We have all heard a version the old joke where a lost tourist asks an old man at the side of the road for directions to a town. After pondering for while the old man responds carefully that if he were going there, he would not start from here.
That is often the way with our processes. A skilled engineer or lean team will identify the optimum method for making the product, and will often conclude that it is very difficult to get to that point from the current process, and the best way would be to start over completely.
However, even with the long product lifetimes in regulated industries, it is often not worth while completely reengineering the method of manufacture of the current product. Sooner or later we will be manufacturing a replacement product that will use a new process. We may well be better off sticking with the current process until that day, optimising it as best we can without major change.
Often there is pressure to make improvements. There might be a system where annual decreases in the cost of production is baked into the budget. In the early years this is easy to achieve by tidying up the inefficiencies that become apparent with increasing production. These ‘low hanging fruit’ are often identified with a kaizen process.
But after a few years these low hanging fruit have been picked and the financial managers keep coming back for the same percentage improvements in costs each year with no easy way to meet the demand. So the temptation is to look for bigger improvements. And because there is always a better way, improved processes will be identified.
But are they worth doing? For this reason, it is important to have an honest project assessment process with an accurate method for assessing the Net Present Value of any potential improvement. Often not all the project costs are included in the assessment. This might be because engineering teams are keen to identify projects to justify continued staffing levels. Without all costs included in the analysis, projects that are not financially viable may be approved.
The cost of the time of internal staff is often not included at full cost based on the logic that they are employed anyway. But they need not be working on this task. When applying for research grants, academics to include the cost of their time, their students time and post-doctoral fellows time in their application. Their institution will add a percentage on top of this to cover the cost of overhead.
It is important that your own internal assessment of projects includes these costs when assessing projects. This is particularly important if the project will require many regulatory scrutinized changes.
With all these costs it may be difficult to identify viable improvement projects. And as the production of regulated products matures this may well be the situation. In this case you are better off concentrating your engineering efforts on optimising the process for the new product that will be introduced in a few years’ time and managing the current process in its present state. You are better off not supporting a large team for your current products if the team cannot be viably employed.
In many cases just because there is a better way it is not worth doing. You are often better off not going there from where you are now.