Simulation Powers Lean & Six Sigma

2006 ProModel User Conference
Bruce Gladwin VP Consulting Services, ProModel Corp. Claus Weidinger Principle, REOSS

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Seminar Agenda
• Exploring the Lean/Six Sigma Connection • Simulation Powers Lean Manufacturing
– Example 1: Automotive Supply Chain Process – Example 2: Automotive Production Line

• Simulation Powers Six Sigma Analysis
– Example 1: Power Generation Industry – Example 2: Six Sigma Metrics in Lean Models

• Questions and Open Discussion
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What is Lean Manufacturing?
A production method that uses minimum resources of machines, manpower and materials to produce finished goods. Also known as the Toyota Production System because it was invented & perfected at Toyota by Taiichi Ohno.
To Weld/HT Kanban

Weld/HT Kanban

Finished Goods Kanban

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What are the Benefits?
Metric/Benefit Inventory Inventory Value > 50% Inventory Turns x 2+ Customer Satisfaction Cycle Time, On-time Delivery

Additional benefits: • Reduced floor space requirements • Increased line capacity • Increased worker productivity • Improved Quality

Safety

OSHA recordable incidents

4

Value Stream Map
RAC Meeting Engineering creates RM drawings 2 to 4 weeks Engineering creates Final drwngs 6 to 8 weeks Buyer places PO with Suplr Engineering provides final Drwng to Mfg

Massa to FLR (Leg 3) Weds Friday

Day

DepartArrive
9:00 9:00 12:00 12:00

Florence Plant

3 2
FLR to Massa (Leg 2)

Massa Plant

6 to 8 weeks

5 to 8 weeks DepartArrive

1
Empty Container Full Container
Raw Mat Supplier

Tuesday 15:00 18:00 Thursday 15:00 18:00

Day

8 to 10 weeks

11 to 37 weeks 5

How is Lean Implemented?
Understand the Current State Process through Value Stream Mapping Identify and Eliminate Waste & Variability in the Process 7 Types of Waste:

• Correction (Rework) • Over Production (Make to Stock) • Transportation • Excess Inventory (Just in Case) • Unnecessary Motion • Unnecessary Processing • Waiting (Queue for machines/labor0

Accomplish Waste Reduction in a Series of Action Workouts

• Processes Mapped • TAKT and Cycle Determined • Waste Identified • Work Cells Designed • Visual Controls Developed • Standard WIP Developed • Standard Work Developed • Equipment Moved

Action Workouts Produce a Step Change in Performance Action Workouts Produce a Step Change in Performance
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What is Six Sigma?
• A formal quality program focused on product and process improvement, with a goal to consistently achieve a set of customer-driven metrics. • Originally defined by Motorola in early 80’s as a standard stating that a 12 standard deviations of a process metric must fall within the upper and lower specification limits (traditional process capability allowed six standard deviations of the process to fall within the upper and lower specification limits). • Implemented by GE in early 90’s as a systematic procedure for achieving the Six Sigma standard which has been extended to overall process improvement.
– Qualified individuals for using these tools are called Green Belts, Black Belts and Master Black Belts.
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Who Is the Customer?
Supplier

Input

Process

Output

Customer

• Customer - Whoever receives the output of your process (internal and external customers). • Output - The material or data that results from the operation of a process. • Process - The activities you must perform to satisfy your customer’s requirements. • Input - The material or data that a process does something to or with.
What is critical to the quality of the process? …according to your customer!
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CTQ

Six Sigma Quality
LSL (Lower Specification Limit) USL (Upper Specification Limit)

In-control Process

-6σ

-5σ

-4σ

-3σ

-2σ

-1σ

0

+1σ

+2σ

+3σ

+4σ

+5σ

+6σ

99.73% (2,700 dpmo) 99.999983% (3.4 dpmo)
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Goal of Six Sigma
• In statistical terms, Six Sigma quality means that for any given product or process quality measurement, there will be no more than 3.4 defects produced per 1,000,000 opportunities. An "opportunity" is defined as any chance for nonconformance, or not meeting the required specifications. By comparison, typical quality levels for manufactured products today achieve about 4 Sigma, which translates to about 6,000 defects per 1,000,000 opportunities.

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Six Sigma in Perspective
Traditional Quality “99% Good” (3.8σ) • 20,000 lost articles of mail per hour Unsafe drinking water almost 15 minutes each day 5,000 incorrect surgical operations per week 2 short or long landings at most major airports daily Six Sigma Quality “99.99966% Good” (6σ) Seven lost articles of mail per hour One minute of unsafe drinking water every seven months 1.7 incorrect surgical operations per week One short or long landing at most major airports every five years
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Lean Sigma
• Many companies use both Lean and Six Sigma. • Lean is implemented first to get the right process, i.e. Focus on Eliminating Waste. • Six Sigma is used to optimize the process and make it more robust. Focus here is on Process Repeatability.

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Complementarity of the Lean Manufacturing and 6 Sigma projects Generally, when faced with problems, we are led to compensate (additional controls, stocks...) => which generates wastes

Variability
Stocks Product lead time Failures & Break Downs

Non quality

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Complementarity of the Lean Manufacturing and 6 Sigma projects The solution : tackle the problems by using 6 Sigma and Lean Manufacturing
The principles of Lean Manufacturing Methodology 6 Sigma

Variability
Stocks Product lead time Failures & Break downs

Non quality

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Complementarity of the Lean Manufacturing and 6 Sigma projects We get rid of problems (non quality, breakdowns, variability...) by using the 6 Sigma methodology

Variability
Reduction of wastes

Non quality

Failures

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Complementarity of the Lean Manufacturing and 6 Sigma projects After reducing the risks, we can reduce work in process, stocks and product lead time with Lean Manufacturing

Trade Winds

Paradise Lagoon
Just Necessary

Non quality

Failures

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Two progress programs for a common objective
Six Sigma
« Open to trained people » Methodology & advanced tools Approach • Reduce variability. • • Focus Methodology • • A performance to reach on a process. Measure, quantify, identify and eliminate main causes of variability, improve statistic process control. The global performance is getting better each time a variation cause is suppressed. • • • •

Lean Manufacturing
Implemented by experts Share manufacturing people Concentrate on non-added value to the customer Reduce wastes. The whole product flow and its DVC costs ( including support functions) All the methodologies & tools for solving problems. Re-engineer layout and organizations (Hoshin, etc…) Reduce costs and cycle times, WIP,stocks.

• 1st Effect

Objective

Common to contribute to the industrial performance Quality Lead time Cost 17

Two different programs but complementary and indispensable for excellence

• A 6 Sigma program will be more effective with simple production flows • A Lean Manufacturing program will be more effective with variability under control • The two programs need specific competencies and different project organizations

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Simulation Powers Lean Mfg
Claus Weidinger Principle, REOSS

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Simulation Powers Six Sigma
Bruce Gladwin VP Consulting Services, ProModel

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Central Theme of Six Sigma
• The central theme of Six Sigma is that product and/or process quality can be improved greatly by understanding the relationships between the inputs to a product or process and the metrics (outputs) that define the quality level for the product or process. • Critical to these relationships is the concept of “Voice of the Customer.” In other words, quality can only be defined by the customer, who will ultimately receive the outputs or benefits of a product or process.
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Focus on Transfer Functions
• In mathematical terms, Six Sigma seeks to define a transfer function, y = f(x1, x2, …, xn), between the quality metrics of a product or process (e.g. the life expectancy of a product, or the % on-time delivery for a fulfillment process), and the inputs that define and control the product or process (e.g. tolerance of a physical dimension or the number of resources available to service customers). • The focus of Six Sigma then is two-fold; 1) understand which inputs (x’s) have the greatest effect on the output metrics (y’s), and 2) control those inputs so that the outputs remain within a specified upper and/or lower specification limit.
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Transfer Functions
Y=
Y Dependent Output Effect Symptom Monitor

f (X)
X1 . . . Xn Independent Input-Process Cause Problem Control

To get results, should we focus our behavior on the Y or X?

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Process Inputs and Outputs
Inputs (X’s)
• • • • • • • • • • • • • • Activity (move & opn) times Number of resources Resource avail. (MTBF,MTTR) Buffer size (push/pull, etc.) Move batch size On-time supplier delivery Operation yield Production lot size Work schedules (OT, shifts) Setup time Resource sharing Number of dependencies Work prioritization Variability of any times above • • • • • • • • • • • • •

Outputs (Y’s)
Throughput Cycle time WIP Service level Waiting time On-time customer delivery Customer response time Process yield Unit cost Resource utilization Cycle time efficiency Throughput efficiency Variation in any of above

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Quality Function Deployment (QFD) Diagram
A QFD diagram basically shows X variables (independent) across the top and Y variables (dependent) down the side.
X1, X2,…

y1, y2,…
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Reality Matrix – What can I change?
High 1 2

Impact
Low 3 4

Low

High

Effort/Cost/Risk
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Six Sigma Methodologies
Six Sigma is achieved as problem areas are targeted and projects are planned and conducted using one of two different methodologies.
1. DMADV* – A methodology that achieves Six Sigma performance for new processes. It can also be used to make radical improvements. 2. DMAIC – A methodology targeting existing processes for making incremental improvements.
*a.k.a. DFSS (Design for Six Sigma)
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DMAIC Methodology
(existing processes)
• Define the project goals and customer deliverables. Set up scope and schedule. • Measure the process to determine current performance. Focus here is on the Y’s. • Analyze to find cause-and-effect relationships. Define transfer function relating inputs to outputs. • Improve the process optimizing settings of decision variables and verify achievability. • Control future process performance through monitoring and feedback mechanisms. Focus here is on the X’s.

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DMADV Methodology
(a.k.a. DFSS or Design for Six Sigma) • Define the project goals and customer (internal and external) deliverables • Measure and determine customer needs and specifications. Focus on the Y’s. • Analyze the process options to meet the customer needs • Design (detailed) the process to meet the customer needs • Verify the design performance and ability to meet customer needs. Focus on the X’s.
GE adds an Optimize step after Design resulting in DMADOV.
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How Simulation Supports Six Sigma
• Simulation is a tool that can be used in multiple stages of a Six Sigma project. • Typically applied to the Analyze & Improve or Analyze & Design stages. • A simulation model becomes a realistic transfer function that relates the critical X’s (inputs) to the Y’s (outputs). • Gives quantifiable output of performance and variation. • Allows an optimum solution to be determined before implementation.
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Example: Generator Mfg

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Project Proposal
PROBLEM STATEMENT: The ST/Gen Field & Rotor machining area is experiencing rising WIP levels and inflated cycle times due to capacity constraints in the system. This problem is expected to become worse in Q4 due to increased volumes in next year’s production schedule. A solution to maintain acceptable cycle times must be found. DEFECT DEFINITION: Whenever the cycle time predicted by the model, from receipt of a forging through completion of the 3rd Lathe operation, is longer than the established planning cycle.

BUSINESS CTQ’s: On-time delivery of a Field to the Final Assembly Area, which increases the probability of on-time delivery to the customer.

OPPORTUNITY: One opportunity for a cycle time defect exists for each Field in the production schedule. PROJECT BENEFITS: Reduced cycle times will result in lower inventory levels, better schedule control, and the avoidance of unnecessary capital expense.
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Field Machining Process

33

Metric: Variance to the established planning cycle target for each Field type. Target: Planning Cycles (Calendar Days) - Field Type 1 = 86 days - Field Type 2 = 73 days - Field Type 3 = 106 days - Field Type 4 = 124 days Upper Specification Limit: 0 days late
Source: Generator Master Schedule Source: Generator Master Schedule
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Performance Standards

Customer Customer Fulfillment Fulfillment (Span) (Span)

Big Y

CTQ Flowdown

Availability of Availability of Raw Materials Raw Materials & Components & Components

Cycle time of Cycle time of Field Mfg Field Mfg Process Process

Outside Outside Vendor Vendor Capacity Capacity

Lower level y’s or key Xs

Machine Cycle Machine Cycle Times Times

Changeover Changeover Times Times

Machine Machine Downtime Downtime

Crane Crane Availability Availability

Mfg Cycle = ƒ(X1, X2, X3, …)
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Fishbone Diagram for Vital X’s
Materials
Delivery Performance Material Quality Make vs Buy Material Flow

Machines
Availability Capability

Manpower
Availability Capability

Mfg Cycle

Methods Measurements

Mother Nature

Assuming on-time delivery of quality materials and available labor, Assuming on-time delivery of quality materials and available labor, the focus of the project will be on machine capability and the focus of the project will be on machine capability and availability, and the methods of production. availability, and the methods of production.
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The Transfer Function (model)

37

The goal of the analysis is to reduce the number of model-predicted cycle observations that are greater than the established target cycle. This will result in a shift in the standard deviation, although the main effect will be to eliminate the right tail of the distribution. The mean will also be reduced indirectly. A 2k Factorial DOE will be performed to analyze the effects of each vital X: Machine Changeover Time, Machine Downtime and Crane Move Time.
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Problem with Spread

Desired
Accurate but not Precise Accurate but not Precise

Current Situation T T USL USL

LSL LSL

39

Problem with Centering

Desired
Precise but not Accurate Precise but not Accurate

Current Situation Off Target T T USL USL

LSL LSL

δ

40

Base Run
Histogram of Base Run, with Normal Curve
14 12 10

Frequency

8 6 4 2 0 -30 -25 -20 -15 -10 -5 0 5 10

Base Run

41

Minitab Analysis
Process Performance
Actual (LT) Potential (ST)

Process Benchmarks
Actual (LT) Potential (ST) Sigma
(Z.Bench)

USL

0.68

0.89

-40

-30

-20

-10

0

10

20

30

PPM

247356 186612

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Run Chart for Base Run
10 0 -10 -20 -30 10 30 50 70

Base Run

Observation
Number of runs about median: Expected number of runs: Longest run about median: Approx P-Value for Clustering: Approx P-Value for Mixtures: 24.0000 38.0000 9.0000 0.0005 0.9995 Number of runs up or dow n: Expected number of runs: Longest run up or dow n: Approx P-Value for Trends: Approx P-Value for Oscillation: 48.0000 49.0000 4.0000 0.3901 0.6099

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Observations
• It is obvious from the run chart above that something must be done to prevent late deliveries in weeks 10 through 45. From our CTQ Flowdown, we know that we have some degree of control over machine cycle times, setup and down times and crane availability. However, at this point we do not know which of these factors will have the greatest impact on overall cycle time.
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Experiment Table Run 1 0/0/0 Run 2 30/0/0

Experimental Design
Run 3 Run 4 30/30/0 30/0/30 Run 7 Run 8 0/0/30 30/30/30
2k Factorial DOE for Field Cycle Time

Run 5 Run 6 0/30/0 0/30/30

Run 1 = Base Run Factor Level 1 Changeover: 0% Downtime: 0% Crane Time: 0% Level 2 30% 30% 30%

Levels represent the % reduction in average time for each parameter.
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Results Table
Results Table: DPMO Run 1 Run 2 247,356 224,386 Run 5 Run 6 121,242 12,762 Run 3 72,795 Run 7 61,384 Run 4 30,748 Run 8 8,505
Project Goal: 90% Reduction in DPMO !!

Run 1 = Base Run
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Results Table: DPMO Run 1 Run 2 247,356 224,386 Run 5 Run 6 121,242 12,762 Run 3 72,795 Run 7 61,384 Run 4 30,748 Run 8 8,505
2k Factorial DOE for Field Cycle Time

Run 1 = Base Run Factor Level 1 Changeover: 0% Downtime: 0% Crane Time: 0% Level 2 30% 30% 30%
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Run 6 and Run 8 provide over 90% reduction in Field cycle-time defects.

Choosing a Feasible Solution
• Run 6 = 30% reduction in crane move time plus a 30% reduction in machine downtime • Run 8 = 30% reduction in all parameters (changeover, downtime & crane move time) • Neither solution considered feasible due to extensive downtime reduction requirement. • Therefore, we must consider additional scenarios with lesser degrees of downtime reduction.
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DOE
Run 2 Run 5

Run 7

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Additional Scenarios
• Run 9 = 30% reduction in Crane move time plus a 10% reduction in Machine downtime • Run 10 = 30% reduction in Crane move time plus a 20% reduction in Machine downtime • Run 9 DPMO = 24,325 (> 90% reduction in baseline cycle-time defects). Therefore, this solution chosen as feasible. • Run 10 not necessary
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Implementation and Results

Improvement plans will need to be carried out by the ST/Gen Production Team. Two specific action items resulting from this project include: 1) Launch of a focused six-sigma project to reduce Crane move times by 30%. 2) Launch of a focused six-sigma project to reduce Machine downtime by 10%.

51

Measure
PRACTICAL PROBLEM

Tools Used: Fishbone diagram, As-is Process Map Tools Used: Fishbone diagram, As-is Process Map Takeaways: Vital X’s include Changeover times, Machine downtimes Takeaways: Vital X’s include Changeover times, Machine downtimes and Crane move times. and Crane move times.
K Tools Used: 22KFull Factorial DOE using aadiscrete-event simulation Tools Used: Full Factorial DOE using discrete-event simulation model to predict future Field cycle times. model to predict future Field cycle times.

Analyze
STATISTICAL PROBLEM

Takeaways: Initial solutions were infeasible due to DT requirements. Takeaways: Initial solutions were infeasible due to DT requirements. Tools Used: Additional experiments run based on trends identified in Tools Used: Additional experiments run based on trends identified in K 22KFull Factorial DOE. Solution found requires only aa10% reduction Full Factorial DOE. Solution found requires only 10% reduction in machine downtime. in machine downtime. Takeaway: ST/Gen Production Team to Launch focused 6σ projects Takeaway: ST/Gen Production Team to Launch focused 6σ projects to reduce Crane move time by 30% and Machine downtime by 10%. to reduce Crane move time by 30% and Machine downtime by 10%. Takeaway: ST/Gen Production Team responsible for long term Takeaway: ST/Gen Production Team responsible for long term control of new procedures developed in the focused 6σ projects to control of new procedures developed in the focused 6σ projects to reduce Crane move time and Machine Downtime. reduce Crane move time and Machine Downtime. DPMO reduced from 247,356 to 24,325 (>90%) DPMO reduced from 247,356 to 24,325 (>90%) ZLT increased from 0.68 to 1.97 ZLT increased from 0.68 to 1.97 52

Improve
STATISTICAL SOLUTION

Control
STATISTICAL CONTROL

PRACTICAL SOLUTION PRACTICAL SOLUTION

Conclusion
• • • • • • • Simulation takes into account process variation, uncertainties and interdependencies Simulation can test many alternative solutions quickly and easily Models can be developed with little risk and no disruption to existing processes Simulation takes the subjectivity and emotion out of decision making Animation features make simulation a good tool to help “sell” others on the best solutions Reusable models encourage continuous improvement Impact on upstream or downstream customers/operations/processes can be considered
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