Lean Manufacturing

1. LEAN MANUFACTURING Minimize Waste, Maximize Value © Operational Excellence Consulting. All rights reserved. © Operational Excellence Consulting. All rights reserved.

2. NOTE: This is a PARTIAL PREVIEW. To download the complete presentation, please visit: https://www.oeconsulting.com.sg LEARNING OBJECTIVES Define the success factors for sustaining a Lean culture Acquire knowledge on the key concepts and principles of Lean Describe the common Lean methods and tools for waste elimination and value creation Define the key roles in Lean deployment 2 © Operational Excellence Consulting

3. CONTENTS 02 03 04 05 01 INTRODUCTION TO LEAN MANUFACTURING KEY CONCEPTS & PRINCIPLES OF LEAN LEAN METHODS & TOOLS SUSTAINING A LEAN CULTURE LEAN ROLES 3 © Operational Excellence Consulting

4. THE CASE FOR LEAN MANUFACTURING Increasing market competition Long delivery lead times Complicated processes and systems Rising cost of labor and materials Maintain customer satisfaction and loyalty Develop a culture of continuous improvement and innovation High cost of poor quality Improve productivity 4 © Operational Excellence Consulting

5. WHAT IS LEAN? Focus & Scope Objective Approach & Tools § Lean is a management philosophy based on the Toyota Production System (TPS) § Value stream as primary work unit § Wide range of Lean methods and tools are available § Focused on improving process performance § Learn-by-doing approach to performance improvement and capability-building § Eliminate everything that does not add value (waste) in the customer’s eyes § Clear view of end state 5 © Operational Excellence Consulting

6. “ path, which creates energy, focus and longevity.” Lean production is not merely a set of techniques. By connecting to our whole being, it becomes a PASCAL DENNIS Author of “Lean Production Simplified” 6 © Operational Excellence Consulting

7. FIVE PRINCIPLES OF LEAN Let Define Value Identify the Value Stream Make Value Flow Pursue Perfection Customers Pull Value Identify the value stream or process for each product or service and reduce or eliminate steps that do not add value Align the value-added steps so they flow continuously Define value from the customer’s perspective and provide what they want Allow the level of customer demand to pull the process, i.e., produce only what is ordered Pursue perfection through continuous improvement Source: Adapted from Lean Thinking by James P. Womack and Daniel T. Jones 7 © Operational Excellence Consulting

8. LEAN IN A NUTSHELL –REDUCING THE TIME LINE FROM ORDER TO CASH TIME LINE Reduce by removing non-value added activities ORDER CASH 8 Source: Adapted from Taiichi Ohno © Operational Excellence Consulting

9. WHAT LEAN IS NOT Laying off employees by the bus load Just a set of “tools” like 5S, kaizen events, etc. ● ● Delivering less or working harder Automation or buying a monstrous ERP system ● ● Outsourcing or offshoring ● Winning a Shingo Prize so as to look Lean ● A cost cutting program ● 9 © Operational Excellence Consulting

10. WHAT DOES LEAN IN MANUFACTURING & PROCESS INDUSTRIES LOOK LIKE? APPLICATION COMMON ISSUES TYPICAL SOLUTIONS AUTOMOTIVE § Production § Inventory management Throughput Equipment downtime Rework and re-inspection Inventory costs One-piece Flow/Pull systems Equipment reliability Elimination of defects Inventory optimization § § § § § § § § AEROSPACE § Engine overhaul § Spare parts Turnaround time Obsolescence costs Process streamlining Standard operating procedures Spare parts management § § § § § PROCESS § Materials management § Asset management Material wastages Equipment availability Elimination of defects Reduction of unplanned downtime § § § § 10 Source: Operational Excellence Consulting Research © Operational Excellence Consulting

11. LEAN THINKING REQUIRES A MINDSET CHANGE TRADITIONAL THINKING LEAN THINKING VS Large batches Small batches Low unit costs Total system cost Work at full capacity Work at necessary capacity Tight schedules Flexible schedules High WIP inventories Low WIP inventories High level of specialization Cross-training Long cycle times Short cycle times 11 © Operational Excellence Consulting

12. LEAN MANUFACTURING FRAMEWORK (a.k.a. TOYOTA PRODUCTION SYSTEM) Goals: highest quality, lowest cost, shortest lead times The Lean framework consists of five key elements: 5 4 3 Jidoka • Separate man & machine work • Abnormality Identification • Poka-yoke • Visual Control Just-In-Time Involvement • Continuous flow Stability ● 1 • Takt time Standardization ● 2 • Pull system • Flexible workforce Just-In-Time ● 3 Jidoka ● 4 2 Heijunka Standardized Work Kaizen Involvement ● 5 1 Stability 12 Source: Adapted from Toyota Production System © Operational Excellence Consulting

13. TWO KEY PILLARS OF THE LEAN MANUFACTURING SYSTEM JUST-IN-TIME JIDOKA § Refers to the manufacturing and conveyance of only what is needed, when it is needed, and in the amount needed § The ability to stop production lines in the event of problems such as equipment malfunction, quality issues, or late work § Jidoka helps prevent the passing of defects, helps identify and correct problem areas using localization and isolation Both the Just-In-Time and Jidoka pillars are required to function properly for the Lean system to be effective! 13 © Operational Excellence Consulting

14. METHODS TO INCREASE PRODUCTIVITY More Staff Quantitative Approach More Machines Work Longer How to Increase Productivity? Work Harder Qualitative Approach Eliminate Waste & Simplify Focus of Lean Let’s work smarter! 14 © Operational Excellence Consulting

15. WHAT IS WASTE? Consuming more resources than are necessary to produce the goods, or service, that the customer wants ● Value Add Non-Value Add: Pure Waste Pure Waste: Actions that could be stopped without affecting the customer ● Non-Value Add: Incidental Waste Incidental Waste: Actions that need to be done based on how the current system operates but do not add value ● 15 © Operational Excellence Consulting

16. COST REDUCTION PRINCIPLE Higher profit is achieved by reducing cost (waste) while maintaining sales price Higher profit is achieved by increasing sales price Profit 2 Profit 1 Profit 1 Profit 2 Sales Price 2 Sales Price 1 Sales Price 1 Sales Price 2 Cost 1 Cost 2 Cost 1 Cost 2 Future Future Present Present COST PLUS PRINCIPLE COST REDUCTION PRINCIPLE 16 © Operational Excellence Consulting

17. WORK vs. WASTE Value-added Activities Non-Value Add: Incidental Waste Non-Value Add: Pure Waste § No value created but required by current thinking § Consume resources but creates no value for the customer § Transform or shape material or information § No value created but required by process limitations § Customer wants it and willing to pay for it § Could be stopped and it would be invisible to the customer § No value created but required by current technology § Done right the first time § No value created but required by government/ business regulations 17 © Operational Excellence Consulting

18. LEAN WASTES IN MANUFACTURING OVERPRODUCTION Producing sooner, faster or in greater quantities than customer demand WAITING INTELLECT Not using employees’ full intellectual contribution People or parts that wait for a work cycle to be completed MOTION OVERPROCESSING Processing beyond the standard required by the customer Unnecessary movement of people, parts or machines within a process Wastes DEFECTS TRANSPORTATION Unnecessary movement of people or parts between processes Work not done right the first time such as scrap and rework INVENTORY Building or storing extra products that the customer has not ordered 18 © Operational Excellence Consulting

19. LEAN THINKING PHILOSOPHY Identify Waste Identify and eliminate all activities that are waste ● “True North” (Value Added Time = Lead Time) Focus on optimal flow throughout the process ● Current State Future State Full of Waste, Variation, and Rigidity Focus on creating value for customers ● Eliminate Waste 19 © Operational Excellence Consulting

20. GO SEE, ASK WHY, SHOW RESPECT Why must you go and see? Why show respect? Why ask why? Because you need to question what you’re seeing. You need to be clear about what you are seeing by asking: Why is this happening? What do I need to know more about it? What do others here know that I don’t? In many ways, that’s the most critical step in solving a problem. If you don’t show respect to people doing the work, they are not likely to share what they know, and you don’t. Because you cannot know what’s going on in a problem situation, no matter how much experience you have, unless you have seen this specific problem in- depth. 20 Source: Adapted from Lean Enterprise Institute © Operational Excellence Consulting

21. 4Ms Operations safely carried out with all tasks organized in the best known sequence and by using the most effective combination of resources ● Man ○ Machine Method ○ ○ Material ○ If the 4Ms are not stabilized, flow and pull is not possible ● 21 21 © Operational Excellence Consulting © Operational Excellence Consulting. All rights reserved.

22. 5S –EXAMPLE An office desk before and after conducting 5S Sort, Set In Order and Shine. Clutter and unused items have been removed leaving only what is needed. After Before 22 © Operational Excellence Consulting

23. VISUAL MANAGEMENT –EXAMPLES GAUGE LABELS Adding a simple gauge label enables any employee to easily detect abnormalities at a glance and at a distance. Without the label, only a trained inspector would know if the temperature or pressure setting is correct. OIL LEVEL INDICATORS Placing a green and red striped label behind the oil sight tube helps operators quickly detect when oil levels are too high or too low. REJECTS OR MATERIALS ON HOLD FOR QA Mark parts and products that need to be inspected, or that have been inspected and have been rejected as defective. It is recommended the color orange be used to indicate that inspection is needed before use; red can be used to indicate if the product has been rejected. 23 © Operational Excellence Consulting Source: Brady 50 Lean Visuals Pocketbook

24. STANDARD WORK –EXAMPLES Standard work board at the manufacturing cell helps to coordinate work for operators manning different machines/equipment. Visual work instructions at the workstation help the operator to perform the steps in the right sequence. 24 © Operational Excellence Consulting

25. POKA-YOKE SYSTEMS –EXAMPLES TOOL BOARD / DRAWER With a tool board/drawer, available tools can be easily accessed and tools after being used can be returned to their designated locations. As a visual display, any tool which is missing, in the wrong slot or being used can be easily noticed. SAFETY COVER An example of a positive stop is on equipment that requires operators to perform a safety task before starting the machinery. To activate the power to the equipment, the operator must first close the cover so as to prevent operator injury or damage to the equipment. RHYTHMIC MOVEMENT One application of poka-yoke devices is the way it supports the rhythmic movement of the operator when performing standard operating procedures at takt time. Any deviation in the movement or results of the operator’s “dancing hands” will be detected. They cannot forget if they have forgotten anything. 25 © Operational Excellence Consulting

26. HOSHIN KANRI IS A POWERFUL SYSTEM FOR THE DEPLOYMENT OF ORGANIZATIONAL GOALS –VERTICALLY & HORIZONTALLY Organization Goals § Alignment through entire company structure using top- down goal setting Vertical alignment Department Objectives Department Objectives § Each subsequent goal supports the previous level’s goals Individual Objectives Individual Objectives Individual Objectives Individual Objectives Horizontal coordination 26 © Operational Excellence Consulting

27. ROLE OF LEAN STEERING COMMITTEE Create a vision for the Lean initiative Create awareness and publicity Define Lean implementation roadmap Identify and track projects and kaizens Define the strategic goals and measures Establish rewards and recognition system Create an environment that will promote the use of the Lean methods and tools Make resources available – team members and budget 27 © Operational Excellence Consulting

28. LEAN IMPLEMENTATION –A SIMPLE ROADMAP Kaizen #2: Waste Elimination Kaizen #3: Standardization Kaizen #1: 5S Operations Management & Improvement Build Lean Activity Board Daily Management Meeting Value Stream Mapping for Key Processes Build Capability Lean Thinking Training Lean Leadership Training Lean Methods & Tools Training Train-the-Trainer Training Senior Management Awareness Lean Update in Monthly Newsletter & Intranet Create Awareness Information Sessions for Whole Organization Month 2 Month 3 Month 1 28 © Operational Excellence Consulting

29. SUSTAINING A LEAN CULTURE Management commitment Success measures and KPIs Alignment to vision and mission Management review Availability of resources Rewards and recognition Address “what is in it for me” Managing resistance to change 29 © Operational Excellence Consulting

30. ABOUT OPERATIONAL EXCELLENCE CONSULTING Operational Excellence Consulting is a management training and consulting firm that assists organizations in improving business performance and effectiveness. Based in Singapore, the firm’s mission is to create business value for organizations through innovative design and operational excellence management training and consulting solutions. For more information, please visit www.oeconsulting.com.sg © Operational Excellence Consulting