Lean manufacturing

Outline

Competitive Challenges Putting Companies on a Lean Diet

The Lean Tools

Get on the Scale! the Need to Measure Some Examples and Results

Achieving Operational Excellence

Right Products and Services

Customer Focus
Make what we sell not Sell what we make

Innovation

Achieving Operational Excellence

Right Products and Services

High Quality

Customer Satisfaction
Centered on the Target Reduced Variability

Both Products and Services

Relentless Pursuit of Improvement
4

Achieving Operational Excellence

Right Products and Services Necessary But Not Sufficient

High Quality

Achieving Operational Excellence

Right Products and Services Necessary But Not Sufficient

High Quality
On-Time Delivery Short Lead Times Flexibility Increased Reliability Customization Low Cost/Reduce Waste Based on Continuous Improvement & A Lean Manufacturing Philosophy

World Class Operational Execution

Perceived Value:
The Ultimate Measure of a Lean Company
Perceived Value = What the Customer Receives The Cost
Why Does It Matter? Because the Companys Life Expectancy Depends on it!!!

Perceived Value: The Ultimate Measure of a Lean Company

In the Eyes of the Customer

PV=

The Right Products and Services

High Quality

Delivery

Cost

The Motivation for Becoming Lean

The New Economics: Old Way : Price = Cost + Profit Margin

We set the price to assure the desired profit

Now: options. How do we make a profit?
9

Price - Cost = Profit Price is fixed (or falling) customers have many

Most Companies Are Too Fat

Need to Reduce Costs
How? without decimating our team members without skimping on maintenance and quality without weakening the company in the long run.

Must eliminate/reduce waste increase yield

10

The 8 Sources of Waste

The Bad Carbs
1.
2. 3. 4. 5. 6.

7. 8.

Overproduction Excess Inventory Defects/Re-Work Non Value Added Processing Idle (Waiting) Time Non Value Added Motions (people and machines) Non Value Added Conveyance of Materials Waste of Peoples Talents and Time
11

Putting Companies on a Lean

Lean focuses on eliminating waste in processes Lean is about expanding capacity by reducing costs and shortening cycle times between order and delivery Lean is about understanding what is important to the customer Lean is not about eliminating people

12

Toyota Production System TPS

The Beginning of Lean Manufacturing
Tiachi Ohno Toyota U.S. Beginning New United Motor Manufacturing, Inc. NUMMI Freemont California

13

14

15

The Basic Lean Tools

Continuous Improvement
Pull/Kanban Root Cause Standardized Work Cellular/Flow VAM TPM

Quick Changeover
Kaizen Value Stream Mapping
16

Batch Reduction

5S/ Visual Control

6-Sigma

Theory of Constraints

Lean Tool: Value Stream Mapping

17

Value Stream Mapping

Identify Problems/Issues
18

Lean Tool: Root Cause Analysis -

USUAL APPROACH
Problem Identified

Firefighting!
Immediate Containment Action Implemented Find someone to blame!

Problem reoccurs elsewhere!

PREFERRED APPROACH
Problem Identified

Immediate Containment Action Implemented

Defined Root Cause Analysis Process

Solutions validated with data

Solutions are applied across company and never return! 19

Root Cause Example Identify Problem

Project Is behind Schedule Wont Finish on Time

20

Immediate Action

Additional resources applied to help get the project team back on schedule

No new projects started until Root Cause Analysis completed

21

Root Cause
Didnt complete project on time

Why?

22

Cause and Effect Diagram

Procedures Personnel
Lack of worker knowledge Poor project plan Poor project mgmt skills Lack of resources

Didnt complete project on time

Inadequate computer programs

Poor documentation

Inadequate computer system

Materials

Equipment

23

Cause and Effect

Procedures Personnel
Lack of worker knowledge Poor project plan Poor project mgmt skills Lack of resources

Didnt complete project on time

Inadequate computer programs

Poor documentation

Inadequate computer system

Materials

Equipment

24

Root Cause
Didnt complete project on time

Resources unavailable when needed

Why?

25

Didnt complete project on time

Resources unavailable when needed

Took too long to hire Project Manager

Why?

26

Didnt complete project on time

Resources unavailable when needed

Took too long to hire Project Manager

Lack of specifics given to Human Resources Dept

Why?

27

Didnt complete project on time

Resources unavailable when needed

Took too long to hire Project Manager

Lack of specifics given to Human Resources Dept

No formal process for submitting job opening

28

Corrective Action

Permanent Hired another project manager to meet needs of next project team Preventive - Developed checklist form with HR for submitting job openings in the future
29

Lean Tool: 5S

Sort (Seri) determine which equipment is necessary and which is not Straighten (Seiton) have the necessary equipment in reach and in the right place Shine (Seiso) - clean Standardize (Seiketsu) maintain the above 3 S Sustain (Sitsuke) mental discipline and readiness

30

Why 5S?

To eliminate the wastes that result from uncontrolled processes. To gain control on equipment, material & inventory placement and position. Apply Control Techniques to Eliminate Erosion of Improvements. Standardize Improvements for Maintenance of Critical Process Parameters. 31

After 5S

Clear, shiny aisles Color-coded areas Slogans & banners No work in process

32

Lean Tool: Poka yoke

Mistake-proofing systems Does not rely on operators catching mistakes Inexpensive Point of Origin inspection

Quick feedback 100% of the time

Be more careful is not effective

33

Everyday Poke yoke Examples

3.5 inch diskettes cannot be inserted unless diskette is oriented correctly.

Fueling area of car has three error-proofing devices: 1. insert keeps leaded-fuel nozzle from being inserted 2. tether does not allow loss of gas cap 3. gas cap has ratchet to signal proper tightness and prevent overtightening. New lawn mowers are required to have a safety bar on the handle that must be pulled back in order to start the engine. If you let go of the safety bar, the mower blade stops in 3 seconds or less.
34

3 Rules of POKA YOKE

Dont wait for the perfect POKA YOKE. Do it now!

If your POKA YOKE idea has better than 50% chance to succeedDo it!
Do it now.improve later!
35

Lean Tool: Kaizen Events and the Kaizen Blitz

Identify the customer Deming Cycle Plan identify what to change and how to do it Current state Future state Implementation plan Do execute the improvement Check ensure the improvement works Act future and ongoing improvements Repeat
36

Kaizen Blitz - Agenda

Day 1: Setting the scene Meet the team, training Day 2: Observe the current process Flowchart, identify waste, identify root causes Day 3: Develop the future state process Brainstorm and flowchart (typically the longest day!) Day 4: Implement the new process Plan, communicate, implement, modify Day 5: Report and analyze Performance vs expectations
37

Use Visual Story Boards

38

Identify the Current State

39

Identify VA, NVA-R, and NVA

40

Brainstorm and Analyze

Kaizen team brainstorming to develop new process Post improvement ideas on map or by category Workflow Technology People / Organization Procedures Develop detailed future state map New workflow Value Add and Non-Value Add Cycle times Identify Kaizen bursts (immediate radical change)

41

Develop the Future State

42

Lean Implementation Examples at Welco Lumber Company

43

Potential Kaizen Objectives

Improve Quality

Improve Cycle Time Reduce Costs

Increase Yield
44

Kaizen Methodology at Welco

Analyze Operation Identify Opportunity
5-Nov-03 Thru 21-Nov-03 Head Rig Log Study Baseline Log # 1 2 3 4 5 6 7 8 9 Operator Sid Sid Sid Sid Sid Sid Sid Sid Sid Large/Small Correct Cut Log (Yes or No) Error Category Log Size Welco Value Potential Value Potential Gain 15 Large No Excessive Log Breakdown $59.00 $65.97 $6.97 17 Large No Excessive Log Breakdown $79.27 $85.33 $6.06 11 Small Yes No Error $35.40 $35.40 $0.00 11 Small No Off Center Cant $31.61 $35.40 $3.79 14 Large No Reduced Value Cut $47.67 $58.86 $11.19 17 Large Yes No Error $85.33 $85.33 $0.00 8 Small Yes No Error $16.22 $16.22 $0.00 11 Small Yes No Error $35.40 $35.40 $0.00 9 Small Yes No Error $21.54 $21.54 $0.00

Collect Baseline Data Brainstorm Changes/ Improvements Collect Follow-Up Data/ Analyze Improvement Results Make Changes

45

Horizontal In-feed Project Overview

Purpose: The purpose of the Baker snipe test is to reduce the annual cost associated with board snipe. Two tests will be conducted to gain information necessary to estimate the snipe cost: 1. Harp Test 2. Snipe Volume Test

46

Proposed Change to Horizontal In-feed Process

Run Slabs 1 at a time rather than side-by-side

Process Change Only No New Equipment

47

Horizontal In-feed Results

30-Min Snipe Test # 2 - B

Number Of Boards With Test # Total Boards Snipe 1 416 18 2 397 17 3 284 13 4 412 18 5 294 17 Total - 1803 83

% Mis-Manufactured 4.33% 4.28% 4.58% 4.37% 5.78% 4.60%

48

Dollar Cost Savings

Snipe Test #2-B
Ave. # Boards 721 5,770 1,442,400 Ave. # Snipe Boards After Change Hour 33 Day 266 Year 66,400 Before Change 105 837 209,148

Hour Day Year

Estimated Annual Savings = $86,000 - $120,000

Estimated $16,507.04.00 Potential Gain Per Year Per Shift

Snipe Test # 2 - B was conducted with the baker operator instructed to run one slab at a time.

49

PPROPORTION OF SNIPE
0.1 0.02 0.04 0.06 0.08 0.12 0

1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96 101 106 111 116 121 126 131 136 141 146 151 156 161 166 171 176 181 186 191 196 201 206 211 216 221 226
SAMPLE # DAYSHIFT SNIPE P CHART

Holding the Gain

Average Snipe Rate = 2 %

50
231 236 241

Head Rig Project

Objective: Increasing Recovery/Value

51

Baseline Data Collection

3 Operators 6 Hours Video 362 logs (all diameters)

View the Head Rig Saw

52

Baseline Data

53

Beck Group Log Breakdown Rules Based on Optimizing Log Recovery and

Value of Finished Product

54

Potential For Improvement

Welco Log Breakdown Decisions Based on Past Training
Versus The Beck Group Optimal Breakdown Rules

55

Improvement Opportunities Baseline Data

Potential Value % Optimal Cut Welco Realized Value Potential Gain Mean Gain Per Log Cut Mean Gain Per Hour
2 6 inch $15.80 50% $13.13 $2.67 $1.34 $0.45 9 7 inch

$100.17

33%

$91.89

$8.28

$0.92

$1.38

49 8 inch

$810.74

49%

$768.74

$42.00

$0.86

$7.00

62 9 inch

$1,335.48

47%

$1,249.02

$88.46

$1.40

$14.74

73 10 inch

$2,107.38

56%

$2,007.24

$100.14

$1.37

$16.69

362 Logs

65 11 inch

$2,301.00

66%

$2,210.20

$90.80

$1.40

$15.13

40 12 inch

$1,672.02

50%

$1,594.60

$77.42

$1.94

$12.90

26 13 inch

$1,262.04

31%

$1,115.81

$146.23

$5.62

$24.37

14 14 inch

$824.04

21%

$720.63

$103.41

$7.39

$17.24

22 >14 inch

$1,804.68

41%

$1,726.95

$77.73

$3.53

$12.96

Total =

$12,233.35

50%

$11,498.21

$735.14

$2.03

$122.52

56

Improvement Opportunities
Head Rig Analysis Hours Per Shift Shifts Per Week Weeks Per Year Logs Per Hour 8 10 52 70 Total Logs 560 5600 291200 Per Shift Per Week Per Year

Log Diameter Percentage Mean Potential Gain Per Log Gain Per Hour Gain Per Shift Gain Per Week Gain Per Year 6 inch 0.7 $1.34 $0.65 $5 $52 $2,721 7 inch 2 $0.69 $0.97 $8 $77 $4,019 8 inch 12 $0.68 $5.73 $46 $459 $23,849 9 inch 15 $1.24 $13.07 $105 $1,045 $54,360 10 inch 20 $1.21 $16.89 $135 $1,352 $70,280 11 inch 20 $1.40 $19.63 $157 $1,570 $81,665 12 inch 13 $1.72 $15.64 $125 $1,251 $65,069 13 inch 7 $4.57 $22.39 $179 $1,791 $93,144 14 inch 5 $7.17 $25.10 $201 $2,008 $104,406 >14 inch 5.3 $3.91 $14.51 $116 $1,160 $60,345 Total -All Logs $1.93 $134.58 $1,077 $10,767 $559,859

57

How to Achieve The Gains?

Know the Beck Group Rules Operator Training Use the Beck Group Rules Laser Lights Other ???

58

Analyze Changes

Video Data Collection and Analysis Assess Progress Hold the Gains

59

Results After Kaizen Project

60

Final Section of Kaizen Report to Welco Management

Project Cost:
The projected gains from this head rig project were the result of the process improvement efforts of a team of people at Welco of Idaho including, the head rig operators, relief operator, maintenance staff, supervisors the management team. In addition to the time spent by the team, the capital costs associated with the improvements have been:

Two laser lights One Mirror

$1,600 $ 70

Thus, on an annual basis, Welco stands to gain between $300,000 and $500,000 in profit based on a total capital expenditure of less that $2,000!

61

Lean Tool: Quick Changeover at Boise Cascade Corporation Traditional Approach

Produce to Order 1000 units Set Up Order 1000 Run 3000 units Set Up Order 3000 Run

Problem: Up-time rate too low - throughput down - setup times too long
Their answer to Improve Efficiency 10,000 Set Up Order Run Set Up Order 10,000 Run to inventory

9,000

to inventory

7,000

62

The Lean Paradigm

Adopt this approach toward reducing setup times
Time in Seconds 240 250 200 150 100 50 0 1950 1960 1970 1980 1990 2000 2004 49 35 30 22 TIME FOR A NASCAR PIT CREW TO CHANGE 4 TIRES AND ADD 22 GALLONS OF GAS

14

12

63 Source:NASCAR, USA Today

Lean Tool: Quick Changeover Methodology

Identify internal and external steps Convert internal steps to external Improve all aspects of the setup operation Abolish setup

64

Boise Cascade - Becoming Lean Reduce Setup Times

Produce to Order (After Lean Implementation) 1000
Set Up

3000
Set Up

500
Set Up

Run

Run

Run

(Before Lean)

1000 units
Set Up Order

1000
Run

3000 units
Set Up Order

3000
Run

65

Quick Changeover Results

Company T Manufacturing1 S Metals1

Machine 80t single shot press 100t single shot press

Before improvement 4 hours 0 mins 40 mins

After improvement 4 mins 18 sec 2 mins 26 sec

Redn 98% 94%

H Press1
TT Industries1 Expanded Metal Co. S Engineering AM Bottlers E Finishing

30t single shot press

50 oz injection moulding m/c 46 lath press Machining Centre Bottling plant Paint Plant

50 mins
1 hour 10 mins 4 hours 30 mins 139 minutes 32 mins 43 secs 56 mins 26 secs

48 sec
7 mins 36 sec 11 mins (note: NOT SMED) 59 mins 29 secs 23 mins 33 secs 23 mins 12 secs

98%
89% 96% 57% * 28% * 59% *

Ref 1: Modern Approaches to manufacturing improvement the Shingo System, Shigeo Shingo, ISBN: 091529964x 66 After one SMED exercise

Lean Tool: Reduce Non-Value Adding Time

Value-Adding Activities Activities that accomplish something the customer is willing to pay for. Non Value-Adding Activities Everything Else (such as Inspection
Re-work Material Movement
67

Value Added Analysis

Total Cycle Time 95% Non Value-Adding 5%
Value Adding

Traditional Response: Focus on value-Adding Steps

2%

98% Non Value-Adding 50%

Value-Adding Response: Focus on Non-value Adding Steps
Non Value Adding
Value Adding

50%
Value Adding

Lead Time Reduced Non Value-Adding Time Reduced

68

Naval Air Depot Jacksonville, FL

69

70

Right

Get the Company On the Scale

Impediment to Success; Measuring the Wrong Things

People do how they are measured.

Dave Packard -- HP
71

Implement Appropriate Measures

Customer Focused

On-Time Delivery Defects Customer Satisfaction

Drivers of Competitive Operations

Production Focused

Throughput WIP FGI Rework/Product Waste

Cycle Time Value Added Ratio Changeover Times
72

Process Focused

Implementing Lean

Gain Top Management Buy In and Support Perform overall company assessment tied to company strategic, operational, and marketing plans Develop strategic lean deployment plan Integrate customized training with lean to improve specific skill sets, leverage training resources
73

More Implementation Steps

Team Building, Communications, Problem Solving, Change Management, Lean Manufacturing Tools

Conduct Kaizen blitz high impact events

5S, Manufacturing Cell, Set-Up Reductions, Inventory Reductions, Work Standardization

Use an enterprise wide approach to help Transform a Companys culture and the way they do business.

74

Some Lean Results

Oregon Cutting Systems Iomega - Utah Bernoulli Drives 1987 Output Per Hour Up 55% Lead Time from 21 days to 1 day 21.4 days

Zip Drives 1999

.75 days

Surface Mount Process cycle time from 2.5 weeks to 1 hour Lockheed Defect Rate Reduced 80% Rework Down 91% Lead Time Down by 95% Pager Lead Time from 16 weeks to 28 minutes 75

Motorola

More Results
Company Product Order-to-Finish Old New

General Electric
Hewlett-Packard

Circuit Breakers
Elect. Test Equip.

3 wks
4 wks

3 days
5 days

Brunswick
Matsushita

Fishing Reels

3 wks

1 wk
2 hrs

Washing Machines 360 hrs

Harley-Davidson

Motorcycles

1 yr

3 days

76

Lean vs. Traditional Manufacturing

Half the hours of engineering effort Half the product development time Half the investment in machinery, tools and equipment Half the hours of human effort in the factory Half the defects in the finished product Half the factory space for the same output A tenth or less of in-process inventories

Source: The Machine that Changed the World, Womack, Jones, and Roos, 1990.
77

Barriers to Lean

Implementing Lean Can Be Difficult Because it is Counterintuitive from a Traditional Paradigm:

Buying multiple small machines rather than one big machine that offers economies of scale. Shutting down equipment when maximum inventory levels are reached rather than running flat out. Using standards to continuously improve. There are some basic steps but the how-to varies from organization to organization Requires an assessment of the company in order to map out the strategy
78

There is no step-by-step cook book

Company culture plays a big part in the how-to

Lean Is A Journey

The Journey never ends Toyota estimates it is only 50% waste-free There is much room for Improvement It is time to begin.

79