Introduction to Kaizen, Kyosei and Obeya How to be Creative, Innovative, Fast & Flexible Dr. John Blakemore Principal Innovation Blakemore Consulting Intrernational National President Manufacturing Society of Australia Advisor to Australian Government on Innovation and Research and Development

1.Lean manufacturing is a Japanese Pull System which maximises throughput and profit with minimum inventory and waste. 2. This method is employed with great success by Toyota, Honda, Canon, Panasonic, and all globally competitive manufacturers. 3. This method employs, Value stream mapping, pull systems, SPC, Six Sigma and other Deming techniques. 4. The key words are KAIZEN & KYOSEI & OBEYA. What is Lean Manufacturing?

Kaizen & Kyosei & Obeya Kaizen = Continuous Improvement Kyosei = Living and Working Together for the common good Obeya = Big Room

Waste Expenses (P&L Bal Sheet) Resources ($,Plant, People, Material etc) Planning System

1.Develop a Pull System with Continuous Flow 2.Enhance People skill, flexibility and Teamwork 3.Achieve Shorter Lead Times 4.Have Less Inventory and Waste 5.Use capital more effectively 6.Maximize Value Added 7.Improve Quality 8.Have Less Defective Product and Process 9.Reduced Time to Market for new Products 10.Improve Information and data flow Aims of Lean Manufacturing

Lessons from The Best Companies in the World 1.John Blakemore in Sept and Oct 2006, visited some of the best companies in the world including, Honda, Toyota, Canon, Mazda, Kawai, Panasonic as part of an investigation to add to our understanding of Lean Manufacture. 2.These lessons can be applied to all manufacturers. 3.To the list of Lean we now need to add Kyosei, (inc Karakuri and the German Meister system).

Buying Decision Service Value Creation Core Process Strategic Advantage for Winning Value Creation Value Chain Customer People Marketing&Sales Innovation Finance Operations Customer Value SUPPLYSUPPLY

Pull Systems: 1. Reduce and cap Work In Process(WIP) 2. Make by Replacement or MTO 3. Aim at limiting cycle time variability 4. Aim at Continuous WIP (CONWIP) 5. Kanban = linked processes 6. CONWIP = pull from FG Supermarket 7. MRP = push to FG 8. CONWIP is the most Robust System The Magic of Pu ll

1. Once value is added to a product, the product must continue to have value added. 2. No queuing, idle time or stopped flow 3. Remove or speed up the bottlenecks 4. Synchronise…look at a Formula 1 pit- stop Continuous Flow

Minimise Waste Waste can be in the form of : Material Time (total, lead etc) Space Money Tampering ( Changing ) Double Handling Breakdowns Band-Aid “Solutions” Setups, Cleanups, Idle Time, Inventory (RM, WIP, FG)

Japanese Inventory

Lead Time Reduction

Effectiveness

1. Quality, Cost, Delivery (OTD) 2. Lead Times 3. Stock Turns 4. Working Capital 5. Waste % 6. Quality Indices 7. Time to Market 8. Net Tangible Value 9. ROI, RONA, 10. EBIT, VA Key Performance Indicators

Pirelli..Output & Defectives Defectives

Maximise Value Added 1. Keep the product moving to customer 2. Run Time/ Total Time maximised 3. Maximise use of Tools and Jigs 4. Use clear labels 5. Eliminate non value added steps 6. Push to Pull

PROCESS PARTS (6) Setup(Preparation) 2 - Run(The Value Added Step) 3 - Maintenance (Preventive) 4 - Breakdown(Errors & rework) 5 - Idle(available to run but not utilised 6 - Cleanup VA = 2,(3)? = Run + Preventive Maintenance Eliminate Breakdown Idle Setup? (  SMED) Cleanup  Concurrent Engineering Value Added

Costs in the Supply Chain Labour

Manufacturing or Service? There is no such thing as a pure Manufacturing Company All companies are Service Driven

The Solution Lean Customer Service Driven Cooperative Culture Strong Relationships Team Cross Functional Structure High Velocity Accurate Information Short Time Periods Synchronised Processes Pull not Push Dynamic not Static

1.Hazard: 800% productivity gain in 18months 2.Pirelli : Output doubled, NP from –5% sales to 15% profit 3.CSFB : $40M fr WC, OT D 32% to 95%, Loss to $40M EBITA 4.Tannery : Colour defects eliminated from 15% defective 5.Steel Fabricator : Plant redesign, Mat Handling $ halved 6.Computer Supplier : Loss $60,000 to profit $1.0M I year 7.Aluminium Fabricator : Productivity doubled in 6 months 8.Speedo: QR to retailer, inventory down, service up Plastics Companies : All increased bottom line in 1 yr. 10.Geelong Cement : Productivity Gain of 25% in 6 months 11.Warkworth Mine : Productivity Gain of 16% in 6 Months 12. BHP to PVA: RM Inventory reduced from $1.5M to $60,000 Recent Achievements

What Has Been Done (Shaw Australia) $300M T/O

Lean Production, Pirelli (Italy, Australia) (Loss to Profit then Float) Defectives

Removing Variation, Cr in Effluent (Saving a Tannery)

The End