Husky - Improving Operational Efficiencies

Improving Operational Efficiencies Through
“Lean Manufacturing”
May 2010
ADVICE IMPLEMENTATION
Operational Optimized Improvement Detailed
Assessment Facility Implementatio Design
Design n Support
Manufacturing Advisory Services 2

Definition of “Lean”
• A management philosophy/ strategy that focuses on eliminating
wastes in manufacturing. Waste inflate costs, lead times and
inventory requirements. By eliminating waste, quality is improved,
and production time and cost are reduced
• Lean principles come from the Japanese manufacturing industry.
• For many, Lean is the set of "tools" that assist in the identification and
steady elimination of waste.
– The original seven wastes are:
• Transportation
• Inventory (raw material ,WIP, and finished product)
• Motion (people or equipment moving or walking more than is required)
• Waiting (Down time)
• Overproduction (production ahead of demand)
• Over Processing (resulting from poor tool or product design creating activity)
• Defects (the effort involved in inspecting for and fixing defects)
3
“Wastes” in Injection Molding
Waste in:
1. Raw material
2. Overall Equipment/ Plant Efficiency
• Machine “Availability” (Scheduled/ Unscheduled down time)
• Machine “Performance” (Cycle and cavitation)
• Rejects
3. Labor
4. Over production
– Conformance ratio
5. Inventory
– WIP, FG, and spare parts
6. Product flow/ Transportation
7. Production lead time
• Value stream mapping
• “Push” vs. “Pull” system
8. Energy
9. House keeping
4
Waste in:
1. Raw material
• Rejects
3. Labor
4. Over production
5. Inventory
8. Energy
9. House keeping
5
• Material is the largest contributor to operational cost regardless of
market type
• Any reduction/ elimination of wastage in material directly impacts
bottom line
1%
3% 3% 2% 2%
9%
2% 7%
2%
PET
Automotive
Preform
Large Tonnage
24%
60%
85%
1%
Material 7% 1% 2%
6% 5%
Primary Equipment
18%
Energy 16% Closure
molders Custom
Labor molders
Building & Infrastructure
Maitenance 5%
69% 6% 64%
Waste In “Raw Material” 6

• Material waste typically happens in the following areas:
– Part weight
2004 2007 2009

Lightweighing Weight Annual Resin
Opportunity Savings (g) Savings
Sub-total Savings 2.8 $3,148,235
Assumptions
Preforms (3 machine plant) 850 Million/yr
PET Resin Cost $1.40 $/kg
HDPE Resin Cost $1.10 $/kg
14.5g 12.3g 11.7g

– Part weight
– Unrecoverable scrap

– Part weight
– Over packing
Weight variation due to process control
0.90%
0.70%
0.50%
0.30%
% variation from nominal
current range
0.10%
0 10 20 30 40 50 60 70
-0.10%
-0.30%
-0.50%
-0.70% improved range
-0.90%
-1.10% quality spec
-1.30%
-1.50%
• Resin consumption reduction: 312,000 kg/yr ($450,000/yr)

• Based on plant with 69 SKU (preforms) and 13 IMM

– Part weight
– Over packing
– Spillage, Purge, Start up

– Part weight
– Over packing
– Spillage, Purge, Start up
– Excessive use of colorant

Waste in:
1. Raw material
• Rejects
3. Labor
4. Over production
5. Inventory
8. Energy
9. House keeping
12
Common Goal Between Departments
Best-in-class molders enable collaboration among

maintenance, production, and financial groups
• Maintenance, operation, and engineering have traditionally

been compensated on different goals
• Best-in-Class molders address this challenge by establishing
goals that are aligned (i.e. OEE)
OEE = Availability x Performance x Quality
• Connecting these metrics will ensure that functional groups

work collaboratively to achieve common goal
13
Overall Equipment/ Factory Efficiency
OEE/ OFE = Availability x Performance x Quality
OFE =
OEE =
Scheduled time = (Total available hours - Hours not scheduled due to lack of sales)
14
Asset Intensive Companies: Source: Aberdeen Group, Nov. 2009
Industry Average Laggards

Best-in-Class
(Middle 50%) (Bottom 30%)
(Top 20%)
OEE 88% 81% 75%

Unscheduled Down Time 2% 11% 18%
Injection Molding Companies:
Thinwall /
PET (1) Closure (2) Custom Automotive
Medical (2)
OEE >96% >90% >90% > 80% > 85%
Unscheduled downtime < 3% < 5% < 5% < 8% < 8%
(1) Preforms only
Best-in-Class Metrics 15
• Increasing “Availability” through predictive maintenance
Unscheduled and Scheduled Down time
Shift from Reactive to Predictive Maintenance 16


Predictive
Machine Availability Program
100,0%
98,0%
96,0%
Preventive
94,0%
Program
Machine Availability
92,0%
90,0%
88,0%
86,0%
84,0%
82,0%
80,0%
0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 5,5 6,0 6,5 7,0 7,5 8,0 8,5 9,0 9,5 10,0
Years of Production
Data curve generated from more than 200 Husky machine audits

Breakdown of Maintenance Spend Lost Production caps in Milions per year
35.00
300,000.00 30.00
250,000.00 25.00
200,000.00 20.00
Spending 150,000.00 15.00
100,000.00 10.00
50,000.00 5.00
- -
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Lost Prod'n/Year
Emergency Maintenance Parts
Revenues lost K$
• New policy started 2007 to minimize 120.00
maintenance spend 100.00
80.00
• Postponed PM visits 60.00
• Affect on reducing maintenance resulted in 40.00
increased total spend and production loss 20.00
-
• By Q3 of 2008 PM practices were renewed 2005 2006 2007 2008 2009
Revenue Loss
Predictive Maintenance - Case Study 19

• Increasing “Availability” through Quick Mold Change (QMC)
Reduce Scheduled Down Time by QMC 20

Steps to reduce mold change time:

1. Separation of internal from external
times
2. Conversion of internal to external
3. Parallel operations
4. Automation (hardware)
• Quick connects and disconnects
• Hydraulic, Pneumatic, Magnetic clamping
• Ejector Couplers
5. Elimination of adjustments


times Organization
Up to 60% immediate
2. Conversion of internal to external reduction through
3. Parallel operations the first three steps
4. Automation (hardware) Water line

7%
Clamping
9%
• Quick connects and disconnects Tool positioning
10% Ejector
• Hydraulic, Pneumatic, Magnetic clamping 6%
Press settings
• Ejector Couplers 6%
5. Elimination of adjustments Other

4%
Organization
58%


times
2. Conversion of internal to external
3. Parallel operations
4. Automation (hardware)
• Quick connects and disconnects
• Hydraulic, Pneumatic, Magnetic clamping
• Ejector Couplers
5. Elimination of adjustments

• Increasing “Performance and Quality” through “Asset
Performance Optimization Program”
Improving Equipment Life Cycle Costs 24


Existing System with Technology

Upgrades /Encore
Cost per Part
New System
Today
Life Economical End of New End of Life

Life Upgraded system

Key Strategies to Increase Return On
Assets (RoA) in Molding
1. Adopt a “Risk based strategy” to enable efficient decision making
• Plant and operational assessment to “Identify, Quantify, and Prioritize”
risks that are inherent to the organization (i.e. unscheduled down time)
2. The key strategy that differentiates Best-in-Class is to implement APM

(Asset Performance Management) as the company moves from
reactive to predictive asset management
• One of the main goals of the best-in-class molders is to maximize
OEE and minimize down time.
• The only way to achieve this goal is by being predictive in managing
assets and proactive in controlling the process
• This key strategy enables Best-in-Class molders to perform at a
maximum efficiency and minimum unscheduled down time.
• Best-in-Class molders avoid asset failure before they actually happen
resulting in lower unscheduled down time
27
Key Strategies to Increase RoA in Molding
3. The successful execution of previous strategy requires molders to have
real time visibility into asset performance (also a differentiating factor)
• Making effective asset decisions requires molders to equip their employees

with the right data at the right time in the right form
• Best-in-Class differentiate themselves from industry average and laggards
by more effectively leveraging data and turning data into action
70% Best-in-Class
59% 59% Industry average
60%
Percentage of Participants
52% Laggards
50%
50% 45%
40%
30%
21%
20%
10%
0%
Failure data is used to perform root Historical as well as real time data is
cause analysis used as actionable intelligence
Source: Aberdeen Group, Nov. 2009
28
Waste in:
1. Raw material
• Rejects
3. Labor
4. Over production
5. Inventory
8. Energy
9. House keeping
29
Labor Reduction without Automation
• Case study: Workcells pared for labor sharing
Warehouse
3 1 1 1
1 1 1 1 1
30
Labor Reduction with Automation
• Utilize the existing automation (i.e. robots)
• Consider other financial metrics in addition to simple
payback when evaluating automation
• Life cycle costing
31
Waste in:
1. Raw material
• Rejects
3. Labor
4. Over production
5. Inventory
8. Energy
9. House keeping
32
Over Production
• Is “Conformance Ratio” one of your main KPIs?
• Over production leads to excess inventory
• High unscheduled down time leads to under production
which in turn leads to low service level
180%
160% Over production due to
% of scheduled production
High scheduled down time

140%
120%
100%
Under production due to high
80%
Unscheduled down time
60%
40%
20%
0%
12 37 99 41 17 36 97 13 40 24 4 14 6 11 42 1 25 22 22 48 11 98 18 91
Machine number
33
Waste in:
1. Raw material
• Rejects
3. Labor
4. Over production
5. Inventory
8. Energy
9. House keeping
34
Combined cost
Cost ($)
Set Up Costs
Carrying Costs
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Annual Inventory Turns
Optimum Inventory turns 35

Combined cost
Cost ($)
Set Up Costs
Carrying Costs
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Combined cost
Cost ($)
Savings Combined cost

Set Up Costs
Carrying Costs
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Mold Change Time and Inventory
UTILIZATION
A Total production: 24
2 changes, I hour each
B Total production: 27
Lot size reduced in half. 5 Changes, I hour each
C Total production: 24
Lot size reduced in half. 5 Changes, 24 min. each
Production
Mold change
38
Category A
Service level and inventory @ 85% OEE
Category B
Category C 102.0% 700
Top 10 100.0% 600
Inventory level(x1000)
Inventory Top 10 98.0%
500
96.0%
Service level
94.0% 400
92.0% 300
90.0%
200
88.0%
86.0% 100
84.0% 0
Base 50% lot size 25% lot size 200% lot size
Category A 93.5% 97.0% 97.5% 92.0%

Category B 95.1% 95.0% 95.2% 92.3%
Category C 96.0% 95.9% 96.1% 91.8%
Top 10 92.4% 99.4% 99.6% 89.6%
Inventory Top 10 512 466 352 591
• Simulated the effects of different lot sizing policies on inventory and

service level
• Lot size reduction improved service level and reduced inventories
Case study- lot size reduction simulation 39

Sensitivity to spare parts inventory
$2,100,000
$2,000,000
• Preventive Maintenance 10% - reduction of parts not used
$1,900,000 • Mean Time Between Failures (MTBF) 25% - reduction of parts not used
50% - reduction of parts not used
$1,800,000 75% - reduction of parts not used
$1,700,000
$1,600,000
$1,500,000
$1,400,000
Value of inventory
$1,300,000
$1,200,000
$1,100,000
Reduction to 3 months for
$1,000,000
parts used in 2009
$900,000 Today
$800,000
$700,000
50% reduction in not used parts
$600,000
$500,756
$500,000
$400,000
$300,000
Goal
$200,000
$100,000
$0
2 1.9 1.8 1.7 1.6 1.5 1.4 1.3 1.2 1.1 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0
Years of inventory (parts used in 2009)
Case Study – Spare Parts 40

Waste in:
1. Raw material
• Rejects
3. Labor
4. Over production
5. Inventory
8. Energy
9. House keeping
41
ASSEMBLY, PACKAGING, MACHNE HALL
and PALLETIZING
Assembly
Assembly/
Packaging/ Conveyor
Palletizing
WAREHOUSE
Product Flow – “Before” 42

ASSEMBLY, PACKAGING, MACHNE HALL
PALLETIZING
WIP
Assembly/
Packaging
Palletizing
STAGING
Product Flow – “After” 43

Forecast PRODUCTION CONTROL Forecast
SYACC Customer
Suppliers Demand: 127K
Units/day
Daily/ Weekly orders Daily/ Weekly orders
Scheduling
Injection:
part #: 8720, 90ml vial
Cavitation: 24 cavity
Cycle: 9.6 sec.
Parts/ hr.: 9,000
Daily demand: 127,000/ day
12 sec. 7 days
Injection: Assembly: Sterilizing: Receiving/ Shipping:

part #: 9962, 48 mm cap Part #: B 90210 Outside supplier Daily demand: 127,000/ day
Cavitation: 16 cavity Cycle: 0.58 sec. / unit Daily demand: 127,000/ day
Cycle: 10 sec. Parts/hr.: 6,200
Parts/hr.: 6,000 Daily demand: 127,000/ day
10 sec. 7 days
Production Lead Time:
14 days 8 days 22 days
Processing Time:
22 sec. 0.58 sec. 22.6 sec.
“Value Stream Map” - Existing System 44

Forecast PRODUCTION CONTROL Forecast
SYACC Customer
Suppliers
Full
Full
Lleno Demand: 127K
Units/day
Daily/ Weekly orders Daily/ Weekly orders
Scheduling
Empty
Empty
Vacío
Injection:
part #: 8720, 90ml vial
Cavitation: 24 cavity Production Withdrawal
Cycle: 9.6 sec. Kan Ban Kan Ban
Parts/ hr.: 9,000
12 sec.
Injection: Assembly: Sterilizing: Receiving/ shipping:

part #: 9962, 48 mm cap Part #: B 90210 Outside supplier Daily demand: 127,000/ day
Cavitation: 16 cavity Cycle: 0.58 sec. / unit Daily demand: 127,000/ day
Cycle: 10 sec. Parts/hr.: 6,200
Parts/hr.: 6,000 Daily demand: 127,000/ day
10 sec.
Production Lead Time:
73days
days 8 days 15 days
11 days
Processing Time:
22 sec. 0.58 sec. 22.6 sec.
“Value Stream Map” - Future System 45

1,600,000 $2,000,000
Push $1,800,000
1,400,000
$1,600,000
1,200,000
$1,400,000
1,000,000
Average Inventory
$1,200,000
Carrying Cost
800,000 $1,000,000
$800,000
600,000
Pull
$600,000
400,000
$400,000
200,000
$200,000
0 $0
Push: 46 machines Pull: Summer + reduced mold change Pull: Level summer + reduced mold
time (26 machines) change time (21 machines)
Average Inventory Inventory Carry Cost
• Pull System reduced :

– Batch size by an average of 56% on high volume products and 74% on low
volume products
– Safety Stock from an average of 15 days to 3 days
– Inventory by 68%
Push Vs. Pull – Simulation Analysis 46

• Shift from “Push” to “Pull” system requires standardization, process
stability and repeatability
• Stabilize operation prior to lean conversion
Material Control
Methods Level • Reduce response times or changes in demand
Production • Reduce upstream schedule variability
• Material replenishment linked to customer withdrawals

Pull
• Constraint management applied to
System manage bottlenecks
Synchronized • Synchronize operations with customer

requirements
Production
• Create disciplined process repeatability
• Standardize work
Continuous • Increase process flexibility
Flow • Reduce WIP inventory, time loss and defects
• Create repeatability between workstations
• Bring processes under control

Stability
• Provide an environment to eliminate waste
• Show a quick business impact
Start here
Time
Shift from Push to Pull 47

Waste in:
1. Raw material
• Rejects
3. Labor
4. Over production
5. Inventory

8. Energy
9. House keeping
48
Social Responsibilities with Profits
• Reducing energy consumption of assets is an untapped
resource in both the quest for profits and social responsibilities
ENERGY
Air compressors
Others
HVAC 6%
1%
8%
Lighting
3%
Labour Infrastructure
Energy 2% 2%
d cooling Maintenance
12%
Machines
3% 2%
50%
Dryers
Equipment
20% 5%
Resin
86%
49
Two Approaches to Reduce Energy Cost
1. Reduce the cost per unit of energy ($/KWh) through

negotiation and risk mitigation
• Numerous consulting firms provide “Negotiation and risk
mitigation” services
• Alternative Energy generation
2. Reduce the amount of energy used (KW/lb):

• Certain utility companies offer programs that provide molders
rebates towards the purchase and installation of qualified
equipment that improves their facility’s energy efficiency
These two approaches alone without an “Energy Management

Program” can not be sustainable
50
Total Energy Management Program
1- Estimate and verify site energy profile

2- Understand your “Base” and “Process” loads
Phase 1:
3- Understand when and how much energy is used Energy audit
& reduction
4- Identify, Quantify, and Prioritize opportunities strategy
5- Eliminate waste and reduce consumption through
- Implementation of selected energy reduction projects
6 - Monitoring and Targeting
- Understand Where energy is used Phase 2:
7 - Data analysis and reporting energy KPIs Sustainability
Through
- (Energy dashboard) by department M&T
8 - Conduct internal and external benchmarking
9 - Repeat the steps – Continuous improvement
51
Estimated Estimated Payback Electricity Carbon
Capital Cost Annual Savings Reduction Reduction
Identified Opportunities ($) ($) (year) (KW) (ton)
Process Water System

Free cooling
Option 1 $ 60,000 $ 29,000 2.1 years 322,222 72
Option 2 (4) $ 128,000 $ 26,000 4.9 years 288,889 64
Compressed Air
Air Leaks $ 2,500 (1) $ 37,500 24 days 416,667 93
Reduced PSI for IMMs $0 $ 8,376 (2) immediate 0
Install ES control solution $ 8,500 $ 12,000 0.7 years 150,000 33
Cost avoidance of new Air comp. 0
$50,000
Lighting
Retrofit to T5s as per layout $ 98,560 $ 46,689 2.1 years 449,206 100
Power Conditioning
Power cure to condition power $ 55,300 $ 23,000 (3) 2.4 years 204,254 45
and improve power factor
Cycle times
Estimated 6% reduction plant wide $ 24,000 $ 25,000 0.96 years 318,000 71
TOTAL ESTIMATED COSTS & SAVINGS $ 248,860 $ 178,564 1.39 years 1,827,016 KW 407 ton
Percent reduction compared to current usage 17.77%
Case Study 52
Waste in:
1. Raw material
• Rejects
3. Labor
4. Over production
5. Inventory

8. Energy
9. House keeping
53
Visual Kan Ban to eliminate excessive material handling
Implement “5S” 54
Action Plan
• Start with assessing your current operation

• Plant and operational assessment to “Identify,
Quantify, and Prioritize” Waste reduction
opportunities that are inherent to the organization
• Husky’s Manufacturing Advisory Services team

can assist you in developing and implementing a
“Lean Manufacturing” program tailored to your
operation
55
Contacts
• Santiago Archila,
– sarchila@husky.ca
– 905-951-5000, Ext. 3810
• Sean Golzarian,
– sgolzarian@husky.ca
– 905-951-5000, Ext. 3550
• Husky website: www.husky.ca
56

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Improving Operational Efficiencies Through

Manufacturing Advisory Services 2

Waste In “Raw Material” 6

2004 2007 2009

Waste In “Raw Material” 7

Waste In “Raw Material” 8

Weight variation due to process control

-0.70% improved range

-1.10% quality spec

• Resin consumption reduction: 312,000 kg/yr ($450,000/yr)

Waste In “Raw Material” 9

Waste In “Raw Material” 10

Waste In “Raw Material” 11

Best-in-class molders enable collaboration among

• Maintenance, operation, and engineering have traditionally

OEE = Availability x Performance x Quality

• Connecting these metrics will ensure that functional groups

OEE/ OFE = Availability x Performance x Quality

Industry Average Laggards

OEE 88% 81% 75%

Injection Molding Companies:

OEE >96% >90% >90% > 80% > 85%

Unscheduled downtime < 3% < 5% < 5% < 8% < 8%

(1) Preforms only

Unscheduled and Scheduled Down time

Shift from Reactive to Predictive Maintenance 16

Unscheduled and Scheduled Down time

Shift from Reactive to Predictive Maintenance 17

Unscheduled and Scheduled Down time

Shift from Reactive to Predictive Maintenance 18

Spending 150,000.00 15.00

• New policy started 2007 to minimize 120.00

maintenance spend 100.00

• Affect on reducing maintenance resulted in 40.00

increased total spend and production loss 20.00

Predictive Maintenance - Case Study 19

Reduce Scheduled Down Time by QMC 20

Steps to reduce mold change time:

Reduce Scheduled Down Time by QMC 21

Steps to reduce mold change time:

4. Automation (hardware) Water line

5. Elimination of adjustments Other

Reduce Scheduled Down Time by QMC 22

Steps to reduce mold change time:

Reduce Scheduled Down Time by QMC 23

OEE = Availability x Performance x Quality

Improving Equipment Life Cycle Costs 24

OEE = Availability x Performance x Quality

Improving Equipment Life Cycle Costs 25

OEE = Availability x Performance x Quality

Existing System with Technology

Life Economical End of New End of Life

Improving Equipment Life Cycle Costs 26

2. The key strategy that differentiates Best-in-Class is to implement APM

• Making effective asset decisions requires molders to equip their employees

• Case study: Workcells pared for labor sharing

High scheduled down time

Optimum Inventory turns 35

Optimum Inventory turns 36

Savings Combined cost

Optimum Inventory turns 37

Category A 93.5% 97.0% 97.5% 92.0%

• Simulated the effects of different lot sizing policies on inventory and