Professional Documents
Culture Documents
Analysis of Efficiency of Lean Manu
Analysis of Efficiency of Lean Manu
Corresponding author:
Adam Hamrol
Poznan University of Technology
Department of Management and Production Engineering
ul. Piotrowo 3, 60-965 Poznan, Poland
phone: +48 61 665-27-74
e-mail: adam.hamrol@put.poznan.pl
14
Unauthenticated | 89.67.242.59
Download Date | 6/2/13 7:25 PM
Management and Production Engineering Review
to decrease lead time between a customer’s order of a This means that the longer a product remains in
specific product and delivery of the finished product production, the higher the costs of its manufacturing
to a recipient [1]. are. Figure 1 presents the substance of this approach.
Therefore, waste is a key concept of LM. Taichi
Ohno, the creator of Toyota Production System [2],
has identified seven major types of waste:
Overproduction: Producing something when it is
not required or manufacturing amounts that exceed
demand.
Excessive inventory: Stockpiling inventory that
exceeds the level required to guarantee continuity of
sales or production. Fig. 1. The idea behind Lean Manufacturing; VA – value
Defects: Eliminating the so called “hidden facto- added activities, NVA – non-value-added activities [6].
ries”.
Overprocessing: Actions that are useless and do Six Sigma
not add value and inefficient processing caused by
tools in bad condition.
Unnecessary transportation: Excessive trans- Similar to LM, Six Sigma is a strategy of enter-
portation of materials between particular production prise management aimed at boosting financial results
stages. by systematic improvement of processes and reduc-
Unnecessary motion: Excessive motion of an op- tion of their variability. Six Sigma utilises strictly
erator during a production process, for example, determined data collection methods and statistical
searching for elements or tools, or reaching for or analysis tools in order to find reasons for defects and
relocating them. methods to eliminate them (based on [7] and [8]).
Waiting: Materials waiting for further processing Variability is a key notion of Six Sigma. Since
and waste of machines’ and workers’ time. manufacturing costs represent a function of variabil-
According to Taichi Ohno [3], the worst types of ity of a manufacturing process, the main goal of Six
waste in mass production systems are overproduc- Sigma projects is reduction of variability. The low-
tion and excessive inventory. A pull system he has er the variability of a manufacturing process is, the
proposed combines consecutive processes in such a greater the stability and predictability of the process.
way that the previous process can start production Moreover, if variability of the process decreases, man-
only when a signal (e.g., kanban) has been sent by ufacturing costs and improvement of financial results
the process which follows. are more likely to increase.
LM [4] methodology assumes that only 5–15% of Statistical measure of variation is represented by
all activities add value to a product (value-added ac- a standard deviation σ. An organisation which has
tivities). It means that the remaining 85–95% is pure adopted Six Sigma management strategy should at-
waste. It must be stressed that the above values refer tempt to reach Six Sigma quality level. It means that
to a total time a product “remains” in the manufac- the variance nonconformity fraction equals 3.4 per
turing system. That period includes storage of raw one million likely to emerge.
materials, semi-finished and finished goods, as well as Figure 2 presents the relativity of a quality lev-
time spent waiting for processing in particular man- el measured by the Six Sigma strategy. This level
ufacturing cells. depends on two factors: requirements of a process
Following this course of reasoning, LM focuses on (e.g., requirements of a customer, a process, stake-
eliminating the types of waste specified above, with holders) and individual variability of a process. With
particular emphasis on overproduction and excessive the predetermined “a” level of a customer’s require-
inventory, since they constitute the largest part of ments, the blue process with a variance of 6σn has
non-value-added activities [5]. Six Sigma quality level (6σa). Using the same “a”
In 1926, Henry Ford made the following state- level requirements, the red process with its own vari-
ment: ance of 6σc has 3 sigma quality level (3σa). The same
“One of the most noteworthy accomplishments in red process has Six Sigma quality level (6σc) when a
keeping the price of Ford products low is the gradual customer’s requirements are at the “c” level, whereas
shortening of the production cycle. The longer an ar- the same blue process reaches 3 sigma quality level
ticle is in the process of manufacture and the more it (3σb) when a customer’s requirements are at the “b”
is moved about, the greater is its ultimate cost” [6]. level.
Unauthenticated | 89.67.242.59
Download Date | 6/2/13 7:25 PM
Management and Production Engineering Review
Fig. 2. Measuring quality level of processes with the use of Six Sigma [7].
Apparently, in economic reality, expectations of this method, tangible results can be observed in a rel-
customers are becoming higher and higher and com- atively short term, while in the long term the method
panies, in principle, cannot influence this. However, is less effective and should be used as a kind of intro-
what companies have impact on is variability of their duction to Six Sigma. On the other hand, Six Sigma,
manufacturing processes. Six Sigma provides tools due to its relatively formalized procedure, brings re-
which enable control and reduction of process vari- sults later, but these results have larger “gravity”
ability. In addition, with specific customers’ require- in economic sense. Is this true? No one knows. The
ments, application of these tools can support com- fact is, however, that LM is perceived as a “softer”
panies in their attempts to reach Six Sigma quality method than Six Sigma, because the tools it uses are
level. It can be graphically represented as a change not based on a properly established scientific foun-
of the red process into the blue process where the dation.
level of customer’s requirements is “a”.
A conclusion that can be drawn while analysing Fig. 3. Reaching strategic goals with the use of LM and
Lean Manufacturing and Six Sigma is that despite SS [source: own work].
many differences, the two methodologies have one
important common feature: they both belong to a LM focuses on eliminating waste such as non-
group of variance management strategies focused on value-added activities (NVA). In economic terms
achieving the satisfaction of stakeholders. Moreover, they weigh less than value-added activities (VA) and
both methodologies name added value, process im- reduction of variability of non-value-added activities
provement and engagement of top managers as pre- is the major area of concern of Six Sigma. It is also
requisites of success. However, the methodologies dif- more difficult to demonstrate savings accrued from
fer in terms of approach to reaching the assigned LM because some enterprises prefer to calculate sav-
goal. In principle, LM concentrates on eliminating ings received from value-added processes and settle
waste, whereas Six Sigma on reducing variability. their accounts in relation to them.
This concept is presented in Fig. 3. Among the major types of waste specified above,
Major objectives of both approaches correlate; which remain the major area of concern of LM, one
therefore, they can complement each other. Under- can easily notice correction of defects, which Six Sig-
standing the main differences between these method- ma also pays much attention to. Interestingly, ac-
ologies is indispensable to their effective application cording to LM, it is overproduction and excessive
in business practice. Some authors [9] prove that LM inventory, not defects, which are the most harmful
works better in the case of simple problems. Owing to to manufacturing systems.
Unauthenticated | 89.67.242.59
Download Date | 6/2/13 7:25 PM
Management and Production Engineering Review
Table 1
Differences between LM and SS [source: own work on basis [1, 3, 7, 9]].
Attribute description Lean Manufacturing Six Sigma
1 Aim of the method Elimination of waste. In princi- Reduction of variability. In principle, fo-
ple, a focus on non-value-added cus on reduction of variability of processes,
process steps. which by definition should add value.
2 Necessity to understand the need Required Not required
for changes for all employees
3 Economic effect Not always specified and often Necessary for commencement of a project
difficult to calculate.
4 Process improvement according to PDCA DMAIC
the cycle
5 Organizational structure Usually not very formalized Usually very formalized
6 Employee engagement Everyone involved Involvement of everyone is not required.
7 Constant improvement A constant improvement of Improvement of the processes is continuous
processes. only when it is economically profitable.
8 Necessity to train employees Required for everyone. However, Not required for everyone. Only people se-
trainings are limited to presenta- lected to undertake projects undergo train-
tion of general rules. ing. Unlike in LM, the training is highly spe-
cialized.
It has been justified by the assumption that over- • Wide product range: The company produces
production and excessive inventory cause other types around 5,000 different finished goods using ap-
of waste; therefore, eliminating them can indirectly proximately 25,000 various semi-finished products
diminish the level of emerging defects. and components.
Since there is no single universal method capable • Low-volume production: Single orders comprise
of solving all the problems, there is no point in try- from 10 to 500 pieces.
ing to prove which approach is generally better. Both • Large part of manual work in the entire technolog-
LM and Six Sigma have their advantages and disad- ical process: Payroll costs represent approximately
vantages and significantly differ (Table 1). The most 40% of direct manufacturing costs.
important thing, however, is that owing to these dif- • Stabilized manufacturing technology.
ferences, the methods can be applied simultaneously. • Level of stockpiled raw materials, materials, semi-
Utilised together they can bring more profits than if finished goods, work in progress and finished
used in separation. goods is relatively high and constitutes 25% of the
value of annual manufacturing costs.
Effectiveness of Lean Six Sigma
on the basis of a selected enterprise Outcome of Lean Manufacturing
Description of the analysed production implementation
system
The first LM implementation projects in the
The analysed company is situated in Poland and analysed enterprise date back to 2006.
forms a part of an international corporation that spe- Considering the organizational structure of the
cializes in manufacturing medical items. The compa- enterprise, LM has been implemented in modules. A
ny produces over 3,500 models of medical tools, over separate implementation team has been assigned to
1,500 different cardiac and haemodynamic packages, every project and each team has dealt with tasks of
and stents and right heart catheters with nationwide a particular department.
quality parameters. The company’s manufacturing Prior to LM implementation, an LM training cy-
sector in Poland employs over 1,300 people in two cle for managers of the analysed enterprise was con-
locations. ducted. The trainings took place regularly, and in ac-
Over 1,050 people work in the device manufactur- cordance with LM principles, involved all front-line
ing segment, whereas 250 work in the angiography employees.
supplies segment. Several different projects connected with LM
The main features of the analysed manufacturing have been implemented so far. One of them, and the
system are as follows: most typical, is presented below.
Unauthenticated | 89.67.242.59
Download Date | 6/2/13 7:25 PM
Management and Production Engineering Review
LM project in the scissors department duction line one piece flow occured as a sequence of
technological operations.
The project in the scissors milling department Figure 4 shows the effect of conducted Value
was preceded by Value Stream Mapping (VSM) Stream Mapping, so-called Current State Map. It
workshops dedicated to a selected group of semifin- presents, that the time of adding value, which is less
ished milling parts of scissors (more than 100 differ- than a minute, is only 0.02% of the total lead time
ent models of semifinished scissors parts). A daily de- in the studied area of almost 11 working days. It was
mand for semifinished scissors parts was 2000 pieces due to keeping a large inventory of work in progress
with no substantial deviations. (WIP) before each production cell.
The result of VSM was replacing Batch and The result of the conducted LM project was
Queue approach for the production of semifinished preparation of Future State Map, namely the desired
milled scissor parts with One-Piece Flow approach. new organization of production line where One Piece
Work content of the technological process has been Flow approach is possible. Figure 5 presents the Fu-
analysed and the process has been balanced once ture State Map. A marked reduction in lead time by
again (Oparator Balance Chart and Machine Bal- combining separate production cells in a line can be
ance Chart). The production batch has been reduced noticed. The new organization allowed for a signifi-
from 200 to 50 pieces. Within the newly created pro- cant reduction in WIP.
Fig. 4. Value Stream Mapping (VSM) Milling Scissors – Current-State Map [source: own work on basis [10]].
Fig. 5. Value Stream Mapping Milling Scissors Line – Future-State Map [source: own work on basis [10]].
Unauthenticated | 89.67.242.59
Download Date | 6/2/13 7:25 PM
Management and Production Engineering Review
Table 2
Expected Savings after OPF Implementation [source: own work].
Type Lead Time WIP (Pieces) Inventory SFG Production Space Workers
Storage PL07
Current In average 20 000 pieces 40 000 pieces
approx. 11.5 m × 4 m = 46 m2 2.5 Workers
conditions 10 days (10 days × 2000 pieces per day) 400 000 PLN
Max of one shift
0 PLN annual
One – Piece (approx. 2 000 pieces) frozen capital Less than
1 day Annual frozen savings approx. Estimated 30 m2
– Flow condition capital savings 2.5 workers
30 000 PLN
approx. 15 000 PLN
To get to the future state no significant investment has to be done!
Results of implementation of all activities based It only implies that it has not been given enough at-
on a map of future circumstances have been present- tention. During these projects, the entire emphasis
ed in Table 2. Most of all, considerably long process has been placed on reduction of work in progress and
duration and high inventory level, which charac- warehouse inventories. The effects have been reached
terised the semifinished parts of scissors production when previously independent production cells were
prior to introduction of the changes, could be re- connected by supermarkets taking on the role of FI-
duced. In summary: FO queues. By this means, excessive inventory be-
• the average order lead time has been reduced from tween production cells has been reduced, and thus
10 to 1working day and is the effect of 10 times movement of materials between workplaces has been
WIP reduction, improved.
• the stockpiling period of semifinished parts has In order to check the reasons for the staus quo, a
dropped from 40 to 0 days, video analysis of work in two areas (chip machining
• due to the above, annual amount of PLN 45,000 on conventional machines in the surgical clamps and
was gained as a result of the reduction in frozen in scissors department) has been conducted. These
capital. two areas differ mainly in production organization.
Based on the mentioned project and its outcome, Semifinished parts of clamps are milled in the sepa-
it is possible to point out the major benefit of LM rate cells (Batch and Queue). Yet, semifinished parts
implementation. The benefit consists in shortening of scissors are produced in the production line (One
and stabilizing lead time. As a result, inventory can Piece Flow), which is the result of the presented
also be reduced and, in economic terms, requires less above LM project.
financing. The analysis consisted in filming the entire area
However, the undertaken projects have not pro- from a bird’s-eye view, allowing the following mea-
vided measurable proof that LM contributes to a sures to be established for each production cell:
substantial (as it is presented in reference books) • total duration of value-added-activities (VA);
20–30% boost of labour productivity. The results marked in green; the aim of the assessment was
presented below in the pie charts prove, that there to verify if work performed in a given cell was in
is no significant difference between the efficiency line with technological objectives,
of labour force operating in the areas where LM • total duration of non-value-added activities
projects were conducted (OPF in scissors milling (NVA); marked in yellow; refers mainly to activi-
department) compared to areas where these kinds ties connected with resupplying a workstation,
of projects have not yet been performed (Clamps • total duration of activities perceived as waste;
Milling Department). There are several reasons why marked in red; refers to circumstances where a cell
tangible LM-related proof for productivity increase is not operating because an employee left a work-
in the analysed area cannot be delivered. The most station or remains at the workstation but performs
important causes are wide production assortment, activities unrelated to the nature of their work.
fluctuating demand for particular groups of products Owing to the analysis, it has been possible to
and a programme of acquiring new production items estimate the potential improvement of effectiveness
from other locations of the corporation. This does resulting from utilisation of LM. The outcome of the
not mean that productivity growth is unattainable. analysis is presented in Fig. 6–11.
Unauthenticated | 89.67.242.59
Download Date | 6/2/13 7:25 PM
Management and Production Engineering Review
Fig. 7. Total work time of 8 employees in the surgical Fig. 9. Total time worked of 4 employees in the surgical
clamps department; the first day [source: own work]. clamps department; the second day [source: own work].
Unauthenticated | 89.67.242.59
Download Date | 6/2/13 7:25 PM
Management and Production Engineering Review
Unauthenticated | 89.67.242.59
Download Date | 6/2/13 7:25 PM
Management and Production Engineering Review
Outcome of Six Sigma belt. The number of black belts is to gradually rise
implementation to reach 8 as new green belts emerge.
The table below (Table 3) presents topics of 15
Six Sigma projects which were completed in the
The analysed enterprise first became interested last 12 months in the analysed production system.
in Six Sigma at the beginning of 2010. The compa- Projected annual PLN savings were estimated for
ny wanted to find an effective method to solve com- each project (Fig. 13). The aggregate amount of the
plicated manufacturing problems connected with in- planned savings on projects which have been con-
stability of manufacturing processes which caused a ducted so far has reached PLN 1.7M.
relatively high level of defects and corrections. LM The 15 executed projects of the Six Sigma pro-
techniques the enterprise had been using since 2006 gram have proven its incredible potential for generat-
had been inappropriate to successfully eliminate in- ing savings. Due to this, the programme is still sup-
stability of manufacturing processes. porting further development of the analyzed compa-
Formation of Six Sigma culture in the analysed ny. According to estimations, Six Sigma-related sav-
production system was initiated by gradual training ings will amount to PLN 20 million in the next 5
of managers and engineers of Six Sigma techniques years. With Six Sigma alone, projected productivity
at postgraduate studies. To date, 26 people have re- growth in the analyzed area will reach 15–20% a year
ceived the green belt level and 24 more people are to and amount to 80% after 5 years (Fig. 14).
achieve the level within the next year. Currently, 4 An example of a completed Six Sigma project
out of 26 green belts have been training for a black sheet is presented below.
Unauthenticated | 89.67.242.59
Download Date | 6/2/13 7:25 PM
Management and Production Engineering Review
Table 3
Summary of completed Six Sigma projects [source: own work].
Unauthenticated | 89.67.242.59
Download Date | 6/2/13 7:25 PM
Management and Production Engineering Review
Fig. 13. Example of a Six Sigma project sheet [source: own work].
Fig. 14. Outcome of implementation of Six Sigma projects [source: own work].
Unauthenticated | 89.67.242.59
Download Date | 6/2/13 7:25 PM
Management and Production Engineering Review
Unauthenticated | 89.67.242.59
Download Date | 6/2/13 7:25 PM