Becoming Lean: The “Adkins Diet” for Companies

1. Becoming Lean:The “Adkins Diet” for Companies Presented By: Patrick Shannon, Professor Department of Networking, Operations and Information Systems College of Business and Economics

2. Today’s Outline • Competitive Challenges • Putting Companies on a Lean Diet • The Lean Tools • Get on the Scale! – the Need to Measure • Some Examples and Results

3. Achieving Operational Excellence Right Products and Services • Customer Focus • “Make what we sell” not • “Sell what we make” • Innovation

4. Achieving Operational Excellence Right Products and Services • Customer Satisfaction • Centered on the Target • Reduced Variability • Both Products and Services • Relentless Pursuit of Improvement High Quality

5. Achieving Operational Excellence Right Products and Services Necessary But Not Sufficient High Quality

6. Achieving Operational Excellence Right Products and Services Necessary But Not Sufficient High Quality Based on Continuous Improvement & A Lean Manufacturing Philosophy On-Time Delivery Short Lead Times Flexibility Increased Reliability Customization Low Cost/Reduce Waste World Class Operational Execution

7. Perceived Value: The Ultimate Measure of a Lean Company Perceived Value = What the Customer Receives The Cost Why Does It Matter? Because the Company’s Life Expectancy Depends on it!!!

8. Perceived Value: The Ultimate Measure of a Lean Company In the Eyes of the Customer The Right Products and Services High Quality Delivery + + PV= Cost

9. The Motivation for Becoming Lean The New Economics: Old Way : Price = Cost + Profit Margin We set the price to assure the desired profit Now: Price - Cost = Profit Price is fixed (or falling) – customers have many options. How do we make a profit?

10. Most Companies Are Too Fat Need to Reduce Costs How? • without decimating our team members • without skimping on maintenance and quality • without weakening the company in the long run. Must eliminate/reduce waste – increase yield

11. The 8 Sources of Waste “The Bad Carbs” • Overproduction • Excess Inventory • Defects/Re-Work • Non Value Added Processing • Idle (Waiting) Time • Non Value Added Motions (people and machines) • Non Value Added Conveyance of Materials • Waste of People’s Talents and Time

12. Putting Companies on a Lean Diet • Lean focuses on eliminating waste in processes • Lean is about expanding capacity by reducing costs and shortening cycle times between order and delivery • Lean is about understanding what is important to the customer • Lean is not about eliminating people

13. Toyota Production System – TPSThe Beginning of Lean Manufacturing Tiachi Ohno – Toyota U.S. Beginning – New United Motor Manufacturing, Inc. NUMMI – Freemont California http://www.nummi.com/web_tour.html

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16. More Reasons for Studying Toyota

17. Pull/Kanban Cellular/Flow TPM Root Cause VAM Quick Changeover Standardized Work Batch Reduction Kaizen 5S/ Visual Control 6-Sigma Theory of Constraints Value Stream Mapping The Basic Lean Tools Continuous Improvement

18. Lean Tool: Value Stream Mapping

19. Value Stream Mapping Identify Problems/Issues

20. Lean Tool: Root Cause Analysis - USUAL APPROACH Problem Identified Firefighting!Immediate Containment Action Implemented Problem reoccurs elsewhere! Find someone to blame! PREFERRED APPROACH Solutions are applied across company and never return! Defined Root Cause Analysis Process Solutions validated with data Immediate Containment Action Implemented Problem Identified

21. Root Cause Example Identify Problem Project Is behind Schedule – Won’t Finish on Time

22. Immediate Action • Additional resources applied to help get the project team back on schedule • No new projects started until Root Cause Analysis completed

23. Root Cause 5 Why's Didn’t complete project on time Why?

24. Cause and Effect Diagram Procedures Personnel Lack of worker knowledge Poor project plan Poor project mgmt skills Lack of resources Didn’t complete project on time Inadequate computer programs Poor documentation Inadequate computer system Materials Equipment

25. Cause and Effect Procedures Personnel Lack of worker knowledge Poor project plan Poor project mgmt skills Lack of resources Didn’t complete project on time Inadequate computer programs Poor documentation Inadequate computer system Materials Equipment

26. Root Cause Didn’t complete project on time Resources unavailable when needed Why?

27. Didn’t complete project on time Resources unavailable when needed Took too long to hire Project Manager Why?

28. Didn’t complete project on time Resources unavailable when needed Took too long to hire Project Manager Lack of specifics given to Human Resources Dept Why?

29. Didn’t complete project on time Resources unavailable when needed Took too long to hire Project Manager Lack of specifics given to Human Resources Dept Root Cause No formal process for submitting job opening

30. Corrective Action • Permanent – Hired another project manager to meet needs of next project team • Preventive - Developed checklist form with HR for submitting job openings in the future

31. Lean Tool: 5S • Sort • Straighten • Shine • Standardize • Sustain

32. Why 5S? • To eliminate the wastes that result from “uncontrolled” processes. • To gain control on equipment, material & inventory placement and position. • Apply Control Techniques to Eliminate Erosion of Improvements. • Standardize Improvements for Maintenance of Critical Process Parameters.

33. After 5S • Clear, shiny aisles • Color-coded areas • Slogans & banners • No work in process

34. Lean Tool: Poka yoke Mistake-proofing systems Does not rely on operators catching mistakes Inexpensive Point of Origin inspection Quick feedback 100% of the time “Be more careful” is not effective

35. Everyday Poke yoke Examples 3.5 inch diskettes cannot be inserted unless diskette is oriented correctly. Fueling area of car has three error-proofing devices: 1. insert keeps leaded-fuel nozzle from being inserted 2. tether does not allow loss of gas cap 3. gas cap has ratchet to signal proper tightness and prevent overtightening. New lawn mowers are required to have a safety bar on the handle that must be pulled back in order to start the engine. If you let go of the safety bar, the mower blade stops in 3 seconds or less.

36. 3 Rules of POKA YOKE • Don’t wait for the perfect POKA YOKE. Do it now! • If your POKA YOKE idea has better than 50% chance to succeed…Do it! • Do it now….improve later!

37. Lean Tool: Kaizen Events and the Kaizen Blitz • Identify the customer • Deming Cycle • Plan – identify what to change and how to do it • Current state • Future state • Implementation plan • Do – execute the improvement • Check – ensure the improvement works • Act – future and ongoing improvements • Repeat

38. Kaizen Blitz - Agenda • Day 1: Setting the scene • Meet the team, training • Day 2: Observe the current process • Flowchart, identify waste, identify root causes • Day 3: Develop the future state process • Brainstorm and flowchart (typically the longest day!) • Day 4: Implement the new process • Plan, communicate, implement, modify • Day 5: Report and analyze • Performance vs expectations

39. Use Visual Story Boards

40. Identify the Current State

41. Identify VA, NVA-R, and NVA

42. Brainstorm and Analyze • Kaizen team brainstorming to develop new process • Post improvement ideas on map or by category • Workflow • Technology • People / Organization • Procedures • Develop detailed future state map • New workflow • Value Add and Non-Value Add • Cycle times • Identify Kaizen “bursts” (immediate radical change)

43. Develop the Future State

44. Lean Implementation Examples at Welco Lumber Company

45. Potential Kaizen Objectives Improve Quality Improve Cycle Time Reduce Costs Increase Yield

46. Kaizen Methodology at Welco Analyze Operation Identify Opportunity Collect Baseline Data Brainstorm Changes/ Improvements Collect Follow-Up Data/ Analyze Improvement Results Make Changes

47. Horizontal In-feed Project Overview

48. Baseline Results

49. Proposed Change to Horizontal In-feed Process Run Slabs 1 at a time rather than side-by-side Process Change Only No New Equipment

50. Horizontal In-feed Results