Value Stream Mapping 6 4/19/2017 © 2009 RLM & Associates LLC.

Value Stream Mapping Purpose to:
Getting Started Value Stream Mapping Purpose to: Understand the role value stream mapping plays in continuous improvement Draw a current-state map Draw a future-state map Develop an implementation plan Introductions – Discuss Goals and Objectives of this session. 4/19/2017 © 2009 RLM & Associates LLC

Definition of a Value Stream
Getting Started Definition of a Value Stream All activities both value-added and non-value-added required to bring a product from a raw material state to a finished product in the hands of a customer. Bring a customer requirement from order to delivery or bring a design from concept to launch. A value stream map is a pencil and paper tool used in two stages. First, the team follows a product’s production path from beginning to end and draws a visual representation of every process in both the materials and information flows. This is the “current state.” Second, the team develops a “future state” map of how value should flow. 4/19/2017 © 2009 RLM & Associates LLC

Key Elements of a Value Stream
Specify what does and what does not create value from the customer’s perspective Identify all the steps necessary to order, design and produce across the entire value stream to highlight non-value-added wastes Make those activities that create value flow without interruption, detours, backflows waiting or scrap Only make what is pulled by the customer just-in-time Create a dynamic transparency of strategies, costs and information in the value stream Focus on value added activities that the customer is willing to pay for as the starting point. 4/19/2017 © 2009 RLM & Associates LLC

Key Elements of a Value Stream
Address competitive advantage at the value stream network level, moving past simple buyer/supplier partnership rhetoric Use value stream mapping for analysis, diagnosis and implementation of change Focus on key processes, not just separate business departments Address the entire supply chain over time rather than on short-term improvement of individual facilities Strive for perfection by continually removing successive layers of waste as they are uncovered Point #9 is the key – don’t buy off more than you can chew. Start small – have success – then take on bigger and bigger projects to drive out wastes. 4/19/2017 © 2009 RLM & Associates LLC

Value Stream Improvement
& Process Improvement Value Stream Customer MIXING BOTTLING PACKAGING Very basic example of a value stream. The value stream map is the series of activities that an organization performs such as order placement, design, production, shipment, and delivery of the product or service to the customer. A value stream starts from a supplier’s supplier and ends at the customer’s customer. The three main components of a value stream include: Flow of materials from receipt of supplier materials to delivery of finished goods and services to the customer. Examples include: a) raw materials shipped weekly from a supplier to the organization; b) movement of materials from raw material storage to production process through to a finished goods warehouse; and c) shipping of the finished goods to overseas customers via customs. The transportation of raw materials into finished goods or inputs into outputs. Examples include: a) production steps like cutting, shaping, forging, welding, polishing and assembly. The flow of information required to support the flow of material and transformation of goods and services. Examples include: a) purchase order to supplier, internal work order, shipping notice. Incoming Raw Materials Outgoing Finished Product 4/19/2017 © 2009 RLM & Associates LLC

Getting Started Value Stream Mapping Document a product’s production path from incoming raw materials to outgoing finished product. Draw a visual representation of every process in the material & information flows. Then draw a “future state” map of how the production path can be optimized to eliminate the greatest amount of waste. Value stream mapping applies lean thinking as follows: Produce the value stream map using appropriate symbols and icons. Analyze all inventory notes with a focus on inventory reduction. Inventory increase costs – examples include: a) storage space (utilities expenses); b) quality may deteriorate by rust or spoilage; c) design changes may be delayed as parts work there way through inventory; d) money invested on inventory could be spent more productively elsewhere. Analyze the value stream for unneeded steps. Try to eliminate all non-value-added processes. Determine how flow is driven. Production processes should be developed based on a “PULL” system. Extend the value stream to supplier’s suppliers and the customer’s customers. 4/19/2017 © 2009 RLM & Associates LLC

Using the Value Stream Mapping Tools
Product Family Understanding how production currently operates. This is the foundation for the future state. Current State Drawing Future State Drawing Designing a LEAN flow. Mapping Steps: – Start with understanding the product family Draw the current state map Determine what the process should look like in an ideal state Plan the conversion and implement Plan and Implementation 4/19/2017 © 2009 RLM & Associates LLC

Focus on One Product Family
Determine Product Families via: Similar downstream “assembly” steps and equipment. Process Steps & Equipment Depalletize Bottles Spice Weighing Batch Making Fill Packaging Shipping Products Light Raspberry Vinaigrette X X Light Ranch Tuscan House Italian Thousand Island Catalina Product families are defined as: A group of products that are related by common functionality. A set of items considered as a related group in forecasting, capacity planning or other functions. A Product Family is a subset of the Product Line which have certain attributes in common. A group of products having common classification criteria. Members normally have many common parts and assemblies. Product family engineering is a relatively new approach to the creation of new products. It focuses on the process of engineering new products in such a way that it is possible to reuse product components and apply variability with decreased costs and time. Product family engineering is all about reusing components and structures as much as possible. Several studies have proven that using a product family engineering approach for product development can have several benefits (Carnegie Mellon (SEI), 2003). Here is a list of some of them: Higher productivity Higher quality Faster time-to-market Lower labor needs 4/19/2017 © 2009 RLM & Associates LLC

Focus on One Product Family
Determine Product Families via: Similar downstream “assembly” steps and equipment. Process Steps & Equipment Spot Weld Robot Weld Flash Remove Paint Manual Assm. Fixtures Assm. Electronic Test Products LH Steering Bracket X RH Steering Bracket Instrument Panel Brace Seat Rail Bumper Brackets Product families are defined as: A group of products that are related by common functionality. A set of items considered as a related group in forecasting, capacity planning or other functions. A Product Family is a subset of the Product Line which have certain attributes in common. A group of products having common classification criteria. Members normally have many common parts and assemblies. Product family engineering is a relatively new approach to the creation of new products. It focuses on the process of engineering new products in such a way that it is possible to reuse product components and apply variability with decreased costs and time. Product family engineering is all about reusing components and structures as much as possible. Several studies have proven that using a product family engineering approach for product development can have several benefits (Carnegie Mellon (SEI), 2003). Here is a list of some of them: Higher productivity Higher quality Faster time-to-market Lower labor needs 4/19/2017 © 2009 RLM & Associates LLC

Value Stream Managers Customer The Value Stream Manager
Each Value Stream Needs a Value Stream Manager Customer Process 1 Process 2 Process 3 KAIZEN For product ownership assign responsibility for the future state mapping and implementing LEAN value streams to line managers with the capability to make change happen across functional and departmental boundaries. Who is the value stream manager? Who does the value stream manager report to? The Value Stream Manager 4/19/2017 © 2009 RLM & Associates LLC

Single Facility (door to door)
Value Stream Types of Value Streams Process Level Begin Here Single Facility (door to door) Multiple Facilities Basic value stream starts with the “door-to-door” model. Across Organizations 4/19/2017 © 2009 RLM & Associates LLC

Multiple Choice, what’s the best answer?
Quiz 1 Question #1 Session 1 Quiz Multiple Choice, what’s the best answer? Value stream mapping examines: The people, material, and information flow in a value stream. The material and information flows in a value stream. The detailed operation steps within cells. The steps that people take in designing and producing a product. Correct Answer is: A 4/19/2017 © 2009 RLM & Associates LLC

Quiz 1 Question #2 Session 1 Quiz Multiple Choice, what’s the best answer? 2. A product family matrix: Creates a listing of all your products and the steps that are taken to produce them. Determines which products are most important to your customers. Identifies and groups products into families based on whether they pass through similar steps in your downstream processes. Divides the mapping teams up into groups with individual mapping assignments. Correct Answer is: C 4/19/2017 © 2009 RLM & Associates LLC

Quiz 1 Question #3 Session 1 Quiz Multiple Choice, what’s the best answer? 3. A value stream manager: Is a staff person vested with the authority to make change in the value stream. Is a lead hand with the responsibility for understanding a product family’s value stream and improving it. Is responsible for the day-to-day operation of the processes in the value stream plant. Is a line person reporting to the senior person on site, with the lead responsibility for understanding a product family’s value stream and improving it. Correct Answer is: C 4/19/2017 © 2009 RLM & Associates LLC

Quiz 1 Question #4 Session 1 Quiz Multiple Choice, what’s the best answer? 4. The starting point for developing a value stream map for a product family is: Corporate wide. Door-to-door in an individual facility. Across multiple facilities. At the process level. Correct Answer is: B 4/19/2017 © 2009 RLM & Associates LLC

Value Stream Mapping Tools
4/19/2017 © 2009 RLM & Associates LLC

Process Activity Mapping
VSM Tools Process Activity Mapping The study of the flow of processes The identification of wastes Can the process be rearranged into a more efficient sequence A consideration of a better flow pattern involving different flow layout or transportation routing A determination of whether each activity is really necessary – what would happen if it was removed? A major focus area for this class. Day two will be devoted to VSM and process mapping. This is where Lean and Six Sigma projects begin. 4/19/2017 © 2009 RLM & Associates LLC

Quality Filter Mapping
VSM Tools Quality Filter Mapping Identify where quality problems occur in the supply chain Focuses on: Production defects Service defects Scrap defects Not discussed further in this course. Will be applied in the Six Sigma Black Belt course. 4/19/2017 © 2009 RLM & Associates LLC

Decision Point Analysis
VSM Tools Decision Point Analysis Where in the supply chain are the key decision points Are these decision points aligned with the push- pull philosophy Develop what if scenarios to help develop future state maps This is a Senior Management tool – not discussed further. 4/19/2017 © 2009 RLM & Associates LLC

Value Stream Mapping Symbols
VSM Symbols Value Stream Mapping Symbols 4/19/2017 © 2009 RLM & Associates LLC

Plan and Implementation
Current State Current State Drawing Product Family Current State Drawing Future State Drawing Plan and Implementation Determining how production currently operates. Material and Information flows Draw using VSM icons Start with the “door to door” flow Walk the production lines and get actuals No standard times Draw by hand, with pencil Foundation for the Future Site Once you identify what to map you must set out to create a current state value stream map. As the name implies we are interested in how things look today. We are not interested in how things “should” look or were “designed” to look. No, we want to draw reality onto a piece of paper. The piece of paper is a key point. While I am a big advocate of using software to draw our final maps up, I cringe when I see people attempting to go straight to the computer. A stopwatch, oversized piece of paper, pencil, and good eraser are all you need at this point. 4/19/2017 © 2009 RLM & Associates LLC

TAKT Time Work Time per Shift TAKT Time =
Match assembly pace to pace of orders. Rate for assembling based on orders rate. Work Time per Shift TAKT Time = Customer Requirement per Shift Cycle time is the total time from the beginning to the end of your process, as defined by you and your customer. Cycle time includes process time, during which a unit is acted upon to bring it closer to an output, and delay time, during which a unit of work is spent waiting to take the next action. In a nutshell - Cycle Time is the total elapsed time to move a unit of work from the beginning to the end of a physical process. (Note, Cycle Time is not the same as Lead Time). What is Takt Time? "Takt" is the German word for the baton that an orchestra conductor uses to regulate the speed, beat or timing at which musicians play. So Takt Time is "Beat Time", "Rate Time" or "Heart Beat". Lean Production uses Takt Time as the rate that a completed product needs to be finished in order to meet customer demand. If you have a Takt Time of two minutes that means every two minutes a complete product, assembly or machine is produced off the line. Every two hours, two days or two weeks, whatever your sell rate is your Takt Time. How is Takt Time established? The customers buying rate establishes Takt Time. It's the rate at which the customer buys your product. So this means that over the course of a day, week, month, or year the customers you sell to are buying at a rate of one every two minutes. What happens if the customers buy fewer products? You can't predict when and how much a customer will buy. But if customer demand falls for an extended period of time then the Takt time should change. This means that if your producing at a Takt Time of one every two minutes and the customers demand fall to a rate of one every 3 minutes. Then your takt Time should increase or become more. Your Takt Time should increase to 3 minutes and production staffing should be set accordingly. What happens if the customers buy more? Then your Takt Time will decrease. You would lower your Takt Time to make more products in a shorter amount of time. This means if your customer buy more than your 2 minute Takt Time. Then you would lower your Takt Time to match the sell rate and increase staffing accordingly. Producing to Takt Time with optimal staffing is where you want to be. Where you have the right amount of people to produce your product within your established Takt Time. The Operators cycle times are loaded to Takt Time. Imbalances in Takt Time, especially in older facilities, drive security inventories and buffer space. If you manage such a facility, one step on "the Lean Journey" is to monitor Summed Takt in order to move toward preventive (rather than reactive) quality measures. That is, if you can detect, contain, and correct a problem within Takt + Buffer Time (Summed Takt) then you have taken a step toward Error Proofing. This is no substitute for continuously improving a balanced Takt Time (thereby eliminating security inventory / buffering) but, rather, it is a first step which you can institute quickly and economically and which will help the people begin to "see" Lean. 27,600 sec 460 pieces = 60 seconds 4/19/2017 © 2009 RLM & Associates LLC

“VSM Example” Data Set Stamping
VSM Inc. produces several aftermarket components for motorcycle repair and replacement companies. This example investigates one Kawasaki product family: progressive suspension forks in two types: model #VN1500 and VN1600. These components are sent to two distributors (1) supplies requests East of the Mississippi River (customer A) and (2) supplies requests West of the Mississippi River (customer B). Customer A & B receive a 50/50 split of each component. Customer A & B Requirements: 1980 pieces per month = 1200 per month of Type “VN1500” and 780 per month of Type “VN1600” Customer plant operates on two shifts Palletized returnable tray packaging with 5 forks in a tray and up to 10 trays on a pallet. - The customer orders in multiples of trays. One daily shipment to each distribution center (Customer A & B) by truck. Work Time: 22 days in a month - Two shift operation in all production departments Eight (8) hours every shift, with overtime if necessary Two 15-minute breaks during each shift - Manual processes stop during breaks - Unpaid lunch Case study data and information. 4/19/2017 © 2009 RLM & Associates LLC

“VSM Example” Data Set (continued)
Stamping “VSM Example” Data Set (continued) Production Processes: VSM Inc. process for this product family involves milling a metal part followed by welding, painting and subsequent assembly and inspection. The components are then staged and shipped to Customers A & B on a daily basis. Switching between Type ”VN1500 and Type “VN1600” suspension forks requires a 60 minute changeover in milling and a 10-minute fixture change in welding and a 40 minute changeover in painting. Raw materials are supplied by Urbana Metal Co. - Deliveries are made to VSM Inc. on Wednesday. One daily shipment to each customer distribution center by truck. VSM Inc. Production Control Department: Receives East and West Distributor’s 60/30/10-day forecasts and enters into MRP Issues VSM Inc. 6-week forecast to Urbana Metal Co. via MRP Secures raw materials by weekly FAXed order to Urbana Metal Co. Receives daily order from East (Customer A) and West (Customer B) Distributor’s Generates MRP-based weekly departmental requirements based upon customer A & B’s orders. - WIP inventory levels, F/G inventory levels, and scrap and downtime Issues weekly build schedule to Milling, Welding, Painting, & Assembly/Inspection Issues daily shipping schedule to Shipping Department. Case study data and information. 4/19/2017 © 2009 RLM & Associates LLC

Stamping “VSM Example” Data Set (continued) Process Information: All processes occur in the following order - each piece goes through all processes. Milling (The mill is semi-automated and requires two operators) Cycle Time: 10 minutes (6 pieces per hour) Changeover time: 1 hour (good piece to good piece) Machine reliability: 90% Observed Inventory: 10 days raw materials before milling 160 pieces of type “VN1500” finished millings 100 pieces of Type “VN1600” finished millings 2) Welding Workstation (dedicated to this product family) Manual process with one operator Cycle time: 150 seconds Changeover time: 10 minutes (fixture change) Reliability: 100% Observed Inventory: 120 pieces of Type “VN1500” 75 pieces of Type “VN1600” Case study data and information. 4/19/2017 © 2009 RLM & Associates LLC

Stamping “VSM Example” Data Set (continued) 3) Painting Workstation (dedicated to this product family) Manual process with one operator Cycle Time: 300 seconds Changeover time: 40 minutes (fixture change) Reliability: 95% Observed Inventory: 100 pieces of Type “VN1500” 60 pieces of Type “VN1600” 4)Assembly & Inspection Workstation (dedicated to this product family) Manual process with two operators Cycle time: 165 seconds Changeover time: none Reliability: 100% Observed Inventory: 240 pieces of Type “VN1500” 150 pieces of Type “VN1600” Case study data and information. 5) Shipping Department Removes parts from finished goods warehouse and stages them for truck shipment to customer A & B. 4/19/2017 © 2009 RLM & Associates LLC

Team Tips Current State Mapping 1. Mapping the Current State:
Review the basic processing steps and calculate assembly takt time. Everyone draw while on the shop floor. Be sure to draw both the material & information flows. Always introduce yourself to operators and tell them what you are doing: “Drawing the total factory flow as part of a training session.” Show them your drawings. Select a scribe and combine drawings into one current state map. Calculate total lead time versus processing time. Draw the current state on one of the classroom flip charts. Current state mapping team tips. 4/19/2017 © 2009 RLM & Associates LLC

Team Tips Current State Mapping 1. Presenting Your Current State Map:
All team members go up front with presenter. State the product family and takt. Present from your flip chart. (Less than 5 minutes.) Start with the customer and information flow into the facility. State the lead time vs. processing time. What are the problems you see? Where did you find push and overproduction? Share any future state thoughts you have so far. Current state mapping team tips. 4/19/2017 © 2009 RLM & Associates LLC

Quiz 2 Question #1 Session 2 Quiz Multiple Choice, what’s the best answer? How should a Six Sigma project team draw a value stream map? In pencil on the work floor, mapping the entire value stream yourself. In the office with a good drawing software package. In pencil, by dividing the value stream into segments, and assigning each segment to a different mapping team. In pencil, on the work floor using standard times obtained from engineering. Correct Answer is: C 4/19/2017 © 2009 RLM & Associates LLC

Quiz 2 Question #2 Session 2 Quiz Multiple Choice, what’s the best answer? 2. What is lead time? The total time of those work elements that actually transform the product in a way that the customer is willing to pay for. The time it takes one piece to move all the way through a process or a value stream from start to finish. The time it takes an operator to go through all of his or her work elements before repeating them. The total time it takes inventory to be depleted from a finished goods warehouse. Correct Answer is: B 4/19/2017 © 2009 RLM & Associates LLC

Quiz 2 Question #3 Session 2 Quiz Multiple Choice, what’s the best answer? What information is entered into the data boxes on a value stream map? Engineered standards. The average measurement for a fiscal year. The measurement on an ideal day. What you observe as you draw your map. Correct Answer is: D 4/19/2017 © 2009 RLM & Associates LLC

Quiz 2 Question #4 Session 2 Quiz Multiple Choice, what’s the best answer? Where does the project team begin when developing a value stream map? Receiving. Supplier. Customer. End of the line. Correct Answer is: C 4/19/2017 © 2009 RLM & Associates LLC

Future State Value Stream

Plan and Implementation
Future State Future State Drawing Designing a LEAN Flow The power behind Value Stream Mapping is you always need a future state! Keep Updating. Use pencil! Material and Information flows Basis for your Work Plan – like a “blueprint” Begin by drawing on Current State 1st iteration assumes existing steps & equipment Can move equipment, combine, take out conveyors, make minor purchases etc. Product Family Current State Drawing Future State Drawing Plan and Implementation What is the future state? Now that we have a better understanding of the current state of affairs, which is typically one eye opening experience by the way, we are ready to draw a picture of how we would like things to look in the future. Typically, as an example, we aim to make things flow and reduce the amount of inventory or waiting in between steps. It’s at this point when people get to dream a little. You know, create the ideal working place. But, there is a Problem! 4/19/2017 © 2009 RLM & Associates LLC

Future State Map Future State Discuss the symbols and notations

Mass Production Shipping Warehouse Storage Welding Storage Repair
This is not good! Material Large Lots, Pushed Ahead, “Island” Mentality Receiving Warehouse Shipping Warehouse Storage Welding Storage Repair Stamping Assembly What is wrong with this Value Stream? It is a push system – basically mass production. No single piece flow. Ship Value-Added time: Minutes Time in Plant: Weeks Order Cash Goal: MORE - FASTER – and BETTER 4/19/2017 © 2009 RLM & Associates LLC

Waste The elements of production that add no value to the product
Waste only adds cost and time What you need to remember about Waste Waste is a symptom rather than a root cause of the problem Waste points to problems within the system (at both process and value stream levels) Address the causes of waste Think back to our discussions with regards to the types of WASTES. Where is the waste in the mass production model or existing current state model. 4/19/2017 © 2009 RLM & Associates LLC

Overproduction Making more than is required by the next process
Making earlier than is required by the next process Making faster than is required by the next process 4/19/2017 © 2009 RLM & Associates LLC

Individual Efficiency vs. System Efficiency
How fast should we produce? What are system efficiencies? Discuss theory of constraints model – use water pipes as examples 4/19/2017 © 2009 RLM & Associates LLC

Build to Supermarket or to Shipping?
Finished Goods Build to Supermarket or to Shipping? To Supermarket To Shipping Customer Customer Explain the two methods for holding goods: Shipping – The movement of materials from a manufacturing facility to a customer. Supermarket - represents a stock point of inventory that supplies multiple downstream channels Assembly Shipping Assembly Shipping Supermarket 4/19/2017 © 2009 RLM & Associates LLC

Batch and Push Processing Lead Time: 30++ minutes for total order
Continuous Flow Batch and Push Processing Process A Process B Process C 10 minutes 10 minutes 10 minutes Lead Time: 30++ minutes for total order Continuous Flow A B C 4/19/2017 © 2009 RLM & Associates LLC

Bottlenecks in the Flow
Problem Points Bottlenecks in the Flow Determine Exactly Where One-Piece Flow Ends Customer Stamping Welding Assembly Where should continuous flow stop? A bottleneck in project management is one process in a chain of processes, such that its limited capacity reduces the capacity of the whole chain. The component is sometimes called a bottleneck point. A stage in a process which limits performance. Note: Generally this is interpreted as a facility, function, department etc. A condition that occurs when product demand exceeds production capacity. A resource that constrains the flow of production, inventory movement or data in a system. In a free-flowing system, the first place to restrict throughput when demand is raised. How can we control production between flows? 4/19/2017 © 2009 RLM & Associates LLC

Supermarket Pull System
Customer process goes to supermarket - withdraws what it needs when it needs it. Supplying process produces to replenish what was withdrawn. “Production” KANBAN “Withdrawal” KANBAN Supplying Process Customer Process New Product Withdrawn Product Pull systems are an integral part of lean manufacturing yet they are frequently misunderstood and considered hard to implement. Specifically, one area of repeated struggle I find is the proper connection of assembly processes with upstream batch processes such as stamping, injection molding, paint, or a machining operation, for example. There are three basic types of pull system; replenishment pull, sequential pull, and mixed pull system with elements of the previous two combined. In all three cases the important technical elements for systems to succeed are: 1. Flowing product in small batches (approaching one piece flow where possible) 2. Pacing the processes to takt time (to stop overproduction) 3. Signaling replenishment via a kanban signal 4. Leveling of product mix and quantity over time In order to connect a batch processes to assembly, a replenishment pull system used in conjunction with a specific type of kanban known as signal kanban is used. There are at least three different types of signal kanban and the proper usage depends upon the nature of your process and manufacturing situation. The three types of signal kanban are: 1. Pattern production 2. Lot making with a batch board 3. Triangle kanban Pattern production establishes a fixed order of production and some basic rules around lot sizes, which can vary somewhat as needed. However, the fundamental pattern or order of production is always maintained. This creates a fixed sequence (i.e. pattern) of production that is continually repeated. Often this style of production is needed in heat treat processes, paint, or other processes with specific changeover sequences. While the sequence of product may be fixed in these cases, the actual amount produced each time in the cycle is unfixed and varies according to customer needs. This is known as a fixed order/unfixed quantity replenishment cycle. Supermarket Purpose: A way to control production between flows. Controls production at supplying process without trying to schedule 4/19/2017 © 2009 RLM & Associates LLC

Minimize Supermarkets & Scheduling
Schedule Minimize Supermarkets & Scheduling Process 3 Process 4 Process 1 Process 2 Customer FLOW Supermarket Process 1 Process 2 Process 3 Process 4 Customer FIFO FIFO FLOW Supermarket 4/19/2017 © 2009 RLM & Associates LLC

Mixed Production at the Pacemaker
(Assembly) No Good Assembly Schedule Monday………..600 A Tuesday……….150 A, 450 B Wednesday….300 B, 300 C Thursday……..600 C Friday…………..300 C, 300 A Better: Every Part Every Day Monday: 210 A, 150 B, 240 C A question that often arises is, "What should we focus on as we analyze and redesign our value streams?" There are a host of factors that affect lead time but clearly the pacemaker process — which is often a final assembly process — is one that needs more of our attention. Many manufacturers don't recognize the pacemaker process' important role in attaining a short lead time through the value stream. Today's in-plant value streams can often be divided into two segments: pacemaker and fabrication. Definitions: The upstream fabrication processes respond to requirements from internal customers, and often utilize general-purpose or shared equipment to produce a variety of components for different downstream processes. In contrast, the downstream portion of a value stream is often dedicated to a particular product family and responds to external customers. This segment typically starts at the value-adding process that is the schedule and leveling point in a lean value stream, and involves processing steps that give the product its final form for the customer. This downstream segment of the value stream is called the pacemaker. The pacemaker process influences production lead time because it is the rhythm-setting point, or "heartbeat," for the value stream. If the pacemaker makes large batches of one product type, or if it has significant fluctuations in production volume, then the upstream fabrication processes will have to hold more inventory to be able to meet the peaks of the pacemaker's jerky component requirements. In addition, due to the "bullwhip" effect - any mix or volume surges at the pacemaker get amplified as you move up the value stream and into the supply chain. The effects of pacemaker fluctuations get worse the further upstream you go! Another problem: when the pacemaker makes large batches of one product type, then your external customers who want other types have to wait, or you will have to try to hold even more finished goods inventory of items that you think customers will want. All of this means that the efficiency of your value stream depends partly on how small you can keep the volume fluctuations and batches at the pacemaker (assembly) process. Many plants are trying to link their chain of processes by establishing supermarket pull systems between processes. However, if you run significant volume fluctuations and/or large batches in assembly, then the inventory in those supermarkets will be too high. Result: with or without pull systems the lead time through the value stream will still be long. Leveled and mixed production at the pacemaker — a steady heartbeat — helps make shorter production lead time possible. Think of the pacemaker process as the conductor of an orchestra. To achieve lean value streams, managers, production control, maintenance, supervisors and engineers will need to pay closer attention to how you are operating your pacemakers. Important: Near-zero changeover time and frequent changeovers at the Pacemaker Process! Even Better: Every Part Every Ship Window Monday 75B 105A 120C B 105A 120C 4/19/2017 © 2009 RLM & Associates LLC

? ? ? ? ? Paced Withdrawal at the Pacemaker
What amount of work do you schedule and take away at the pacemaker? The correct amount is equal to your management time frame. (How often do you verify performance based on customer demand?) Are you constantly recalculating/updating your takt time? 1 Week ? 1 Day Management time frames - ? 1 Shift ? 1 Hour ? 12 ? ? 1 Takt 6 4/19/2017 © 2009 RLM & Associates LLC

Quiz 3 Question #1 Session 3 Quiz Multiple Choice, what’s the best answer? What is Takt time? The customer demand rate. The rate at which the Sales departments plan to sell products to customers based on promotions. The fastest rate at which your individual operations can produce the products. The average amount of product bought by your customers in a week. Correct Answer is: A 4/19/2017 © 2009 RLM & Associates LLC

Quiz 3 Question #2 Session 3 Quiz Multiple Choice, what’s the best answer? 2. Where are supermarkets used? Processes are close together but have different cycle times. A customer requires specialized products from a finished goods warehouse. Continuous flow is not possible due to distance, unreliability, or where processes serve multiple product families. Pull can be implemented throughout the door-to-door value stream. Correct Answer is: C 4/19/2017 © 2009 RLM & Associates LLC

Quiz 3 Question #3 Session 3 Quiz Multiple Choice, what’s the best answer? 3. The pacemaker process: Ensures that all processes downstream are controlled by supermarket pull systems. Receives its products from supermarkets controlled by MRP systems. Is always a bottleneck, requiring constant supervision and staff adjustment. Responds to the external customer, and is usually the point at which production is scheduled in the door-to-door value stream. Correct Answer is: D 4/19/2017 © 2009 RLM & Associates LLC

Quiz 3 Question #4 Session 3 Quiz Multiple Choice, what’s the best answer? 4. _____________ is usually the most significant source of waste in a value stream. Customer change of mind. Human error. Out-of-spec parts. Overproduction. Correct Answer is: D 4/19/2017 © 2009 RLM & Associates LLC

Future State Questions
What is the takt time? Will we build to shipping or to a supermarket? Where can we use continuous flow? Where do we have to use supermarket pull systems? At what single point in the production chain do we trigger production? How do we level the production mix at the pacemaker process? What increment of work will we release and take away at the pacemaker process? (leveling the volume) SUPPORTING IMPROVEMENTS What process improvements will be necessary? (e.g. uptime, changeover, training) 4/19/2017 © 2009 RLM & Associates LLC

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