Process Analysis Terms

The following terms may be useful to an organization during the activity of process flowcharting, value stream mapping, and analysis.

• Blocking: Occurs when the activities in a process stage must stop because there is no place to deposit the item just completed
• Bottleneck: Occurs when the limited capacity of a process stage causes work to pile up or become unevenly distributed in the flow of a process
• Cycle Time: Is the average time between completions of successive units exiting a process
• Make-to-order: Only produced in response to an actual order that results in minimum inventory levels
• Make-to-stock: Process produced to meet expected or forecasted demand, shipped from stock, and results in high inventory levels
• Process: Any activity within an organization that converts inputs into outputs
• Starving: Occurs when the activities in a process stage must stop because there is no incoming work
• Takt time: Setting the pace of production to match actual demand Takt time = Available work time per day / daily total customer demand
• Throughput Time: The time it takes a discrete unit to go from start to finish in a process
• Utilization: The ratio of the time that a resource is actually utilized relative to the time that it is available for use

Process Flowcharting

Process flowcharting is the use of a diagram to represent the major elements of a process; in other words, a picture of the process. There are many symbols used in process flowcharting, but the basic elements are tasks or operations, decision points, queue or storage, and directional process flow. The first step in many process improvement projects is to flowchart the process as it currently exists, which may not have any resemblance to company standard operating procedures (SOP). The realization that their SOPs do not reflect how the operation is really running is generally an “Ah-Ha!” moment for the company. Flowcharting also determines the parameters for process improvement since a process cannot be improved before it is understood. Although turning a process into a picture may sound very simple, it is an incredibly powerful tool to see what is really happening in a process. After a flowcharting session, the people actually doing the job are always amazed at the difference between how they perceive the process and what is really going on. A common result is a spaghetti diagram that highlights excessive travel, motion and redundancy. A picture truly is worth a thousand words.

As a working guideline, a flowchart should be used to: 1) Understand how a whole process works, 2) Identify the critical points, bottlenecks, or problem areas in a process, 3) See how the different steps in the process are related, or 4) Identify the “ideal” flow of a process.

One of the fascinating things about lean is that it is occurring everywhere, and many times without the knowledge of the person or organization doing it! How can this be? I recently visited a small sheet metal fabrication company, and during the course of a discussion with the owner the topic of lean came up. Ned, the owner, was more than eager to share his position that they didn’t feel the need for lean. He went on to explain that his company had been in business for over 50 years, and that the average employee tenure was 23 years of service. Ned was very proud to tell me that over the years this experienced workforce had honed their manufacturing best practices to the point that they felt no additional benefit would be gained with lean. I said “OK Ned, let’s take a walk”.

One of the first workstations we visited had a pegboard with all of the operator’s hand tools outlined and hanging from it. I asked Ned what this was all about, and he proudly stated “Rita noticed that her people spent a lot of time looking for their tools every morning before they could start work, so we decided it would be a good idea to place all the tools in easy reach, and give each tool a visual aid for where it belongs.” I subtly explained that they had embraced two lean concepts with this improvement; eliminating motion waste (one of the Seven Deadly Wastes) and the 5S methodology of Seiton, or to Set in Order.

At the next workstation I asked Ned why this process was setup in a horseshoe-shaped workflow. Ned said “Gunther here is my production manager, and he told me one day that a lot of time was being wasted toting product from one end of the plant to the other to different machines for processing. So we decided that it would make sense to physically relocate the machines closer together, in the exact sequence needed, to minimize this wasted time.” I gently suggested that the U-shaped cell concept exemplifies the lean goals of reducing waste and manufacturing footprint while increasing productivity and efficiency. Needless to say, virtually every “best practice” evidenced throughout Ned’s process had its roots in lean principles.

Lean is everywhere!

In Summary

After a very challenging 2012 for the domestic PCB industry, global business conditions are slowly improving. Let’s take a look back at 2013 and what we can expect as we move into the new year. Like many of you, I grew up in this business. I cut my teeth (and more than a few body parts) in this industry working for my dad in the family business. At the risk of dating myself, this was well before the advent of CNC machines, CAD/CAM and automatic plating equipment. Over the past 3 decades I have been proud to see this business grow into the professional industry it has become. I am vested in the success of our industry; it matters to me.

News Flash: US economy is still not working!

After a number of false starts, missteps and failed technologies in the renewable industry, solar/photovoltaic demand is beginning to recover. Europe’s tighter fiscal policies has squeezed consumer purchasing power and increased sovereign-debt tensions, which has an impact on global business. US consumer confidence has not improved, still hovering around 80%. The unemployment rate is 7.2% (published), which is bad enough, but after factoring in the millions of people that are no longer counted because they have flat-out quit looking, the “real” unemployment number is somewhere north of 14% (Forbes/BLS). The US is dead last in the world for Gross Domestic Product growth in 2013 at 1.7%; with forecasts for 2014 only slightly better at 2.8%, pulling ahead of only Japan and the EU. Whether it is RoHS, Conflict Minerals or the EPA, restrictive legislation continues to make it harder for PCB manufacturers to not only make a profit, but survive. Look for the biggest to get bigger through acquisitions both domestically and globally.

In 1990 there were roughly around 1,000 US printed circuit board manufacturers, in 2000 there were 700, and in 2010 the number of domestic shops had fallen to only 365. Unfortunately, I fear this number will be sub 300 by the end of 2015; a short 2 years away. Where the US market needs to continue to compete are QTA/proto business, advanced technology and short run orders.

Global PCB Snapshot

The global printed circuit board industry total available market is currently at a little over $60 billion, with Asia still dominating world production. There are a little over 2,900 printed circuit board manufacturers globally, The United States held onto its fifth place rank with just under a 5 percent share, which may look encouraging; however, this is extremely misleading as the top 4 countries are responsible for 89% of the total global PCB pie. People much smarter than me are only forecasting single-digit growth of the industry for the next 5 years.

Bright Spots Looking Forward

There are a few positive signs looking forward: leading indicators are rising in some regions and new product designs are starting to show some life. The overall world PCB production is increasing (100% growth over the past 10 years), which will continue to present more opportunities for the US market.

Much of the talk at April’s IPC/APEX Expo was how to bring manufacturing back to the US. Onshoring (preservation of existing manufacturing in America) is increasing as a result of US companies becoming more globally competitive through efforts such as lean, product design, reduced labor cost through increased efficiencies, and improved customer responsiveness. Reshoring (return of work to America that had been previously lost to offshore competition) is also on the uptick. China’s rising labor costs, political unrest & weaker exports are driving this trend. Apple plans to move $100 million of Macintosh computer manufacturing back to the US. While this may be a PR move on Apple’s part, but nonetheless, it is still $100 million of work coming back.

Smart Connected Devices: Timeless quotes from folks that didn’t learn from history:

 “I think there is a world market for maybe five computers.”

— Thomas Watson, chairman of IBM

 “There is no reason for any individual to have a computer in his home.”

— Ken Olsen, founder of legendary minicomputer company DEC

 “So we went to Atari and said, ‘Hey, we’ve got this amazing thing, even built with some of your parts, and what do you think about funding us? Or we’ll give it to you. We just want to do it. Pay our salary, we’ll come work for you.’ And they said, ‘No.’ So then we went to Hewlett-Packard, and they said, ‘Hey, we don’t need you. You haven’t got through college yet.'” — Apple Computer Inc. founder Steve Jobs on attempts to get Atari and HP interested in his and Steve Wozniak’s personal computer

 Fortunately, these three boneheaded visions couldn’t have been more wrong as printed circuit boards are the backbone of the electronic technology that has taken us to a place that none of these “prophets” could have imagined in their wildest dreams. The smartphone market is approaching a billion units a year with tablets adding another 400 million to this number. Every one of these devices has at least one printed circuit board that needs to be redesigned and replaced with each new generation launch.

Keep Your Chin Up

Process equipment manufacturers are growing at a solid rate, which is a positive indicator for the PCB industry as a whole. Laminate and other material suppliers are also showing slight growth. So, 2013 was a bit of a wash, but in this economy that is a win and with any luck, 2014 looks to be a little better.

Most lean principles fall under a very old-fashioned ideal that some of us still remember; common sense. During another recent visit with a wire harness and cable manufacturer, I had a great discussion with a fellow old-school manager on the merits of lean. He told me “Steve, I really don’t know what all the fuss is about lean; we have been doing it forever but never called it lean; it’s just common sense.”, which is kinda the whole point of lean. I will close by paraphrasing the great Vince Lombardi, in his speech on What it Takes to be Number One:

Lean “is not a sometime thing; it’s an all the time thing. You don’t win once in a while; you don’t do things right once in a while; you do them right all the time.”

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To paraphrase the great John Houseman, I grew up in an environment where you make money the old fashioned way, you earned it! What will be the impact on our business if the fast food protestors lobbying for a $15 minimum wage actually win?

Old School

I remember starting off in the manufacturing industry earning the impressive minimum wage of exactly $2.10 per hour in a manual entry-level position. My path to earning more money was clearly laid out to me; I had to work hard, gain experience, and master my job. If I wanted to advance more rapidly I had the opportunity to learn other jobs in the shop, often on my own time and after I had completed my own workload for the day. “Back in the day”, there was no sense of entitlement, period; you started at the bottom, worked hard, and moved up in the company. The more skilled you became, the more value to the company you brought and the more money you made. The more skilled the workforce became, the more value the company brought to their customers, and the business grew. This is the basis of our free market system.

107% Raise

When was the last time you received a 107% wage increase? Does never come to mind? That is the result of increasing the minimum wage from $7.25 to $15.00 per hour for entry-level workers. Companies, and particularly the fast food industry, rely heavily on unskilled job seekers to fill entry-level positions in their restaurants and devote great time and expense in training them to become highly-skilled members of the organization. Once the minimum wage is raised, will these workers magically become more skilled, efficient or valuable? Of course not. What are the benefits companies will see from this increase in expenses? None. What this will do is negatively impact the organization’s labor expense, profitability and competitiveness. Flipping the fry basket was never intended to be a family sustaining job.

The $8 Hamburger

Would consumers pay $8 for a Big Mac to support the increase in minimum wage? Most assuredly no, but what would likely happen is fast food owners would invest in robots and automation to flip frys, pour drinks and even build burgers. Robots don’t take breaks, care about diversity, demand wage increases or join unions. They just work. What the protestors don’t realize is that what they are demanding will price their jobs right out of the market.

Collateral Damage

Artificially inflating the minimum wage diminishes the incentive for new workers entering the workforce to want to work hard, learn more, and move up the ladder and will actually have the reverse effect; disincentivizing new workers. Raising the minimum wage is touted as a tool to reduce poverty, but it does not. Instead it encourages teenagers to drop out of high school and reduces low-income workers’ future job prospects and earnings.

We already have somewhat of an entitlement problem in this county with inexperienced workers expecting to land high paying jobs right out of the gate. Couple this with our current struggle to remain competitive, or even relative, in the global environment, and it becomes clear that nothing good can come of this.