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Agenda Lean Methods Benefits of L6S Description of Lean Strategic Viewpoint Operational Level Six Sigma Description of 6s methodology 6s tools and techniques Implementation of L6S 1

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2 Lean Enterprise Key Drivers Total Organizational Buy-in Lean Manufacturing Techniques Manufacturing flexibility Process velocity Total Quality Management Products Processes Sales, Operations, and Inventory planning Forecasting Production Smoothing Capacity Planning Lean replenishment New Product Introduction Delivery Performance

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3 Lean Six Sigma Six Sigma Variation Focus Rigorous problem solving and control (DMAIC) Process and product design (DFSS) Data driven: Y=f(X) Process Control Lean/Kaizen Focus on eliminating waste Cycle time and inventory focus Redesign processes/Standardize Broad involvement Common sense approach based on observation

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4 Six Sigma Lean/Flow Reduced Cycle Time Improved On-Time Delivery Reduced New Product Lead Time Improved Customer Satisfaction Improved Employee Flexibility Improved Capital Utilization/Capacity Improved Customer Responsiveness Reduced Defects Improved Capability Improved Yields Improved Quality Lean 6 Sigma Synergy Reduced Cycle Time Reduced Defects Improved Capability Improved On-Time Delivery Reduced New Product Lead Time Improved Customer Satisfaction Improved Employee Flexibility Improved Capital Utilization/Capacity Improved Yields Improved Quality Improved Customer Responsiveness Lean 6 Sigma Synergy

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5 Improve Response Time Reduce Cycle Time Reduce WIP Reduce Quality Defects Improve Supplier Quality Improve Material Availability Establish Standardized Work Improve Admin. & Mfg. Process LEAN 66 Balanced L6S tool use

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6 Financial Implications Income Statement Balance Sheet Financial Implications

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7 MFG. SPACE REDUCTION REDUCE INVENTORY EQUIPMENT SIZE,& REQUIREMENTS & NUMBERS REDUCED 20% - 30% LEAD TIME REDUCTION INCREASING PRODUCTIVITY Data from 1,500 nation wide manufacturing events: Avg lead time reduction: 52% Avg productivity increase: 24% Avg WIP decrease: 43% Avg reject rate decrease: 38% Avg floor space decrease: 32% Source: Quality in Manufacturing, Mike Peterman, Jan 2001, V12, p24

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8 Raw Material Product Costs Direct Labor Manufacturing Overhead Selling and administrative Raw Material Inventory Work In Process Inventory Finished Goods Inventory Mfg Costs Balance Sheet Cost of Goods Sold Selling and Administrative expenses Income Statement Current Assets Financial Implications Sales

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9 7 Days8 Days53% 12 Days13 Days52% $ 6,000$ 6,00050% $ 5,700$ 4,30043% $ 8,550$ 6,45043% $20,250$16,75045% 7.9 $ 5,088$ 4,16245% Financial Implications

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10 $ 7,500$ 2,50025% $ 465 $ 28538% $ 248 $ 15238% $ 620 $ 38038% $ 1,333 $ 81738% Financial Implications 306,000 144,00032% $ 0 $ 250100% $ 7,729

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11 Cost of Quality Prevention Costs Quality Engineering Quality training Quality Circles SPC Activities Appraisal Costs Incoming test & inspection Supplies for inspection Maintenance of test equipment Internal Failure Costs Net cost of Scrap Rework labor & Overhead Downtime Analysis of cause of defect External Failure Costs Field servicing Warranty Product recalls Returns and allowances

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12 Lean Methods

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13 Improvements HBR; Decoding the DNA of the Toyota Production System; Sep-Oct. 1999 HBR; Learning to Lead at Toyota; May 2004 Companies often implement tools of TPS without the underlying principles. Tools aid in the implementation of a temporary best practice until a new problem is discovered.

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14 Toyota Production System Rule 1- How people work is highly specified Content Sequence Timing Outcome Standard Operating Worksheet Takt time

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15 Toyota Production System Rule 2- Every customer-supplier connection must be direct No question on Supplier (internal or external) Number of units required Timing of delivery Kanban Service Requests

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16 Toyota Production System Rule 3- Pathway for every product and service must be simple and direct Flow along a simple specified path Does not mean each path is dedicated to only one product Product Process Matrix Rule 4- Improvement must be made in accordance with the scientific method at the lowest possible level

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17 Improvements People at all levels Assembly line operators Supervisors Management Executives Structure work and improvements as experiments

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18 Improvements Active experimentation for improvement Standard work Gaps between what is expected through improvements and what is actually obtained become immediately evident. Operators are responsible for operational improvements Management helps them understand that responsibility and facilitate improvements.

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19 Example of Formal CI (Kaizen) Engines Transmissions Eng:Trans Assy Group 1 Group 2Group 3 Group 5Group 4 Group CI (Weekly) Operational Committee (Monthly) Steering Committee (Quarterly)

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20 Batch vs. Lean Batch (Traditional) This was a push system driven by forecast with each process responding at its own pace An order for 900 units over a month gets produced at the end of the month when all parts are received Characteristics: Work orders, weekly or monthly production buckets, hot lists Results: Large WIP, Hidden bottlenecks, High defect rates, Long lead times Lean Nothing is moved or produced until the previous process is completed. Scheduled delivery of parts spread out over a month. Say 45/day. Results: Only necessary amount is produced, waste is visible, customer first mentality

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2004 Pharogen, Ltd 21 RAW MATERIAL FINISHED PRODUCT TO CONSUMER SEA OF INVENTORY POOR SCHEDULING MACHINE BREAKDOWN QUALITY PROBLEMS LINE IMBALANCE ABSENTEEISM LACK OF HOUSE KEEPING LONG SET-UP TIME SUPPLIER DELIVERY COMMUNICATION PROBLEMS LONG TRANSPORTATION Hidden Waste

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2004 Pharogen, Ltd 22 RAW MATERIAL FINISHED PRODUCT TO CONSUMER SEA OF INVENTORY POOR SCHEDULING MACHINE BREAKDOWN QUALITY PROBLEMS LINE IMBALANCE ABSENTEEISM LACK OF HOUSE KEEPING COMMUNICATION PROBLEMS LONG TRANSPORTATION LONG SET-UP TIME SUPPLIER DELIVERY Exposed Waste

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23 Process Efficiency Reducing unnecessary wait-time between value added steps Process cycle efficiency= Value Added Time/Total Lead Time

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24 Lean Six Sigma Journey Status Quo Lean Methods Implementation Six Sigma Projects: Implementation

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25 Lean Six Sigma strategy Time 6 Project Time 66 Company Performance Process Improvement Project Implemented Maintenance of Process Performance CI 6 Sigma Data driven methodology to magnify impact of process improvements attained through lean efforts Control techniques applied to sustain improvements and minimize their erosion Standardize improvements to maintain gains on Key Process Indicators Continuous Improvements (Kaizen) Use small teams to optimize process performance through rapid incremental improvements Apply intellectual capital of team members intimate with process Company Performance

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26 Customer Order Cycle Time Completed vs. Daily Production Schedule Yield Linearity Workforce Skill Speed to Market: Product Development Process Continuous Improvement: Savings Measurements

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27 Lean Methods

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28 Minimize Waste Overproduction Excess Inventory Waiting Motion (Worker movement) Transportation Defective parts Unnecessary Processing

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29 Lean Manufacturing Company Tools Value Stream Mapping TPM 5s/Workplace Organization Standardized Work Visual Organization Seven WastesQuality at the SourceTeams KaizenQuick ChangeoverKanban TaktOne Piece FlowPull Cellular

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30 The 5 S To Sort Eliminate whats not absolutely necessary To Standardize Improvement of the workstation. Be organized to reduce clutter. To Set in Order Ensure space for each thing, and a thing for each space. No more searching. To Shine Maintain a clean and orderly space to make problems easily identifiable. Eliminate rejects and scrap. To Sustain Maintain continuous effort. This is a way of life. Visual Control and the Workstation

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31 Lean Methods: 5S o Sort o Shine o Set in Order o Standardize o Sustain

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32 Lean Methods: 5S Clear, shiny aisle ways Color coded areas No work-in-process ( WIP ) One-Piece Flow Operator Methods Sheets

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33 Lean Methods : Visual Workplace Traditional Toolbox and workbench set up. Access to control panel difficult. Tools now on tool board. Tool outline makes it easy to tell when a tool is out of place or missing. Better access to control panel.

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34 Lean Methods : Poke-Yoke Poka-yoke systems consist of three primary methods: 1. Contact 2. Counting 3. Motion-Sequence Each method can be used in a control system or a warning system. Each method uses a different process prevention approach for dealing with irregularities. Toggle Switches

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35 Lean Methods : Poke-Yoke Poka-yoke systems consist of three primary methods: 1. Contact 2. Counting 3. Motion-Sequence Each method can be used in a control system or a warning system. Each method uses a different process prevention approach for dealing with irregularities. Count the number of parts or components required to complete an operation in advance. If operators finds parts leftover using this method, they will know that something has been omitted from the process.

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36 Lean Methods : Poke-Yoke Poka-yoke systems consist of three primary methods: 1. Contact 2. Counting 3. Motion-Sequence Each method can be used in a control system or a warning system. Each method uses a different process prevention approach for dealing with irregularities. The third poka-yoke method uses sensors to determine if a motion or a step in a process has occurred. If the step has not occurred or has occurred out of sequence, the the sensor signals a timer or other device to stop the machine and signal the operator.

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37 THREE PRINCIPLE RULES WORK TO TAKT TIME ONE PIECE FLOW PULL SCHEDULING Lean Line Design

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38 Create Process Flow Charts Develop Standard Operation Worksheets Define Product/Process Matrices Create Multi-Product Process Flow Charts Calculate Takt Review Actual Requirements vs. Design Develop Standard Operations Create the Facility Layout Define Cells Lean Line Design

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39 Lean Methods Process Flow Charts Understand current state Improve process flow

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Car Assembly PH1001,2,4 Jorge Monreal Taiichi Ohno 060Bolt underside of engine to frame 20.0 20.0 59.4 050 Bolt driver cabin to safety capsule 6.2 3.4 39.4 Torque to 80 ft-lbs 040Bolt rear engine & shield to frame 4.2 3.2 30.7 Torque in sequence per OMS 030 Bolt safety capsule to frame 6.2 2.4 24 Torque to 20 ft-lbs 020 Bolt hood to Mainframe 6.2 6.2 15.3 Torque to 20 ft-lbs 010 X Place mainframe in assy fixture 4.1 4.1 6.6 Wear safety helmet 27.9 59.4 59.4 015 X Obtain Hood 2.5 4.1 9.1 Do not scratch or damage 025 X Obtain safety capsule 2.5 6.2 17.8 Ensure safety decals are on 035 XObtain rear engine & shield 2.5 2.4 26.5 Check for proper option: turbo/NA 045 XObtain driver cabin 2.5 3.2 33.2 005 X Carry mainframe to assembly fixture 2.5 2.5 Ensure parts to BOM Standard Operation Worksheet

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41 Product/Process Matrix LubeTestAssyPaintShip JEEP XXXX SUV XXX Yugo XX Van XXXX Pinto XX AssyPaintLubeTestShip Van XXXX SUV XXX Jeep XXXX Yugo XX Pinto XX SUVs Lemons Product Family

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42 Define product families based on products with similar process flow charts Assy Paint Test Ship Jeep Yugo SUVLube Van Pinto Multi-Product Process Flow Charts Used for Line Design

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43 Takt Work Time/day (minutes/day) Takt Time = Customer Requirements/day (units/day) Every 9 minutes and 33 seconds, each operation must be completed. One shift: 8 hours x 60 min/hr = 480 mins Lunch = - 30 mins 2x breaks = - 30 mins Total available time per shift = 420 mins CUSTOMER REQUIREMENTS: 45 units/day (Daily Production Schedule) 9 min. 33 sec. Takt Time = 420 Min/Day 45 Units/Day = Takt Time

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44 Demand, Capacity, Production Leveling Demand Time Production Schedule Capacity Time 20% 45 units/day Yr 1 Product Family: SUVs (Products Van, Jeep, SUV)

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45 Mixed Model Production Product Family: SUV Demand per month (20 working days): 900 units (Jan-Feb) Per shift demand: 45 units Takt = 9.33 minutes Possible Model Mix: 50% Vans; 25% SUVs; 25% Jeeps Vans: 0.50 x 900 = 450 Vans SUVs: 0.25 x 900= 225 SUVs Jeeps: 0.25 x 900= 225 Jeeps Daily Production sequence: 45 units Van-Van-SUV-Jeep-SUV-Van-SUV-Jeep-Van-Van-SUV

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46 Group into equal splits For Two workstations Split= 59.4/2 = 29.7 30.7 28.7 Car Assembly PH1001,2,4 Jorge Monreal Taiichi Ohno 060Bolt underside of engine to frame 20.0 20.0 59.4 050 Bolt driver cabin to safety capsule 6.2 3.4 39.4 Torque to 80 ft-lbs 040Bolt rear engine & shield to frame 4.2 3.2 30.7 Torque in sequence per OMS 030 Bolt safety capsule to frame 6.2 2.4 24 Torque to 20 ft-lbs 020 Bolt hood to Mainframe 6.2 6.2 15.3 Torque to 20 ft-lbs 010 X Place mainframe in assy fixture 4.1 4.1 6.6 Wear safety helmet 27.9 59.4 59.4 015 X Obtain Hood 2.5 4.1 9.1 Do not scratch or damage 025 X Obtain safety capsule 2.5 6.2 17.8 Ensure safety decals are on 035 XObtain rear engine & shield 2.5 2.4 26.5 Check for proper option: turbo/NA 045 XObtain driver cabin 2.5 3.2 33.2 005 X Carry mainframe to assembly fixture 2.5 2.5 Ensure parts to BOM Line Splits Standard Operations Wkst 1 Wkst 2

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47 Operator Methods Sheets

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48 Operator training Matrix Name Operation 10-Mnfrm Operation 20-Hood Assy Operation 30- Seat Assy Operation 40-Engine Assy Operation 50-Cab Assy Operator One X 4/14/04 X 5/20/04 X 6/20/04 Operator Two X 5/20/04 X 4/14/04 X 6/20/04 Operator Three X 5/20/04 X 4/14/04 X 6/20/04 Operator Four X 5/20/04 X 4/14/04 X 6/20/04

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49 Flexible workforce People move to where work needs to be performed Help out in case of slow down: above or below Reduce repetitive stress Rotate positions every 4-6 months Allows for some imbalance in the line Operator training Matrix

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50 MILLING BORING DRILLDRILL / TAP HONE FINISH One operator for eight machines Tool room support changes tools Standard work- Operator Sequencing Standardized Tooling * Set up reduction * Point of use Manufacturing Cells: Machine Shop TAKT TIME 9.3 MIN Send to Engine Assy line every 9.3 Minutes

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51 MAIN ASSY. LINE MACHINE SHOP KIT CARTS KIT BINS TOOL RACKS PART CARTS TEST PART KIT CART PARTS TOOL & PART KIT RACKS ENGINE BLOCK / PISTON & CRANK- SHAFT MANUFACTURING MANUFACTURING SUPPORT MAINTENANCE * LINE STOPPAGES * MACHINE MALFUNCTION * FACILITY SERVICES ENGINE ASSY. LINE * ASSEMBLY OF FIVE ENGINE MODELS TAKT TIME 9.3 MIN. TAKT TIME 9.3 MIN ENGINE TEST (ALL MODELS) DIRECT SHIP TO ASSEMBLY LINE EVERY 9.3 MIN TAKT TIME 9.3 MIN TOOL ROOM * FILLS THE BINS, RACKS EVERY TWO HOURS. * SUPPORTS ASSEMBLY LINE Line Replenishment Person

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Continuous Flow Traditional Batch Manufacturing Single Piece or Continuous Flow Manufacturing 3-4-52

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53 Lean Line Design Engines Transmissions Eng:Trans Assy Operators are crossed-trained: One up/One down PH2534 PH5345 PH5213 PH5015 Footprints (Large Parts) Kanban Replenishment PH5016 Color coded Takt Time = 9 min. 33 sec. KIT CARTS RHLH

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54 Kanban Design Material Storage Supermarket A A B B C C A A B B C C D DA A BBCCDD

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55 Kanban Design A A BBCCDD Full Empty Full Two identical bins at the line Same card on both containers Must cover the delivery time to obtain additional material Replace when empty Requires disciplined execution