Archive for August, 2009

Toyota Production System (TPS) – How it Influences Design

August 27, 2009 by Nate

You have probably heard a lot about Lean Manufacturing systems like the Toyota Production System and how it can transform a manufacturing plant by eliminating waste, but you may not know that the principals of the Toyota Production System can also apply to the design process.

One of the first steps in the Toyota Production System is to define what adds value for the customer. During the design we try to completely define what the customer wants. What problems are they trying to solve? What needs are they looking for the machine or product to fulfil? By fully defining the scope of the project, you will end up with a set of expectations that are agreed upon so you know what to design and the customer knows what they can expect to receive. This will help eliminate the “Takes What It Takes” (TWIT) attitude that can lead to overages on time and materials.

The next step is to design for manufacturing. Here at Setpoint, we are always looking for ways to make our machines better, faster, stronger, and less expensive both for us and for our customers. We do this by trying to eliminate complicated parts and assemblies, incorporating features like Poke-Yokes (error proofing) and Single Minute Exchange of Dies tooling, and learning from the best practices from past projects.

One of the final steps in the design process is the Post Project Review. This meeting brings together all of the parties involved with the project to reflect upon the things that went right and the things that didn’t go exactly to plan. It includes the design team, project management, purchasing/receiving, electrical and mechanical assembly, the programmers, accounting, and the CEO. These meetings help us to capture all of the “lessons learned” from the project and use that knowledge on the next projects. Reflecting on past projects is a core value of the Toyota Production System and allows Setpoint to build on our successes and prevent us from repeating our mistakes.

At the heart of it, the Toyota Production System is a method to speed up processes, reduce waste, and improve quality. Applying these principles to the design process, allows you to improve quality, become more efficient and provide exactly what the customer is looking for. Happy Designing!

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Non Destructive Testing (NDT) in Modern Manufacturing

August 20, 2009 by Roger

Do you really want to just “hope that it’s right”?!?!


Over the past 30 years or so manufacturing processes and techniques here in the US and abroad have improved significantly, giving us a higher level of quality and consistency in the products that we build, as well as keeping manufacturing costs (and in turn, retail prices) down. One of the key items that has evolved significantly in the last 3 decades is the use of non-destructive testing (NDT) integrated directly into the manufacturing process. NDT is not really a specific type of testing per se, but more of a mentality. The philosophy is that you are able to inspect for critical defects in components or workmanship, often in areas that cannot be seen by an unaided human eye, and during the inspection you do not damage or destroy the part in any way. Some of the more common techniques of NDT are Real-Time Radiography (X-ray), ultrasonic testing, eddy current technology, magnetic particle testing, and liquid dye penetrate testing. While each of these various methods are very different in their core technologies and application, the end goal of each is the same: Verify and validate component quality in areas that are difficult or impossible to see otherwise without damaging or destroying the part in the process.

Industrial radiography started to show up in mainstream manufacturing shortly after the end of WW2, and we’ve been finding new uses for it ever since. A very good example (and one of the more mature applications) of this is the use of radiography in welding inspection. It’s very easy for a welder to lay a very pretty cover pass over inferior root and/or filler passes. With just a visual inspection, the weld in question would probably pass with flying colors. But once you shoot an x-ray of the weld, all the ugly stuff inside is on display for the whole world to see. Critical welds in building, bridge, and pipeline construction have long been inspected in this manner to confirm that the finished weld is a solid structural union of the parent metals.

While NDT solutions have long been a key part of manufacturing, it wasn’t always real-time feedback as it now can be, and it wasn’t always integrated directly into the manufacturing process. ‘Spot check’ NDT procedures were once the norm (and can still be found in many manufacturing processes today), where a small percentage of parts were randomly NDT inspected after completing the entire manufacturing cycle. If all of the parts pass the spot check with flying colors, life goes on as usual. If failures showed up during NDT analysis, then things get complicated. Huge lots of parts need to be quickly quarantined and 100-percent NDT inspections on the quarantined lots will usually follow. Needless to say, NDT spot checking any of your mission-critical components post-manufacture is a sketchy thing at best and a costly nightmare at worst.

Using a lean automation mindset, integrating “100 percent” NDT inspections into critical processes allows validation of component quality prior to adding any additional value to the part. Rejected parts are offloaded at the point of failure instead of later down the line, with no additional work being performed on the flawed part (and consequently no additional costs absorbed). This also minimizes or completely eliminates the need for component backtracking or quarantines of part lots that would normally occur if a problem wasn’t caught and dealt with at the point of failure.

Critical components such as automotive safety components, implanted medical devices, and many other complex manufactured items have long relied on integrated NDT solutions to assure reliable, life-saving performances over and over again. If your mission-critical manufacturing process truly is a matter of life and death, it’s very probable that an integrated NDT solution in your manufacturing process may be a wise investment for your company.

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Health Savings Accounts

August 13, 2009 by Joe Knight

Setpoint Systems, like most small companies, has experienced huge increases in health care insurance.  We have had our share of health challenges in our small group.  As Setpoint System’s CFO, I have been in the middle of this.  Several years ago we went to a new Health Savings Account (HSA) type plan that really solved a lot of our problems.

I testified before the senate finance committee on the value of HSA’s to the health care consumer and the systems as a whole.  Believe me there are many opinions on these types of plans both for and against.  I am for the plans.

A HSA is a tax protected savings account connected with a high deductable low premium plan.  Most HSA’s provide for a fully covered annual physical and then a high deductable for any other medical needs.  The HSA account carries over year to year and can be used tax free to pay for any medical, dental and most alternative medicine treatments.  Upon retirement HSA funds can be withdrawn without penalty for retirement (however funds used for expenses other than medical are taxed as income).

At Setpoint we adopted HSA’s in 2004 and have had them ever since.  While this type of insurance takes some getting used to, it has been a real benefit to Setpoint.  We have had two very serious medical issues with employees and/or spouses that were dramatically driving up our medical costs.  When we went to the HSA I was worried about how this plan would affect the two employees with challenges. (One of the arguments against the HSA is that it costs less for the healthy but more for those with serious illnesses).  In our case both of our employees with serious cases found that they saved thousands of dollars when we went to the HSA.  This is the reason why.  First, Setpoint was able to save on premiums and was able to contribute those savings to the employees’ individual HSA accounts.  Second, the employee no longer had to contribute as much to insurance since the premium was down.  Third, (and this is the one that is not often mentioned but has a huge impact) in our plan once the deductable is met then you have 100% coverage – that means no co-pays on meds or visits.  When you take these three issues together the HSA saved those with health challenges thousands on an annual basis. 

So with a better deal for our employees with challenges and lower costs to those that are healthy, the HSA seemed like the right thing to do.  Since we have been on the HSA plan our premium increases have stabilized and meanwhile our healthy employees are building up saving for the future.  It’s been a win-win for us.  Now every plan is different and obviously our sample is small.

This type of plan helped solve our health care problems.  Let me illustrate with a personal experience with the HSA’s.  I have a large family and use the system quite a bit.  When we need some medical care, we let our providers know that we have a HSA plan and pay cash.  This usually leads to discounts in coverage.  Also, we always ask for and understand costs to procedures.  One of the big issues with economics of health care is transparency of costs.  Since we have relied on insurance for so long and only had to pay fixed co-pays, consumers of health care have no idea how much their care really costs.  In many cases neither do providers.  How do we control costs without anyone on the front line really knowing what they are?

In my first year with the HSA my son needed a simple surgery.  When I explained to the hospital that I had a HSA plan and asked for a cost estimate the administrator said why it matters if you have insurance.  After explaining the new HSA plan the administrator could not come up with a price and it took several calls to get the right number from the hospital.  Then I had to get costs from the doctors to put together a total costs.  It was a challenge but we were able to get to the bottom line and even got a discount when we paid cash for the procedure.

That was in 2004.  Today costs are easier to get on many procedures.  There are still issues with transparency but things appear to be getting better.  As transparency improves, costs will come down as providers innovate and find ways to deliver services at lower costs.  Some argue that the mini-clinics where a physician’s assistant can do a strep test and other simple procedures at low cost of $30-$50 that are near pharmacies are a direct connection to more users on HSA’s.

We believe that more free market based plans like the HSA’s are our best chance to control medical costs.  These types of plans do not solve the problem for the nation’s uninsured.  I believe that an expansion of the HSA plans for those who have employer provided insurance and can afford it is only part of the solution.  Providing for the uninsured should be a second part of a health care solution.  What I hope is that any plan we pursue as a nation uses market principles to control costs.  We believe that the HSA approach is a step in the right direction.


Download Joe’s testimony for the Senate Finance Committee
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Deciding on the Direction for your Company

August 6, 2009 by Brad

Companies that remain static and don’t evolve will eventually lose their profit margins and sink into oblivion. At Setpoint, as we try and adapt to the changing landscape I have noticed several things in dealing with deciding our company’s direction.

First, change is hard. It is much easier to continue doing what has been done in the past, even if it is not getting the results it used to, and rarely have I seen an idea that just works right out of the gate.

You can’t do everything, and if you try to, it will result in spreading your resources (money, time, people) so thin that you cannot be successful at anything. One of the hardest things is, deciding what not to do. It is difficult because you tend think that you are potentially leaving money on the table, and you may be – but you are doing it to pursue a better idea with more potential.

We have found that some feel more passionately about an idea than others, so we have developed a rule that is simply “whoever has passion about an idea gets less than 50% of the vote”. This helps us make more objective decisions. Key message is, don’t be so in love with a strategy or idea that you can’t dispose of it when all the facts point that way.

You never have perfect information before a decision needs to be made. As a result, assumptions are made in order to make progress. The problem is, unless those assumptions are tracked and noted they tend to become facts over time, and often those assumptions are wrong. You have to revisit assumptions to validate, modify, or eliminate them to reflect new information you now have. Not doing so can lead to less than desirable outcomes.

At Setpoint we try and follow the philosophy of “fail faster”. In other words, if something is not going to work the sooner you identify it the cheaper it is for the company in terms of money, time, and people. Most ideas can be validated or eliminated without much cost or time if the key issues have been correctly identified. The few key remaining ideas can then claim your valuable resources.

The shorter iteration cycles the better; the clearer the objectives, the easier it will be to identify the key issues that need to be proved out in order to validate the direction.

These are some of the techniques we are using at Setpoint to decide our companies direction.

This process is an ongoing part of a healthy company’s life. So get on with it.

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