Lean Manufacturing & Waste Reduction

1. Lean Manufacturing & Waste Reduction How Process Improvement Reduces Waste

2. What Is Meant by Lean? • Lean is a collection of tools and methods designed to eliminate waste and improve performance, thereby reducing costs. • Lean focuses on eliminating nonvalue-added activities wherever possible. • Lean is a culture of continuous improvement.

3. What Is a Process? • A process is a set of actions that must be accomplished correctly in the proper sequence at the proper time, creating value for a customer.

4. A Brief History of Lean • Lean principles began with Henry Ford and the production line for model T’s. • Some principles developed in Germany in the 1930’s(TAKT time). • Principles studied and expanded by Toyoda Loom Works (later becoming Toyota).

5. A Brief History of Lean • Popularized in North America in the 1990’s as the Toyota Production System (TPS). • Now adopted by organizations worldwide.

6. Why Is Lean So Popular? • In 2007 Toyota surpassed GM as the #1 Automobile Manufacturer in the World.

7. Why Is Lean So Popular? Competition is now worldwide. Pressure to deliver faster and cheaper. Efficiency improvement is a must.

8. Based on the simple business formula: (Price – Cost) x Volume = Profit Efficiency Improvement

9. Competition dictates price. The market determines volume. Cost is the variable that can be controlled internally. (Price – Cost) X Volume = Profit

10. How Does Lean Work? • Goals set by management. • Training. • Takt time established. • Data collection and analysis. • Employee participation in problem solving.

11. Setting Goals • Top level – Business Plan & Vision. • Defines the organization direction or purpose. • Group level – Targets. • (example) Increase sales by 10%. • Process level – specific. • (example) Reduce set-up time by 50%.

12. Training • Training in lean principles is a must. • Problem solving techniques. • Data collection and analysis. • Process must be performed the same way by all staff as much as possible.

13. TAKT Time • Production rate matches Demand. Example: • Demand 80 units/week. • Production time - 40 hrs/wk. • Production Rate is 80/40 = 2 units/hour. Goal is to produce only what is needed.

14. Data Collection and Analysis • Time based. • Value added time. • “wait” time (waste). • Process based. • Defects/delays. • Movement.

15. Employee Participation • Those who do the work know where improvements can be made. • Management must support and implement as many improvement ideas as possible.

16. Making Lean Work • Data used to make decisions and set goals. • Review process for opportunities to reduce waste. • Use “brainstorming” techniques to develop improvement plan. • Implement plan and measure improvement.

17. The Perfect Process • Each step within the process must be: • Valuable (external or internal customer). • Capable (Six Sigma). • Available (Total Productive Maintenance). • Adequate (Toyota Production System). • Flexible (Toyota Production System).

18. The Perfect Process • The actions in the process are satisfying for people to perform, managers to manage, and customers to experience. • No injuries or pain caused by processing. • No boredom. • No humiliation. • A sense of providing and receiving a valuable good or service. • A sense of personal fulfillment & accomplishment.

19. Seven Types of Waste • Overproduction - Producing more than necessary. • Waiting - Delays in the process flow. • Movement - Distance between value added steps. • Processing - Inefficient processing. • Excess Inventory - More supplies than needed to cover inefficiencies. • Motion - Ergonomic issues. • Defects/errors - Causes rework or scrap.

20. Real Life Examples Harness assembly area. • Production @ 2/day. • Customer demand increased to >20/day. • Using Lean, demand was met while reducing labour to 30% under budget, eliminating overtime. • Re-cycled about 350 pounds of copper and 350 pounds of steel that used to be thrown out.

21. Real Life Examples Sensor Assembly. • Part of process is washing after soldering. • Lean adoption reduced processing from 16 steps to 8 steps. • Removed 2 wash steps. • Reduced water use by 1300 gallons per production batch.

22. Real Life Examples Quality Assurance audit plan. • Plan written by auditor and approved by Manager. • Lean review changed plan from 4 page narrative to 1 ½ page fill-in form. • Reduced paper consumption by 50%. • Reduced labour to produce by >50%. • Reduced review/approval time by Manger.

23. Caution! The Law of Unintended Consequences Sometimes unintended consequences occur from the best intentions. • As part of an energy reduction plan, the Facilities manager decided to reduce energy use by changing all fluorescent lighting to lower energy type. • Manager won an award, but the light spectrum was so poor it affected production. • Eventually, lighting change was reversed.

24. Lean Contributes to Emissions Reduction • Between 1990 and 2003, production in Canadian manufacturing rose by 50%. • At the same time, emissions dropped by 7.5%. • If Canadian society as a whole had matched the manufacturing sector, we would have already surpassed Kyoto requirements. • Source: Canadian Manufacturers and Exporters magazine, June 2007.

25. What Are Others Doing? General Motors hybrid transmission plant eliminates landfill waste. • GM Plant in White Marsh, Md. no longer sends any waste from production operations to landfills. • Eighth GM plant worldwide to achieve this. • 97% of material is recycled. • 3% converted to energy at a waste-to-energy facility. • Source: IndustryWeek.com.

26. Recycled Material From GM Plant. • 510 tons of aluminum. • 600 tons of steel. • 10 tons of alloy metals. • 360 tons of wood pallets. • 20 tons of empty totes and drums. • 250 tons of used oil. • 220 tons of waste water. • 5,400 tons of reusable packaging.

27. What Are Others Doing? In Brazil, vehicles have run on pure alcohol since the late 1970’s. • The Oil Shock in 1975 convinced the Brazilian Government to be energy independent. • Federal Government mandated change, (created the vision), and provided tax incentives for infrastructure development. • Partnered with Volkswagen to develop a “full flex” vehicle, which can run on any type of fuel mixture.

28. The Brazilian Model • Alcohol produced from sugarcane at a 1 to 8 energy output rate (8 units out for every 1 unit expended to produce it). • Plantations grow the sugarcane and process it into sugar and alcohol. • Farm equipment runs on the same fuel. • Waste used to generate electricity to run the plantation. • Their goal is to increase energy output rate to 1 to 12. • Source: National Geographic, October 2007.

29. What Are Others Thinking? • Managers and professionals in the U.S., Italy, Germany and Brazil consider waste reduction as the top priority ahead of energy efficiency or developing green products. • China, Korea and India consider development of green products as the top priority ahead of clean/renewable energy or waste reduction. • Source: Industry Week.

30. What’s Next? “ While the focus today may be on dealing with waste, in the future I anticipate we’ll see more emphasis on areas such as CO2 emissions and use of renewable energy sources as the whole issue of climate change gets more attention.” Peter Cartwright, Dow Corning Executive Director of Environment, Health & Safety.

31. Vision Is the First Step to Action • Action without Vision is passing time. • Vision without Action is dreaming. • Vision with Action can change the world.