Creating Stability & Consistency

1. Creating Stability & Consistency Created by funding from WIRED NW

2. By the end of today: You should be able to determine a Transactional Value Stream and map it Be able to indentify improvement opportunities and develop kaizen plans to address Understand specific lean tools for TPI Created by funding from WIRED NW

3. Lean Overview • How are transactional processes different than factory floor processes? • Difference between “product” and “information” • Difference between “create” and “translate” • 80/20 split between people vs. machines • People are more variable than machines • Where are the metrics on information flow? • Pass/Fail results, not quantitative • Subjective qualitative data (good info is in the eye of the beholder, and he keeps changing his mind!) • Does the information have direct value to the customer? Created by funding from WIRED NW

4. Why Focus on Transactional? • In order to deliver a quality product, all the processes in the value stream for that product must be robust. • All processes can be improved! • The non-manufacturing processes have not typically had the focus needed to find and eliminate waste. • Transactional processes often drive waste into other areas of the business • Poor forecasting/ scheduling • Inaccurate sales order input • Engineering change orders taking too long Created by funding from WIRED NW

5. Quote generation process Contact/Lead generation process Accounts Payable process Accounts Receivable process Service and Warranty support process Sales process Order Entry process Purchasing process Credit process Human Resource process Shipping/Receiving process Product Development process Engineering Change process Improvement Processes What are Transactional areas? Created by funding from WIRED NW

6. process output inputs Transactional Processes Everything we do is part of a process… …all processes can be improved Created by funding from WIRED NW

7. Quality Built Into Each Process Rework Traditional Method Inspection A B C A B C Ship Scrap Quality Built in… A B C Ship Build in Quality at Each Process Do Not Pass Along Defects! Created by funding from WIRED NW

8. Product Design Production Preparation Marketing R&D Purchasing Manufacturing Distribution Service Product Design Production Preparation Mkt. R&D Purch. Manuf. Dist. Service Lead-Time Reduction through Elimination of Waste Concept Cash Total Value Stream Mfg Kaizens Product Design Production Preparation Distribution Marketing R&D Purch. Manuf. Service Total Value Stream Transactional Kaizens Total Value Stream after Kaizen 12 months 6 months Created by funding from WIRED NW

9. Traditional “Over the Wall” Batch Processing Incoming Loan Sorting Loan Calculations Final Approval/ Customer Contact Created by funding from WIRED NW

10. Loan Calculations Final Approval/ Customer Contact Incoming Loan Sorting One Piece Flow Cellular Design Standard Work Customer Sees Improved QDC! Lean Processing Significantly Reduces Waste: Transportation, Waiting, Quality Defects, Inventory, Motion! Created by funding from WIRED NW

11. K S K S K S IMPROVEMENT K S K K K K K TIME Continuous Improvement and Standardization K = Kaizen Activity S = Standardization Activity Without standardization, improvements can not be sustained! Created by funding from WIRED NW

12. Value Added Activities vs. Non-Valued Added Activities Everything we do is part of a Process. Processes inherently contain 2 types of activities: 1. Value Added 2. Non-Value Added Take the next few minutes to write a definition for each: Value added activities are: Non-Value added activities are: Who is your customer? Any process or operation that shapes or transforms a product or service into a final form that the customer will pay for. Those process steps that take time, resources, or space, but do not transform or shape the product or service towards that which is sold to the customer Created by funding from WIRED NW

13. 5 The Value Add Is Usually Much Less Then 5%! Value Added Activities vs. Non-Valued Added Activities What Are The Percentages? Non-Value Adding __% 95 Value Adding____% Created by funding from WIRED NW

14. Value Added Activities vs. Non-Valued Added Activities Auto Repair Bill: Filling out customer information: .5 hrs Moving the auto into the garage: .10 hrs Preparing auto for inspection: . 5 hrs Coffee Break: .25 hrs Looking for parts: 1.0 hrs Working on automobile: 2.0 hrs Lunch: 1.0 hrs Working on automobile: 1.5 hrs Coffee Break: .25 hrs Moving the auto out of the garage: .10 hrs Explanation of bill w/customer: .5 hrs Total Hours Spent 7.7 hrs Take the next few minutes and total the value added time you see in this bill. Created by funding from WIRED NW

15. Value Added Activities vs. Non-Valued Added Activities Non Value Added vs. NecessaryWhere are we going to focus? Value Added & Necessary Non-VA & Necessary Reduce Identify Value Added & Non-Necessary Non-VA & Non-Necessary Eliminate Challenge & Eliminate Created by funding from WIRED NW

16. What are The Eight Wastes? Wrong info Info missing Keypunch error zzz zz Quality Defects Motion Inventory No way! Waiting 12 1 10 9 8 6 4 13 2 3 11 5 7 Sign-offs Over- Processing Over- Production Unused Creativity Transportation Created by funding from WIRED NW

17. The Eight Wastes – Transactional Examples Eight Wastes Examples of Transactional Waste • Walking, routing information • A task waiting to be started (WIP) • Delays and queues • Incomplete or bad information • Unnecessary or extra process steps / • Variation of process methods. • Handoffs of information • Creating info that others don’t use • No process for improvement • Motion • Inventory • Waiting • Quality Defects • Over Processing • Transportation • Over Production • Unused Creativity Created by funding from WIRED NW

18. TheEight Wastes – Causes of Transactional Waste • Functional organization • IS technology gaps • Excessive controls • Outdated process design • No back-up/cross training • Unbalanced workload • System batching • Outdated policies • Changing priorities • Responsibilities not defined • Poor visual control • Disorganized workplace • Lack of training • Obsolete forms • No SOP’s • Authorization levels Created by funding from WIRED NW

19. Distance Exercise Daily Requirement: 40 Orders Enter Order And Print Hard Copy Pickup Next Order @ Fax File Hard Copy 30’ 20’ Associate performs 3 tasks to complete 1 order Feet per (8 hour) day ____________ Feet per (5 day) week ____________ Feet per (240 days) year ____________ Miles (5280 ft.) per year ____________ Hours (Miles/2) 4,000 20,000 960,000 181 90.5 Created by funding from WIRED NW

20. Capturing The Current-State Transactional Value Stream • Transactional Value Stream Mapping (VSM) training • Walk the Value Stream starting from the customer’s perspective, walk from end to start • Map the Current-State Transactional Value Stream • Understand what a lean value stream is • Develop Kaizen Bursts from Current-State Map Created by funding from WIRED NW

21. Value Stream Value Stream Improvement & Process Improvement PROCESS PROCESS PROCESS Receive Order Build Product Get Paid Customer Concept Cash VALUE STREAM = All steps, both VA and NVA, required to bring the product from raw material to customer Created by funding from WIRED NW

22. Mapping a Transactional Value Stream Follow a transactional process path from end to beginning, and draw a visual representation using icons (current-state map) of the material or service and information flows. Then identify areas to improve and focus our TPI efforts Created by funding from WIRED NW

23. What Transactional VSM Does Transactional VSM helps point out waste in a value stream, and then identifies the activities that can eliminate the waste. Created by funding from WIRED NW

24. OCT This is a manual process. Entering an order, checking a drawing… Put this time into the Process Capacity Chart under OCT to calculate the capacity of this operation. Time Time MCT This is an automatic process. Order being processed by the ERP system, customer credit information being looked up by the ERP system… Put this time into the process capacity chart under MCT to calculate the capacity of this machine OCT MCT Time This is a manual process triggering an automatic process. Manual time + Automatic time, typing in customer information, then the ERP system looks up the most recent order, triggering a manual back flush… If the operator can be separated from the machine, record the OCT and MCT on separate lines. If the operator is tied to the machine, put the total time (OCT+MCT) in the process capacity chart. Definition Of Processes And Times Created by funding from WIRED NW

25. Marketing Concept 1 2 No Platform is Created Correct? Comm Manager New Job Opened Yes VA Insp Lit code needed? Log new Job Update log Update log and sign Traffic 3 Insp Graphics Place Sticker/ Log into tracking sys Draft Copy Created Create imagery Assemble 1st Proof Insp VA Production Notify External Vendors/ Quote Process Flow Diagrams - Considerations • What is the “right” amount of detail? • As the process moves you may use a different color paper for each department / group in the process to make the map more visual. • Consider moving from left to right to roughly signify a passage in time • Consider highlighting value added, inspection, or queue points on the map Created by funding from WIRED NW

26. Caution Regarding Calculating TAKT Time In A Transactional Environment With this kind of variation within a day, can you calculate TAKT time the way we learned in a previous slide? Manufacturing has a due DATE, this example has requirements by the MINUTE! Created by funding from WIRED NW

27. Sum Of Process Cycle Times ------------------------------- = TAKT Time # Of Operators 360 Seconds Per Call ------------------------------- = 38 TAKT Time 9.47 Operators 360 Seconds Per Call ------------------------------- = 360 TAKT Time 1 Operator Develop Playbooks To Standardize How Work Is Assigned Based On TAKT Time Looking at the example on the prior slide, we had 47 calls in a ½ hour period at 9:00 AM and 5 calls in a ½ hour period at 5:00 PM. For this exercise we will assume that each call averages 6 minutes or 360 seconds. There are 1800 seconds available in ½ hour. Number of operators required at 9:00 AM: Our TAKT Time = 1800 Seconds / 47 Calls = 38 Seconds At 9:00 AM we would round up to 10 people taking calls Number of operators required at 5:00 PM: Our TAKT Time = 1800 Seconds / 5 Calls = 360 At 5:00 PM we only need 1 person taking calls • A Playbook should do the following: • Show the number of operators required versus time (this example is ½ hour increments) • Should show what work each operator is to perform. Sometimes an operation will be split between operators. In this case, you will need to spell out what steps each operator starts and stops at. • Be visual – high visibility charts work best. Created by funding from WIRED NW

28. STOP It’s Time to make the Improvements Begin by asking from the customers’ perspective “What would the ideal process look like?” and create a high level Ideal Process Flow. -Where is the non-value added? -What is driving the non-value added? -Lack of Visual Systems? -Lack of Standard Work? -Batch processing and bottlenecks (lack of flow)? -Excessive handoffs? -Process Complexity? -What steps can be eliminated? -Do we need to re-design? -Try-storming!! JUST DO IT!! Created by funding from WIRED NW

29. Complete Current-State map of the Transactional Value Stream. • Identify where TPI activities should be focused. • Use the symbol (Kaizen Burst) on the Current-State map to highlight where we will focus within the Value Stream. • Prioritize Kaizen activities and scope what can get done this week. • The team may tackle a portion of the Value Stream or choose to make improvements within the entire value stream. Determining Where To Focus TPI Activities Created by funding from WIRED NW

30. Sustain the Improvements • Complete The Should Be Process Flow Map • Complete The Should Be Process Standard Work Sheet • Put Metrics In Place • Learn About Countermeasures And How To Apply Them • Learn About Future State Mapping • “Should Be” Process Training • Documenting The “Should Be” Process • Kaizen Report Out Format Created by funding from WIRED NW

31. Problem Is Problem Customer Noticed Corrected Manufacturing Generate No Engineering ECR Assign Group Cross Functional Valid Yes Drafting Approved? Analyzes ECR? ECO/ECR Meeting Resource ECR Yes Generate Bring ECO Drafting Changes to Meeting No Implement ECO Coordinator ECO A “Should Be Process” Flow Note: This map is formatted horizontally. While this is very visual, it is not a mandatory format Created by funding from WIRED NW

32. “Should Be” Process Training For Associates • Who are you going to train? • When are you going to train them? • What are you going to train them on? These questions must be answered before you can begin to train. Remember, the “Should Be” process is the process that will be running at the end of the event so the training needs to happen before the end of the event. Created by funding from WIRED NW

33. Documenting The “Should Be” Process • Be sure to modify any existing SOP’s, Standard Work Documentation, or Operating procedures to reflect the changes that this workshop generated • Make sure you perform an audit of the new process to make sure ISO documentation accurately reflect the changes • Post Metrics of the new process – Remember, what gets measured, gets improved and tracking metrics is a great indicator of compliance to Standard Work • Post Standard Work documents that were generated during the event • Takt Time • Playbooks • Standard Work Sheet • SOP’s • Post the Kaizen Newspaper in the area that was kaizened so that the status of open items is available to all the associates in the area • OVERCOMMUNICATE! – Meet with all of the associates whose processes were changed and communicate these changes to them immediately! Created by funding from WIRED NW

34. Post the Kaizen Newspaper Hint: Use the kaizen newspaper format to keep track of action items you intend to address DURING the kaizen. Use the same form to document action items that will be completed AFTER the kaizen. Created by funding from WIRED NW

35. KPI Board Cost Safety Quality Delivery Putting Metrics In Place • Key questions after establishing our New Process • Are we following the standard work we put in place? • How are we doing relative to our goals? • How do we know? • The Answer Is To Put Appropriate Metrics In Place • Good Metrics… • Focus on the customer • Reflect the purpose and scope of the process • Are simple and repeatable • Track progress to goals • Are accepted as fair and helpful • Lead to action! Created by funding from WIRED NW

36. We typically only measure at the End Problem Is Problem Customer Noticed Corrected Manufacturing Generate No Engineering ECR Assign Group Cross Functional Valid Yes Drafting Approved? Analyzes ECR? ECO/ECR Meeting Resource ECR Yes Generate Bring ECO Drafting Changes to Meeting No Implement ECO Coordinator ECO We should measure processes at Decision Blocks and at theEnd of the process Where Should The Process Be Measured? Created by funding from WIRED NW

37. Individuals chart with Shewhart Control Limits 50 100 45 Series1 40 98 Center = 96.4429 35 96 UCL = 98.1719 30 LCL = 94.7139 94 25 Individuals Value Zone A Above 20 92 Zone B Above 15 90 Zone A Below 10 Zone B Below 88 5 0 86 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 Run Use a countermeasure form with historical data and pareto data to clearly show root cause, corrective actions that will be taken, who will take these actions, when they will be taken, and the impact Countermeasures GOAL Pareto Control Chart / Historical Data Root Cause: We have experienced a 5% failure rate of ECO’s at the signature step for the month of July. Who Impact Countermeasures When 1. Reduce Failure Rate to < 1% (VRK Event) Bob 8/10 45K PPM Created by funding from WIRED NW

38. Cost Safety Quality Delivery Visual Controls Pictures Program Changes Complete The Needed “Should Be Process” Forms Process Flow Process Metrics Standard Work Sheet / Spaghetti Diagram Process Data Summary Standard Work Documentation SOP’s Created by funding from WIRED NW

39. Future State Mapping • Future State Mapping should be employed in TPI whenever there is a gap between what was accomplished during the TPI event and the ideal Future State. This Future State should be something that can be accomplished in about six months to one year. • Sometimes, although you may recognize the ideal Future State, there may be other organizational issues that need to be worked out first. • Another improvement that some companies realize is that they could eliminate a substantial amount of Non-Value Added activities by developing an electronic ECO system to improve and automate the following: • ECR generation and submittal • FIFO management • Drawing Checkout process • ECO release process • ECO logging and tracking • You might chose not to automate these functions during the TPI event week to make sure the “Should Be” process works well before attempting to automate it. Created by funding from WIRED NW

40. Documenting The Future-State Process • One organization has decided to attack their ECO process by implementing the following: • The ECR is generated by the Manufacturing Engineer (same as before) • The ECR will be evaluated at a cross functional meeting that will be held 2X per week ( Reduces # Of Handoffs, Reduces WIP) • The cross functional meeting will evaluate ECR’s and check ECO’s for approval. Signatures will happen right at the meeting which eliminates the circulation process. High priority ECO’s will be color coded BLUE so that they stand out. (Develop Visual System For High Priority ECO’s, Improves Timeliness Of Signature Process) • The cross functional meeting will assign the ECR to a Draftsman who will complete the changes. A first in first out system (FIFO) for high priority ECO’s will be established and adhered to. (Establish FIFO) • After the drafting work is completed, the cross functional group will check the ECO for quality and completeness • The ECO Coordinator will take the approved ECO and implement it. Here Are The Kaizen Bursts From The VSM Portion Of The Training Reduce WIP Reduce # Of Handoffs Improve timeliness of Signature Process Develop Visual System For High Priority ECO;s Establish FIFO Created by funding from WIRED NW

41. Drawings Problem Implemented Noticed Implement ECO 1 OCT = 5,400 Batch =0 Reject = 0% 27,000 Sec. Avail. Make Chg’s 2 OCT = 10,800 Batch = 0 Reject = 0 27,000 Sec. Avail. Kaizen activities necessary for the company to get to their ideal state. ECO Process Future State Mfg. Engineer Notified Of Problem Requiring ECO VRK Rej. % To 0 TT = 6,750 Sec. ECR’s FIFO By Priority Software TPI Electronics Doc. System 20 ECO’s Per Week 1 Shift Electronic Submission Of ECR Completed ECO’s ECO Meeting ECR FIFO 2X Per Week 1 6 partial 5 Max. In 3 Max Out OCT = 3,600 Batch = 0 Reject = 0% 27,000 Sec. Avail. OCT = 300 PLT = 0 Batch = 0 . 27,000 Sec. Avail. FIFO 3 Max. Lead Time=2.75 Days Process Time= 20,100 2 Days .75 Days 0 Days 0 Days 10,800 Secs. 5,400 Secs. 3,600 Secs. 300 Secs. Created by funding from WIRED NW

42. Kaizen Report Out • Each team should take no longer then 15 minutes to present their results • All team members stand with the entire team during the presentation • Each team member should participate in some portion of the presentation • At a minimum, the items from the presentation checklist should be presented. Any other significant item may be presented as appropriate. An example would be before and after pictures if the layout of an area was changed • People from the areas that were kaizened who were not on a team should be present for the report out Created by funding from WIRED NW

43. TPI Kaizen Presentation Checklist Check Off Each Item As You Complete The Tasks GENERAL DATA • Team Charter – Members, Leader, Facilitator, Goals, Objectives… AS IS PROCESS DATA • Current State Value Stream Map • Process Flow • Standard Work Sheet / Spaghetti Diagram • Waste Recording Form • Problem Solving Tools Used • Takt Time SHOULD BE PROCESS DATA • Standard Work Sheet / Spaghetti Diagram • Process Flow • Standard Work Documents • Pictures (layout changes, new visuals…) • Visual Controls • SOP’s • Playbooks • Process Metrics • Kaizen Newspaper • Process Data Summary Form • Future State Map (If Generated) Remember to provide a copy of all documents to the host site DBSM Created by funding from WIRED NW

44. Summary Transactional Process Improvement (TPI) is a tool used to improve non manufacturing Value Streams TPI is very similar to Value Stream Mapping Any process can be mapped Look for opportunities to improve Develop Kaizens to address Implement improvements Created by funding from WIRED NW

45. Independent Assignment • Meet with your mentor and review the materials discussed in today’s session. • Mutually agree on opportunities to apply what was learned today, using as many tools as possible. • Value stream map a non-manufacturing process. • Identify Kaizen opportunities to improve the value stream. • Identify an opportunity to apply transactional process improvement tools to a work area. Created by funding from WIRED NW