An Introduction to the Lean Business Model

1. An Introduction to the Lean Business Model

2. Overview • Lean Model • What is Lean? • Lean Business Journey, Timing & Themes • Standardisation & Reducing Variation • Identifying & Eliminating Waste • Inventory Management • Stuck in First Gear

3. The Lean Business and Operational Excellence Act Plan Check Do Lean Business Order Fulfilment

4. What is lean? A quick reminder…

5. Any colour as long as it’s black! Lean and Flow aren’t new Manufacturing at Highland Park in 1913

6. When did it all become so complex? We want variety!

7. Variety means... • Colour changes • Body and shape changes Which, in turn, means... • Increased skill requirement • More parts and part numbers

8. Which, in turn, means… • Process islands • More complex scheduling Which, in turn, means…

9. Spaghetti World! Information Assembly Components Piece Parts Process Material

10. What is Lean Thinking? Inputs Your Process Outputs

11. Value Stream 1 Value Stream 2 Value Stream 3 Value Stream 4 1st Step - ID your Value Streams and create flow with what resources you have Inputs Your Process Outputs MRP, Shared Resource, unbalanced shifts and long C/O times

12. Value Stream 1 Value Stream 2 Value Stream 3 Value Stream 4 2nd Step eliminate the “knots and remaining tangles” by dedicating resources to value streams - commit yourself to single piece flow! Input s Your Process Outputs

13. Lean Business Model • Focussed on maximising profitability and generating cash • Links seamlessly with OE deployment and Sales and operations planning • Supports a plant-specific roadmap • Drives local involvement and competition • Combines all current best practice

14. Lean Business Journey Previous performance Month on month performance improvement Performance Standardisation of new system and methods Reduce variation Understand the waste in the current system Time

15. Lean Business Journey – 5 Phases Performance Time Getting Ready Gaining Control Consistency Continuous Improvement Habitual Behaviour

16. Lean Business Journey

17. Lean Business Journey - Timing Performance 0 – 3 Months 3 – 12 Months 12 – 18 Months 18– 24 Months 24 – 36 Months Time Getting Ready Gaining Control Consistency Continuous Improvement Habitual Behaviour

18. Lean Business - Themes

19. Objective • To understand the current state and implement actions to get started • Themes • Diagnosis • Measurement • Communication • Defining a baseline • Basic routines • Activities • Diagnostic activities • Financial • Flow • Improvement culture • KPI system • 5S & workplace organisation • Standard meetings & handovers Getting Ready

20. Objective • To reduce surprises and firefighting in • order to focus on future improvement strategy • Themes • Standardisation • Data • Variation reduction • Planning and control • Building stability • Identifying and eliminating NVA • Targeted improvement • Activities • Demand analysis • Define stocking policy and realign • Develop capacity planner • Define constraints and exploit • Pull systems • Value Stream Mapping • Process Mapping • 7 Wastes • Line balance • SMED • Breakdown maintenance • Rapid problem solving Gaining Control

21. Standardisation and Reducing Variation

22. Guaranteeing Output is a Manufacturing Plant’s Number 1 Priority Leaders add value by successfully controlling the inputs – the 4 P’s If the inputs are right the output is guaranteed

23. Why is there so much firefighting in a typical day? 10 x 10 x 10 x 10 ? If the inputs aren’t standardised then there could be: 10 People variables x 10 Parts variables x 10 Plant variables x 10 Process variables How can you manage 10,000 possible outcomes?

24. Standards: Effect on Variation and Quality Current: • Variation • Errors • Little control • Reactive 10x10x10x10= 10,000 Possible Outcomes Future • Control • Improved quality • Predictability • Prevention 5x5x5x5 = 625 Possible Outcomes

25. From control into continuous improvement • The systems, people, equipment, product and all need to go from control to habitual improvement • Areas from clutter to clean • Engineering from breakdown panic to predictive calm • Process from fickle to dependable • Product from changeable to consistent • Shift management from reactive to proactive • Continuous improvement from special effort to daily habit Gaining Control Consistency Continuous Improvement Habitual Behaviour

26. The Golden Triangle Standard WorkStandard description of a task or process, which if followed consistently, ensures the same output Creating Standards for Operational Excellence Visual ManagementMake problems visible and bring them to the attention of the user.Status within 10 seconds. Standard ManagementStandard process to ensure standards are being met

27. The Golden TriangleBasis for daily error avoidance and control Standard Work 5S Reject Control Daily Maintenance Standard Management Visual Management

28. Identifying and Eliminating Waste

29. In Manufacturing there are 7 Traditional Types of NVA or Waste • Waste of T ransport • Waste of I nventory • Waste of M ovement • Waste of W aiting • Waste of O verprocessing • Waste of O verproduction • Waste of D efects and Rework

30. High Inventory Manufacturing 4 weeks INVENTORY AVERAGE INVENTORY HOURS 1000 2000

31. Low Inventory Manufacturing 1.5 weeks Has a positive impact on; • Quality and scrap • Engineering change introduction • Margin • Overtime & resources at month-end • Capital investment • Due date performance • Improved forecast reliability • Leadtime- • Leadtime is proportional to inventory INVENTORY 1000 HOURS

32. Objective • To deliver some quick wins, align by value streams, develop the improvement infrastructure and up-skill middle management • Themes • Tools • Consolidation • Widespread learning • Activities • Policy deployment • Align support to value streams • Visual stock control system • Integrate demand cycle into legacy system • Theory Of Constraints (TOC) • VSM all families • Future state deployment • On the job coaching (TWI) • First line manager development Consistency

33. Objective • To engage the majority in focused improvement, achieve a revolutionary change, extend the scope to the supply chain and develop a growth strategy • Themes • Systems • Widespread improvement • Total involvement • Activities • Lean line design • TPM for all assets   • Value Engineering/Analysis   • Target Costing                 • In house improvement events • Production Mgr improvement projects • Living control plans • Six Sigma for specific projects Continuous Improvement

34. Objective • To feedback all the positive improvement experience into the re-design of equipment, systems and suppliers • Themes • Culture shift • Widespread improvement • Total involvement • Activities • Lean project management • Lean supply chain (use own skills) • Design for manufacture • Field failure tracking • External benchmarking Habitual Behaviour

35. Lean Business Journey - Timing Performance 0 – 3 Months 3 – 12 Months 12 – 18 Months 18– 24 Months 24 – 36 Months Time Getting Ready Gaining Control Consistency Continuous Improvement Habitual Behaviour

36. Stuck in first gear and can’t get traction! “Lean production has dramatically lifted the competitiveness of many manufacturing companies and the value they deliver to customers. Despite these triumphs, many firms I visit are stuck in first gear on their initial lean efforts. They are trying to create flow but can’t somehow get traction. An overlooked and recurring pitfall that I’m seeing more often is a lack of “basic stability” in operations.” Art Smalley Lean Enterprise Institute

37. A poor business will get stuck in first gear… Performance Time Stuck in first gear Getting Ready Gaining Control Consistency Continuous Improvement Habitual Behaviour

38. Lean Business Journey Performance Time

39. Journey Summary • Get Ready - To understand the current state and implement actions to get started • Gain Control – To reduce surprises and firefighting in order to focus on future improvement strategy • Consistency - To deliver some quick wins, align by value streams, develop the improvement infrastructure and up-skill middle management • Continuous Improvement - To engage the majority in focused improvement, achieve a revolutionary change, extend the scope to the supply chain and develop a growth strategy • Habitual Behaviour - To feedback all the positive improvement experience into the re-design of equipment, systems and suppliers • Standardisation & Reducing Variation • Identifying & Eliminating Waste • Inventory Management • Stuck in First Gear