The next topic that is frequently a major opportunity in almost every manufacturing facility is setup reduction. Also referred to as changeover reduction, this is a great area of focus with almost unending potential. Facilities with machines that convert product are only making money when the machines are actually converting needed product. Any time machines with customer-driven work to do are sitting idle, lost-opportunity cost is being incurred. If a machine is able to convert products in one hour that equate to profit when shipped, the machine is actually earning a profit for the company at that rate per hour. When the machine is in changeover and idled, no profit is produced; in fact, quite the opposite is going on: costs are being incurred.

There is more to the story, as APICS-trained people know. If a machine is not changed over, often there is a natural requirement for additional buffer inventory to "fund" the longer run times. Small-lot orders or even one-piece orders are the direction most high-performance businesses find to be the most profitable, taking all costs into consideration. These considered costs include inventory charges as well as changeover times amortized on their typical lot size. So now the story becomes more complicated.

Lean thinking and techniques focus on the elimination of waste. Changeover time is waste. One method to minimize this setup time that has been very successful in literally thousands of businesses worldwide is single minute exchange of die (SMED). Developed by Toyota and credited...