 Levinson Productivity
Systems, P.C.William A. Levinson, P.E. Principal 570-824-1986  |
|
An analytical tool for forcing material and energy wastes to become visible
Most manufacturers are familiar with the bill of materials (BOM), which shows all the parts and materials that are necessary to make a unit of product. The concept of the bill of products or bill of outputs comes directly from chemical engineering material balances, which force all forms of waste to become visible.
It is quite frequent that the barrier to eliminating waste (muda) is not lack of a way to do it, but failure to identify the waste in the first place. The old saying, "Keep your eye on the doughnut and not on the hole" is very poor advice. If the doughnut is the product, the manufacturer should be very interested in what became of the material in the hole. The problem is that, as long as the product is going out the door, most manufacturers do not pay attention to the byproducts and wastes. Henry Ford made an enormous amount of money not only by making cars with what is now known as the Toyota Production System, but also by either avoiding the production of the byproducts or finding a constructive use for them. Harry Bennett reports the following story:
One day when Mr. Ford and I were together he spotted some rust in the slag that ballasted the right of way of the D. T. & I [railroad]. This slag had been dumped there from our own furnaces.Few people other than Ford would have paid any attention to rust in a pile of waste material, which means that the ongoing waste of perhaps half a percent of the product would have continued indefinitely. A chemical engineer would probably have identified the waste through a routine material and energy balance, which accounts for everything that goes into and out of the process. A material and energy balance is, in fact, quite similar to an accounting journal and ledger, in which debits must equal credits.
"You know," Mr. Ford said to me, "there's iron in that slag. You make the crane crews who put it out there sort it over, and take it back to the plant" (Bennett, 1951, 32-33).
The material and energy balance is actually so rigorous (albeit conceptually simple) that it identifies wastes that would otherwise hide in plain view. As an example, the material balance for a coal-burning power plant accounts not only for the oxygen but also the nitrogen that enters the furnace. On the surface, it seems rather silly to account for the nitrogen, which plays no part in the combustion. The nitrogen becomes extremely important, however, when the engineer calculates the amount of heat it carries up the smokestack. Since the atmosphere is about 79 percent nitrogen, and since excess air must be provided for the combustion, the amount of heat wasted in this manner is enormous. It is by exposing wastes of this nature that significant process improvement becomes possible.
The material and energy balance also prompts chemical engineers to look for ways to use "everything but the squeal" (to quote the motto of meat packing factories). After expansion through turbines, low-pressure steam is often used for heating purposes before it returns to the condenser and boiler. Chemical reactants that don't react are recycled until they do, or at least until their concentration becomes so low that it is no longer economical to recycle them further. Henry Ford used the sulfur from coal (recognized today as a pollution source) to make fertilizers like ammonium sulfate. Solvents (e.g. in stripping columns) are reused almost indefinitely. Given today's environmental regulations, chemical engineers are very conscious of the need to find constructive uses for wastes or avoid making them in the first place.
In manufacturing operations, however, enormous piles of chips from machining are often taken for granted, and perhaps are even viewed as evidence of a healthy process! We recall an article in Manufacturing Engineering about a manufacturer who bragged about how many tons of chips his high-speed machining tools produced. This reference or another also said that eighty percent of the metal billet was eventually reduced to chips. In other words, the company would (in effect) take five billets, turn one into product, grind up the other four, and return the metal to be recycled into new billets. Henry Ford wrote of the desirability of designing the product and process to minimize the subsequent machining; as an example, he would often weld several parts together instead of casting a large piece and then machining away the excess metal. Dieter (1983, 210-211, emphasis is ours) adds,
The degradation of materials by conventional machining methods is of the order of 30 to 70 percent, and the more complex shapes are at the higher end. Most of the chips are recycled as scrap, but there is a severe economic penalty. As a result, there has been increasing emphasis on 'chipless machining' processes by which a part is made to final, or near-net, shape. Precision forging, precision investment casting, and powder-processing techniques are good examples of such processes.The bill of outputs would force this kind of waste to become visible, e.g.
| Input |
Output |
| Aluminum (5 tons) |
Aluminum parts (1 ton) |
| Aluminum scrap (4 tons) |
This is a very simple example, but it should convey the idea very clearly. Most management teams would be quite happy if the product (1 ton of aluminum parts) had 100 percent quality and on-time delivery, and the four tons of aluminum scrap would never be noticed. Six Sigma's highly-sophisticated metrics would probably never recognize a problem or improvement opportunity of this nature, as long as quality product was going out the door. Only the Henry Ford thought process, which can be applied through the bill of outputs (or any observant employee who points to the metal shavings and says "this is material waste"), can improvement occur. It was in fact quite routine for employees at Ford's River Rouge plant to object to metal shavings from, for example, gear manufacturing, and the processes were changed to reduce it.
The following example, again from the Ford Motor Company, shows the value of watching the hole as well as the doughnut. This very simple Bill of Outputs compels the organization to pay attention not only to the product, but also to what is thrown away in the course of making the product.
| Input |
Output |
| Metal sheet |
Metal sheet with six holes (product) |
| Six metal discs (what was in the holes) |
The discs were of course returned to the blast furnace for recycling, but some innovative employees figured out that the discs could be pressed into radiator caps. One disc was too thin, but pressing two together made a sturdy radiator cap.
Recommended Procedure
- Surround the process (which is in turn defined by the process flowchart, one of the seven basic quality tools) with a control surface. This is a chemical engineering concept that defines the boundaries across which the material and energy balance will be performed. Once the control surface is defined, inputs and outputs must balance, just as debits must equal credits in cost accounting.
- Not only that, the inputs and outputs must balance at the atomic level; that is, for every pound of carbon that goes in, a pound of carbon must come out in some form or another. As an example, a pound of carbon might go in as a hydrocarbon or as coal and emerge as carbon dioxide, carbon monoxide, and/or unburned fuel, but the entire pound must be accounted for in the output streams.
- Every BTU or kilowatt-hour of energy that goes in (e.g.
from a furnace, a chemical reaction, or a heat exchanger) must come out
with the product, the stack gases, through the condenser, and so on.
- Identify all material and energy streams that go into and out of the process.
- Everything must balance. If the inputs include a pound of metal, the outputs must account for a pound of metal--whether as products, shavings from drilling or milling, or leftover pieces from punching.
- Inputs include not only the parts and materials from the BOM, but also cutting fluids, photoresists, etchants, solvents, plating solutions, and so on. These materials, some of which are often treated as "consumables," are not on the BOM so no one pays much attention to them.
- A debit-credit format may be used, noting that, as with chemical material balances, materials must balance in kind as well as quantity.
- Finally, examine the Bill of Outputs.
- The "credits" will include not only the product but everything that is discarded in the process of making it.
- At this point, the cost (real or cash replacement cost, not accounting costs) of everything that is thrown away can be quantified if desired, thus allowing managerial or engineering economic analysis of projects that will reduce the wastes.
- The process may be redesigned to prevent the wastes from occurring.
- The wasted material could conceivably be made into
something else and sold on the side. Henry Ford, for example, converted
the slag from his blast furnaces into cement and paving materials.
Although his primary goal was to make automobiles, these side
businesses provided a means of disposing of the waste at a profit.
Scrap wood was meanwhile distilled into wood chemicals, whose sale
yielded $12,000 per day. At the time, Ford's minimum wage of $6/day was
considered very high, so the wood distillation plant effectively gave
him 2000 free workers.
Bennett, Harry, as told to Paul Marcus. 1951. Ford: We Never Called Him Henry. New York: Tom Doherty Associates, Inc.
Dieter, George. 1983. Engineering Design: A Materials and Processing Approach. New York: McGraw-Hill
Levinson, William A. "Waste Management: Using a bill of outputs to eliminate excess." APICS, The Performance Advantage, January 2005 (33-35)