Lean QuickStart

1. Lean QuickStart Lean: A Practical Overview of what it is, where it fits, and why you should care ….

2. What is Lean? • Lean Thinking … • Getting Started with Lean … • Project Example • Lean and Six Sigma – De-mystifying the Relationship • More resources for learning about Lean • Contact Information

3. What is Lean … Really? • What it is: • Lean is about doing more with less • Lean is based on the premise that anywhere work is being done, waste is being generated … and should be minimized or removed • Lean is a relentless focus on the identification and elimination of waste. • A team based process to quickly help a team understand a business process, identify and eliminate waste to increase efficiency and effectiveness. • A process that can be used at any level of the organisation and applied to any process or work area

4. Lean, done correctly, is not … • A long, complicated process based on a lot of statistical analysis. • Lean tools are accessible to all • An “elitist” improvement methodology • Anyone and everyone can learn and use Lean • A “top-heavy” initiative that takes significant a up-front investment in time and capital • Lean can be deployed quickly and inexpensivesly on a pay-as-you-go/grow model

5. History and Evolution .. While its roots may be in manufacturing, Lean is now being heavily adopted in process and service organizations …

6. Lean Thinking

7. Why Use Lean ? • Why Companies Use Lean • Reduce … • Waste • Lead time to customer • Process cycle time • Inventory • Cost Increase … • Quality • Process capability • Productivity • Safety • Worker morale

8. Real Benefits … • Faster • Removing waste, complexity, and bottlenecks improves process flow and assures that things can be done faster, and be more predictable

9. Real Benefits … • Cheaper • If there are fewer unnecessary steps, less complexity, and things get done faster because of better overall flow, then fewer resources need be consumed • Savings may go right to margin, or be shared with customers to improve market position

10. Real Benefits … • Better • Complexity = more opportunities for defects = reduced service quality • Reduce complexity, and quality improvements often are a natural by-product

11. Lean Thinking Non-Value Added Customer Needs An activity performed in a process that does not add value to the output product or service, which may or may not have a valid business reason for being performed. Examples are rework, delays, reviews, inspections, and setup or preparation. Value Added An activity performed in a process that the customer is willing to pay for. Typically one that changes the part in some fashion, or adds to the service performed. Business Needs WASTE Value Enabling Activities or steps necessary to maintain the business, i.e. financial audits; SPC data collection.

12. Lean Focus – Reducing Waste NVA Typically 80% of what is done in a process is Non-Value Add (NVA) Only 20% of what is done would your Customer really be willing to pay for – Value Add (VA) VA All Non-Value Add work is Waste!

13. Examples of Non-Value Added Work Hand-off’s Complexity Downtime Transporting Delaying Defects Setup Reviewing Rework Counting Multiple signatures Handling Storing Inspecting Moving Approving Finding Re-keying Checking Transportation Motion Repair Walking Idle time Waiting Copying Redesign Redo Redundant Searching

14. Thinking Differently about How to Improve A Process • Traditional thinking has focused on technology, additional resources or working “harder” to improve productivity. • Very often the time actually spent Adding Value to the product or process is a small percentage of the overall cycle time. • The largest percentage of the cycle time, Waste, usually goes untouched. • Improvement results: • Incremental at best

15. Think Differently About the Financial Results Of The Business Traditional Thinking Lean Thinking Cost + Profit = Selling Price Profit = Selling Price - Cost Market Price Profit How Does Lean Do this? Using Lean thinking set the price to what the customer is willing to pay and subtract your cost to determine your profit. Lean forces you to reduce costs (waste) to ensure profit. Today After implementing Lean Competitor

16. Getting Started and Making it Work

17. Lean, done correctly, engages a broad population of the enterprise in constant, incremental improvements that are aligned with the real needs of the business … • Project and results centric, not training centric • Focus on near term, bottom line results to create momentum and buy-in • Should not require large up-front investment • Accessible to the entire enterprise, from process operators to the CEO • Common sense, practical approach to problem solving that is applicable to a large percentage of challenges that any businesses faces

18. Characteristics of Success … • Delivers rapid, measurable results in week(s) instead of months. ROI is clear and immediate. • Focuses on things that are aligned with the real needs of the business. • Stresses smaller, more contained projects that deliver incremental, consistent results to build credibility and momentum • Clear prioritization of projects based on real capabilities and constraints • Introduces a problem solving toolkit that is simple, accessible, and effective for your business – that pulls from proven Lean, BPM, and Six Sigma approaches, but leaves the complexity behind

19. Characteristics of Success … • Draws teams from multiple levels of the organization. • Takes advantage of existing process expertise. People doing day to day work may have the best answers. • Encourages teams and projects that cross existing functional borders. • Establishes a foundation for more advanced capabilities

20. PHASE 1: Build the Foundation, Get some near-term RESULTS Create Momentum and buy-in

21. Simplicity in Approach …

22. Phase 1 - Execute • Align Projects to Capabilities • Review internal capabilities against project requirements • Charter teams from internal capability • Build capability through training and project execution • Outsource • Hybrid / Blended Model Project execution plans are clearly defined based on current capability and identified real business impact. It is not about training goals ….

23. Sample Project Charter Business Case: To improve cases per hour productivity by 5% in 2007 for X Operation. Problem Statement: During 2006, the case picking lines per hour for combined personal care and household products was 14.0 lines per hour. There is a gap of 1.4 lines per hour from historic best performance representing $31,086 of labor reduction benefit. Start / Stop Points for Project: Starting on January 29, 2007 and stopping no more than 4 to 6 weeks out for implementation. In Scope: In scope processes will include all outbound processes. Out of Scope: There will be no system enhancements or staffing changes that negatively impact other processes. Goal Statement: Increase the combined personal care and household products case picking lines per hour to 15.0. This improvement represents 67% of the gap of historic best performance of 15.4 lines per hour representing $21,568 of labor reduction benefit. The process improvement will be completed within 4 to 6 weeks of implementation. Project Team: Champion: Pat M. Team Leader: Ramon L. Team Member: Christina C. Team Member: Joe R. Team Member: Earl B.

24. Phase 1 – Develop the foundation skillset • 5 day workshop to develop Lean and Basic Process Improvement capabilities, AND deliver near-immediate results • Identify 3-4 high value aligned projects • Charter a team for each project • Preferably built from multiple levels of the organization • Run workshop to execute projects • Results at end of week These workshops develop the foundation skillset that is likely applicable to 80+% of common problems. They also deliver near immediate business RESULTS.

25. DMAIC Lean Roadmap

26. A workshop, not a training event … Real teams working on real business problems, learning practical new skills that can be applied every day to improve the business

27. Example

28. Distribution Center – Returns Handling Problem Statement: During 2008, the average cycle time for processing returns was 45 days. There is a gap of 33 days from the desired cycle time representing $487,000 of cost of poor quality. Start / Stop Points for Project: Starting on November 17 and stopping no more than 8 to 10 weeks out for implementation. In Scope: All returns from customer - office products arriving to Warehouse #4 Goal Statement: Decrease the cycle time for processing returns to 22 days average. This improvement represents 70% of the gap representing $350,000 of reduced labor costs and claims charges. The process improvement will be completed by the Jan 26, 2010. Out of Scope: Returns from any of the other divisions from customer. Example: Co-packing Project Team: Champion: Team Leader: Team Member: Team Member: Team Member: Team Member: Team Member:

29. Primary Metric Chart 45 days $500,000 150 people 29,235 • Primary Metric • 2008 Cycle Time per Return . . . . . . . . . . . • Secondary Metrics • 2008 Inventory Adjustments . . . . . . . . . • Headcount . . . . . . . . . . . . . . . . . . . . . . . • Pieces processed per headcount . . . . .

30. Para la clasificación de mercancía vendible y no vendible se pide Vo Bo de calidad NR y asi no genera errores de ingreso de mercancía obsoleta. Se escanea pieza por pieza cada producto por sku La mayoría de las devoluciones NO traen la documentación completa y se generan conflictos al ingresar la mercancía. Demora en autorizaciones. Newell autorizara y notifica vía mail los arribos y recepción de mercancía. Falta de capacitación y compromiso del personal al escanear las piezas ( solo escanean un código y digitan el numero de piezas). Sistemas APLL & Planeación trabajan en conjunto para agilizar la activación de SKUs con problemas y generar la interfase para obtener la nota de crédito. La documentación No da el detalle de las descripciones ni cantidades devueltas genera irregularidades y confusiones Demora en la activación de los códigos en la base de datos. Al no estar actualizada la base de datos se generan conflictos al generar la inerfase del WMS & ERP Se agiliza la captura de la nota de crédito en conjunto con el coordinador de devoluciones NR con el apoyo del administrativo de devoluciones APLl. Ausencia de conocimiento para los criterios de clasificación de la mercancía. Tools Used – Process Mapping Current State Process Map Future State Process Map

31. Tools Used - Waste & Constraints;Spaghetti Chart; Fishbone Spaghetti Chart Wastes & Constraints Fishbone Diagram

32. Implemented Solutions • Implemented formal staging area for receiving • Created production lines scanning all pieces • Implemented use of counting scales • Created new segregation process using color codes • Track and report by customer • Check point to validate transaction between ERP & WMS • Daily reports to Finance New Layout:

33. Cycle Time per Return 2009 2008 Time (days) Post Project Metrics Primary Metric

34. 2009 2008 2009 2008 2009 2008 Post Project Metrics Secondary Metrics 2008

35. Realized Benefits Financial Benefits • Reduced Inventory Adjustments MXN $70,250 • Reduced headcount required in process MXN $61,000 Total Savings: $131,250

36. Realized Benefits Non Financial Benefits • Employee morale greatly improved • Increased customer satisfaction • Faster re-integration of inventory into stock for new orders • Cleaner inventory reconciliation with customer

37. Lean and Six Sigma De-mystifying the relationship

38. Lean or Six Sigma – Which is Best? • An irrelevant question! They are different, but synergistic. They are notcompeting methodologies. • Lean focuses on process flow • Six Sigma focuses on process variation • Art vs. Science • Six Sigma is hard science • Lean is science … practiced as art • A better question may not be which one, but which one to start with … Don’t become a slave to methodology and tools

39. Synergy … • Six Sigma is an improvement approach aimed to primarily improve process capability by removing Variation • Lean is an improvement approach aimed to primarily improve process efficiency by removing Waste and Complexity • Lean Six Sigma is simply an improvement approach that combines the two to improve efficiency and capability through waste and variation reduction .

40. Side-by-Side

41. Improvement Tools: Lean and Six Sigma • Six Sigma and Lean • Lean addresses variation external to processes, such as sales quantity changes, product mix changes etc. to allow the business to continue to make money in spite of the variation. • Six Sigma addresses variation within processes to remove the impact of that variation on the ability of the business to make money. • Both focus on processes and the improvement of processes. • Both are needed for a business to be maximally successful operationally. • Key Thought Framework • Lean = Maximize opportunity for a process to react to external change by removing all waste and operations that lock in a production decision. • Six Sigma = Y=f(x). Find the root cause of a customer critical process problem and eliminate it or make it robust to the variation that causes it. • Six Sigma is a key tool in achieving Lean's goals. Lean tools make Six Sigma easier to focus on value producing x's.

42. Resources … *** You must view in SlideShow to activate links • Qualtec Lean Approach • From the Qualtec Business Performance Improvement Blog • A Pay-as-you-Go Approach to Lean and CI • A Great Example of a Lean Program that Works • Back to CI Basics for Many – Lean, Yellow Belt, and BPM • VOC and Lean Value Stream Mapping – A Simple, but Powerful Equation • Use Lean to Ease the Pain of Enterprise Software Implementations • Getting Results with Lean is not just about Lean Tools …

43. Eric Harris Email: eharris@ssqi.com Tel: 609-356-1481 www.ssqi.com blog.ssqi.com