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Waste Elimination
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Growth Engines
El iminate
Redundancies
Develop Talent
Service
Merrill Lynch Six Sigma Focuses On FourSpecific Objectives
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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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