Implementation Roadmap for Lean Implementation

1. Implementation Roadmap for Lean Implementation SuhasGokhale Lean Manufacturing suhasgo@gmail.com Suhas_gokhale@rediffmail.com + 91 9881075056 www.SuhasGokhale.com

2. CLUSTER METHODOLOGY • INTERVENTIONS are • Common Trainings • Hand Holding Visits • Monthly Review Meetings • Plant Visits

3. COMMON TRAININGS • Topics of training based on the Roadmap • Common Training for all cluster members • Each Co. to nominate 3 – 4 members • CEO & Coordinator to attend training • Coordinators to train other employees • Training will be spread over 10 months • One hard copy of the training material shall be given to each unit (Co.)

4. HAND HOLDING VISITS : PURPOSE • To elaborate and customize what has been taught in Training programs. • To help the units to identify improvement projects / activities, in line with what has been taught. • Discuss on the implementing the improvements identified and suggest different options. • Review progress on the work assigned.

5. HAND HOLDING VISITS : METHOD • The units will be visited by the LMC and the facilitators from OE and Tier I on agreed dates. • The Unit owner and coordinator to be available. • The coordinator of the Unit to record all points of action discussed during the visits and commit target dates.

6. HAND HOLDING VISITS : METHOD …..contd. • The handholding visits will seek more information about the units for providing appropriate solutions and implementation method. • Transparency and cooperation is needed in sharing the information. • Digital camera is strongly recommended for capturing and analyzing “Before and After” situations.

7. INTERNAL MRMs • It is very much essential that Unit owner conducts formal internal MRMs before the cluster MRM. • The purpose of internal MRM is to review the progress in a formal way, identify gaps and action plan to fill the gap and record. • It is suggested to have following persons in the internal MRM. The Unit owner, the coordinator, the zone coordinators and team members.

8. MONTHLY REVIEW MEETINGS • MRM is a monthly meeting of • Unit owner and the coordinators from Cluster member companies • Coordinators and facilitators from OE and Tier I. • LMC or his representative. • Special invitees based on the need • Experts / Industrialists

9. PURPOSE OF MRM • To share the experience among the Cluster members. • To review the progress and results of the Cluster members. • For conducting the Training programs for Cluster members. • To have direct interaction between all key persons involved in the cluster activities. • To give / receive feedback on implementation. • To share concerns and suggestions.

10. CONDUCT OF MRMs • Frequency : Monthly • Dates : Last Thursday of every month • Timing : 10 am to 2 pm in conference hall (LEAR / Sharda Motor) 2 pm to 6 pm factory visit (hosting member company) • Coordination : LMC, OE and Tier I • Hosted by : A cluster unit shall host the MRM by rotation

11. CONDUCT OF MRMs….contd. Requirement of Venue • Should accommodate 30 – 40 persons • A computer, LCD projector, white board, marker, audio arrangements. • Tea / coffee / Lunch / snacks as appropriate

12. CONDUCT OF MRMs….contd. • The sequence of MRM is on the next page. • The agenda will be finalized and distributed to all concerned by LMC in advance. • Lear to take lead in organizing. • The cluster members MUST come prepared with the presentations in the prescribed formats in SOFT COPY. • The host company to take care of safe & time bound tour of factory and explanations through volunteers. • CD of all presentations shall be compiled at the end of the project for circulation in the cluster.

13. TYPICALSEQUENCE OF MRMs • ABE Enterprises : 29th Dec’11 • Guru Enterprises : 25th Jan’12 • Jay Industries : 23rdFeb’12 • Raj Industries : 29thMar’12 • Shiv mfg company : 26th Apr’12 • ShriUdyog : 31st May’12 • Star Engine : 28th Jun’12 • YashEngineering : 26th July’12 • Raj Engineering comp : 30th Aug’12 • Ram Fastners : 27th Sept’ 12

14. SUCCESS OF MRMs It highly depends on • The Unit owner, his coordinators, cluster members attending the MRMs REGULARLY. • Proper and detail presentations (ppt) by the Units. Zone wise achievements, Learning during the month, case studies. • Conducting internal trainings to all employees in the unit by the coordinator. • Conduct and record of internal MRMs.

15. KEY INDICATORS OF OPERATIONAL PERFORMANCE 7 Primary Indicators • Product Quality • Labour productivity • Stock Turnover (Inventory Turn Ratio – ITR) • Delivery Schedule Achievement • Overall Equipment Effectiveness (OEE) • Floor Space Utilization • Value Added per Personnel Cost (VAPCO)

16. KEY INDICATORS OF OPERATIONAL PERFORMANCE contd. 14 Secondary Indicators • 5 S scores • SMED Index • Inventory Quality Control (Red, Grey, Green inventory) • Floor Space saving • Safety • Absenteeism • OT hours • Suggestions per employee • Employees Involvement in Improvement activities • Machine breakdown hours • Machine breakdown frequency • Energy Cost Savings • Improvements implemented • Value Added per person (VAP)

17. 1. PRODUCT QUALITY • This indicator measures Product Quality Levels • Expressed in ‘No. of defective parts per million’ • This indicator should decrease over time. • There are three indicators • Customer complaints (No.s) • Customer returns(ppm) • In process Rejection (ppm)

18. 2. LABOUR PRODUCTIVITY • This is a measure of Productivity • This is measured as the ratio between the no. of accepted units made and the total no. of employees hours associated with the mfg. of these units. • It includes Direct, Indirect & Admin staff. • This measure should increase over time.

19. 3. INVENTORY TURNS RATIO • This measures how frequently the stock of raw material, work in process and finished goods are turned over in relation to the material cost in the Sales revenue. • Inventory levels are the key indicators of the ‘Leanness’ of the process and are directly related to the simplicity of production flows. • This increase over time.

20. 3. INVENTORY TURNS RATIO… contd. • Unit Company should define its method of calculation of material cost, inventory compilation. • Unit Company should take a stock of the inventory of RM, WIP, FG on the last day of the month and calculate the ratio. • Include all materials owned, at subcontractors, warehouse etc.

21. 3. INVENTORY TURNS RATIO… contd. Material cost of sales in a particular month ITR = ------------------------------------------- x 12 Inventory of RM + WIP + FG as on date

22. 4. DELIVERY SCHEDULE ACHIEVEMENT • This measures how well a supplier’s dispatches match the planned delivery requirement of the customers. • Unit of this measure is % • This should increase over time. Total no. of dispatches achieved = ------------------------------------------- x 100 Total no. of dispatches planned

23. 5. OVERALL EQUIPMENT EFFECTIVENESS (OEE) • This is a composite measure of the Equipment Performance. • This includes Availability Performance, Operational Performance & Quality performance of the equipment. • This should increase with time. • Unit of measure is % • OEE = Availability Rate x Performance Rate x Quality Rate x 100

24. 6. FLOOR SPACE AREA • This indicator is measured as a ratio of the Sales Revenue generated to the Sq. M of the Unit Co. • It should increase over time. • Unit is Rs./ Sq.M • Considers shop floor, WIP, FG, Tool room, unutilized space for this indicator Sales Value of Production Floor Space Utilization = --------------------------------- Shop floor in Sq.M

25. 7. VALUE ADDED PER PERSONNEL COST (VAPCO) • This is a financial measure that relates the value added with the cost incurred towards the people involved in the value addition process. • Unit for this is Rs. / Rs. • This should increase over time. (Sales value of Production – Variable Cost) VAPCO = --------------------------------------------------------- Total Personnel Cost

26. SECONDARY INDICATORS These are for improving the Operations • The 5 S Audit cum Score sheet is used to measure 5 S score of the Unit Co. • Unit for this indicator is % • It should increase over time. • It is improved through • 5 S audit • WPP (Worst Point Photography) • FPP (Fixed Point Photography)

27. SMED Index • This indicator is a measure of flexibility and agility of the shop floor. • The purpose of this indicator is to implement ‘Quick Changeover’ • It should reduce over time. • Make a monthly trend graph for this indicator. • Unit for this indicator is % No. of changeovers in less than 10 min Formula = ----------------------------------------------------- x 100 Total No. of Changeovers

28. INVENTORY CONTROL(Through Red, Grey, Green tags) • Inventory shall be controlled for RM, WIP, FG • There are three inventory types • Red - Not Required (in this Qtr) • Grey - Not required today (but in Qtr) • Green - Required today (monthly demand) • Actions are suggested based on the type / tag of the inventory

29. FLOOR SPACE UTILIZATION • This indicator is measured thru the Sq.M of floor space saved thru improvements • It can be office space or shop floor • It should increase over time • Unit is Sq.M • Formula : Space Utilization = Floor Space saved

30. SAFETY There are two measures for safety • Accident Frequency Rate – No. of accidents occurring in the Co. due to unsafe practices/ conditions. • Prepare monthly chart for it. It should reduce over time. No. of Accidents = ----------------------- X 1 million Total man hours Man hours lost • Accident Severity Rate = --------------------- x 1 million Total man hours avl

31. Absenteeism & Overtime • This indicator measures the willingness of the employees to come to the workplace and perform value added activities • This indicator should decrease over time. • Unit is % Absenteeism & Rs. for Overtime • Company to prepare trend graph

32. SUGGESTIONS PER EMPLOYEE • This indicator measures the morale of the employees and readiness to accept the change initiatives within the work environment • Unit is No. / person • This should increase over time Total No. of employee suggestions Formula : ---------------------------------------------- Total no. of employees

33. MACHINE BREAKDOWN • B’down includes machine stoppage due to • Mechanical faults • Electrical faults • Electronic faults • Unit of this indicator is hours & No.s • It should decrease over time. • Co. should make a monthly trend graph

34. ENERGY COST SAVINGS • This indicator is a measure of energy input cost reduction in the working of the whole organization. • Unit is Rs. • Energy savings may be Electrical energy, Fuel savings etc. • It should increase over time. • Co. should make a monthly trend graph

35. IMPROVEMETS IMPLEMENTED • This indicator is a measure of employee participation levels. • Unit is No.s • It should increase over period of time. • Co. should make a monthly trend graph

36. VALUE ADDED PER PERSON (VAP) • This is a financial measure that relates the value added with the No. of people involved in the value addition process. • Unit is ‘Rs. / Person’ • It should increase over period of time. • Co. should make a monthly trend graph (Sales value of Production – Variable Cost) VAP = -------------------------------------------------------------- Total No. of persons (Direct, Indirect & Admin) Variable cost includes cost of RM, BO, Sub contracted processing, consumables, power, payrolls etc.

37. Q & A Thank You!