Isen workshop: adventures in batch production (or not...)

Interesting anecdote from Dave Kirk about batch production, in response to a question from Gary Smith of Indy Fab:

Hey GS,

You have asked the $64,000 question my friend and I have a very long answer that might be best done over a beer, lunch and dinner – but – I’ll give you my Cliff’s notes version for now and if you ever want to talk more just let me know.

Cash flow and profit are obviously the things we are shooting for here and one without the other is worthless in the long run. The question is how does one get both of those things to happen at the same time.

I would call your shop a medium sized shop and IMO this is by far the toughest place to be. Not small enough to be small or big enough to be big and caught in no-man’s land. One thing I’ve seen over and over is that medium sized shops think that by getting the production numbers up, and building in batches, it will make you more profitable. It will not – period – full stop. It just won’t. Most shops don’t believe this and struggle perpetually to sell a few more bikes and to then build those bikes in batches that will save money and they all, if lucky, just make ends meet. Most will never break out of the cycle and really turn a solid profit.

If I may be so presumptuous I’d guess you are building about 10 frames a day and to follow sales some are steel, some are Ti, some are carbon and all are different sizes. If you try to organize them as they pass through the shop with the hope that you will save some money by making two 56 cm steel bikes on the same day you are wasting your time and lots of money. I don’t know where you stand on this and if it hits home at all but if you lean this way it’s best to give up on the idea entirely. It will not save money and in the end will cost you plenty.

It should go without saying but just in case it doesn’t – all the tooling needs to be silly flexible and have short set up times. If you have a chainstay bridge mitering fixture that takes so long to set up and you have the urge to cut a months worth at a time to ‘save’ money you are burning money in a huge way. Take the time to invest in the tools that will allow for very quick set ups. That said…………..

The medium sized shop needs to concentrate on throughput time. Actual hands on hours are important but throughput time is more so. Lets say it takes 10 man/hours to make one of your bikes but you have that bike in WIP (WIP = Work in Progress) over a two-week period. In other words it takes 10 days to do the 10 hours of work – this is common BTW. So you are doing on average 1 hour a work a day for ten days. Doesn’t sound too bad until you realize how many man-hours you have ‘on the shelf’ or in stock if you will. On the 9th day you have 9 hours of labor and the entire pile or raw materials that you are in effect floating and financing. The medium sized business cannot make a profit and have good cash flow doing this.

IMO what needs to be done is to change the way you look at your production. In most shops the sales dept shoves work into production and hopes it comes out the far end ASAP. The shop deals with this by holding onto some orders so that they have a few of the same size to build at a time to ‘save money’ and be more ‘efficient’. This is the classic way to do it and it feels right. But for a medium sized shop it is slow death. Instead the shop needs to concentrate on getting as many bikes into the UPS truck as possible everyday. Nothing else should matter. One needs to look at the end of production because that is where the money is. We don’t get paid for starting things; only for finishing them so concentrate on finishing them. This means you should not start a bike that will stall because the shipping dept is understaffed or at capacity. If the end of the line needs help and can’t keep up there is zero reason to start more bikes at the front of the line so the guy who normally miters the tubes needs to go over into the shipping and crumple newspaper and get the things into boxes and out the door. It might sound crazy to pay a welder $20/hr to stuff boxes but it is cheaper than putting his welding labor and raw material on a hook for ten days while the rest of the shop tries to catch up. Keep careful track of how many bikes go into the truck every day and let the rest serve that.

If you concentrate on getting bikes out the door and not how many you get into WIP then you will find that batching work makes no sense. The welder should finish welding the bike and then NOT hang it on a hook and wait until the rack is full so he can then be ‘efficient’ and roll that entire rack to the guy doing the braze-ons. He should instead finish his task and walk it across the room and put it in the hands of the next guy and so on and so forth. In a perfect world the bike would never hang on a hook. Never. It should always be being worked on. This is near impossible but it is what needs to be aimed for. If you do this you will find that people stay fresher and make fewer ($) mistakes, your inventory costs will plummet, you will put bikes through the shop faster and get paid for them sooner and you will have a marketing advantage as you can brag about your fast delivery.

I will leave you with a short story of what happened at Serotta. Ben bought the company back and I came back to work there (things were so bad I took a leave of absence) and we had the goal of completely changing production. At the time it took about 10 hours to build a given bike and we were doing about 12 bikes a day and it took a whopping 15 work days to get a bike through the shop and into the truck. There were racks everywhere full of ½-completed bikes. We worked on average only about 40 minutes a day on any given bike and there were well over 200 bikes in WIP. Think about the carrying cost of that. Staggering. We then concentrated on not getting bikes started but getting them finished. For a few weeks no new orders hit the floor and we just took the bikes that were closest to be done and worked on those and got them in the truck and then worked out way back. This meant highly paid welders and machinists stuffed boxes. Once we started to get the shop flushed out of all the WIP I went around and removed the storage racks from around the shop. I eventually started cutting pegs off the remaining racks and the rule was that if you set a bike on the floor it was your last day working there. So that meant that each guy finished his task and had to bring it to the next guy as there was no where to put it otherwise and on down the line it went.

The results were fantastic. We reduced the throughput time from 15 days to 3 ½ while reducing the WIP from 250ish to 45 bikes, we got the bikes out the door so damn fast that we could promise 2 week delivery on anything worldwide, we reduced our inventory and labor-carrying cost by 60% and we had a one time cash infusion of $250,000 from getting all that shit out the door. The fact that all that WIP was gone meant we had a huge amount of free floor space and we had cash so we bought more machines that we could set up for a dedicated purpose to save set up time/cost. It was a revelation. We had cash flow and profit at the same time for the first time ever. People took real pride in their work even if it meant the machinist was sweeping the floor and so much money came in that it made financial sense for the welder to wad up packing material if need be. It saved the company from certain demise.

There are 1000 steps I’ve skipped in the middle but you get the idea. If I have completely missed the mark and you are not in this situation I apologize for wasting your time. If that’s the case then maybe someone at Waterford will read this and take note and stop the swirl they are no doubt going through.

FWIW Ben and I did not invent this idea but it’s the work of a guy named Goldratt who wrote a book called “The Goal”. We used it like a bible. We bought a stack of them and each employee was required to read it. If you didn’t read and understand it you were shown the door. I’ve bought many copies of the book and given to many builders and some have made real changes that have helped them in a big way. Some view it like Amway or some shit and are too cool to read it. It’s their money to waste and they are the ones that suffer. I use the principles even in my one-man shop everyday. Buy a dozen copies and give them to the entire staff and then implement the ideas with brutal force and you will have money in your pockets.

I hope that is the direction you wanted to go with this and that I didn’t bore you. Let me know if you need anything else.

Dave

Interesting, although I don't agree that a guy named Goldratt invented that stuff as it is basic LEAN / Toyota Production System principles.

Hopefully I'll get my Isen whichever way.

it is basic LEAN

Don't lean :)

AFAIK, @coldharbour watches NYCCNC, and John Saunders is all about that lean stuff, so with a bit of luck some of it will rub off.

Would have gone for this for the Trans Am Bike Race (and 650b) but money...

Funnily enough, Gary Smith cites all three (Goldratt, LEAN, Toyota) as influences in his response to Kirk. (https://www.velocipedesalon.com/forum/f22/kirk-frameworks-15424-4.html ) Worth noting that the thread is seven years old now and I think it's fair to say there have been some changes in the market for semi-custom and custom steel frames since then. Still a good read.

Very interesting article, I had heard of lean through a this american life podcast, as well as nyccnc as tester points out (as I said, no-it-all 😉). One thing to bear in mind is that at this stage we are not a medium company, but rather a small one with aspirations. Moreover, we are a small company, with aspirations, squatting in the workshop of two other small companies so comparing us to serrota at this stage is a bit premature.

The other thing to bear in mind is that there isn't a team of people for this batch, there is me and Caren, so thumb twiddling is unlikely to happen. Part of the reason for building this batch is that we want to really get an idea for what's involved in building this specific frame, what's going to cause issues etc...

I had an interesting chat with one of the guys from shand, who basically confirmed all the points in the article, and they moved from the batch/stock model to lean building as orders came in about a tear ago and haven't gone back.

Finally, with what we know now, it does beg the question if it was such a great method and serrota was doing so well, why did it all go wrong. I doubt it was method of production, but its always more important to know about businesses that fail, rather than business that succeed.

Tldr: in the long term this model is something we want to emulate, but for a few reasons we will be building in batches for the first few months.

I'm going to see if @velocio minds turning this into a current projects thread now, and I'll update with all the ways our well laid out plans go to shit. It will probably be something I do....

https://m.thisamericanlife.org/radio-archives/episode/403/nummi

This is a great episode, and covers Toyota method.

Ah, project management... my speciality. What Kirk has described is somewhere between the Toyota method, and pure Kanban. He's totally right, anything in-flight is tying up space, material and represents invested money sat on a shelf (as well as a distraction in managing expectations/communication with buyers).

At work we measure velocity (throughput) and also measure latency/lag at all steps (where we slow down). The idea being that only throughput matters, and that the parts of the process that affect throughput are the parts we need to figure out better tooling, or radical things like revisiting the entire process or method. We're still shit, everyone is, but we're less shit than we were.

I could give you free training in this stuff if you wanted. It may be of interest to you. The software tooling to manage it isn't really necessary, most project management stuff can be done on paper or with a whiteboard.

I'd love to take you up on that....

I wish I could paint a bike 10 hours.

Use decals instead of wet for the logos, do single colors etc and I'd imagine you could...

I know I'm probably being a dick but I keep thinking it so I'm just going to bang it out there.

Why is the chainstay bridge on this funny? Looks like a PITA to make, file, paint and fit mudguards to.

Chainstay one is realitvely normal, do you mean the seat stay bridge? 'Asymetric' is Caren's 'sick candy fades'. Its not actually that hard to do, I've got a nice fixture for it, which I will photograph. It also helps with my 'can you tell who made it with no paint on' test for frames.

What is the coldharbour bare nekkid frame signature?i thought it was the pencil wishbone but that won't be on the Isen bikes.

Wishbone and antenna head badge. Isen is it's own thing, so its only #ifyouno

So what is your stamp on these? Or was the seatstay bridge a collaborative effort?

Sick fadez, why u no pay attention?

Sick candy fadez yo!

Also the head tube badge is a joint effort.

Sik candi doesn't help with

" 'can you tell who made it with no paint on' test for frames."

Ahh, see what you mean. It's not 'can you see which person built it?' but rather 'can you see which company built it?'.

With the bridge and head tube badge, you can tell it is an isen.

Damn, i was hoping they'd come with a free matching balance bike.

I am officially done with balance bikes. Youngest now demandind pedals ffs.

I blame the parents.

Duh yeah seatstay bridge I mean, obvs. Stupid middle aged brain.

Frame identifiable without paint... harks back to 'Diadrant' forks and curly stays, eh.

I am mentally incapable of differentiating the two, I have a tedious mental block on it, imagine how I feel?!