make green go green by going lean[1]

7/30/2019 Make Green Go Green by Going Lean[1]

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RSM McGladrey, Inc. is a member firm of RSM International an affiliation of separate and independent legal entities.

"Make Green, Go Green, by Going Lean

Presented By Paul V. Burnett

October 2007


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Paul V. Burnett, BSME, MBA

IBM

John Deere

Ford Motor Company

Detroit Diesel Corporation

Applied Materials

Sanmina-SCI

RSM McGladrey


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How to Go Green?How to Go Lean?

Why?


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Doing nothing is not an option!

Governor Arnold Schwarzenegger signed into law emissionreduction targets for California:

By 2010, reduce GHG emissions to 2000 levels,

By 2020, reduce the GHG emissions to 1990 levels,

By 2050, reduce GHG emissions to 80 percent below 1990

levels


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Green and Lean

15-30% of a manufacturing companys monthly energy bill createsgreenhouse gases.

The energy management within a facility - benchmark competitors. Lean methodologies can be used to reduce waste in the

consumption of energy within a manufacturing facility.

The ultimate goal - eliminate equipment not needed in the process.

If elimination is not possible, minimize the use plot energy consumption to predict maintenance schedules and replacement

cycles.


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Analysis of Electric Industry CO2 Impacts

The electric industry cannot provide substantial reductionsin CO2emissions in the near future to meet goals

Limited potential to switch to greener energy near-term CO2 reduction must come from reducing demand

supported by new energy efficient technologies

conservation programs

A market-based collaborative systematic approach todemand reduction is a critical success factor (profitpotential)


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The Economic Case For Change

Asset performance management can reduce energyconsumption by 6% to 11%.

DOE has established a minimum 10% energy reductionguideline as attainable through the application of propermaintenance and technology solutions.


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G.A.S. Index: Global Asset Sustainability Index

G.A.S. Index = Availability * Performance * Quality *Energy Efficiency

Availability = All downtime / Scheduled time Performance = Actual output for scheduled time / Design

output for scheduled time

Quality = Total production minus defects or rework / Total

production Energy Efficiency = Design energy consumption/Actual

energy consumption


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Example: Motor Efficiency

90,000 Watts 100 HP 76,000 Watts

1HP = .746 kWatts

15,400 Watts (17.4%)


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Motor Efficiency Savings

Energy Savings = 90kW x 8,000 hrs./year x (1-(.828/.94)) =

87,336 kWh/yr.

At an average cost of 11 cents per kWh, the estimatedsavings would be $9,607 per year.

Motor operating cost: (100 HP x .746 kW/HP x 8,000 hrs. x $.11/KWh ) / .94 efficiency

= $69,838 per yr.


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Repair v. Buy

Break even analyses must be based on the increasedcost of purchasing a new, more energy efficient

equipment versus the energy consumption reduction. The cost energy today ranges from 10-13 cents per

kilowatt-hour.


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Lean Definition

A philosophy of production that emphasizes the

minimization of the amount of all the resources

(including time) used in the various activities ofthe enterprise.

- APICS Dictionary, 10th ed.


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Lean Enterprise

An enterprise with a focus on waste eliminationand the customers needs in all parts of its

operations, manufacturing and administration.Emphasis is given to lean structures andprocesses, flexibility of response and methodsand techniques to continually seize newopportunities as they arise.

- APICS Lean SIG


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Early Lean Processes

Mass Production

Early 1900s

Ford Motor Company was a pioneer

Assembly line production

High volume production

Limited number of products

Significant cost reductions


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Today

More than 96% of all U.S. companies have less than 250 employees Global competition / low cost labor Demands by customers:

Higher quality Innovation Mass customization Flexibility Lower Costs

Limited resources

Source: U.S. Bureau of Census, 2004


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What is Lean?

It is NOT: Collection of techniques or a methodology

Reduced staffing or low inventories

It IS: A philosophy of manufacturing

Totally different way of thinking

A different value system

Seeks to eliminate waste (non-value added activities to the customer) Emphasis on flow manufacturing


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What is Lean?

Lean Production

Total Quality Management (TQM)Six Sigma

Cellular ManufacturingBusiness Process Improvement (BPI)

Just in TimeTheory of Constraints

Zero DefectsSPCTQC

Kanban


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Lean Characteristics

Focus is on the improvement of resource utilization:

Equipment setup time reduced

Scheduled machine maintenance Orderly, clean workplace

Pull production being used

JIT inventory control

Factory layout in work cell arrangement by products

Active error elimination

Improved quality, etc.


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The Importance of Waste Elimination

Lean deals with the elimination or reduction ofmany types of non-value-added activities, often

referred to as waste

The driving force for waste elimination is improvedvalue in the products and services customers buy


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Seven Popular Wastes

Overproduction

Waiting

Excessive transportation

Inappropriate processing (the hidden factory)

Unnecessary inventories

Unnecessary motion

Defects- Taiichi OhnoToyota Production System


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The Nature of Wastes

1. Overproduction Target and achievement unclear

Processes not statistically capable

2. Waiting Operators waiting

Operators slower than production line

3. Excessive Transportation Widely spaced equipment waiting

Forklifts not available when needed


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The Nature of Wastes (continued)

4. Inappropriate Processing Variability in operators performance

Processes not statistically capable

5. Inventory Large safety stocks

Variable procurement lead times


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The Nature of Wastes (continued)

6. Motion Double handling

Non-standard layouts Equipment widely spaced from each other

7. Defects Low material yields

Excessive process variability


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Correcting Wastes

1. Overproduction Eliminate by reducing setup times.

Synchronizing quantities and timing between processes. Make only what is needed now.

2. Waiting Eliminate through synchronizing work flow.

Balancing uneven loads with flexible workers and equipment.


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Correcting Wastes (continued)

3. Excessive Transportation Establish layouts and locations to make transport and handling

unnecessary, if possible.

4. Inappropriate Processing Why should this item be made?

Why is each process necessary?

Are any processes being performed that are not part of the workflow?


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5. Inventory Reduce by shortening setup times. Improving work skills.

Smoothing fluctuations in demand for the product. Reducing all the other wastes reduces the waste in stocks.

6. Motion Study motion for economy and consistency. Economy improves productivity, and consistency improves

quality. Improve the motions, then mechanize or automate. Otherwise,

there is a danger of automating waste.


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7. Defects Develop the production process to prevent defects.

Eliminate the need for inspection. At each process, produce nodefects.

Design processes to be failsafe (Poka yoke).

Quality processes yields quality products automatically.


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Can you think of other actions to eliminatewaste in your company?


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Leadership Function

Initiate needed change by identifying a vision

Aligning employees to that vision

Motivating to achieve that vision


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Leadership

Lean Change InfrastructureProject &

Training Plans___________________

___________________

___________________

___________________

___________________

______________________________________

___________________

___________________

Vision &

Lean Strategy

ValueNo Waste

Flow

PullStandard Work

JIT

Champion

CEO

Plant Management/President

Vice President

Sponsors:

Manufacturing

Engineering

Quality

Lean Office

FacilitatorFacilitator Facilitator

Team Team Team Team Team Team


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Transparent Workplace


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Define Processes

Value-Added Activities

A Value-Added Step Value versus Non-Value-Added

Value-Stream Mapping

Typical Process Flow Analysis Visual OrderThe Five Ss

Visual Control


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A particular method of doing something which involves anumber of steps, activities, or operations

Processes are found in manufacturing & service industries Example:


Processes Definition

Grind

Type

Contract

Turn Mill Drill

Obtain

Signature

Type

Envelope Mail

Manufacturing

Office


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Process Map

Supplier Customer

Stamping Weld Assembly Paint Shipping

Staging

Weekly

Orders

Weekly

Orders

Weekly Schedule

1

2

3

4

5

Production

Control

I I II

Daily Daily

Total Time: 10 Days

Value-Added Time: 6 minutes

1 Day 1 Day 2 Days 3 Days 1 Day2 Days

50 sec 40 sec 90 sec 120 sec 60 sec

Process Time Line


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Map customer requirements (orders)

Map order information flows

Map physical product/material flows Map plant/office information flows

Add a process time line

Summarize current state

Ask questions at each step to determine waste or

non-value-added areas


Value-Stream Mapping Process


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The % of value-creating time

The number of units of inventory required to support a

production unit Total travel distance versus value-creating distance


Summarize Current State


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Add value to products & services that customers arewilling to pay for Improvements that change a products or services form, fit or

function

Other activities use resources but add no value Some non-value-added activities may be necessary

Based on current knowledge or technology

Long term goal - Eliminate

Remaining non-value-added activities should be eliminatednow!


What Are Value-Added Activities?


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A process that physically changes the work passingthrough it that makes it more valuable to the customer

A step requested by the customer - they are willing to payfor it


A Value-Added Step


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Value versus Non-Value-AddedValue-Added Activities

Entering order Ordering materials, supplies Preparing drawings Assembling Shipping to customers Processing customer deposits Examining patients Filing insurance claims Dispensing event tickets

Fueling airplane

Non-Value-Added Activities

Waiting/sorting Moving Kitting/staging Counting Inspecting Checking Recording Obtaining approvals Testing

Reviewing Copying Filing Revising/reworking Tracking work - Charlene B. Adair & Bruce A. Murray,

Breakthrough Process Redesign


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Value Stream Costing

Value Stream

Operational

Support

Facilities &

Maintenance

All other

Value

Stream

Costs

Production

Labor

Production

Materials

Production

Support

Machines &

equipment


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Traditional Accounting and Lean Controls

System/Issue Traditional Accounting Lean

Production Inventory Control Work Order

Production tracking

Inventory Cycle Count

Kanban

Visual signals

Five S

Procurement Purchase order approval

Three way match in AP

Key Suppliers

Master POs

Supplier Certification

Quality of Products Detailed inspection

Rework or scrap

Standardized work

Single-piece flow

Production Cost Control Standard cost

Variance Reports

Analysis of Variance

Cell/VS CSFs and measures

Analysis of Root Cause


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Costs Outside the Value Stream

Identify tasks not related to the Value Stream Exp. - ISO 9000

These costs are not allocated to the Value Stream They are treated as sustaining costs of the business

Budgeted

Controlled

No need for full absorption costing Value Stream costing proves relevant, accurate cost info

about the Value Stream


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Observe & record the flows of orders, materials, goods andinformation for a product family

Product family: A group of product variants passing throughsimilar processing steps that use common equipment

Mapping identifies waste situations for improvements


Value-Stream Mapping (VSM)


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What are some value-added& non-value-added activities

at your company?


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To eliminate waste, you must first find it

Visual order makes waste evident and is a good starting

point for managing resources Toyota Production - Five Ss as the method for exposing

waste & poor utilization of resources


Visual OrderThe Five Ss


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Sort

Set in orderShine

StandardizeSustain


Visual OrderThe Five Ss


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Lockheed & Boeings Six Ss

SORT SUSTAIN

STRAIGHTEN SAFETY

SHINE STANDARDIZE

6S


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Sort: Classify tools, parts, instructions into necessary &unnecessary

Set in Order: Make it visible & easy to use; 3 Es = easy

to see, easy to get & easy to return Shine: Conduct cleanup to identify abnormalities Standardize: Put a system in place to readily identify

abnormal conditions Safety: Identify & eliminate dangerous & hazardous

conditions Sustain: Make a habit of properly maintaining & following

standard practices


The Six Ss


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Awareness of whats happening Manpower: Skill levels, performance, continuous training

Machines: Develop Maintenance schedules and use them

Materials: Demand Signals indicating shortages; shadow boardsfor location of tools

Methods: Standard Worksheets and Operating Procedures

Measurements: Performance trends

Display schedule Quality targets

Reductions in setup & lead times


Visual Control


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Pull versus Push Production Strategy

ValueValueStream

Flow Pull Perfection

Lean Principles


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Pull

No one upstream should produce any good or service

until the customer downstream asks for it Kanban

ValueValueStream


Lean Principles


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Push

Build product to forecast

Excess inventory

Poor utilization & distribution of product

Filled distribution channels

50% of all books manufactured are shredded

ValueValueStream


Lean Principles


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Pull

Design

Schedule based on actual demand signals Produce exactly what the customer wants

Flow takes place throughout the supply chain, not justinside your production facility

ValueValueStream


Lean Principles


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Pull

Benefits

High throughput

Excellent protection against stock-outs Higher flexibility

Less congestion

Shorter lead times

Higher customer service

ValueValueStream


Lean Principles


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Perfection

Begins with visualizing the perfect process

Continuous process to remove waste by eliminating effort,

time, space and defects

ValueValueStream


Lean Principles


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Final Thoughts Lean and Green

There is a social responsibility component to savingenergy and reducing the amount of CO2 emissions.

Green as a marketing tool. Select an small area with high visibility and a manageable

number of variables for the first G.A.S. Assessment andLean project.

The journey is never-ending and definitely not easy(especially at first) but the results are well worth the effort.


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QUESTIONS?


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Paul V. Burnett, BSME, MBARSM McGladrey, Inc.

Senior Consultant - Operations and Financial

221 3rd Ave SE, Suite 300Cedar Rapids, IA 52401

319.298.5298

make green go green by going lean[1]

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