Lean Manufacturing Takeaways

1. Lean Manufacturing Takeaways SCLC / ECC Spring Meeting April 26th, 2007

2. Remember what Lean is? Lean constitutes a philosophy / culture of how to satisfy customers’ increasing demands for greater value. An ideal value-creation process exists when the fewest number of steps are properly sequenced and made to continually flow. Waste Eliminated

3. Waste Lean is a philosophy which shortens the time line between the customer order and the shipment by eliminating waste. Business as Usual Waste CUSTOMER ORDER PRODUCT SHIPMENT Time Lean Manufacturing CUSTOMER ORDER PRODUCT SHIPMENT Time (Shorter)

4. 5S’s and Visual Factory Value stream mapping Total Productive Maintenance Standardized Work Process Pull Error Proofing TAKT time Kanban Basic Lean tools you will need…

5. Implementing Lean - Leadership • An inspired leader at the top is required, somebody who takes responsibility for change. • Operating managers need continual education and assessment to assure no backsliding. • Change agent has to fully understand Lean Thinking. • Remove the anchor draggers early. Small groups who simply can not accept new ideas. • Make sure Upper Management drives the initiative. (Top Down approach is essential).

6. Implementing Lean - Organization • No cookie cutter approach; needs to take into account current culture, resources, etc. • Look upstream and downstream. Include entire organization (at some point in time). • Emphasize that lean is a process, don’t try to jump to an end solution. Focus on culture, not tools. • Listen to consultant’s ideas and adapt them to your needs. Don’t follow all recipes exactly as presented.

7. Implementing Lean - Organization • A plan for lean is like a 1 year forecast. So the process needs frequent modification. • Adapt tools as needed. Don’t force the use of a tool if there is no need. • Create a Lean accounting system (ABC is of great help) around value stream costing. You still need financial accounting for GAAP requirements. • Adjust metrics to support new culture.

8. Implementing Lean - Execution • Focus on matching execution & resources to capabilities. Careful with taking in too much. • Mapping processes raise awareness about current states and spark new ideas to improve. • Involve & inform all the stakeholders from the bottom up. • Make small incremental changes constantly rather than one time change. • Communicate the plan with clarity to all employees.

9. Implementing Lean – Goal Setting • Focus on results (key metrics)… • Get data for the last 5 years. • Benchmark your plant against the best plants worldwide. • Compare your results against your own history. • If there is no perceived urgent need, people will not perceive the need to change and will not change. • Create scorecard to measure baseline metrics. • Set goals and time frames for success criteria.

10. Implementing Lean – People • Have a communication strategy that includes: • Mechanism to keep everyone informed. • Mechanism to handle improvement ideas. • Establish Roles and Responsibilities clearly. • Audit the compliance of the roles and responsibilities. • Teams must have authority and resources to exist. • Establish PBL process for teams to structure proper meetings, to set accountability and focus on metrics. • When designing work groups, try to have small teams.

11. Implementing Lean – Training • Certify your staff on Lean Management techniques, prior to implementation. • Spread lean techniques through intensive training across staff level. • Cross train employees before implementation of module. • Train personnel on “soft skills” prior to the start of the pilot.

12. Implementing Lean – Compensation • Have a well defined group compensation system in place before implementation. • Pay system has to achieve behavioral changes that impact bottom line business results. • Manage new pay system. • Include indirects in your compensation scheme. • Set non-monetary reward systems as well.

13. What you want to measure… • Productivity • Units produced per day per employee (all employees in the building). • Throughput Time (Dock to Dock) • Time (in days or hours) it takes for units to move from first dock (receiving raw materials) to the last dock (finished goods shipping area). • Total Cost / unit • Must include all costs in the garment. Overhead, variable cost, labor, materials, etc.

14. What you want to measure… • WIP Cost for the system • Number of units inside the process times the value of the materials in the process. • First time through • Quality level at each step accumulated across all steps. % of the total that make it to the end with no re-work. • Productive time, Non-productive time, Waiting time • Start by removing non-productive time into waiting time. It then moves from waiting to productive time.

15. Lean Pilot Results BEFORE PILOT IMPACT

16. Lean Improvements by team • Productivity Before: 33 operators After: 27 operators

17. Lean Improvements by team • PDCA: Implementation of Lean Tools Associates received an award because of their participation in a PDCA targeted at reducing the defects in Seatseam

18. Evidence of Progress toward Lean • Increased capacity • Higher inventory turns • More available floor space • Improved workplace organization • Improved quality: reduced scrap / re-work • Reduced inventories: raw, WIP, FG • Reduced lead times • Greater gross margin • Improved participation & morale

19. Lean resources • www.lean.org • www.productivityinc.com • www.productivitypress.com • www.leanadvisors.com