Lean and the Strategic Plan

1. Lean and the Strategic Plan H. David Paris, C.P.M., CFPIM, CIRM V.P. Training Industrial Solutions, Inc. (ISI) R. Henry Migliore, Ph.D. Professor Emeritus /Northeastern State University President, Managing for Success

2. SUCCESSFUL IMPLEMENTATIONS • An enterprise must conduct change from the top • If strategic vision does not include the Lean philosophy, radical changes taking place will not follow the predetermined path of the enterprise • Most US companies fail to implement Lean because of wavering leadership • Use the strategic plan to drive successful implementation

3. MODEL FOR PROVEN APPROACH

4. STRATEGIC PLANNING FOR EACH FUNCTION • PURCHASING • MATERIALS • LOGISTICS • QUALITY • FINANCIAL • HUMAN RESOURCES • DESIGN ENGINEERING • MARKETING • SALES • SAFETY • MANUFACTURING

5. PURCHASING • Support production with the uninterrupted flow of material without excess inventory • Established through contracts with suppliers • Use MRP output for forecasting only • Track commodities our factory uses • Track commodities used by suppliers • Match purchased lot sizes with manufacturing lot sizes • A-B-C analysis for inventory turns

6. MATERIALS • Balance customer requirements and manufacturing capacity • Lean implementation of visual pull systems • Drive MPS and support the S&OP • Drive MRP output for forecasting capacity constraints • Control the shop floor through visual signals not through MRP • Produce to supermarkets

7. LOGISTICS • Cease buying truckloads of one part number, and fill the same truck with a smaller quantity of several part numbers • Consolidate shipments • Imported product can be held in local warehouses at the supplier’s expense

8. QUALITY • Identify problems as they occur, not final inspection • Prevention activities include • 6 sigma problem solving • Run charts • CEDAC • Verify process control • Simple process capability (Cp) • Process capability to a central tendency (Cpk) • Functionality check • Continuous improvement

9. FINANCIAL • Cost accounting • Identify cost of each product • Maximize return on investment (ROI) • Maximize contribution • Fixed cost will remain the same • Improve the difference between revenue and variable cost to increase profit • Optimize the mix within constraints • Sales possibilities • Capacity constraints

10. FINANCIAL MEASURES • Optimize the mix through linear programming • % of optimum sales • % adherence to the production plan • Variable cost variation • Purchase price variation (PPV)

11. HUMAN RESOURCES (HR) • Excellent hiring practices • Background checks • Literacy test • Minimum education • Training programs • Cross training • Job mapping • Continuous improvement program • Eliminate waste • Improve processes • Increase safety • Reward efforts

12. DESIGN ENGINEERING • All functions must be linked during the design stage to insure compatibility • More likely to meet target completion date • More likely to function properly • More likely to meet objectives • Size - Weight - Capabilities • Quality Functional Deployment (QFD) • Failure Mode Effect Analysis (FMEA) • Design For Manufacturability (DFM) • Design For Assembly (DFA)

13. MARKETING AND SALES • Marketing concentrates on • Long term planning • New product development • Sales • Leads the sales and operations process (S&OP) • Production plan by family • Monthly production for 12 to 18 months • Prepare all functions for fluctuations in demand • Promotions • New product growth • Competition

14. SAFETY • Comply with OSHA regulations • Training is a must • Post charts depicting • Attendance • Training • Accidents • Lost time accidents • Deploy safety to every level • Safety must be a part of every employee’s job

15. MANUFACTURING • Radical changes outlined by value stream maps • Stop pushing large lots through production • Start pulling small lots (1-piece) through production • Relocate some equipment to support • Flow – Repetitive – Cellular Production

16. MANUFACTURING • If possible, always flow production • Balanced Operations – Close Layout – Mixed Models - POUS – Visual Management • Schedule the pacemaker process and flow to product completion • If not flow, then pull • Unbalanced operations • Distanced layout • Setup long • Uptime problems

17. MANUFACTURING • Environments for flow and pull systems • MTS • ATO • MTO • DTO

18. FIFO LANE MTS: PULL WITH BALANCED FLOW Information Flow Customer Raw Matl Fin. Goods Process C Process A Process B Supplier

19. MATERIAL FLOW Kanban Locations MTS: PULL WITH IMBALANCED FLOW Information Flow Customer Raw Matl Fin. Goods Process C Process A Process B Supplier

20. FIFO LANE Kanban Locations ATO: PULL WITH BALANCED FLOW Information Flow Customer Raw Matl Fin. Goods Process A Process B Process C Supplier

21. Parts Flow Kanban Locations ATO: PULL WITH IMBALANCED FLOW Information Flow Raw Matl Fin. Goods Process C Process A Process B Customer Supplier

22. MTO - DTO Information Flow Customer Raw Matl Fin. Goods Process C Process A Process B Supplier FIFO LANE

23. CONCLUSION • Implement Lean through the strategic plan • Management lead • All functions can work together • Better financial support • Common goals and objectives

24. H. David Paris, C.P.M., CFPIM, CIRM DParis@isiworld.net R. Henry Migliore, Ph.D. hmigliore@aol.com E10 Lean and the Strategic Plan Please return your completed session survey to the room monitor or the collection boxes near the exit APICS programs are noncommercial forums. Speakers have agreed to refrain from the use of brand names and specific product endorsement whenever possible. Speakers understand that the association’s podium cannot be used as a place for direct promotion of the presenter’s product, services, or for monetary self interest.