Leaning it out!

1. Leaning it out! Organizing team efforts for Efficiency, Accuracy and Focus Patrick Lynch CFPIM, C.P.M. October 19, 2004 Nashville!

2. Background • Patrick Lynch • CFPIM; APICS member for 15 years • C.P.M. Certified Purchasing Manager ISM • B.A. Michigan State University Materials and Logistics Management • Practitioner for 20 years • General Motors, NCR, Toro, Callaway Golf • Currently Principal of Materials, Guidant Corp.

3. More importantly… • 2 Sons, youth hockey and x-cycle riders • Coaching (hockey and pop warner) • Desert rats • Beach combing • Snow skiing • Enjoy writing • Teaching/mentoring • Developing employees and coaching kids continues to be the most rewarding experience in my career – or life, in general !

4. Tonight • Hear the good, bad and ugly related to a Lean conversion of product, support and assembly areas • A “before and after”,… of sorts • Tools /techniques – stuff you can take home • From a simple guy …with simple tools

5. Things you probably already know… • Kaizen Process Review • Muda Waste • Takt Drum Beat • Cycle time Build time of one unit • Line-balance Efficiency/cycle time reduction • Kanban Visible record/replenishment

6. Success factors for any Lean Implementation • Waste elimination – as an ingrained thought • Continuous improvements in: • Sales $$ per employee • Units per direct employee and units per employee • Decreased cycle time • Improved quality • Making every step in your process count • Lower inventories (Raw, WIP and FG) • Decreased excess and obsolescence • Everyone in the plant THINKING LEAN

7. Lets get started…The MARKET • Pacemaker- remote monitor- Model# CP • 1970’s vintage, declining life stage, but surviving • 5 variations of end product (literature/leads/battery) • Sales rate steady at 90/day (+/-8 at one sigma) • Fairly low volume – moderate margin • New technologies threaten longevity • Medicare reimbursement • ISO approved/ FDA approved/CE approved site • In general ,…Faced with tough competition and antiquated technology

8. …MANUFACTURING / STAFFING • Process Orientation • Sub-operation processes (at other buildings) included: • case assembly • board stuff, • testing, • packaging • Total of 19 assembly resources including Case, PCBA, kitting, test and packaging • Build cycle-times varied from 2 ½ days to 3 days depending on queues. • ** Production support shared across 6 major lines

9. …DEMAND,…and SUPPLY • New technologies threaten DEMAND and supply • Dated electronics; NCNR common • Tooling very mature • Fortunately, mostly domestic-sourced components • Healthy supplier relations • Lead-times for components from 3 weeks to 16 • Some Lead-times vary from 8-16 weeks • MRP-driven replenishment of 95 components

10. …Support areas • 1 Supervisor (single shift, dedicated) • 1 Master Scheduler (shared) • 5 Material handlers (shared) • 4 Buyers (two shared across commodities) • 3 Planners (all were shared across product lines) • 2 Dispatchers (shop order reconciliation + kitting) • Test, Packaging, Shipping supported by shared service

11. Challenges • Separation from Mother Company • Fledgling history and no legacy • Limited Resources / Limited Data • Unknown details on some parts/poor BOMs • Tribal knowledge • Program DeJour • Limited knowledge or interest in many ranks • Trust • No fallback for materials: Kanban or bust • Dependence on MRP and a lot of bad habits

12. Forecasted requirements systematically drive time-phased launches of shop orders and purchase requisitions at the planned lead-time offset, based on routing and bill of material (BOM) data,…ya de ya de ya da… We all know the routine:

13. Support Processes….typical findings during Kaizen events • the biggest offender is usually the MRP planning system in many repetition-build factories . • infinite non-value-added transactions • Overhead • Slow response system • Causes Over-handling of materials and data

14. Over the years…. Unmanaged evolution leads to process Upon process, Upon process, upon process…

15. The result of the mapping process (as-is)…..

16. The Game Plan • Find new facility • Create lean infrastructure • Knight the knights • Training programs • Facilities • Materials management / S&OP • Collect pertinent data (BOMs, history, usage, specs) • Revamp storage and replenishment philosophies • Simplify ERP structure to support Lean • Manufacturing • Assembly • Sub-ops on line • Support areas (Doc Ctl, customer service, accounting) • Be completely moved in <120 days

17. Our Plan of attack – In The Golden Zone • “Knight” the Top Management sponsor • Company wide training; paper airplanes, etc • identify and document Waste via weekend Kaizen • …of ALL processes, including support • Planned facility moves and implemented (always fluid and mobile, things will change -continually • S&OP conversion and a one-time data collection of all component usage

18. Prepare S&OP for Lean • Forecasting now only at Family Level and only in enough detail to support: • Supplier Capacity Discussions and Kanban • Plant/Equipment expansion • Long term staffing • Integrate Daily Sales and Demand information via a Biz Barometer approach

19. What is a biz barometer? ? ???

20. Bizbarom - example Titan Bobble Heads 10/13/04 13th day of October Yesterday's MTD ave Yesterday's MTD ProductSales Sales daily sale Inventory Production Production D-O-H Mason 97 960 80 1250 0 490 15.6 Mcnair 118 1360 113 980 0 300 8.7 Calico 5 70 6 341 0 0 56.8 Bennett 67 620 52 750 0 180 14.5 Chris Brown 157 1497 125 750 200 920 6.0

21. Materials • Convert buyers, where possible, to Buyer/Planners. Best if assigned responsibility for a full product line even if commonality exists on a large portion of materials • Establish a Masterbook of part info: Part Number, where-used, usage per month on average, lead time, starting inventory. • Calculate bin sizing, move material into bins at point-of-use • Implement Kanban incentives while driving leadtime reductions • Start with a stable production line and go full-tilt. Set up bins/sheets and establish program with all suppliers willing. • Pull the plug on MRP when that data can be ignored (60 days)

22. Lead Time Reduction is the Key to Inventory Reduction… • The smaller the Lead time, the less material in your bins. • Do the math - - it may pay to negotiate a shorter turnaround time (from signal to delivery) instead of building and carrying a larger bin size.

23. Executing the first steps • Cross training of all assembly and manufacturing • Implemented Global incentives and killed local incentives • Storage at point-of-use, in bins; warehouse conversion • Facilities conversion; wheels and drops • Accounting modification for full-bin transactions • Suppliers aligned for kanban; indemnify to create trust • Rolled sub-processes on line and achieved single piece flow (JIT/JIT/JIT/JIT/JIT/JIT/JIT and more JIT)

24. Simplify your ERP inputs! • Use ONLY the required functionality • Blanket purchase order creation • Receiving (into Raw) • Bin issue to WIP • Credit to FG at the end of each day • BY KEEPING YOUR TRANSACTIONS TO A MINIMUM, EXPECT BETTER ACCURACY !!

25. Facilities / Manufacturing IE • Point-of-use single-point storage • Place wheels on unique test equipment • U-cell production layout, with limited space between operators • Bringing sub-ops on-line • Multiple ceiling drops to allow various configurations in manufacturing • Create dedicated put-away zones in warehouse while that component inventory is depleted to bins only…

26. What we started with….

27. Improvements

28. Manufacturing @ Move-in date

29. Manufacturing Line Balance 2nd

30. Results of 1st line balance • 14 second takt improvement • Saved 2 headcounts by consolidating 2-3-4 …And there is opportunity to split BOXING between #2 and the preceding step # 4 to save another headcount. Bottleneck is now the test step.

31. Manufacturing Line Balance 2nd

32. What were our results (really?!) • Pulled the plug on MRP in 59 days (1300 components for 3 product lines) • Achieved bonus for cross-training • PCBA stuff, test and packaging on-line • Cycle reduction from 3 days to 4.0 minutes • Aligned production rates to meet sales rate (takt time) • 25% floorspace and storage space reduction • Margin improvements; continued viability • Incidentals: improved inv. accuracy, morale, better sales response, lower E/O, improved margins. • Agility: with the kanban material was on-site, ahead of demand, and much greater flexibility.

33. After the mapping process…..

34. Better yet! • We kept our production… …ON-SHORE!!

35. Your Kaizen, …………..and those next 60 days • Start with flowing your entire support process. Luza-da-muda. • Include EVERYONE: MFG, MAT, FAC, ACCT, CS, IT, HR • Move components to point-of-use; install 3 BIN with suppliers [One bin = usage during leadtime + 15% buffer] • Bring a breath of fresh air to your ERP and transact in full bin quantities. Do not issue daily. • Bring every sub-process possible ON-LINE, including test and packaging. • Reducing your cycle time to create agility is the key to “Build tomorrow what you sold today”. • Single-piece flow, and line balancing will maximize your effort • Incent Teamwork, remove silo’s….movie tickets to cold cash • Challenge what forecasting and MRP really bring to the table

36. Come on now!! Don’t be nervous! • Its Organized Chaos…and unavoidable. • And its more fun than anything anyone in manufacturing may ever experience. • Make “fun” a requirement. Set challenges.

37. Lessons Learned… • Kaizen the processes by interviewing the doers, not the supervisors. Make it direct, but impersonal & fun. • Single-flow may not be optimal; it may be one, two, three or more based on variables. • Team incentives, …..or bust. • VMI is a step above Kanban • Smaller is usually better when it comes to equipment selection. Dedicated pieces. • Avoid postponement strategies unless identity is created at the end of the process. Packout Option? • Best long-term metric is: Units per employee

38. Integration makes success • Orchestrating a kaizen puzzle is like putting together a symphony Supp Eng Qual Mat’ls Doc Ctl Mgmt Cust Acct Prod

39. Resources are everywhere! • APICS Library and publications • AME • Kanban: 3 Bin, Simple as ABC • October 2002 Performance Advantage • Chainleank Resources: Email: Chainleank2@aol.com

40. What you make of it is up to you… • FIND the Opportunity, • TAKE the initiative and • APPLY common sense • Your next 20 minutes at your work site should be focused on looking at your plant with your new set of eyes! • Your first stop is your shipping area…is your corrugated on a kanban or vendor managed program?? • Its all about applying simple fundamentals and organizing common sense into a program for optimized plant-wide flow

41. Lean • Its not an event… ……………..Its an attitude • Aim for a LEAN ENTERPRISE and Lean out every process possible

42. Thanks for having me! • Anytime I can come to Nashville is worth the extra effort…. So, Until next time!

43. Feedback • Please take a moment to complete the feedback forms and let George know if you have learned anything here or if you have discovered any new resources. • Never forget – NETWORK, NETWORK!