Capitulo 7

The Leveling ParadoxThe Toyota Way is full of paradoxes, and one of the most counterintuitive is theleveling paradox: that slow and steady can beat fast and jerky, like the parable ofthe tortoise and the hare [which the older Toyota Production System (TPS) mastersoften cite]. The tortoise lumbers along slow and determined while the hare sprints,runs out of breath, and takes a nap. We see a similar trend all the time in the waypeople work. Work, work, work to meet a deadline, and then coast for a while.Toyota would always prefer a slow and consistent pace of work.The other side of leveling, besides a steady quantity of work, is a steady mixof work. In some ways this is even more difficult to rationalize. In manufacturing,if you’re making more than one type of part, say 50-50 production betweenPart A and Part B, it is natural to try to get the most production possible bybuilding large batches of A followed by large batches of B. This is particularlyattractive if it takes time to set up the process to switch between A and B. YetToyota would prefer to make A, B, A, B . . . This leveled mix is closer to a trueone-piece flow.These days, “build to order” is all the rage. Companies like Dell Computerhave led the way building just what the customer orders over the Internet andvirtually eliminating finished goods inventory. Unfortunately, what is good forthe assembler is not always good for the supplier. Dell expects suppliers to keepa considerable amount of inventory that the supplier is paying for in warehousesnear Dell’s assembly plant. From the Toyota Way viewpoint, Dell has not solvedthe root cause of the problem, but merely pushed the problem backward ontoother companies. This will show up in a non-lean value stream and ultimatelyin higher costs and lower profits for someone—in this case the suppliers.One might ask: “If Toyota is in fact lean wouldn’t they build exactly whatthe customer orders in the sequence in which they order, like Dell?” The answeris decidedly no! Customers do not order in a stable, predictable way. Yet thefoundation of TPS is a stable, leveled schedule. Another Toyota paradox is thatin order to have a lean value stream, you sometimes want to hold the most expensiveinventory—finished goods inventory. This allows you to ship to order butbuild to a leveled schedule. In this chapter we will discuss the whys and howsof leveling the schedule.

Heijunka Provides a Standardized Corefor Resource PlanningThe term “heijunka,” as we noted earlier, means to level, or to make smooth. As

with many translated words, there is some conceptual meaning lost in the translation.In most lean references, the meaning is to level the product mix over aspecific time period, with the objective of producing every part every day (oreven every few hours). Customers do not typically order products in specificbatch sizes, but they’re often produced in batches. The concept is to produce insmaller quantities more aligned with actual customer consumption.But this is only part of the concept. Pushing a process toward an ideal smoothnessin production also pushes the process to the highest degree of flexibilityand responsiveness to changing customer demand.We have never seen a situation where customers conveniently order the samemix and quantity of parts every day. If life were only that simple! Constantlychanging demand creates many issues within the value stream; namely, thealignment of resources to the constantly changing need. If the demand swings arelarge, there will be a need to have higher levels of inventory to adjust to theswings. Equipment capacity is limited when demand swings to the high side,and is in excess when demand is on the decline. The amount of resources neededwill be higher overall—generally, set at levels necessary to meet the higherdemand, and excessive when the demand falls.The swings in customer demand create a “bull whip” effect. A slight flick ofthe wrist by someone skilled with a bullwhip creates a tremendous destructiveforce at the other end of the whip. Similarly, even small variations in customerdemand at the final process ripple through the entire value stream, increasingin amplitude with each successive operation. This whip effect is particularlylarge for suppliers or subprocesses, at the end of the whip. This magnifying effect

creates the need for higher levels of resources (and cost) to be able to accommodatethe wide swings.This creates a condition that makes standardized work difficult, if not impossible,to implement. Remember, in standardized work we’re trying to create aprecise balance of work across operations, based on the takt time, which is basedon the rate of customer demand. If the takt goes up and down with the bullwhip,the work balancing and standardized work swings wildly every day. How is itpossible to standardize when the takt is continually changing? This is the basisfor the second form of heijunka: a self-imposed leveling for the internal benefitof the value stream (and cascading outward to suppliers as well). This leveling ofdemand creates a standard core onto which all resource needs are attached andaligned, as depicted in Figure 7-1.

Why Do This to Yourself?

Leveling your production is a self-inflicted choice. We say self-inflicted becauseit is a conscious choice, and there is a consequence. Some negative effect comeswith the choice. Leveling means precise timing and being very flexible to cyclethrough products in small batches. This flexibility taxes the process. Any problemthat causes delays will reveal itself immediately and result in a missedschedule.For example, to level by product type means making small quantities ofeach item throughout the day, which means changing over from product toproduct. There is often some time associated with changing materials, changinga fixture, and so on. Changing over is lost production time. If the changeoverprocess is not standardized and precise, then the large number of changeoverswill lead to lost production, and the schedule will be missed. From a traditionalmass production perspective, any lost production time is bad. From an overalllean system perspective, making smaller batches is good. The choice to levelwill leave no option but to reduce the time it takes to change over, which meanshaving a controlled and standardized changeover process.Some people do not like the fact that when you put this level of requirementon the process there is pressure to perform. And there’s some risk of missingproduction numbers. Our minds are designed to naturally protect us from risks,and the purposeful creation of risk is not a natural act. This is the rub of theToyota Way. We must put ourselves in harm’s way, but not haphazardly. Itrequires a carefully crafted system, and diligent effort and management of theprocess, to minimize the risk. You must realize that when you sign up for the creationof a lean process, you sign up for life. If you want it to work, it’s a permanentcommitment.So, why would you do this to yourself? If we look at any typical operation,we hear terms like “bubble” and “wave,” which refer to the change in demandand the amount of work that flows through the value stream. Many managersspend time managing the waves—attempting to adjust the balance of resourcesand constantly fighting the fires that erupt as a result of the crashing waves.These managers are always looking for the day when they catch the wave andget things back to “normal.” Unfortunately, like in the ocean, the next wave isnot far behind. This continuous riding of the waves diverts efforts from theprocess of improvement. Management is devoting much of their time to thecontainment effort rather than the strengthening activity.

Smoothing Demand for Upstream ProcessesWhat if your demand were consistent? How would that affect your process? Theintroduction into the value stream of consistent “customer” demand signals (thequotes signify that heijunka is not the “true” customer demand) will provide asmoothing effect for all of the processes. This smoothing allows for the standardizationof resources, which greatly simplifies planning and control.Let’s revisit our value stream model introduced in Chapter 3 and depicted in

Figure 7-2, below. We see that the future state value stream has a heijunka “board”or “box.” This is a common approach to visually displaying the leveled schedule.Each slot in the box represents a specific time period (such as 8:00 A.M. to 8:15 A.M.)in which the material handler might pick up a production kanban, deliver it to thepacesetter as the next order, and pick up what was produced based on the previousorder. In reality there are many ways to do this; for example, sometimes theorders are posted on a white board by the hour. There are several variations on thetheme, but all serve the same purpose—to show the “pitch” time incrementbetween when orders are delivered and picked up, and the quantity to produceduring the pitch(see “Learning to See” for a description of pitch time). This is amechanism that supports the leveling process. The pacesetter has a clear understandingthroughout the day whether he or she is ahead or behind.If the value stream pacesetter follows this schedule, what happens? Thepacesetter will consume the components necessary to complete the task and“withdraw” them from the supermarket upstream. Since the pacesetter is leveled,this withdrawal will also be leveled. For example, say there are three differentcomponents used for assembly at the pacesetter—call them A, B, and C—andeach is used for a different end product. If the assembly of end products is leveled,the consumption of A, B, and C will be leveled. That is, there will be a smoothrotation among the consumption of A, B, and C. This allows for keeping theminimum amount of inventory of A, B, and C in the supermarket. In contrast, ifthe assemblers suddenly spend an entire day just using part A and the supplierhad put just a part of the day’s worth of part Ain the supermarket, the assemblywould run out of A and shut down. So once the system is set up to be leveled,it’s critical that the leveling process is actually followed, or you will run out ofparts. When production is initiated to replenish the component supermarket,the process withdraws raw materials from the supermarket, which signals thesupplier of the need for replenishment. Again, if the pacesetter is leveled, thenthe signals to the supplier will also be leveled, mitigating the infamous bullwhipeffect in which the customer plant makes changes in schedules for its convenienceonly to jerk around suppliers in violent waves. With leveling, suppliers will havea good idea of what is expected of them and be able to plan with confidence.They can now balance resources to a known takt and get lean by improvingquality and operating at lower cost.We often hear companies say we cannot be level because our customers arenot level. The leveled “schedule” for the first flow loop is created by productioncontrol even when the customer is not level. Note that production control hastwo sources of information to create the leveled schedule. There is a direct arrow

from the customer—the build-to-order signal—and a second arrow from thefinished goods supermarket—the build-to-stock signal. In lean systems this is acommon way to handle high-variety product mixes. The relatively high-volumeproducts that you know customers will buy are built to stock—kept in the supermarketand replenished as they are shipped to the customer using a kanbantypesystem. The lower-variety, less predictable products are built to customerorder. Production control sees the stream of real customer orders coming in andthe kanban orders from the supermarket. Typically there is a third stream of safetybuffer stock that can be replenished if there are not enough real or kanban ordersto fulfill in a day. Through this combination of orders, production control hasthe tools to create a leveled schedule.

There is no need for additional external scheduling or planning beyond thisone scheduling point. For the build-to-stock items, the needs of the customer(represented by the supermarket) are visible to everyone. The kanban are usedto represent the inventory position and are effectively used to control the correctquantities. Kanban can be placed on a board, and visually represent an inverserelationship of the inventory—each kanban represents a reduced level of inventory.Build-to-order items can also be placed on the board so it’s clear what is beingbuilt to a real customer order, to replenish the supermarket, and to replenishsafety stock. Setting priorities becomes visual and straightforward. When Toyotasays, “Operators can schedule their own work,” this is what they mean. Theoperators are not performing traditional planning and scheduling—predictingwhat should be produced and when—they are simply using the informationthat flows to them from the visual system and a defined process governs thedecision making.

How to Establish a Basic Leveled ScheduleGetting to a true heijunka schedule with a steady pitch multiple times in the dayis what we would consider an advanced lean practice. Some minimum amountof leveling is needed in the stability phase (see Chapter 4) to even establish abasis for calculating a takt time and setting up basic flow. During the initialstages the pitch time is generally larger, often a daily time window, which createsa basis for stability, but it is not an impossible challenge. Attempting a smallerpitch prematurely may surface too many problems and create a system that isimpossible to maintain.In addition to the pitch time increment, the three aspects that will be leveledare:1. Product volume, which is simply the quantity of a given product that mustbe produced in a specified period of time (the pitch).2. Product mix, which is the proportion of the various models that are produced

during the pitch increment, the quantity of A’s, B’s, C’s, and soforth.3. Product sequence, which is the order that the product volume and mix areproduced. It may be model by model, such as A, A, A, B, B, B, C, C, C, orpart by part, such as A, C, A, B, A, C.These three are listed in order of difficulty. Depending upon your startingpoint, you may need to begin by establishing a simple volume and mix levelingon a larger pitch time such as one shift or one day. We know that everyone istouting single-piece flow and sequenced heijunka as the epitome of lean, butthat objective may be far off, depending upon the current condition of yourfacility. After all, it has taken Toyota 50 years to achieve their current success,and in many cases they’re still striving to reach the epitome. The key is to stretchenough to make a great improvement, and to challenge your capabilities, butnot so much that total failure results.

TIPIdentify the Most Important Items for theGreatest BenefitIt may not be practical to level all products, due to extremely lowor sporadic demand of some items. Before beginning the analysisto identify specific products to level, it may be necessary to isolatevariation (see Chapter 3) or to utilize an isolation technique we call“slice and dice,” which is discussed later in this chapter. Identifykey products in key areas and begin with those that will providethe greatest benefit.

Begin with a review of the actual production or sales for each specific productover the previous 12-month period. This will provide a high, low, and averagevolume demand. The actual numbers can be plotted on a graph to get a visualrepresentation, which is better than the plain numbers because it’s possible tosee the “weighted average.” Simple highs and lows represent peaks, and a fewpeaks may skew the average. Plotting the actual numbers on the graph allowsyou to use your eye to see the most appropriate leveling point.The final decision of the level volume is somewhat subjective. In general,Toyota selects a number that is approximately 80 percent of peak demand(unless the peak was an isolated event) because the gap between 80 and 100 percentcould be filled using overtime (eight hours per week). The determinationof leveled demand will be used to calculate takt time. In the previous chapter,we discussed the use of takt time as a design parameter. When determining theleveled demand quantity it is better to err on the side of a slightly higherdemand if you are uncertain or uncomfortable with the 80 percent level. In reality,when you determine a quantity to serve as your assumed daily leveldemand it will either be too high, too low, or just right (not as likely). The problemis, it’s difficult to determine initially because of the variation that has beenoccurring in the production (a cloud). Once the process is stabilized, the clouds

clear a bit and the correct level will become more evident and adjustments easilymade.

TRAPAvoid Analysis ParalysisIt’s easy to slip into “analysis paralysis” at this point if you try todetermine the perfect leveling point. There are a few factors atwork here that make a perfect selection virtually impossible.First, as they say about mutual funds, “Past performance is not aguarantee of future performance.” We are basing future plans onpast results, but they will not be the same. Second, the law oflarge numbers means that the more data points are observed, theless influence any one point has on the overall total. When lookingat yearly totals for production volumes, a random spike hereand there has less effect on the overall average. In laymen’sterms this simply means looking at a large enough sample, so the“noise” in the data is filtered out. Third, the information you’reanalyzing may be flawed. It may not show the actual demand, butrather, the orders that are generated internally by an MRP systemto fulfill “demand.” These order quantities are influenced by manyfactors, and the quantities do not necessarily reflect true demand.Finally, as you’ll see below, when you attempt to level the entireproduct mix, there will have to be some slight adjustments madeto achieve an effective balance. Our tip is to select a level volumefor each item that seems to be correct and get started on levelingthe process. We guarantee that you’ll need to make adjustmentsno matter how carefully you do the analysis!

TIPIdentify the Multiple for the Level PatternThe best pattern is based off of a multiple of two. This providesa consistent pattern of daily, every other day, every fourth day,and at most every sixth day. If the volume of an item is such thatthe daily demand times six is still too low to be practical, youeither need to reduce setup times or shift the item to the “other”category until setup times are reduced. In our example, the patternof every other day was established for the items that hadroughly one-half the demand of the every day items, and theevery four-day items had roughly one-fourth the demand of thedaily items.

The first pass of leveling will remove a layer of waste associated withchasing the waves. This will provide additional capacity that was not availablebefore. Many companies discover that the initial leveling effort allows them to“catch up” with orders, and that they are overproducing based on the initial

assumptions. It is possible to either reduce the resources or to increase sales ifpossible.Let’s look at a specific example. The data in Table 7-1 represents a simplifiedversion of a real situation, but the concepts can be applied to more complex situationsas well. In our example we will level 10 parts, designated Athrough J, eachwith varying demands. The “Other” items that are produced in the process hadlow volume requirements, an average of 125, and will not be leveled by individualpart. The total daily volume for all products, including the “Other”items, is leveled. In fact the “Other” items and the quantities will vary, and it ispossible to make adjustments by increasing or decreasing the total running timeif the actual requirement is more or less than planned. This adjustment does notalter the leveling effect for items A through J.Based on the volume requirements for the leveled items, a production patternis developed to minimize the negative effects of changeover (the processhas improved, but the time is still greater than desired—for now). Items A

through C are produced every day (ED), and items D through F are producedevery other day (EOD). Items G through J are produced every four days (E4D—yes, yes, we know the goal should be to produce every part every day, but weare not there yet!).One potential pattern is shown in Table 7-2. The daily requirement of 1,318 wasadjusted slightly to 1,325 just to round the numbers. As we said, this is irrelevantbecause there is variation in the quantity of the “Other” items. This pattern ismore evenly spread and allows for production of some “Other” items daily, buton some days the quantity of the “Other” items is low. If average order sizes of“Other” items are typically greater than these amounts, another pattern may beconsidered.Table 7-3 shows an alternative pattern that groups more of the ED and EODitems on the same day. The ED items are a given—they run every day. The EOD andE4D may be changed to suit the needs of the process. For example, the EODitems could all be produced on the same alternating days as in this example. Thereare other potential patterns as well. The objective is to achieve the best level volumeacross the pattern by row—leveled by individual item over a time window,and down the pattern by column—total volume, and mix per time increment(pitch). The production sequence is defined by following the patterns (A through J)in the order specified. The level across the time period is within a defined

repeating increment. In our case, the pattern has a four-day repeating sequenceand each item is leveled (the totals are equal) every four days. Toyota typicallyuses a monthly window for leveling, but it is based on a repeating multiple ofone day. Note: The main vehicle assembly line has a repeating pattern on a shortpitch frequency depending on the particular mix of vehicles produced, but thesupporting operations that are producing to a supermarket or “selectivity bank”are producing to a different pattern that is a derivative of the primary pattern.Notice that in the alternative pattern the total in days one, three, five, andseven exceeds the daily goal. This is not a major problem since the amount iswithin reasonable limits (normally a maximum of 10 percent). In most caseswhen working with actual demands, the numbers don’t work out as evenly asthis example. For the first attempt, get the numbers as close as possible. Afteryou’ve had the opportunity to produce based on a level schedule, you will gaina clearer understanding of the true need and will adjust the pattern accordingly.It is much easier to calculate a leveled schedule than to actually produceaccording to the plan! At first it’s likely that you will discover many obstacles thatprevent adherence to the schedule. These obstacles need to be systematicallyidentified and corrected so stability can be achieved (track causes for missing theheijunka, and use the problem-solving method to eliminate them). The leveledschedule should now be considered the “voice of the customer.” It is not the truecustomer, but a defined agreement that represents the needs of the customerthat have been smoothed for the benefit of your processes.Since this is the “customer,” you should measure and track your ability to satisfythe customer. If at any time you are unable to achieve the volume, mix, orsequence that has been defined, it is equivalent to a “missed order” (and representsa dissatisfied customer, although you may not miss an actual order). Youmust train people to consider the heijunka as the voice of the customer and asa primary objective of the value stream.

Incremental Leveling and Advanced HeijunkaCongratulations! Having gotten to this stage in your lean journey, you’re readyfor the real fun to begin. After processes are stabilized and connected, there isvalue stream flow, and improvements are standardized, you now begin the continuousimprovement cycle. That’s right, you get to go through it all again, andagain, and again, forever. The good news is that each successive loop throughthe continuous improvement spiral will be somewhat easier, since much of thefoundational learning has been done and resistance to change overcome. Anychanges made from now on will yield direct benefits for the entire process. In otherwords, instead of “pocket” improvements that do not affect the overall result,improvements now will influence the outcome of the entire value stream.

Now the bad news. From here on, the improvement process is a continuouscycle of “tightening” and refining the operations to achieve shorter lead timesand greater degrees of flexibility and capability, push inventory levels down, andstrengthen the long-term position of the business. Now, the results will be incrementalin nature; that is, they will be of a predetermined amount because changeto standardized processes can occur within a defined portion. Because of the systemthat has been created, the desired outcome is identified and the result willbe assured.The method will stress the value stream, and the weakest link will snap, creatinginstability. When the weak link is detected, resources are gathered to attackthe issues. This cycle repeats over and over as shown in the continuous improvementspiral model in Chapter 3 (Figure 3-4). Each successive cycle uncoversdecreasingly smaller problems. So it’s a good news/bad news scenario. The badnews is that the issues become more difficult to correct. The good news is thatimprovements in the process will be significant and your skill level will grow asthe difficulty of issues increases.

Incremental LevelingAfter the value stream is connected, the incremental tightening process is appliedto specific points. Remember what happens to the value stream if the produc-tion rate of the pacesetter is changed? It establishes a new rate for every otherprocess in the value stream. Now, if the leveled schedule product mix wereadjusted, all processes would need to adjust to support the new mix.This type of incremental leveling or squeezing of the value stream forces theimprovement process. It’s a planned and controlled process that will incrementallydrive continuous improvement in a specific manner. If inventory in the supermarketis reduced, for example, the effect on the supplying processes should be predictable.This may force a changeover more frequently, which forces the need forshortened changeover times. Each change in a standard element of the value streamwill force the need for improvement and create a specific and predetermined result.

Points of ControlWithin a connected value stream there are specific “points of control” that willinfluence other processes in the value stream. Because of the connected natureof the value stream, an adjustment to the point of control will require an adjustmentto all processes that supply the control point. And since the point of controlis the primary operation within the value stream that must be closely managedin order to create consistent output of the value stream, managing it allows

you to effectively understand how to maximize the entire value stream.One key point of control is the leveled schedule. It provides a standardizedcore that is used to establish takt time. The pacesetter process uses this takt timeto establish a beat that will be followed by all other operations. Understandingthe point of control allows managers to effectively troubleshoot operations anddrive continuous improvement.If the pacesetter consistently produces the desired volume of product and iscapable of producing the correct product mix and sequence according to the leveledschedule, the value stream is consistently meeting the customer requirement(the next step would be cost reduction). If, however, the pacesetter is unable tofulfill the requirement of the leveled schedule, the first place to stand in the circleis at the pacesetter. From this vantage point it is possible to evaluate whether thepacesetter is being supplied properly. If not, look upstream to find the weaklink. If so, look at the pacesetter to determine if he or she is being blocked by adownstream operation. (The rules forbid overproduction, so if a downstreamprocess is blocking the pacesetter, it will be visibly evident.) The creation of visibleconnections allows quick identification of flow stoppages, simplifying managementof the value stream.

Point of Control for Managing InventoryThe point of control for inventory management is the kanban. Reducing thenumber of kanbans within the system will reduce total inventory quantity.

TRAPUse Inventory Reduction as a Yardstick for Success,Not a GoalMany people pursue inventory reduction as a primary goal of leanactivities. There are numerous ways to achieve this goal, includingmanipulation of the inventory. It is better to establish a goal tocreate connected flow and to use inventory as a measure of success.Kanban are used to control inventory, and it’s simple to measurethe effectiveness of the process by regulating the kanban. Inventorycontrol via kanban is standardized, and the possibility of falsemanipulation is reduced.These reductions should be done systematically, either as improvements aremade to the process or to force the need for improvements. The quantity ofinventory needed to support a process can be used as a yardstick for yourimprovement efforts. Sustainable inventory reductions are an indication of acapable process.Inventory turns can also be influenced by the kanban. If the part quantityper kanban (also the container quantity) is reduced, the kanban will “cycle” morefrequently, moving inventory through the process at a faster rate. Reducing the

quantity per kanban also provides a greater degree of flexibility in the replenishmentprocess, and reduces the size of the work area and waste. Strange as itseems, having more kanban “in the system” is an advantage. For example, if thetotal inventory level of an item is 2,000 pieces, it’s better to have 20 kanban of 100pieces each than two kanbans of 1,000 pieces each. It’s difficult seeing thedemand with only two kanban in the system, and each time a kanban isreturned, it must be filled immediately.

A Leveled Schedule Dictates ReplenishmentIn addition to the smoothing effect for all processes, heijunka establishes a“pitch” time. Because materials are being consumed at a standard rate duringa defined pitch time, it’s possible to establish a defined process for materialreplenishment. Material replenishment is subordinate to the primary valueadding operation; therefore, establishment of material replenishment “routes”or methods should not be attempted before creating a standardized “core” in theprimary process.The following example illustrates how a leveled schedule dictates the materialreplenishment needs and establishes a consistent requirement. This allows

TIPSet Your Pitch Based on Current ConditionsUnless you are well along in your lean journey, you will not likelyset a one-hour pitch initially. We recommend progressing in halves.If you currently move material at a daily pitch (or it is not defined),start with a shift-by-shift pitch. Then incrementally reduce thepitch by one-half as the processes become more capable andrefined.the standardization of work for material handlers, including routes that arecompleted during the pitch time or a multiple of the pitch. Material quantitiesare standardized, and the quantities per container may be adjusted to match therequirement per pitch. For illustrative purposes we assume that this process iscapable of advanced heijunka and produces each item in the exact sequence,and that the total available work time is eight hours. Demand is 400 total pieces,and the ratios are shown in Table 7-4.Based on the quantity required and the ratios, the repeating heijunka pattern(which minimizes batching) would be: ABACABAD—ABACABAD—ABACABADThe pitch time to repeat the pattern is determined by dividing eight hoursby the demand of 400 pieces and multiplying by the number of pieces in a pattern(pitch):28,800 seconds (eight hours) per day / 400 pieces _ 72 seconds per pieceAnd:72 seconds per piece x 8 pieces per pitch _576 seconds per pitch (9 minutes 36 seconds) or 6.25 pitch-cycles per hour.Let’s also assume that we want the material handler to move material every

hour (the pitch for material replenishment). Table 7-5 shows the calculation of thenumber of containers that will be moved during each one-hour material replenishmentcycle.Based on the material movement requirement during a one-hour cycle time,it is possible to define standardized work, including the specific route of travel andother processes that will be serviced during the route.

Slice and Dice When Product Variety Is HighHeijunka seems straightforward enough when you are dealing with 5 to 10products. But what happens when there are many different finished products?One company claimed to have 25,000 individual finished goods part numbersand insisted heijunka was impossible. How would it be possible to level withthis kind of variety? We have to go through a process we call “slice and dice,”which is a method of dividing the whole into groups of products with similarcharacteristics (you may also think of this as “divide and conquer”).The first “slice” separates products into value streams that have commonproducts and processing steps. This grouping puts like items together and alsoreduces the overall number of items within the slice—the 25,000 may now onlybe 5,000. Think of your operation with the variety of products and processes in itsentirety as a rectangle. The separation into value stream “families” with commoncharacteristics and processing steps would divide the rectangle horizontallyinto slices (Figure 7-3). If the most important value stream overall is addressedfirst, the greatest benefit will be achieved from the effort.If the slice is “diced” (Figure 7-4), the most significant items within the 5,000are isolated, and the primary focus is reduced further. The “dicing” of the value

the volume of the first group; and a third group, one-half again lower than thesecond group (the volumes in the leveling example above represent a typicalexample). Generally, the first group is relatively small in terms of the quantityof part numbers but large as a percentage of total volume. (If you are thinkingthat this is the Pareto principle in action, you’re exactly right. This method allowsyou to isolate the “significant few” from the “trivial many.”)We began with 25,000 part numbers. The top 100 part numbers in terms of volumeaccounted for 35 percent of the total sales volume for the company! That is asignificant reduction. An additional slice revealed that the volume for the numberone item was 10 times greater than the fiftieth item. It was decided to focus on levelingproduction for the top 50 part numbers (out of 25,000). While loopingthrough the continuous improvement spiral, we work on specific segments or layers(slices), and each successive pass through the cycle brings the addition of subsequent

layers. After the first 50 parts are successfully leveled and the value streamis performing consistently, the next 50 parts (or more) will be initiated.With the focus quantity reduced to 50, the magnitude of the effort is minimizedand the benefit is maximized. Many people incorrectly assume that if it’snot possible to level everything, it’s not possible to implement heijunka. In reality,the question is a matter of simple math. Is it better to be stabilized zero percentof the time on 100 percent of the items, or to be stabilized 100 percent of the timeon 25 percent of the items? This is not an all or nothing proposition.As your operations develop greater capabilities, it becomes possible to considerleveling smaller and smaller quantities. It may never make sense to levelall items. Consider the slice and dice: If 75 percent of all items are leveled—andtherefore 75 percent of the total resource needs are leveled—the remaining 25percent of the resource time (people and equipment) can be devoted to the “asneeded” items. The raw materials may be shared between the leveled and nonleveleditems, and the additional need can easily be factored into the materialreplenishment calculations.Case Example: Leveling Workload in aCustom Cabinet ShopThe workload required at various operations in this company fluctuatedgreatly, depending on the product, which caused many problems,including poor quality (workers were frequently rushed), line stoppage,and unpredictable production schedules. Because of the custom natureof the product, it was assumed that standardized work for the processeswas not possible.When dealing with a situation of this nature, the apparent complexitycan be overwhelming. There were many interconnected and interrelatedissues resulting from the ripple effect of the workload (imagine the snakethat eats the rat, and the bulge proceeds down the length of its body).As is often the case, the company had attempted to address the outlyingissues (where the “problem” was realized), creating elaborateschemes to shift labor to the bulge, but the problem originated at thecore. Intuitively, they understood this, but believed it was impossibleto change because every item produced was different and the size ofeach order and the mix of components (cabinets, doors, drawers) variedsignificantly. They assumed that customers dictated the schedule andthere was nothing they could do to level the workload.The first step was to stop looking at the product as “part specific” or“job specific” and to look at it based on the work content and theeffect that content had on the processes within the value stream. Ifyou step back a bit, you can see commonalities either in the productitself or in the processing. In this case, we first identified that most “jobs”or orders had some common elements that affected the workload.The primary components were: cabinets, drawers, shelves, doors,miscellaneous parts, and trim. We also determined that there were afew characteristics common to all products that had an effect on theworkload, primarily the type of finish. The finishes were in two categories:stains and solid colors. Further discussion revealed that withinthe two finish categories each had two additional separations. The

stain colors had a burnished and unburnished option, and the solidcolors were light and dark.A review of the value stream revealed that the finishing line whereproduct is stained or colored was the “pacesetter.” All productsconverged at the finish loading area and from that operation flowedon as a complete order. Leveling the workload at the pacesetter wouldserve to create a smooth workload to subsequent operations (includingthe finish operation) and provide leveled signals to all upstream feederoperations.Again the question surfaced: How do you level the workload whenthe product is always different? By standing on the circle the answerwas clear. The finish type, and the surface area to be finished, affectedthe workload. Workers confirmed that burnished stain jobs requiredmuch more effort than unburnished ones, and that dark-coloredsolid jobs were much harder than light ones because the solid colorshad a “polished” finish. We also saw that parts with larger surface arearequired more time, as did many small parts with less surface area. Itwas becoming clear that creating a sequenced pattern with leveledmix would be the answer. But, again the question: How do you dothis when every job is different?This group, and especially the supervisor who had struggled withthe issue for years, was not easy to convince. What we needed wasa variable standard; that is, we would develop a standard with an

allowance for variation. The variation method would be defined so itwas consistent (standardized variation).Analysis of the production data revealed the ratio of finishes was 75 percentstained to 25 percent solid colors. The burnished jobs (the moredifficult ones) accounted for approximately 25 percent of the total stainjobs. For solid colors, the split was nearly even, with slightly more lightcolored(easy) jobs. This allowed us to create a primary leveling factorfor establishing mix based on the ratios of finish colors and types. Sincethe actual daily mix did not necessarily match the averages, there weresecondary conditions added to the pattern. For example, the regularpattern was:STU, STU, SOLL, STU, STU, STUB, STU, SOLD, STU, STUSTU _ Stain, unburnishedSTUB _ Stain, burnishedSOLL _ Solid, light colorSOLD _ Solid, dark colorBut because the workload for solid light color and unburnished stainwas similar, they could be substituted on the pattern. The goal was tocreate as consistent a workload as possible, while processing the correctratio of each type job.The second layer of the pattern was the individual components. Theteam identified that the trim work should always be the first item of anyjob because of the special processing needed. The small parts went atthe end of a job because they tended to have a low workload andprovided a “spacer” between jobs to allow for color changes, etc. Inaddition, two empty racks were sent through between jobs to providean empty zone to prevent overspray from job to job. A pattern wasdeveloped that adequately mixed the size and surface area combinationsof each job. Like the color application, some of the categories weresimilar and could be substituted as defined (the standardized variation).

The pattern for components was: trim—cabinet—doors—cabinet—drawers—shelves—doors—cabinets—drawers/doors—repeat as needed—miscellaneous parts—space—space (next job) trim . . .Secondary rules were established based on the finish type (because ofworkload). For example, cabinets were placed two to a rack if small,and one if large (or one only of any size for burnished and dark finish).Doors were six to a rack for unburnished and light colors, four toa rack for burnished and dark colors. The same logic was applied todrawers and shelves.In this case example, the production volume was difficult to define.The number of pieces, racks, and jobs all had variation. The companyhad a goal for 25 jobs per day, so we set that as the volume target, eventhough the total amount of work varied. This variation, however, washandled by slight adjustment of the total work time each day and didnot affect the workload balance throughout the day. The mix includedtwo layers—the primary mix based on finish, and the secondary mixof components. The primary determination based on finish provided thecorrect mix to meet customer orders and workload, and the secondaryprovided the correct mix for workload. Sequence of the orders by finishhelped to balance the workload, as did sequencing the components.These changes were the foundation for establishing standardizedwork and flow. Balancing the workload reduced the amount of linestoppage and smoothed flow throughout the rest of the operations.Future activities that connected operations reduced the “pile-ups”that frequently occurred.In a custom environment, it’s difficult to find an accurate measurementfor performance. There is always an element of variation that will skewany measure. In this case, a longer view had to be developed, with theidea that over a wider time window (one month) the variation wouldbe equalized. In other words, month over month we could begin tosee improvement in performance as measured by total hours requiredversus total sales dollars. When performance was viewed over a sixmonthperiod, the variation was equalized even further, and therewas a noticeable mean shift.

Leveling Is an Enterprisewide ProcessThe single most common reaction we get when we try to teach leveling to companiesis: “Sales has their own incentives, and sales always comes first in thiscompany. They sell whatever they can, and we in manufacturing are expectedto build it, and sales can change by 100 percent or more from week to week.”When we’ve examined the data more carefully, we typically find that actualdemand is much smoother than what manufacturing sees.In one office furniture manufacturing company that built a large variety ofdifferent filing cabinets, customer orders to the plant were unstable. Yet the corporatepolicy was 100 percent build to order, and manufacturing was constantlyfighting fires to build whatever orders came in. This led to huge amounts ofinventory at every stage of production and no clear takt time anyplace in theprocess. When asked what lead times they gave customers who ordered filing cabinets,the answer was six to eight weeks out. So the manufacturing plant wasworking like crazy to build orders that were all over the place, but there were six to

eight weeks of nonvalue activities in the pipeline. Why couldn’t that time bufferbe used to level the schedule? If there was inventory of finished filing cabinets, atleast for the high-volume cabinets, that six-to-eight-week lead time could bereduced and level the schedule, creating a more efficient process. In fact, the plantreorganized around three product family value streams, used some finishedgoods inventory to level the schedule, freed up one-fourth of the plant for newbusiness, and dramatically reduced overall inventory, lead time, and total cost.To accomplish what appears to be a logical plan is not as easy as it sounds.The furniture manufacturer had to change the way sales people placed orders.They had to change the distribution process and the way production controlscheduled the plant. These are all governed by different functional groups whohad been doing things a certain way for decades. Nobody believed the new systemcould possibly work, and all predicted disaster. Overcoming this resistancerequired a strong vision of a future state and a lot of top management support.Frequently, sales groups work to incentives based on sales targets by monthor quarter. Such incentive systems lead to lumpy sales patterns with serious discountsto move product at the end of the bonus period. At Toyota, sales is awareof the importance of a leveled schedule in production. While, even at Toyota,production often complains about what sales does to them, there is a lot morecooperation than we typically see in other companies. This cooperation isencouraged by top management who understand the implications of sales patternson the leveled schedule that is the foundation of TPS.Thinking in systems terms and enterprise terms is just plain hard. Andlearning to think in value stream terms is the most critical in leveling the schedule—the foundation of lean systems.Case Study: Leveling the Schedule in an EngineeringOrganizationMost knowledge work is inherently lumpy. And you cannot parcel outa schedule in units the way you can in a manufacturing process.Nonetheless, Toyota has found a way to level the workload in engineeringnew products to a far greater degree than its competitors.First, you have to get some basic stability in the process. Toyota hasdeveloped a stable development process in which there are clear stages,and each one takes a standard amount of time and engineering hours.Second, this allows Toyota to set up a planned schedule at the beginningof the program and stick to it. Roughly, Toyota freshens cars everytwo years and issues a major new version about every four years.Knowing this, not all cars are completely overhauled in the sameway. This is spread out so that roughly one-quarter of the launchesare overhauled in one year.Third, within a vehicle program, Toyota has a clear profile of manpowerover the program. The program definition phase starts off with a smallnumber of senior engineers, the program ramps up to a peak and thencomes back down to a relatively small number of engineers throughlaunch. Again, this is based on the stability Toyota has in the process.Many of its competitors send an army of people to the plant when they

launch. Toyota has such a well-planned process and does enoughhigh-quality engineering in the concept stage that its launches aresmooth and most engineers are on to another program.Fourth, Toyota takes care of the peak of the program by drawing onits affiliates. This includes closely linked contract firms that providetechnicians and computer-aided design specialists at peak times. Italso includes affiliated companies like suppliers and Toyota Auto Body,which send engineers at the peaks. This allows Toyota to keep the coreengineers on staff and bring in the rest flexibly. Standardized designprocesses and designs help Toyota engineers and affiliates come in andout of the program and contribute seamlessly.Fifth, Toyota staggers the release of a lot of engineering information. Forexample, its competitors often provide a batch of all body data releasedat once to die engineers who then process all of this data into the designof stamping dies. Toyota releases body data as parts are developed andreleased directly to die design, which releases data as it goes to die making.There is a clear understanding of what body parts can be releasedearly, before the rest are complete. This creates something like a onepieceflow and is much more level than releasing large batches of partdesigns.Reflect and Learn from the ProcessBasic leveling of production volume and model mix is necessaryto establish process stability and continuous flow. Using yourcurrent state value stream map as a guide, identify the operationsthat continue to struggle with meeting the expectation.1. Are these operations being affected by external customervariation?a. Does the daily requirement change?b. Determine the extent of the fluctuation (show the dailydemand on a line graph). Variation of greater than 10 percentmust be reduced.c. Identify current methods for aligning resources (people,material, machines) to these fluctuations, and your effectivenessin meeting the requirement (measurements ofefficiency and customer delivery).2. Establishing a “level schedule” requires up-front effort, anddiligence to sustain.a. Evaluate the effect of the variation and decide whetherleveling the product flow would be beneficial.b. Are you willing to make the effort to eliminate problemsthat currently prevent you from producing smaller quantitiesmore frequently and consistently?3. If you’re producing a product to stock, establish a finishedgoods supermarket to absorb the true customer variation.a. Determine the average daily volume demand for yourproducts.b. Determine a pitch time for each product. The highest 10 to20 percent of products by volume (maybe more) shouldbe set for daily production.c. Determine the repeating time pitch for the other products,and create a “pattern” in which to produce the product.Consider the mix of products required and the sequence

to produce them for balanced flow.4. Your leveled schedule becomes a standard for operation.Measure your effectiveness in achieving the standard andcorrect obstacles that prevent consistent ability to achieve theschedule. Note: Do not change the plan because the processis not capable. Correct the weakness.5. As a process continues to achieve higher levels of capability,it is necessary to incrementally raise the bar. Evaluate yourvalue stream, and reflect on the following questions:a. Do you know where the “point of control” is within yourvalue stream?b. Are you measuring and managing the point of control?c. What changes at the point of control will impact the entirevalue stream?d. How will these changes affect the value stream (where willthe chain break)?e. Can you implement corrective action to the weakness inthe value stream prior to forcing the change?6. Leveling is necessary to provide a “standard core” to which allresources are aligned. Build these additional elements basedon your level schedule process:a. Material replenishment: All material supply within the facilityis based on the consistent requirement at each process.This dictates the material replenishment pitch and is thebasis for a replenishment strategy, including consistentreplenishment from suppliers.b. People: The level schedule becomes the basis for determiningtakt time, which is necessary for standardizedwork. Establish standardized work for all processes, anddetermine the required number of people.c. Equipment: Standardized work is also the basis forequipment requirements. Align the required equipmentto the people and work based on the level schedule.