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#Capacity building of Business Service Professionals and Business Support InstitutionsINNOVATIVE QUALITYTQM LEAN MANAGEMENT SIX SIGMA Day 1

Developed byOlga Trofymova, PhD#Capacity building of Business Service Professionals and Business Support InstitutionsOlga TrofymovaDirector of the Quality Centre, Kharkov, Ukraine. Trainer and consultant for SME with 10-years experience. Associated professor at National Aerospace University.STE and trainer at 11 International projects (TACIS, World Bank, DFID, TEMPUS, SWISSContact). The main expertise is training and consultancy providing for trainers, consultants and SME.Partner and trainer of WIFI Austria; designer, organiser and trainer of training programs on Quality management and Lean production for SME in Austria, Germany, Russia and Ukraine together with WIFI, ACVR, Magna Styer, Quality Austria, Moody International. Lead Auditor of Intertek Moody International Certification Body according to ISO 9001 requirements. Project manager on quality improvement for SME.

#Capacity building of Business Service Professionals and Business Support InstitutionsTraining rulesYou will be expected to share your experiences and ideas with the class as a whole. We will learn from each other. The only bad question is an unasked question. Dont feel uncomfortable asking questions - its how to learn. We certainly intend to ask you questions. We will frequently ask you to read or work on a hypothetical business situation. These we call cases. We will expect you to share your thoughts and ideas on the cases with the class. We may want you to discuss openly in the class issues with you We have experienced at your enterprises and/or clients. If thisrepresents a problem, please, let us know.#Capacity building of Business Service Professionals and Business Support InstitutionsTraining program. Day 1Lean management as a movement History of Lean Management Toyota Production System (TPS) Principles of LeanThe Goals of Lean EnterpriseValue Stream Mapping (Current State)Lean MetricsValue-add analysisTime value mapsValue-add chartFuture State Value Stream Mapping

#Capacity building of Business Service Professionals and Business Support InstitutionsTraining program. Day 2 Reducing Lead Time and Non-Value-Add Cost Just-In-Time One-Piece Flow Generic Pull System Replenishment Pull Systems Two-Bin Replenishment System Kanban Quick Changeover (SMED) Total Productive Maintenance (TPM) Error Proofing (Poka-Yoke) Heijunka - Production Leveling

#Capacity building of Business Service Professionals and Business Support InstitutionsTraining program. Day 3 Work cell optimization 5S Standard Operations Visual Management Car Assembling Game

#Capacity building of Business Service Professionals and Business Support InstitutionsTraining program. Day 4 What is Six Sigma Six Sigma Tools Histogram Control Charts Process SigmaProcess Capabilityy = f (x) FormulaDMAIC Six Sigma StoryboardsFMEALean Six Sigma for services

#Capacity building of Business Service Professionals and Business Support Institutions

#Capacity building of Business Service Professionals and Business Support InstitutionsHistory of Lean Management

Source:http://www.strategosinc.com/lean_manufacturing_history.htm#Capacity building of Business Service Professionals and Business Support InstitutionsWhat is Lean?Lean manufacturing, lean enterprise, or lean production, often simply, "Lean," is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes a product or service, "value" is defined as any action or process that a customer would be willing to pay for.Essentially, lean is centered on preserving value with less work. Lean manufacturing is a management philosophy derived mostly from the Toyota Production System (TPS) (hence the term Toyotism is also prevalent) and identified as "Lean" only in the 1990s.

#Capacity building of Business Service Professionals and Business Support InstitutionsToyota Production System (TPS)A production system which is steeped in the philosophy of "the complete elimination of all waste" imbuing all aspects of production in pursuit of the most efficient methods.This production control system has been established based on many years of continuous improvements, with the objective of "making the vehicles ordered by customers in the quickest and most efficient way, in order to deliver the vehicles as quickly as possible." The system is a major precursor of the more generic "Lean manufacturing." Taiichi Ohno. Shigeo Shingo and Eiji Toyoda developed the system between 1948 and 1975.

#Capacity building of Business Service Professionals and Business Support InstitutionsToyota House

Quality must be built in during the manufacturing process! (Toyoda Sakichi)#Capacity building of Business Service Professionals and Business Support InstitutionsTPS Concept. Jidoka highlighting/visualization of problemsQuality must be built in during the manufacturing process!If equipment malfunction or a defective part is discovered, the affected machine automatically stops, and operators cease production and correct the problem.For the Just-in-Time system to function, all of the parts that are made and supplied must meet predetermined quality standards. This is achieved through jidoka.

#Capacity building of Business Service Professionals and Business Support InstitutionsTPS Concept. Jidoka highlighting/visualization of problemsJidoka means that a machine safely stops when the normal processing is completed. It also means that, should a quality / equipment problem arise, the machine detects the problem on its own and stops, preventing defective products from being produced. As a result, only products satisfying quality standards will be passed on to the following processes on the production line.Since a machine automatically stops when processing is completed or when a problem arises and is communicated via the "andon" (problem display board), operators can confidently continue performing work at another machine, as well as easily identify the problem's cause to prevent its recurrence. This means that each operator can be in charge of many machines, resulting in higher productivity, while continuous improvements lead to greater processing capacity.#Capacity building of Business Service Professionals and Business Support InstitutionsTPS Concept. Just-in-Time Productivity improvementMaking only "what is needed, when it is needed, and in the amount needed!Producing quality products efficiently through the complete elimination of waste, inconsistencies, and unreasonable requirements on the production line.In order to deliver a vehicle ordered by a customer as quickly as possible, the vehicle is efficiently built within the shortest possible period of time by adhering to the following 4 steps:#Capacity building of Business Service Professionals and Business Support InstitutionsTPS Concept. Just-in-Time Productivity improvementWhen a vehicle order is received, a production instruction must be issued to the beginning of the vehicle production line as soon as possibleThe assembly line must be stocked with required number of all needed parts so that any type of ordered vehicle can be assembledThe assembly line must replace the parts used by retrieving the same number of parts from the parts-producing process (the preceding process)The preceding process must be stocked with small numbers of all types of parts and produce only the numbers of parts that were retrieved by an operator from the next process#Capacity building of Business Service Professionals and Business Support InstitutionsTPS GoalsThe main objectives of the TPS are to design out overburden (muri) and inconsistency (mura), and to eliminate waste (muda). The most significant effects on process value delivery are achieved by designing a process capable of delivering the required results smoothly; by designing out "mura" (inconsistency). It is also crucial to ensure that the process is as flexible as necessary without stress or "muri" (overburden) since this generates "muda" (waste). Finally the tactical improvements of waste reduction or the elimination of muda are very valuable.#Capacity building of Business Service Professionals and Business Support InstitutionsPrinciples of LeanSpecify value from the standpoint of the end customer by product familyIdentify all the steps in the value stream for each product family, eliminating whenever possible those steps that do not create valueMake the value-creating steps occur in tight sequence so the product will flow smoothly toward the customerAs flow is introduced, let customers pull value from the next upstream activityAs value is specified, value streams are identified, wasted steps are removed, and flow and pull are introduced, begin the process again and continue it until a state of perfection is reached in which perfect value is created with no waste.#Capacity building of Business Service Professionals and Business Support InstitutionsPrinciples of Lean

#Capacity building of Business Service Professionals and Business Support InstitutionsThe Goals of the Lean EnterpriseGoal #1. Improve quality.Goal #2. Eliminate waste.Goal #3. Reduce lead time.Goal #4. Reduce total costs.

Why are these goals important?Implementing lean tools and techniques will enable your company to meet its customers' demand for a quality product or service at the time they need it and for a price they are willing to pay.Lean production methods create business and manufacturing processes that are agile and efficient.Lean practices will help your company manage its total costs and provide a fair ROI to its stakeholders.

#Capacity building of Business Service Professionals and Business Support InstitutionsLean Goal #1. Improve qualityQuality is the ability of your products or services to conform to your customers' wants and needs (also known as expectations and requirements). Product and service quality is the primary way a company stays competitive in the marketplace.

Quality improvement begins with an understanding of your customers' expectations and requirements. Once you know what your customers want and need, you can then design processes that will enable you to provide quality products or services that will meet their expectations and requirements. In a lean enterprise, quality decisions are made every day by all employees.

#Capacity building of Business Service Professionals and Business Support InstitutionsLean Goal #1. Improve quality. How to do itBegin your quality-improvement activities by understanding your customers' expectations and requirements. Tools such as quality function deployment are helpful ways to better understand what your customers want and need.Review the characteristics of your service or product design to see if they meet your customers' wants and needs.Review your processes and process metrics to see if they are capable of producing products or services that satisfy your customers.Identify areas where errors can create defects in your products or services.Conduct problem-solving activities to identify the root cause(s) of errors. Apply error-proofing techniques to a process to prevent defects from occurring. You might need to change either your product/service or your production/business process to do this.Establish performance metrics to evaluate your solution's effectiveness.

#Capacity building of Business Service Professionals and Business Support InstitutionsLean Goal #2. Eliminate WasteWaste is any activity that takes up time, resources, or space but does not add value to a product or service. An activity adds value when it transforms or shapes raw material or information to meet your customers' requirements. Some activities, such as moving materials during product production, are necessary but do not add value. A lean organization's primary goal is to deliver quality products and services the first time and every time. As a lean enterprise, you accomplish this by eliminating all activities that are waste and then targeting areas that are necessary but do not add value. To eliminate waste, begin by imagining a perfect operation in which the following conditions exist:Products or services are produced only to fill a customer order - not to be added to inventory.There is immediate response to customer needs.There are zero product defects and inventory.Delivery to the customer is instantaneous.

#Capacity building of Business Service Professionals and Business Support InstitutionsTypes of WasteOverproductionWaitingTransportExtra ProcessingInventoryMotionDefectsUnderutilization of employees

#Capacity building of Business Service Professionals and Business Support InstitutionsTypes of Waste. OverproductionThe worst type of waste, overproduction occurs when operations continue after they should have stopped. The results of overproduction are 1) products being produced in excess quantities and 2) products being made before your customers need them.

#Capacity building of Business Service Professionals and Business Support InstitutionsTypes of Waste. WaitingAlso known as queuing, this term refers to the periods of inactivity in a downstream process that occur because an upstream activity does not deliver on time. Idle downstream resources are then often used in activities that either don't add value or, worse, result in overproduction.

#Capacity building of Business Service Professionals and Business Support InstitutionsTypes of Waste. TransportThis is the unnecessary movement of materials, such as work-in-progress (WIP) materials being transported from one operation to another. Ideally, transport should be minimized for two reasons: it adds time to the process during which no value-added activity is being performed, and goods can be damaged during transport.

#Capacity building of Business Service Professionals and Business Support InstitutionsTypes of Waste. Extra processingThis term refers to extra operations, such as rework, reprocessing, handling, and storage, that occur because of defects, overproduction, and too much or too little inventory. Another example of extra processing is when an inside salesperson must obtain customer information that should have been obtained by the outside salesperson handling the account. It is more efficient to complete a process correctly the first time instead of making time to do it over again to correct errors.

#Capacity building of Business Service Professionals and Business Support InstitutionsTypes of Waste. InventoryThis refers to any excess inventory that is not directly required for your current customer orders. It includes excess raw materials, WIP, and finished goods. Keeping an inventory requires a company to find space to store it until the company finds customers to buy it. Excess inventory also includes marketing materials that are not mailed and repair parts that are never used.

#Capacity building of Business Service Professionals and Business Support InstitutionsTypes of Waste. MotionThis term refers to the extra steps taken by employees and equipment to accommodate inefficient process layout, defects (see the section below), reprocessing, overproduction, and too little or too much inventory. Like transport, motion takes time and adds no value to your product or service. An example is an equipment operator's having to walk back and forth to retrieve materials that are not stored in the immediate work area.

#Capacity building of Business Service Professionals and Business Support InstitutionsTypes of Waste. DefectsThese are products or aspects of your service that do not conform to specification or to your customers' expectations, thus causing customer dissatisfaction. Defects have hidden costs, incurred by product returns, dispute resolution, and lost sales. Defects can occur in administrative processes when incorrect information is listed on a form.

#Capacity building of Business Service Professionals and Business Support InstitutionsTypes of Waste. Underutilization of human resourceEvery worker, even the people do the most routine job in the organization will have something to contribute to the organization than their muscle power. Therefore not making the full use of the human resource is a waste. Wasting this without using to fight against wastes is the biggest loss for the organization.Most of times the human talents are deteriorated because they are not identified by the decision makers. Decision makers do not have the mind set of managing human resource productively. Also most of the organization do not have a proper system to use the talents of the people. They also do not have a good motivation and rewarding system for the talents.

#Capacity building of Business Service Professionals and Business Support InstitutionsLean Goal #2. Eliminate Waste. How to do itBegin your team-based waste-reduction activities by identifying a product or operation that is inefficient.Identify associated processes that perform poorly or need performance improvement. If appropriate, select the operation in your organization with the lowest production output as a starting point for your waste-reduction activities.Begin by creating a value stream map for the operation you are reviewing.Review the value stream map to identify the location, magnitude, and frequency of the seven types of waste associated with this operation.Establish metrics for identifying the magnitude and frequency of waste associated with this operation. Begin your problem-solving efforts by using lean principles to reduce or eliminate the waste.Periodically review the metrics you have identified to continue eliminating waste associated with this operation.Repeat this process with other inefficient operations in your organization. #Capacity building of Business Service Professionals and Business Support InstitutionsLean Goal #3. Reduce Lead TimeLead time is the total time it takes to complete a series of tasks within a process. Some examples are the period between the receipt of a sales order and the time the customer's payment is received, the time it takes to transform raw materials into finished goods, and the time it takes to introduce new products after they are first designed. By reducing lead time, a lean enterprise can quickly respond to changes in customer demand while improving its return on investment, or ROI. Reducing lead time, the time needed to complete an activity from start to finish, is one of the most effective ways to reduce waste and lower total costs.

#Capacity building of Business Service Professionals and Business Support InstitutionsLead Time componentsCycle time. This is the time it takes to complete the tasks required for a single work process, such as producing a part or completing a sales order.Batch delay. This is the time a service operation or product unit waits while other operations or units in the lot, or batch, are completed or processed. Examples are the period of time the first machined part in a batch must wait until the last part in the batch is machined, or the time the first sales order of the day must wait until all the sales orders for that day are completed and entered into the system.Process delay. This is the time that batches must wait after one operation ends until the next one begins. Examples are the time a machined part is stored until it is used by the next operation, or the time a sales order waits until it is approved by the office manager.

#Capacity building of Business Service Professionals and Business Support InstitutionsLead Time solutions. Product designProduct rationalization. This involves simplifying your product line or range of services by reducing the number of features or variations in your products or services to align more directly with your customers' wants and needs.

#Capacity building of Business Service Professionals and Business Support InstitutionsLead Time solutions. ManufacturingProcess simulations. These enable you to model your work processes to reveal waste and test the effects of proposed changes.Delayed product configuration. This means waiting until the end of your production cycle to configure or customize individual products.One-piece, or continuous, flow of products and information. This enables you to eliminate both batch and process delays.Technology (i.e., hardware and software) solutions. These enable you to reduce cycle time and eliminate errors.Quick changeover. This involves making product/service batch sizes as small as possible, enabling you to build to customer order.Work process standardization. This means identifying wasteful process steps and then standardizing "best practices" to eliminate them.#Capacity building of Business Service Professionals and Business Support InstitutionsLead Time solutions. SupplyDemand/supply-chain analysis. This reveals wasteful logistical practices both upstream and downstream in your demand/supply-chain. It often reveals excess inventories being held by your customers, your organization, and/or your suppliers due to long manufacturing lead times that result in overproduction. Freight analysis sometimes reveals that overproduction occurs in an effort to obtain freight discounts. However, these discounts do not necessarily offset the costs of carrying excess inventory. #Capacity building of Business Service Professionals and Business Support InstitutionsLean Goal #3. Reduce Lead Time. How to do itBegin your team-based lead-time-reduction activities by creating a value stream map for the business process you are targeting. Calculate the time required for the value-added steps of the process.Review the value stream map to identify where you can reduce lead time. Brainstorm ways to make the total lead time equal the time required for the value added steps that you calculated in step 2.Determine what constraints exist in the process and develop a plan to either eliminate them or manage them more efficiently.Establish metrics to identify the location, duration, and frequency of lead times within the process. Once you have established a plan for improving the process, measure the improvement.Repeat this process for other inefficient operations in your organization.#Capacity building of Business Service Professionals and Business Support InstitutionsLean Goal #4. Reduce Total CostsFor cost management to be successful, everyone in your organization must contribute to the effort. When you implement a process to reduce total costs, your goal is to spend money wisely to produce your company's products or services.To minimize the cost of its operations, a lean enterprise must produce only to customer demand. It's a mistake to maximize the use of your production equipment only to create overproduction, which increases your company's storage needs and inventory costs.Before you can identify opportunities to reduce costs, your team should have some understanding of the way that your company tracks and allocates costs and then uses this information to make business decisions. #Capacity building of Business Service Professionals and Business Support InstitutionsCost-Reduction MethodsTarget Pricing. This involves considering your costs, customers, and competition when determining how much to charge for your new product or service. The rise and fall of production volumes impact both the variable and fixed costs of the product - and ultimately how profitable it will be for your company.Target Costing. This involves determining the cost at which a future product or service must be produced so that it can generate the desired profits. Target costing is broken down into three main components, which enables designers to break down cost factors by product or service, components, and internal and external operations.Value Engineering. This is a systematic examination of product cost factors, taking into account the target quality and reliability standards, as well as the price. Value engineering studies assign cost factors by taking into account what the product or service does to meet customer wants and needs. These studies also estimate the relative value of each function over the product's or service's life cycle.#Capacity building of Business Service Professionals and Business Support InstitutionsCost-Reduction MethodsActivity-based costing (ABC). ABC systems allocate direct and indirect (i.e, support) expenses - first to activities and processes, and then to products, services, and customers. For example, your company might want to know what percentage of its engineering and procurement costs should be allocated to product families to determine product-contribution margin. In addition, you can do indirect cost allocations for each customer account, which enables you to do a customer-profitability analysis.Kaizen (i.e., continuous improvement) costing. This focuses on cost-reduction activities (particularly waste reduction and lead-time reduction) in the production process of your company's existing products or services.Cost maintenance. This monitors how well your company's operations adhere to cost standards set by the engineering, operations, finance, or accounting departments after they conduct target costing and kaizen-costing activities.#Capacity building of Business Service Professionals and Business Support InstitutionsLean Goal #4. Reduce Total Costs. How to do it1. Decide whether your cost-improvement efforts will begin with new or existing product lines.2. If new products or services are the focus of your improvement efforts, techniques to consider using are target pricing, target costing, and value engineering.3. If existing products or services are your focus, begin by reviewing your company's high-cost products and processes. Apply ABC, Kaizen costing, and cost maintenance to assist your cost-improvement initiatives.#Capacity building of Business Service Professionals and Business Support InstitutionsValue Stream Mapping

#Capacity building of Business Service Professionals and Business Support InstitutionsValue stream mapsA value stream can be defined as all the steps both value added and non value added required to take a product or service from its raw materials state into the waiting arms of a happy customer.

PurposeTo capture all key flows (of work, information, materials) in a process and important process metrics. It helps employees understand how the separate parts of their companys value stream combine to create products or services.

Why use a value stream mapMore complicated to construct than other flowcharts, but much more useful for identifying and quantifying waste (especially in time and costs)

#Capacity building of Business Service Professionals and Business Support InstitutionsWhat is a value stream?The term Value stream refers to all the activities your company must do to design, order, produce, and deliver its products or services to customers. A value stream has three main parts:

The flow of materials, from receipt from suppliers to delivery to customersThe transformation of raw materials into finished goodsThe flow of information that supports and directs both the flow of materials and the transformation of raw materials into finished goods

#Capacity building of Business Service Professionals and Business Support InstitutionsWhy Value Stream Mapping?To set strategy before diving into tactics. The future state VSM is a macro level blueprint for change; road mapEnables us to SEE the processPromotes systems thinking/seeing the whole. Helps us avoid sub-optimizing

#Capacity building of Business Service Professionals and Business Support InstitutionsFour Steps to Value Stream MappingDefine and pick the product or product familyCreate the Current State Value Stream Mapping (CSVSM)Create the Future State Value Stream Mapping (FSVSM)Develop an Action plan to make the FSVSM the CSVSM

#Capacity building of Business Service Professionals and Business Support InstitutionsLets create a Current State Value StreamWhenever there is a product for a customer, there is a value stream. The challenge lies in seeing it. -Learning to See, Lean Enterprise Institute

#Capacity building of Business Service Professionals and Business Support Institutions1. Draw the process flowReview process mapping symbolsBegin at the end of the process with whats delivered to the customer and work upstreamIdentify the main activitiesPlace the activities in sequence on the map

#Capacity building of Business Service Professionals and Business Support Institutions2. Add the material flowShow the movement of all materialGroup together material with the same flow Map all subprocessesInclude any incoming inspection, and material and process testing activitiesAdd supplier(s) at beginning of processSee symbols

#Capacity building of Business Service Professionals and Business Support Institutions3. Add the information flowMap the information flow between activitiesFor manufacturing areas:Document the production orders associated with the parts through the processDocument the scheduling system and tracking of the parts as they move through the processDocument how the process communicates with the customer and supplierDocument how information is gathered (electronic, manual, go look, etc.)

#Capacity building of Business Service Professionals and Business Support Institutions4. Collect process data and connect it to the boxes on the chartWalk the process to observe realityFor each step, gather the following data:Trigger what starts the stepSetup time and Processing time/untilTakt rate (rate of customer demand)Percent defective and/or scrap rate (in mfg.)Number of peopleDowntime % (includes any time that people cannot reach full productivity because machines, computers, materials, information. etc., is not available when needed)WIP downstream and upstreamCost of links to IT, warehouse(s), etc.Batch size

#Capacity building of Business Service Professionals and Business Support Institutions5. Add process and lead time data to the chart

#Capacity building of Business Service Professionals and Business Support Institutions5. Add process and lead time data to the chart

#Capacity building of Business Service Professionals and Business Support InstitutionsKey Metrics: TimeProcess time (PT) - Value added time (VA/T)The time it takes to actually perform the work, if one is able to work on it uninterrupted Includes task-specific doing, talking, and thinking aka touch time, work time, cycle time

Lead time (LT) - Production lead time (PLT) ROI LTThe elapsed time from the time work is made available until its completed and passed on to the next person or department in the chainaka throughput time, turnaround time, elapsed time Includes Process Time, not merely waiting time.

#Capacity building of Business Service Professionals and Business Support InstitutionsSummary Metrics: TimeActivity Ratio (expressed as a percentage) Process Cycle Efficiency (PCE) The percentage of time anything is being done to the work passing through the system (whether value-adding or non-value-adding) %Act = (PT LT) 100 100 %Activity = % Time Work is IdleCommon finding = 1-10%Could also calculate %VA Activity to show how little time is spent on value-adding activities.

#Capacity building of Business Service Professionals and Business Support InstitutionsKey Metrics: Quality%Complete and Accurate (%C&A) The percentage of input thats deemed usable as is by the person doing the work% of incoming work where the downstream customer can perform task without having to CAC: Correct information or material that was supplied Add information that should have been supplied Clarify information that should have or could have been clearer Measured by the immediate downstream customer and all subsequent downstream customers.Similar to first pass yield in manufacturing.

#Capacity building of Business Service Professionals and Business Support InstitutionsSummary Metrics: QualityRolled First Pass Yield (RFPY)

The percent of value stream output that passes through the process clean, with no hiccups, no rework required. RFPY = %C&A x %C&A x %C&ACommon finding = 0-15% Multiply ALL %C&As, even if parallel processes

#Capacity building of Business Service Professionals and Business Support InstitutionsTraining program. Day 1Lean management as a movement History of Lean Management Toyota Production System (TPS) Principles of LeanThe Goals of Lean EnterpriseValue Stream Mapping (Current State)Lean MetricsValue-add analysisTime value mapsValue-add chartFuture State Value Stream Mapping

#Capacity building of Business Service Professionals and Business Support InstitutionsValue-add (VA) vs. non-value-add (NVA) analysisUsed to distinguish process steps that customers are willing to pay for from those they are notThe objective of VA/NVA analysis is to:Identify and eliminate the hidden costs that do not add value for the customerReduce unnecessary process complexity, and thus errorsReduce the process lead timeIncrease capacity by better utilizing resources

#Capacity building of Business Service Professionals and Business Support InstitutionsTo perform a value analysisClassify each process step as value-added (also known as customer value-add), business non-value-add (sometimes called required waste), and non-value-add.Add up the time spent in each category. Use a Time Value Map or Value-add Chart to display the resultsDecide what to do nextValue-add tasks should be optimized and standardizedBusiness non-value-add tasks should be checked with customer and, where possible, minimized or eliminatedNon-value-add activities should be eliminated

#Capacity building of Business Service Professionals and Business Support InstitutionsValue classificationsValue-Added (VA), also called Customer Value-Add (CVA): Any activity in a process that is essential to deliver the service or product to the customerBusiness Non-Value-Added (BNVA): Activities that are required by the business to execute VA work but add no real value from a customer standpointNon-Value-Added (NVA) or waste: Activities that add no value from the customers perspective and are not required for financial, legal, or other business reasons

#Capacity building of Business Service Professionals and Business Support InstitutionsTime value mapsA visual depiction of value-add and non-value-add time in a processGives better impression of overall cycle time than Value-add chart

#Capacity building of Business Service Professionals and Business Support InstitutionsTo create a time value map Determine process cycle time Determine queue times (delays) between steps and the value-add time needed to perform each task Draw a timeline and divide into units equal to the total process time Place steps and delays along the timeline in the order in which they happen; use segments proportional to the times VA steps go above the line Non-value-add goes below the line (think about using different colors for emphasis) The white space between boxes indicates queue or delay time Draw in feedback loops and label yield percentages Summarize time use Activity vs. non-activity times Value-add vs. non-value-add times

#Capacity building of Business Service Professionals and Business Support InstitutionsValue-add chart (task time or takt time chart)A visual depiction of value-add and non-value-add time in a process Does more to illustrate balance of time between process steps; weaker on overall cycle time (compare to time value map on previous page) Does not visually emphasize wasted time as strongly as a time value map does but makes it easier to compare steps to each other

#Capacity building of Business Service Professionals and Business Support InstitutionsTo create a value-add chart Follow instructions in the value-add analysis to classify process work as customer value-add (VA), business non-value-add (BNVA), or other non-value-add For each step in the process, collect data on how much time is spent on each type of work Visually display the results in a bar chart like that shown here Calculate takt time The takt time is the amount of available work time divided by the customer demand during that time period. Act on the result by brainstorming ways toEliminate NVA activities Improve VA activities Reduce BNVA activities

#Capacity building of Business Service Professionals and Business Support InstitutionsTakt Time The key to Continuous Flow

#Capacity building of Business Service Professionals and Business Support InstitutionsTraining program. Day 1Lean management as a movement History of Lean Management Toyota Production System (TPS) Principles of LeanThe Goals of Lean EnterpriseValue Stream Mapping (Current State)Lean MetricsValue-add analysisTime value mapsValue-add chartFuture State Value Stream Mapping

#Capacity building of Business Service Professionals and Business Support InstitutionsApply Five Simple PrinciplesSpecify value from the stand point of end customer Identify the value stream for each product family Make the product flow So the customer can pull As you manage toward perfection

#Capacity building of Business Service Professionals and Business Support Institutions8 Questions for Future State VSMWhat are the customer requirements? Whats the takt time?With goods, will we produce to order or to finished goods inventory? (With services, youre almost always producing to order.)Where can continuous flow be put in place?Where should pull systems be implemented?What is the single point of scheduling?How do we level the load and the mix?What should the management time frame be?What process improvements are necessary to achieve the future state?

#Capacity building of Business Service Professionals and Business Support InstitutionsFuture State Value Stream MappingCreate a Cycle Time/ Takt time GraphDecide if you will build to stock or make to orderCalculate optimal crew size and Implement One piece flowPull when One piece flow is not possibleImprove communication and schedule a pacemaker

#Capacity building of Business Service Professionals and Business Support InstitutionsPurpose, Process, PeoplePurposeWhat customer problems will the enterprise solve to achieve its own purpose of prospering?ProcessHow will the organization assess each major value stream to make sure each step is valuable, capable, available, adequate, flexible, and that all the steps are linked by flow, pull, and leveling?PeopleHow can the organization insure that every important process has someone responsible for continually evaluating that value stream in terms of business purpose and lean process? How can everyone touching the value stream be actively engaged in operating it correctly and continually improving it?

#Capacity building of Business Service Professionals and Business Support InstitutionsBibliography and LinksMichael L. George, John Maxey, David T. Rowlands, Malcolm Upton. The Lean Six Sigma Pocket Toolbook : A Quick Reference Guide to 70 Tools for Improving Quality and Speed, McGraw-Hill, 2005Manor Parkway, Salem. The Lean Enterprise Memory Jogger. GOAL/QPC.Diane Ritter, Michael Brassard, Lynda Finn, Dana Ginn, Cathy Kingery, Michele Kierstead. Six Sigma Memory Jogger II: A Pocket Guide, GOAL/QPC, 2002Paul Sheehy, Daniel Navarro, Robert Silvers, Victoria Keyes. The Black Belt Memory Jogger: A Pocket Guide for Six Sigma Success, GOAL/QPC, 2002 James P. Womack, Daniel T. Jones. Lean Thinking. Simon&Schuster, Inc.Mike Rother, John Shook. Learning to See. The Lean Institute.www.toyota-global.comwww.lean.orgwww.gembaacademy.comhttp://lssacademy.comwww.ksmartin.com

#Capacity building of Business Service Professionals and Business Support InstitutionsHVALA VAM NA POZORNOSTI!

#Capacity building of Business Service Professionals and Business Support Institutions

IPA Component IIIc Regional Competitiveness Operational Programme 2007-2011, The European Union Programme for the Republic of Croatia

This project is implemented by a consortium led by EUROMED

This project is fundedby the European Union

Ministry of Economy, Labourand Entrepreneurship

Capacity Buildingof Business Service Professionalsand Business Support Institutions