Our Lean Accounting Journey Who Are We and What Do We Do (PDFDrive)

10/13/2014
Our Lean Accounting Journey
Lean Accounting Summit

October 21, 2014
Donna Tremblay
Division Controller
Monica Lee
Division Lean & Quality Mgr
PARKER CONFIDENTIAL - DO NOT COPY OR DISTRIBUTE
Who are we and what do we do?
2
1
10/13/2014
1918
Arthur Parker founds the Parker Appliance
Company.
1957
Parker acquires the Hannifin Company.
2007
Parker Hannifin reaches $10 Billion in Sales.
3
Key Facts about Parker

The Global Leader in Motion and Control Technologies (NYSE:PH)
$13.2 Billion in Revenue

875,000 Products Sold
450,000 Customers
57,500 Employees
13,000 Distribution/MRO Outlets
1,100 Markets
142 Divisions
323 Manufacturing Plants
50 Countries
2
10/13/2014
Porter Instrument Platforms

Process Instrumentation Microelectronics Healthcare - Dental
Need a few
more photos
Oil & Gas, Power Gen, Chemical - Semiconductor, Solar Dental, Anesthesia
Petrochem, Water, BioPharm, Analytical
Porter Instrument Technical Competencies

• Bubble tight metal to metal
sealing
Tight Tolerance Machining • Orifice drilling
• High resolution threads
• Instrument clean – burr and
hydrocarbon free
Glass tube forming and • Proprietary Static Free Tube

coating Coating
• Mandrel Making
• Thermal Mass Flow

• Complex Flow Calibration
Mass Flow Control And • Communication Protocol
Calibration Support
• Clean Room Capabilities

• System/Sub-System Design
Value Added Design and • Tube Welding(Orbital)
Assembly • FDA Requirements
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10/13/2014
How did it Begin?
7
Traditional P&L
4
10/13/2014
Value Stream P&Ls
Box Scores
5
10/13/2014
Which led us to the Work Order

Elimination Initiative…
11
Business Case
• Hours a day releasing work orders
• Recording labor & transactions several times a day
• Incorrectly applied labor to work orders causing rework
• Lost docs with key customer requirements
• Dual scheduling systems
• Too much paper handling
• Processes waiting for work orders
• Continuous interruption throughout the day
• Extra walking to distribute work orders
• Production Variance hard to understand
12
6
10/13/2014
Current State
Overall Leadtime 6 days

Total Process Time 3 hrs
13
Why Do We Use Work Orders?
Needed to make sure the new

process addressed these
items
14
7
10/13/2014
Future State
15
EPEI and FIFO – Machine Shop

EPEI board at ea machine
Cleaning & Deburring FIFO

Lane
MTS
MTO
16
8
10/13/2014
Outside Services and Inspection
Has dedicated shelves for

Machine Shop & Outside Services
17
Financial Integrity – Back to the

Basics
18
9
10/13/2014
Where is the WIP Lab & OH?
Focus on the Machine Shop, the remainder accounts for less

than .4% of gross inv
19
Machine Shop WIP Standard Work
20
10
10/13/2014
Machine Shop WIP Valuation Model

1. Parts on the machine
• Assume 50% of the standard lab & OH of the part on the
machine
2. At the vendor
• Accumulate the standard lab & OH of the previous operations for
the kanban cards on the outside service board
3. In Inspection
• Accumulate the standard lab & OH of the previous operations for
the kanban cards on the rack
21
Operational Benefits
• Eliminated the logging in and out of work orders
• Backflush labor and overhead at standard
• Created visual system of on/off track tools to manage
the business
• Increased capacity of buyer/planners & operators
• Moved reporting & analysis to the decision makers
• Less time to close
• One scheduling system
• Reduced use of paper, printing, distribution waste
• Reduced walking and interruptions
22
11
10/13/2014
Lessons Learned
• Be Patient
• Go to the Gemba
• Review Kanban Quantities
• Meet often after go live
• If you can, wait for stability
• Keep asking why
23
How are we helping?
24
12
10/13/2014
On-Track/Off Track Visuals

AR and AP Daily Heijunka Monthly Close Heijunka Board
Boards w/problem solving
Stress Level
25
Month End Close Labor Balancing
26
13
10/13/2014
Standard Work
Issues:
• Tribal knowledge
• Not all tasks documented
• If documented, not current
• No cross training tool
• Mistakes when covering for vacations or items missed
Solution:
• Compiled list of tasks & backups trained
• Wrote procedures for all tasks
• Instituted layered audits to sustain
• Created database to track audits
27
Kamishibai Board • Controller schedules audits

for the month for the auditors
• Auditor flips card to green
when audit completed
• Audit card is placed in bin
when done
• Team creates action plans
for any audit findings
Auditor is a second set of eyes. Can suggest process

28 improvements.
14
10/13/2014
Audit Database
• Can run reports to see what

procedures relate to AR, AP, etc.
• If training on an area, know all
procedures that one must learn.
Contains all
Finance tasks,
trained
backups, &
procedure no. List of tasks that need a backup
Audit Results to sustain the gains. Shared at

weekly TIB meeting
29
A/P Current State Value Stream Map

(portion) Date
Upload to
Stamp
Parker
Invoices
ERS Flow
6:45 PM
A/P ITClerk
Manual
Voucher
Stamp
Date Date
Bind Compare
Date Date Date
Run Voucher APERS Run Review Issue
Stamp Stamp
APOS APOS
Stampw/ Stamp Stamp
APERS in JIT Rpt Update Rec Payment
Invoices Invoices
Rpt Invoices
JIT Invoices Invoices
Entered
Next Day
A/P Clerk A/P Clerk A/P Clerk A/P Clerk A/P Clerk A/P Clerk A/P
ActgClerk
Mgr A/PCorp
Clerk
Day
165 Sec Min 14 Hrs Min 15+
s
Non-ERS Flow 16 Sec 93 Sec 22 Min 15 Min 164 Sec Min
Recycle Date Stamp

Sort Place in Match
Date Enter
Date Date Date
ERS Stamp Run Invoices File
Sort Mail Invoice by Folder Invoice
Stampto Invoices
Stamp Stamp Stamp
Invoices Invoices APURA & APURA Invoices
Type Receiver
Invoices Invoices
into JIT Invoices Invoices
Entered
Next Mthly
Reception A/P Clerk A/P Clerk A/P Clerk A/P Clerk A/P Clerk A/P Clerk A/P Clerk A/P Clerk A/P Clerk
Day
Mail ERS
arrives Manual 3-way
during Not Needed
Match
lunch
EPO
P-Card
MRP Inv
1 Hr 12 Hrs 164 Sec Min

Min 161 Sec 15 Sec 78 Sec 20 Sec
July 2010
30
15
10/13/2014
A/P Kaizen Key Takeaways
• Vouchering of ERS is manual

• Batching
• High stress and at full capacity
• Rework of EPOs required
• Double entry – 2 systems
• ERS vendors still sending invoices
31
A/P Kaizen Action Items

• Vouchered ERS automatically
• Have ERS vendors note on mail
• Developed variance thresholds
• Tracked EPO errors
• Identified pcard candidates
• Verify payment accepted
• Created a Heijunka Box
32
16
10/13/2014
Debit Memos – Current State
Issues:
• 40 day leadtime between rejection & process of debit memo
• Financial Integrity of financial statements at risk due to transactions crossing
periods
• Manual process subject to errors or missed transactions
33 • Cash flow not being maximized
Debit Memos – Future State
• Automated the debit memo generation as well as underlying transactions

• Leadtime reduced to 7 days
• Eliminated 16 hand-offs/transactions
34• 10% Increase Productivity (2 hr. x 2 people/wk.)
17
10/13/2014
AR Collection Database Created
•Daily Task lists

•Collection Letters
•New Accounts
•Account Status
35
Status Report with Conditional Formatting
Highlights Items due today

or prior
Color Codes by oldest Aging Bucket

36
18
10/13/2014
Thank You!
Questions, Comments ,Discussion.
Appendix
19
10/13/2014
Scheduling and On/Off Track – Tubes

VS
AWP Forming Supermarket AWP Stations after Forming
AWP Accounts for 80% of tubes

39
Dental/Medical VS
Kanban/Pull Signals Day by Hour
40
20
10/13/2014
Scheduling Board – F&P VS

Industrial Assembly Order Board AWP Regulators
Complete 6-10 pcs/hr Complete 50/day
Assume 50% completion

41
Mass Flow VS WIP Map

MASS FLOW DEPT WIP LOCATIONS MAP
C RACK
A
STATION 6 STATION 7 L
ASSY TABLES (3) C
A
B
STATION 8 ASSY RACKS
L
C
E
ASSY BENCH
A
N
STATION 10
B
L
C
E
H
STATION 5 N
B
ASSY BENCH C
E
H
N
C
STATION 4 STATION 9 H
CLEAN ROOM
STATION 3
STATION 11 MOBILE CART RACK
ULTRASONIC ROOM
STATION 2 ASSY TABLES (3)

ASSY TABLE
MASS FLOW ROOM
STATION 1
MOBILE CART RACK
SHIPPING ROOM
TEST TABLES TEST TABLES
TEST TABLE
ASSY TABLES (2)

ASSY TABLES (3) RACK
EPC ROOM TEST TABLE
42
21
10/13/2014
On/Off Track and FIFO– Mass Flow

Ex. of on/off track
Assembled MFC waiting for
calibration – 30% Complete
90% Complete – Waiting for pre-ship

work
43
Max 2 orders open at a time

FIFO– EPC
Schedule and on/off track
FIFO Rack for Internal Assy –

50% Complete
If at test, 100% complete
44
22

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10/13/2014

Our Lean Accounting Journey

Lean Accounting Summit

PARKER CONFIDENTIAL - DO NOT COPY OR DISTRIBUTE

Who are we and what do we do?

Key Facts about Parker

$13.2 Billion in Revenue

PARKER CONFIDENTIAL - DO NOT COPY OR DISTRIBUTE

Porter Instrument Platforms

PARKER CONFIDENTIAL - DO NOT COPY OR DISTRIBUTE

Porter Instrument Technical Competencies

Glass tube forming and • Proprietary Static Free Tube

• Thermal Mass Flow

• Clean Room Capabilities

PARKER CONFIDENTIAL - DO NOT COPY OR DISTRIBUTE

How did it Begin?

PARKER CONFIDENTIAL - DO NOT COPY OR DISTRIBUTE

Value Stream P&Ls

PARKER CONFIDENTIAL - DO NOT COPY OR DISTRIBUTE

PARKER CONFIDENTIAL - DO NOT COPY OR DISTRIBUTE

Which led us to the Work Order

Overall Leadtime 6 days

Why Do We Use Work Orders?

Needed to make sure the new

EPEI and FIFO – Machine Shop

Cleaning & Deburring FIFO

Outside Services and Inspection

Has dedicated shelves for

Financial Integrity – Back to the

Where is the WIP Lab & OH?

Focus on the Machine Shop, the remainder accounts for less

Machine Shop WIP Standard Work

Machine Shop WIP Valuation Model

How are we helping?

On-Track/Off Track Visuals

Month End Close Labor Balancing

Kamishibai Board • Controller schedules audits

Auditor is a second set of eyes. Can suggest process

• Can run reports to see what

Audit Results to sustain the gains. Shared at

A/P Current State Value Stream Map

Recycle Date Stamp

1 Hr 12 Hrs 164 Sec Min

A/P Kaizen Key Takeaways

• Vouchering of ERS is manual

A/P Kaizen Action Items

Debit Memos – Current State

Debit Memos – Future State

• Automated the debit memo generation as well as underlying transactions

AR Collection Database Created

•Daily Task lists

Status Report with Conditional Formatting

Highlights Items due today

Color Codes by oldest Aging Bucket

Questions, Comments ,Discussion.

PARKER CONFIDENTIAL - DO NOT COPY OR DISTRIBUTE

PARKER CONFIDENTIAL - DO NOT COPY OR DISTRIBUTE

Scheduling and On/Off Track – Tubes

AWP Forming Supermarket AWP Stations after Forming

AWP Accounts for 80% of tubes

Scheduling Board – F&P VS

Complete 6-10 pcs/hr Complete 50/day