Strategic Lean Manufacturing to Maximize Operations

Andrew L. Lux, Ph.D.

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MANUFACTURING STRATEGY DEVELOPMENT

Build it “inside” or outsource

Criteria

Product TypeCapability Capacity Modular Integral

No No Yes Very RiskyYes No Yes Partnership

DependentNo Yes Yes Very RiskyYes Yes No No

• Integral = related components customized for the product

• Modular= comprised of interchangeable and independent components, interface between components are standardized

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DEFINITIONS / OUTPUTS

• Manufacturing Network = distribution centers, manufacturing facilities, offices, research facilities

• Focused Factory = production system that produces most/all products in product family

Factories

Factory Manufacturing Outputs

Cost

Quality

Performance

DeliveryTime

FlexibilityReliability

Innovativeness

Manufacturing Network Outputs

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MANUFACTURING OUTPUT MEASURES

Manufacturing Output MeasuresCost Product cost (COGs)

Inventory turnsProductivityCapacity, utilizationYield

Quality Cost of Quality (A,P,F)

Performance # of standard features# of advanced features# of ECOMTF

Delivery on-time deliveryInventory accuracyOE time

Flexibility # of products in product line# of optionsMin order size, lot size# of products produced by a group of machines# of parts produced by group of machines/total# processed by factory

Innovativeness ECO/yearNew products/year

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LAYOUTS

• FUNCTIONAL

• CELLULAR - Family

• LINE - Individual

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PRODUCTION SYSTEMS

Production System: Type of ProductsManufacturing outputs

Production System: Product/Vol: layout/flow (PV:LF)

Production System Product/Vol Layout/Flow

Job Shop Many Functionalfew ext. varied

Batch flow Many Cellularlow varied & patterns

Operator-paced line flow Many Linemedium paced via operators

Equipment-paced line flow several Linehigh equipment paced

Continuous flow Few Linehigh rigid to continuous

JIT Many Linemedium operator paced

FMS (flex-manufacturing system) Very many Cellular or linelow equipment paced

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CHARACTERISTICS OF THE SEVEN PRODUCTION SYSTEMS

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CHARACTERISTICS OF A MANUFACTURING PROCESS:

• Production Systems Number of products Volume PV:LF layout flow

• Factory Production Outputs Cost Quality Performance Delivery Flexibility Innovativeness

• Manufacturing type Craft Production

Job shop Batch flow

Mass Production Operator paced line flow Equipment paced line flow Continuous flow

Lean Production JIT FMS

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MFG OUTPUTS PROVIDED BY WELL-MANAGED PRODUCTION SYSTEMS

Poor Good

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MANUFACTURING LEVERS

Average (2.0) World Class (4.0)

Human Resources -Unskilled -Employees are investment-Employees are expensive -Multi-skilled

-Problem I.D. solutions

Organization -centralized -flatstructure & controls -cost accounting driven -competitive performance measures

Production -centralized, complex -small # of suppliersplanning and control -detailed monitoring of -partnership

resource usage -critical capabilities

Process Technology -mature tech. -developed internally-developed externally -provides MFS outputs-reduce cost

Facilities -large, infrequent changes -focused-capital appropriation driven -frequent changes

-improve capabilities

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CUSTOMER NEEDS & EXPECTATIONS

• Market Qualifying• Order Winning• Does not apply

Defines:• Production system• Level of

Manufacturing capabilities of production system

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MANUFACTURING STRATEGY DEVELOPMENT

Competitive Analysis

Customer Requirements

Manufacturing outputs

Target levels for each output defined

Production system to hit target levels

Programs to adjust

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FRAMEWORK FOR STRATEGY DEVELOPMENT

1. Determine Current location on PV/LF MatrixAssess level of capabilities of each lever

2. Competitive AnalysisDefine the required market qualifying and order winning outputs

3. Determine ideal PV:LF Matrix Define Adjustments needed at each manufacturing lever

Adjustments converted into projects.

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IMPROVEMENTS PER THE STRATEGY

•INTRODUCTION TO VALUE STREAM MAPPING

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VSM APPROACH

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VSM EXAMPLE – CURRENT STATE MAP

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VALUE STREAM MAPPING

• VSM Helps you visualize more than just a single-process level, i.e. assembly, filling, packing. You can see the flow

• Mapping helps you see the sources of waste in a value stream

• Provides a common language for talking about manufacturing processes.

• Forms the basis of an improvement plan

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WHAT DOES THE CUSTOMER NEED?

What is the customer willing to pay for?

What are the key Quality Requirements as defined by the customer?

How often is it required?

What are the current Product Complaint Levels?

What are the Current KPI associated with COQ

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SEE WHAT IS HAPPENING AT ALL LEVELS OF PROCESS

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HOW IS INFORMATION FLOWING TO AND FROM THE PROCESS?

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VALUE STREAM MAPPING

• It shows the linkage between the information flow and the flow of material

• It forms the basis of an implementation plan. By helping you design how the whole door to door flow should operate.

• VSM is a qualitative tool by which you describe how the facility should operate in order to create flow

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VSM EXAMPLE – CURRENT STATE MAP

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VSM EXAMPLE FUTURE STATE MAP

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WHAT TO DO WHERE FLOW IS NOT POSSIBLE

Where flow is not possible, implement supermarkets to match upstream process to down stream customers. Yields similar benefits as continuous flow

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BUILD TO SUPERMARKET OR SHIPPING?

How will the process be linked to customer demand?

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WHERE CAN WE USE CONTINUOUS FLOW?

Continuous flow improves yield, improves quality, reduces defects, and improves response to customer

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SCHEDULE 1 POINT IN THE VS

Feed customer requirements to a single spot in the value stream, and let other process be pulled by the flow created

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VSM BENEFITS

• Knowledge is obtained walking the actual process flow

• Information is captured while walking the flow, not from engineering standards.

• The process uses pencils and paper, there is no steep learning curve.

• Process is interactive and engages diverse skill sets.

• Action plans developed tie directly to strategic goals

• Improves cost, quality, delivery and ultimately customer satisfaction

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VALUE STREAM MAPPING

• How does a VSM Drive process improvement

Value Stream Map

Do ItsItems identified which can be changed

immediately

ProjectImprovements with longer lifecycles or complexity

Kaizen Events1 piece flow / Standard work / 6S / Pull

Systems

Improvements Identified

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VALUE STREAM MAPPING

• Six Sigma and Lean Projects

Value Stream Map

ProjectImprovements with longer lifecycles or

complexity

Six Sigma ToolsEvaluate project for 6 Sigma execution

Improvements Identified

1. Identify Improvement

2. Scope Projects

3. Define Goal

4. Evaluate Project and goal against Six Sigma Filtering Criteria

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VALUE STREAM MAPPINGPROCESS IMPROVEMENT EXECUTION

• Process Improvements must have;-Clear Measurable Goals-Assigned responsibility and review dates

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VALUE STREAM MAPPINGPROCESS IMPROVEMENT EXECUTION EXAMPLE

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Project Leader: Keith Martin Project: RCD1 - Reusable Clip Deployment Date: 1/2/13

Major Tasks 1 Initial Feedback from EU and US A B 2 Prototoype initial concepts A B C 3 Determine marketing specifications A 4 Project Kick-Off meeting A 5 Business Plan A 6 Feasibility Testing B A C 7 Finalize Design - TDR1 A 8 Select Vendor for deployment tool A B

9 Detailed Design work A 10 Deployment tool development A B 11 Drawing Updates A

12 Confirm Design Concept A B 13 Tooling Phase - TDR2B A C B

14 MFG validation activities (IQ/OQ/PQ) B A C 15 Test Method Validations B A C

16 Design Control Doc updates TDR3 A C B 16 Build EP devices A B 17 Design Verification Testing A C B 18 Submit 510(k) A

19 Build MP devices B A 20 Design Control Doc updates TDR4 A C B 21 User Preference Evaluation A

Risks, Qualitatives, Other MetricsA Business Plan (sales price and marketing strategy)B FDA submission date: early JuneC Low Cost of Goods

Project 15% Complete

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Project Objective: Reusable Clip Deployment System (Tool and Cartridge) targeted in OUS and US markets

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dce15Labels Budgeted ExpendedOther -$ -$ Capltal -$ -$ Expenses 180,000$ 25,000$

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Project Scope: To create a cost effective Reusable Clip deployment system (Tool and Cartridge)A version of the existing Miltex tool design has been selected during the Concept/Feasibility phase.Business Plan: It will be important to finalize the Business Plan and marketing strategy for this tool.

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Summary & Forecast

Sub-Objectives

Target Dates

Costs and Metrics

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$180,000

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$25,000

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Capltal

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Expended Budgeted

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SUMMARY

• Strategic business plan

• Strategic/Tactical Plant plan

• Identify the opportunities via business needs

• Identify waste areas

• Internal benchmarking & goal setting

• “As is” = VSM

• Lean improvements via Kaizen methods

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•Thank you!

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Dock to Stock

Vendor Kanban

Vendor Reduction/

Management

Demand Pull(K-Loops)

Lean Manufacturing

Labor Variance Improvement

Labor Variance Improvement

RGA Mgt

BV Repair Depot

Product StockingProduct Stocking

Manufacturing Process Improvements StrategyManufacturing Process Improvements Strategy

Black Belt Program

DFSS

2012 2013

2014

DONE

Barcode

Time Matrix

Visual Management

Facilities Upgrades

Skill Set Certification

Key Performance

Indicators

BV Inventory Management

Internal Kanban

Process ControlProcess Control

Cost Reduction5% / yr

Inventory10 Turns

Delivery100%

Cost of Quality 8% of Revenue

Gross Margin Improvement

SPC

MVDA

Parts Cleaning Room Upgrades

Label Printer Implementation

Factory Physics

Lot Size Optimization

WIP Optimization

Labor Force Reduction

Input / Output Analysis

Make/Buy Analysis

Strategic Sourcing

Fixture Deployment Inventory

Reduction

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VALUE STREAM PROCESS

• Creation of the Current State Map– Visual representation of material and information

flow as seen while walking the value Stream

• Creation of Future State Map– Application of LEAN concepts to Current State

VSM to develop the future look of the process

• Development of Improvement Plan– Summarize and prioritize activities (Kaizens,

Supermarkets, 5S improvements etc.) required to move from the current state to the future state.

– Improvements are ranked based on impact, ease of implementation , and availability of resources

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VALUE STREAM MAPPING – SIX SIGMA FILTERING

1. Does the project involve solving a problem orimproving a system through collection and analysis of data? Yes

2. Is the root cause or solution known? No

3. Is the problem factual or perceived? Factual

4. Is the issue being addressed elsewhere? No

5. Does the project focus on the CTQ’s (Critical to Quality)? Yes

6. Does the project focus on Revenue Growth? Yes

7. Does the project focus on Cost Reduction? Yes

8. Can the project be completed within 2-4 Months? Yes

9. Is the project contained within the boundaries of the organization? Yes

10. Does the project have management sponsorship? Yes

11. Does the project have adequate resources? (i.e. staffing and expertise) Yes

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VALUE STREAM MAPPING

• What is Value Stream Mapping (VSM)

– Visual representation of the current process that includes both value added and non-value added activities required to bring a product from raw material to the arms of the customer.

– A Value Stream Map includes Materials and Information flow.