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History of Manufacturing
• Made customer specific • Each product is unique • Variable quality / expensive

• Interchangeable - Whitney • Division of labor – Fredrick Taylor • Assembly lines & low variety – Ford

• High Variety • Small batches • Six Sigma Quality

What is LEAN? – Rock to Art
• “Lean is the elimination of anything not absolutely required to deliver a quality product or service, on time, to our customers” • LEAN is a fundamentally different business logic • LEAN is based on eliminating unnecessary actions • LEAN links value activity in a continuous sequence

• “Only a small fraction of total time and effort in an organization adds value for end customer”

Why LEAN? • Severe Competitions in all walks of business • Firms face reduction in margins to keep the market share • Every little saving will improve the economy • Time for every available resource to perform the best • Operation Cost reduction is critical to our survival • Profits = Price – Cost (price dictated by the market and cost incurred by us) • Cost = Activities involved (VA + NVA) .

it cant apply to our business • Its an excuse to take our jobs away • Zero Inventory . it is another Kaizen event 5S is all about cleaning up your office or workstation • We are different.LEAN – Some myths • • • • LEAN is a factory thing LEAN will not work here We tried it.

Mass Production vs. Dispose of inventory at fire-sale prices By Executive command and coercion Individualism and militarystyle bureaucracy Based on price Lean Production Makes what customers want with zero defects. Lean Production Mass Production Customer Satisfaction Makes what engineers want in large quantities at statistically accepted quality levels. when they want it and only the quantities they order By vision and broad participation Team based operations and flat hierarchies Based on long-term relations Leadership Organization External Relations Information Management Poor management based on Rich management based on abstract reports generated by visual control systems and for managers maintained by all employees .

minimal skills. Lean Production Mass Production Culture Lean Production Of Loyalty & obedience. long production runs. massive inventories Human scale machines. functional layout.Mass Production vs. multiskill. with input from customers & concurrent development of product and process design Production Maintenance By Specialists & Quality Design & Engineering Isolated genius model with little input from customers and little respect for production realities . zero inventories Equipment management by production & engineering Team-based model. one-piece flow. Harmonious culture of sub-culture of alienation and involvement based on labor strife human resources & long term relations Large-scale machines. cell-type layout.

LEAN Business System Common Goals Shared Vision Policy Deployment Cross functional Teams Value Stream Management Supply Chain Standard Production System Extended Enterprise Tools aligned to need .

LEAN & its Tools .

LEAN System .Benefits The Hard Ones (typical) • 15% growth in 1 year • 12% Productivity increment in 1 year • 20% Space saving in 1 year • 90% On Time Delivery in Full • 28% Throughputs Lead time reductions • Improved Supplier performance • Improved Customer Quality • Progressive MUDA Elimination .

Benefits  The Soft Ones • Flexible structures assigned to business goals • Roles & Responsibilities assigned to business goals • Process driven culture • Visual demonstration of achievements • Increased employee ability and morale • Visual abnormal situations • Focused application of resources for best return • Believable prediction of results .LEAN System .

LEAN Principles • Specify what creates value from customers’ perspective • Identify all steps across the whole value stream • Make those actions that create the Value flow at the pull of customer • Involve and empower Employees • Strive for perfection by continually eliminating the successive layers of waste. .

What is Value? • Value is what the customer wants. when they want it in the expected quantity and quality • To establish the “customers’ wants”. employ the QFD (Quality functional deployment) technique • To analyze the customers’ wants. use KANO model .

What if the characteristic is present? 2.KANO Model • Classify Characteristics as Basic. & 2=bad it is basic • If 1=good & 2=neutral. it is delighter • If the answer is “it depends. What if the characteristic is absent? • If 1=neutral. Performance and Delighter • Ask Two questions 1. it is performance .

Value Perception Activities Reality Resource % Value to Customer in % Produce Manuals 60% Hotline support 60% Answer Hotline 15% Locate Repair Respond to inquires Updates Manual availability 20% 10% 5% 5% Respond to letters 5% Locate Repair Revise Manuals 10% 10% .

Define Values in the Eyes of Customer • What Product / Service? • What attributes / Features? • What Quality Levels? • What Delivery? Rate Response time expectations • Are we measuring it? If yes. How? .

TDU (total defects per unit) • Productivity – (Units produced / man-hour) • Work In Progress Inventory • Purchased Inventory • Quality. shortage frequency of purchased items • Annual Inventory turns • Finished Goods inventory • Floor Space consumption (total sq ft x Rs/Sqft) 120 100 80 60 40 20 0 1st Qtr Measure What matters To customers 80 60 40 20 0 2nd Qtr 3rd Qtr 4th Qtr Quality Cost Delivery . Delivery.What to measure? • % On time delivery to customers • Do we meet what we promise our customers? • Cycle time & Throughput • Quality – RTY (rolled throughput yield).

fit.Value Adding Activity • Activities within the company or supply chain for which the customer would be happy to pay for • An activity that changes the size. shape. form or function of material or information as to satisfy customers’ demands and requirements .

Non-Value Adding Activity • Activities that do not contributing directly to satisfying customers’ requirements • Activities that consume resources but do not meet the customers’ demands or requirements • Necessary Non-value adding: NVA that are necessary under present operating system & will take time to eliminate .

Value Stream Information Flow Customer Value Sales & Mktg Design Order Entry & PPC Operation Finance Material Flow .

Value Stream • “The entire set of activities that requires to design. produce and deliver a product…” Design Continuous Improvement Purchase Manufacturing Quality Finance Sales Order Fulfillment Sales Acquisition New Product Development Technology Plant & Equipment HR Development Strategic Management / Policy Deployment .

Why Use Value Stream Mapping? • Helps us Visualize Flow • Helps us see waste. more importantly. the sources of waste • Ties together Lean thinking principles • Forms the basis of an implementation plan • Shows relationship between material and information flow • Enables us standardize operations and paves for continuous improvement .

30s C/O .30m D/T .30s C/O .30m D/T .90m D/T .7% Testing M-1 C/T .10% Q .10s C/O .5m D/T .6% 8 days Shipping 4 days Subassy M -4 C/T .10s C/O .Sample Map of Value Stream Supplier 1000/day Customer 800/day Machine M-2 C/T .16% Packing M-2 C/T .3% Q .14% Q .18% Q .11% 6 days 3 days 4 days Note: Value Adding time is 70 secs Inventory is 23 days! 10 days 2x/day 2x/week .

Process Activity Mapping .GOJO Activities FLOW VA Location Distance Time in secs People Cycle time Remove part from machine Inspect the parts Pack the parts Parts waiting Place the part in machine Insert ball in the pump body Pack the pump body in bags Spring assembly in spout Prepare for Assembly Stamp assembly Pack the parts in poly-bag Parts waiting / curing Scanning machine O Y N Molding Molding Molding Assy Assy Assy Assy Assy Assy Assy Assy Assy Assy 86400 10 2 86400 10 14 12 345600 1 1 T D T O N N N Y N 1 2 O O O Y N Y N 1 1 1 8 8 8 D O N N 1 10 .

WASTE • “Any activity that absorbs resources but does not create value…” • “Waste is so often in front of us that we always do not see it!” • “Most of our processing is a waste and it is an ongoing process to remove waste from each layer as to reach perfection” .

OHNO’S SEVEN WASTES WASTE IMPORT • • • • • • • MUDA of Waiting (material) MUDA of Inventory MUDA of Motion (man) MUDA of Processing MUDA of Over Production MUDA of Re-work / Reject MUDA of Transportation .

EIGHTH WASTE • Untapped Resources (Brainpower) • People are told to do & not asked to think • Problems are overlooked & opportunities missed • People lose motivation at work • Management spends time dealing with day-to-day affairs in lieu of focusing on longer-term issues .

Sources of Waste  Layout (distance)  Long setup time  Incapable processes  Poor maintenance  Poor working methods  Lack of training  Lack of adherence  Ineffective scheduling  Poor supervisory skills  Inconsistent performance measures  Functional organization  Excessive controls  No back-up / cross training  Unbalanced workload  No decision rules  No visual control  Supplier quality  Lack of workplace organization .

Value Flow at PULL of customer Four Key Elements of making Value Flow: • • • • TAKT FLOW PULL IMPROVE  Continuous Improvement in pursuit of perfection! .

TAKT Time • The Available operating time to satisfy customer demands • Establishes the pace. beat or cadence of the process • Takt time is used to balance the various loads and identify the bottlenecks in the process Net Available time per day in seconds  TAKT Time = ------------------------------------------------Customer demand per day in pieces .

the third flow – CASH FLOW starts pouring in” .FLOW • Product or service does not stop once it is launched • “No de-tours”. “no back-flows”. “no waiting” • Interruptions to in-flow work process are drastically minimized • Vigorously respond to flow stoppages with dedicated approach  “When information and material flows in opposite directions.

when it is wanted • Compare the volatility in orders with volatility in demand • Inventories needed to support a given level of sales (KANBAN) “Organizations are to be structured so customer can pull the value from the producer” .PULL • Work does not move until there is a need from the next process step • Make only what is wanted.

Impact of One Piece Flow Batch Flow Op #1 10 min Op #2 10 min Op #3 10 min 1pc/30min One piece flow Op #1 30 min Op #2 30 min 200 Piece Batch Op #3 30 min 3pcs/30min One-Piece Flow Cycle Time WIP 100 hours 600 30 min 3 .

Batch Flow & One-piece Flow 000 00 A B C D 000 00 A B C D 5 10 A 000 00 B C D 000 0 A 0 B C D A B 000 00 C D 000 A 0 B 0 C D 15 A B C 000 00 D 00 A 0 B 0 C 0 D 20 A B C D 000 00 0 A 0 B 0 C 0 D 0 Different Process Process time = 1unit / 1min .

0 parts/man-hour.” •Total time to produce one (1) part = 6+3+4+3 = 16 min •Total man time to produce one part = 6 x 4 = 24 min •Efficiency = 67% . we need 3.The Process & Situation 6 min 4 min 4 min 3 min “We’re getting 2.5 parts/man-hour.

33/man-hour (33% gain) •Efficiency = 89% • …… “but we’re still working overtime!” .First Improvement 6 min 3 min 4 min 3 min •Total time to produce one (1) part = 6+3+4+3 = 16 min •Total man-time to produce one part = 6 x 3 = 18 min •Productivity = 80 parts / 3 people = 3.

.Realization of Takt Time 6 min 3 min 4 min 3 min Productivity = # Parts Man Hours Capacity = Time available 6 min e.5/man hr e.g.g.. 80/shift . 2.

Second Improvement 6 min 3 min 4 min 3 min •Supports 2 lines & can operate 24 hours/day • Capacity = 240/day. allocated per line/product •Requires no additional support personnel •Material transport simplified •“Parts fall off the line” •Capacity = 120/shift •Efficiency = 10/12 = 83% Plant 1 Plant 2 .

evaluate and assess the process • Every incremental improvement uncovers the future flow of speed • Eliminating wasted steps and defects • Reducing inventories and volatility • Cutting management time devoted to firefighting and negotiating “The whole enterprise must pursue not its competitors but perfection” .Perfection • Continuously monitor.

teams and suppliers • The management of change from traditional mass production .Three Main Pillars of LEAN • The management of processes and an integrated logistics flow • The management of relationships with employees.

Fundamental Objective of LEAN thinking • Shift the focal plane of management to differentiate Value from Waste • Start with primary actions affecting each product. rather than organizations. technologies and assets .

Input: Organizational attributes of LEAN • Integrated One-piece flow  Small batches  JIT made  Low inventories • Team based work organization  Multi-skilled  Few indirect staff • Defect Prevention • Level Scheduling • Production pulled  By customer  Not pushed to suit machine loading • Active involvement  Root cause analysis  Eliminate NVA & Variability • Close Supply Chain Integration  Partnership not adversarial .

LEAN is ongoing as priorities change • LEAN is the foundation of competitiveness .Overall Summary • LEAN is not just manufacturing • LEAN is no quick-fix – it has a long history of success • As the “onion is peeled”.

LEAN Road Map Commitment To LEAN Develop LEAN Structure Focus on Value Stream Adapt LEAN Decision to Pursue LEAN Focus on Continual Improvement Implement LEAN projects Create Implementation plan Pilot LEAN Implement ation .