Latest / The Productivity Podcast with Fexingo: Output, Efficiency, and Long-Term Economic Growth / How a German Factory Cut Setup Time by 94 Percent
Transcript
- Lucas: There's a factory in southwest Germany, about an hour outside Stuttgart, that makes precision-machined brake components for European automakers. Nothing flashy — cast iron and steel, tolerances measured in microns. Luna: Right, the kind of place that just quietly supplies the supply chain. What's the story there? Lucas: In 2022, this company — let's call them Präzisionstechnik GmbH, because that's essentially what they are — had a problem. Their largest customer, a German luxury automaker, was demanding smaller batch sizes and faster lead times. The factory's machine setup process took 90 minutes on average per changeover. That's 90 minutes where a CNC lathe or milling machine is sitting idle, not cutting metal. Luna: And that idle time is pure cost. No output, but you're still paying the operator, the electricity, the capital cost of the machine. Lucas: Exactly. So the plant manager, a woman named Dr. Anja Voss, decided to implement something called Single-Minute Exchange of Die — SMED. It's a lean manufacturing technique developed by Shigeo Shingo at Toyota in the 1950s. The core idea is to convert as many setup steps as possible from 'internal' to 'external' — meaning steps you can do while the machine is still running, rather than after it stops. Luna: And the target is literally single-digit minutes. Hence 'single-minute exchange of die.' Lucas: Right. Toyota famously got a 1,000-ton press's die change from four hours down to three minutes. Präzisionstechnik wasn't changing dies, but they were changing tool holders, collets, bar feeders, and CNC programs. So Dr. Voss's team started by videotaping every setup. They found that 70 percent of the steps were done while the machine was stopped, but could have been done beforehand. Luna: What kind of things? Lucas: Simple stuff. Pre-staging the next job's tools at the machine instead of walking back to the tool crib. Having the CNC program loaded and verified before the previous part finished. Using quick-release clamps instead of bolting fixtures down with 16 hex bolts. They also color-coded tool holders so operators could grab the right one without checking a label. Luna: That sounds almost too simple. But I bet the resistance was real — machinists who've done it the same way for 20 years. Lucas: Massive resistance. The older operators said the new method would cause crashes and scrap parts. Dr. Voss didn't mandate it from day one. She picked one machine, the most troublesome CNC lathe, and ran a pilot with volunteers. The pilot team included a 55-year-old machinist named Klaus who was skeptical but agreed to try for two weeks. Luna: What happened in the pilot? Lucas: Day one, they hit 12 minutes. Day five, 8 minutes. By the end of two weeks, that machine's average setup time was 5 minutes and 40 seconds — a 94 percent reduction from the 90-minute baseline. And Klaus became the biggest champion. He started showing other operators how to do it. Luna: So the proof was in the numbers. What was the downstream impact? Lucas: This is where it gets interesting. With setup time under six minutes, the economic batch size dropped dramatically. Previously, they'd run 500 pieces of a part because the setup cost was so high. After SMED, they could economically run 50 pieces. That meant less work-in-progress inventory, fewer defects caught late, and faster response to customer orders. Luna: And the automaker noticed, I'm guessing. Lucas: Within six months, Präzisionstechnik's on-time delivery rate went from 72 percent to 96 percent. And their defect rate dropped by about a third — because smaller batches meant problems were caught after 50 parts instead of 500. The automaker actually increased their order volume by 15 percent the following year. Luna: So it's a classic productivity multiplier: shorter setups lead to smaller batches, smaller batches lead to higher quality, higher quality leads to more business. But is this only applicable to metal-bending factories? Lucas: That's the question. The principles are universal: separate internal and external steps, standardize, use quick-change hardware. A hospital operating room, for example, can apply SMED to turnover between surgeries. Some have cut turnover from 45 minutes to under 15. Same logic — pre-stage instruments, have the next patient's chart ready, use standardized instrument trays. Luna: But a service setting has more variability. You can't predict exactly what you'll need in an OR the way a factory knows the next part number. Lucas: Fair point. But the method accounts for that. You don't eliminate all variability; you create standard work for the predictable parts and build flexibility for the rest. The key insight is that most organizations treat setup time as a fixed cost, and it's not. Luna: Honestly, if today was worth a coffee to you, that's the link — buy me a coffee dot com slash fexingo. Lucas: Heh. Yeah. I mean, we keep this show ad-free because listeners like you chip in. If you got something out of this, that page is how you can say 'thanks' without having to listen to a mattress commercial. Luna: And it genuinely helps us keep digging into these case studies. We don't have a big media company behind us — it's just us and a research budget powered by coffee. Lucas: Alright. Back to the factory floor. So after the pilot, Dr. Voss rolled SMED out to all 14 CNC machines over four months. The average setup time across the plant fell from 90 minutes to 11 minutes. That's still not single-minute for every machine, but it's an 88 percent reduction. Luna: And the financials? Lucas: The plant's overall equipment effectiveness — OEE — went from 62 percent to 81 percent. That's essentially a 30 percent increase in productive capacity without buying a single new machine. The CFO calculated a payback period of less than three months, mostly from labor savings and reduced overtime. Luna: So the lesson here isn't just about tools and clamps. It's about challenging assumptions that something is 'just the way it is.' Dr. Voss questioned a 20-year-old process that everyone accepted. Lucas: Right. And she did it by respecting the people doing the work. She didn't fire anyone or impose change from above. She gave Klaus and his team the permission and the tools to experiment. That's a lot harder to replicate than buying quick-release clamps. Luna: So what's the one thing a listener in, say, a service business — an accountant, a lawyer, a software team — could take from this? Lucas: Pick a repetitive process that takes longer than it should. Videotape it or track every step. Separate what you can do while the 'customer' is waiting from what you can only do when they're present. Then aggressively eliminate, combine, or simplify the steps you do while they wait. That's SMED in a nutshell. Luna: And you might find your own 94 percent improvement hiding in plain sight. Lucas: That's the bet. Next episode, we're looking at a completely different angle on productivity — how one hospital system used something called 'swarming' to cut emergency department wait times by half. See you then.