Lean in a Lean Economy

Copyright EMS Consulting Group, Inc. 2008

Lean Manufacturing in a Lean Economy

Darren Dolcemascolo

EMS Consulting Group, Inc.


Lean Manufacturing in a Lean Economy

• You will learn:– The need to become lean today– Benefits you can expect by implementing a

lean initiative– Principles and steps of implementing a

lean program– Critical success factors—the reasons that

lean ideas fail in so many companies, and how to avoid these pitfalls


Presentation Agenda

1. Lean Manufacturing Principles and Benefits

2. The Lean Implementation Process

3. Pitfalls/Critical Success Factors

4. Q&A


• Not a set of Techniques• Structural System• The house is strong only if the:• Roof is strong• Pillars are strong• Foundation is strong• People are strong

• A weak link weakens the whole system

The TPS House Diagram

A System Based on a StructureGoal:

Highest Quality, Lowest Cost, Shortest Lead Time

Best Safety, High Moral

TPS

Just In TimeRight part-

Right amount-Right Time

JidokaBuilt-in-Quality

• Line Stop• Efficiency• Visual

Controls• Error

Proofing• Andon• 5 Whys

Operational StabilityStandardized Work TPM

KaizenLeveled Production

• Flow• Takt Time• Pull• Quick

Changeover

Toyota Production System


Lean Manufacturing Overview

• Value - A capability provided to a customer at the right time at an appropriate price, as defined in each case by the customer. Features of the product or service, availability, cost and performance are dimensions of value.

• Waste - Any activity that consumes resources but creates no value.


Lean Manufacturing Overview

• Lean Manufacturing is an operating philosophy that focuses on the elimination of the seven wastes:– Overproduction – Excess inventory – Defects – Non-value added processing – Waiting – Excess motion – Transportation


What does Lean do?

Value-Creating Time

Non-Value-Creating Time (waste)

Total Lead Time

Total Lead Time

Lean Transformation


Lean Manufacturing OverviewMeasure Initial Lean Conversion Continuous

Improvement

Labor Productivity Double Double Again

Production Throughput Times

90% reduction 50% reduction

Inventories Throughout 90% reduction 50% reduction

Errors Reaching Customers


Scrap 50% reduction 50% reduction

Time to Market / New Product Development


Lean Thinking, Womack and Jones, 1996


Lean Conversion Process

“The greatest enemy to tomorrow’s success is sometimes today’s success.”

- John Maxwell


Current State of Our Economy

• Credit Crisis: Difficult for Businesses to Obtain Credit to– Meet Payroll– Purchase Raw Materials– Grow as a company

• Unemployment on the Rise• Major Recession


How Can Lean Help?

• Current Economic Conditions create an opportunity for lean thinking – a need to go lean based on survival!

• Applying lean principles will create the following:– Shorter Lead-Times to Customers– Net Decrease In Inventory- Frees Up Cash– Productivity Growth- increases capacity without

additional capital/hiring– Quality Improvement- lowers costs and attracts

additional business


How Can Lean Help: Shorter Lead Times

• Benefits to Operation– Ability to Quote Jobs Faster– Ability to Process Orders Faster– Ability to Get Orders to Production Faster– Ability to Process Jobs Through Production

Faster• Competitive Advantages

– Attract more business– Get paid faster/rely less on credit


How Can Lean Help: Decrease in Inventory

• Benefits to Operation– Freed up floor-space– Freed up cash

• Competitive Advantages– Have cash on hand for expansion of

business or to handle short-term “down” periods


How Can Lean Help: Productivity Growth

• Benefits to Operation– Lower Product Costs– Increased Capacity

• Competitive Advantages– Increased profitability – Ability to compete on price due to lower

costs– Attract more business


How Can Lean Help: Quality Improvement

• Benefits to Operation– Lower Product Costs– Better Quality Product Produced

• Competitive Advantages– Increased profitability – Attract more business


How Can Lean Help: Bottom Line

• Lean thinking will help a company become self-reliant:– Fuel for growth by producing better quality, lower

cost products with the shortest lead times.– Ability to Grow without relying on the availability of

credit from financial institutions.


Lean Conversion Process: Lean Thinking

• Specify value – can only be defined by the ultimate customer

• Identify the value stream – exposes the enormous amounts of waste

• Create flow – reduce batch size and WIP

• Let the customer pull product through the value stream – make only what the customer has ordered

• Seek perfection – continuously improve quality and eliminate waste


Value Stream Approach• Select Product Family• Create current and future state maps• Develop and manage action plan using

Project Management approach


Planning Tool: Value Stream Mapping

• Definitions

- Current State Map – Map showing information and product flow as it is currently done.

- Future State Map - Map showing an attainable information and product flow with significantly less waste than that of the current state.


Value Stream Mapping

• Purpose of Mapping– To identify and eliminate waste in the value

stream.• End Product of VSM

– Picture of “future state” with an action plan to achieve it.

– Prioritized Projects


Value Stream Mapping: Current State

• Begin mapping at the end of the process (customer) and work backwards.

• Then, map the information flow from your customer back to your supplier.

• Connect the two.


Current State Value Stream Map

Process C

Data

Customer

Units/day

Production

Control

MRP

Process B

Data

Process A

Data

Raw Matl.

Units/day

Supplier

Value Creating Time = 180 seconds

Lead Time = 18 days

Material Flow

Information Flow

I I I


Value Stream Mapping: Future State Elements

• Flexibility• Short Lead-Time• Connected Processes• Flow Loops• Simplified Information Flow• Awareness of the Customer Requirement• Scheduling one point in the value stream


Kaizen Event Approach

• Kaizen Event Overview– 3 to 5 day breakthrough event– “Working level” participants w. facilitator– Appropriate for use with several lean tools– Appropriate for new implementations and

for continued improvement


Kaizen Events

• Typical Tools– 5S– SMED (Single Minute Exchange of Die)– TPM (Total Productive Maintenance)– Mistake Proof (Poka-Yoke)– Visual Controls– One-Piece Flow/Takt Time/Layout


Kaizen Events

• Kaizen Event Process– Educate (1/2 – 1 day) – Lean with emphasis on

particular tool– Set goals– Map out baseline– Brainstorm ideas– Select ideas and formulate future state– Develop plan to implement future state (Implement

as much as possible immediately- during event.)


Kaizen Events

• Advantages– Exciting experience for all involved– Can Accomplish Improvement Rapidly– Participants learn a great deal– Skeptics can be won over– Valuable tool for implementing aspects of a

value stream improvement


Kaizen Events

• Disadvantages– Improves points in the process but without VSM

approach, does not lead to flow across the enterprise

– Action list at the end often is ignored- important to meet weekly until complete.

– Tendency to revert to old methods after the event.– No lasting cultural change.– Tendency to judge events on short-term cost

savings only


Where to Start- Toyota’s 4 P’s?

1. Philosophy – Hold an off-site meeting of top leaders and define your company’s vision

2. Process – Begin implementing a connected value stream.

3. People – Train and indoctrinate your people into the new lean way of thinking, effecting culture change.

4. Problem Solving – Train people in a problem-solving methodology and give them time to meet in groups and solve problems.


Typical Approach that Works1. Perform an assessment and develop an overall

plan for implementation. Create a Company X Production System based on an assessment.

2. Select some key items/pilot projects for process improvement (based on an assessment) and implement kaizen/5S.

3. Combine VSM approach with problem solving and 5S training.

a) Use the Value Stream Mapping approach to identify improvement projects (both kaizen and “six sigma” projects)

b) Roll out 5S implementation and basic problem solving training plant-wide to build momentum.


Typical Approach that Works4. Implement the projects/roll out lean training in small

bites in conjunction with projects5. Continue expanding by value stream (or

department), whichever makes more sense.6. Extend across entire organization.7. Create a Lean Promotion Function.8. Develop a growth strategy for additional business.9. Extend Lean to Your Suppliers.


Pitfalls/Barriers• Too much compromise/Lack of Leadership

Commitment to Lean• Tendency to Revert Back to Old Ways when

setbacks occur• Tendency to use TPS/Lean as a Cookbook• Tendency to make surface changes without

applying lean principles properly (customizing to suit the situation)

• Short-Term Thinking at the Expense of Long Term


Roles in Change Process

Lean Coach

Executive Sponsor

Process Owner

Value Stream Team

Resources Accountability


Leadership• Top management support /commitment is

critical for successful lean transformation.• Support and commitment means not only lip

service but $$, resources, making difficult decisions, and eliminating roadblocks.

• Middle managers down to team leaders must become change agents- the transformation from skeptic to teacher does not happen overnight.


Lean Coach/Teacher• Internal or external lean expert that teaches

but does not do the work. The lean coach:– Leads model line programs – Leads value stream mapping– Leads kaizen events– Teaches lean tools and philosophy through

courses and improvement events– Coaches leaders at all levels– Develops the lean operating system (metrics,

principles, assessment approaches)– Internally promotes the lean transformation.– Externally learns and brings back new ideas.


Key Ingredients of Change

Change

Effort

Learn by doingEducation &mentoring

Accountability

Committed, Knowledgeable

Leadership

Structure• Organization• Documents• Roles/Resp

Participation &Ownership

Lasting Results

Toyota Way Fieldbook, Liker and Meier, 2005


Culture Change

• Education and changing metrics alone will not drive culture change

• Seeing/Experiencing is believing.• Lean must be tried and the word must

be spread through successes in pilot projects.

• Strong leadership is necessary to drive culture change.


Recap• The Current Economy is a compelling reason to

implement lean• Lean thinking will help a company become self-

reliant:– Fuel for growth by producing better quality, lower

cost products with the shortest lead times.– Ability to Grow without relying on the availability of

credit from financial institutions.• Lean Requires a Systematic Implementation

Approach• Lean Requires Strong Leadership


Lean Conversion Process

“Perfection is not attainable, but if we chase perfection, we can catch excellence.”

- Vince Lombardi


Questions?