LEAN and AGILE approaches to manufacturing and process improvement

1. DMEM DMEM LEAN and AGILEapproaches to manufacturingand process improvement Centre for Strategic Manufacturing Dr Peter Ball Centre for Strategic Manufacturing www.dmem.strath.ac.uk/csm/ p.d.ball@strath.ac.uk

2. 10OoC 5OoC OoC The frog! Uh oh! Rebbit! Rebbit! “Poikilothermic” (= don’t try this at home)

3. A Lean and Agile Manufacturing • What are they? • What are the benefits? • How to do it? • Case studies • Sources of further information

4. Item Qnty Day 1 Day 2 Day 5 Runner 100 20 20 20 store Repeater 27 7 7 kanbans withdraw & process Stranger 5 5 K K Load 132 27 27 25 Cap’ty 135 27 27 27 work centre work centre replacement batches Upper action limit Upper warning limit Self average Continuous improvement Competitiveness Competitor time Present change Uncompetitive Competitive Time action? Lean Thinking roots in Toyota Philosophy • Doing it all for the Customer • Levelled production • Pull system • Continuous-flow production • Takt time • Multi-skilling • TQM • TPM • Poka Yoke • SPC • Standardised work • Kaizen

5. What is Lean Manufacturing? • Builds on roots but with specific focus on: • Lead time reduction • Regular production • New products • Flexibility improvement • Variability reduction • Cost reduction

6. Customer Satisfaction Profitability Greater Control Lean Characteristics & Benefits • Characteristics Benefits (higher …) Customer Driven Profit Driven Team Based Fewer Players Devolved responsibility

7. Improving business performance • Increase turnover • Sell more • Charge more • Reduce cost • Reduce direct material cost • Improve production efficiency/effectiveness • Increase the rate of adding value

8. 3 / 3 • Why no value being added: • Waiting for completion of batches • Waiting for physical / intellectual rework • Waiting for management decision • 1/4 - 2 - 20 • For every quartering of total time, productivity doubles, costs reduce by 20% Time based competitiveness - some rules • 0.05 to 5 • Value actually added between 0.05% - 5% of total time • Source: survey of industry (by Boston Consulting Group?) • 3 x 2 • Lean competitors enjoy x3 avg growth rate, x2 profit margin

9. What is World Class Manufacturing? Being the best Delighting the customer? Being the lowest cost producer Schonberger’s agenda?

10. What is World Class Manufacturing? Flexibility & control to satisfy customer on time, every time Managing through people, teams and aligning all to goals Reduction of waste in the manufacturing system Product quality right first time, every time

11. 1 Understand customers and what value they want Setting the direction, targets and checking results 2 Define the internal value stream An internal framework for delivering value 3 Eliminate waste, make info & products flow, pulled by customer needs Appropriate method to make necessary change 4 Extend the definition of value outside your company Externalise the value focus to the whole value stream 5 Continually aim for perfection Strive for perfection in the product and in all processes and systems How to go lean Objective Method

12. Cornerstone of Lean Manufacturing • Value stream mapping • Construct process map of the value stream • Avoid using existing maps, may be out of date or have misconceptions • Analyse the process map • Focus on customer • Identify value-added and non-value-added activities • Calculate the value-add ratio • Reduce and eliminate wasteful steps • (several value streams exist in a value chain, • e.g. key product line to key customer) Many mapping tools (process activity, supply chain response, quality filter, etc.) Conduct all improvements in context of value-add ratio

13. Example of process map • Note value-add time -vs- lead time

14. Demand amplification mapping • Many tools exist including demand amplification mapping • Concerned with batching and response time • Spreadsheet example from IOM publication shows effect

15. Capability of processes and the dangers • Need to establish capability in all processes • Need capable machines • Need capable suppliers • etc. • Danger is that you can base lean on poor foundations • Focus on assembly area when machine shop is not capable • Focus on production processes when supplier is not capable • Need to be careful with available literature, can assume • You have sales and operations planning • You have capable machines • etc. If your production planning function was likely to produce infeasible plans occasionally would you trust them?! See roots of lean thinking slide

16. Lower specification limit Upper specification limit Defects 1350 parts per million Defects 0.001 ppm Nominal • 3s • 6s Capability / variance • Variation of output of a process can give rise to defects internally and/or passed onto customer • Aim to reduce process variation to increase reliability of a process • This is the foundations of Six Sigma methodology …

17. Executive vision Assess & kickoff Select champions … Deploy strategy Train and set up structure … Measurement Map, id critical input/output variables … Analysis Project implementation Determine variance … Improvement Design of experiments … Control Use control charts … Six Sigma • A complete methodology for improving the business or simply a process reliability concept? • Key to Motorola, GE and other businesses at all levels

18. Agile – a step on from lean? • Roots of agile in America defence industry – developing the ability to react and reorganise to successful equipment bids • Lean and agile have common components • See “Lean Thinking Roots” slide (quality, reliability, improvement, etc) • But lean is process focused, agile is boundary focused • Ability to thrive in constant, unpredictable change • Key attributes of agile • Customer value focus (solutions not products) • Flexibility to adapt to fundamental market changes • Not simply changes in product mix • Competing from multiple fronts, possibly virtually • Organisational knowledge, including ability to adapt IT systems to support new processes

19. The journey A spectrum of companies Traditional Lean Agile Complementary Make to order Make to forecast Stock (to decouple) Material suppliers Lean Agile customer Lean Agile Make/Engineer to order, High variety, Service culture “Product Innovator”? “Customer intimate”? Make to stock Low variety Mass, repetitive “Cost minimiser” Upstream variation Downstream variation Different views on lean -vs- agile

20. Establishing Foundations for Lean, Agile … • Need the classic pre-requisites for any programme • Strategy • Commitment • Objectives • Communication • Empowerment • Establish framework • Activity plan, cost, time and execution • Measurement and evaluation system Culture change Use of champion

21. Actual Available Production Time Theoretical time minus planned downtime and shutdowns This is the realistic best available production time (100%) Planned Downtime PM, Shutdowns, Holidays Machine Running Time Actual production hours minus downtimes This is possible production if 100% performance Unplanned Losses Breakdowns, HR, Set-up time Availability Net Operating Time Machine speed against theoretical speed This is the possible output if 100% quality Speed losses Idling, minor stopages performance Performance OEE Useful Production Time Material in minus product out This is the real output Quality Losses, adjustments, Set-up waste Quality Key to Lean Manufacture is measurement • Need clear, objective focus on value • Example: OEE (Overall Equipment Effectiveness) • A composite measure of the ability of a process to carry out value adding activity • OEE = % availability x % output achieved x % perfect output • If change to a process increases OEE it is worthwhile

22. Loading Time A. Working Time = 525 mins B . Line Off Time = 30 mins C. Loading Time (A-B) = 495 mins Line Off Time Lunch break 30 mins Asset Care 0 mins Availability D. Downtime = 190 mins E. Operating Time (C-D) = 305 mins F. Availability (E divided by C x 100) = 62% Downtime Start up 30 mins Shut down 20 mins Breakdown 40 mins Changeovers 90 mins Materials Supply 10 mins OEE Example Calculation Performance G. Total dozens produced = 3869 dozen H. Balanced Speed (180 BPM=0.067) = 0.067 I. Performance (HxG / Ex100) = 85% Quality J. Rejects during operating time = 20 dozen K. Rate of quality products (G-J / Gx100) = 99% Overall Equipment Effectiveness OEE (F x I x K / 10000) = 52%

23. Cost benefit analysis • Costs Benefits (higher …) Investigation Customer Satisfaction Implementation Profitability Project specific Greater Control

24. Summary • Strategy that encompasses business [profit] objectives and customer order winning [and maintaining] criteria • Achieve short-term, KPI-driven improvements consistent with strategy • Plan and act for sustainable change

25. Example: Rolled metal manufacture (batch) • Major initiative to remove waste • Significant formal education and training • Targeted specific product stream • From supplier to customer • Mapped out processes and established measures • Result • Major quality improvements, 60% drop customer complaints • Other significant financial benefits • Short / long term EVA moved negative to neutral (EVA=Economic Value Add -> sustainable investment) • Openness of data systems!

26. DEPALLETISER TOPSTAR/DUBUITT RINSER FILLING HALL FILLER CASE ERECTOR BOTTLING HALL CAPPER CASE SEALER LABELLER CASE PACKER OCME (S/wrapper) HANDLE APPLICATOR PALLETISER STRETCHWRAPPER Example: Bottled water (process) • Phase 1 • Education and training of teams • Use of DTI funding via TCS Programme (tcd.co.uk) • Full integration of sales, purchasing, manufacturing • Improved management information system • (Soft) greater teamwork, responsiveness • From 80% to 100% peak season stock cover • Sales up 30%, same headcount • Phase 2 (underway) • Production processes focus • Introducing OEE • Focus on waste • CI, include quick changeovers • Ambitious, achievable targets • Self-managed work teams

27. Example: Whisky bottling (process) • Use of OEE as key measure • Specific focus on bottling lines • Low OEE • Start / stop • Breakdowns • Introduced asset care • 5S Sort, Straighten, Sweep, Standardise, Self discipline • Quick changeovers • Reliability centred maintenance • Asset care programme brought £0.5m savings in 6 months

28. Useful sources of information • www.competitiveSCOTLAND.com • Seminars, resources & discussion for Scottish manufacturing • Centre for Strategic Manufacturing web site • dmem.strath.ac.uk/csm/ (this presentation, resources, lean courses) • James Womack & Daniel Jones, Lean Thinking: Banish Waste and Create Wealth in your Corporation (Simon & Schuster, 1996) • John Bicheno, The Lean Toolbox, 2nd edn (Picsie Books, 2000) http://www.picsie.co.uk/ (£10?) • Peter Hines & David Taylor, Going Lean: a guide to implementation (Lean Enterprise Research Centre, Cardiff Business School, 2000) • Institute of Operations Management (IOM) • Papers and courses on Lean, Agile, etc, see iomnet.org.uk • Seminars (e.g. Recently: Lean at Boots, 5S at Ratheon) • Pande, Neuman, Cavanagh, R.R. 2000 "The Six Sigma Way”, McGraw-Hill ISBN 0-07-135806-4 (£20) • For knowing about it without actually dealing with the detail • Breyfogle 1999 "Implementing Six Sigma - Smarter Solutions Using Statistical Methods" Wiley-Interscience ISBN 0-471-29659-7 (£60) • Good for detail if you actually want to implement it • Agile • http://www.agility.co.uk/ or internet search for “agile” (care with “agility”!)

29. Rebbit! DMEM DMEM LEAN and AGILEapproaches to manufacturingand process improvement These slides can be downloaded from: www.dmem.strath.ac.uk/csm/ Centre for Strategic Manufacturing Dr Peter Ball Centre for Strategic Manufacturing p.d.ball@strath.ac.uk