1. Value Stream Mapping Plus Learning to See Better Know the Laws. Use the Tools. Profit. www.factoryphysics.com ©2003-2006 Factory Physics, Inc.

2. Agenda Overview Overview  The basic steps 1.Choose a product flow 2.Create VSM & Current State Model  Validate model 3.Modify Current State model to get to optimal Future State 4.Implement cost effective improvements VSM Plus Example VSM Plus Example Review Review

3. ©2003-2006 Factory Physics, Inc. Value Stream Mapping Plus Mapping and understanding the flow of Mapping and understanding the flow of  Materials  People  Information Plus Absolute Benchmarking and Optimization Plus Absolute Benchmarking and Optimization  What is current, best and marginal case performance  What is the source of variability and buffers  What is the optimal future state for your environment

4. ©2003-2006 Factory Physics, Inc. The Value Stream Two essential components DemandTransformation Buffers develop when variability is present. Only three buffers: 1. Inventory 2. Time 3. Capacity A value stream is “lean” if it uses minimal buffering cost. Production Assembly Distribution Market Demand Flow Stock Flow Stock Planned Demand

5. ©2003-2006 Factory Physics, Inc. Where to Start? If Design is done well, Planning becomes easeier. If Design is done well, Planning becomes easeier. If Planning is done well, Execution becomes easier. If Planning is done well, Execution becomes easier. Value Stream Mapping Plus is a practical application for value stream design analysis and improvement.

6. ©2003-2006 Factory Physics, Inc. The basic steps are … Choose a product flow in the value stream. Choose a product flow in the value stream. Develop current state map and model based on existing conditions. Develop current state map and model based on existing conditions.  Must validate that model reflects reality Create a future state model and map to reach goals for improved performance. Create a future state model and map to reach goals for improved performance.

7. ©2003-2006 Factory Physics, Inc. 1.Choose a Product Flow Only a few Only a few  Part numbers make up most of the demand  Process centers are potential bottlenecks  Sources of variability really hurt A Product Flow is a generic routing in which A Product Flow is a generic routing in which  Most parts follow essentially the same routing  Parts can go out and return  Parts can start inside  Parts on same level in a bill of material

8. ©2003-2006 Factory Physics, Inc. 2.Current state model Walk-through of process to identify the pointless buffers Walk-through of process to identify the pointless buffers  Where is the obvious waste?  Where is the time? Draw value stream map to show: Draw value stream map to show:  Process Steps  WIP  Information Flow  Cycle Time

9. ©2003-2006 Factory Physics, Inc. 2.Current state model (continued) Collect the following data for each Item and Process in the flow: Collect the following data for each Item and Process in the flow:  Number of tools needed  Number of workers needed for setup; needed for process  Process rate  Setup (changeover) time  Availability (MTTR, MTTF)  WIP  Scheduled time available  Transfer and Process Batch Sizes

10. ©2003-2006 Factory Physics, Inc. Current state model (continued) Use Flow Benchmarking to identify opportunities Use Flow Benchmarking to identify opportunities  Throughput (customer demand)  Work in process (WIP)  Raw Process Time (RPT)  Bottleneck Rate (BNR)  Critical WIP (CW = RPT * BNR)

11. ©2003-2006 Factory Physics, Inc. Current state model (continued) Process Debugging Process Debugging  Often model runs much better than actual system  Try to make the model run as poorly as the actual system  Can often make improvements by reversing the changes

12. ©2003-2006 Factory Physics, Inc. 3.Future state model Use analysis tools and look for: Use analysis tools and look for:  Utilization > 95%  Raw Process Time / Cycle Time ratio < 30%  Long, infrequent outages  High yield loss downstream causing high utilization upstream

13. ©2003-2006 Factory Physics, Inc. 3.Future state model (continued) Consider optimization tools to determine Consider optimization tools to determine  stocking levels  lot sizes  WIP/cycle time for given demand  product mix

14. ©2003-2006 Factory Physics, Inc. VSM+ Example Two brackets (L, R) Two brackets (L, R) 18,400 p/mo 18,400 p/mo Current cycle time is 23.6 days Current cycle time is 23.6 days Value added time is 188 sec Value added time is 188 sec NOTE: This material is taken from LEI source material and belongs to Lean Enterprise Institute, Inc., who owns its copyright, and is used here with permission.

15. ©2003-2006 Factory Physics, Inc. Current State Map (see handout) Source: Lean Enterprise Institute

16. ©2003-2006 Factory Physics, Inc. The basic steps are … Choose a product flow in the value stream. Choose a product flow in the value stream. Develop current state map and model based on existing conditions. Develop current state map and model based on existing conditions.  Must validate that model reflects reality Create a future state model and map to reach goals for improved performance. Create a future state model and map to reach goals for improved performance.

17. ©2003-2006 Factory Physics, Inc. Basic Factory Physics Model Items represent Demand that follow a Product Flow through a Plant Items represent Demand that follow a Product Flow through a Plant Plants are composed of Plants are composed of  Product Flows  Stock Points Schedules relate Demand time to Plant time Schedules relate Demand time to Plant time

18. ©2003-2006 Factory Physics, Inc. Basic Factory Physics Model Product Flow composed of Product Flow composed of  Routings assigned to Items containing Steps involvingSteps involving –Process Centers (machines) –Work Groups (people) Stock Point: where inventory accumulates between Flows Stock Point: where inventory accumulates between Flows

19. ©2003-2006 Factory Physics, Inc.

20. Data elements for any model

21. ©2003-2006 Factory Physics, Inc. This data is available for company (or it wouldn’t be in mfg.)

22. ©2003-2006 Factory Physics, Inc. Throughput > Bottleneck Rate (BNR) Utilization > 100%

23. ©2003-2006 Factory Physics, Inc. Something’s Wrong! Could not meet demand in time allowed Could not meet demand in time allowed Is actually clear from data … Is actually clear from data …  Demand = 18400 units per month  7.67 h/s * 2 s/d * 20 d/m = 306.67 h/mo  = 18400 minutes per month  Takt time = 60 sec  Assembly # 1 takes 62 sec

24. ©2003-2006 Factory Physics, Inc. Add More Time Increase time available until we match observed cycle time Increase time available until we match observed cycle time Requires 17.6 h/d that includes some overtime Requires 17.6 h/d that includes some overtime Check Demand Analyzer again. Check Demand Analyzer again.

25. ©2003-2006 Factory Physics, Inc. Throughput < Bottleneck Rate (BNR) Utilization < 100% In practice, this validation is done by asking, “Why?” Why does the data given provide results that are not reflected in reality?

26. ©2003-2006 Factory Physics, Inc. Flow benchmarking TH920Brackets/dayWIP21,730Brackets BNR1,021.85Brackets/day RPT.0653days

27. ©2003-2006 Factory Physics, Inc. Fat zone Lean zone TH CT Current TH and CT are on the marginal case A high-level design assessment – too much WIP.

28. ©2003-2006 Factory Physics, Inc. The basic steps are … Choose a product flow in the value stream. Choose a product flow in the value stream. Develop current state map and model based on existing conditions. Develop current state map and model based on existing conditions.  Must validate that model reflects reality Create a future state model and map to reach goals for improved performance. Create a future state model and map to reach goals for improved performance.

29. ©2003-2006 Factory Physics, Inc. Drill down on the components of cycle time

30. ©2003-2006 Factory Physics, Inc. To get the components of cycle time for a product

31. ©2003-2006 Factory Physics, Inc. Time factor is the largest component of queue time

32. ©2003-2006 Factory Physics, Inc. Drill down into Batch Cycle Time

33. ©2003-2006 Factory Physics, Inc. Batch Time is the largest component

34. ©2003-2006 Factory Physics, Inc. What if we reduce the process batch to 200 for each product?

35. ©2003-2006 Factory Physics, Inc. Cycle Time reduced from 25 days Is there still room for improvement?

36. ©2003-2006 Factory Physics, Inc. Future state modeling Saw that Batch size was big driver of cycle time. Saw that Batch size was big driver of cycle time.  Reduced batch size with huge improvement in cycle time  What about the additional setups?

37. ©2003-2006 Factory Physics, Inc. Assembly # 1 is still the bottleneck No setups at Assembly #1 so increased setups did not affect throughput.

38. ©2003-2006 Factory Physics, Inc. Balance Assembly #1 and #2 Current Processing Times Current Processing Times  Assembly # 1 = 1.03 min  Assembly # 2 = 0.67 min Average Processing Time =.85 min Average Processing Time =.85 min Average Process Rate = 70.59 units/hr Average Process Rate = 70.59 units/hr Balancing the two lines adds more time (waste?) to Assembly #2. Is it worthwhile?

39. ©2003-2006 Factory Physics, Inc. Change Process Rate on Assembly # 1 and Assembly # 2

40. ©2003-2006 Factory Physics, Inc. Cycle Time reduced from 2.17 days

41. ©2003-2006 Factory Physics, Inc. Weld #2 becomes bottleneck Bottleneck rate increased from 1021 units/day. The rebalancing of the Assembly work station increased output and the bottleneck moved.

42. ©2003-2006 Factory Physics, Inc. Can we improve the availability?

43. Reduce MTTR from 7.2 to 3 hours

44. ©2003-2006 Factory Physics, Inc. Availability increases by about 10%

45. ©2003-2006 Factory Physics, Inc. Cycle Time reduced from 1.85 days

46. ©2003-2006 Factory Physics, Inc. We continue … Stamping has a large setup time of one hour. Stamping has a large setup time of one hour. Lets decrease it by ½ and see what affect it has on the cycle time Lets decrease it by ½ and see what affect it has on the cycle time

47. ©2003-2006 Factory Physics, Inc. Reduce setup time to 0.5 hrs

48. ©2003-2006 Factory Physics, Inc. Cycle Time reduced from 1.27 days

49. ©2003-2006 Factory Physics, Inc. We continue … We already decreased the process batch size to 200. We already decreased the process batch size to 200. Lets decrease it again by ½ and see what affect it has on the cycle time. Lets decrease it again by ½ and see what affect it has on the cycle time.

50. ©2003-2006 Factory Physics, Inc. Reduced from 10 to 5

51. ©2003-2006 Factory Physics, Inc. 99% reduction of Cycle Time and WIP

52. ©2003-2006 Factory Physics, Inc. Capacity has increased 9% from 1,021.86 units/day

53. ©2003-2006 Factory Physics, Inc. Recap Improvement Steps 1. Reduce batch size to 200 2. Balance Assembly #1 and #2 3. Reduce MTTR at Weld #2 to 3 hrs 4. Reduce setup at Stamping to 0.5 hr 5. Reduce batch size to 100

54. ©2003-2006 Factory Physics, Inc. Recap Results Cycle time reduced 99%  Customer service should increase  Raw material inventory should decrease WIP reduced 99%  Should reduce scrap  Should improve quality Capacity increased 9% Capacity increased 9%  Reduce overtime or take on more demand Sounds good but here’s where the “rubber meets the road.”

55. ©2003-2006 Factory Physics, Inc. The basic steps are … Choose a product flow in the value stream. Choose a product flow in the value stream. Develop current state map and model based on existing conditions. Develop current state map and model based on existing conditions.  Must validate that model reflects reality Create a future state model and map to reach goals for improved performance. Create a future state model and map to reach goals for improved performance. Implement the most cost-effective improvements Implement the most cost-effective improvements

56. ©2003-2006 Factory Physics, Inc. Implement Improvements 1. Reduce batch size to 200.  Policy change – minimum expense 2. Balance Assembly #1 & #2  Standard work design – minimum expense 3. Reduce MTTR at Weld #2 to 3 hrs.  SMED approach to repairs, maybe stock replacement parts – moderate expense Day to day management decisions clarified, prioritized.

57. ©2003-2006 Factory Physics, Inc. Implement Improvements (continued) 4. Reduce setup at stamping to 0.5 hr.  SMED techniques – cost depends heavily on type of changes required to achieve reduction, e.g. setup carts vs. new fixtures. 5. Reduce batch size to 100  Policy change – minimum expense Focused effort, predictable results.

58. ©2003-2006 Factory Physics, Inc. The basic steps are … Choose a product flow in the value stream. Choose a product flow in the value stream. Develop current state map and model based on existing conditions. Develop current state map and model based on existing conditions.  Must validate that model reflects reality Create a future state model and map to reach goals for improved performance. Create a future state model and map to reach goals for improved performance. Implement the most cost-effective improvements Implement the most cost-effective improvements

59. ©2003-2006 Factory Physics, Inc. Review Value Streams are composed of Demand, Transformation and Buffers. Value Streams are composed of Demand, Transformation and Buffers. There are only three buffers for addressing variability There are only three buffers for addressing variability The three buffers are: The three buffers are:  Inventory, Capacity and Time  It’s “pay me now or pay me later”

60. ©2003-2006 Factory Physics, Inc. Review (continued) LeanPhysics Tools provide applications for optimizing each of the three buffers. LeanPhysics Tools provide applications for optimizing each of the three buffers. We worked with practical optimization of the WIP/Time and Capacity buffers. We worked with practical optimization of the WIP/Time and Capacity buffers. Optimization of the Inventory buffer covered by the Stock Optimizer. Optimization of the Inventory buffer covered by the Stock Optimizer.

61. ©2003-2006 Factory Physics, Inc. Review (continued) Advantages of analytic modeling over Value Stream Mapping Advantages of analytic modeling over Value Stream Mapping  Provides additional information building on VSM  Can easily handle multiple products and complex flows  Much faster than VSM for initial analysis  Provides financial optimization capability

62. ©2003-2006 Factory Physics, Inc. Review (continued) Advantages of analytic modeling over simulation: Advantages of analytic modeling over simulation:  fewer data requirements  quicker  enables iteration to narrow down options if simulation required later