Did you know that the exemplar of lean manufacturing, Toyota, assigns an industrial engineer to each foreman in its plants? It’s true. Toyota has long understood the value of optimizing operations through traditional industrial engineering techniques. For example, the company “stopwatches” each operation to assure that the people performing work tasks can actually accomplish the task in an optimal amount of time. Optimal is defined as the rate feasible to do the task “right the first time” according to the Toyota standard method (for quality purposes) and to be economically efficient in the traditional manufacturing cost paradigm. If the time assigned to an operation is not “optimal,” then the workers receive additional training or the operation time is adjusted. Assigning an industrial engineer to each foreman has other benefits – work flow management, cycle time reduction, work methods and the like.
So, how does the Toyota approach – clearly feasible for a multibillion dollar global corporation – relate to the small to medium size enterprise (SME)? The message of the Toyota example is rediscovery of the lost art of industrial engineering and its use in making an SME company lean and cost-effective. Certainly few if any SMEs can afford to have an industrial engineering staff like the one Toyota has, but industrial engineering talent can be obtained in many ways and employed just as effectively,
WHY BOTHER WITH INDUSTRIAL ENGINEERING?
Why indeed you may ask? Isn’t labor cost reduction passe with labor costs per unit amounting to six or seven percent of the sales dollar? Does it make sense to try to squeeze an extra quarter second out of an operation by changing the way some one moves their left hand when turning a dial? Furthermore, isn’t labor a variable cost that fluctuates with production requiring us to staff up and down as needed? The answer to all these questions is no. Let’s look at each of these questions and then visualize some benefits from industrial engineering in a twenty-first century style.
Low unit labor costs. It is true that direct and indirect labor on a unit basis is lower than it has ever been in recent memory but, labor is often the single largest non-material total dollar expenditure for most manufacturing companies. It therefore behooves management to insure that the labor force is trim and is not growing out of proportion to the level of sales revenue.
Squeezing the additional quarter second out of the process. The additional fractional time reductions and fractional people reductions (we saved one-third of an employee by doing this!) associated with traditional industrial engineering were no doubt meaningful to cost reduction in the first half of the twentieth century when labor forces were orders-of-magnitude larger. These fractional savings, in fact, added up to actual dollar labor savings back in the day. They have almost no similar value today except to comprehend how jobs may be combined to eliminate duplication or non-value added activities.
Labor variability. One of the enduring myths of the twentieth century …
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