Raw materials / consumables labs are integral to the smooth and stable operation of a production plant and as such they perform a very important function. The cardinal sin for an incoming materials laboratory is to cause a change in the production schedule due to a material not being released on time. While most plants will try to have some sort of fixed production schedule, production environments are inherently fluidic and dynamic in nature. This fluidity can negatively impact the lab; often leading to constant prioritization and re-prioritization cycles of materials to be tested in the laboratory. This means that a lot of unnecessary non value-add effort is expended on scheduling. The net effect of all of this is a pressurized environment where analysts feel that they are in constant firefighting mode.
Raw materials / consumables labs are different to process / finished goods labs in a number of ways and therefore strategies that work in those environments may not be the most appropriate options for the raw materials/consumables scenario. Raw materials and consumables labs can be characterized by:
High receipt volatility
- Receipt of goods is ultimately controlled by procurement. The amount of material purchased may be influenced by deals/incentives to buy in certain quantities or there may be restrictions to buy by the lorry/container load. This can result in non-urgent lots (i.e. not needed by production in the short-medium term) arriving with urgent lots.
- Budgetary considerations can dictate purchasing at beginning/end of quarters/financial years.
- Warehousing constraints for bulkier items (e.g. dextrose, starch)
- Suppliers can send in multiple receipts/lots to fulfill the required larger quantity of the PO. The laboratory has to test each receipt/lot.
High mix volatility
- The labs receive a large number of diverse materials for testing. Given each finished product SKU will have multiple ingredients/components the number of materials to be tested can very easily number in the hundreds.
High degree of complexity with respect to testing
- common to have a large number of test methods as a result of having a large mix and different method procedures and requirements (USP vs. EP)
- testing sessions run sizes are typically small – much smaller than process lab testing as generally there is not the same opportunity for test ganging / run size optimization
- tendency to have test specialists - i.e. senior analysts that perform unusual/infrequent tests
- Dedicated reviewers – often leading to backlogs.
- Typically day-to-day (or shift-to-shift) scheduling
- Huge effort expended in prioritization and re-prioritization of samples. Result is a lot of WIP due to testing of samples being suspended mid testing to concentrate on the new ‘priority’ sample
- Poor understanding of analyst loading. Given the complexity of the testing and test methods, it is often the case that there is poor understanding around the touchtime and turn around time for material x versus material y and this can lead to large imbalances in analyst loading.
There are significant opportunities to be realized if one can design a Real Lean solution to address the challenges with the current setup. Tackling the inherent volatility in the system is where the greatest opportunity lies. Raw Mats testing is often linked to the pattern of material delivery and all too often the laboratory is testing items to adhere to leadtime targets as the leadtime clock starts when the material is received in the lab. Ideally, the lab should level the incoming workload by linking to consumption by production– i.e. testing the genuinely urgent items that the business needs first and then when there are no priority items left in the queue the lab can test all other items in a FIFO manner up to the levelled demand (usually expressed in hours for raw materials).
Testing at the rate of consumption will level the short interval workloads while ensuring that the plant does not run out of approved materials. Rather than being concerned with when a material arrived, the focus moves to when the material will be used in production and hence is more aligned to the business’ needs. Linking to consumption can be achieved via Kanbans (i.e. test a new lot when an approved lot is taken from stores) or via Enterprise Resource Planning (ERP) system reports (e.g. SAP) which rank materials based on the amount of approved stock versus short to medium term planned or forecasted requirements. The latter is by far the more desirable option as it is the most effective and it minimizes the amount of stock and storage requirements.
BSM routinely apply this approach to raw material laboratories and the schematic below is a simple representation of such methodology. The materials that are received in any given week are shown up top – in order of receipt (the single brown drum being the oldest item (first received) in the queue. In the traditional setup a laboratory would often test this item first, followed by the next receipt etc. BSM design custom tools that take information from SAP (or similar): listing the dispensing plan requirements by material (upcoming production needs) for any given period and the current levels of approved stock of same. The tool then calculates which materials should be tested and assigns a priority. For example, in the schematic below two items have been identified as priority (demand > current approved stock) and the rest are currently not priority (demand < current approved stock).
The benefits of a BSM Real Lean solution for Raw materials / consumables labs can include:
- Significant decrease of work in progress (WIP)
- Significant decrease in day-to-day scheduling and firefighting effort
- Decrease in average leadtimes with concomitant marked increases in productivity.
Linking testing to the business’ consumption via tailored ERP strategies ensures a smooth continuity of service from the laboratory to the business and elevates the average raw materials / consumables labs to Best in Class status.
This blog was written by Ger Doorley PhD, Operational Consultant at BSM USA Inc. If you would like further information on implementing lean in Raw materials / consumables labs or any other aspect of Real Lean, send an email to Gerard Doorley.