Integrating Six Sigma and Lean Manufacturing The Challenges & Benefits

1. Integrating Six Sigma and Lean Manufacturing The Challenges & Benefits ADVENT DESIGN CORPORATION

2. SIX SIGMA or LEAN MANUFACTURINGNeed to lower costs & reduce lead time? • Material flow is poor • Error rate is high • Can’t deliver ontime • Equipment too slow

3. Six Sigma or Lean Manufacturing? LEAN MANUFACTURING: Reduce Lead Time by eliminating waste in the Value Stream Provides the Game Plan and Plays SIX SIGMA: Reduce process variation Provides the Instant Replay and Play by Play Analysis

4. Six Sigma or Lean Manufacturing? LEAN MANUFACTURING: Lean cannot bring a process under statistical control SIX SIGMA: Can not dramatically improve process speed or reduce invested capital NEED BOTH!

5. Integrating Six Sigma with Lean Manufacturing • Increases customer satisfaction • Improves profitability & competitive position • Has historical integration problems • Requires a different system model • Requires implementation & sustaining plans

6. Definition ofValue -Added • Value is added any time the product is physically changed towards what the customer is intending to purchase. • Value is also added when a service is provided for which the customer is willing to pay (i.e. design, engineering, etc.). • If we are not adding value, we are adding cost or waste. 90% of lead time is non-value added!

7. Value Stream The value stream is the set of all the specific actions required to bring a specific product (good or service) through the critical management tasks of any business: 1. Information Management 2. Transformation

8. Lean Manufacturing System • Goals are • Highest quality • Lowest cost • Shortest lead time • Achieved by eliminating waste in the value stream • Industry benchmark: Toyota Production System (TPS) • TPS is applied I.E. and common sense • Principle: organization supports the value adder

9. The EIGHT Wastes • Inventory (more than one piece flow) • Overproduction (more or sooner than needed) • Correction (inspection and rework) • Material Movement • Waiting • Motion • Non-Value Added Processing • Underutilized People

10. Six Sigma System • A defined management process and CTQ goal (3.4 ppm) 3 sigma is 66,807 ppm! • Driven from the top • A data analysis and problem solving methodology • Strong focus on variation reduction • Supported by highly trained problem solvers

11. Six Sigma Variation Reduction Process Variation Should be Less Than Specs Variation Reduction is Cost Reduction

12. Six Sigma System Improving Profitability A 1 Sigma Improvement Yields….. • 20% margin improvement • 12 to 18% increase in capacity • 12% reduction in number of employees • 10 to 30% reduction in capital Source: Six Sigma - Harry & Schroeder

13. Six Sigma System A culture characterized by….. • Customer centricity: What do they value? • Financial results • Management engagement & involvement • Resource commitment: 1 to3% of staff full time • Execution infrastructure: black & green belts, teams

14. The DMAIC Cycle Six Sigma In Action SDCA Define Measure & Analyze Plan-Do-Study-Act Teams Benchmark Analysis tools ID variability Management Commitment SDCA Employee Involvement Control Improve Plan-Do-Study-Act Design of Experiments SDCA = Standardize-Do-Check-Adjust

15. Six Sigma Information Flow

16. Need for Six Sigma & Lean External - Satisfying Customers….. • Quality, Warrant, Cost • Customers Require Six Sigma • Customers Require Lean Manufacturing • Competitors are implementing Lean & Six Sigma • Staying in business

17. Need for Six Sigma & Lean Internal - Improving Profitability….. • Operational Cost Reduction • Improve Productivity • Reduce Scrap and Rework • Reduce Inventory & WIP • Engineering Design Cost Reduction • Stabilize & Quantify Process Capability • Input for Product and Design Process

18. Lean Six Sigma Model

19. Lean Six Sigma Implementation Historical Implementation Problems • Only Six Sigma or Lean Implemented - big $ savings but money left on the table • Separate Six Sigma & Lean initiatives competing for best resources • Difficulty in sustaining the gain

20. Lean Six Sigma Implementation Some Solutions……. • Need to implement in the correct order • Policy deployment to align business objectives • Focus on shop floor results, not class room skills • Experienced teachers & coaches • Standardized work to institutionalize the gains

21. How Do We Use Lean Six Sigma Techniques • Get Management commitment • Assess the operation using a Value Stream Map (Product families & Production data) • Identify lean improvements & kaizens without automation • Implement lean improvements using VSM plan • Identify Identify processes requiring Six Sigma analysis • Analyze, eliminate, and control variation • Start the cycle again!

22. The Lean Six Sigma Cycle VSM Commitment & Assessment Recommended Solutions Set Up Layout Cells Visual Continuous Improvement Variation Reduction DO IT! Implementation Plan Information Systems

23. Value Stream MapAn Assessment Tool • The value stream map follows the production path from beginning to end and shows a visual representation of every process in the material and information flows • Shows how the shop floor currently operates • Foundation for the future state

24. Using the Value Stream Mapping Tool product family current state drawing Understanding how the shop floor currently operates. The foundation for the future state. future state drawing Designing a lean flow plan and implementation

26. Value Stream Map (Current State) Orders Every 2 Weeks Production Control New Jersey Porcelain (Round Stones) Randomly Placed Orders (Various Sizes) Andrea Aromatics (Scented Oils) Alanx (Shaped Stones) Order as Needed Various Customers Average of 6,000 Stones per Day in Various Size Orders (8 to 20 case & 200 to 400 case range mainly) 30 Cans of Oil Every 2 Weeks 59,000 Stones Every 2 Weeks 50,000+ Stones Every 2 Months (via stringer) Bi-Weekly Production Schedule Daily Shipping Orders Daily Shipments Existing Work Cell Soak & Dry Packaging Labeling Cartoning Case Packing Shipping APAI Automatic Stapler Multiple Batch Tanks Ameripack Flow Packager Manual Manual I I I I I I up to 250 stones in WIP 0 0 125 Cans of Oil 20,640 Round Stones 49,000 Shaped Stones 1 Operator 4290 Stones 1 Operator 1/2 Operator 1/2 Operator 90,504 Stones 1 Operator C/T = 25 - 65 min. C/O = 10 min. Rel. = 100% C/T = 1 sec. C/O = 5 min. Rel. = 85% C/T = 3 sec. C/O = 2 min. Rel. = 80% C/T = 2 sec. C/O = N/A Rel. = 100% C/T = 1 sec. C/O = N/A Rel. = 100% 11.6 Days 0.7 Days 15.1 days 27.4 Days Lead Time 65 minutes, 7 seconds Value-Added Time 65 min. 7 seconds

27. Value Stream Map (Future State) Orders Every Week Production Control New Jersey Porcelain (Round Stones) Randomly Placed Orders (Various Sizes) Andrea Aromatics (Scented Oils) Alanx (Shaped Stones) Monthly Order Various Customers Average of 6,000 Stones per Day in Various Size Orders (8 to 20 case & 200 to 400 case range mainly) Bi-Weekly Production Schedule (large orders) 12 to 16 Cans of Oil Once a Week 30,000 Stones Once a Week 25,000 Stones Once a Month (via stringer) Daily Shipping Orders Daily Shipments 4 Cases Existing Work Cell Soak & Dry Packaging Labeling Cartoning Case Packing Shipping APAI Automatic Stapler Multiple Batch Tanks Ameripack Flow Packager Manual Manual I I I I I up to 250 stones in WIP 0 0 75 Cans of Oil 40,000 Round Stones 25,000 Shaped Stones 1 Operator 4290 Stones 1 Operator 1/2 Operator 1/2 Operator 30,000 Stones in a supermarket type arrangement with stocking levels by shape and scent 1 Operator C/T = 25 - 65 min. C/O = 10 min. Rel. = 100% C/T = 1 sec. C/O = 5 min. Rel. = 85% C/T = 3 sec. C/O = 2 min. Rel. = 80% C/T = 2 sec. C/O = N/A Rel. = 100% C/T = 1 sec. C/O = N/A Rel. = 100% Increase Reliability 10.8 Days 0.7 Days 5.0 days 16.5 Days Lead Time 65 minutes, 7 seconds Value-Added Time 65 min. 7 seconds

28. Questions to Ask About the Value Stream • Is the step valuable? • Is the step capable? • Is the step available? • Is the step adequate (capacity)? • Is the step flexible?

30. Lean ManufacturingConcepts & Techniques • Flow: Setup Reduction, Cellular Manufacturing, Batch Size Reduction, Visual Workplace, Layout • Pull: Kanban Systems, Supply Chain Management, Point of Use • Perfection: Quality Systems including variation reduction, Training

31. Road Map to Lean Six Sigma

32. Low Productivity Electrical Device AssemblyThe Challengein Two Steps • Client wanted wave soldering and robotic pick and place • Functional operational layout • Ergonomic problems • Extensive material staging • No space • Initially, 13 people in Aurora cell • Low output: 300 units/day

33. Lean Six Sigma Techniques Used • Process flow diagrams • Cellular Manufacturing & Layout • Balance Cycle Times Between Work Stations • Reduce Batch Size & parts staging • Quality Data Collection & Analysis (Reduce Reject Rate)

34. Cellular Assembly Layout

35. WORKSTATION CYCLE TIME: 25sec., 1.25 min. PER 3 UNITS REJECT DATA 2 LED SOLDER & CUT 7 TEST SAMPLES 4 5 6 8 9 ATTACH BACK COVER, STAKE STRAP & ATTACH STRAP ASSEMBLY #1 COLD STAKE TEST PCBs CONTACTS ASSEMBLY & SOLDER BUTTON & BATTERY ASSEMBLY LABEL GLUE SWITCH/ ATTACH STRAP PACK LED PLACEMENT 1 INSERT SWITCH ACTIVATOR LED SOLDER & CUT REJECT DATA TEST PCBs 3 ASSIST Cell Changes REJECT DATA AFTER CHANGES WORKSTATION CYCLE TIME: 25sec., 1.25 min. PER 3 UNITS 4 TEST SAMPLES 1 2 3 5 6 ATTACH BACK COVER, STAKE STRAP & ATTACH STRAP PCBs from supplier ASSEMBLY #1 COLD STAKE TEST PCBs CONTACTS ASSEMBLY & SOLDER BUTTON & BATTERY ASSEMBLY LABEL GLUE SWITCH/ ATTACH STRAP PACK INSERT SWITCH ACTIVATOR REJECT DATA

36. Lean Six Sigma Changes • Cold staking fixtures • Powered screw drivers • Light test & Soldering fixtures • Quality data tracking via % defect control chart (p chart)

37. With Lean Six SigmaThe Results • Balanced cell at 24 sec per work station • Two U-shaped cells • 3 piece flow • 1000 units/day per cell vs 300 • 6 people per cell vs 13 • Faster identification of quality problems • Operating at 5 to 6 sigma • Better teamwork • No backlog

38. Reducing Lead Time & Improving Quality Steel Panel FabricationThe Challenge • Client wanted to reduce lead time to less than one week • Automated equipment had been installed but had problems • Panel rejects & rework • Material flow problems • Few process controls or data collection

39. Value Stream Map (Current State) Blanket Annual Purchase Order with Daily Releases Production Control (normally working 24 to 48 hours ahead of promised shipment) Randomly Placed Orders (normally single unit orders) Various Distributors (~ 24 for Smith Corp. & ~ 6 for Jones Systems Sheet Galvanized Steel (4’ by 8’ or cut) Sheet Galvanized Steel (4’ by 8’ or cut) Sheet Galvanized Steel (4’ by 8’ or cut) Sheet Galvanized Steel (4’ by 8’ or cut) Average volume of 1000 systems per month in peak season. Customers are mainly distributors. There are a few dealers. Daily Production Reports Daily Production Reports Up to an average of 130,000 lbs daily in peak season Daily Shipping Schedule Daily Shipments In Straight Panel Dept. Shear Notch Specialty Punch Corner Punch Bend Stake & Label Add Z Brace Rack Shipping Radius & Band 1 Accurshear Automated Shear (P-3) 1 Manual Notcher (S-23) & 1 Automated Notcher (R-3) 4 Semi-Auto Punches 3 Semi-Auto Punches (S-1, S-2, & S-3) 1 Manual Brake (R-7) & 1 Automated Brake (R-13) 1 Automated Machine (R-8) 1 Automated Machine (ACR) 1 Manual Table, 1 Jig-less Machine (R12), & 1 Jig Machine (R1) I 2 to 5 days depending on pre-cut size 1 Material Handler 1 Operator 1/2 Operator 0 Operators 1 Operator 1/2 Operator 1/2 Operator 1/2 Operator 2 Operators 2 Operators C/T = 4 min. C/O = N/A Rel. = 99% C/T = 2 min. C/O = 4 min Rel. = 95% C/T = 2 min. C/O = N/A Rel. = 99% C/T = 2 min. C/O = up to 30 min. Rel. = 99% C/T = 5 min. C/O = 30 to 60 sec. Rel. = 90% C/T = 2 min. C/O = N/A Rel. = 99% C/T = 7 min. C/O = N/A Rel. = 98% to 99% C/T = N/A C/O = N/A Rel. = 100% C/T = 8 min. (average) C/O = 2 to 30 min. Rel. = 80% to 100% 2 to 5 Working Days, Lead Time 32 minutes, Value-Added Time 2 to 5 days 4 min. 2 min. 2 min. 2 min. 5 min. 2 min. 7 min. 8 min.

40. Lean & Six Sigma Techniques Used • Value Stream Mapping • Process flow diagrams • Setup time Analysis • Quality Data Collection & Analysis (Reduce Reject Rate & Variability)

41. INITIAL IMPROVEMENT CONCEPTS Improve reliability and changeover capability of R1 and R12 machines. Reduce panel reject rate. Work to 1 to 2 days lead time Radius & Band 1 Manual Table, 1 Jig-less Machine (R12), & 1 Jig Machine (R1) Rack 1 Material Handler 2 Operators C/T = 8 min. (average) C/O = 2 to 30 min. Rel. = 80% to 100% C/T = N/A C/O = N/A Rel. = 100% 2 to 5 Working Days, Lead Time 8 min.

42. 6 Foot Long Custom Radius Panel Fabrication Trumpf Area Straight Panel Dept. Notch & Punch (Trumpf Machine) Panel Material Bend & Stake Add Z Brace(s) (if required) Raw Material Stock 14 Ga. Galvanized Steel (pre-cut 53-15/16” by 6’3-15/16” sheets) Radius & Band (R12 - Jigless Machine) Label Rack Ship WIP Stock 16 Different Panels with Various Cutouts Custom Panel Dept. Band Material Shear & Cut Raw Material Stock Partially finished panels are stocked in sixteen different configurations. Panels are finished to order. Work is done in three different areas as noted. 11 Ga. Galvanized Steel (4’ by 8’ standard sheets) 7/19/02

44. Process ImprovementsSeparating Process & Machine Issues • Common setup procedure • Replace measurement gages • Established process capability • Implemented process controls for panel dimensions • Identified realtime data requirements • Completed identified maintenance actions • Implemented PM program

45. New Radius Bending Machine R13 • Automated band cutting • Servo driven adjustments from panel bar codes • Online radius measurement and tracking

46. R13 Capabilities After Lean Six Sigma • Operates as a cell • Runs two product families • Changeover in less than 5 sec. within and between product families • Cycle time reduced from 5 min. to 1.8 min. • Realtime auto check of each panel with data collection • Operating at 6 sigma

47. Automation Provides Realtime Data to Control Variation for Six Sigma • Enhances Define-Measure-Analyze-Improve-Control methodology (DMAIC) • Online measurement of process parameters • Provide realtime controls as limits are understood Process Control

48. R13 Process Controls & System Status Realtime Data Collection for Six Sigma Analysis Diagnostics for Rapid Identification of Problems

49. Realtime Data From R13

50. How Do We Use Lean Six Sigma Techniques • Get Management commitment • Assess the operation using a Value Stream Map (Product families & Production data) • Identify lean improvements & kaizens without automation • Implement lean improvements using VSM plan • Identify Identify processes requiring Six Sigma analysis • Analyze, eliminate, and control variation • Start the cycle again!