Lean Thinking in Business

1. Lean Thinking in Business Presentation by Scott Summach and Colleen Mackenzie, Manufacturing Team, Saskatchewan Industry and Resources

2. Saskatchewan Industry and Resources (SIR) • SIR is the lead Provincial department to strengthen and diversify the Saskatchewan economy. • SIR is divided into Strategic Sector Development, Regional and Co-operative Services, and Resource Policy and Development

3. Strategic Sector Development Branch • SIR’s Strategic Sector Development Branch has identified six sectors key to growing Saskatchewan’s economy: • Manufacturing • Energy • Minerals • Forestry • Agri-value • Advanced Technology

4. Manufacturing Team • Scott Summach and Colleen Mackenzie represent the Manufacturing Team along with support from staff within our Regional and Cooperative Services Branch – Jason Regier in Saskatoon, and Dale Mitchell in Regina.

5. Manufacturing as a Key Economic Driver • Manufacturing employees 30,000 employees and shipped $7.5 billion in goods in 2003 • Saskatchewan produces a wide range of major goods and exports 75% of what we manufacture

6. World-Class Products • Saskatchewan products that are internationally recognized include: • Beef, pork and chicken products • Paper, furniture, cabinets, millwork, flooring • Agricultural equipment • Specialty vehicles such as ambulances, highway trailers, recreational vehicles and automotive accessories

7. World Class Products • Mining and industrial equipment • Satellite and landline communications technology • CATV and wireless telecom products • Contract manufacturing services for telecommunications, satellite, military and aviation markets

8. Manufacturing Team • Today, we’re here to speak about two initiatives undertaken by the Manufacturing Team: • Lean Thinking • Corporate Procurement

9. I. Lean Initiatives • Since 1999 SIR has introduced manufacturing companies to Lean Thinking. • We work with individual companies as well as national organizations like the Canadian Manufacturers and Exporters (CME) that have developed consortium building and lean enterprise expertise.

10. Lean Thinking • What is Lean Thinking? • Simply put, Lean Thinking is a focus on eliminating waste so that all processes in the total system, process, or production line add value from the Customer perspective.

11. What Lean is Not • Lean Thinking is not about: • Staff cuts • Assigning Blame • Nominal or one-time changes

12. Lean Thinking is About • Creating a positive and safe work environment • Empowering all staff to make improvements to their processes and workplace • Encouragement from the leaders of the company

13. Why Become Lean? • In today’s global marketplace with a high Canadian dollar and trade border issues, companies must become more competitive. • The application of Lean Thinking will reduce waste, improve productivity, and give companies that competitive edge needed to survive.

14. Who Can Become Lean? • Lean Thinking is applicable to all businesses and organizations. You do not have to be a manufacturer or processor.

15. The Lean Drivers People Technology Process • Lean Thinking • Employee Involvement Customer Success • Flow • Elimination of Waste • Tools to support people and process

16. Quality Processes – Quality Results Inconsistent Process Inconsistent Results Traditional = People doing whatever they can to get results Consistent Process Desired Results Lean = People using standard process to get results

17. The 5 Principles of Lean Thinking • Define “value” from the customer perspective • Identify the value stream • Make the process flow • “Pull” from the customer • Head toward perfection

18. 7 Forms of Waste • Overproduction • Waiting (time) • Transporting • Inappropriate processing • Unnecessary inventory • Unnecessary motions • defects

19. Waste Identification Sheet (Office) Definition Observation Type of Waste Producing more/sooner than the Internal or External customer needs Overproduction Waiting Long periods of inactivity for people, information, machinery or materials Transportation Excessive movement of people, information or materials Inappropriate Processing Using the wrong set of tools, procedures or systems Unnecessary Inventory Excessive storage and delay of information or products Unnecessary Motion Any motion that does not add value to the products or process Defects Frequent errors in paperwork, product quality problems etc…

20. The Lean Journey • Should begin with Value Stream Mapping: every process in the company from the first customer contact to the delivery of the product is examined to determine its value to the process and how it can be improved.

21. Tools to Make Your Process Flow Standardization of Processes Pull Systems - (signal when to start a process) Increase Visibility Mistake proofing Manage by exception Minimization of upstream / downstream impacts Set-up reduction Cellular Processing Preventative Maintenance Apply Measurement or Metrics

22. PDCA Plan 1. Select Focus Problem 2. Gather Data & Investigate 3. Identify Root Causes 4. Brainstorm Possible Solutions 5. Develop Solution Plan Do Act 9. Capture Improvements & Standardize 10. Evaluate Team & Next Steps Continuous Improvement 6. Implement Solution Plan Check 7. Verify Results (Compare with 2. Above) 8. Confirm Acceptance

23. 5S • The next step involves figuring out what to change and how to change it. • Japanese’s manufacturing plants like Toyota established a waste reduction theory we commonly call the 5S.

24. The 5S’s • Seiri – sort • Seiton – set in order • Seiso – shine • Seiketsu – standardize • Shitsuke -- sustain

25. Sort • Review the workplace and for each item, ask: • Is it needed? • How many are needed? • Where should it/they be located? • Remove anything that isn’t needed for the current job. • Leave only the bare essentials.

26. Set in Order • Arrange items so that they are easily accessible • Arrange items so they are visible • Follow: “everything in its place and a place for everything”. • cartoon

27. Shine • Clean everything • Eliminate all sources of clutter • Find ways to keep the area clean • Adopt cleaning as a form of inspection • Make cleaning a part of everyday work and every employee’s responsibility

28. Standardize • Create the rules by which the first 3 S’s are implemented and maintained • i.e.. Standardize location of all items and cleaning schedule and procedures

29. Sustain • Continuous Improvement • Total employee involvement • Coaching • Education

30. Success in Lean • There are many Lean resources available. • Lean Training is not a one time course, but must be a corporate long term commitment. • In our experience companies have a greater chance of success by working together.

31. Lean Consortiums • The Manufacturing Team works with Saskatchewan companies to form consortiums of manufacturers: • The Saskatchewan Consortium of Manufacturing Excellence; • The Northern Saskatchewan Consortium of Manufacturing Excellence; and • The South Saskatchewan Manufacturing Consortium

32. Canada Post Cover-All Building Systems Inc. Doepker Industries Industrial Machine & Manufacturing Inc. Bourgault Industries Schulte Industries Ltd. DSI- Thiessen Team MIFAB Mfg Northern Steel Industries Ltd. Vanguard Inc. Precision Metal Fabricating Ltd. Saskatchewan Consortium of Manufacturing Excellence

33. SED Systems International Road Dynamics Dawn Foods Burton Cabinets Siemens Laserworks CNH Global Hitachi Canadian Industries Norampac Standard Machine Combine World Northern Saskatchewan Consortium of Manufacturing Excellence

34. Brandt Industries Canada Post Dumur Industries Dutch Industries Stewart Steel Inc. Ralph McKay Empire Watergroup Companies Inc. Precision Industries Conserva Pak Seeding Systems Raider Industries Sasko Windows and Doors Inc. Sweeprite South Saskatchewan Manufacturing Consortium

35. Training Courses • The CME leads the Saskatchewan Consortium of Manufacturing Excellence and the Northern Saskatchewan Consortium of Manufacturing Excellence • Training begins with Value Stream Mapping • Members choose their courses from the following examples:

36. Introduction to World Class Fundamentals Lean 101 Hands on Introduction also High-Mix, Low-Volume 5S and the Visual Factory Lean Set Up Reduction Continuous Improvement Lean Product Design Effective Office Lean Purchasing/ Procurement Lean Accounting Effective Coaching Training Courses

37. The Role of the Office in Lean Enterprise

38. Keys to a Successful Consortium • Non-competing companies • Membership fees that allow a pooling of resources to hire leading consultants and offer training sessions • Membership that decides on the courses offered and membership in the consortium • Members willing to share their best practices and learn from each other

39. Results Some results from our Consortiums: • Reduce Inventory by 56 %; • Decrease bank debt by 50 %; • Deliver product in 10 days rather that 2 months; • Engineering time reduced to 2 hours from 2 weeks; • Space requirements reduced by 35 %; • Space requirement reduced by 200 %; • Productivity increased by an average of 55 %

40. Results • Travel time reduced by 75 %; • Process time reduced by 82 %; • Inventory turns increased by 40 %; • Production time reduced by 40 %; • Gross Margin increased by 105 %; • Product Cycle time decreased from 4 weeks to 24 hours; • 6 fold increase in throughput;

41. Results • No finished good inventory – all goods pulled by customer and shipped the day of manufacture; • On time delivery 96.1 %; • 25 % decrease in manufacturing inventory; • Cultural change from traditional manufacturing to scheduling based upon product pull; • Staff are involved with the production process and allowed to make necessary changes.

42. Why Join a Lean Consortium? • You cannot live long enough to make all of the mistakes necessary to implement lean on your own; • It is time to eliminate “fire fighting or management by crisis”; • The sharing of concepts, actions, and results with other non competing companies takes company performance to a level that is unattainable unless expenditures, resources, and efforts are all at a much higher level than required in the Consortium.

43. II.Corporate Procurement Committee • The Manufacturing Team chairs the provincial Corporate Procurement Committee (CPC) • The CPC consists of members from major Saskatchewan corporations representing the Crowns, the private sector, and government departments.

44. CPC Mission Statement • The Mission of the Corporate Procurement Committee is to promote Saskatchewan economic growth by developing quality, competitive suppliers of goods and services in Saskatchewan.

45. CPC Goals and Objectives • To maximize Saskatchewan content in the acquisition of goods and services • To increase awareness of Saskatchewan supplier capabilities • To encourage the export of goods and services by Saskatchewan suppliers

46. CPC Goals and Objectives • To identify opportunities to Saskatchewan suppliers • To maximize Aboriginal content in the acquisition of goods and services • To encourage the implementation of Quality Assurance Programs by Saskatchewan suppliers.

47. CPC Action Plan • Meet as a committee five times per year • Share information on suppliers, new products, success stories, and Saskatchewan content statistics • Visit supplier facilities in conjunction with meetings

48. CPC Action Plan • Prove information to SIR to maintain databases i.e.. Manufacturers Guide • Share information on policies and programs • Promote the selective use of offset counter trade agreements to support Saskatchewan suppliers.

49. CPC Success Stories • Hitachi Canadian Industries – manufacture of wind towers for SaskPower • Del-Air – manufacture of pedestals for SaskTel and SaskPower • Country Leather – manufacture of leather gloves for SaskPower

50. CPC Meetings for 2005 March 17-18 Melfort/Tisdale April 28 Saskatoon June 2-3 Meadow Lake September 22-23 Kindersley November 24 Regina Interested in presenting to CPC? Call us.