Transcript Lean Manufacturing Workshop Series Introduction to Lean

"Make Green, Go Green, by Going Lean”
Presented By Paul V. Burnett
October 2007
RSM McGladrey, Inc. is a member firm of RSM International – an affiliation of separate and independent legal entities.
Paul V. Burnett, BSME, MBA
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IBM
John Deere
Ford Motor Company
Detroit Diesel Corporation
Applied Materials
Sanmina-SCI
RSM McGladrey
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How to Go Green?
How to Go Lean?
Why?
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Doing nothing is not an option!
Governor Arnold Schwarzenegger signed into law emission
reduction targets for California:
• By 2010, reduce GHG emissions to 2000 levels,
• By 2020, reduce the GHG emissions to 1990 levels,
• By 2050, reduce GHG emissions to 80 percent below 1990
levels
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Green and Lean
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15-30% of a manufacturing company’s monthly energy bill creates
greenhouse gases.
The energy management within a facility - benchmark competitors.
Lean methodologies can be used to reduce waste in the
consumption of energy within a manufacturing facility.
The ultimate goal - eliminate equipment not needed in the process.
If elimination is not possible, minimize the use
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plot energy consumption to predict maintenance schedules and replacement
cycles.
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Analysis of Electric Industry CO2 Impacts
• The electric industry cannot provide substantial reductions
in CO2 emissions in the near future to meet goals
• Limited potential to switch to “greener energy” near-term
• CO2 reduction must come from reducing demand
– supported by new energy efficient technologies
– conservation programs
• A market-based collaborative systematic approach to
demand reduction is a critical success factor (profit
potential)
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The Economic Case For Change
• Asset performance management can reduce energy
consumption by 6% to 11%.
• DOE has established a minimum 10% energy reduction
guideline as attainable through the application of proper
maintenance and technology solutions.
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G.A.S. Index: Global Asset Sustainability Index
G.A.S. Index = Availability * Performance * Quality *
Energy Efficiency
• Availability = All downtime / Scheduled time
• Performance = Actual output for scheduled time / Design
output for scheduled time
• Quality = Total production minus defects or rework / Total
production
• Energy Efficiency = Design energy consumption/Actual
energy consumption
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Example: Motor Efficiency
90,000 Watts
100 HP
76,000 Watts
1HP = .746 kWatts
15,400 Watts (17.4%)
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Motor Efficiency Savings
• Energy Savings = 90kW x 8,000 hrs./year x (1-(.828/.94)) =
87,336 kWh/yr.
• At an average cost of 11 cents per kWh, the estimated
savings would be $9,607 per year.
• Motor operating cost:
– (100 HP x .746 kW/HP x 8,000 hrs. x $.11/KWh ) / .94 efficiency =
$69,838 per yr.
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Repair v. Buy
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Break even analyses must be based on the increased
cost of purchasing a new, more energy efficient
equipment versus the energy consumption reduction.
The cost energy today ranges from 10-13 cents per
kilowatt-hour.
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Lean Definition
• “A philosophy of production that emphasizes the
minimization of the amount of all the resources
(including time) used in the various activities of
the enterprise.”
- APICS Dictionary, 10th ed.
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Lean Enterprise
• “An enterprise with a focus on waste elimination
and the customer’s needs in all parts of its
operations, manufacturing and administration.
Emphasis is given to lean structures and
processes, flexibility of response and methods
and techniques to continually seize new
opportunities as they arise.”
- APICS Lean SIG
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Early Lean Processes
Mass Production
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Early 1900’s
Ford Motor Company was a pioneer
Assembly line production
High volume production
Limited number of products
Significant cost reductions
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Today
• More than 96% of all U.S. companies have less than 250 employees
• Global competition / low cost labor
• Demands by customers:
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Higher quality
Innovation
Mass customization
Flexibility
Lower Costs
• Limited resources
Source: U.S. Bureau of Census, 2004
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What is Lean?
• It is NOT:
• Collection of techniques or a methodology
• Reduced staffing or low inventories
• It IS:
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A philosophy of manufacturing
Totally different way of thinking
A different value system
Seeks to eliminate waste (non-value added activities to the customer)
Emphasis on flow manufacturing
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What is Lean?
Lean Production
Total Quality Management (TQM)
Six Sigma
Cellular Manufacturing
Business Process Improvement (BPI)
Just in Time
Theory of Constraints
Zero Defects
SPC
TQC
Kanban
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Lean Characteristics
• Focus is on the improvement of resource utilization:
― Equipment setup time reduced
― Scheduled machine maintenance
― Orderly, clean workplace
― Pull production being used
― JIT inventory control
― Factory layout in work cell arrangement by products
― Active error elimination
― Improved quality, etc.
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The Importance of Waste Elimination
• Lean deals with the elimination or reduction of
many types of non-value-added activities, often
referred to as waste
― The driving force for waste elimination is improved
value in the products and services customers buy
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Seven Popular Wastes
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Overproduction
Waiting
Excessive transportation
Inappropriate processing (the hidden factory)
Unnecessary inventories
Unnecessary motion
Defects
- Taiichi Ohno
Toyota Production System
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The Nature of Wastes
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Overproduction
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Waiting
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Target and achievement unclear
Processes not statistically capable
Operators waiting
Operators slower than production line
Excessive Transportation
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Widely spaced equipment waiting
Forklifts not available when needed
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The Nature of Wastes (continued)
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Inappropriate Processing
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Variability in operator’s performance
Processes not statistically capable
Inventory
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Large safety stocks
Variable procurement lead times
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The Nature of Wastes (continued)
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Motion
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Double handling
Non-standard layouts
Equipment widely spaced from each other
Defects
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Low material yields
Excessive process variability
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Correcting Wastes
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Overproduction
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Eliminate by reducing setup times.
Synchronizing quantities and timing between processes.
Make only what is needed now.
Waiting
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Eliminate through synchronizing work flow.
Balancing uneven loads with flexible workers and equipment.
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Correcting Wastes (continued)
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Excessive Transportation
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Establish layouts and locations to make transport and handling
unnecessary, if possible.
Inappropriate Processing
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Why should this item be made?
Why is each process necessary?
Are any processes being performed that are not part of the work
flow?
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Correcting Wastes (continued)
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Inventory
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Reduce by shortening setup times.
Improving work skills.
Smoothing fluctuations in demand for the product.
Reducing all the other wastes reduces the waste in stocks.
Motion
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Study motion for economy and consistency.
Economy improves productivity, and consistency improves
quality.
Improve the motions, then mechanize or automate. Otherwise,
there is a danger of automating waste.
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Correcting Wastes (continued)
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Defects
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Develop the production process to prevent defects.
Eliminate the need for inspection. At each process, produce no
defects.
Design processes to be failsafe (Poka yoke).
Quality processes yields quality products – automatically.
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Can you think of other actions to eliminate
waste in your company?
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Leadership Function
• Initiate needed change by identifying a vision
• Aligning employees to that vision
• Motivating to achieve that vision
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Leadership –
Lean Change Infrastructure
Champion
CEO
Plant Management/President
Vice President
Vision &
Lean Strategy
Value –
No Waste –
Flow –
Pull –
Standard Work –
JIT –
Project &
Training Plans
___________________
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Sponsors:
Manufacturing
Engineering
Quality
Lean Office
Facilitator
Team
Team
Facilitator
Team
Team
Facilitator
Team
Team
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Transparent Workplace
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Transparent Workplace
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Define Processes
Value-Added Activities
A Value-Added Step
Value versus Non-Value-Added
Value-Stream Mapping
Typical Process Flow Analysis
Visual Order – The Five S’s
Visual Control
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Transparent Workplace –
Processes Definition
• A particular method of doing something which involves a
number of steps, activities, or operations
• Processes are found in manufacturing & service industries
• Example:
Manufacturing
Office
Grind
Turn
Mill
Drill
Type
Contract
Obtain
Signature
Type
Envelope
Mail
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Process Map
Total Time: 10 Days
Value-Added Time: 6 minutes
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Production
Control
Weekly
Orders
Supplier
Weekly
Orders
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Customer
Weekly Schedule
Daily
Daily
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Stamping
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Weld
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1 Day
1 Day
50 sec
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Assembly
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2 Days
40 sec
Paint
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2 Days
90 sec
Shipping
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3 Days
120 sec
Staging
1 Day
60 sec
Process Time Line
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Transparent Workplace –
Value-Stream Mapping Process
• Map customer requirements (orders)
• Map order information flows
• Map physical product/material flows
• Map plant/office information flows
• Add a process time line
• Summarize current state
 Ask questions at each step to determine waste or
non-value-added areas
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Transparent Workplace –
Summarize Current State
• The % of value-creating time
• The number of units of inventory required to support a
production unit
• Total travel distance versus value-creating distance
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Transparent Workplace –
What Are Value-Added Activities?
• Add value to products & services that customers are
willing to pay for
– Improvements that change a product’s or service’s form, fit or
function
• Other activities use resources but add no value
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Some non-value-added activities may be necessary
Based on current knowledge or technology
Long term goal - Eliminate
Remaining non-value-added activities should be eliminated
now!
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Transparent Workplace –
A Value-Added Step
• A process that physically changes the work passing
through it that makes it more valuable to the customer
• A step requested by the customer - they are willing to pay
for it
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Transparent Workplace –
Value versus Non-Value-Added
Value-Added Activities
Non-Value-Added Activities
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Entering order
Ordering materials, supplies
Preparing drawings
Assembling
Shipping to customers
Processing customer deposits
Examining patients
Filing insurance claims
Dispensing event tickets
Fueling airplane
Waiting/sorting
Moving
Kitting/staging
Counting
Inspecting
Checking
Recording
Obtaining approvals
Testing
Reviewing
Copying
Filing
Revising/reworking
Tracking work
- Charlene B. Adair & Bruce A. Murray,
Breakthrough Process Redesign
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Value Stream Costing
Production
Labor
Production
Materials
Production
Support
Machines &
equipment
Value Stream
Operational
Support
Facilities &
Maintenance
All other
Value
Stream
Costs
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Traditional Accounting and Lean Controls
System/Issue
Traditional Accounting
Lean
Production Inventory Control
• Work Order
• Production tracking
• Inventory Cycle Count
• Kanban
• Visual signals
• Five S
Procurement
• Purchase order approval
• Three way match in AP
• Key Suppliers
• Master POs
• Supplier Certification
Quality of Products
• Detailed inspection
• Rework or scrap
• Standardized work
• Single-piece flow
Production Cost Control
• Standard cost
• Variance Reports
• Analysis of Variance
• Cell/VS CSFs and measures
• Analysis of Root Cause
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Costs Outside the Value Stream
• Identify tasks not related to the Value Stream
– Exp. - ISO 9000
• These costs are not allocated to the Value Stream
• They are treated as sustaining costs of the business
– Budgeted
– Controlled
• No need for full absorption costing
• Value Stream costing proves relevant, accurate cost info
about the Value Stream
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Transparent Workplace –
Value-Stream Mapping (VSM)
• Observe & record the flows of orders, materials, goods and
information for a product family
– Product family: A group of product variants passing through
similar processing steps that use common equipment
• Mapping identifies waste situations for improvements
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What are some value-added
& non-value-added activities
at your company?
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Transparent Workplace –
Visual Order – The Five S’s
• To eliminate waste, you must first find it
• Visual order makes waste evident and is a good starting
point for managing resources
• Toyota Production - Five S’s as the method for exposing
waste & poor utilization of resources
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Transparent Workplace –
Visual Order – The Five S’s
Sort
Set in order
Shine
Standardize
Sustain
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Transparent Workplace –
Lockheed & Boeing’s Six S’s
SORT
SUSTAIN
6S
STRAIGHTEN
SHINE
SAFETY
STANDARDIZE
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Transparent Workplace –
The Six S’s
• Sort: Classify tools, parts, instructions into necessary &
unnecessary
• Set in Order: Make it visible & easy to use; 3 Es = easy
to see, easy to get & easy to return
• Shine: Conduct cleanup to identify abnormalities
• Standardize: Put a system in place to readily identify
abnormal conditions
• Safety: Identify & eliminate dangerous & hazardous
conditions
• Sustain: Make a habit of properly maintaining & following
standard practices
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Transparent Workplace –
Visual Control
• Awareness of what’s happening
– Manpower: Skill levels, performance, continuous training
– Machines: Develop Maintenance schedules and use them
– Materials: Demand Signals indicating shortages; shadow boards
for location of tools
– Methods: Standard Worksheets and Operating Procedures
– Measurements: Performance trends
– Display schedule
– Quality targets
– Reductions in setup & lead times
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Pull versus Push Production Strategy
Lean Principles
Value
Value
Stream
Flow
Pull
Perfection
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Pull
• No one upstream should produce any good or service
until the customer downstream asks for it
• Kanban
Lean Principles
Value
Value
Stream
Flow
Pull
Perfection
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Push
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Build product to forecast
Excess inventory
Poor utilization & distribution of product
Filled distribution channels
50% of all books manufactured are shredded
Lean Principles
Value
Value
Stream
Flow
Pull
Perfection
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Pull
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Design
Schedule based on actual demand signals
Produce exactly what the customer wants
Flow takes place throughout the supply chain, not just
inside your production facility
Lean Principles
Value
Value
Stream
Flow
Pull
Perfection
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Pull
• Benefits
• High throughput
• Excellent protection against stock-outs
• Higher flexibility
• Less congestion
• Shorter lead times
• Higher customer service
Lean Principles
Value
Value
Stream
Flow
Pull
Perfection
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Perfection
• Begins with visualizing the “perfect” process
• Continuous process to remove waste by eliminating effort,
time, space and defects
Lean Principles
Value
Value
Stream
Flow
Pull
Perfection
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Final Thoughts – Lean and Green
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There is a social responsibility component to saving
energy and reducing the amount of CO2 emissions.
Green as a marketing tool.
Select an small area with high visibility and a manageable
number of variables for the first G.A.S. Assessment and
Lean project.
The journey is never-ending and definitely not easy
(especially at first) but the results are well worth the effort.
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QUESTIONS?
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Paul V. Burnett, BSME, MBA
RSM McGladrey, Inc.
Senior Consultant - Operations and Financial
221 3rd Ave SE, Suite 300
Cedar Rapids, IA 52401
319.298.5298
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