Gray Research

Master It
If the terms pacemaker process, heijunka, and takt time don't roll off your tongue, it's time
they did. Welcome to master scheduling in the language of lean.
By Chris Gray, Gray Research and Tom Wallace, T. F. Wallace and Company
To comment on any of
these articles, email
Chris Gray at
cgr...@grayresearch.com
Overheard in the halls of the Acme Widget Company:
Jane: I hear you've been having some problems meeting takt time in the large widget
assembly cell. What's going on?
Bill: The problem is big volume increases from the customers. We'll probably need to
redesign the cell and add people to get an engineered cycle time in the right range. Then
we'll need to relevel the schedule.
Jane: What about using inventory out of the finished goods supermarket?
Bill: If it were just normal demand variability, we'd have enough in the supermarket to handle
it. But it isn'twe're seeing a significant volume increase. We can keep the operational takt
time at 65 seconds until the supermarket stock is gone, which will happen in less than a
week. After that, we'd better have higher throughput in the cell or we're going to miss the
customer call-offs.
Jane: How are things otherwise?
Bill: We're fine. We've dropped the EPE interval to less than a week in most of the shared
resources and our heijunka process is working great. No, the major problem is in the
assembly pacemaker cell.
Wait a minute. Who are these people? What are they saying? And what are they trying to
do? They live in the brave new world of lean manufacturing. Just as lean manufacturing
calls for processes quite different from traditional ones, it also has a different set of
terminology. Let's see if we can get a handle on what Jane and Bill are discussing.
Takt time
The basic rate of productionwhat Acme needs in order to meet customer demandis the
takt time, sometimes called the drumbeat for the process. Takt time communicates the
frequency of demand and, consequently, the frequency at which a product must be
produced by the finishing process.
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Takt time = operating time required quantity
For example, if Acme's customers require 240 items per day and the factory operates 480
minutes per day, takt time is two minutes, or 120 seconds. To meet customer demand, the
plan must authorize sufficient resources, both in people and equipment, to produce one unit
every 120 seconds. The cell or finishing line for the product needs a proven engineered
cycle time of 120 seconds or less.
Using the language of demand and supply, we can say that takt time is the demand for
capacity and that engineered cycle time represents the supply of capacity. Supply must
equal or exceed demand, or the total demand will not be met and the customers will be
disappointed.
So takt time is the rate of production required to meet customer demand. This is the
simplest approach, when conditions allow. Frequently, however, there are other issues that
need to be considered in setting actual production rates. Inventory adjustments, products
with seasonal sales curves, plant vacation shutdowns, intermittent large demand shifts, and
other factors may require a wider view than pure takt time provides.
Operational takt time is the rate of production required to meet customer demand as well as
the other factors cited above. Within the context of sales and operations planning (S&OP),
pure takt time would be calculated from customer orders and forecasts; operational tact time
would be derived from the production plan, which is the pure demand plus or minus
necessary adjustments. In Acme Widget's case, the operational takt time should be used to
determine the required output rates, taking into account the need to replenish and expand
the finished goods supermarketa term we'll discuss in a momentbecause of the
increase in demand.
The pacemaker process and heijunka
A basic concept of lean manufacturing is to schedule at only one point in the overall value
stream (the value stream comprises all the actions required to bring a product from order to
delivery). Scheduling at this one pointthe pacemakerresults in pulling work from
upstream processes and flowing product to the customer through the subsequent
processes. The planned volume and mix at the pacemaker process typically corresponds to
what's known as the master schedule; the scheduled mix for the day's actual production, as
defined by the heijunka box (see sidebar for definition), corresponds to the finishing
schedule.
Pacemaker schedules are established in accordance with the takt time for all items that go
through the pacemaker process. The entire system depends on a foundation called leveled
production or heijunka. As Taiichi Ohno points out in his book Toyota Production System,
"production processes must be managed to flow as much as possible. This is really the
basic condition." He goes on to say that another important condition is leveling production as
much as possible.
Finished goods supermarkets
Producing only to customer orders is, when practical, the best way to operate. However,
producing to a small inventory may make more sense than flexing labor and plant processes
to match day-to-day order variations. Products are often produced to a buffer called the
finished goods supermarket rather than to customer orders.
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For situations where the customer provides stable and reliable demand, it's often possible to
operate with little or no finished goods supermarket. For a customer whose demand is highly
variable, maintaining a larger supermarket will probably be required.
Supermarkets are essential for our friends at Acme Widget for two reasons. First, they
provide a buffer of finished goods between highly variable customer demand and the
pacemaker process that must run at a more stable and leveled rate. Second, they can
decouple processes that run at different rates, for example a finishing process that flows at a
constant rate and an earlier fabrication process with a long setup that runs large lot sizes at
a much faster cycle time. These supermarkets do not contain finished goods but rather
components that are used at the pacemaker (final assembly).
The size of an item's supermarket depends on the frequency of replenishment and the
volume and variability of demand for the item.
Pull to the customer
Another essential element of lean manufacturing is the principle of demand pull, which says
"replace what is used."
Pull replenishment is quite simple. Inventory for items in a supermarket is divided into equal
units called kanbans. As a kanban-worth of inventory is consumed, it is reported. When the
number of empty kanbans hits a predetermined level, a signal is generated to schedule
replenishment. In a company with low setups, small order quantities, and lots of
manufacturing flexibility, one kanban of consumption might signal one kanban of
replenishment. In other cases, several kanbans may need to accumulate before a
replenishment is signaled.
To use the pull replenishment method rather than a more traditional work order method,
there are some prerequisites:
Demand for the item must be relatively repetitive.
Lead times must be relatively short.
Components must be available so an item can be produced on demand when the visual
signal is generated.
Of these prerequisites, the most difficult to achieve for most companies is relatively
repetitive demand. Techniques used to create level demand include finished goods
supermarkets and load-leveling mechanisms like the heijunka box, plus other level-
scheduling methods for both volume and mix.
For items that are being replenished using pull, some of the traditional techniques often
associated with material requirements planning (MRP) are shut off. Examples would include
order releasing based on planned orders and traditional shop floor control based on push
dispatching rules. Typically, however, MRP planning continues to run to project
requirements for suppliers of purchased components and raw materials.
The issue is how to communicate execution signals. In the conventional production situation
and for low-volume, intermittent usage items, order releases would typically be used. In the
lean situation for high volume and relatively continual usage items, the best execution
mechanism is almost always demand-pull (kanban). Here, a pull signal can indicate the
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need to replenish finished goods inventory, produce a product to order, and replenish
component inventories.
EPE interval
Long setups are an impediment to creating value streams that flow. They typically result in
larger lot sizes, lumpier demands, longer lead times, potentially poorer quality, more
inventory, and surges of work upstream. The large amount of time needed to change over a
pacemaker may prevent a true mixed-model schedule and stand in the way of implementing
effective pull systems for upstream components.
The every-part-every-interval (EPEI) shows the effect of current setups on the flow through
a process, plus the frequency that each item produced in the process can actually be run
without exceeding available capacity. The EPE interval calculates the capacity required for
running all the items that go through a process and uses that to determine how much time is
available for setup. The amount of time available for setup can be factored by the total setup
time for producing every item at least once and from this can be calculated the maximum
number of times you can set up every item and the order quantity for each one based on
that frequency. For example, in the EPE interval calculation shown in Figure 1, Acme has
calculated that each part going through the molding process can be produced twice each
monthan EPE interval of 10 days for each part. This enables the company to set a lot size
equal to ten days of demand for each item without incurring any kind of capacity problem
and without running a larger lot size and more inventory than required. The company would
typically do this same calculation for each different manufacturing process including its
pacemakers.
The EPE interval answers the key question: How often can we run every part through the
process? Once a month? Once a week? Once a day? Once an hour? The EPE interval
validates that the schedules are actually doable from a capacity perspective. For fabrication
processes that are not part of a pacemaker, the EPE interval is essential for setting lot sizes.
Lot sizes based on the EPE interval ensure work scheduled for the process is doable and
the most repetitive possible in the current environment.
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The benefits of running each item using the smallest valid interval (and decreasing it to an
even smaller one) include
Reduced lead time across the value stream
Increased flexibility and responsiveness
Reduced in-process inventory
Reduced space requirements
Improved quality
Increased opportunities to ship on demand
Fewer surges of work upstream.
For the pacemaker process, reducing the setup time and consequently cutting the EPE
interval to less than the ship window (the interval between shipments to a customer, daily or
each shift or every two hours) has another potential benefit. This enables the company to
meet small orders as easily as large ones. For many companies, an EPE interval of less
than a day means that any item can be run essentially on demand. For this reason, a goal of
mixed-model scheduling is to get the EPE interval to less than a day, shift, or ship window.
The role of planning in lean production
Key scheduling people in a lean environmentwhether their job title is master scheduler or
something differenttypically are involved in the following activities:
Developing better strategies for dealing with highly variable demand. They focus on
reducing variability by inventory supermarkets or through a pure finish-to-order or make-to-
order strategy to dampen the impact of that variability on the plant.
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Leveling the schedule for both the volume and mix. They create a plan for flow that
supports the drumbeat of expected customer shipments and enables the smooth
movement of work through the plant.
Monitoring customer order patterns and validating the daily execution mechanisms. They
produce to customer orders whenever possible at the exact day's mix using heijunka boxes
or other load-leveling techniques.
Driving improvement activities so all processes can produce smaller quantities at shorter
intervals. They create a true mixed-model schedule as well as more repetitive demand for
components being pulled from upstream processes.
Such activities are in addition to these employees' traditional roles of balancing supply and
demand, ensuring customer responsiveness isn't sacrificed in the name of factory stability
(or vice versa), deciding where and how to meet the customer, and deciding how to manage
changes to the plan.
These, then, are the basic tools needed for effective planning and scheduling in lean
manufacturing: takt time, operational takt time, scheduling at the pacemaker, supermarkets,
heijunka/load leveling, kanban/demand pull, and the EPE interval. They are also the most
important areas to understand for those planning to integrate their master scheduling
processes effectively into a lean manufacturing environment.
Will you and your company be moving to lean manufacturing? Our answer is yesit is
simply too good and too powerful to ignore. Some companies embrace lean 100 percent
and reap great rewards. Others use lean on their high-volume products and remain in a
conventional mode on the others. Some companies use lean principles for waste elimination
but have difficulty with the scheduling elements of lean because of highly volatile,
nonrepetitive demand and perhaps a broad and fragmented product line.
Almost all companies should be using lean. Too few are using it today. Lean will probably
touch your life, if it hasn't already, so start building your knowledge base.
"Master It" originally appeared in "APICS - The Performance Advantage", the monthly magazine of APICS
(www.apics.org).
Chris Gray is the president of Gray Research and can be reached at cgr...@grayresearch.com .
Over the last twenty years, he's helped more companies sort out manufacturing and distribution
software issues than any other individual in the field and has authored three books on this topic.
His Web site is www.grayresearch.com.
Tom Wallace is a Distinguished Fellow at Ohio State's Center for Excellence in Manufacturing
Management.
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