Bringing Automation to Solar Manufacturing

Robots can significantly reduce cost in the photovoltaic manufacturing process. Here's a guide to picking the right one.

www.industryweek.com/articles/bringing_automation_to_solar_manufacturing_21791.aspx?SectionID=30

By Rush LaSelle, Adept Technology, Inc.

The U.S. has set 2015 as a goal to reach grid parity, which means the point in which solar electricity is equal to grid electricity. Many other nations predict reaching it as soon as 2010. But no matter what your thoughts on regulatory involvement, it is clear there will be a resurgence in investment, development and innovation within the photovoltaic (PV) manufacturing community throughout the world -- and it will largely be driven by technology.

Finding the most effective tools and processes is paramount. While the significance of robot automation in the manufacturing of solar cells is obvious, determining which fits a specific process may not.

Robotic Automation's Impact

Robots in the photovoltaic manufacturing process are important due to their ability to significantly reduce costs while continuing to increase their attractiveness compared to manual labor. Richard Swanson, CTO of SunPower, a large-scale manufacturer of solar technology, described automation's impact through the prism of economies of PV manufacturing in terms of labor.

According to Swanson, to produce one gigawatt of solar power it requires 250 to 500 laborers to produce polysilicone, 250 to 500 laborers to process ingots, 3,000 to 6,000 people to manufacture the cells, between 1,500 and 3,000 for the panel lamination and associated applications and between 2,500 and 5,000 for the solar system integration. In total that's anywhere from 8,000 to 16,000 laborers required to produce 1GW of photovoltaic capacity.

Therefore, to produce 500GWs of solar power per year equates to roughly 4 million people who could be adding tremendously more value in other capacities. With more automation, inclusive of appropriately applied robotics, the solar industry can cut that labor to 1 million people realizing a 75% savings in direct labor costs alone. Given this magnitude it is critical robots receive ample consideration in line design.

Selection Considerations

A handful of considerations will provide good direction in selecting the correct robot. First and foremost, what is the payload requirement for the robot? Frequently people only consider the products that are being handled. However it is important to also consider the tooling solution or end of arm tool (EOAT).
Evaluating the motion requirements is also critical. Not only the simple motion of picking and placing, but also what interferences exist between the robot, its linkages as well as other items that may be in dynamic motion within the cell.

Consideration must also be given to how parts are produced and throughput requirements. Repeatability is also an important factor and it should be understood that robot manufacturers tend to speak in terms of repeatability, while engineers and designers tend to look at it from the standpoint of accuracy. A robot's repeatability outlines the machine's ability, once taught, to return to that taught position. Accuracy references the ability to input a given location digitally and have the robot move to that point in space "accurately." Accuracy, therefore, encompasses offsets and other digitally inputted motion parameters and often varies within a given mechanical unit's work envelope. Thus, a good understanding of a process's requirements in combination with the capabilities of a given robotic solution requires careful evaluation.

Major Robot Types

Robot kinematics can be divided into four major categories: Cartesian, SCARA (selective compliance assembly robot arm), articulated and delta/parallel.

Cartesian The Cartesian kinematic solution is highly configurable as the platform includes everything from a single degree of freedom or unidirectional travel, to numerous axes of motion. Cartesian solutions have numerous applications within the PV industry. They can be applied to both small and large workspaces. An example of a job using a small Cartesian robot might be dispensing sealing material on the flange of a junction box. The sorting and placement of solar cells in a large rectangular is also an optimal application for a Cartesian. Solar cell sorting into multiple stacks in a large work area and processes such as stringing up and lay up within a large cubic area where robots are required to reach with good repeatability are optimum applications for a Cartesian robot.

SCARA The selective compliance assembly robot arm (SCARA) robot typically provides higher speeds for picking, placing and handling processes when compared to Cartesian and articulated robotic solutions. They also deliver greater repeatability by offering positional capabilities that are superior in many cases than those of articulated arms. This class of robot is usually used for lighter payloads, such as 10,000 pieces or less, for applications such as assembly, packaging and material handling.

Articulated Articulated robots have a spherical work envelope. These arms offer the greatest level of flexibility due to their articulation and increased numbers of degrees of freedom (DOF). This is the largest segment of robots available on the market. Articulated robots are frequently applied to process-intensive applications where they can utilize their full articulation and dexterity for applications such as welding, painting, dispensing, loading, assembly and material handling.

Articulated robots are applied in many solar applications, such as handling heavy silicon ingots which are also in an area where the robots might require industrial protection, and handling wafer cassettes where the orientation of the carrier might differ from pick to place utilizing the full dexterity of the robot.

Delta/parallel Parallel robots provide a cylindrical work envelope and is most frequently applied to applications where the product remains in the same plane from pick to place. The design utilizes a parallelogram and produces three purely translational degrees of freedom driving the requirement to work within the same plane. Parallel robots offer high-speed transfer of solar cells through manufacturer lines and a multitude of processes. Three examples are diffusion of process equipment, wet benches and PECVD anti-reflective coating machines.

Flexibility with Vision Vision has become a highly adopted tool to improve the productivity of robot automation in all industries and all facets of placement. Vision systems offer tremendous flexibility for applications that don't require fixtures or trays for part location.

Different part geometries only require vision re-training or the selection of a recipe instead of manual changes in fixtures and tooling, which increases the overall lifetime profit of the equipment by virtue of its optimization and improved throughput. Most robot manufacturers offer packages with multiple cameras and tracking solutions for integration into a single cell, which offers tremendous power and flexibility for solar manufacturing.

The common goal for solar manufacturers is to drive down the cost per watt. History has shown that automation has played a significant role in reducing manufacturing costs in many industries. When the costs associated with higher quality and yields are considered, the benefits of automation offer even more value.

As the solar sector scales for increased demand, many manufacturers in solar are looking outside their industry for the best practices in high-volume manufacturing. Automation and robotics is one answer to achieve that cost reduction.

Manufacturers Can Be Both Earth-Friendly and Wallet-Friendly

Achieving ROI from waste reduction efforts is still a major issue for corporate sustainability efforts.

By David Blanchard

May 21, 2010

Sustainability isn't always about being "earth-friendly," says Bruce Tompkins, executive director of the Supply Chain Consortium. "Many times green initiatives also need to be wallet-friendly." And the good news, he notes, is that quite a few manufacturers have hit on effective and yet inexpensive ways to keep waste out of their landfills. Even so, achieving return on investment from waste reduction efforts is still a key challenge for those companies attempting to make their processes more sustainable. Based on a recent study by the consortium, more than half the companies surveyed are finding that ROI constraints are their main stumbling block on the road to sustainability. A lack of reporting standards is also a major issue, being cited by nearly half of the respondents. The survey also identifies the most frequently uses waste recycling techniques being used in the workplace:

• 84% place clearly marked recycling collection bins in easily accessible areas;
• 68% provide different types of containers for various types of waste to avoid mixing incompatible materials;
• 58% ensure that every employee has a recycling bin at their desk;
• 51% develop a company policy to recycle every possible material; and
• 51% provide reusable mugs, glassware, plate, and utensils for employee use in the cafeteria or break rooms.

Consider This -- Avoiding Obsolete Inventory

Possession is 9/10ths of the problem.

By Rick Pay, President, The R. Pay Company LLC

May 20, 2010

http://www.industryweek.com/articles/consider_this_--_avoiding_obsolete_inventory_21862.aspx?Page=2&SectionID=12

Obsolete inventory is one of the largest components of inventory cost and often is larger and more costly than executives are willing to admit. Many suggest optimistically (and often sheepishly) that there is no such thing as obsolete inventory because it will sell … someday. I have developed a new three-letter acronym for this to go along with JIT, RAW, WIP and FGI. It is "GSM" for "Glacially Slow Moving"! Studies related to inventory cost and inventory reduction prove that obsolete inventory does in fact exist, along with the warehouses, containers and trailers to hold it. Warehouse personnel will express how frustrated they are because the inventory takes up prime bin locations and gets counted, recounted and moved many times during its life. Most companies are busy searching for ways to return, sell, give or throw away obsolete inventory, but the important question isn’t how to get rid of it, but how to avoid it in the first place.

Why does obsolete inventory build up? The root cause is uncertainty in both supply and demand. Reduce the uncertainty and you diminish your exposure to obsolescence. Three tools can accomplish this: 1) sales and operations planning; 2) auto-replenishment systems; and 3) "ramp-up/ramp-down" discipline.

Sales and Operations Planning

If you are experiencing growth in obsolete inventory, missed forecasts, reduced earnings and increased backlogs, consider taking major action through sales and operations planning (S&OP). S&OP strategies closely integrate the supply and demand planning processes that allow the business to provide the right products/services at the right time in the right quantity at the lowest possible cost. A tight connection between operations capabilities and sales demand planning enhances profitability, performance, customer satisfaction and return on investment, all while lessening exposure to potential obsolete inventory. Recent studies by the Aberdeen Group show that S&OP can boost profitability, delivery and cash flow, regardless of company size, by as much as 40%.

One of the key traps associated with demand planning is the optimistic view that new products or promotions will generate high sales. Many a company executive has been stranded with major amounts of excess inventory after ordering surplus materials/parts in anticipation of demand. Inflexible operations and supply chains require a gamble of sorts to ensure that the demand can be met. For example, many companies have ordered container loads of parts from China only to see the anticipated demand fail to materialize, leaving them holding mountains of inventory. Some companies make it worse by renting warehouse facilities to store it all, increasing costs in an already bad situation. Flexible operations, supplier partnerships and agile supply chains help prevent this catastrophe.

Auto-replenishment Systems

Auto-replenishment systems, which help reduce supply uncertainty, are another valuable means of preventing obsolete inventory. As the name suggests, they automatically replenish inventory without using systems such as MRP. The two most widely used are vendor-managed inventory (VMI) and kanban. Recently I helped a client almost double its inventory turns (from six to 11) in about six months using these methods. During the same period, the client trimmed its average order lead-time from more than 90 days to about 30 days, and the numbers are still improving.

The VMI approach asks suppliers to come on site to determine needed inventory, order it, receive it and often even put it away in point-of-use locations. While such systems must be managed correctly, VMI has the power to reduce not only stock-outs and excess inventory but also handling and transaction costs. Kanban, a Japanese technique that uses a card or other visual trigger to replenish inventory, is usually implemented as a two-bin system. When one bin is empty, the in-house or out-of-house supplier receives a signal to replenish in a fixed quantity. Both approaches can improve overall inventory turns and accuracy, while reducing stock-outs.

VMI is not without traps. If the programs are not carefully designed and monitored, suppliers will over-fill the bins, potentially resulting in excess stock. Many a salesperson, needing to make month-end or quarter-end numbers, has aggressively replenished customer stock. While VMI can be a strong tool for inventory management, bin sizes and vendor activity must be monitored to ensure that the system is preventing, not encouraging, obsolete inventory.

Ramp-up/Ramp-down

The last technique is what I call "ramp-up/ramp-down." This is the process of introducing new products and parts into the inventory system and eliminating old ones, and it prevents overstock in anticipation of a spike in sales. During the ramp-up phase, buyers should carefully monitor results to determine if sales are meeting the targets and communicate closely with suppliers to update plans frequently and set appropriate restocking levels. Even before the sales process starts, the materials group can collaborate with design engineering to suggest common parts that will help reduce the quantity of part numbers and the potential for excess stock.

Ramp-down is the process of systematically reducing the quantity of products and parts that are going to be superseded. Companies are often hesitant to discontinue old products, thinking that there may still be customers who will need it, or in the excitement of rolling out a new product, they fail to plan the slowdown of the old one. By making last-buy offers to customers, salespeople could actually boost sales levels in the short run. Buyers should adjust their restocking plans with suppliers to flush the entire supply chain. Regardless of how a company implements its ramp-down, someone specific (usually in the materials group or purchasing) must take charge of the process and remain actively engaged with sales and new product development.

Finally, what gets measured gets managed. Hold people accountable by establishing key performance measures for obsolete inventory, set a level of acceptable obsolescence and measure write-offs against it, and monitor slow-moving inventory through turn and earn reports to help ensure levels don’t creep up unintentionally. Use the "ABC" classification to rename obsolete or slow-moving items as "D" stock to help it stand out in reports. Then clean out the old stock.

Do you have obsolete inventory? Are you willing to own up to it? If you’re ready to reduce your GSM quotient, take a close look at what S&OP, auto-replenishment systems and ramp-up/ramp-down can offer. These three approaches, properly implemented, can help you avoid obsolete inventory and add to your bottom line.

Volt: GM's Four-Letter Word for Hope

GM is investing heavily in research, testing and manufacturing facilities to pursue its electrification strategy.

www.industryweek.com/articles/volt_gms_four-letter_word_for_hope_21612.aspx?SectionID=7

By Steve Minter

April 21, 2010

"GM is moving from a company that, for 100 years, has been based on mechanically driven automobiles, to one that will eventually be focused on electrically driven vehicles," GM Vice-Chairman Bob Lutz told reporters at the Los Angeles Auto Show last December. "This is a big deal." GM's well-publicized first major step in this transformation is the Chevy Volt, scheduled to hit showrooms in November. GM describes the Volt as an extended-range electric vehicle. For up to 40 miles, the Volt can operate off its 16 kWh lithium ion battery pack. When the battery is discharged, the Volt's gasoline-powered engine kicks in to generate electricity to power the car. With this set-up, the Volt can travel more than 300 miles before re-charging or refueling is needed. Lutz says that "eliminates the ‘range anxiety' of electric-only vehicles -- the fear of being stranded by a depleted battery." GM says this technology combination means the Volt can achieve city fuel-economy equivalent to at least 230 miles per gallon. Based on a cost of electricity of 11 cents per kWh, GM explains, a Volt would cost $2.75 for electricity to travel 100 miles, or less than 3 cents per mile. GM is investing heavily in research, testing and manufacturing facilities to pursue its electrification strategy. The company is spending $336 million in its Detroit-Hamtramck assembly plant to produce the Volt. Other Michigan investments include $43 million for its Brownstown Battery Pack Assembly Plant, where the more than 200 battery cells used in each Volt are processed and installed into modules by flexible automated equipment and then delivered to the battery pack main line, as well as tooling and various components from five other plants. The lithium ion cells are manufactured by LG Chem. The current battery pack weighs nearly 400 pounds and is expensive. Some estimates put it at more than $5,000. Tony Posawatz, vehicle line director for global electric vehicles at GM, expects to see "dramatic improvements" in the battery technology and cost factor as GM and others ramp up both research and production volumes. "We are already working on a gen-two vehicle and battery program," says Posawatz. "We think we can take half the cost out of the battery."

Posawatz credits Lutz as a "driving force" to have GM take "the leap across the chasm to have electric motors drive the car." And with the potential for 200 million additional vehicles on the road by 2020 as consumers in developing countries such as China, India, Brazil and Russia buy more vehicles, says Posawatz, it's a "good business strategy" for GM to offer a variety of vehicles not dependent on petroleum.

While Posawatz credits start-up electric car manufacturers for their innovations, he says they want GM to succeed with the Volt and other electric-car initiatives because only the large-car manufacturers can drive the volumes necessary to attract more suppliers and reduce component costs. "Even the Volt had difficulty getting suppliers. When I went to get charger suppliers, basically the only guys out there were golf cart charger suppliers. They couldn't even approach our specs," he recalls. Now on the brink of producing the Volt, Posawatz, who was tapped as "employee No. 1" in the Volt program in March 2006, says its development "has indicated to us that we can be technology leaders again." Moreover, he says the Volt serves to "shine a light" on other high-quality GM products and help consumers "revisit the relationship they have had with GM." If it does do that, the Volt will have given battered GM just the shot in the arm it needs to put itself back on a profitable path.

Simplify Before You Automate

Apr 1, 2010 12:00 PM, By William (Bill) Eureka

Simpler processes are easier and less expensive to automate than complex ones. Automation can be key to business efficiency, but only if done right. Smart orgaizations know if they first simplify a process before they automate it, this will ultimately lead to reaping the greatest amount of rewards from the automation process. Certainly, automation can reduce cost, create more throughput and, in many cases, improve quality. Theoretically, any process can be automated. Some are more difficult than others. One key to improving the success of automation is to simplify your process before attempting to automate it. Benefits of simplifying include: � Ease of automation; � Reduced cost of automation; � Easier transition from current process; � Higher return on investment; � Locked-in improvements. It is just plain easier to automate a simple process than a complex process, and the greater the complexity, the greater the difficulty and cost. Complex processes generally require more complex automation, which is more difficult to design, build, debug and install than their simpler counterparts. This difficulty consumes capital investment, lowering your payback. Finally, once a process is automated, it is usually difficult to change. This provides the benefit of process standardization, but makes process improvement difficult. Generally, improvements are best made before automating. Failure to do so may cut you off from ever getting those improvements implemented. Types of Processes Not all processes are equally suitable for automation. We can group most processes into three broad categories: physical, transactional and hidden mental processes. There may be other ways to categories processes, but this will suffice for our discussion. Physical processes are those that accomplish physical work, such as machining, assembly, transporting and shipping. Transactional processes accomplish non-physical work, such as order processing, scheduling, inventory management (excluding the physical part) and payroll processing. Hidden mental processes accomplish non-physical work by thinking, such as assessment, diagnosis, design, quoting and other processes that are generally thought to require judgment. Hidden mental processes are usually the most difficult to automate, simply because they are not well understood. They are what goes on in the head of an expert�a doctor diagnosing a medical condition, a mechanic analyzing a malfunctioning machine, a TSA agent reviewing images of luggage to find security threats. These are all processes, but not well understood, even by the experts themselves. These may well be processes worth automating, but until their steps can be identified, they simply are not suited for automation. Physical and transactional processes are often excellent candidates for automation, though the approaches are quite different. Physical processes are automated through machinery, which must be engineered, fabricated and installed. Transactional processes are typically automated through computers and software. Even so, both types of processes share the common characteristic of being composed of a sequence of work steps, each of which accomplishes a function. The clear identification of those steps must be done before the process can be automated. Such a well defined process may be then automated, but that can result in excessive complexity and cost, often providing lower performance than needed. No process can be automated without first defining its steps, but the second step should always be simplification. Simplifying the Process At the most basic level, simplification is merely a review of the process, removing steps that are not necessary. This can appear almost silly, since why should there be unnecessary steps in any process? Every process, even the best, contains both value-added and non-value-added steps. The value-added steps are those that directly contribute to accomplishing the purpose of the overall process. Non-value-added steps do not. Theoretically, there shouldn't be any, but it always seems to happen.

So, how much non-value-added is okay? Strictly speaking, none of it is okay, but high-efficiency companies typically will have 70% or more nonvalue- added activity, as measured by time spent in the process. If we think of an assembly process, the value-added steps would be those which actually join parts together. Nearly all other steps, such as transferring parts into position, pre-positioning parts, starting fasteners and transferring the assembly out, are non-value-added.

Many of the non-value-added steps may be necessary, but only because we can conceive of no way to accomplish overall process objectives without them. If we could, it would be a simpler process. In a physical process, there are things that go wrong and often a need to detect and act upon such conditions. Both the detection and the correction are non-value-added because they would be unnecessary if the error could be avoided from the start.

If a product design calls for 18 screws to secure an access cover, of course we need to move 18 screws into position and drive them home, perhaps repositioning the assembly between driving screws. But if the product could be redesigned so that the access cover slid into a channel in the rest of the product, requiring only two screws, that would be a much simpler design to assemble. Simplifying the product that is assembled by a physical process will not only save cost but also improve the profitability of the product itself.

It is not the intent of this article to show how this simplification is done, only that it should be done. The method for simplifying a product was developed in 1947 by Larry Miles of General Electric, known as Value Analysis and Value Engineering (VAVE) and added to by Boothroyd and Dewhurst in the 1960s in their Design for Manufacturing and Assembly (DFMA). These techniques are basic engineering approaches that are all too often overlooked at great cost.

Another technique for process simplification is to eliminate opportunities for errors by mistake-proofing (pokayoke). Suppose a part that is inserted upside down will assemble but cause the finished product to be defective. We might build sensors into the process to detect such a defect, alarming or causing the defective product to be ejected from the process. All of the steps that would be taken to correct the problem would be non-valueadded. It may be more cost effective to repair a minor error than to scrap the assembly, but none of those steps would be needed if the error had not happened. Mistake-proofing prevents the error from ever occurring, so the correction, and even the detection, can be eliminated from the process itself. Shigeo Shingo has developed a host of methodologies for this and has been published extensively.

Eliminating Waste
Transactional processes nearly always contain much waste, but unlike physical processes, the waste is hidden. Defects in a physical process are often very obvious, whereas defects in a transactional process may simply cause work to be corrected somewhere downstream. Transactional processes, by their very nature, are invisible. If you watch workers in a physical process, you will see parts added and adjustments made, and will often be able to see the product emerging. Workers in a transactional process may be equally busy, but all you will see is their dealing with paperwork, typing at a computer or talking on the telephone. The process by which they do their work is not evident and neither is most of the waste.

To simplify a transactional process, we first have to make the process visible. This is typically done by process mapping, also known as flowcharting. By collaborating with those who actually do the work, we document the sequence of steps by which the work is done. Usually, the outcome of process mapping shows the process to be more complex than anyone had imagined. The fact is, in transactional pr ocesses, simplicity happens as the result of simplification efforts, while complexity happens all by itself. Over time, transactional processes change and steps get added, but there is usually no explicit effort to eliminate steps that are no longer needed. As a result, work that is no longer needed may continue for decades.

For instance, a shipping process in a Michigan furniture manufacturer had more than 200 steps. Leadership was amazed that something as simple as putting product in a truck could be so complex. Of all of these steps, very few involved touching product, but rather processing information (packing lists, bills of lading, customs documents, etc.).

A transactional process may be simplified by carefully reviewing each step and determining the value-added steps. In most transactional processes, there are typically less than 10% value-added steps. All other steps are candidates for elimination. One of the major opportunities can be found in error-correction loops. Just as in physical processes, things go wrong in transactional processes. When they do, there is an inspection that finds them and a set of corrective steps. These loops cause processes to become larger and larger over time.

In the shipping process above there might be a point at which it is discovered that a valid �ship to� address is not known, prompting a flurry of activity to determine the address. Rigorous examination of the process might reveal that the missing address was caused by an oversight in the order-entry process, which takes place in an entirely different part of the organization. The appropriate action would fix the order-entry process in a manner that guarantees that the �ship to� address is always correct and complete. With this done, the shipping process would never have to deal with the error, and the process would be correspondingly simpler. Most transactional processes use computers and software for at least a portion of the process. Software provides a good way to mistake-proof the process.

Anyone who has bought things online has experienced this. Most well designed merchant Web sites will take you through a series of steps and simply not permit you to proceed if there is missing or invalid information. Ensuring that e-mail addresses fit the usual format, credit card numbers are valid and ship to addresses are entered (if different from the billing address) are examples. Nearly everyone has been or will be touched by automation of some sort. If you are party to a process that is being automated, be sure to ask the question: What simplifications have we made in the existing process? Hopefully, it will be the beginning of a discussion that will result in substantial improvement and lower cost. Sometimes, you'll find that after simplifying a process, there just isn't enough left to make it worth automating. That's a bad deal for those you would hire to automate, but a very good deal for you and your company.

You've Done Six Sigma -- Now What?

Does the scrutiny of your processes stop at your customers' front door?

By Jeff Thull, President and CEO of Prime Resource Group, Inc.

May 6, 2010

http://www.industryweek.com/articles/youve_done_six_sigma_--_now_what_21760.aspx?SectionID=12

One of the greatest strengths of the Six Sigma process is the intense scrutiny and subsequent improvements that can be made on critical processes. A potential but significant weakness in its execution is that most Six Sigma projects are inward focused and stop at the customer's front door. The typical approach asks questions such as "how can we make our processes more efficient, how can we improve the quality of our products and services, and how can we better serve our customers?" All of these questions revolve around internal processes with the goal of creating more value for our customers and delivering it at a lower cost. Certainly this is a valuable and rewarding approach, but if you agree that value only exists when it is created and measured as a net economic impact to your customer's business - then the "now what" of Six Sigma is going further to apply the principles to the processes of your customers and determine how value is created within their businesses.

An outward focus on the customer looks at how value is created within their business and what processes a solution can affect. It also determines what new solutions could be provided and how to measure the economic impact of those solutions when they are implemented. However, a critical issue facing many businesses today is that they have made serious investments in creating and delivering high-value solutions, yet their sales organization is not able to capitalize sufficiently on that investment by connecting that value to their customer's business drivers and the processes their value impacts. Therefore, their customers are not recognizing that value, cannot quantify it, and the net result is that sellers are pressured to discount and face a downward spiral in profitability, likely combined with the increasing costs of delivering that value.

It is a dangerous spiral that one company, Ossur, a manufacturer of orthopaedic devices, found itself in.

Lisa Tweardy, Ossur's Vice President, Orthopaedics, noted that the Six Sigma approach had correctly identified that their customer acquisition process was not bringing in the projected number of new customers, and the incremental volume of business that was anticipated as a result of their acquisition of six companies was also less than expected. Six Sigma helped immensely with the first step of getting all the companies functioning as one operating unit. What Six Sigma wasn't providing was the new processes and skills required for their customer facing organization. They found themselves continuing to sell as six independent legacy companies with six unique sales organizations, each focused on their own products and frequently competing for the same customers. A key question on Lisa's mind was, "How do we know a process, even when improved, is going to accomplish our objectives?" She noted that the shortcoming of Six Sigma is not the Six Sigma process itself, but "applying it to outdated processes." To create a new customer acquisition process, Ossur turned to Prime Resource Group who helped them apply the rigors of Six Sigma analysis to study how economic value is created within their customers' businesses. They then created a new customer acquisition and retention process based on Prime's Diagnostic Business Development process. The following recaps the additional questions that needed to be asked and the actions taken:

• How is economic value created within our customers' businesses? Ossur identified three major customer processes that they could impact with their solutions -- quality of care, inventory management, and billing and reimbursement profitability.
• How does our solution impact our customers' value creation processes and can we enhance that impact? Ossur's treatment guidelines improved patient outcomes through educating the clinician on applying specific braces at different treatment phases of the continuum of care. This created various types of value -- for the patient (shortened recovery time and improved outcomes), for the payor (back to work sooner), for the clinician and the practice (improved clinical outcomes, increased accuracy of billings and reimbursements, increased patient satisfaction and referrals, and increased Durable Medical Equipment (DME) profitability).

With value clarity received from the answers to the first two questions, the following questions were then considered and addressed:

• What is the profile of our ideal customer? In other words, what are the visible characteristics of a sports medicine physician practice in which, when implemented, Ossur's solutions would be able to create the most value?
• Based on this profile, what would be the likely economic impact of applying Ossur's solution to a specific customer's practice? This is referred to as building the value hypothesis.
• What is the most effective customer acquisition process that will connect and quantify the value impact of their clinical education programs, inventory management software, and DME Management programs, to the value creation requirements of their customers?

By turning the focus of their analysis outward, on their customers' business processes, they uncovered that one of the major flaws of their legacy customer acquisition processes was that they were tracking the activity of the sales organization, not the activity or progress toward creating value for their customers. This led to a shift in focus and produced a dramatic increase in results. In the first 90 days of piloting the new process, Ossur had acquired more new customers than they had in the previous 18 months and with only 5% of the sales organization involved in the pilot program.

According to Robert Shoemake, Ossur's Sports Medicine Sales Director, "One of the more interesting aspects of the entire project is that to improve our sales process, we stopped thinking like sales people and started thinking like the clinical advisors we really are. We developed a profile of the characteristics of our best customers and recognized what constitutes value according to their business metrics. We then developed a 'Diagnostic Selling' process that included what questions to ask of each individual in our customer's organization according to their individual job responsibilities.

The outcome was a value simulation to quantify what the value impact of our solution would be when applied to their specific practice. In short, we were able to develop a process to help our customer understand how their practice was at risk and the costs associated with that risk. We could then connect the value of our solution to a reduction in that risk and an improvement in their business performance metrics. Six Sigma provided us the understanding of our customers' business processes. The Diagnostic Selling process then allowed us to apply that knowledge in a credible manner -- the net result, significant value created and captured for us and our customers."

As Lisa explained, "We repositioned ourselves from one of many vendors of orthopedic devices to trusted advisors and a source of clinical and business advantage to our customers."

Consider This -- Taking Lean Beyond the Shop Floor

Industry Week: March 17, 2010

Fokker Aerotron has seen a variety of benefits from applying lean, but it's where it was applied that may surprise manufacturers focused on their production floor.

http://bit.ly/c1TtNZ

Frans van de Pol is not easily impressed. In fact, you might say that the president of Fokker Aerotron, a LaGrange, Ga., company specializing in maintenance, repair and overhaul of aerospace parts and part of the Fokker Aerospace Group, has been around the block when it comes to the MRO industry -- a block that includes management assignments in the area of aircraft manufacturing, engineering, aircraft conversions and MRO. Still, despite 23 years on the job, he admits to being awed by the results of a process improvement initiative that began shortly before he joined Fokker Aerotron at the end of 2008.

"When I arrived, our on-time delivery performance was unacceptable," says van de Pol. "Today, we've cut our turnaround time by half, and our on-time delivery is up to more than 57%. In fact, I fully expect it to be at world-class performance by the end of the year."

Needless to say, these drastic improvements in turnaround time and on-time delivery translate to a nearly priceless impact on the company's bottom line. It's an impact directly attributable to the application of lean process improvement techniques, which comes as no big surprise. No, the surprise is that the lean process improvements were focused not on the shop floor, but rather on the company's administrative processes.

A New Paradigm for Lean Application

I do not have enough words to describe how positive lean is and how huge the benefits are," says Fokker Aerotron Director of Purchasing Stacey Russell-Karr. "At the beginning, even I was skeptical, but now it's a permanent part of everything I do, including my personal life."

Under Russell-Karr's direction and with guidance from the University of Tennessee's Center for Executive Education, Fokker Aerotron has applied lean to six targeted administrative areas and now possesses documented proof that improvements in administrative processes have a direct impact on bottom-line performance.

For example, after two years of applying lean to administrative processes, Fokker Aerotron's gross profit margins are up by 5%, late delivery penalties have dropped by 93%, warranty repairs have been reduced 50%, work-in-process (WIP) is down 72% and inventory has been pared 39%. Moreover, the company now has excess capacity in facilities and staff, which enables future growth and expansion without additional capital outlay.

"When we started our lean adventure in 2008, we had a lot of processes that existed simply because we had always done them that way," describes Russell-Karr. "When we sought to improve our on-time delivery, we typically looked to the manufacturing end -- how could we push our technicians to turn the wrenches faster? It had never occurred to us that we could improve the entire operation by improving things in the office. Now, we've proven it several times over."

Long-awaited Proof

From the outset, the roots of lean have been grounded in manufacturing processes -- from as far back as Henry Ford's production of the Model T to Taiichi Ohno's modern-day Toyota Production System.

Given its origins, it is no wonder that the preponderance of lean application (and documented success) has been focused on the shop floor. Nevertheless, in the early 2000s, lean made its way to a few non-manufacturing venues such as call centers, software development, and, to a certain extent, the service sector. Still, the storehouse of success stories beyond the manufacturing arena is woefully lacking. Concrete, replicable implementation approaches for non-manufacturing scenarios are few and far between, and skepticism abounds as to whether manufacturing-based lean tools and techniques can be translated and sustained in a service or administrative setting.

Yet, the impetus for successful translation is enormous. The administrative expenses of running a business are a large part of the cost of an organization. In fact, average overhead expenses of manufacturing organizations have risen from 10% to more than 50% since the early days of manufacturing. Yet, those same administrative processes are often a bottleneck -- a huge source of inefficiency and waste, not to mention a hindrance to the revenue-producing components of the business.

Those overhead activities are supposed to serve as levers in the organization, enabling the production side of the business to more easily lift the heavy weight. Unfortunately, in many organizations, the servant becomes master, and administrative processes bog everything down. However, if those administrative processes are made better, all other operations also will improve.

Same Tools, New Venue

To be sure, Fokker Aerotron is no stranger to process improvement techniques. With its sights set on being an industry leader, the company embraces a variety of improvement programs such as lean, Six Sigma and 5S as a part of its "World-Class Performance" initiative. However, these efforts historically have focused directly on the shop floor.

Fokker Aerotron's adventure in applying lean to business processes began when the author was invited to consult with the company about improving invoicing and inspection processes. Shortly thereafter, Russell-Karr attended the Lean Applied to Business Processes course at the University of Tennessee.

"The Lean Applied to Business Processes course emphasizes practical application, so the entire week I was experimenting with applying lean techniques to our purchasing activities. The more I learned, the more applications I could envision," says Russell-Karr.

Back at Fokker Aerotron, Russell-Karr assembled a team that included her purchasing staff and upper management; she launched the first "event" in August 2008. Described broadly, the process comprised three phases:

• Identifying key administrative wastes and the constraints limiting performance;
• Analyzing potential root causes; and
• Applying the proper continuous-improvement countermeasures.

"Our first meeting was rather quiet," recalls Russell-Karr, but van de Pol encouraged her to forge ahead. "Sometimes employees are very skeptical about these projects because they think that they have to work harder, but ultimately it is about working smarter, sometimes even eliminating unnecessary tasks," van de Pol explains.

Russell-Karr says "buy-in" by the staff came rather quickly. "As we worked through the process, our meetings got very animated and productive. Now, my group is so good that they often work through the process and use the tools on their own, which frees me to manage additional lean events."

Inarguable Results

Buffy Smith, senior buyer, shares the impact lean has made on her professional life. "I used to spend a good part of my day literally walking invoices around in circles, not being as productive as I could have been, because we had so much wasted motion in our processes," says the purchasing supervisor. She cites the path of an invoice as an example: 3.1 days of processing; 80 steps in the invoicing process, including 30 handoffs among employees and 12 trips to the printer; 1,080 feet of travel per invoice, with 17,540 feet (that's 3.3 miles!) of average transport by purchasing agents on any given day.

That was then -- before the company applied lean improvement techniques to its administrative processes. This is now: one day to process an invoice, requiring half the steps and one-third the number of handoffs. Moreover, Fokker Aerotron discovered that 30% of the total invoicing paperwork volume for customer parts was not needed at all.

The new flow of work has eliminated altogether the paper copies of purchase orders, likewise removing the need for a four-drawer filing cabinet and an entire warehouse of paper files. Says Smith: "We've now eliminated wasted motion; I have time to focus on things that really add value to this company, such as pre-planning and negotiation."

Another lean event honed in on "the cage" (the company's spare parts inventory) and the process of ordering not-in-stock (NIS) parts. Through the efforts of the lean team, the number of NIS orders was pared by 34%, the turnaround time on ordered parts fell by more than 50% and the stock-out rate improved from 30% to less than 3%. Moreover, the team eliminated more than 100 shelves of no-longer-needed parts and reduced its inventory of spare parts by 39%. This, in turn, freed up 2,375 square feet of floor space, so an expensive warehouse addition once thought to be a necessity is no longer needed.

Wouter van Dis, director of operations, cites an additional impact, albeit indirect, of Lean Applied to Business Processes that perhaps is its most significant contribution to Fokker Aerotron. "What we were really able to do on the work floor because of the administrative improvements was to put in lean cells, where our technicians have every tool and component at their disposal to fix the exact component they are working on at the time. If we had not ‘leaned out' our purchasing processes, lean cells would have failed. Instead, because our purchasing processes are so efficient, we're using lean cells successfully, and the impact on turnaround time, on-time delivery and customer satisfaction is enormous."

Scott Whittaker, Fokker Aerotron director of business development, says customers have noticed that something wonderful is going on at the company. "Our quality has improved, our service has improved, and our attitude has improved -- what's not to love about that?" Continues Whittaker: "Without a doubt, Lean Applied to Business Processes has made my job immensely easier because I have a quality product to sell and a quality company standing behind it."