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Implementing the Lean Transformation in a Flow Processing Environment
Derek SteepleDe Montfort University
The Nature of Customers
• They pay the bills - usually• They know what they want - most of the
time• If you have a need you have to buy• If you have a product you can’t necessarily
sell it• No customers - no business• Sales and no profit - no business
Market Qualifying Criteria
Required to enable a company to operate in a market place
Order Winning Criteria
If a company is qualified to operate in a market place order winning criteria are those factors which have to be satisfied to have a possibility of winning an order
QCD Performance Measures
• PPM not right first time• Value added per employee (VAPE)• Overall equipment effectiveness (OEE)• Stock turns• Floor space utilisation• People productivity (PP)• Delivery schedule adherence
What is World Class Manufacturing ?
• Being the best?• Being the lowest cost producer?• Delighting the customer?• Schonberger’s Agenda?
What is World Class Manufacturing ?
• Product quality right first time - every time• Reduction of waste in the manufacturing
system• Managing through people, teamworking and
orientating all individuals to a set of customer- and profit-driven goals
• Flexibility and control in satisfying customer requirements on time - every time
World Class and Lean
The Lean Transformation is seen today as the best way of achieving
World Class Objectives
The 7 Wastes
• Scrap• Waiting• Inventory• Motion• Transportation• Over production• Over processing
The Value Stream
Logistics Operations Marketing& Sales
Service
Company infrastructure
Personnel management
Technological development
Acquisition
Primary activities
Profit margin
A Lean Manufacturing System
• What it is• What the benefits are• How to do it• Case studies
Roots of Lean Thinking in Toyota
• Post-war rebuilding of Japanese industry• Study of American Auto industry• Mass production, large-batch Fordism
wouldn’t work• Market was small• Manufacturing flexibility was needed• Ingenious people created simple tools
Toyota Philosophy and Framework 1
• Doing it all for the Customer• Levelled production• Pull system• Continuous-flow processing• Takt Time• Multiskilling
Toyota Philosophy and Framework 2
• TQM• TPM• Poka Yoke• AQP• SPC• Standardised work• Kaizen
What is Lean Manufacturing
•Lead time reduction– Regular production– New products
•Flexibility improvement•Variability reduction•Cost reduction
Characteristics of Lean Production
• Customer Driven• Profit Driven• Team Based• Fewer Players• Devolution of Responsibility
Characteristics of Lean Supply
• Total acquisition cost driven
• Supplier reduction
• Co-operative relationships
• Information Exchange
Benefits of LeanManufacturing
• Increased customer satisfaction
• Improved profitability
• More controllable system
There are only two ways to improve business performance
• Increase turnover • Reduce costs
There are only two ways of increasing turnover
• Sell more• Charge more
There are only three ways of reducing costs
• Reduce direct material costs• Improve production effectiveness/efficiency• Increase the rate of adding value
Typical Cost Distribution(Automotive sector)
• 15% labour• 50% raw material• 35% overhead
• Essential to concentrate on lean production, lean supply and the rate of adding value (lean overheads)
Case Studies
• An automotive veneer-component manufacturer
• A coconut and nut processor• A non-ferrous foundry supplying the
automotive and aerospace industries.
Case Study – Veneer Trim
• Primary and secondary manufacture were decoupled due to a lacquering process with a 3-day, post-finish cure time.
• The rest of manufacturing also having a process focus.
• 5 pre-lacquer functional areas, 6 post lacquer functional areas.
• The final operation was known as “Finals” –inspection not assembly.
Analysis of Waste
Identified• Scrap• Inadequate product costing• Poor productivity • High WIP• Poor customer service As the main problems.
Solution
• The factory was relayed out using product-focused manufacturing cells – No more “Finals”
• Visual management systems backed up by a spreadsheet-driven production and capacity planning system.
• “Available to Promise” facility to understand the consequence of imposed short-term schedule changes
• A performance reporting facility for calculating real-time product profitability using elements of throughput accounting principles
Case Study Coco(nut) Processor
• A combination of flow processing and batch manufacturing
• The main problems were poor planning, high raw material stocks poor customer service.
• A manual visual management manpower and machine planning system was implemented and TPM techniques were utilised to improve process reliability.
Case Study – Foundry
• The main flow line produced the main casting box however was supplied by mould cores from a batch-manufacturing area of PLC-controlled, core-blowing machines
• In addition secondary flow line and small batch motorsport areas supplied from this latter area
Problems
• High customer returns• High scrap• Poor overall equipment effectiveness• Poor customer delivery performance• Poor control of core WIP
Solutions
• Line balancing techniques were used to improve the flow of work
• Kaizen techniques involving operators from the front and back ends of the production line were implemented to eradicate process waste.
• A spreadsheet-based capacity planning system using Drum-Buffer-Rope techniques was developed and used to improve machine utilisation and ensure there was sufficient WIP to supply the line.
Sequence to Implementa Lean Initiative
• Culture change• Use of Champion• Waste mapping• Measurement• Implementation• Evaluation
Establishing a Foundation for Lean Manufacturing 1
• Strategy• Commitment• Objectives• Communication• Empowerment• Establish framework• Activity plan, cost, time and execution• Measurement and evaluation system
Establishing a Foundation for Lean Manufacturing 2
• No blame culture
• Education and Communication
• Top down alignment process
• Bottom up enabling process
• Selection of flexible teams and Champion
How to Implement Lean Manufacturing 1
• Process Mapping– Manufacturing– Business / information– Relationships / change
• Measurement and Prioritisation
How to Implement Lean Manufacturing 2
• Tools / Techniques / Philosophies– JIT– One piece flow– SMED– Poka Yoke– TQM– Visible management
• Transparent cost structure• Activities team based
ImplementingLean Supply
• Commitment to supply chain improvements• Increase rate of adding value• Open behaviour and open book• Intra- and inter-organisational problem solving
teams• Shared benefits
Making the Business Case for a Lean Manufacturing System
• Cost benefit analysis– Costs
• Development/investigation• Implementation• Project specific
– Benefits• Improved customer satisfaction• Improved profitability • More controllable system
The Costing Myth
• Cellular manufacturing must increase unit costs
• Machinery and equipment must be duplicated
• Certain skills are finite• Aha!
The Costing Reality of Functional Layouts
• Encourage overproduction, poor quality• Extend lead times• Reduce visibility• Over-complicate scheduling• Increase WIP• Make finished goods difficult to control• Don’t focus on problem solving
Justifying a Lean System
• Identify manufacturing labour variances• Identify overtime• Identify scrap• Identify cost of rectification• Identify WIP• Cost customer service
Justifying a Lean System
• Forget standard costing• Examine before and after actual costs• Identify costs of change• Identify Kaizen opportunities post-change
– SMED– TPM– Scrap and rework
Six Conditions for Success
• Strategy Development and policy deployment
• Process Improvement• Problem Solving• Team Work• Supply Development• New Product Development
Summary
• Strategy that encompasses business [profit] objectives and customer order winning [and maintaining] criteria
• Achieve short-term, KPI-driven improvements consistent with the strategy
• Plan and act for sustainable change