Lean Manufacturing in a Lean Economy Darren Dolcemascolo EMS Consulting Group, Inc. Copyright EMS Consulting Group, Inc. 2008

Lean Manufacturing in a Lean Economy You will learn: The need to become lean today Benefits you can expect by implementing a lean initiative Principles and steps of implementing a lean program Critical success factors—the reasons that lean ideas fail in so many companies, and how to avoid these pitfalls Copyright EMS Consulting Group, Inc. 2008

Copyright EMS Consulting Group, Inc. 2008 Presentation Agenda Lean Manufacturing Principles and Benefits The Lean Implementation Process Pitfalls/Critical Success Factors Q&A Copyright EMS Consulting Group, Inc. 2008

Toyota Production System The TPS House Diagram A System Based on a Structure TPS Goal: Highest Quality, Lowest Cost, Shortest Lead Time Best Safety, High Moral Not a set of Techniques Structural System The house is strong only if the: Roof is strong Pillars are strong Foundation is strong People are strong A weak link weakens the whole system Just In Time Right part-Right amount-Right Time Jidoka Built-in-Quality Line Stop Efficiency Visual Controls Error Proofing Andon 5 Whys Flow Takt Time Pull Quick Changeover Operational Stability Standardized Work TPM Kaizen Leveled Production Toyota Production System Copyright EMS Consulting Group, Inc. 2008

Lean Manufacturing Overview Value - A capability provided to a customer at the right time at an appropriate price, as defined in each case by the customer. Features of the product or service, availability, cost and performance are dimensions of value. Waste - Any activity that consumes resources but creates no value. Copyright EMS Consulting Group, Inc. 2008

Lean Manufacturing Overview Lean Manufacturing is an operating philosophy that focuses on the elimination of the seven wastes: Overproduction Excess inventory Defects Non-value added processing Waiting Excess motion Transportation MUDA Copyright EMS Consulting Group, Inc. 2008

What does Lean do? Total Lead Time Lean Transformation Total Lead Time Value-Creating Time Non-Value-Creating Time (waste) Copyright EMS Consulting Group, Inc. 2008

Lean Manufacturing Overview Lean Thinking, Womack and Jones, 1996 Copyright EMS Consulting Group, Inc. 2008

Lean Conversion Process “The greatest enemy to tomorrow’s success is sometimes today’s success.” - John Maxwell Copyright EMS Consulting Group, Inc. 2008

Current State of Our Economy Credit Crisis: Difficult for Businesses to Obtain Credit to Meet Payroll Purchase Raw Materials Grow as a company Unemployment on the Rise Major Recession Copyright EMS Consulting Group, Inc. 2008

Copyright EMS Consulting Group, Inc. 2008 How Can Lean Help? Current Economic Conditions create an opportunity for lean thinking – a need to go lean based on survival! Applying lean principles will create the following: Shorter Lead-Times to Customers Net Decrease In Inventory- Frees Up Cash Productivity Growth- increases capacity without additional capital/hiring Quality Improvement- lowers costs and attracts additional business Copyright EMS Consulting Group, Inc. 2008

How Can Lean Help: Shorter Lead Times Benefits to Operation Ability to Quote Jobs Faster Ability to Process Orders Faster Ability to Get Orders to Production Faster Ability to Process Jobs Through Production Faster Competitive Advantages Attract more business Get paid faster/rely less on credit Copyright EMS Consulting Group, Inc. 2008

How Can Lean Help: Decrease in Inventory Benefits to Operation Freed up floor-space Freed up cash Competitive Advantages Have cash on hand for expansion of business or to handle short-term “down” periods Copyright EMS Consulting Group, Inc. 2008

How Can Lean Help: Productivity Growth Benefits to Operation Lower Product Costs Increased Capacity Competitive Advantages Increased profitability Ability to compete on price due to lower costs Attract more business Copyright EMS Consulting Group, Inc. 2008

How Can Lean Help: Quality Improvement Benefits to Operation Lower Product Costs Better Quality Product Produced Competitive Advantages Increased profitability Attract more business Copyright EMS Consulting Group, Inc. 2008

How Can Lean Help: Bottom Line Lean thinking will help a company become self-reliant: Fuel for growth by producing better quality, lower cost products with the shortest lead times. Ability to Grow without relying on the availability of credit from financial institutions. Copyright EMS Consulting Group, Inc. 2008

Lean Conversion Process: Lean Thinking Specify value can only be defined by the ultimate customer Identify the value stream exposes the enormous amounts of waste Create flow reduce batch size and WIP Let the customer pull product through the value stream make only what the customer has ordered Seek perfection continuously improve quality and eliminate waste Copyright EMS Consulting Group, Inc. 2008

Copyright EMS Consulting Group, Inc. 2008 Value Stream Approach Select Product Family Create current and future state maps Develop and manage action plan using Project Management approach Copyright EMS Consulting Group, Inc. 2008

Planning Tool: Value Stream Mapping Definitions - Current State Map – Map showing information and product flow as it is currently done. - Future State Map - Map showing an attainable information and product flow with significantly less waste than that of the current state. Copyright EMS Consulting Group, Inc. 2008

Copyright EMS Consulting Group, Inc. 2008 Value Stream Mapping Purpose of Mapping To identify and eliminate waste in the value stream. End Product of VSM Picture of “future state” with an action plan to achieve it. Prioritized Projects Copyright EMS Consulting Group, Inc. 2008

Value Stream Mapping: Current State Begin mapping at the end of the process (customer) and work backwards. Then, map the information flow from your customer back to your supplier. Connect the two. Copyright EMS Consulting Group, Inc. 2008

Current State Value Stream Map Production Control Raw Matl. Customer Supplier MRP Units/day Units/day Information Flow Material Flow Process A Process B Process C I I I Value Creating Time = 180 seconds Lead Time = 18 days Data Data Data Copyright EMS Consulting Group, Inc. 2008

Value Stream Mapping: Future State Elements Flexibility Short Lead-Time Connected Processes Flow Loops Simplified Information Flow Awareness of the Customer Requirement Scheduling one point in the value stream Copyright EMS Consulting Group, Inc. 2008

Copyright EMS Consulting Group, Inc. 2008 Kaizen Event Approach Kaizen Event Overview 3 to 5 day breakthrough event “Working level” participants w. facilitator Appropriate for use with several lean tools Appropriate for new implementations and for continued improvement Copyright EMS Consulting Group, Inc. 2008

Copyright EMS Consulting Group, Inc. 2008 Kaizen Events Typical Tools 5S SMED (Single Minute Exchange of Die) TPM (Total Productive Maintenance) Mistake Proof (Poka-Yoke) Visual Controls One-Piece Flow/Takt Time/Layout Copyright EMS Consulting Group, Inc. 2008

Copyright EMS Consulting Group, Inc. 2008 Kaizen Events Kaizen Event Process Educate (1/2 – 1 day) – Lean with emphasis on particular tool Set goals Map out baseline Brainstorm ideas Select ideas and formulate future state Develop plan to implement future state (Implement as much as possible immediately- during event.) Copyright EMS Consulting Group, Inc. 2008

Copyright EMS Consulting Group, Inc. 2008 Kaizen Events Advantages Exciting experience for all involved Can Accomplish Improvement Rapidly Participants learn a great deal Skeptics can be won over Valuable tool for implementing aspects of a value stream improvement Copyright EMS Consulting Group, Inc. 2008

Copyright EMS Consulting Group, Inc. 2008 Kaizen Events Disadvantages Improves points in the process but without VSM approach, does not lead to flow across the enterprise Action list at the end often is ignored- important to meet weekly until complete. Tendency to revert to old methods after the event. No lasting cultural change. Tendency to judge events on short-term cost savings only Copyright EMS Consulting Group, Inc. 2008

Where to Start- Toyota’s 4 P’s? Philosophy – Hold an off-site meeting of top leaders and define your company’s vision Process – Begin implementing a connected value stream. People – Train and indoctrinate your people into the new lean way of thinking, effecting culture change. Problem Solving – Train people in a problem-solving methodology and give them time to meet in groups and solve problems. Copyright EMS Consulting Group, Inc. 2008

Typical Approach that Works Perform an assessment and develop an overall plan for implementation. Create a Company X Production System based on an assessment. Select some key items/pilot projects for process improvement (based on an assessment) and implement kaizen/5S. Combine VSM approach with problem solving and 5S training. Use the Value Stream Mapping approach to identify improvement projects (both kaizen and “six sigma” projects) Roll out 5S implementation and basic problem solving training plant-wide to build momentum. Copyright EMS Consulting Group, Inc. 2008

Typical Approach that Works Implement the projects/roll out lean training in small bites in conjunction with projects Continue expanding by value stream (or department), whichever makes more sense. Extend across entire organization. Create a Lean Promotion Function. Develop a growth strategy for additional business. Extend Lean to Your Suppliers. Copyright EMS Consulting Group, Inc. 2008

Copyright EMS Consulting Group, Inc. 2008 Pitfalls/Barriers Too much compromise/Lack of Leadership Commitment to Lean Tendency to Revert Back to Old Ways when setbacks occur Tendency to use TPS/Lean as a Cookbook Tendency to make surface changes without applying lean principles properly (customizing to suit the situation) Short-Term Thinking at the Expense of Long Term Copyright EMS Consulting Group, Inc. 2008

Roles in Change Process Executive Sponsor Lean Coach Resources Accountability Process Owner Value Stream Team Copyright EMS Consulting Group, Inc. 2008

Copyright EMS Consulting Group, Inc. 2008 Leadership Top management support /commitment is critical for successful lean transformation. Support and commitment means not only lip service but $$, resources, making difficult decisions, and eliminating roadblocks. Middle managers down to team leaders must become change agents- the transformation from skeptic to teacher does not happen overnight. Copyright EMS Consulting Group, Inc. 2008

Copyright EMS Consulting Group, Inc. 2008 Lean Coach/Teacher Internal or external lean expert that teaches but does not do the work. The lean coach: Leads model line programs Leads value stream mapping Leads kaizen events Teaches lean tools and philosophy through courses and improvement events Coaches leaders at all levels Develops the lean operating system (metrics, principles, assessment approaches) Internally promotes the lean transformation. Externally learns and brings back new ideas. Copyright EMS Consulting Group, Inc. 2008

Key Ingredients of Change Participation & Ownership Structure Organization Documents Roles/Resp Committed, Knowledgeable Leadership Change Effort Lasting Results Accountability Learn by doing Education & mentoring Toyota Way Fieldbook, Liker and Meier, 2005 Copyright EMS Consulting Group, Inc. 2008

Copyright EMS Consulting Group, Inc. 2008 Culture Change Education and changing metrics alone will not drive culture change Seeing/Experiencing is believing. Lean must be tried and the word must be spread through successes in pilot projects. Strong leadership is necessary to drive culture change. Copyright EMS Consulting Group, Inc. 2008

Copyright EMS Consulting Group, Inc. 2008 Recap The Current Economy is a compelling reason to implement lean Lean thinking will help a company become self-reliant: Fuel for growth by producing better quality, lower cost products with the shortest lead times. Ability to Grow without relying on the availability of credit from financial institutions. Lean Requires a Systematic Implementation Approach Lean Requires Strong Leadership Copyright EMS Consulting Group, Inc. 2008

Lean Conversion Process “Perfection is not attainable, but if we chase perfection, we can catch excellence.” - Vince Lombardi Copyright EMS Consulting Group, Inc. 2008

Copyright EMS Consulting Group, Inc. 2008 Questions? Copyright EMS Consulting Group, Inc. 2008