GA 570 | How Kanban Exposes Problems with Uriel Eisen

You know, Kanban, there's a lot to it, and I think one that's often forgotten about is it's a tool for exposing problems in the business. There's the analogy of a pond of water with a few rocks sticking up and the water level is inventory. And I think what we had done is basically drained the water all the way out and then the whole day was just the organization sort of bumping in from one rock to the next. And that became sort of the new normal today.

I am excited to welcome Uriel Eisen to the show today. Really the theme of the, of the episode, I suppose, is Kanban, which might not sound too exciting, but boy, oh boy, this is a good one. Ariel has got incredible amount of experience and knowledge and he's super well spoken and just does a great job articulating his thoughts. And I really, really enjoyed this episode. We got into really their story with just kind of beginning with things like, well, how they got started with Lean and Toyota production system and then got into some really specific stuff like at a certain point in their. The journey, they tripled production and so talked about like, how did you do that? But then what was interesting is again, on this theme of inventory and Kanban and whatnot, there was a situation to where they felt the need to increase inventory was the right thing to do, which is sort of counterintuitive. Right. With Lean, we want to reduce inventory, but they actually had a point to where they actually increased it. And so Oriel does a great job of sort of walking us through that and explaining what happened and why they did it. So really, really good stuff. I enjoyed this one. I think you're going to as well. Show notes can be found over@gembapodcast.com look for episode 570 and please be sure to go connect with Ariel over on LinkedIn. Just scroll down on the app and we'll have all the links to. To connect with him on LinkedIn and whatnot. Okay, enough. Get to the show. Ariel, welcome to the show. How are you?

I'm doing great. Thanks so much for having me.

Yeah. Well. Hey, where are you calling in from, Ariel?

I'm up in Seattle, Washington.

Okay. Yeah, my business partner, John Miller, he lives out in that part of the world as well, so that's awesome. Beautiful part of the country.

I'd love to meet him at some point. He sounds like quite an awesome guy to talk to.

Yeah, no, he's. He's pretty swell. I'm a little biased, but, you know, sure. So. All right, well, hey, you know how we like to get things going out of the gate, like to start with a quote. So what do you got?

Yeah, so I have. Without standards, there can be no improvement from Taichi Ono. And yeah, one that just keeps coming back for me. We, you know, implementing all these ideas from TPS in our facility and now helping other people, you just keep seeing the same problems arise. And then once you standardize it, and those can be sort of political within a company also is something we've started seeing recently. And then once you kind of create that standard, everyone has to agree or make their disagreements known, and then you kind of settle on something. And that's, I think there's a few aspects to it. One, with that standard, you keep on testing the same thing over and over, and so it sort of exposes new opportunities for improvement. And then also, you know, it really forces the, you know, hard on, hard on process, soft on people. Because, you know, we have a standard, we have a process. We've all kind of come up with that. And now that that is documented, you can go back and, and make those changes instead of just yelling at someone saying, like, hey, do better next time. Right. But there is no what is better. Right?

Yeah.

Better than what?

Yeah, you know, and you know, longtime listeners and longtime lean thinkers, we've, we've all heard this quote a gajillion times.

Right.

And. But yet do we really hear it? You know what I'm saying? Like, you can hear the words. You can say the words. It sounds great, you know, and Mr. Rono this and that, but, but really, do you hear it in. And do you do it? Do you believe it? Maybe that's a way to say it. Do you really believe it? And if so, what is your evidence that you believe it?

Right.

And because it's a pretty deep, profound statement that I feel like gets glossed over way quicker than it should.

Yeah. I mean, with all these books, like, I've read a lot of them multiple times at this point, and I feel like with each reading there's like each statement, you know, they're all short books. It kind of cracks me up. I don't know if, well, I don't have it on the shelf behind me, but I have a book on mass production from the 60s, and it's about, I don't know, three, four inches thick. And then I always put the Toyota Production system by Taichi Ono right next to it, which is like half an inch, you know, half an inch thick. So they're short books. But yeah, each statement I think as I'm at a different point in my journey, you know, listening to your podcast, listening to other resources, you just have to keep revisiting the ideas because there's just a lot in them.

Okay, got it. All right, well, so speaking of your journey, why don't you tell us a little bit about yourself, tell us about your background. Always curious to hear how folks first sort of got, I don't know, drank the Kool Aid, whatever, dumped in the rabbit hole. Tell us a little bit about that.

Yeah, so I kind of started in prototyping for manufacturability. That's sort of been my whole career, helping companies just, you know, Even if you're 3D printing now, we should understand what injection molding looks like so we don't have to do a redesign. And that seems sort of a little trivial, but a lot of teams kind of treat those two sort of separately, not going to the Gemba, you know, seeing how stuff is actually made, even if you're on the design team. Right. And so just really helping company close that loop. Worked in aerospace, in robotics, designed spacesuits for NASA for a bit. And one of the things I was most proud of, actually within three months of the pandemic starting, we open sourced a face shield design, and over 3 million of them were made worldwide in the first three months. And that was really just understanding, you know, what production lines were closed, which was basically all of them. But, you know, we converted cardboard lines, sign shops with, you know, plotter cutters. Just really trying to make designs that were easy for everyone. So, like, making sure that our bent, our. Our cut lines didn't have too tight a radii for making, you know, steel rule dies, et cetera. Just really refining that process by going and understanding what people had and what, what they could convert. Anyway, my. My work in spacesuits led me to start a manufacturing business making the world's most performant buckles. So small CNC buckles for soft goods that, you know, for. For people staying on Earth that are super light, super strong kind of thing. And, yeah, started running into all sorts of production issues. There was more demand for those than we anticipated. Good problem to have, but.

Sorry, I gotta ask, like, explain again. Like, buckles, like, what are you. What are you making? Like.

Yeah, yeah. So all the adjusters on soft goods, right? Backpack, tents, bikepacking gear, hunting gear, like the plastic thing?

Like.

Exactly. Yeah, yeah. Especially in the last 10 years, you know, the advancements in textiles that are available to sort of recreation are pretty, pretty Amazing. Some of them are like, you know, 40, $40 per yard. Just for context. Most, most fabrics in the outdoor space up until then were, you know, $5 to $15 per yard. And they're really amazing fabrics. Come out of the sailing world and just different applications. Super strong, super lightweight, durable, waterproof. And then they're held together with, you know, 5 to 35 cent pieces, which are pretty incredible little bits of engineering for sure and useful for many folks. But then there's applications where you actually don't care about the cost, I mean, within reason, but you really just want performance. And it turns out there's not really anything that is light and really strong. You can find strong buckles, right. Tie downs, safety, you know, like fall restraint hardware, etc. So it's a very strange little niche, but it's something I wish existed for years and years working on all of these different projects. And so finally I was like, you know what? Let's just do it.

Yeah, I mean that's, that's, I feel like that's the, I mean, Gamba Academy is a version of that. You know, like back when we started this, I mean, there was a few things out there, some, I always call them voiceover cartoon style videos, but I couldn't stand them personally. So let's just sit in front of a camera and teach people about Lean in Six Sigma. And that's what we did. You know, it's like it didn't exist. So. So I feel like those are the best businesses really, when you just solve a problem. Right. That.

Yeah. And one you, you're experiencing and. Yeah. Change. You want to see?

Yeah, yeah. Awesome. Awesome. All right, well, hey, in, in our sort of lead up to the, to this interview, you were mentioning something to the effect about tripling production. So I'm wondering if you could maybe tell us a little bit about what was that and how, how did it come about?

Yeah, I mean, so in our, in our shop, you know, as I mentioned, we started running into a lot of these problems with having demand and then not being able to deliver and, and it kind of fell into, I mean, one overarching category, which is overproduction, which obviously, you know, is said to be the mother of all lean waste. I feel like that was hard for me to wrap my head around for a long time. I could read about it and sort of understand that that's what they, they were saying. But then actually seeing that in action was a different thing. And, and what that looked like where finally made it click for me is in Our shop we would go, we have pretty vertically integrated. And so our cnc, we have a few Kanban loops set up. Our CNC is feeding the paint department. The paint department is supplying the assembly area. And when we would go to paint, we were running out of parts. And so we'd go to paint some parts that were needed on the assembly area. There weren't enough. And so naturally it was like, okay, we need another cnc, right? And then at some point I was, I forget which book I was on at that point, but I, I was kind of looking at it. We were reading about overproduction. And while we didn't have the part we needed to paint, we had a bunch of other parts that were sitting there, right. And so that was misallocated capacity on the cnc, right. We had locked up machine time and human time in inventory that was now just sitting there and the customer didn't want it. And it was just very striking. And so the source problem in that very specific example was that we were running Kanban. But there's still this temptation. You know, I love the quote, operation focused process, process blind, where the operator is, you know, instead of doing a changeover on the machine, what if I just run more? Because actually if I just sort through the stack of Kanban we have to produce today, you know, we have to make more of these. Yeah, we got to do it. Let's just keep it running, keep, keep the show on the road. And so it feels more efficient because those changeovers are, you know, waste. And it was actually really messing up our operation. And so by eliminating that and really increasing, you know, decreasing the local optimum and increasing the global optimum, we could just ship a lot more stuff. And so we basically doubled production there. But broadly, something I've seen and now that we've started sort of helping other companies with Kanban, something I've seen kind of across the board is just a lot of companies sort of focus on the value add parts of their business. I'm sure you've seen this, right? We're a cabinet shop, we're a CNC shop. And so what do we do? We CNC stuff, right? Like if we're looking to improve, let's buy another cnc. Like decrease the cycle time on this part, really focused on the value add portion of their business instead of the non value add. And it turns out that there's just a lot more to be gained at a much lower price in the non value add portion. And you know, in. I think it's the Toyota way they talk about, if you ask people, they say that 80% of their day is value add, but in audits, it's flipped. It's like 20%. And even 20% is high. Right. Most industries are well below that. And so just, I guess just getting honest about, like, hey, what would the customer be happy to pay for? And if the answer would be no, like, can we cut it? A funny example in the paint department, I was, I did all the paint till recently and someone was watching me and he was like, hey, is there a reason you're only painting moving your hand in one direction? And to be clear, the customer only cares about, you know, the instant when paint is landing on the part, all of the racking part, all of the maneuvering, like, that's all right, non value. So. And I was like, oh, no, there is. And so we cut our cycle time in the paint department by about 40% just by pulling the trigger while, while moving the paint gun both directions, which simultaneously. We were also looking at, you know, a painting robot. Right. That was $30,000 if we did the integration in house, about 120 if we just bought a off the shelf solution. So a lot of opportunities there of just kind of, instead of looking at the things that we quote, unquote, do, it was looking at all the things in between and just being really real about, you know, can we, can we cut these, can we reduce walking across the shop for a tool? And yeah, and that was big. And then the second was really the adherence to Kanban and doing, not overproducing. And that's on procurement. You know, you don't like to run out. So people order a lot of something and stick it on the shelf, but then it doesn't fit on the shelf. So you put some in a back closet. Yeah. So it was kind of, I would say, largely under the umbrella of overproduction and then also just like really drilling in on that non value add.

Okay, so, okay, well, sticking with this whole inventory theme. I know and sort of leading up to this, we were brainstorming and what to talk about and you were, you were mentioning, you know, obviously a key theme in Toyota production system is, you know, inventory reduction. You kind of mentioned that already, but I understand there was a time and maybe still is, I don't know where you, you actually increased your inventory. Is that accurate?

That. That is accurate. So this is another funny one. What's that? Practice and theory are the same in theory. So it was, it was kind of one of those, you know, reading the books it's like, okay, drop your inventory. This all makes sense. Less space, all. All that. And so we did. And that's when we first implemented Kanban. We got pretty aggressive about it, and that was a success in terms of freeing up space. But, you know, Kanban is sort of. There's a lot to it. And I think one that's often forgotten about is it's a. It's a tool for exposing problems in the business, right. There's the analogy of a pond of water with a few rocks sticking up, and the water level is inventory. And I think what we had done is basically drained the water all the way out, and then the whole day was just the organization sort of bumping in from one rock to the next. And that became sort of the new normal. And we just didn't have the capacity as a company to actually address those problems. And so a big part of, you know, TPS lean all these methods of continuous improvement is about solving problems, not hiding them. Right? But if you don't have the capacity to solve them, you sort of have all the downside of experiencing the problem, but none of the benefit of actually taking the opportunity to solve it. And so we sort of figured that our company was able to deal with kind of one. One problem a day, maximum, right? And so it was just all waste to experience problems and not have the bandwidth to fix them. And so we ended up just bringing up our inventories kind of across the board in a pretty significant way from the baseline of having slashed them massively. So we were still well below where we were previously. And that was hugely helpful. It really smoothed things out. So one of the things I started really looking out for is expediting sort of a very. I don't know, it can really sneak up on you, right? But any conversation that's like, hey, you're running this part right now. And we had this all the time, you know, hey, I know the Kanban says to paint orange today, but we actually have a customer who ordered two weeks ago. And I just finished the part, you know, I just consumed all the parts, and now we're out. Can you just paint some black right today? So that's all expediting, and that's not, you know, back to the top of the episode kind of. Without standards, there's no improvement that's outside of the standard. Right? The standard is let's follow the Kanban and let's experience the failures there and actually fix them in a systematic way rather than sort of this ad hoc, hey, we're all Smart people, we can solve this problem. I think oftentimes firefighting is sort of the thing people, I guess, gets rewarded in companies.

Yeah, for sure.

And really.

Yeah, they're so dedicated, you know, they can, you know, and they are, I suppose those folks, they're doing it, but.

Yeah, yeah. And they make the company work. Right. It's like, why could we ship? It's well, you know, Tom made it happen.

Right.

Like there was a big problem and found a workaround. But in a funny way that, that enables you to move further away, further and further away from just sticking to the system and testing it and improving the system. Yeah. And so really just raising all that inventory across the board just smoothed everything out. And now by reducing that noise of like all these constant problems, we were able to work on more fundamental things and improve them there. One of those things actually was in needing all the inventory, we needed to make more kanbans. So instead of doing like a 1 kanban loop, we have like 5 cards, 6 cards and a loop. And we ended up building some software to make the kanbans and have a nice image on the front, but also to have this digital backend. Because one of the things we were seeing is we had all these Kanbans that were circulating, but placing orders like through email, through POS was a lot of manual labor on the back end. And kind of getting back to that like, you know, value add, non value add, you know, it's all, it's all waste. Also I'm kind of dyslexic and so it's something I'm particularly not good at, like the admin kind of manual labor side. So built out that software and that made it way easier to print Kanban that looked good, that had a nice image on them, but then also able to kind of look at the data and see, you know, what's getting ordered when what is the cadence and sort of just capturing some of that on the back end and automating the reorder process when it was external vendors. And that's sort of what we've gone on to help other customers, other companies implement with. Similarly, I would say, you know, radical effects on their throughput is sort of surprising until you dig into, you know, lean.

Yeah. So you mentioned that a few times now that, you know, obviously raise. Raise inventory a bit. I'm wondering, do you like, do you measure like, you know, inventory turns or days as apply or other sort of supply chain metrics like that? I'm curious, like, where are you when you say you've got all this inventory, but, like.

Right.

Do you?

Yeah, yeah, I. So I would say we went from like two days of inventory up to maybe, you know, eight to ten days of inventory. And so one of the things we like to look at, or theoretically, you know, we haven't dialed in getting the numbers exactly is difficult, but like inventory dollar days. Right. So there's some stuff like plastic bags.

Another one, Right?

Yeah, yeah, yeah, yeah. So plastic bags that come in a pack of a thousand and that lasts us maybe, let's say six months. Right. That I don't care about as much as something that's costing me money and sitting on the shelf and taking up, you know, that money could be tied up in the goods. It could be tied up in the fact that it's bulky and taking up a lot of warehouse space. Yeah. So, you know, we're not pushing out to like, let's just hold three months. Six months.

Right, right. So you're still very lean, so to speak. Right.

Like, yeah, yeah.

I was curious always like to think about our accounting friends. Like what, your, your controller, your financial controller, who or whoever's taking care of your. Your finances. What was their thoughts when. When inventory was. Was sort of increasing a bit. Did they have any. Any comments?

Yeah, so I, I think one of like, we're a lot smaller than a lot of folks, so it's a pretty small company. So I kind of handle that. You know, we have a bookkeeper, et cetera.

Okay.

But, you know, it's hard to argue with doubling your sales. Right. We can now deliver a lot more faster without having a lot of internal conversations. The other thing I've seen, which has kind of been interesting, is I kind of figured that being a smaller company, going to other companies, I would see that they've kind of solved a lot of these problems, but it actually seems like a lot of them just get multiplied. Right. And so I think that just having like that smoothness of supply, you know, there's, there's. What is it? Muri, Moody and Mura and I. I think just there's a lot of other wastes besides just the, the cost of the goods on the shelf. And as I mentioned, you know, we also have an advantage in the parts we make. You know, we talked about the, the small little buckles. They don't take up a lot of space. You know, each block of aluminum that goes into them is sub $1. Right. So again, we're not tying up too much capital on the shelf. Got it, Got it.

So I'm wondering To maybe as we wrap things up here, you know, obviously you've got a lot of experience with, with Kanban, with inventory and just production in general. Do you have any sort of like, I don't know, final words of wisdom or some advice for companies who might think, gosh, we should really focus in on, on our inventory or maybe they don't have proper Kanban set up and they're just sort of pushing materially around what, what thoughts do you have for those folks?

For sure, yeah. So we built out this business, it's called Arda. It makes kind of the creating cards, printing cards, but then also executing the orders really seamless. And we've started to implement it with other companies and I think it sort of depends where you're coming from. Right. Some of the listeners I'm sure are deep into this and know a lot more about this than me and other people maybe are listening going like, hey, maybe we should try Kanban. I think the biggest thing just with continuous improvement in general that I've seen and this applies to Kanban would just be that moving in the right direction is a really big deal and it doesn't have to be perfect. Exactly. And so when we go in, oftentimes people, you know, we have a lot, there's a lot of fields you can fill out for each, each Kanban loop. Right. And sometimes we see people sort of holding up the release of those Kanban onto the floor because they're like, well, we want to make sure we have all of our locations, sub locations like really dialed in, all of it filled out. We want our supplier in there, we want our secondary supplier in there, we want our secondary supplier contact info in there. And I think just starting, right? And one of the things, the conscious decisions we made with the product early on was rather than the QR code taking you directly to Amazon or McMasterCard to make the purchase, it takes you back into the database and that allows you to constantly update the data. And I would just say like fill out the bare minimum, get a card in and get moving Again, depending on where you're at, only about 7% of businesses use a purpose built solution. And so we started saying this as a joke, but that the whiteboard was our biggest competitor. But it's not really a joke and you're just so much better off having a standard around procurement. Right. When we get down to this level, we buy this much and we know that that much fits on the shelf conveniently and it just saves a huge amount of time, you know, and that's what we've seen again and again we have a couple customers. I mean, I feel weird taking credit for this because really it's just how pull production, like the effects of implementing pull. But a few of our customers have doubled their throughput in, you know, six to eight months. And that's just, I mean again, not due to us, but due to implementing Kanban. And the effect that has where instead of running around going like, hey, we're out of screws again. Do you know where those in. Did. Did they. Oh yeah, go check receiving. Oh no, they're not here. Let's run to Home Depot. Like we have customers who have, you know, run to Home Depot once, twice a day. And so just creating that standard. But I think the real, the real advice I would have is just start, you know, grab some index cards, grab a Sharpie. And what I love to, you know, is just like make one a day. Make one Kanban for the thing you don't like to run out of. And that can be someone who works on the factory floor. That can be someone, you know, in the C suite walking out and saying, hey, this adhesive is always a problem. Let's implement it. One, one interesting note that I'll add is from Goldrat. ERPs are built around the premise of getting global data for global optimum. And I don't know if you've worked around many ERPs. I'm sure you have.

Oh yeah, yeah.

The pursuit of good global data is really costly and generally really hard to come by. And then Kanban, conversely, sort of aims for a local optim. Well, all local data. Right. It's like, how much do I use in what frequency? And let's get cards in place to, to make sure I don't run out. And so it's just much easier to implement. And a partial implementation actually delivers value.

Right.

So yeah, I don't know those, you know, kind of, kind of rambly there, but yeah, pretty excited about Kanban.

Yeah, no, for sure, man. I mean, well, if you're in manufacturing, I mean, not just manufacturing, I mean we use Kanban in our, in our break room. You know, like, don't run out of coffee, man. That's a crisis, man. We ran out of coffee.

Right. So yeah, yeah. And then people spend, you know, five, 10 minutes on that and they're like, oh, it's not a big deal. I just do it once or twice a week. It's like, well, it's not a huge deal, but like, wouldn't you rather do something different with that 10 minutes, right?

Exactly.

Good stuff.

All right. Hey, if folks wanted to connect with you, what's the. What's the best way?

Yeah, so we post a lot of our continuous improvement stuff at Austere Underscore Manufacturing on Instagram and then spell that A U S T E R E Underscore Manufacturing. And then the Kanban tool is Arda cards on Instagram and www.arda.cards on the world Wide Web as well. You can also reach out to me on LinkedIn and I think that link will be in the.

Yeah, we'll get everything linked up here in the show notes. Everybody just kind of scroll down and be sure to connect with the Oriole and check out all the cool Kanban stuff.

Yeah. And Ron, I really wanted to thank you for putting this together. And over the years, just having those touch points with other people who are going through their own journey, kind of reminding me of the many aspects to, you know, what is Lean. And I feel like every. I kind of get zoned in on one area every few months and really hammering on that. And it's really helpful to have that constant reminder of all the different aspects that you can be thinking about.

Awesome. Well, our pleasure, man. We love doing it.

So.

All right, well, hey, thanks for coming on and keep up the great work.

Thanks. Thanks for having me.

All right, take care of. Thanks for listening. Whether you've been on the continuous improvement journey for many years or perhaps you're just getting started, Gemba Academy is here to support you. And while we're best known for our more than 1500 lean and 6 Sigma teaching and virtual tour videos, we also have a team of experienced Lean and Six Sigma practitioners available for one on one coaching, as well as a variety of Lean and Six Sigma certification options. To learn more and to schedule a demo, head on over to gembaacademy.com.