©2005 Rucker & Associates, Inc. All Rights Reserved. 1 LeanSigma Transformation Overview

©2005 Rucker & Associates, Inc. All Rights Reserved. 2 Lean Sigma A blend of Lean Manufacturing and Six Sigma improvement tools Applied using Kaizen Methodology Lean Sigma generates rapid, team-based results

©2005 Rucker & Associates, Inc. All Rights Reserved. 3 60s 70s 80s 90s 00s Deming Quality Improvement Tools Reduce Variation Six Sigma (Motorola) Six Sigma (Motorola) Toyota Production System Just-in-Time Lean Lean Sigma Lean Six Sigma Ford TQM History of Lean Sigma

©2005 Rucker & Associates, Inc. All Rights Reserved. 4 LEAN Process Evolution in Lean Transformation Waste Reduction People Equipment Materials Space Variation Reduction Capability Improvement Quality Improvement Demand Smoothing Flow Consistency Flow Predictability

©2005 Rucker & Associates, Inc. All Rights Reserved. 5 Value-Add vs. Non-Value-Add Value-Adding Activities Transform materials and information into products and services the customer wants Non-Value-Adding Activities Consume resources, but don't directly contribute to product or service

©2005 Rucker & Associates, Inc. All Rights Reserved. 6 Value Added Essential processes that transform inputs into outputs that are necessary to meet customer’s requirements STREAMLINE Business Value Added Processes deemed necessary to support, control, and monitor internal business functions but have little or no perceived value to the customer Minimize Non Value Added Processes that contribute to neither customer satisfaction nor improved business operations Eliminate Lean Approach to VA – NVA - BVA

©2005 Rucker & Associates, Inc. All Rights Reserved. 7 Wastes in Manufacturing Defective products Overproduction Inventories Excess motion Lead time reduction: identify and eliminate waste Processing Transportation Waiting OPERATIONAL LEAD TIME Wasted Time and Activity Core Process Value Excessive Motion (Walking to Next Task, etc.) Defective Products (Identifying, Handling, Fixing) Unneeded Processing Time Waiting (Often Result of Unbalanced Tasks) Transportation (Movement to Storage area) Excessive Inventories Overproduction

©2005 Rucker & Associates, Inc. All Rights Reserved. 8 Production Lead Time Typical Company 1% 99% Value-AddedNon-Value-AddedImprovement Minor Customer Impact Traditional Improvement 0.5% 99 % 0.5% Lean Waste Reduction 49.5% 1% 49.5% Major Customer Impact Lead Time

©2005 Rucker & Associates, Inc. All Rights Reserved. 9 Order Entry Order Entry Production Planning Production Planning Suppliers Manufacturing Distribution Customers Accounts Receivable Accounts Receivable O-E Prod Plan Prod Plan Supp MFG Dist Cust A/R Time Operational Lead Time Admin Business Process Kaizen Shop floor Kaizen Time-Based Strategies Lead-Time Reduction Critical for driving improvement to your customers

©2005 Rucker & Associates, Inc. All Rights Reserved. 10 Lead-Time Reduction Impacts Cost Quality Delivery

©2005 Rucker & Associates, Inc. All Rights Reserved. 11 Lean Sigma – Benefits Your Business Improves Quality & Reliability Rapid & dramatic improvements in efficiency and productivity Creates Culture of Continuous Improvement New Competitive Advantages

©2005 Rucker & Associates, Inc. All Rights Reserved. 12 Kaizen Breakthrough Methodology ©2005 Rucker & Associates Consulting Group, Inc. All Rights Reserved. Day 1 Training Day 2 See Process, Baseline, Generate Ideas Day 3 Try Storm, Implement Day 4 Refine, Stabilize, Document Day 5 Sustain, Report Out One Week

©2005 Rucker & Associates, Inc. All Rights Reserved. Just in Time Takt One Piece Flow Pull People and Partners 5S: Sort, Set in Place, Shine, Standardize, Sustain TPM Production Smoothing Philosophy (Long Term Thinking) Jidoka Elimination of Waste Time Based Strategy Lean Production System “The Rule Book” Base Management Decisions on a long-term philosophy Kaizen Breakthrough Methodology Problem Solving (Continuous Improvement and Learning) Go see for yourself to thoroughly understand the situation Monday Train Tuesday Discovery Wednesday Change Thursday Sustain Friday Communicate Grow Leaders who live the philosophy! Respect, develop, and challenge your people

©2005 Rucker & Associates, Inc. All Rights Reserved. Determine the DefectY Establish Process PerformanceY Evaluate Measurement SystemY Evaluate Standard OperationsY Identify Root CausesX’s Develop SolutionsX’s Prioritize & Implement SolutionsVital Few X’s Test Solutions & Verify ResultsVital Few X’s Refine Standard OperationsVital Few X’s Validate Measurement SystemVital Few X’s Implement Control System & Audit PlanVital Few X’s Determine Process CapabilityY MeasureMeasure AnalyzeAnalyze ImproveImprove ControlControl Lean Sigma Project Phases

©2005 Rucker & Associates, Inc. All Rights Reserved. Project Implementation Measure Phase – 5 day Kaizen Day 5Day 4Day 3Day 2Day 1 Lean Sigma Overview Kaizen Breakthrough Methodology Lean Sigma Measure Tools Identify defect, “Y”, & project scope Observe Process & Collect Live & Historical Data Enhanced Spaghetti Map Quality Map Verify Standard Operations Teach & Do: Training & Scope Determine Process Capability Measurement System Analysis Improve measurement system, if necessary Quick kills Comparative Analysis Basic Quality Tools Cause & Effect Chart Gather Additional Data if Required Teach & Do: Presentation of Measure Phase

©2005 Rucker & Associates, Inc. All Rights Reserved. Project Implementation Day 5Day 4Day 3Day 2Day 1 Lean Sigma Measure Review Update Information w/Additional Data Collection Lean Sigma Analyze/ Improve Tools Basic Analytical Tools Hypothesis Testing Identify Root Cause Shop Floor Observations Teach & Do: Training & Scope Implement Improvements Mistake Proofing Collect Data Verify Improvements through Hypothesis Testing Refine Standard Operations Teach & Do: Presentation of Analyze/ Improve Phase Analyze/Improve Phase – 5 day Kaizen

©2005 Rucker & Associates, Inc. All Rights Reserved. The Lean Sigma Process MeasureMeasureAnalyzeAnalyzeImproveImproveControlControl  Determine performance  Verify measurement system  Identify Y & preliminary “x’s”  Narrow the field to the vital few “x’s”  Identify & implement Kaizen improvements for vital few  Verify improvements  Optimize settings for vital few  Control the process to maintain the gains  Establish a plan to control & review the processDeliverables  Problem statement  Finan. & customer impact  “Y” & defect definition  Preliminary “x’s” identified  Quality map  Zst & Zlt  MSA  Root cause determination  Correlation of vital few “x’s” with “Y”  Graphical & statistical analysis of “x’s”  Refined standard ops  Mistake proof process  Estimate of improved performance  Kaizen results & newspaper  Train operators  Results analysis & process verification  Develop control plan  Identify leverage opportunities Common Tools  Quality mapping  C & E diagram  Pareto analysis  Capability analysis  Gage R&R  Comparative analysis  Histograms  Box & whisker  Matrix plots  Run charts  ANOVA  Linear regression  Multivariate regression  Binary logistic regression  DOE  Risk assessment (improvement)  Mistake proofing (improvement)  Statistical tolerancing  Control plan (SPC)  Mistake proofing (controls)  Risk assessment (controls)

©2005 Rucker & Associates, Inc. All Rights Reserved. 18 Questions? Lean Sigma Transformation Overview