Productivity Improvement Program Through Lean Manufacturing

Presented By: Boston Industrial Consulting, Inc.

Agenda For Lean Manufacturing Program

1. 2. 3. 4. 5. 6. 7. 8. 9. Program Objective What is Lean Manufacturing? Pressures Requiring Companies to Become Lean Typical Approach to Cost Reduction Batch Manufacturing vs. Lean Manufacturing Formula for Successful Implementation Obstacles to Avoid Expected Results of Lean Manufacturing Boston Industrial Lean Manufacturing Program

1.0 Program Objective

1.1 To understand the differences between Lean Manufacturing Systems and the traditional Batch Manufacturing approach. To understand the key requirements of a successful Lean Implementation Program. To present an actual case study that has been successfully executed by Boston Industrial Consulting; reviewing the goals, approach, problems and the results achieved.

1.2

1.3

2.0 What is Lean Manufacturing?

2.1

Lean is a Team Based continuous improvement process designed for long term maximization of company resources. Lean is an approach to achieving manufacturing excellence based upon the continued elimination of waste. Waste is defined as activities that do not add value to the product. Lean Manufacturing utilizes techniques and principles that improve efficiencies of value added activities.

2.2

2.3

2.0 What is Lean Manufacturing?

2.4

Value Added Activities: Transform raw materials and information into parts or products. NonValue Added Activities: Consume resources that do not contribute to the physical change of the product.

2.5

2.0 What is Lean Manufacturing?

2.6 Eliminating Waste Waste in Operations:

Walking Searching Standby Rework Changeover

Waste in Layout:

Distances traveled Backtracking Crowded Conditions Redundant handling

2.0 What is Lean Manufacturing?

2.6 Eliminating Waste Waste in Flow of Goods:

Overproduction W.I.P. Failure to Meet Standard Output/ Hour/ Person Line stops Broken Down / Antiquated, Poor Production Yields Poor Housekeeping Practices Damaged Materials Improper Tools Not Having the Right Information

Waste in Equipment

Other Waste

Lead time reduction is achieved by identifying and eliminating waste.

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3.0 Pressures Requiring Companies To Become Lean

Past Conditions
Sellers Market Rapid Expansion High Unit Volume High Quality Delivery & Service Financial Muscle

Current Reality
Buyers Market Slower Growth & Shrinking Markets Flexibility Higher Quality Quicker Delivery and Better Service Asset Utilization

3.0 Pressures Requiring Companies To Become Lean

3.1

High Costs
Labor Material Burden - Overhead

3.2

Poor Quality
Internal between departments & processes External rework due to vendors, O.V.S.s

3.3

Late Delivery
Internal Customers on time to satisfy requirements External Customers on time to satisfy requirements

4.0 Typical Approach to Cost Reduction

5%

25%

Material Burden Direct Labor

70%

The primary focus has typically been on lowering direct labor to achieve Cost Reduction Benefits.

4.0 Typical Approach To Cost Reduction

10%

35% 55%

Material Burden Direct Labor

Most manufacturing costs are found in Materials: Raw Materials, Purchased Parts, WIP, & Finished Good Inventory, Lean Manufacturing seeks to focus on improving all areas, especially Material Cost Reduction.

5.0 Batch Vs. Lean Manufacturing

5.1 Cost and Time:
RM OP 1 WIP OP 3 OP 2 WIP FG

Traditional Manufacturing
(Batch and Queue)

Total Cost

Time
FG

Lean Manufacturing
(One Piece Flow) (Cellular Manufacturing)
OP 1 RM

OP 3 OP 2

Total Cost

Costs increase the longer product is moved, staged and stored.

Time

5.0 Batch Vs. Lean Manufacturing

Batch Characteristics:
Expensive Machinery with high throughput capability. Machine Utilization is usually high; the machine runs whether there is a demand for the part or not Long Setup Times which lead to Large Lot Sizes Push System are prevalent creating excessive W.I.P. Results: High Capital investment Overproduction Lack of Flexibility to meet customer demands Long Lead Times Excessive W.I.P. Poor utilization of Floor Space Excessive Rework
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5.0 Batch Vs. Lean Manufacturing

Lean Characteristics:
Kaizen Quick Step Pull Systems Waste Elimination Tact Time/Line Balancing Point of Use / Kanban Work Cells O.P.F. Error Proofing Source Inspection Visual Factory Flexible Low Cost Automation

Results:
Reduced Costs Reduced inventory Reduced Obsolescence Reduced WIP Reduced Cycle Times Reduced Scrap Improved Quality Increased Productivity Improved Utilization of Space Reduced Lead Times Reduced Material Handling

6.0 Formula For Successful Implementation

1. 2. 3. 4. 5. 6. 7. Define the Goals & Establish a Baseline Choose The Pilot Study and Evaluate the Pilot Process Operator Training Pilot Implementation Run Pilot and Refine Full Implementation

6.0 Formula For Successful Implementation

Step 1: Define Goals & Establish a Baseline With management define the goals and objectives of the program:
Improve profit margin by 20% Improve lead time to the customer by 50% Improve quality by 30% Reduce inventory by 40% Increase productivity 30% Long Lead times Bottlenecks Excessive inventory Quality issues (internal & external) High Costs (labor materials & overhead)

Identify obvious problems:

6.0 Formula For Successful Implementation

Step 2: Choose The Pilot Pick an important product, product family, or customer. Perform a Pareto Analysis:
By Volume (QTY) By Sales Dollars By Scrap By Costs By Customer

Divide and Conquer:

Based on Pareto Analysis choose 1 item for study Pick an Item with high probability of success

6.0 Formula For Successful Implementation

Step 3: Study and Evaluate the Pilot Process
Gather data Observe processes Flow Chart the Process Perform engineering studies: capacity analysis, labor analysis, Tact time analysis, methods analysis, handling analysis, space analysis and value engineering analysis Interview Key People and identify Key assumptions Identify Bottlenecks in the process Identify Waste in the process Brainstorm with key personnel Document short and long-term improvements Make recommendations Quantify savings and benefits Summarize Capital Costs Perform an R.O.I. Present to management for approval
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6.0 Formula For Successful Implementation

Step 4: Operator Training Expose required personnel to techniques of Lean Manufacturing. View training films developed by professional associations such as AME, SME, and IIE. Review proposed operating procedures, layouts and equipment with personnel. Emphasize the expected savings and benefits.

6.0 Formula For Successful Implementation

Step 5: Pilot Implementation Establish Core Project Team For Implementation:
Review scope and objectives for validation Select team leader Select team facilitator

Specify, Bid and Select Equipment:

Develop detailed specs for equipment Source vendors for competitive bid Coordinate site visits with vendors Make recommendations in regard to equipment & vendors

6.0 Formula For Successful Implementation

Step 5: Pilot Implementation Develop Detailed Project Schedule:
Establish detailed move sequence Coordinate in-house activities to plan Coordinate vendor activities to plan Conduct weekly / bi-weekly meetings as required

Install Equipment:
Interface with vendors for proper installation Assure equipment conforms to customer specs Develop punch list

6.0 Formula For Successful Implementation

Step 6: Run Pilot and Refine Run pilot for process validation, debug and training of personnel Run production. Refine and make adjustments as necessary. Identify opportunities for full implementation. Measure results Signoff and approval

6.0 Formula For Successful Implementation

Step 7: Full Implementation Integrate pilot project into total Lean Program. Define goals and objectives of the total Lean Program. Identify areas for improvement and study. Establish a baseline to measure expected savings and benefits. Perform detailed engineering studies and analysis to include savings, benefits, costs and ROI. Document current conditions and area for improvement to eliminate waste.

6.0 Formula For Successful Implementation

Step 7: Full Implementation

Establish Project Team and train in the techniques and principles of Lean Manufacturing. Divide Lean Program into manageable and focused projects.
Develop executive plan for each project.

Facilitate weekly or bi-weekly team meetings to keep teams focused on a schedule. Provide project management for full implementation of each project. Monitor and measure each project after implementation, measure and post results. Make the necessary revisions and adjustment to ensure success.
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7.0 Obstacles to Avoid

7.1 Trying to do Too Much at One Time:
Walk before you run Divide and conquer Minimize the scope of the program

7.2

Starting with a Tough Project:

Choose a project with a high probability for success A tough project can stop momentum in its tracks

7.3

Setting Unrealistic Goals:

Benchmark Compare to other departments in the same facility Compare to other facilities in the same company Compare to other companies within the same industry

7.0 Obstacles to Avoid

7.4

Lack of a Detailed Execution Plan:

Provides instruction and direction Helps maintain focus A road map to success

7.5

Lack of Leadership or a Champion

A person that is committed to success A person that can motivate A person that can lead A person that can empower others A person that can sustain momentum

7.0 Obstacles to Avoid

7.6 Employees That Are Not Exposed to Lean:
An informed employee usually contributes An educated employee understands why its happening Cross training is essential

7.7

People and Resistance to Change:

Unfreeze explain why change is necessary Educate expose to fundamentals of Lean Empower make part of the decision making process Refreeze strong belief in that Lean is the answer

8.0 Expected Results of Lean Manufacturing

Areas For Improvement
Reduced Raw Material On Hand Reduced W.I.P. Reduced F.G. Inventory Material Flow Distances & Space Reduction Reduction in Vendor Base Increased Productivity - Units/Employee Improved Quality (Scrap & Rework) Reduced Cumulative Lead Times

Expected Results
30% 80% 40% 50% 50% 20% 50% decrease10x the value added time

Actual Results

8.0 Expected Results of Lean Manufacturing

8.1

A Dynamic Workforce that: Is Focused on Continuous Improvement Is Biased For Action Puts Creativity Before Capital Is Totally Involved

Boston Industrial Lean Manufacturing Program

Step 1: Client Survey On-Site Survey Evaluation of All Manufacturing and Support Areas Identify Obvious Processes Define Realistic Goals and Objectives in Letter Report to Management Estimate of Effort: 3 to 5 Man-days Budget Costs: $3,000 - $4,000

Boston Industrial Lean Manufacturing Program

Step 2 - 6: Pilot Program Pick the Pilot Work Center Study the Current Process Make Lean Recommendations - Layout, Process, Methods ROI / Cost Analysis Operator Training Implement Pilot Plan Estimate of Effort: 4 to 10 Man-days Budget Costs: $4,000 - $9,000

Boston Industrial Lean Manufacturing Program

Step 7: Full Implementation Roll Out Pilot Plan into Total Manufacturing Operation Full Lean Staff Training Lean Recommendations - Layout, Process Physical and Process Implementation Training on New Process Estimate: Client / Operation Specific