Why Implement SMED (Single Minute Exchange of Die) If Changeovers Aren't Your Biggest Constraint?

Very often Lean manufacturing tools used in isolation only serve to embrace a culture of local-optimization (optimizing the parts rather than the whole.) In other words, you can optimize operation "C" to the point that it is running great, producing terrific numbers, and really looks fantastic, but if operation "D" is your constraint, all your efforts on operation "C" may not have much of an impact on your overall throughput or profitability.

If you have limited resources, and can only focus your kaizen efforts on one issue at a time, I'd recommend you focus on operation "D" in the example above, until it has been resolved, or is no longer your biggest constraint.

Sometimes, however, you can spend some Lean improvement time on non-constraint processes and realize very substantial, even incredible, and immediate bottom-line gains. SMED is one of the Lean tools that virtually always pays for itself many times over. Allow me illustrate with a brief case study.

SMED Case Study:
A medical device manufacturer (company "X") can sell every product it can possibly produce. The more their lines run, the more money they make; it's pretty much that simple. Changeovers take time, and therefore reduce the run-time of the lines. In reality, however, changeovers are not their biggest constraint when you look at the company as a whole, (re-read your TOC materials on "policy constraints;") but opportunity for improvements and the potential for additional run-time was obvious.

To address line and product changeovers we formed a "kaizen team" and took a closer look at the situation in an "up-close and personal" way. I've listed some of the results from our efforts below. We'll let the math speak for itself.

After a five-day SMED event, company "X" was able to reduce their setup/changeover time by 4 hours per changeover. That may sound like a lot, or just a little depending on your experience and industry, but this is what 4 hours more production time means to company "X."

Company "X" produces about 90 million units per year
Every minute of line run-time is valued at $500.00 per line
There are 9 lines running
Each line experiences a changeover an average of once per day

So, how does that all work out?

Well, a reduction of 4 hours of downtime due to changeovers for 9 lines actually turns out to be an increase of production time across those 9 lines. Each line literally has another 4 hours to produce pre-sold products every day.

4 hours x 9 Lines = 36 hours more production time everyday

Since company "X" values each minute of production time at $500.00 we can further break this down:

36 hours x 60 minutes per hour = 2160 minutes more production time each day

2160 minutes more production time x $500.00 per minute = $1,080,000.00 increased sales every day provided their customers keep purchasing all company "X" can produce.

If that's not an impressive ROI than nothing is!

And...they are still improving.

Now, just for a minute, let's pretend that company "X" can easily out-produce customer demand, or they are just a one-shift operation. Where's the value now?

Well, the truth is, the dollars won't add up the same way, but company "X" could still enjoy the following benefits:

*Increased capacity, (capacity they don't actually need at the moment, but may as sales increase)

*Might work a shorter workweek or reduce overtime

*Less downtime/production losses when an "urgent" changeover is needed

*More maintenance attention to bottleneck equipment that runs 24/7 (if this situation exists)

*Might not need to purchase additional equipment (capacity increases negate need)

*Might allocate freed changeover team time to proactive maintenance of equipment

*Increased flexibility on the production floor (think "mixed-level-loading,") which results in smaller batch sizes, and carrying less inventory, etc., and

*Could probably reduce a 1 1/2 shift operation to a 1 shift operation (that doesn't mean a RIF! but that's a subject for another time)

Occasionally I'm asked, "Why should we care about SMED if we do all our die/mold changes at night when nobody's here anyway?" The simple answer is; you can do more of them in less time, with greater ease and safety, and prepare your company for future increased demand. You also need to ask; if changeovers only take ten minutes to complete, why would you need a night shift to do them? Why wouldn't you just do them during the daytime so you could run smaller batch sizes, and carry less inventory, while being more responsive to your customer's needs?

I like to think of SMED as a tool of efficiency and execution. Great teams and great companies know how to execute for outstanding results. Eventually, most companies will need to implement SMED in one form or another. Even if changeovers/setups aren't your biggest "constraint" you may find that a little attention in this area can have a major bottom-line impact for relatively little expense and effort.

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