15/11/2024. Achieving Operational Excellence with Modular5®

In a recent article, Modular5® shared how Operational Excellence helps cover the cost of implementing a modular design. Our clients benefit from decreasing product costs by starting continuous improvement initiatives. These gains are subsequently repurposed to design the modular portfolio. You can read that article here.

A common question we get is how to start reducing costs. In this article, we explain how we begin driving productivity throughout the organisation, not only in production.

What is waste? 🤔.

Modular5® achieves operational excellence by focusing on one thing: waste elimination. In this context, waste is a clearly defined word. Waste is everything that adds no value to the product while consuming time and resources.

To recognise waste, we first must understand what isn’t waste, i.e., value-added work. Value-added work must fulfil three requirements:

1. The customer needs to be willing to pay for it.
2. The product needs a form, fit, or function change.
3. Work must be done correctly the first time.

There are two forms of waste we confront in the pursuit of operational excellence:

1. Non-Value Added Work: Essential activities that do not match our value-adding criteria.
   Examples are human resources, financial management, and product transportation between sites.
   These jobs do not immediately generate consumer value, yet they are required to run a business.
   Our goal here is to keep them to an absolute minimum.
2. Pure waste refers to activities with no purpose or value. They can and should be removed entirely.
   Eliminating these activities saves resources, lowers production costs, and makes our processes more efficient and productive.

This simple definition prevents people from getting lost in complex tools and methods. Once waste or non-value-added work is uncovered, all the following steps are clear.

NOTE: When an activity is classified as non-value-added work, it does not mean it is unimportant. The examples given – human resource management, financial management, and internal transportation – are all necessary to deliver the product or service to the customer.

Lean vs 6Sigma vs Theory of Constraints debate ⚙️

Multiple frameworks are available to analyse processes and find inefficiencies. Modular5® is not connected to a single improvement system. For example, Lean, Six Sigma, and the Theory of Constraints are all valuable approaches to finding and reducing waste.

We focus on identifying waste, not debating which strategy is “the best.”

Eliminating waste before optimising the process makes the most sense to us. Wasteful activities are still wasteful after reducing the resources used; you just waste fewer resources faster. This is why Modular5® starts with approaches that originate from lean manufacturing.

Getting Started: The 5S Method for a Solid Foundation.

One of our favourite ways to start operational improvement is with the 5S method. This basic, approachable strategy instils a culture of continuous improvement from the outset. The 5S method is adaptable to any context, making it appropriate for any firm seeking efficiency and quality.

5S Steps:

1. Sort: Identify essentials and discard unnecessary items. This frees up space, time, and attention for what is genuinely important.
   A multi-disciplinary team reviews the tools at and around a workstation. Often, many tools are collected at workstations over time. Most of these utensils are
   
   
2. Set in order: Having everything in its proper location makes activities faster and easier to finish.
   Tools that are frequently needed are placed at arm’s length, while those that are needed infrequently can be stored at a small distance.
   
   
3. Shine: Maintain cleanliness and functionality to minimise maintenance downtime.
   The workstation and tools are cleaned and readied. Work is finished faster with tools that are ready for their task, e.g., sharp and calibrated.
   
   
4. Standardise procedures to make them second nature and increase efficiency in daily tasks.
   Standardisation is the heart of continuous improvement. Enhancements are embedded by updating processes and instructing the production staff. Opportunities to better the process only stand out when all products are produced using the same methods.
   
   
5. Sustain: Maintain the procedure throughout time to reinforce a culture of efficiency and improvement.
   The first four steps bring (almost) instant gains for the company. This last step is the hardest and the most powerful. The work centres’ organisational level is tracked and gradually improved in the sustain step.

The 5^th S is essential because it lays the groundwork for a continuous improvement culture, which is the ultimate goal of our operational excellence journey. Over time, this promotes an efficiency mindset that spreads throughout the firm.

Why Waste Reduction is Important 🏆

Here’s why reducing waste is more than just saving time and money; it’s about developing a streamlined, robust process that helps every business area.

Companies with low-volume/high-mix markets, such as those with complicated and diverse products, can undergo significant transformations by focusing on waste reduction. Here’s what you can gain:

• Increased Product Design Efficiency: A streamlined design process may allow you to spend more time creating rather than doing repetitive activities.
• Reduced Planning and Manufacturing Costs: Eliminating needless work allows resources to be allocated more effectively.
• Improved Productivity: Teams work smarter, not harder, focusing on activities that add value.
• Lean operations lead to more targeted and effective maintenance and repair efforts, reducing costs.

Companies can use our approach to shift to standardised building blocks, enabling modularisation and greater information reuse in design and production planning. This strategy of reuse and standardising in product modularisation directly impacts product lifecycle management and enables businesses to scale more efficiently and inexpensively.

Beyond Production: Operational Excellence in All Areas 🚀

Operational excellence is not limited to the factory floor; it encompasses all aspects of a firm. Optimising processes in finance, human resources, and marketing departments, for example, minimises non-value-added work, freeing up time for strategic tasks that contribute to growth. Here are a few instances.

• Streamlining recruiting, onboarding, and employee training leads to speedier integration of new team members.
• Automated reporting and accounting processes improve efficiency and accuracy.
• Efficient campaign planning and data analytics enable marketing teams to focus on customer-centric tactics that promote growth.

Modular5® minimises these activities, allowing clients to operate more effectively and gain a firmer foothold in competitive, high-complexity markets.

Practical outcomes include modular product design and engineering solutions.

For industrial organisations, especially those with low production quantities and significant product complexity and variety, attaining operational excellence through waste elimination directly influences competitiveness and customer satisfaction. Product modularisation allows our clients to transition from bespoke designs to standardised building blocks, allowing them to assemble goods to order swiftly. This increases productivity, improves design efficiency, and promotes continual development, offering our clients an advantage in competitive marketplaces.

Here’s how this affects your company’s operations:

1. Efficient Design Cycles: Modular designs save development time and speed up time-to-market.
2. Optimised Manufacturing Processes: Less waste leads to more efficient manufacturing, greater resource utilisation, and higher output.
3. Standardised parts simplify maintenance and repair, resulting in lower costs.

Office environments are just as prone to inefficiencies

Key Takeaways: Become Waste-Free with Modular5®.

Achieving operational excellence may appear hard but merely involves identifying and reducing waste. Reducing what doesn’t add value leaves an opportunity for ongoing improvement, resulting in a more flexible, robust, and efficient firm. Here is a recap:

• Waste refers to any activity that does not bring value to the consumer, product, or process. We eliminate it by emphasising three principles: consumer willingness to pay, form/fit/function change, and first-time-right execution.
• The 5S methodology promotes continual improvement and efficiency as a core value, making it an approachable starting point for achieving operational excellence.
• Flexible methods enable us to focus on results rather than disputes. Every technique is important for identifying waste, and our top aim is to eliminate non-value-added work wherever it is detected.
• Product and process modularisation improves design, production, and maintenance, resulting in long-term efficiencies.

Operational excellence is more than just cutting costs; it’s about building a resilient, flexible business that can thrive in a low-volume/high-mix market. Whether you want to enhance product design efficiency, save planning expenses, or optimise manufacturing, our strategy will help your firm build a stronger future.

Ready to transform your business? 🌟

We can assist if you work in a high-complexity industry and want to improve efficiency while minimising waste. Contact us now to learn how Modular5® can help you on your path to productive operations. Let us help your firm achieve operational excellence!

You can schedule a call directly on our calendar via our website’s contact page.