how to improve your bottom-line through lean six sigma

How to Improve Your Bottom-Line Using

Lean Six Sigma October 1st, 2014

Presented by: Luis Socconini, CEO of Lean Six Sigma Institute

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Objective

Understand how important is to develop lean companies in order to be competitive and improve your bottom-line.

A radical way to success!

For more information, call 416.216.1067

Some concerns


Causes

Market has

changed to

high mix and

low volume

Only 2 % of

forecasts are accurate

Functional

structures with

little interaction

Poor Planning

Rigid budgets


Do We know?

What is the rate at which customers buy?

What is the supply chain capacity?

What is the demand level of variation?

What is the bottleneck in the supply chain?

Do we all know the same?

Productivity

Productivity = Outputs

Inputs

PROCESS

inputs Customer outputs/

inputs

PROCESS outputs


Productivity


Lean Company

R&D Sales Purchasing Operations Delivery Accounts

receivable

R&D Sales Purchasing Operations Delivery Accounts

receivable

Time

Cost

Time & Cost

Lean

Manufacturing

Service Lean

Accounting

Lean Office

Lean

Design

Lean

Logistics Lean

Logistics Lean

Sales

Lean Company

Processes Lean contribution

Management Strategy, Box score, Project management, budget

Human Resources Talent development and value stream structure

Design Faster design process and designed for six sigma

Finance Managerial, Cost, Financial

Commercial Sales and marketing integrated

Logistics Agile planning, programing, purchasing, warehousing, transportation

Manufacturing / Service High quality Products and services, fast delivery time

Quality Quality lightweight processes and effective.

Maintenance High reliability in equipment and facilities.

InformationTech. Only the necessary technology and information available.

Lean Green All the above processes : low energy waste, less pollution, etc

It´s the integration of the key processes of the company, eliminating all types of

wastes, variation and overburden.


Management tools

Hoshin Kanri

Box score

Value stream structure

Lean cost accounting

Talent development

Lean Management Leaders designing the future

16 hours total


Basic tools Housekeeping (5 S´s)

Visual management (Andon)

Standard work

Teamwork

Time management

White Belt Every body hands on

8 hours total


1 Define A3

Gantt chart

2 Measure and Map Data collection

Value stream map

3 Analysis Spaghetti diagram

Balance chart

Waste analysis

Yellow Belt: Lean Practiotioner

• 4 Improvement – Cellular work

– Quick setup

– Total productive maintenance

– Kanban

• 5 Control – Standard work audits

– Poka Yoke

40 hours total


1 Define QFD

Kano Model

Needs tree

2 Measure and Map SIPOC diagram

Sampling

Gauge R&R

3 Analysis FMEA

Basic statistics

Hypothesis testing

Histogram

Probability distributions

Process capability

DPMO

Sigma level

Green Belt: Lean Six Sigma Practioner

• 4 Improvement – Brainstorming

– Basic design of experiments

– Prioritization matrix

– Box plots

• 5 Control – Control charts

– Control plan

80 hours total


Train Trainers

Lean Accounting advanced

1 Define Project management

Financial project analysis

2 Measure and Map Cross-functional diagram

3 Analysis Variance analysis

Regression analysis

Multi-vari analysis

4 Improvement Pugh Matrix

Advanced design of experiments

Theory of constrains

Heijunka

5 Control KPI trees

Standard work for leaders

Gemba walks

Project report

Black Belt: Lean Six Sigma Expert


Advanced tools

Change management Business process model advanced project

management Lean layout Lean green

Master Black Belt: Lean Six Sigma Leader - Trainer

• 1 Define – Project

– Target cost

• 2 Measure and Map – Voice of the customer

– Product measurements

– Map the design process

• 3 Analysis – Design FMEA

– Functional analysis (value engineering)

– Pugh matrix

• 4 Design – TRIZ

– Design for manufacturing

– Design of experiments advanced

• 5 Validation – Validate design

120 hours total


How to implement lean supply chain into a lean enterprise

Key elements ◦ knowledge of current demand

◦ Inventory accuracy > 99%

◦ Value stream structures

◦ Internal process improvements

◦ Continuous interaction throughout the supply chain


What is a lean supply chain?

Work philosophy to remove all waste from the supply

chain.

The supply chain includes sourcing processes, from

obtaining the materials, production, distribution

center to deliver the product or service


What is Lean in the Supply chain?

Synchronize the rate of consumption and replenishment cycle.

To develop a flexible logistics service process that never stops manufacturing or service from lack of materials or information.


What to measure?

Sem 1 sem 2 Sem 3 Sem 4 Sem 50

Units per person 36.16 42.05 51.39 Ontime delivery 98.00% 94.00% 98.00%

Backlog value $22,022 $76,824 $28,168 Delivery time 23.58 20.5 16.5

First time yield 96% 92% 98% Cost of poor quality $12,133 $2,134

Average cost per unit $388.46 $348.66 $316.91 Inventory accuracy 97% 97% 99% Inventory turnover 8 9 24

Total effectiveness of supply chain 49% 51% 75% Accounts receivable 34.5 37 35

Demand 3616 3998 4250 Capacity 5000 5000 5580

Available capacity 28% 20% 24%

Revenue $1,101,144 $1,280,400 $1,408,440 Cost of material $462,480 $512,160 $535,207 Conversion cost $250,435 $231,884 $208,696

Supply chain profit $388,229 $536,356 $664,537 Return over sales 35% 42% 47%

Inventory value $593,008 $577,987 $255,000


Implementation plan


Example: Unit parts Co.

Proveedor Fábrica Distribuidor Tienda Cliente

Average 1353 668 477 395 201

Lead Time 4.5 4.06 3.5 3.2

Std. Dev. 1091 397 158 69 25

Variation 81% 129234 59% 14567 33% 11092 17% 4874 12%

Inventory (days) 95 22 23 12

0

500

1000

1500

2000

2500

3000

3500

4000

1 3 5 7 9 11 13 15 17 19 210

50

100

150

200

250

300

1 3 5 7 9 11 13 15 17 19 21

0

100

200

300

400

500

600

1 3 5 7 9 11 13 15 17 19 210

100

200

300

400

500

600

700

800

1 3 5 7 9 11 13 15 17 19 21

0

200

400

600

800

100 0

120 0

140 0

1 3 5 7 9 11 13 15 17 19 21

Excess inventory throughout the supply chain.

Not everybody has the same information, especially regarding consumer's demand.

Supplier Factory 2 Store Distributor Factory 1

Promedio 1353 668 477 395 201

Lead Time 25.7 5 9.25 3.3

Desv Est. 1091 397 158 69 25

Supplier Factory 1 Factory 2 Distributor Customer

Inventario dias 95 22 23 12

Variación 81% 129234 59% 14567 33% 11092 17% 4874 12%

Días 94.0 10.3 14.9 7.6

0

2000

4000

135791113151719210

500

1000

1500

13579111315171921

0

200

400

600

800

13 5 7 91113151719210

200

400

600

135791113151719210

100

200

300

13579111315171921

Average


Example: Actions

Define:

Select team (internal/ext

ernal) & objectives.

Measure:

Supply chain´s value

stream map.

Analyze:

Identify waste &

bottlenecks.

Improve:

Kaizen improvement

s.

Control:

Training & follow up.


Current Value Stream Map

Current state analysis with Supply Chain´s Value Stream Map.

PASOSTotal=73

PasosVA=8

Estatores

Almacen (TEXAS)

Estatores QAPI

Guadallajara

RM336h.

WIP110h.FG48h____3turnos___5dias_____EPE=3DiasDefectos=

2000ppm

Magnecom

Monterrey

Rollosdecobre

Alternadores Unit Parts Co

RM56h.


400ppm

2 x

Semana

6 x

año

500millas__

Loteembarcado=72rollos

Defectos=8%

2 x

Semana

2xaño

1500millas__

Loteembarcado=36pallets

Defectos=6%

1 x

Día

5 x

año

100millas__Loteembarcado=12palletsDefectos=6%

1 x

Día

100millas__


Defectos=3%

.3días 4.0días .25días .25días

20.6días 4.6días

1 (3131seg) 1 1.0días 1 (30seg) 1

22(3) 4 21(3)

Controldeproducciónde

laOC

MRP

Controldeproducción

MRP

14días

6días

14días

Guadalajara

Oklahoma

OklahomaOK

PlantaBetaControldeproducción

MRP

6días

ControldeproduccióndelaOCdeUPCo.

MRP

6días

ClevelandOH

1xSem.

semanalmente

1xSem

1xSem

2xsem

1xsem

2xsem

1xsem

1xdía

1xdía1xdía

1 x

Día

2xaño

Elpaso,TX

TiempoTiempototal=44.3diasTiempoenplanta=31diasTiempodetransporte=13.3diasTiempoVA=54.7min,3281seg

EstatoresBetaCross-Dock

AlphaMotrosCross-Dock

Tiendas

960/día640A426ST214HT320B

213ST107HT

Ditribución

Colorado

RM50h.


5ppm

600millas__


Defectos=3%

1 x

Día

2000millas__


Defectos=3%

Oklahoma

1xsemana

500millas__

Loteembarcado=1Tren

Defectos=1%

4.0días 4.0dias .5dias

2.8dìas

.5días 1 .5días 1 (120seg) 1

4 4 11(2)

14días

Controldeproducciónde

laOCdeclientes

MRP

10días

Colorado

BancodeRecepcióndeOTdeALPHA

MRP

ControldeproducciónenlaplantadeALPHA

MRP

6días

Controldematerialesdela

plantadeALPHA

MRP

1xSem

1xdía

1xSem 1xSem

1xdía

1xdía

1xSem

1xdía


Example: Waste & Value Analysis

Rawmaterialsupplier.

1.-Shipping,twiceweek. 10min

Transportconnection1.

2.-DirectShipment. 8hours

Supportsupplier.

3.-Unloadmaterials. 10min

4.-Registerandticketimpression. 10min

5.-Warehousingmaterial. 14days

6.-Movematerialtoproductionareas. 10min

7.-Loadrawmaterialonmachine. 5min

8.-Stamping1. 1 1sec 1sec

9.-Accumulatestampedparts. 4hours

10.-Movestampedinventorytowarehouse. 10min

11.-Warehousingstampedpieces. 48hours

12.-Movethestampedinventorytomachine2. 10min

13.-Loadpartsintothemachine2. 10min

14.-Secondstampingprocess. 2 10sec 10sec

15-Accumulatestampedparts. 4hours

16.-Movestampedinventorytowarehouse. 10min

17.-Warehousingpieces. 48hours

18.-Movepiecestopaintwarehouse. 10min

19.-Placepiecesonpaintingmachine. 3 130min 52min

20.-Removepaintedpieces,inspectandpilethemonpallet. 2hours

Valueadded

stepsTotalsteps Totaltime

Value

addedtime


Example: Summary of actions

73 8

44.3 days

54.7 min

TOTAL Value aded

Steps

Time

Value aded %

11%

.08%


Example: Future Value Stream Map

Logistic process redesigned, based on “Pull” system.

Bancoderecepciónde

ordnesPEPBOYS

ControldeMateriales

UP

Controldeproducc.

UP

Centro de Distribución PEP

BOYS

Minessota

Cleveland

960día640A320B

1xDía

1xdía

1xdía

1xdía

CTRL.deproducc.

QAPI 1xdía

MAGNECOMcentrodeproducc.

1xdía1xdía

Magnecom

Monterrey

Rollosdecobre

oxox

oxox

1xdía

Uniit Parts

OklahomaTiempoTiempototal=15.8diasTiempoenplanta=6.5diasTiempodetransporte=9.3diasTiempoVA=54.7min,3281seg

500millas__

Loteembarcado=960vehiculos

Defectos=1%

RM=15WIP=2FG14

2TURNOS5días

EPE=1díaDefectos=5ppm

Magnecom QAPI

RM=15WIP=0FG12

2TURNOS5días


RM=24WIP=62FG12

3TURNOS5días


1800millas__


Defectos=1%

1500millas__


Defectos=2%

500millas__

Loteembarcado=24rollos

Defectos=3%

GuadalajaraMonterrey

.3días 4días 4.5días .5días

1 4días(3131s) 1 1.2días(30s) 1 1.3días(120s) 1

20(3) 1 7(2)

1xdía1xdía

1xdía


Example: Actions

Continuous flow in production processes.

Housekeeping (5 S´s) on warehouses and production.

Takt time & capacity boards.

Quick changeovers on production and expedition areas.

Leveling the work load on production and expedition areas.

Setting up buffers/kanbans with suppliers and customers.


Example: Achievements

Average 228 220 216 203 201

Lead Time 4.5 1.86 0.8 0.5

Std. Dev. 63 57 64 27 25

Variation 28% 129234 26% 14567 29% 11092 13% 4874 12%

Inventory days 567 66 51 24

Kanban 1310 515 224 115

Days 6.0 2.4 1.1 0.6

0

100

200

300

400

500

1 4 7 10 13 16 190

100

200

300

400

500

1 4 7 10 13 16 19

0

100

200

300

400

500

1 4 7 10 13 16 190

50

100

150

200

250

300

1 4 7 10 13 16 190

50

100

150

200

250

300

1 4 7 10 13 16 19

Down stream Up stream

Proveedor Fábrica 1 Fabrica 2 Distribuidor Tienda Supplier Factory 1 Store Distributor Factory 2

Supplier Factory 1 Factory 2 Distributor Customer

Lead Time 4.5 1.86 0.8 0.5

Desv Est. 63 57 64 27 25

KANBAN 9.5 5.1 3.1 1.5

Variación 28% 26% 29% 13% 12%

0

100

200

300

400

500

135791113151719210

100

200

300

400

500

135791113151719210

100

200

300

400

500

135791113151719210

50

100

150

200

250

300

13579111315171921

0

50

100

150

200

250

300

13579111315171921


Requirements

Conclusion


We are standing in front of a unique opportunity to become more productive, by transforming the Supply Chain and achieving our

strategic goals.

Conclusions

7 Dimensions Actions to take

1. Demand Management Following real demand, agile budgeting, weekly mindset.

2. Inventory Management Pull system (kanban).

3. Warehousing Minimize looses, stock breakouts and obsolescence.

4. Batch size Quick changeovers, Leveling (heijunka).

5. Speed Managing bottlenecks, continuous flow (cells).

6. Quality Management Mistake proof (poka-yoke), Six Sigma, SPC.

7. Transportation Distribution network plan.


QUESTIONS?


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increasing your organization’s effectiveness through Lean

Six Sigma.

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[email protected]

416.216.1067

mailto:[email protected]

Thank You for Attending

For Questions please contact Maysa Hawwash

[email protected]

416-216-1067