Building a Lean Business System
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The Lean Management Summit in Aachen, Germany, marked a significant turning point for lean thinking, emphasizing its expansion beyond manufacturing and its role as a job saver. Key elements of lean thinking include managing processes from the customer's perspective, eliminating waste, and establishing continuous flow in production. The agenda for action focuses on building lean expertise in Germany and encouraging innovative lean designs for future engineering challenges.
Building a Lean Business System
- 1. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org BUILDING A LEANBUILDING A LEAN BUSINESS SYSTEMBUSINESS SYSTEM Professor Daniel T JonesProfessor Daniel T Jones Chairman, Lean Enterprise AcademyChairman, Lean Enterprise Academy
- 2. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org Lean Management SummitLean Management Summit • Marks a significant turning point for Lean Thinking in Germany – after two false starts in 1991 and 1997 • The establishment of the Lean Management Institut with RWTH Aachen lays a solid foundation here • Lean management has spread well beyond the shop floor, across sectors and across the world • Germany at this point lags behind – although we have always believed that German industry has a significant contribution to make to the future of Lean • Lean is actually a “job saver” rather than a “job killer”
- 3. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org ToyotaToyota -- the Lean Modelthe Lean Model • Most people now recognise that Toyota is setting the pace – based on its Lean business system – It leads in efficiency and quality around the world – It also leads in time to market for new products – And in introducing new technologies - like hybrids – It is globalising assembly and localising parts supply – It has overtaken Ford and plans to overtake GM! • Superficially Toyota’s functional organisation looks not unlike a German firm! • So what distinguishes the way it operates?
- 4. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org Toyota’s Lean StrategyToyota’s Lean Strategy “Brilliant process management is our strategy. We get brilliant results from average people managing brilliant processes. We observe that our competitors often get average (or worse) results from brilliant people managing broken processes.” Lean Thinking is Process Thinking Just think what you could do with brilliant people running brilliant processes!
- 5. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org Lean ThinkingLean Thinking • The objective is to manage the business backwards from the customer definition of value - not forwards from your organisation and your assets • To create lean primary processes to design, deliver and support this value - with minimum wasted effort and time – and the necessary lean support processes • And to build a lean management system to develop, sustain and improve these processes over time • Be clear about customer Purpose, before designing the Processes and then organising the People
- 6. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org Lean PrinciplesLean Principles • Specify value from the standpoint of the customer (do they want goods and services or to solve their problem?) • Identify the value stream for each product and remove wasted activities • Make value flow towards the customer as quickly as possible • Only at the pull of the customer • While striving for perfection (in products and processes)
- 7. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org The Dynamics of LeanThe Dynamics of Lean To only one pacemaker process With just the right Standard Inventory of:- Cycle stock Buffer stock and Safety stock Uninterrupted flow back to the customer’s point of use No warehouses, only Cross-Docks and Mixed-model Milk Runs FIFO Reflexive Pull all the way back to raw materials Every Product Every Interval capability Separate capacity planning from production instructions Production pulled from every upstream step Every step is:- Valuable Capable Available Flexible and Adequate Combine steps where you can to flow Demand signals direct from the customer’s point of use No created demand amplification Levelled and released in small quantities
- 8. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org Low Volume LeanLow Volume Lean • Lean is as relevant to build-to-order businesses • The starting point may be the engineering, procurement and quotation process • Then breaking the order down into increments of takt time to track progress and problems • And modularising the elements to be produced and synchronising them • But does the customer really need all that complexity? • Toyota is now developing “Lean and Simple” equipment for use across the world
- 9. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org Current State Value Stream ShippingAssembly 2Assembly 1S. Weld 2S. Weld 1Stamping Production Control MRP Weekly Schedule Daily Ship Schedule Production Lead Time = 23.5 days Value Added Time = 184 secs State Street Assembly Forecast Daily Order Daily Michigan Steel Forecast Weekly Order 2 x Week II I I I I Future State Value Stream Production Lead Time = 4.5 days Value Added Time = 166 secs Shipping Production Control State Street Assembly Forecast Daily Order Daily Daily Order Weld and Assembly CellStamping Michigan Steel Forecast Daily Order Daily Ask theAsk the keykey questionsquestions ImplementingImplementing LeanLean Value Stream Plan Product Value Person Family Stream Measurable Monthly Schedule in Business Objective Goal Charge Objective 1 2 3 4 5 6 7 8 9 Improve Profitability In Steering Brackets V S Manager Jim Date 03/02/2003 Product Family Steering Brackets Pacemaker *Continuous flow from weld to assembly Zero WIP John *Kaizen to 168 secs < 168 s/t Dave *Eliminate weld changeover < 30 sec c/o Sam *Uptime weld #2 100% Mike *Finished goods pull 2 days FG Sue *Materials handler Pull Schedule James routes Stamping *Stamping Pull 1 day inventory Fred + pull schedule *Stamping changeover batch size Tim 300/160 pieces c/o < 10 min Supplier *Pull coils with daily delivery Graham daily deliveryr < 1.5 days of coils at press CheckCheck progressprogress and stabiliseand stabilise
- 10. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org Current State 44d 55m 73 8 Steps Time Steel DELTA STEEL Stamping GAMMA STAMPING Warehouse Cross Dock Wipers BETA WIPERS Assembly Dist. Centre Cross Dock ALPHA MOTORS Amplification F E D C B A % 40 30 20 10 0 F E D C B A Quality & Delivery ppm 2000 1500 1000 500 0 F E C A % 10 5 0 AssemblyWipersStamping Steel Dist. Centre 16d 55m 39 8 Steps Time Amplification F E D C B A % 40 30 20 10 0 Quality & Delivery ppm 2000 1500 1000 500 0 F E C A % 10 5 0 F E D C B A DELTA STEEL GAMMA STAMPING BETA WIPERS ALPHA MOTORS Future State 2 Flow and Pull between Plants TimeTime reducedreduced from 44 tofrom 44 to 24 days24 days Ideal State Value Stream Compression Dist. Centre 3d 55m 30 8 Steps Time Amplification F E D C B A % 40 30 20 10 0 Quality & Delivery ppm 2000 1500 1000 500 0 F E C A % 10 5 0 F E D C B A Steel EPSILON STEEL Assembly ALPHA MOTORSSUPPLIER PARK Wiper Cell Stamping Cell Time reducedTime reduced from 24 to 3from 24 to 3 daysdays Across theAcross the Value StreamValue Stream
- 11. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org Using a Common LanguageUsing a Common Language Lean Enterprise Academy www.leanuk.org Acme Stamping Steering Bracket Value Stream Improvement Background Acme supplies stamped steel steering brackets (LH & RH) to State Street Assembly. The product goes through 5 manufacturing processes & shipping. The customer uses 18,400 pcs/month & requires daily shipments in pallets of 10 trays of 20 brackets. A pallet is either all RH or LH. Current Situation Lead time for steering bracket from coil steel to shipment = 23.6 days Of 23.6 days, only 188 seconds are spent making a bracket. Large inventories of material between each process. Long changeover times, downtime in welding. State Street Assembly Michigan Steel Co. 1x daily I Production Control Daily Ord er Weekly Fax 6 Week Forecas t 90/60/3 0 Day Forecas t Weekly Schedule Ship Sche dule Analysis Each process operates as isolated islands, disconnected from the customer. Push system, material builds up between each process. Each process builds according to its own operating constraints (changeover, downtime etc.) Plans based on 90 & 30 day forecasts from customer. Weekly schedule for each department. System is frequently overridden to make delivery Goals Improve profitability of steering bracket value stream. Reduce lead time - 23.6 days to 4.5 days. Reduce inventories: Stamping 7.6 days to 1 day. Welding 6.5 days to 0 days. Shipping 4.5 days to 2 days. Recommendations Create continuous flow through weld & assembly Establish TAKT time . Base the pace of work through weld & assembly on customer demand. Set new weld - assembly cell as pacemaker for entire value stream. Establish EPE_ build schedule for stamping based on actual use of pacemaker cell & pull steel coils from supplier based on actual usage by stamping. Improve uptime in weld. Establish material handling routes for frequent withdrawal & delivery. Establish new production instruction system with Levelling Box. Follow Up Reviews & involvement of related departments TBD. Other functions: Production Control Material Handling, Purchasing, Maintenance, Human Resources, Finance. Production Control Daily Ord er Daily Order 6 Week Foreca st 90/60/3 0 Day Forecas t State Street Assembly Michigan Steel Co. Daily Order 20 OXO X Current State Map Future State Map Deliverables Responsible Review CCF at pacemaker Kaizen each CT to >TT Weld uptime to 100% CO reduction to < TT Pull at pacemaker FG = 2 days KB Matl handling Levelling Box Pull from Stamping WIP = 1 day CO < 10 min Pull from supplier Info flow Daily delivery RM = 1.5 days Action Plan For Problem Solving, Managing Projects and Planning
- 12. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org Managing LeanManaging Lean • It is not an extension of continuous improvement or a tool box – but a system redesign for each value stream • Involving design & production – as well as logistics, production control, maintenance, purchasing etc. • It is not about what works theoretically or automation – but a robust system tolerating day to day disturbances • It will not happen unless someone is responsible for each Value Stream Plan – and unless they get the necessary support and resources from functional departments (which also means lean in every office!)
- 13. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org Challenges for ManagementChallenges for Management • To reconcile the Chief Engineer’s plans for each product family with the resources required in each function and the overall needs of the business • To move away from centralised, cognitive production control systems to stable levelled processes triggered by reflexive pull • To spread lean across office support activities despite the resistance to standardisation – lean frees up time for creativity and problem solving
- 14. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org Lean Product DevelopmentLean Product Development • Strong leadership from the Chief Engineer, drawing on resources from functional departments • More time is spent pursuing sets of alternatives – so that fewer engineering changes are needed later • Once agreed detailed engineering proceeds very rapidly, using standardised processes and checklists and pull communication to trigger work – a fully industrialised design process across every project • Manufacturing and key suppliers are involved throughout to ensure quality and low cost – based on long term joint product and process analysis
- 15. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org Future LeanFuture Lean • The biggest gains come from rethinking the product and the process based on the lean experience of trying to improve today’s design, equipment and locations • Toyota is targeting every new product to deliver increased functionality at 30% lower costs – forcing step changes rather than incremental improvements • They are also designing “Lean and Simple” equipment for use across the world – which is a challenge for future engineers
- 16. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org An Agenda for ActionAn Agenda for Action • We will continue to write down the lean knowledge and to push the frontiers of lean implementation • You need to build a much greater pool of lean experience in Germany – to compensate for the fact there is no Toyota plant here! • We need to build examples of successful lean implementation that enable to others to see why this counterintuitive thinking works better • The biggest challenge is to provide a new direction for tomorrow’s engineers – designing lean for tomorrow’s global realities
- 17. Lean Management Summit - Aachen, Germany 11 November 2004 www.leanuk.org BUILDING A LEANBUILDING A LEAN BUSINESS SYSTEMBUSINESS SYSTEM Professor Daniel T JonesProfessor Daniel T Jones www.leanuk.orgwww.leanuk.org