-
and “cycle time” (see Figure 6, next page).
complish this. We recommend that manu-
facturers use an external consultant to pro- >> System setup: For a system to behave
vide this educational service. as the right enabler, it needs to be set up
cognizant 20-20 insights 9

10. with the correct information. Flow-specific could be developed through Kaizen or RII ini-
data elements include flow routing, maxi- tiatives. The review process should be trans-
mum and minimum flow line capacity, flow parent and involve people responsible for the
resources, BOM, shift capacity, inventory specific process or operation. Depending on
rules, etc. The decision-support systems the review results, the pilot launch duration
should be integrated with flow transaction could be extended or shortened.
systems to provide real-time information
and alerts to flow line managers.
• Buy-in: As flow implementation is more of
a mindset and cultural transformation than
• Pilot launch: The fourth key step is to actually anything else, it is absolutely necessary to
run the pilot for the selected line(s). The pilot conduct a formal review of the pilot results with
should be kick-started in non-critical financial- all stakeholders and address every concern.
ending periods such as year- or quarter-end. Before starting the full implementation, make
This will avoid the extra pressure of meeting sure to obtain:
revenue numbers while learning to adjust to the
new way of functioning in a flow environment.
>> Buy-in from the leadership/management
team.
During the pilot, frequently gather data related
to process time, setup changes, material
>> 100% backing from the production lines/
shop floor team.
movement, wait times, rework, defects/scrap,
etc. While there is no rule of thumb on the • Roll-out: Once the pilot is successful, there are
frequency of data collection, data should four important activities to complete before
be compiled multiple times during a shift to the actual rollout commences.
generate a representative sample size for 1. Set up the flow lines for the full-blown pro-
further analysis and review. Data collection duction roll-out:
can be performed either by line employees or
with the help of process/value engineers using »» Start with the product that has reason-
normal data collection techniques such as a ably stable demand. If not already avail-
stop watch, data sheet, etc. able, map out the current manufacturing
process steps for each product.
• Review: This step can be viewed as part of
step four. Data can be reviewed on its own or »» Perform value engineering to determine
the value-added steps. Eliminate non-val-
be used to generate the relevant metrics/KPIs.
ue-added steps.
Reviews should happen on a regular basis, and
corrective actions should be instituted immedi- »» Determine if there is commonality across
ately in the line. Many times, corrective actions product families such that multiple fami-
A Change in Metrics
Metric Metric Definition Calculation
Measures the percent of time an order is delivered to the Orders delivered on time/
customer within the promised time. (Note: The promised Total number of orders shipped
On-time delivery
date is expected to be strictly the total cycle time plus total
shipping time. No buffers are expected to be included. )
Measures the first-time pass rate. This can be calculated Total number of units produced —
First-time either for a specific operation or specific line. (The numerator Number of defective units/Total
pass yield considers the number of defects and hence it will always be a number of units produced
number either equal to or less than the denominator.)
Measures the actual operational cycle time in line with Actual operational cycle time/TAKT
TAKT time the TAKT time calculated for that line. (Note: TAKT time is time calculated for that line
adherence calculated based on the projected average daily demand for
the products on that line.)
Measures the total value of WIP inventory in the flow line. Inventory quantity for each item
WIP inventory
type x Value of the item
Measures the percent of time the process discipline was not Number of process deviations
Process discipline
followed and hence deviation occurred in the line. recorded/Number of FG items
conformance rate
produced
Figure 6
cognizant 20-20 insights 10

11. lies could be built on the same flow line. approach, and rely on real-time manufactur-
The more products built on the same line, ing data, bottleneck constraints, inventory
the more flexible the process will be. and actual consumption to drive production
decisions.
»» Once the products per line are deter-
mined, calculate the TAKT time for the One proven way to make these changes is to
line, based on the projected average daily adopt flow manufacturing and the related com-
demand of products in that line. plementary techniques. There are many examples
»» Once this is done, physically rearrange of companies doing this.
the shop floor to create the flow lines.
If there is one thing that industry captains have
Note: Once actual production starts, there will learned, it is that the cookie-cutter approach does
be a need for making changes based on actual not work; in reality, there is no single solution that
observation of the line. This can be addressed fits all business scenarios, and flow manufactur-
through RIIs. ing is no exception. Just as with any other process
change, flow manufacturing is not a panacea, nor
2. Training and education is 100% complete.
should it be embraced as a religion. So, never try
3. Required resources (people, processes, to force-fit a solution.
etc.) are in place.
We can guarantee that minimal to no benefits will
4. IT systems are fully enabled.
be achieved if flow manufacturing is treated as a
Flow Manufacturing Moving Forward “fad of the month.” It is an operational strategy
that needs to be carefully reviewed for applicability.
To deliver customer orders at the right time, right
price and with the right quality, the first step is Given the long list of benefits, it is not surprising
to synchronize customer demand with manufac- that flow manufacturing has become a competi-
turing execution. To accomplish this, a couple of tive necessity for most industries. The extension
fundamental changes must happen: of flow methods to non-manufacturing processes
is happening rapidly, and industries such as
• Manufacturers must become customer centric banking, software development, healthcare and
by measuring against on-time delivery metrics.
construction are leading the way.
• Manufacturers must focus on a holistic collab-
orative pull approach, instead of a siloed push
References
• R. Michael Donovan, “Demand-Based Flow Manufacturing For High Velocity Order-to-Delivery Perfor-
mance,” Performance Improvement, May 23, 2001, http://www.idii.com/wp/donovan_demand.pdf.
• Gerard Leone and Richard Rahn, Fundamentals of Flow Manufacturing, Flow Pub, 2002.
• “Demand Driven Manufacturing,”Aberdeen Group, November 2007,
http://www.nmetric.com/pdfs/4172-RA-DDMManufacturing-ML-SPF.pdf.
• James Womack and Daniel Jones, Lean Thinking, Free Press, June 2003.
• Definition of “rapid improvement,” Kaufman Global, http://www.kaufmanglobal.com/glossary-pages-61.php.
• “Manufacturing Readiness and New Product Introduction,” Aberdeen, May 2012,
http://www.aberdeen.com/Aberdeen-Library/7902/AI-manufacturing-readiness-operations.aspx.
• “Transitioning to Lean with Oracle Flow Manufacturing,” Technology Evaluation Centers, April 2006.
• Visionary Manufacturing Challenges 2020, National Academy Press, 1998.
• “Design for the Environment,” U.S. Environmental Protection Agency,
http://www.epa.gov/dfe/pubs/pwb/tech_rep/usecluster/pr_pt2-1.htm.
• Jon Duane, Nazgol Moussavi and Nick Santhanum, ”A Better Way to Measuring Shop Floor Costs,”
McKinsey Quarterly, August 2010, http://www.mckinseyquarterly.com/A_better_way_to_measure_shop_
floor_costs_2664.
cognizant 20-20 insights 11

12. • Wallace J. Hopp and Mark L. Spearman, Factory Physics: Foundations of Manufacturing Management,
Waveland Press, August 2011.
• Marshall Fisher, Janice Hammond, Walter Obermeyer and Ananth Raman, “Making Supply Meet Demand
in an Uncertain World,” Harvard Business Review, May-June 1994, http://homepages.rpi.edu/home/37/
neubed/public_html/Stuff/Classes/Supply%20Chain/Sport%20Obermeyer%20Reading.PDF.
• Fredrik Nordstrom, Piotr Gawad and Adam Nowarski, “The Science of Manufacturing,”
ABB Review, 2006.
About the Author
Deepak Mavatoor is a Manager within Cognizant’s Manufacturing and Logistics Consulting Practice. He
has over 15 years of experience in the supply chain, manufacturing, logistics and technology domains.
Deepak has rich experience in the automotive, manufacturing, high technology, consumer electronics
and IT sectors. He has an M.B.A., with Beta Gamma Sigma honors, from the Stephen M. Ross School of
Business, University of Michigan, and a degree in mechanical engineering from Mysore University, India.
He can be reached at Deepak.Mavatoor@cognizant.com.
About Cognizant
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