An Introduction to LEAN MANUFACTURING

History of Manufacturing
CRAFT
Made customer specific Each product is unique Variable quality / expensive

MASS
Interchangeable - Whitney Division of labor Fredrick Taylor Assembly lines & low variety Ford

LEAN
High Variety Small batches Six Sigma Quality

What is LEAN? Rock to Art

Lean is the elimination of anything not absolutely required to deliver a quality product or service, on time, to our customers LEAN is a fundamentally different business logic LEAN is based on eliminating unnecessary actions LEAN links value activity in a continuous sequence

Only a small fraction of total time and effort in an organization adds value for end customer

Why LEAN?
Severe Competitions in all walks of business Firms face reduction in margins to keep the market share Every little saving will improve the economy Time for every available resource to perform the best Operation Cost reduction is critical to our survival Profits = Price Cost (price dictated by the market and cost incurred by us) Cost = Activities involved (VA + NVA)

LEAN Some myths

LEAN is a factory thing LEAN will not work here We tried it, it is another Kaizen event 5S is all about cleaning up your office or workstation We are different, it cant apply to our business Its an excuse to take our jobs away Zero Inventory

Mass Production vs. Lean Production

Mass Production
Customer Satisfaction Makes what engineers want in large quantities at statistically accepted quality levels. Dispose of inventory at fire-sale prices By Executive command and coercion Individualism and militarystyle bureaucracy Based on price

Lean Production
Makes what customers want with zero defects, when they want it and only the quantities they order By vision and broad participation Team based operations and flat hierarchies Based on long-term relations

Leadership Organization External Relations Information Management

Poor management based on Rich management based on abstract reports generated by visual control systems and for managers maintained by all employees

Mass Production vs. Lean Production

Mass Production
Culture

Lean Production

Of Loyalty & obedience; Harmonious culture of sub-culture of alienation and involvement based on labor strife human resources & long term relations Large-scale machines, functional layout, minimal skills, long production runs, massive inventories Human scale machines, cell-type layout, multiskill, one-piece flow, zero inventories Equipment management by production & engineering Team-based model, with input from customers & concurrent development of product and process design

Production

Maintenance By Specialists & Quality Design & Engineering Isolated genius model with little input from customers and little respect for production realities

LEAN Business System

Common Goals Shared Vision Policy Deployment

Cross functional Teams

Value Stream Management Supply Chain Standard Production System

Extended Enterprise

Tools aligned to need

LEAN & its Tools

LEAN System - Benefits

The Hard Ones (typical) 15% growth in 1 year 12% Productivity increment in 1 year 20% Space saving in 1 year 90% On Time Delivery in Full 28% Throughputs Lead time reductions Improved Supplier performance Improved Customer Quality Progressive MUDA Elimination

LEAN System - Benefits

The Soft Ones Flexible structures assigned to business goals Roles & Responsibilities assigned to business goals Process driven culture Visual demonstration of achievements Increased employee ability and morale Visual abnormal situations Focused application of resources for best return Believable prediction of results

LEAN Principles
Specify what creates value from customers perspective Identify all steps across the whole value stream Make those actions that create the Value flow at the pull of customer Involve and empower Employees Strive for perfection by continually eliminating the successive layers of waste.

What is Value?
Value is what the customer wants, when they want it in the expected quantity and quality To establish the customers wants, employ the QFD (Quality functional deployment) technique To analyze the customers wants, use KANO model

KANO Model
Classify Characteristics as Basic, Performance and Delighter Ask Two questions 1. What if the characteristic is present? 2. What if the characteristic is absent? If 1=neutral, & 2=bad it is basic If 1=good & 2=neutral, it is delighter If the answer is it depends, it is performance

Value
Perception
Activities

Reality

Resource % Value to Customer in %

Produce Manuals 60%

Answer Hotline 15%

Hotline support
Locate Repair Respond to inquires Updates Manual availability

60%
20% 10% 5% 5%

Respond to letters 5% Locate Repair Revise Manuals 10% 10%

Define Values in the Eyes of Customer

What Product / Service? What attributes / Features? What Quality Levels? What Delivery? Rate Response time expectations Are we measuring it? If yes, How?

What to measure?
% On time delivery to customers Do we meet what we promise our customers? Cycle time & Throughput Quality RTY (rolled throughput yield), TDU (total defects per unit) Productivity (Units produced / man-hour) Work In Progress Inventory Purchased Inventory Quality, Delivery, shortage frequency of purchased items Annual Inventory turns Finished Goods inventory Floor Space consumption (total sq ft x Rs/Sqft)
120 100 80 60 40 20 0 1st Qtr

Measure What matters To customers

80 60 40 20 0 2nd Qtr 3rd Qtr 4th Qtr

Quality Cost Delivery

Value Adding Activity

Activities within the company or supply chain for which the customer would be happy to pay for

An activity that changes the size, shape, fit, form or function of material or information as to satisfy customers demands and requirements

Non-Value Adding Activity

Activities that do not contributing directly to satisfying customers requirements Activities that consume resources but do not meet the customers demands or requirements

Necessary Non-value adding: NVA that are necessary under present operating system & will take time to eliminate

Value Stream
Information Flow

Customer Value

Sales & Mktg

Design

Order Entry & PPC

Operation

Finance

Material Flow

Value Stream
The entire set of activities that requires to design, produce and deliver a product
Design
Continuous Improvement

Purchase

Manufacturing

Quality

Finance

Sales

Order Fulfillment Sales Acquisition New Product Development Technology Plant & Equipment

HR Development

Strategic Management / Policy Deployment

Why Use Value Stream Mapping?

Helps us Visualize Flow Helps us see waste, more importantly, the sources of waste Ties together Lean thinking principles Forms the basis of an implementation plan Shows relationship between material and information flow Enables us standardize operations and paves for continuous improvement

Sample Map of Value Stream

Supplier 1000/day Customer 800/day

Machine
M-2 C/T - 10s C/O - 90m D/T - 18% Q - 7%

Testing
M-1 C/T - 30s C/O - 5m D/T - 3% Q - 16%

Packing
M-2 C/T - 10s C/O - 30m D/T - 10% Q - 6%

8 days

Shipping

4 days

Subassy
M -4 C/T - 30s C/O - 30m D/T - 14% Q - 11%

6 days

3 days

4 days

Note: Value Adding time is 70 secs Inventory is 23 days!

10 days

2x/day

2x/week

Process Activity Mapping - GOJO

Activities FLOW VA Location Distance Time in secs People Cycle time

Remove part from machine Inspect the parts Pack the parts Parts waiting Place the part in machine Insert ball in the pump body Pack the pump body in bags Spring assembly in spout Prepare for Assembly Stamp assembly Pack the parts in poly-bag Parts waiting / curing Scanning machine

Y N

Molding Molding Molding Assy Assy Assy Assy Assy Assy Assy Assy Assy Assy 86400 10 2 86400 10 14 12 345600

1 1

T D T O

N N N Y N

O O O

Y N Y N

1 1 1

8 8 8

D O

N N

10

WASTE
Any activity that absorbs resources but does not create value Waste is so often in front of us that we always do not see it! Most of our processing is a waste and it is an ongoing process to remove waste from each layer as to reach perfection

OHNOS SEVEN WASTES

WASTE IMPORT
MUDA of Waiting (material) MUDA of Inventory MUDA of Motion (man) MUDA of Processing MUDA of Over Production MUDA of Re-work / Reject MUDA of Transportation

EIGHTH WASTE
Untapped Resources (Brainpower)
People are told to do & not asked to think Problems are overlooked & opportunities missed People lose motivation at work Management spends time dealing with day-to-day affairs in lieu of focusing on longer-term issues

Sources of Waste
Layout (distance) Long setup time Incapable processes Poor maintenance Poor working methods Lack of training Lack of adherence Ineffective scheduling Poor supervisory skills Inconsistent performance measures Functional organization Excessive controls No back-up / cross training Unbalanced workload No decision rules No visual control Supplier quality Lack of workplace organization

Value Flow at PULL of customer

Four Key Elements of making Value Flow: TAKT FLOW PULL IMPROVE

Continuous Improvement in pursuit of perfection!

TAKT Time
The Available operating time to satisfy customer demands Establishes the pace, beat or cadence of the process Takt time is used to balance the various loads and identify the bottlenecks in the process
Net Available time per day in seconds
TAKT Time = ------------------------------------------------Customer demand per day in pieces

FLOW
Product or service does not stop once it is launched No de-tours, no back-flows, no waiting Interruptions to in-flow work process are drastically minimized Vigorously respond to flow stoppages with dedicated approach

When information and material flows in opposite directions, the third flow CASH FLOW starts pouring in

PULL
Work does not move until there is a need from the next process step Make only what is wanted; when it is wanted Compare the volatility in orders with volatility in demand Inventories needed to support a given level of sales (KANBAN) Organizations are to be structured so customer can pull the value from the producer

Impact of One Piece Flow

Batch Flow Op #1 10 min Op #2 10 min Op #3 10 min 1pc/30min

One piece flow

Op #1 30 min

Op #2 30 min 200 Piece Batch

Op #3 30 min 3pcs/30min

One-Piece Flow

Cycle Time WIP

100 hours 600

30 min 3

Batch Flow & One-piece Flow

000 00 A B C D 000 00 A B C D

5 10

000 00

000 0

000 00

000

15

000 00

00

20

000 00

Different Process Process time = 1unit / 1min

The Process & Situation

6 min 4 min 4 min 3 min

Were getting 2.5 parts/man-hour; we need 3.0 parts/man-hour.

Total time to produce one (1) part = 6+3+4+3 = 16 min Total man time to produce one part = 6 x 4 = 24 min Efficiency = 67%

First Improvement
6 min 3 min 4 min 3 min

Total time to produce one (1) part = 6+3+4+3 = 16 min Total man-time to produce one part = 6 x 3 = 18 min Productivity = 80 parts / 3 people = 3.33/man-hour (33% gain) Efficiency = 89% but were still working overtime!

Realization of Takt Time

6 min 3 min 4 min 3 min

Productivity = # Parts Man Hours Capacity = Time available 6 min

e.g., 2.5/man hr

e.g., 80/shift

Second Improvement

6 min

3 min

4 min

3 min

Supports 2 lines & can operate 24 hours/day Capacity = 240/day, allocated per line/product Requires no additional support personnel Material transport simplified

Parts fall off the line Capacity = 120/shift Efficiency = 10/12 = 83%

Plant 1

Plant 2

Perfection
Continuously monitor, evaluate and assess the process Every incremental improvement uncovers the future flow of speed Eliminating wasted steps and defects Reducing inventories and volatility Cutting management time devoted to firefighting and negotiating The whole enterprise must pursue not its competitors but perfection

Three Main Pillars of LEAN

The management of processes and an integrated logistics flow The management of relationships with employees, teams and suppliers

The management of change from traditional mass production

Fundamental Objective of LEAN thinking

Shift the focal plane of management to differentiate Value from Waste Start with primary actions affecting each product, rather than organizations, technologies and assets

Input: Organizational attributes of LEAN

Integrated One-piece flow
Small batches JIT made Low inventories

Team based work organization

Multi-skilled Few indirect staff

Defect Prevention Level Scheduling Production pulled

By customer Not pushed to suit machine loading

Active involvement
Root cause analysis Eliminate NVA & Variability

Close Supply Chain Integration

Partnership not adversarial

Overall Summary
LEAN is not just manufacturing LEAN is no quick-fix it has a long history of success As the onion is peeled, LEAN is ongoing as priorities change LEAN is the foundation of competitiveness

LEAN Road Map

Commitment To LEAN Develop LEAN Structure Focus on Value Stream

Adapt LEAN

Decision to Pursue LEAN

Focus on Continual Improvement Implement LEAN projects

Create Implementation plan

Pilot LEAN Implement ation