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Achieving Lean Changeover by John R. Henry

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119
Chapter 6
Externalize
Perhaps the greatest contribution of Shigeo Shingos single-minute exchange
of die (SMED) system was the concept of converting changeover tasks from
internal to external, sometimes called intrinsic and extrinsic. An internal
task is one that is performed while the line is stopped. Shingo teaches that
tasks must be converted to external wherever possible.
The goal of lean changeover is to maximize the amount of time the line
is producing good product at normal speed. By itself, externalization does
not eliminate any tasks and may not save any labor hours. In some cases it
may even increase the labor hours. An operator may be available to fetch
parts during changeover if the machine is stopped. If the task of fetching
parts is done prior to changeover, the operator will not be available to do it
and an additional person may be required.
Externalization will still make economic sense due to the disparity
between the labor and the cost of downtime. It is likely that the downtime
will cost $10,000 or more per hour. In most parts of the United States, an
operator will cost in the range of $15–30 per hour. A technician such as
a mechanic might cost double that. At this differential it will take a lot of
operator and mechanic labor hours to make up for the cost of even a single
hour of machine downtime.
The need for every plant to know the costs of changeover downtime
were discussed in Chapter 2 and cannot be over emphasized. Frequently,
externalization will require the purchase of additional tooling, changeparts,
specialized handling equipment, or even entire duplicate machines. If manu-
facturing requests authorization to spend $50,000 on additional parts to save
20 minutes per day, management has no way of evaluating whether that is
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.
Material Handling
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

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