Strategic Lean Manufacturing to

Maximize Operations

Andrew L. Lux, Ph.D.

MANUFACTURING STRATEGY DEVELOPMENT

Build it “inside” or outsource

Criteria
Product Type
Capability Capacity Modular Integral
No No Yes Very Risky
Yes No Yes Partnership
Dependent
No Yes Yes Very Risky
Yes 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 Manufacturing Network Outputs

Cost

Quality Innovativeness

Performance

Time Delivery

Reliability Flexibility

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MANUFACTURING OUTPUT MEASURES

Manufacturing Output Measures

Cost Product cost (COGs)
Inventory turns
Productivity
Capacity, utilization
Yield
Quality Cost of Quality (A,P,F)
Performance # of standard features
# of advanced features
# of ECO
MTF
Delivery on-time delivery
Inventory accuracy
OE time
Flexibility # of products in product line
# of options
Min 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/year
New products/year

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LAYOUTS

• FUNCTIONAL
• CELLULAR - Family
• LINE - Individual

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PRODUCTION SYSTEMS

Production System: Type of Products

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

Production System Product/Vol Layout/Flow

Job Shop Many Functional
few ext. varied
Batch flow Many Cellular
low varied & patterns
Operator-paced line flow Many Line
medium paced via operators
Equipment-paced line flow several Line
high equipment paced
Continuous flow Few Line
high rigid to continuous
JIT Many Line
medium operator paced
FMS (flex-manufacturing system) Very many Cellular or line
low 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 -flat

structure & controls -cost accounting driven -competitive performance measures

Production -centralized, complex -small # of suppliers

planning 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 Defines:

• Production system
• Order Winning • Level of
• Does not apply 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 Matrix

Assess level of capabilities of each lever

2. Competitive Analysis
Define 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 How often is

customer willing it required?
to pay for?
What are the
What are the key current Product
Quality Complaint
Requirements as Levels?
defined by the
What are the
customer?
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

Improvements Identified

Do Its Kaizen Events

Items identified which can be changed 1 piece flow / Standard work / 6S / Pull
immediately Systems

Project
Improvements with longer lifecycles or complexity

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VALUE STREAM MAPPING

• Six Sigma and Lean Projects

Value Stream Map 1. Identify

Improvement

2. Scope Projects

Improvements Identified 3. Define Goal

4. Evaluate Project
and goal against
Six Sigma
Project Filtering Criteria

Improvements with longer lifecycles or

complexity

Six Sigma Tools

Evaluate project for 6 Sigma execution

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VALUE STREAM MAPPING
PROCESS IMPROVEMENT EXECUTION

• Process Improvements must have;

-Clear Measurable Goals
-Assigned responsibility and review dates
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VALUE STREAM MAPPING
PROCESS IMPROVEMENT EXECUTION EXAMPLE

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 Project Leader: Keith Martin Project: RCD1 - Reusable Clip Deployment Date: 1/2/13
Project Objective: Reusable Clip Deployment System (Tool and Cartridge) targeted in OUS and US markets
Major Tasks Schedule Owner / Priority
 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 Metrics

A Business Plan (sales price and marketing strategy)
B FDA submission date: early June
C Low Cost of Goods

Project 15% Complete

E valuate N ew D esign.

M F G V a lid atio n activities

D e sign V erificatio n testing

A u gust
Janu rary

Ju ly

L ivyn
N ovem ber

F ebrua ry

June

Justin
A pril

M ay
M arch

S tefan

Josh
D ecem ber

S e ptem ber

October
Major Tasks
201 3

C o-o p
Target Dates

Sub-Objectives dce15 Millions

$25,000
Expenses Labels Budgeted Expended
Costs and Metrics $180,000
Other $ - $ -
$-
Capltal
$- Capltal $ - $ -
$- Expenses$ 180,000 $ 25,000
Other
$-
Summary & Forecast Expended Budgeted

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

• 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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Cost Reduction Cost of Quality8% of Delivery Inventory
5% / yr Revenue 100% 10 Turns

Dock to Stock Process Labor

Labor Variance
Variance
Process Control
Control Improvement
Product
Product Stocking
Stocking
Improvement

Vendor Key BV Inventory Input / Output

Reduction/ SPC Performance Management Analysis
Management Indicators

Vendor Visual
Kanban MVDA Factory Physics
Management BV Repair Depot

Gross Margin Black Belt

Improvement Program Time Matrix Demand Pull Lot Size
(K-Loops) Optimization

Make/Buy DFSS Barcode Internal Kanban WIP

Analysis
Optimization

Parts Cleaning Lean

Strategic Room Upgrades RGA Mgt Labor Force
Manufacturing
Sourcing Reduction
Fixture Skill Set Label Printer
Deployment Certification Implementation Inventory
Manufacturing
Manufacturing Process
Process Reduction
Improvements
Improvements Strategy
Strategy 2012 2013 DONE

2014
Facilities
Upgrades

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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 or

improving 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.

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