T1S2_Lean Six Sigma Logistics Boot Camp

7/27/2019 T1S2_Lean Six Sigma Logistics Boot Camp

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Lean Six Sigma Logistics Boot Camp

Track 1 Session 2


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Thomas J. Goldsby

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Title: Professor of Logistics, The Ohio State University

Organization: Ohio State University

Email: [email protected]

Web: http://www.fisher.osu.edu/~goldsby_2/

Phone: 614-247-4261
mailto:[email protected]://www.fisher.osu.edu/~goldsby_2/http://www.fisher.osu.edu/~goldsby_2/mailto:[email protected]


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2 0 1 1 MA T E R I A L H A N D L I N G & L O G I S T I C S C O N F E R E N C E S P O N S O R E D B Y D EMA T I C WWW . MH C 2 0 1 1 . C OM

Abstract

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Skip this session if you have no operationalwaste, perfect quality, minimum costs anddelighted customers. If not, you will find this

session invaluable in formulating a powerfulcontinuous improvement program for yoursupply chain operation. Included is a roadmapfor successful implementation of Lean Six Sigma

Logistics from the speaker's book by the samename.


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Agenda

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Gain an understanding of Lean principles andhow they relate to the management of logistics;

Review the basics of Six Sigma methodology

and the application of its primary tools forvariation reduction and process improvement;and

Provide a starting point for the Lean Journeyand employment of Six Sigma in this journey.


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555

Dilbert On Lean Six Sigma


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666

The Law Of Entropy And You

Law of Entropy (2nd Law of Thermodynamics): Inan isolated system, the degree of disorder canonly increase, or a system left unto itself will

grow in complexity.

If you are in supply chain management today,

then complexity is a cancer you have to fight.Process management is the weapon.

Tom Blackstock

Coca-Cola North America


7/312 0 1 1 MA T E R I A L H A N D L I N G & L O G I S T I C S C O N F E R E N C E S P O N S O R E D B Y D EMA T I C WWW . MH C 2 0 1 1 . C OM

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What is a process?

In what processes is logistics

involved?



DISCIPLINE

THE

COMPANY

AND ITS

RESOURCES

CUSTOMERS

AND

MARKET

OPPORTUNITIES

How do Lean and Six Sigma Help?

8



What Does It Mean To Be Lean?

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Being Lean means developing a value streamto eliminate all wastes, including:

- Overproduction

- Inventories

- Waiting

- Overprocessing

- Unnecessary motion- Unnecessary transport

- Product defects



Key Aspects of Lean Implementation

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Five-S organization

Process orientation

Heijunka

Jidoka quality

Continuous Improvement

Kaizen

Value stream mapping

Standardized work

High frequencySmall lot size

JIT

Kanbans

Total Cost Analysis

Teamwork

Discipline



111111

Seeing the Rocks

PoorCommunication

Rework

ObsolescenceService Quality

PoorMeasurement

Poor Processes

Waiting Uncertainty

Long Lead Times Reward Systems

Supplier Quality

Complaints



121212

Reinforcing Learning

Learning Organization

Problem-Solving Organization

Makes Problems Visible

Lowers the Water Level

Natural Teamwork Created

Organizational Learning Occurs

EngageEverybody

Everyday



131313

Visual Management

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Visual Workplace = Self Explaining and Self Improving

Seeing as a Group

1. Production Status

2. Inventory Levels3. Resource Availability

Knowing as a Group

1. Service Agreements

2. Goals and Schedules

3. Management Rules

Acting as a Group

1. Consensus on Rules

2. Jidoka

3. Involvement



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Japanese Term English Translation Definition

Seiri Sorting

Clearly separate necessary items from

unnecessary; abandon the unnecessary.

Seiton Set in Order

Neatly arrange and identify things for ease

of use.

Seiso Shine

Always maintain tidiness and cleanliness.

Regularly scheduled clean-ups.

Sediketsu Standardizing

Constantly maintain the 3S' mentioned

above.

Shitsuke Sustaining Create vehicles to enforce the above rules.

What Is The 5S Philosophy?

Red Tag Initiative = If in doubt, throw it out

Achieved Through use of Visual Controls



151515

5S - Exercise

6

1

3

30

37

17

812

1

25

27

39

18

5

15

22



161616

5S Exercise - SORT

6

1

3

20 17

12

1

25185

22

48



171717

5S Exercise - SET

61

145

13

3

167

247 21

10

25221

8

1

11

19

15

22

2

25

8



181818

5S Exercise - Shine

6

145

13

3

1620

7

247 21

120

22

9

18

1

11

19

15

23

2 4

25

8



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Separating Value-Add FromThe Rest

A value-adding activity is one that creates a benefit forwhich the customer is prepared to pay

- An activity adds value if

the customer cares about it,

it physically changes the item, and/or

creates time and place utility

A non-value-adding activity is an activity whose

elimination would lead to no reduction of the productor services attributes as seen by the customer (e.g.,

performance, function, quality, perceived value)

- Some non-value-adding activities are necessary; others not



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The Critical Waste Of Time

A typical measure of throughput efficiency is < 10%

Many will be as low as 2% - 5%

Throughput

Efficiency

Value-Adding Time

Pipeline Time

=

What does th is mean?



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Mapping the Value Stream

Processing .75 hrs. (0.5-1.3) 1.5 hrs. (1.2-3.0) .75 hrs. (0.5-2.0) .50 hrs. (0.4-1.5) 1.2 hrs. (.8-4.0)

Queue Time 30 days 5 days 4 days 5 days 45 days

Setup Time .25 hrs. 2.0 hrs. 1.75 hrs. 0.75 hrs. .20 hrs

Uptime % 98% 96% 88% 92% 96%

I II I

5 days30 days 4 days 5 days

I

45 days

Order Time

= 10 days

12% Late

3% Short

4% Wrong

84% Perfect

89 Days supply of inventory

(45 at Regional DC)

Service problems

Pipeline Time = 93 days

Value-Added Time = 4.2 days

2 days

1 day1 day



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Reported Benefits Of Leanness

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Reduced cycle times

Reduced inventory

Reduced changeover time

Reduced rework

Improved service

Reduced wastes

Doubling productivity

Lead times reduced by 90%

Inventory reduced by 75%

Near-zero defects

On-time delivery close to100%

Reduced accidents

Improved morale



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What Is Six Sigma?

Data-driven approach to better understand,predict, and control processes through thereduction of variation.

Project Management toolsVoice of Customer

Root Cause Analysis

Statistical analysis

Voice of Business

DMAIC Methodology

Project Selection tools

Process Capability assessment

- DPMO and Sigma calculations

Belts


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How can

the gains

be

sustained?

The DMAIC Method

How can

process

capability be

improved?

When and

where do

defects

occur?

What is the

capability

of the

process?

Measure Analyze Improve Control

Improvement goals set

Value of projects determined

Projects are organized

Process mapped

Data collected

Sources of variation identified Root causes determined

Solutions proposed & prioritized

Solution piloted & implemented

Improvement validated

Process owner takes over

Periodic validations

What problem

needs to be

solved?

Define


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Sigma Level

841,300 0.5

691,500 1.0

500,000 1.5308,500 2.0

158,700 2.5

66,800 3.0

22,700 3.5

6,200 4.0

1,300 4.5

230 5.0

30 5.5

3.4 6.0

Defects per Million

Opportunities (DPMO)

Why SixSigma?


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What Is Lean Six Sigma?

The elim inat ion o f wastes through d iscipl ined

efforts to understand and reduce variation , whi le

increas ing speed and f low in the supply chain.

Lean and Six Sigma as complements rather thancompetitors

- Lean provides the inspiration for processimprovement

- Six Sigma provides the structured approach fordelivering results


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Improving In Two Ways

Accurate and

Consistent

XXXX

XXXX

XXXXXX

XXX

XXX

XX

Consistent,Not Accurate

Center

Process

Not Accurate orConsistent

X X

X X X

X

X X

X

X

X

Reduce

Spread

(Lean Influence) (6 Influence)


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Standard Work1) Each worker understands

his task

2) All tools and equipment

are at arms length

3) Standard work has been

practiced to perfection

4) Continuous observation

and analysis drives

continuous improvement

Types of Waste Eliminated Searching

Finding

Selecting

Transporting

Waiting

Once Improved, Sustain &Challenge


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Key Takeaways

Waste and variation are found in all processes,and particularly so in logistics processes;

Lean and Six Sigma offer philosophies,

concepts, and tools that can help to improveprocesses, lower costs, and satisfy customers;

Lean and Six Sigma can be employed in

isolation or together; and Lean Six Sigma is about DOING THE RIGHT

THINGS RIGHT.

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For More Information

Books:

Thomas J. Goldsby and Robert Martichenko (2005), Lean Six SigmaLogist ic s: Strategic Developm ent to Operat ional Success, J. RossPublishing, www.jrosspub.com

Darren Dolcemascolo (2006), Impro ving the Extended Value Stream: Lean fo rthe Ent ire Supply Chain, Productivity Press, www.productivitypress.com

Websites:

Lean Enterprise Institute at: www.lean.org

Process Excellent Network: www.processexcellencenetwork.com

Groups:

LinkedIn groups: The Lean Supply Chain, Lean Logistics, Lean Six Sigma
http://www.jrosspub.com/http://www.productivitypress.com/http://www.lean.org/http://www.processexcellencenetwork.com/http://www.processexcellencenetwork.com/http://www.lean.org/http://www.productivitypress.com/http://www.jrosspub.com/


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T1S2_Lean Six Sigma Logistics Boot Camp