Understanding the X-Factor: A Values Based Productivity Tool
In
a perfect factory, there is no variation in the entry of product to the
floor. Every minute of work is spent working on the product. There is
no down time, no paperwork, no difficult versus easy product. As soon
as the product is finished in one area, work begins at the next area.
It is like product flowing on a conveyor belt. This perfect factory has
perfect input and perfect output – one equals the other. The X Factor
of this mythical factory is 1!
In a world-class factory, the time
spent working on the product is only one third of the total cycle time.
The product release is still constant, predictable and in line with the
capabilities of the factory, but there is paperwork, delay and
sometimes machine breakdown. Still, all of these variations are kept to
a minimum. A world-class factory brings fear to those that are forced
to compete with them. They know how to keep the variations in their
process to a minimum. People that work there feel good about their job
and their future. The X Factor of this very real factory is 3!
In a struggling factory, the scheduling and release of product
is likely to be highly variable because there are always problems to
deal with that cause extra work and loss of output. Extra product is
released to the line in amounts exceeding capabilities. Product is
expedited throughout the process. WIP builds up at constriction points
regularly. Orders are often late and customers are often upset. This
factory often accepts work that they are not prepared for, or capable
of manufacturing. People that work in this factory do not feel good
about their job or their future. The X Factor of this COMMON factory is
greater than 10, and likely to be higher than 15!
If you
work in a factory that has a high X Factor, you are probably one that
doesn’t work hard to reduce your variability. You spend most of your
time just fighting fires or doing damage control. Analysis and Action
are not part of the daily work scheme. There is hope for those that
work in this kind of factory. There are things that they can do to
improve their own departments and their factory. They would be
surprised at how much they can improve their situations by simply
working on the right things. We aren’t talking about rocket science
here. We are talking about a simple, common sense approach to process
improvement. ANY factory can reduce its X Factor by 50 to 75% within
one work quarter!
X Factor is a shortened way to say
multiplication factor. Quite simply, it tells the user how many times
his or her Raw Process Time (RPT) can be multiplied to equal the Total
Cycle Time (TCT) of a unit of product for their department or their
plant. Using the perfect factory as an example, all of the work
completed is spent working only on the product. Cycle Time = Raw
Process Time. Raw Process Time can be described as the amount of time
that a unit of product is physically worked on. When product moves
quickly, RPT is very close to TCT. When product sits around waiting to
be worked on, TCT is increased and X Factor goes up.
To
calculate the X Factor of a factory, you would take the Total Cycle
Time of the product from the front to the end of manufacturing, and
divide it by the Total Raw Process Time accumulated from the front to
the end. To calculate the X Factor for a department or work center, you
would take the daily output of that department, and divide it by the
RPT of that department. Although it is important for management to
understand the X Factor of a plant, the greatest use of X Factor comes
from using the calculation in departmental productivity analysis.
There, it is a powerful analytical tool that can make a huge difference
in the ability of a company to deal more effectively with the ups and
downs of manufacturing.
Not included in RPT are setup
times, time spent on paperwork before, during and after product process
time and transport time into, or within the area. Also not included are
tasks such as counting product when it comes into the area or is about
to be transported out. While these tasks require completion and are
certainly important, it is also important that the time spent on them
is held to a minimum. When more than one unit of product is worked on
simultaneously, at one station, the amount that is worked on
simultaneously becomes the “unit” for RPT, but not for TCT. TCT is
still calculated for a single unit, as is TAKT. If you count your
output in units, use units in your calculations.
Remember, Raw process time is associated with your product, whatever it
is. In a factory that produces panels, you look at the total amount of
time that you actually work on a panel to determine RPT. The cycle time
that you are calculating is the total cycle time of one panel. In a
test department, you don’t actually change the functional capabilities
of a panel, but you do work on it. Do not confuse RPT with value add
time. If you are working on a panel, you are accumulating RPT. If the
panel has not yet been shipped, it is accumulating cycle time even if
it is just sitting around waiting.
If you had a raw process time of 1 hour, and the average unit
remained in the area for 4 hours, the X Factor would be 4 (4/1 = 4). If
the same area’s RPT was 15 minutes, the X Factor becomes 16 (4/. 25 =
16). It could be said that, the higher the X Factor, the less efficient
the area is, but in some cases, this may not be true. A department
could have a high X Factor because there is more product released to
them than they are capable of processing during the same time period.
In that case, the solution would be to slow down the release of product
and increase the capability of the area.
A high X Factor
may point to the fact that an area is holding on to the product too
long. There is more WIP in the area than it should have for their level
of output. There may be explainable reasons why the product stays in
the area so long, but explainable does not have the same meaning as
optimum. As Little’s Law teaches us, there should only be the amount of
WIP in the area necessary to support the present output capability. WIP
entering the area should be processed quickly and transferred to the
customer regularly (hourly). You don’t need a lot of WIP if you process
it quickly and you are confident of receiving more material in the next
hour.
Working on setup reduction is a great way of
reducing the X Factor. When you reduce the setups, you are able to
process more product in the same time period. The approach that too
many factories take is to rely solely on large batches or to avoid
setups by combining batches, thus eliminating the need for setups.
While setup avoidance is acceptable, the best approach is to rely more
heavily on setup reduction. With setup reduction, you can reduce the
need for large amounts of WIP. With less WIP you have a lower cycle
time and a lower X Factor. Setup avoidance by itself is worse than
useless, because you have to rely on a predictable mix. With setup
reduction, you control your destiny.
It is very hard for
some people to get used to being comfortable with a low amount of WIP.
Even though they are confident of receiving more material very soon,
they are still uncomfortable without a lot of material on hand.
Any
X Factor greater than 1 has opportunity, and when an X Factor gets
above 5, there is a great deal to be concerned about. If you have an X
Factor in the double digits, you are very susceptible to devastating
effects from normal problems, such as absenteeism and machine down
time. As you can see in the chart above, Cycle Time increases
significantly with a very low percentage of expediting, while it has a
minimal effect if the X Factor can be kept lower than 5%. Expediting is
a killer to a company with greater than 10X, which is important to know
since many manufacturing companies exceed 10X and even 15X. What is
even scarier is the fact that other types of problems can be inserted
into the chart above in place of prioritizing and the chart would still
be fairly accurate for that situation also.
If a company
is having trouble getting the product out the door, you can bet that
the department that is causing the delay has a high X Factor. On the
positive side, if you are looking to improve a department, it is a good
idea to work on improving the X Factor of that department. In addition,
think about being in the only department with a very high X Factor and
being hit with a number of orders that suddenly become “Hot”, and are
suddenly given a high priority. That department will suddenly get
behind on other orders, WIP will build up and a downward production
spiral will be a grim reality. It is best to work to keep your X Factor
at a reasonable level so that you can respond to sudden emergencies
without devastating results.
The X Factor equation can be
used to evaluate opportunity in any department that processes product.
If the product is paperwork, panels, lumber, autos or whatever, the X
Factor equation can be used to identify opportunity. The effect of
prioritizing product is more devastating to a company with a high
(greater than 5) X Factor. Companies or departments with high X Factors
are affected by problems more significantly than are companies or
departments with low X Factors. A department with a low X Factor can
respond to emergencies much better and can get more out of overtime
than can departments that have allowed their X Factors to balloon.
Determining the X Factor of a department is relatively easy, since it
is a single unit that you are following. Watching that single unit from
in to out and counting the hands on process time is normally a simple
task. It becomes even easier when flowcharting is used to map the
process. Knowing where, and under what circumstances the product is
batch processed is important.
For management to realize
the full benefits of X Factor analysis, all departments must calculate
and understand their individual X Factors. To use it as a management
tool, having several departments that do not understand X Factor
dilutes the significant power of X Factor analysis. It is a tool that
has to be used throughout the production process in order to be truly
effective as a tool. Hiding the bad spots, or just showing the good
departments minimizes its usefulness.
Implementing X
Factor analysis should be simple. When individual departments and the
people in them work to determine their X Factors, there is involvement
and commitment to improving it. When only a supervisor or manager is
involved, all the people hear is that they need to improve what they
do, not why. All levels of management should understand the concept and
the significance. When there is multi-level involvement, the effect is
more than positive.
Finally, X Factor analysis is a
productivity tool that blends well with TAKT Management values. It can
be a powerful tool when implemented with commitment and sincerity. Most
importantly, it is not to be thought of as a flash that quickly fades.
This tool is designed for long-term use.