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The Global View: Don’t Re-Shore the “Factory-Within-a-Factory” Concept

Posted By Everette Phillips, August 10, 2012 at 7:33 AM, in Category: Factories of the Future

I first heard the term “factory-within-a-factory” while helping to automate the assembly of pagers at Motorola. You—unlike my kids—remember pagers, the advanced technology that predated cellphones.

The pager line was advanced for its day, and highly automated. Automation was seen as the solution to keep pager manufacturing in the U.S. But one reason the line was successful was that prior to deploying automation, careful attention was paid to the manual assembly processes for the existing pager products. During the observation period, it was noted when an operator would repeat a process or correct issues on individual parts during production. The new, automated process was then engineered to avoid the multiple handling of parts for the same process, an inefficiency that the automation team called a factory-within-a-factory.

When you handle parts multiple times for the same process, it is like manufacturing the item more than once. And when you manufacture something more than once, you are not as efficient as when you manufacture it only once. You are, by definition, wasting time, resources, and money. You are not as profitable as you could be.

In low-cost countries, factory-within-a-factory is simply a way a life. It is part of the culture. I have seen well-run production lines moved from the U.S. to Asia, only to suffer terribly in efficiency and yield, in part because they adopted this factory-within-a-factory approach. Yet these lines produce a quality end product at a globally competitive price. That achievement is done by having low-wage workers rework non-conforming parts, re-inspect parts, and scrap non-conforming parts that cannot be recovered.

This situation is reinforced by the accounting systems used by most factories in developing countries. In the U.S., we have a saying, "That which gets measured gets fixed." In China, however, no one says this. The people behave as though the saying were, "That which gets measured gets taxed." There is incredible inertia against measuring inefficiencies and documenting the efficiencies needed to improve processes and move away from the factory-within-a-factory practice.

A factory-within-a-factory is not just a simple waste of production resources. It is a barrier to success for the re-shoring of production to America. It also interferes with automation, which, I am sorry to say to those thinking there will be a one-to-one job transfer from offshore, is required to achieve the efficiencies needed to re-shore manufacturing. With the U.S. federal minimum wage at $7.25 per hour—and this is not considered a "livable wage"—you need to squeeze out every ounce of productivity if you expect to re-shore production from a country where wages can be $1 per hour or even less.

To avoid the factory-within-a-factory trap, one should carefully observe how the process is done manually when planning to automate a production process. Do the two parts always fit together, or does the operator have to do something special or unusual to get the two items to fit? For example, does the operator make one attempt, then pick up a different part and succeed? Does the operator make one attempt and then bang or modify the part to succeed? If one wants to automate the process, one needs to either improve the quality of the bill-of-material parts so they fit with the first attempt or add flexibility to the automation equipment. However, flexibility adds costs and will decrease the cycle time.

We in the U.S. have sent our manufacturing base on a world tour in recent years, and we now want it to come home. During its trip, I am sure that it picked up some new and useful practices. This is one of the benefits of world travel. But, while traveling around the world, our manufacturing base has picked up some bad habits. The factory-within-a-factory is one such bad habit. Whether you plan to reintroduce a manual assembly line or introduce automation as you re-shore production, be mindful of this insidious waste of time, resources, and profits. You can improve your competitive advantage by eliminating it.

Written by Everette Phillips

Everette's experience includes robotics, advanced manufacturing, supply chain management and international manufacturing. After a career path as a robotics engineer helping automate plants in North America, he became a manager of European Operations for Factory Automation & Robotics in Europe for SEIKO living an expat in Brussels then returning to the US as GM for Advanced Mfg Technologies in North America. Currently, as President of Global Mfg Network, he is involved in coordinating production of highly engineered parts, assemblies and products across a wide range of industries in manufacturing facilities located in Asia and North America and Europe. Everette is a regular speaker and panelist on topics related to manufacturing, international business and technologies such as robotics and advanced manufacturing. He has a BS Bioengineering from Cornell and an MBA from the UCLA Anderson School. Everette serves on the board of Cornell Engineering Alumni Association as a Regional VP and on the Advisory Board for Entrepreneurship@Cornell.

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