Lean in a Lean Economy

Lean Manufacturing in a Lean
Economy

Darren Dolcemascolo
EMS Consulting Group, Inc.

Copyright EMS Consulting Group, Inc. 2008

Lean Manufacturing in a Lean
Economy
• You will learn:
– The need to become lean today
– Benefits you can expect by implementing a
lean initiative
– Principles and steps of implementing a
lean program
– Critical success factors—the reasons that
lean ideas fail in so many companies, and
how to avoid these pitfalls


Presentation Agenda
1. Lean Manufacturing Principles and
Benefits
2. The Lean Implementation Process
3. Pitfalls/Critical Success Factors
4. Q&A


The TPS TPS Diagram
House
Goal:
A System Based on a Structure
Highest Quality, Lowest Cost, Shortest Lead Time
Best Safety, High Moral

•Not a set of Techniques
Just In Time Jidoka
Built-in-Quality
Right part-
•Structural System
Right amount-
Right Time •Line Stop
•The house is strong only if the: •Efficiency
•Flow •Visual
• Roof is strong
•Takt Time
•Pull
Controls
•Error Proofing
• Pillars are strong
•Quick
Changeover
•Andon
•5 Whys
• Foundation is strong
Operational Stability
• People are strong Standardized Work
TPM
•A weak link weakens the whole system
Kaizen
Leveled Production

Toyota Production System

Lean Manufacturing Overview
• Value - A capability provided to a customer at
the right time at an appropriate price, as
defined in each case by the customer.
Features of the product or
service, availability, cost and performance are
dimensions of value.

• Waste - Any activity that consumes resources
but creates no value.


• Lean Manufacturing is an operating
philosophy that focuses on the elimination of
the seven wastes:
– Overproduction
– Excess inventory
– Defects
– Non-value added processing
– Waiting
– Excess motion
– Transportation


What does Lean do?

Total Lead Time

Lean
Transformation

Total Lead Time
Value-Creating Time

Non-Value-Creating
Time (waste)

Measure Initial Lean Conversion Continuous
Improvement
Labor Productivity Double Double Again

Production Throughput 90% reduction 50% reduction
Times
Inventories Throughout 90% reduction 50% reduction

Errors Reaching 50% reduction 50% reduction
Customers
Scrap 50% reduction 50% reduction

Time to Market / New 50% reduction 50% reduction
Product Development

Lean Thinking, Womack and Jones, 1996

Lean Conversion Process

“The greatest enemy to tomorrow’s success
is sometimes today’s success.”

- John Maxwell


Current State of Our Economy
• Credit Crisis: Difficult for Businesses to
Obtain Credit to
– Meet Payroll
– Purchase Raw Materials
– Grow as a company
• Unemployment on the Rise
• Major Recession


How Can Lean Help?
• Current Economic Conditions create an
opportunity for lean thinking – a need to go
lean based on survival!
• Applying lean principles will create the
following:
– Shorter Lead-Times to Customers
– Net Decrease In Inventory- Frees Up Cash
– Productivity Growth- increases capacity without
additional capital/hiring
– Quality Improvement- lowers costs and attracts
additional business

How Can Lean Help: Shorter Lead Times
• Benefits to Operation
– Ability to Quote Jobs Faster
– Ability to Process Orders Faster
– Ability to Get Orders to Production Faster
– Ability to Process Jobs Through Production
Faster
• Competitive Advantages
– Attract more business
– Get paid faster/rely less on credit

How Can Lean Help: Decrease in
Inventory
– Freed up floor-space
– Freed up cash
– Have cash on hand for expansion of
business or to handle short-term ―down‖
periods


How Can Lean Help: Productivity Growth
– Lower Product Costs
– Increased Capacity
– Increased profitability
– Ability to compete on price due to lower
costs


How Can Lean Help: Quality
Improvement
– Lower Product Costs
– Better Quality Product Produced
– Increased profitability


How Can Lean Help: Bottom Line
• Lean thinking will help a company become
self-reliant:
– Fuel for growth by producing better quality, lower
cost products with the shortest lead times.
– Ability to Grow without relying on the availability of
credit from financial institutions.


Lean Conversion Process: Lean Thinking
• Specify value
– can only be defined by the ultimate customer
• Identify the value stream
– exposes the enormous amounts of waste
• Create flow
– reduce batch size and WIP
• Let the customer pull product through the value
stream
– make only what the customer has ordered
• Seek perfection
– continuously improve quality and eliminate waste


Value Stream Approach
• Select Product Family
• Create current and future state maps
• Develop and manage action plan using
Project Management approach


Planning Tool: Value Stream Mapping

• Definitions
- Current State Map – Map showing
information and product flow as it is
currently done.

- Future State Map - Map showing an
attainable information and product flow
with significantly less waste than that of
the current state.

Value Stream Mapping
• Purpose of Mapping
– To identify and eliminate waste in the value
stream.
• End Product of VSM
– Picture of ―future state‖ with an action plan
to achieve it.
– Prioritized Projects


Value Stream Mapping: Current
State
• Begin mapping at the end of the process
(customer) and work backwards.
• Then, map the information flow from your
customer back to your supplier.
• Connect the two.


Current State Value Stream Map
Raw Matl. Production
Control Customer
Supplier
MRP Units/day
Units/day

Information Flow

Material Flow

Process A Process B Process C Value Creating Time =
I Data
I Data
I Data
180 seconds
Lead Time = 18 days


Value Stream Mapping: Future State
Elements
• Flexibility
• Short Lead-Time
• Connected Processes
• Flow Loops
• Simplified Information Flow
• Awareness of the Customer Requirement
• Scheduling one point in the value stream


Kaizen Event Approach

• Kaizen Event Overview
– 3 to 5 day breakthrough event
– ―Working level‖ participants w. facilitator
– Appropriate for use with several lean tools
– Appropriate for new implementations and
for continued improvement


Kaizen Events

• Typical Tools
– 5S
– SMED (Single Minute Exchange of Die)
– TPM (Total Productive Maintenance)
– Mistake Proof (Poka-Yoke)
– Visual Controls
– One-Piece Flow/Takt Time/Layout

Kaizen Events

• Kaizen Event Process
– Educate (1/2 – 1 day) – Lean with emphasis on
particular tool
– Set goals
– Map out baseline
– Brainstorm ideas
– Select ideas and formulate future state
– Develop plan to implement future state (Implement
as much as possible immediately- during event.)

Kaizen Events

• Advantages
– Exciting experience for all involved
– Can Accomplish Improvement Rapidly
– Participants learn a great deal
– Skeptics can be won over
– Valuable tool for implementing aspects of a
value stream improvement


Kaizen Events

• Disadvantages
– Improves points in the process but without VSM
approach, does not lead to flow across the
enterprise
– Action list at the end often is ignored- important to
meet weekly until complete.
– Tendency to revert to old methods after the event.
– No lasting cultural change.
– Tendency to judge events on short-term cost
savings only

Where to Start- Toyota’s 4 P’s?
1. Philosophy – Hold an off-site meeting of top
leaders and define your company’s vision
2. Process – Begin implementing a connected
value stream.
3. People – Train and indoctrinate your people
into the new lean way of thinking, effecting
culture change.
4. Problem Solving – Train people in a problem-
solving methodology and give them time to
meet in groups and solve problems.


Typical Approach that Works
1. Perform an assessment and develop an overall
plan for implementation. Create a Company X
Production System based on an assessment.
2. Select some key items/pilot projects for process
improvement (based on an assessment) and
implement kaizen/5S.
3. Combine VSM approach with problem solving and
5S training.
a) Use the Value Stream Mapping approach to
identify improvement projects (both kaizen and
―six sigma‖ projects)
b) Roll out 5S implementation and basic problem
solving training plant-wide to build momentum.


Typical Approach that Works
4. Implement the projects/roll out lean training in small
bites in conjunction with projects
5. Continue expanding by value stream (or
department), whichever makes more sense.
6. Extend across entire organization.
7. Create a Lean Promotion Function.
8. Develop a growth strategy for additional business.
9. Extend Lean to Your Suppliers.


Pitfalls/Barriers
• Too much compromise/Lack of Leadership
Commitment to Lean
• Tendency to Revert Back to Old Ways when
setbacks occur
• Tendency to use TPS/Lean as a Cookbook
• Tendency to make surface changes without
applying lean principles properly (customizing to
suit the situation)
• Short-Term Thinking at the Expense of Long Term


Roles in Change Process

Executive Sponsor

Resources Accountability
Lean Coach

Process Owner

Value Stream Team


Leadership
• Top management support /commitment is
critical for successful lean transformation.
• Support and commitment means not only lip
service but $$, resources, making difficult
decisions, and eliminating roadblocks.
• Middle managers down to team leaders
must become change agents- the
transformation from skeptic to teacher does
not happen overnight.


Lean Coach/Teacher
• Internal or external lean expert that teaches
but does not do the work. The lean coach:
– Leads model line programs
– Leads value stream mapping
– Leads kaizen events
– Teaches lean tools and philosophy through
courses and improvement events
– Coaches leaders at all levels
– Develops the lean operating system
(metrics, principles, assessment approaches)
– Internally promotes the lean transformation.
– Externally learns and brings back new ideas.

Key Ingredients of Change
Structure
Participation &
• Organization Ownership
• Documents
• Roles/Resp

Committed,
Knowledgeable Change Lasting
Leadership Effort
Results
Accountability
Learn by doing
Education &
mentoring

Toyota Way Fieldbook, Liker and Meier, 2005

Culture Change
• Education and changing metrics alone
will not drive culture change
• Seeing/Experiencing is believing.
• Lean must be tried and the word must
be spread through successes in pilot
projects.
• Strong leadership is necessary to drive
culture change.


Recap
• The Current Economy is a compelling reason to
implement lean
• Lean thinking will help a company become self-
reliant:
– Fuel for growth by producing better quality, lower
cost products with the shortest lead times.
– Ability to Grow without relying on the availability of
credit from financial institutions.
• Lean Requires a Systematic Implementation
Approach
• Lean Requires Strong Leadership


Lean Conversion Process

“Perfection is not attainable, but if we chase
perfection, we can catch excellence.”

- Vince Lombardi


Questions?


Lean in a Lean Economy

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