120 ◾ Achieving Lean Changeover: Putting SMED to Work
a good or a bad use of capital. Management’s default decision in a case like
this is probably to do nothing and rightly so.
If the cost of downtime is known by management to be $10,000/hour, the
calculation becomes straightforward. Twenty minutes/day is 4,800 minutes
or 80 hours per year. That equals $800,000 in annual savings in return on an
investment of $50,000. This is about a 4-month payback on investment. Most
managers would think that well justiﬁed.
Some externalization opportunities are easy to see and free or nearly free
to implement. Movement of materials prior to rather than during changeover
is one example. Others may be costly and complex. Many will fall some-
where in between.
Externalization can occur prior to production or post production.
Preparing materials in advance is one example of prior externalization.
Performing parts cleaning or product reconciliation after line restart is an
example of a postproduction externalization.
Part, component, and material movement from the warehouse can represent
a signiﬁcant opportunity for externalization. It is not uncommon to complete
the changeover before fetching the materials required for the next produc-
tion run. In some cases, the materials have not even been picked from the
warehouse racks prior to this point. Assuming that everything goes well,
there is a fairly obvious loss of production time from this practice. Assuming
that everything goes well, every time, is probably not realistic. When the
materials are requested there can be a number of delays as a result of other
orders being picked, a dead battery on the forklift, warehouse operators on
break, errors in documentation, or missing signatures.
A more serious problem can occur when the inventory control system
does not match what is on the racks. This can be the result of errors in the
system if it is not updated and checked rigorously. The system might show
5 pallets of parts when there are only 4. Or there might be 5 pallets, but
one pallet is missing 2 or 3 cases that were removed for whatever reason. A
related problem can occur when all 5 pallets are present but are not avail-
able for use. This might be because they are awaiting inspection approval,
have been damaged in storage, or have expired.
In one plant they would normally complete the changeover prior to picking
the material in the warehouse. Frequently, at least once or twice a week, the