Manufacturing sector in context

Compiled 28 March 2008
Source ONS

Numbers employed in manufacturing, by region

Twelve months ending June 2007
United Kingdom total: 3,638,800
Source: ONS

Term

Definition

A

Activity-Based Costing

An accounting technique that enables an organisation to determine the actual cost of a product or service by tracing the cost back to the specific activities that produce or provide it.

Andon Lights/Boards

A visual management system which uses traffic lights to indicate the status of production. Developed by Toyota

Asymmetry

When opposite sides of a part, tool, material, or fixture are different in size, shape, or relative position. Asymmetrical differences can be hard to spot, resulting in errors.

Autonomous Maintenance

A programme in which equipment operators share responsibility with maintenance staff for the care of the equipment that they use.

B

Batch Delay

The amount of time a service operation or product unit waits while other operations or units in the lot, or batch, are completed or processed.

Batch Processing

The movement of products through the manufacturing process in large numbers of identical units at once. Entire batches, or lots, are sent to each operation in the production process at the same time. Also known as large-lot processing.

BTS

Build to Schedule

A metric that measures the percentage of units scheduled for production on a given day that are actually produced on the correct day, in the correct mix, and in the correct sequence.

C

Capacity

The ability of a machine and its operator to complete the work required

Constant order-cycle system

An inventory-control system that features a fixed reorder date and a varying order quantity

Constant order-quantity system

An inventory-control system that features a fixed order quantity and a varying reorder date

Constraint Operation

An operation that is long in duration or is critical to completing a manufacturing process

Constraining Operation

The manufacturing step that determines the upper limit on the number of finished parts that can be produced within a value stream. Also known as a bottleneck operation.

Constraint Operation

An operation that is long in duration or is critical to completing a manufacturing process.

Contact Method

An error-proofing method that involves inspecting the size, shape, or colour of an object to determine if any deviations exist.

Core Processes

The essential activities an organisation must perform to produce products, complete order-fulfillment functions, maintain its assets, and complete all supporting business functions.

Cost shifting

Moving costs from one account to another without creating any real savings. Cost shifting often hides waste rather than removing it.

Customer Value

An aspect of a product or service for which the customer is willing to pay.

Cycle time

The time it takes to successfully complete the tasks required for a work process.

D

Defect

A part, product, or service that does not conform to specifications or a customer’s expectations. Defects are caused by errors.

Demand-supply chain

All the parts, materials, and services supplied by outside sources that are necessary to produce a product or service.

DMAIC

Define, Measure, Analyse, Improve, Control

A structured problem-solving methodology widely used in business in particular lean and six sigma. The letters are an acronym for the five phases of six sigma.

DTD

Dock to Dock

A metric that measures how long it takes raw materials or sub-components coming into a plant to be turned into finished products.

E

EFQM

European Foundation for Quality Management

A European organisation that have developed a model to assist in driving best practice – the EFQM Model

End-of-the-line inspection

An inspection or check done at the end of each process

ERP

Enterprise Resource Planning

The integration of all an organisations departments and functions onto a single computer system that can serve all the different departments needs.

Error

Any deviation from a specified manufacturing or business process. Errors cause defects in products or services.

Error-proofing devices

Mechanical, electrical, or pneumatic devices that signal existing errors or prevent potential ones.

External processes

Activities that an equipment operator can perform while the production line is still running

FIFO (first-in, first-out)

A production method in which which the oldest remaining items in a batch are the first to move forward in the production process.

5S (Five S)

Sort, Shine, Set (in order), Standardise, Sustain. A method of creating a clean and orderly workplace that exposes waste and errors

F

Fixed costs

Costs that aren’t changed by production or service/sales levels, such as rent, property tax, insurance and internet expenses. They are the costs of being in business.

Fixed-value method

An error proofing method that ensures the right quantity of parts is used or the right number of activities are performed

FTT (first time through)

A metric that measures the percentage of units or aspects of a service that are completed without error the first time they go through your work processes

H

Hard-cost savings

Money that actually produces cash savings or profit increases and directly affects a company’s profit-and-loss statement.

Heijunka

Japanese term for production smoothing or levelling

Synchronising the production of different products to match customers demand

I

Informative inspections

An error-proofing method that provides timely information about a defect so that a root-cause analysis can be performed and process adjustments can be made before significant numbers of defects are created.

Internal processes

Activities that an equipment operator must perform while the production line is idle

Inventory

Any part or product that is not immediately required for a customer order, such as excess raw materials, work in progress, and finished goods.

ITO (Inventory Turnover Rate)

A metric that measures how quickly your company sells the products you produce

J

Judgement inspection

An error-proofing method in which a quality inspector or operator compares the final product or part with a standard. It is a type of end-of-the-line inspection

K

Kaizen

Japanese term that means continuous improvement, taken from words 'Kai' means continuous and 'zen' means improvement.

Some translate 'Kai' to mean change and 'zen' to mean good, or for the better.

Kaizen Blitz

A Kaizen Blitz could be defined as 'a sudden overpowering effort to take something apart and put it back together in a better way." What is taken apart is usually a process, system, product, or service. ‘ ref Goldratt, The Goal

Kaizen Event

Any action whose output is intended to be an improvement to an existing process.

Kaizen Events are commonly refered to as a tool that:

1) Gathers operators, managers, and owners of a process in one place
2) Maps the existing process (using a deployment flowchart, in most cases)
3) Improves on the existing process
4) Solicits buy-in from all parties related to the process

Kanban

A production-control system that uses cards or tickets as visual signals to trigger or control the flow of materials or parts during the manufacturing process

L

Lead time

The time it takes to complete an activity from start to finish; it includes batch and process delays.

Lean

Lean production is aimed at the elimination of waste in every area of production. Its goal is to incorporate less human effort, less inventory, less time to develop products, and less space to become highly responsive to customer demand while producing top quality products in the most efficient and economical manner possible.'

Principles of Lean Enterprise:

• Zero waiting time
• Zero Inventory
• Scheduling -- internal customer pull instead of push system
• Batch to Flow -- cut batch sizes
• Line Balancing
• Cut actual process times.

Lean metrics

Financial, behavioural, and core-process measurements that help you monitor your organisations progress towards achieving the goals of your lean initiative.

Load balancing

Finding a balance between the volume of work that your organisation needs to do and your capacity.

Load levelling

Adjusting a production schedule to meet unexpected changes in customer demand.

Location indicators

Markers that show where and how much material should be kept in a specific location in a work area.

Marketplace

An area where materials are stocked in a supermarket system.

Motion-step method

An error-proofing method that involves checking to make sure actions are performed in the correct sequence.

Muda

Japanese term for Waste

Any activity that takes time, resources, or space, but does not add value to a product or service.

OEE

Overall Equipment Effectiveness

A metric that measures the availability, performance efficiency and quality rate of equipment

OFLT

Order-fulfilment lead time

The average time that elapses between your company’s receipt of an order from a customer and when you send an invoice to your customer for the finished product or service.

One-piece flow

The movement of products through the manufacturing process one unit at a time. As opposed to batch processing

OTD

On-Time Delivery

A metric that measures the percentage of units you produce that meet your customers’ deadlines.

P

PDCA

Plan Do Check Act

A business improvement cycle developed by Deming.

Planned maintenance

Maintenance activities that are performed on a set schedule. As opposed to reactive maintenance

Pokayoke

A Japanese term which means mistake proofing. A poke yoke device is one that prevents incorrect parts from being made or assembled, or easily identifies a flaw or error.

Process

A series of steps or actions that produces a completed order or product

Process capacity table

A tool for gathering information about the sequence of operations that make up a work process and the time required to complete each operation.

Process delay

The time that batches or lots must wait until the next process begins

Process route table

A tool that shows the machines and equipment that are needed for processing a component or completing an assembly process. Aids in grouping your manufacturing tasks into work cells.

Production smoothing or Production levelling

Synchronising the production of different products to match customers demand

Productivity

Ratio of output to input. It provides information about the efficiency of core processes

Pull system

A production system in which goods are built only when requested by a down-stream process. i.e. a customer’s order ‘pulls’ a product from the production system. Alternative of a push system.

Push system

A production system in which goods are produced and handed off to a downstream process where they are stored until needed. This system creates excess inventory

Q

Quick changeover

A means of analysing manufacturing process and then reducing the materials, skilled resources, and time needed for equipment setup, including the exchange of tools and dies. Also known as SMED – Single Minute Exchange of Die. Allows for small-batch production or one-piece flow in a cost-effective manner

R

Reactive maintenance

Maintenance that occurs when a piece of equipment breaks. As opposed to planned or preventative maintenance.

Red flag

Used during a Five S exercise to determine excess or ancillary tools, equipment or materials

Red-flag condition

A situation in which the probability that errors will happen is high

ROI

Return on Investment

Profit from an investment as a percentage of the amount invested.

Root Cause Analysis

A process of identifying problems in an organisation, finding their causes, and creating the best solutions to keep them from happening again.

RTY

A metric that measures the probability that a process will be completed without a defect occurring.

RRS

Runners, Repeaters, Strangers

Used in lean scheduling. A runner is a product having sufficient volume to justify dedicated facilities or manufacturing cells. A repeater is a product with intermediate volume, where dedicated facilities are not justifiable. A stranger is a product with low, intermittent volume.

S

Self inspection

An inspection performed by the operator at his or her own workstation or area

Shadow board

A visual control technique that uses an image of an object to show where it should be stored.

Six Sigma

A structured problem solving methodology. The overall concept is to reduce deviation to ensure perfection in production.

Soft-cost savings

Assets that are freed up so they can be used for another purpose. Contributing no positive change to the company’s P&L. As opposed to hard-cost savings

Source inspection

An inspection that detects errors in the manufacturing process before a defect occurs in the final part or product.

SOPs

Standard Operating Procedures

Reliable instructions that describe the correct and most effective way to get a work process done.

Standard operations

The most efficient work combination that an organisation can put together.

SPC

Statistical Process Control

The use of mathematics and statistical measurements to sole problems and build quality into products and services

Steamline

To reduce time spent in non-value-added steps, such as downtime, travel time, and inspecting or reworking materials.

Successive inspection

An inspection that is performed after one operation in the production process is completed, by employees who perform the next operation process.

Supermarket system

A stocking system in which materials are stored by the operation that produces them until they are retrieved by the operation that needs them. When a store is full, production stops

Symmetry

When opposite sides of a part, tool, material, or fixture are, or seem to be, identical. The identical sides of a symmetrical object can be confused during an operation, resulting in errors. Compare to asymmetry.

T

Takt time

Total available work time per day/shift divided by customer-demand requirements per day/shift. Takt time sets the pace of production to match the rate of customer demand.

Theory of Constraints

The TOC Improvement Cycle has similarities to PDCA but is more focused. It is based on the principle that if a company has no constraints it would make an infinite profit and that most companies have very few true constraints. See Eli Goldratt in “The Goal”.

TPM

Total productive/preventative maintenance

A series of methods that ensures every piece of equipment in a production process is always able to perform its required tasks so that production is never interrupted.

TPS

Toyota Production System

TCA

Traditional cost accounting

An accounting technique that arbitrarily allocates overhead to the products or services an organisation creates. It is unable to calculate the actual cost of a product or service.

V

Value-added activities

Tasks performed during the production of a product or service that increase its value to the customer.

Value stream

All the activities that a company must do to design, order, produce, and deliver it sproducts or services to customers.

Value Stream Map

An illustration that uses simple graphics or icons to show the sequence and movement of information, materials and actions in a value stream

VA/NVA

Value-added / Non Value-Added

A metric that compares the amount of time in your work process spent on value-added activities to the amount of time spent on non-value-added activities.

Variable costs

Costs that vary with production or service/sales levels, such as the cost of raw materials used in the manufacturing process.

VMI

Vendor Managed Inventory

Inventory that is managed at the point of manufacturing by the supplier.

W

Waste

Any activity that takes time, resources, or space, but does not add value to a product or service.

Workflow

The steps and motions employees take to perform their work tasks.

Work sequence

The sequential order in which tasks that make up a work process are performed.