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Chapter 1

Chapter 1. Why Implement World Class Manufacturing? Proof of the Need to Change. Why do you come to work?. Why Implement WCM?. Profits are the reward of satisfied customers and, ultimately, the source of jobs. Increased customer satisfaction

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Chapter 1

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  1. Chapter 1 Why Implement World Class Manufacturing? Proof of the Need to Change

  2. Why do you come to work?

  3. Why Implement WCM? • Profits are the reward of satisfied customers and, ultimately, the source of jobs. • Increased customer satisfaction • Defined as meeting a customer’s expectation for the quality, delivery, price, performance, and service of its products. • Requires execution by the entire company team on the customer’s requirements.

  4. Why do we need WCM? Total Product or Service Price to Customers Budget Constraints and Competition Drive a Lowered Price Profit Profit Total Cost to Produce or Provide Waste (COPQ) Price $ Profit Profit COPQ Theoretical Costs i.e.., Cost of Doing the Right Things Right the First Time Waste (COPQ) Theoretical Theoretical COSTS COSTS 0 a. b. c. d. e. “The price of gaining knowledge is nothing compared to the cost of ignorance.” Anonymous

  5. Customer Satisfaction • Customer satisfaction alone has the power to guarantee profits and jobs. • Customers guarantee the jobs of employers and companies. • Customers will not pay the wages of anyone, hourly or management, who does not add value to the future product. • Improved through continuous improvement “It’s not the employer who pays the wages. Employers only handle the money. It’s the customer who pays the wages.” -Henry Ford

  6. is a mindset or attitude focused on the continuous elimination of waste. Continuous Improvement It’s a way of life!

  7. What is Waste? • Is anything other than the MINIMUM amount of people, time, equipment, material, parts, and space required to ADD VALUE to the product Maximize Value Added Activity Minimize Non-Value Added Activity OUR OBJECTIVE Eliminating Waste Will Make Us More Competitive

  8. Eight Types of Waste Defects Overproduction Waiting Non-utilized resources Transportation Inventory Motion Extra Processing The 8 General Types of Waste

  9. Class Exercise - Office Type Waste • Office/service areas produce “knowledge and information products” • Give examples of office type waste for each category • Defects • Overproduction • Waiting • Non-utilized resources • Transportation • Inventory • Motion • Extra Processing What can you use to identify waste? Value Stream Mapping

  10. Office Area Waste Examples • Hunting, Looking, Searching • Waiting Time • Purchasing Reorders, Transactions, Supplier Invoices • Authorizations • Double checking work • Conflicting Department Goals • Traditional Accounting Methods • Poor Product Designs • Order Processing Time • Errors • Copy and paste

  11. How do we uncover these problems?? – Go look MAKE THE WASTE UGLY !! Identify the waste, expose it, and eliminate it!!

  12. Adding Value / Eliminate the Waste Any operation or process the customer is willing to pay for. • How? • Ask the customer! • Adding value generally means changing the shape or form of the product. • Converting wasted activities to value-added activities. • Doing less may give you more!

  13. Improved Profitability • Waste Elimination Leads to….. • Improved Customer Satisfaction Leads to….. • Improved Profitability Yeah!!

  14. Change = Improvement If you always do what you have always done, you will always get what you have always got. • Japanese Success Factors • Teamwork • A company-wide war on waste • Dedication to perfect quality It is part of the culture – they listened to Deming

  15. Lower Costs= Customer Satisfaction • The reality of satisfying the customer is that it does not raise costs. • Customer satisfaction always costs less. • The reason is simple. • In every business, there are inherent roadblocks which prevent the business from performing in a manner that meets the customer’s expectations. We have created these roadblocks!

  16. Roadblocks • Material Handling • Inspection • Inventory Storage • Product Test • Counting Inventory • Late parts • Thinking you are unique • Scrap/Rework • Machine Setups/Unplanned Downtime • Supplier Lead Times • Inventories • Lost Time Accidents • Bias processes • “Experience”

  17. Scrap/Rework • Limits competitiveness, costs are borne by the buyer. • Prevents on-time deliveries which cause additional costs in overtime, premium freight, warranty, and/or administrative costs. • Represents quality problems which could reach the customer. • 100% inspection is only 85%* effective.

  18. 100% Inspection Four fully armored aircraft carriers launched fifteen flights of fighter planes on a daily basis. In each flight of planes, there were four F-15's, five F-14's, and a few support aircraft. For three hours the planes flew, finding target after target to attack, with few enemy fighters to bother them. Finally, after the mission was over, they did a flyby at the airfield, to show their friends how well they had fared. Their mission had been very successful. How many F’s, f’sdo YOU see?

  19. How Many F’s? • How many did you find? • There were 29 F’s • Do you still think inspection is the answer? I cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdgnieg  THE PAOMNNEHAL PWEOR OF THE HMUAN MNID. Aoccdrnig to rscheearch atCmabrigde Uinervtisy, it deosn't mttaer in waht oredr the ltteers in a word are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it wouthit a porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter byistlef, but the wrod as a wlohe. Amzanig huh? Visual inspection only catches 85% of the errors*

  20. Machine Setups/Unplanned Downtime • Reduces manufacturing capacity • Prevents on-time deliveries • Promotes building inventories • Supports the requirement for indirect labor and higher costs. Creates a whole hidden factory!

  21. Supplier Lead Time • Prevents the reduction of product lead times. • Prevents the ability to becoming a World Class Company. • Since world class companies require world class suppliers How do you have perfect quality and deliver on-time if half of your supplied product is late and non-conforming?

  22. Inventories • Adds carrying cost of inventories. • Approximately 25-30% per year is waste • Hides unsolved manufacturing problems: • Scrap • Rework Lean is not about inventory reduction - it is about right sizing your inventory This is measured in Turn Times

  23. Lost Time Accidents • Causes physical and mental hardships on team members and their families. • May limit the full participation and involvement of the team member. • Prevents a member from being available to serve the customer. • Injury claims add cost to the product. This affects our number one resource – human resources

  24. Product Test • Not a value added operation when used as an audit of manufacturing or assembly processes.

  25. Summary • World Class Manufacturing & World Class Enterprise • A technique that can continuously improve the following business and manufacturing processes: • Quality, delivery, responsiveness, cost, safety, …… • While reducing: • Lead-time & costs

  26. Where do you start?

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