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Lean Metrics

“Data

is of course important in manufacturing

but I place the greatest emphasis on facts”

Taiichi Ohno

Objectives

Understand the importance of measurements to each level of operations and management Understand measurables

Understand how to use them in a production environment

Meanings, calculations, importance

What do you think was the result? Did this improve traffic safety? .Example    Police in Alexandria. DC. Virginia (outside of Washington. USA) were told that they had a quota of 25 traffic tickets per officer per month.

pay attention to it) (Hawthorn principal) -Traditional methods cause resistance to change > 'Old' metrics provide comfort > Metrics often used as basis for incentive . and I’ll tell you how I’ll perform” -People will perform to how they are measured (if you want to improve an area.“Tell me how I will be measured.

no metric should be taken Actions need to be in positive direction -Are we managing problems or “shooting the messenger”? .What do we do with measures? -Take time for metrics FOR A REASON -measuring only for a report is MUDA -If no action is taken from metric results.

 Performance measurement must tie directly to the goal of creating value for customers A change in the value of a performance measure should be felt by the customer of the process  ◦ If metrics show a change and the customer doesn’t perceive a difference. then we’re not measuring the right things or we’ve defined our customer incorrectly .

Performance measures act as both identifiers and quantifiers of improvement opportunities • Solutions to issues enable improved performance • Understanding supports the generation of good solutions • Measurement promotes understanding Improve Solve Understand Measure .

and update. Limited in number – Each area should have only 2-3 key 5. compile. Informative – Suitable metrics may not always reveal the source of an issue. but they need to alert us when problems exist measures 4. Directly impacted – Process changes should have a clear 3.Good performance measures are: 1. Complex calculations or excessive work may lead people to avoid them and measurable affect on the chosen measures 2. Simple – Use metrics that are easy to capture. Visually displayed – Results should be posted for all to see .

Performance improvements: metric records are basis for PDCA improvement activities. Alignment: Everyone can understand if they are supporting the goals.   . Feedback and Control: share information in real time to catch problems before they affect customer.

don’t rely on old data or reports (or even new ones).    Go to see the actual place Make first hand observation Talk to the people Look for current measurement tools and methods Know the real situation .   Insist problems are defined from facts. .

    Quality – First Time Through (FTT) Delivery – Build to Schedule (BTS) Flexibility – Lead Time Total Cost  Productivity  Material Use  Machine effectiveness (oee)  Downtime .

Definition: Measure ability to produce defect free products the first time without repair. Key Requirements:     Implementation of well-defined standards Stable/ capable processes Sound maintenance of equipment Empowered and skillful workforce .

Defect: Loss or something cannot be repaired.1. Example: B or C grade components/shoes 2. (rework inside of Takt time is not included) . Rework: Any part produced out of standard. that must be repaired offline or online with/without stoppage is considered rework.

Core Value Stream FTT= Quality Rate (Cutting) x Quality Rate (Prefit) x Quality rate (stitching) x Quality rate (Stockfit) x Quality rate (Final Assembly) Quality rate of Cutting : Measuring in pieces Total # pieces produced – (Defect+ Rework) Total # pieces produced Total # pieces = Daily target x # of pieces per pair Quality rate of Stitching . Stock fit & Final Assembly: Measuring in half pairs Quality Rate = Total # half pairs produced – (Defect + Rework) Quality Rate = Total # half pairs produced .

 Quality rate of Prefit: Measuring in pieces For embroidery. include in Prefit…and for those that come from a “supplier” or a brownfield part of the factory – just measure the bad parts received as defects. Total # pieces produced/received – defects Quality Rate = Total # pieces produced/received . HF. Upper Molding and the like.

 Bottom Process FTT: = Quality Rate (Outsole) x Quality Rate (PU) x Quality rate (PH) Quality Rate = Total # half pairs produced – (defects + Rework) Total # half pairs produced .

000 10 0 =9990 Outsole: Total # half pairs produced: Defect : Rework: 1.000 22 0 =978 Prefit: Total # pieces produced: Defect : Rework: 8.000 48 60 =892 Stitching: Total # half pairs produced: Defect : Rework: 998 2 120 =876 Phylon: Total # half pairs produced: Defect : Rework: 1.Daily Customer demand: 500prs/day Cutting: Total # pieces produced: Defect: Rework: 10.000 98 0 =902 Stockfit: Total # half pairs produced: Defect Rework 978 5 140 =833 Final Assembly: Total # half pairs produced: Defect Rework 973 10 150 =813 .000 5 42 =7953 PU: Total # half pairs produced: Defect : Rework: 1.

mix and sequence. Key Requirements No Overproduction Process capability Reliable material delivery Empowered and skillful workforce .Definition: Measure the ability to produce products to a plan which considers volume.

BTS = (volume performance) x (mix performance) x (Sequence performance) Volume Performance = actual # of units produced scheduled # of units Mix Performance = actual # of units build to mix actual # of units produced Sequence Performance = actual # of units build to sequence actual # of units produced .

Trblnc 9 A.95 . Cl BW 30 60 5 Volume Performance = actual # of units produced scheduled # of units Actual # of units produced = 95.Trblnc 9 50 Actual Production Actual Xcellerator A. Scheduled # of units = 100 Volume performance = 95/100 = 0.Production Plan Schedule A.CL BW 20 Xcellerator 30 A.

Actual # of units produced = 95 Mix performance = 85/95 = 0. Cl BW 30 60 5 Mix Performance = actual # of units build to mix actual # of units produced Actual # of units build to mix = 5+30+50= 85.CL BW 20 Xcellerator 30 A. Trblnc 9 A.89 .Trblnc 9 50 Actual Production Actual Xcellerator A.Production Plan Schedule A.

85 = 85% .95 Mix performance = 0.89 BTS = 0.95 x 0.BTS = (volume performance) x (mix performance) Volume performance =0.89 = 0.

Key Requirements:        Continuous material and information flow A focus on plant/operation constraint areas Work groups focused on waste Level /sequenced production Reduction in inventory levels Small batch size More frequent material delivery/withdrawals .Lead time Definition: Measure the time required for material and products to flow through the plant from raw material warehouse to finished goods warehouse.

Lead time .“Dock to Dock” Raw Mat’l Storage Manufacturing Lead Time FG Storage Raw Material Warehouse W I P Cut W W I Stitch I P P Assemble W W I Pack I P P Finished Goods .

Upper Value Stream L/T: LT of ( Raw Mtrl Storage W/H + Cut + Prefit + Stitching + Stockfit + F/A + F/G W/H) Cutting Raw Mtrl Storage area Prefit Stitching WIP F/A WIP F/G W/H I WIP I WIP I I .Lead time      Upper Value Stream L/T: Lead time of (R/M Storage W/H + Cut +Prefit + Stitching + Stockfit +Final Assembly + F/G W/H) Outsole L/T: Lead time of (O/S + S/F + F/A + F/G W/H) PU L/T: Lead time of (PU + S/F + F/A + F/G W/H) PHYLON L/T:Lead time of ( PHYLON + S/F + F/A + F/G W/H) Total DTD is the longest of the 4 measures above.

Outsole L/T: LT of (Outsole + Stockfit + F/A + F/G W/H) O/S S/F F/A WIP F/G W/H I WIP I WIP I PU L/T: LT of (PU + Stockfit + F/A + F/G W/H) P/U S/F F/A WIP I WIP I WIP I F/G W/H Phylon L/T:LT of ( Phylon+ Stockfit + F/A + F/G W/H) P/H F/A WIP F/G W/H S/F I WIP I WIP I .

5 + 0.5 hours (0.25 + 0.25 + 1.5days .75 +0.06 days Phylon Lead Time: 0.25 + 1.5 = 1.25 + 1.5days Upper Value Stream Lead Time: 0.25 day ) 1.25 day) 5 hours ( 0.5 hours (0.75 day ) 2 hours (0.56 day) 2 hours ( 0.25 + 1.56 day) 4.62 + 0.5 day ) 2 hours (0.000 pairs / 8 hours working day Lead time Lead time Lead time Lead time Lead time Lead time Lead time Lead time Lead time of of of of of of of of of Cutting : Prefit: Stitching : Stockfit: Outsole: PU: Phylon: Assembly : F/G W/H : 4 hours ( 0.25 + 0.5 = 2.25 + 0.5 days Outsole Lead Time: 0.25 + 0.* Daily customer demand is 3.5 = 2.56 + 0.62 day) 4.62 days PU Lead Time: 0.25 day) 6 hours ( 0.56 + 0.56 days Total DTD is the longest of the 4 measures: 3.25 + 0.5 = 3.

Cost reduction is an outcome. Key Requirements:   All production system tools (physical and cultural) Activity based focus .Definition: Measure the actual cost to produce a unit of production.  Note : Toyota focuses on the process of waste elimination.

Non-material cost : Labor + Overhead + B grades + Customer returns  .Total Cost per Unit: {material + Labor + overhead + B grades + customer returns } # of good units produced in a given period Notes:  Material Cost :all material actually used (not the specification or FOB calculation) including additional issued material.