2 Waste Elimination Overview

7/27/2019 2 Waste Elimination Overview

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Waste Elimination


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3

Growth Engines

El iminate

Redundancies

Develop Talent

Service

Merrill Lynch Six Sigma Focuses On FourSpecific Objectives


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4

ReduceVariabilityEliminateWaste

Growth

Merrill Lynch Six Sigma Integrates PowerfulApproaches to Better Achieve These

Objectives

Growth Engines

El iminate

Redundancies

Develop Talent

Service


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ReduceVariabilityEliminateWaste

Growth

DMAICLEAN

DFSS

DMAIC = Define, Measure, Analyze, Improve & ControlDFSS = Design For Six Sigma

Merrill Lynch Six Sigma is a System ofProven Methodologies

Growth Engines

El iminate

Redundancies

Develop Talent

Service


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Reduce

VariabilityEliminate

Waste

Growth

Process

Capabil i ty

FMEA

Mistake Proofing

Reliabil i ty

SPC

Process Mapping

DOE

C&E Matrix

Problem

Solving

Systems

ThinkingVisualControls

Value SteamMapping

5STakt

Standardize

UnpredictableDemand

BalancedWork

JIT

SupplierCapability

QFD

AxiomaticDesign

PredictiveModeling

ProductDevelopment

Marketing & Sales

TRIZ

DMAICLEAN

CTQ

DFSS

It Is a Network of Processes Backed by aSet of Robust Tools

Lets look at the first of these 3 Key Components

Growth Engines

El iminate

Redundancies

Develop Talent

Service


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Lean Thought Leaders

Historically, firms have been organized, based on functional silos andpoorly defined processes. They are loaded down with non-value-added

waste

Based on the successes of Toyota and other highly efficient firms, the

authors of The Machine That Changed the World and Lean

Thinking have defined an idealized model for operational efficiency,and a means to pursue that ideal

Lean or as we describe it at Waste Elimination, amongst other

things, is also known as Toyota Production System, Ford Production

System and Demand Flow Technology

Lean demands an organizational culture that is intolerant of waste inall forms


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Benefits of Lean

Significantly reduced process cycle-time Elimination of costly non-value-added activities

Enhanced value creation and team focus

Reduced non-recurring and indirect costs

Improved utilization of scarce resources

Maximized synergy among all related processes


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The Role of Lean

The methods of Lean provide an efficient way to reduce operational

waste, save time, save cost, and extend capacity of valuable resources

A typical waste-filled value stream...

Task Waits

in Queue

Deliverable

Created

Desired

Outcome

Unnecessary

Task

Approval

Cycle

Error-Correction

Loop

...and a lean value stream for the same process:

Desired

Outcome


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Lean Removes Obstacles to Improvement

Poorly defined organizational roles and responsibilities Chaos resulting from fire fighting and expediting

Habit of managing through a functional organization

Lack of well-defined and efficient processes

Poor utilization of valuable human and capital resources

Lack of metrics focused on client value-added processes

Lack of productivity enhancing work methods

Lack of uniform prioritization of work


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New Competition - New Standards!

010

2030

4050

6070

80

P

ercentIncrease

inProductivity

(1997

-2001) Dramatic Improvement

In Just the Last

Four Years!

Source:BusinessWeek

January8,

2001

Improved work methods have enabled significant productivity

improvement in virtually every industry... Dont get left behind!


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How Lean Do You Think You Are?

The Opportunity* 20% - 60% Reduction in Process Cycle Times

>50% Improvement in Resource Utilization

10% - 50% Increase in Gross Margins

>30% Gain in Process Capacity

Dramatic Improvement in Schedule Predictability

* Based on reported results from firms spanning several industries, 1999 - 2000


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Our goal is to eliminate Type 2 activities wherever possible, and minimize

the waste in Type 1s through the use oflean methods.

Definition of Value

Any activity or task that transforms the deliverables of a process insuch a way that the client is both aware of it, and willing to pay for it, is

value-added

Based on this (strict) definition of value, we can divide the tasks and

activities of any process into three categories Value-added (essential) tasks

Type 1 Waste - Non-value-added (NVA), but currently necessary

Type 2 Waste - Non-value-added (NVA), and not necessary


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Value-Added Quiz

Activity Value Added Type 1 Type 2

Attending a weekly team coordination meeting

Filtering through your daily e-mail list

Reporting status to upper management

Gaining multiple approvals on documents

Gaining management approval for routine actions

Expediting a document through the approval list

Writing formal policies and procedures

Writing brief work-method instructions

Gaining regulatory or agency approvals

Creating ISO 9000 documentationHunting for needed information to do your job

Building a best practices database

Holding a lessons learned meeting

Spending time on process improvements

In which category should the following activities be placed?


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Lean can be summarized in five principles*: Principle 1 - Precisely specify the value of a specific process

Principle 2 - Identify the value stream for each process

Principle 3 - Allow value to flow without interruptions

Principle 4 - Let the client pull value from the process

Principle 5 - Continuously pursue perfection

* Womack, J. P. and D. T. Jones, 1996, Lean Thinking, Simon & Schuster

The Five Principles of Lean

. . . Provides a Framework for Waste Elimination


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Principle #1 - Specify the Value

IncreasedValue

ofProcess

Output

Cost of Process Output

Point of Optimized

Output Value

Too Much

Information,

UnnecessaryFeatures, Etc.

Missed Value

Opportunities


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Revise

Continue

C/T = 14 days

W/T = 2 days

VA/T = 1 day

Customer

Meetings

C/T = 14 days

W/T = 2 days

VA/T = 1 day

Verify

Customer

Requirements

C/T = 5 days

W/T = 2 days

VA/T = 4 hours

Consult With

Manufacturing

Engineer

C/T = 5 days

W/T = 2 days

VA/T = 1 day

Create

Preliminary

RFQ

C/T = 14 days

W/T = 2 days

VA/T = 1 day

Gather Strawman

Requirements

C/T = 3 days

W/T = 4 hours

VA/T = ~ 0

Assign Buyer

C/T = 5 days

W/T = 1 day

VA/T = ~ 0

Review and

Approval Cycle

C/T = 5 days

W/T = 2 days

VA/T = 1 day

Create Final

RFQ

C/T = 5 days

W/T = 1 day

VA/T = ~ 0

Review and

Approval Cycle

C/T = 2 days

W/T = 1 day

VA/T = 2 hours

Release RFQ

Continue

Triggering

Event

C/T = Calendar Time

W/T = Work Time

VA/T = Value-Added Time

As-Is Process

Cycle Time*:

C/T = 58 days

W/T = ~14 days

VA/T = 5 days

Measurable

Deliverable

* Assumes no revisions!

Revise

Iterate

Principle #2 - Identify the As-is ValueStream

The Value Stream is theideal sequence of value-creating steps that leadfrom a triggering eventto a final deliverable

without waste.


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Value

There can be many obstacles

to the flow of value!Client

Functional Departments/Inadequate Resources

Batch

Processes

ExcessiveInventory

Unnecessary Documents and Approvals

Unnecessary Queues and Wait Times

Principle #3 - Eliminate Obstacles to the Flowof Value


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Principle #4 - Let the Client Pull Value

If every activity within a process has a deliverable, and...

every deliverable must be received by some client

Then

the best way to ensure a satisfied client is to have

them define the format and content of their deliverables.

For recurring production -

Build to demand

Kanban/pull linkages

JIT material flow For business processes -

Client defined deliverables

Linked tasks

JIT information flow


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It takes about a week for

THIS to look like THIS!

Principle #5 - Continuously Pursue Perfection

Waste constantly invades every work processDisorder tends to naturally increase (entropy effect)

Constant vigilance is essential to maintain lean production and lean

business processes!


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Some Examples of Waste and AssociatedLean Methods

Lean Business Processes

Process Looping

Long Cycle Time

Capacity BottlenecksPoor Communication

Missing Information

Straw manning/Feed-Forward

Transaction Time Reduction

Global Task PrioritizationVisual Communication/Control

Centralized Information Access


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Any or all of these measures can be used to quantify progress toward lean

business processes:

Capacity to

Handle New Work

Process

Cycle-Time

Level of Employee

Multi-tasking

Length of

Process QueuesProfit Margin

on Sales

Productivity per

Employee

Return on Capital

Investment

Consistency of

Delivery

Measurable

Improvement

Metrics of Lean


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Module Objectives

By the end of this module, the participant will be able to: Explain the History, Benefits and Role of Lean in Eliminating Waste

Discuss potential improvements from implementing Lean

Identify value added activities

Discuss the Five Principles of Lean

Review potential metrics for Lean


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Reference Material

Waste Elimination Cheat Sheet and Key Questionsto Ask


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Who was involved in the creation ofthe value stream maps? Was it a

cross-functional team?

What was your method for

measuring process time

observations (cycle time, lead time,

work or touch time, calendar time,

etc.)?

Did you walk the process to

validate the value-stream map?

How did you create the future state

value stream map?

Can we remove those process

steps that do not add value?

What are the baseline metrics

(RTY, takt time, failure rates, defect

types, etc)?

Value Stream Mapping Questions

1. Precisely specify the value of a

specific process

2. Identify the value stream for each

process

3. Allow value to flow without

interruptions; eliminate obstacles

4. Let the client pull value from the

process5. Continuously pursue perfection

The Five Principles of Lean

1. Mapping the process allows us to

understand process to improve

2. Value stream is all actions required

to bring a specific product/service

through three critical tasks: Problem solving

Information management

Physical transformation

3. Identify value-added activities

4. Define opportunities to remove

non-value-added steps

5. Value Stream Map of the ideal

process (future state)

Value Stream Mapping

Key Concepts

ValueAny activity or task that transforms the

deliverables of a process in such a

way that the client is both aware of it,

and willing to pay for it, is value-added.


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1. Workplace Organization

5S

Visual Workplace

2. Spaghetti Chart

3. Process Flow Diagram

4. Pareto Chart

5. Cause and Effect Diagram

Five Whys6. Process Reports and Assessments

Tools to Make Waste Visible

Key Concepts

TAKT Time

Demand Profile Establishment ("takt"

time) A German term that refers to the

tempo set by the conductor of anorchestra, it is a calculation that sets the

rate of production equal to the average

client demand.

The Eight Types of Waste

1. Overproduction

2. Inventory

3. Waiting

4. Transportation

5. Motion

6. Making Defects

7. Over-processing

8. Human Capability

Contributors to Waste

1. Unevenness

2. Overburden

3. Current Methods and Processes

Key ConceptsWaste

Identify types and contributors of waste

in operations.

Lean demands an organizational

culture that isintolerant of waste in all

forms


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EliminateWaste

ReduceVariability

Growth

Six Sigma Elements

The methods of Lean provide an efficient way to

reduce operational waste, save time, save cost,

and extend capacity of valuable resources.

Waste Elimination Report-Out

Questions and Key ConceptsKey Concepts

Implementation

Biased for IMMEDIATE actionJust do itmindset

Questions on Making Waste Visible

What tools to make waste visible have you used andhow were they helpful?

Was a waste chart useful in identifying times forstorage, handling, inspection and processing(SHIP)?

What interim actions have you taken to eliminatewaste?

Was a formal 5S conducted? Were safety itemsidentified? Actions? Did this have any impact on

operator/administrator morale?

Does the spaghetti chart indicate potential changes

to the layout?

Are additional techniques required?

Has a FMEA (Failure Modes and Effects Analysis)

been completed to identify potential risks of

changing the process?

What are your improvement plans and next steps toget there (including timing, responsibility and

expected results)?

How did the spaghetti chart change before and afterchanges?

Did the more detailed process flow diagram illustratemore than one way of doing things? Hidden

factory?

Process Blitz or Kaizen

Were expectations set for the Kaizen based on earlierfindings?

Was a plan in place to meet the expectations? What techniques were used?

How many Kaizens were conducted?

Did actions create a positive attitude towards changeand success?

How did before and after change metrics compare?

Was it a base hit or a grand slam?


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EliminateWaste

ReduceVariability

Growth

Six Sigma Elements

The methods of Lean provide an efficient way to

reduce operational waste, save time, save cost,

and extend capacity of valuable resources.

Waste Elimination Report-Out

Questions and Key Concepts

What are your next steps toward achieving your

improvement targets?

Can we lean the process more or is it necessary to

reduce variability first?

Can value-added activities flow better?

Was additional employee training necessary?

What process controls are being implemented to

ensure we sustain the gains?

Has the process owner taken responsibility for

maintaining the process after the team completed

its project? Is there a plan to revisit this process in the future or

have controls been established to ensure the new

capability level is maintained?

What is the expected improvement in terms of cost

reduction? Has finance been involved in the

project?

How did the level of cooperation and support that

you received during the project compare to your

previous history of making change? What should

we do differently to better support the next process

blitz?

Did you present and celebrate theaccomplishments?

What rewards (pins, cups, polo shirts, hats, etc.)

were distributed to participating team members?

Were the process changes properly documented?

Were improvements made part of standard

operations?

Document procedures

Standardized Operations

CONTROL PHASE

For the control on this stage of your project:

Key Concepts

Str ive for perfection

Improvement issues should be continuous


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