Implementing the Lean Transformation in a Flow Processing Environment

Derek SteepleDe Montfort University

The Nature of Customers

• They pay the bills - usually• They know what they want - most of the

time• If you have a need you have to buy• If you have a product you can’t necessarily

sell it• No customers - no business• Sales and no profit - no business

Market Qualifying Criteria

Required to enable a company to operate in a market place

Order Winning Criteria

If a company is qualified to operate in a market place order winning criteria are those factors which have to be satisfied to have a possibility of winning an order

QCD Performance Measures

• PPM not right first time• Value added per employee (VAPE)• Overall equipment effectiveness (OEE)• Stock turns• Floor space utilisation• People productivity (PP)• Delivery schedule adherence

What is World Class Manufacturing ?

• Being the best?• Being the lowest cost producer?• Delighting the customer?• Schonberger’s Agenda?

What is World Class Manufacturing ?

• Product quality right first time - every time• Reduction of waste in the manufacturing

system• Managing through people, teamworking and

orientating all individuals to a set of customer- and profit-driven goals

• Flexibility and control in satisfying customer requirements on time - every time

World Class and Lean

The Lean Transformation is seen today as the best way of achieving

World Class Objectives

The 7 Wastes

• Scrap• Waiting• Inventory• Motion• Transportation• Over production• Over processing

The Value Stream

Logistics Operations Marketing& Sales

Service

Company infrastructure

Personnel management

Technological development

Acquisition

Primary activities

Profit margin

A Lean Manufacturing System

• What it is• What the benefits are• How to do it• Case studies

Roots of Lean Thinking in Toyota

• Post-war rebuilding of Japanese industry• Study of American Auto industry• Mass production, large-batch Fordism

wouldn’t work• Market was small• Manufacturing flexibility was needed• Ingenious people created simple tools

Toyota Philosophy and Framework 1

• Doing it all for the Customer• Levelled production• Pull system• Continuous-flow processing• Takt Time• Multiskilling

Toyota Philosophy and Framework 2

• TQM• TPM• Poka Yoke• AQP• SPC• Standardised work• Kaizen

What is Lean Manufacturing

•Lead time reduction– Regular production– New products

•Flexibility improvement•Variability reduction•Cost reduction

Characteristics of Lean Production

• Customer Driven• Profit Driven• Team Based• Fewer Players• Devolution of Responsibility

Characteristics of Lean Supply

• Total acquisition cost driven

• Supplier reduction

• Co-operative relationships

• Information Exchange

Benefits of LeanManufacturing

• Increased customer satisfaction

• Improved profitability

• More controllable system

There are only two ways to improve business performance

• Increase turnover • Reduce costs

There are only two ways of increasing turnover

• Sell more• Charge more

There are only three ways of reducing costs

• Reduce direct material costs• Improve production effectiveness/efficiency• Increase the rate of adding value

Typical Cost Distribution(Automotive sector)

• 15% labour• 50% raw material• 35% overhead

• Essential to concentrate on lean production, lean supply and the rate of adding value (lean overheads)

Case Studies

• An automotive veneer-component manufacturer

• A coconut and nut processor• A non-ferrous foundry supplying the

automotive and aerospace industries.

Case Study – Veneer Trim

• Primary and secondary manufacture were decoupled due to a lacquering process with a 3-day, post-finish cure time.

• The rest of manufacturing also having a process focus.

• 5 pre-lacquer functional areas, 6 post lacquer functional areas.

• The final operation was known as “Finals” –inspection not assembly.

Analysis of Waste

Identified• Scrap• Inadequate product costing• Poor productivity • High WIP• Poor customer service As the main problems.

Solution

• The factory was relayed out using product-focused manufacturing cells – No more “Finals”

• Visual management systems backed up by a spreadsheet-driven production and capacity planning system.

• “Available to Promise” facility to understand the consequence of imposed short-term schedule changes

• A performance reporting facility for calculating real-time product profitability using elements of throughput accounting principles

Case Study Coco(nut) Processor

• A combination of flow processing and batch manufacturing

• The main problems were poor planning, high raw material stocks poor customer service.

• A manual visual management manpower and machine planning system was implemented and TPM techniques were utilised to improve process reliability.

Case Study – Foundry

• The main flow line produced the main casting box however was supplied by mould cores from a batch-manufacturing area of PLC-controlled, core-blowing machines

• In addition secondary flow line and small batch motorsport areas supplied from this latter area

Problems

• High customer returns• High scrap• Poor overall equipment effectiveness• Poor customer delivery performance• Poor control of core WIP

Solutions

• Line balancing techniques were used to improve the flow of work

• Kaizen techniques involving operators from the front and back ends of the production line were implemented to eradicate process waste.

• A spreadsheet-based capacity planning system using Drum-Buffer-Rope techniques was developed and used to improve machine utilisation and ensure there was sufficient WIP to supply the line.

Sequence to Implementa Lean Initiative

• Culture change• Use of Champion• Waste mapping• Measurement• Implementation• Evaluation

Establishing a Foundation for Lean Manufacturing 1

• Strategy• Commitment• Objectives• Communication• Empowerment• Establish framework• Activity plan, cost, time and execution• Measurement and evaluation system

Establishing a Foundation for Lean Manufacturing 2

• No blame culture

• Education and Communication

• Top down alignment process

• Bottom up enabling process

• Selection of flexible teams and Champion

How to Implement Lean Manufacturing 1

• Process Mapping– Manufacturing– Business / information– Relationships / change

• Measurement and Prioritisation

How to Implement Lean Manufacturing 2

• Tools / Techniques / Philosophies– JIT– One piece flow– SMED– Poka Yoke– TQM– Visible management

• Transparent cost structure• Activities team based

ImplementingLean Supply

• Commitment to supply chain improvements• Increase rate of adding value• Open behaviour and open book• Intra- and inter-organisational problem solving

teams• Shared benefits

Making the Business Case for a Lean Manufacturing System

• Cost benefit analysis– Costs

• Development/investigation• Implementation• Project specific

– Benefits• Improved customer satisfaction• Improved profitability • More controllable system

The Costing Myth

• Cellular manufacturing must increase unit costs

• Machinery and equipment must be duplicated

• Certain skills are finite• Aha!

The Costing Reality of Functional Layouts

• Encourage overproduction, poor quality• Extend lead times• Reduce visibility• Over-complicate scheduling• Increase WIP• Make finished goods difficult to control• Don’t focus on problem solving

Justifying a Lean System

• Identify manufacturing labour variances• Identify overtime• Identify scrap• Identify cost of rectification• Identify WIP• Cost customer service

Justifying a Lean System

• Forget standard costing• Examine before and after actual costs• Identify costs of change• Identify Kaizen opportunities post-change

– SMED– TPM– Scrap and rework

Six Conditions for Success

• Strategy Development and policy deployment

• Process Improvement• Problem Solving• Team Work• Supply Development• New Product Development

Summary

• Strategy that encompasses business [profit] objectives and customer order winning [and maintaining] criteria

• Achieve short-term, KPI-driven improvements consistent with the strategy

• Plan and act for sustainable change