EngineeringManagement

MSE507Lean Manufacturing

"There is only one boss: the customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else." Samuel M Walton

Chapter 1Customer Value

Key Point

Value is defined by the customer

Whenever there is a product for a customer, there is a value stream.

The Challenge lies in seeing it…

Module Goals

Know• Your external customers• Your internal customers

Feel• Capable of talking to your customer

Do• Identify what your customers value• Measure the delivery of value to your customers

ResultsProfitable Sales

Knowing what your customers value enables you to…• …build loyalty - penetrate deeper, retain more longer• …win new accounts - keep them• …make transactions easier, faster• …add services, support - higher value• …develop new products, services - higher value• …enhance marketing programs• …help customers succeed

Delivery

Quality

Cost Control

Design

Functional Silos

Voice of The

Customer

Profitable Sales

Growth

Customer Satisfactio

n

What do Customers Value?

The technical performance or quality of a product is no longer the primary determinant of customer value.

Customers evaluate other "value factors“ such as:• Delivery• Total cost of ownership• Data and information• Value or solution bundles• Business expertise

What does your customer value? More importantly, what are you doing about it?

7 Types of Waste

7 Types of Waste

1. Overproduction - The primary waste• Making parts faster than is required

• Excess Inventory• Time wasted, that could be used to make product that is

required

2. Waiting• An operator waiting for a long machine cycle to end

3. Transportation• Moving parts and products does not add value - it just adds cost

7 Types of Waste

4. Unnecessary Processing• Booking work into a store and then having to book it back out

again to use.

5. Inventory• There is a cost to the Company for carry inventory• There is always the risk it can become obsolete• It covers up other inefficiencies

e.g. Long set-up times

7 Types of Waste

6. Unnecessary Motion• Any motion of a person that does not add value

• Operators / Setters looking for tooling

7. Correction• Reworking defective materials

Things to remember about waste• It is a symptom rather than a root cause of the problem• It points to problems within the system, at both process and value

stream levels• We need to find and address the causes of the waste

Basic Roadmap

Understand and DefineEntire Value Streams

Deploy Key Business Objectives- Measure and target (6 metrics)- Align and involve all employees

- Develop and motivate

Define, Measure, Analyze, ImproveIdentify root causes, prioritize, eliminate waste,

make things flow and pulled by customers

Control-Sustain Improvement

-Drive Towards Perfection

Identify Customer Value

Vision (Strategic Business Plan)

Continuous Improvement (DMAIC)

Cautions Never, ever assume that…

You already know what the customer wants. Marketing and sales people “know the customer”

• Unless they have a defined program of regularly asking the customer what they want.

Customer’s requirements are the same as always• They will change over time• We need to monitor and track

You understand why customers do what they do.• What drives them?• Ask customers directly; do not assume you know.

Quiz TimeDo you…

Have management commitment and involvement? Have a defined list of your customers? Ask your customers what they value? Ask your customers the importance of those values? Ask your customers how you perform? Map the flow of value to the customer? Measure your performance in delivering value? Know how your performance affects the company? Know your competitive advantage? Use this information to prioritize OpEx projects? Have a defined program for continuous improvement?

Basic Plan

Identify your customers Ask the customers what they value Map your value stream Measure the delivery of value Make continuous improvements

Identify Your Customers

External• Consumers• Distributors• OEMs

Internal• Next process• Shipping• Management• Inspection/audit

Other• Employees• Suppliers

Be Customer Focused

Make a list of all customers Put the list in order of priority to your process

• The most important customer is often the next process Post the list in the work area

• Be aware of all customers

Ask the CustomerAsk Yourself 3 Questions

1. What do you want to know?

2. Who do you want to know it from?

3. What are you going to do with the information?

If you cannot answer question 3, you should not bother asking questions 1 and 2.

Ask the CustomerGeneral Questions

What is most important to them? What would ‘make their day’?

• What would utterly delight them? What would differentiate you from the competition?

Use open-ended questions.

Ask the CustomerStandard Questions

How important to you is [OTD]? What do you mean by [OTD]? How do we perform on [OTD]? What do you do if we don’t perform? What impact does non-performance have on you?

Ask for each factor of interest to you. Use a scale of 1 (low) to 9 (high)

Ask the CustomerProcess

Openly state your purpose for asking questions Do more listening than talking Do not be defensive, take criticism graciously Probe for explanations; ask “why” five times Do not try to ‘sell’ the customer, just gather data

Ask the CustomerReport Findings – 2x2 Grid

Customer Ratings

We're Better ----- They're Better

Imp

ort

an

ce

to

Cu

sto

me

rsOTD Leadtime Quality Cost

Map Your Value Stream

Customer

Demand = 45 per day2 shifts

Stamping

342

CT=1sec

Co=1 hr.

Uptime=85%

S. Weld # 1

CT=3 min

Co=10 min.

Uptime=70%

I

I

II

Coils5 days

CT= 15 min

Co=0 min.

Uptime=100%

2 shifts

CT= 67 minCo= 23 min

FTY = 67%2 shifts

ShippingI

I81

202122

Assembly Test

90

1XDaily

90/60/30 dayForecasts

Order Entry

ProductionControl

MRP

6 WEEKForecast

Suppliers Weekly

Fax

WEEKLY SCHEDULELead Time - 34 Days

5 days

1 sec

7.6 days

3 min

1.8 days

15 min

2.7 days

67 min

4.5 days

4 min

2 days

Lead Time =23.6 days

1 shift1 shift

CT= 4 minCo=0

Uptime=100%2 shifts

Competitive Lead Time = 3 Days

Takt Time= 18.2 Minutes

Orders/day= 36

Queue = 1.5 Days

Touch Time = 89 min

Customer

Demand = 45 per day2 shifts

Stamping

342

CT=1sec

Co=1 hr.

Uptime=85%

S. Weld # 1

CT=3 min

Co=10 min.

Uptime=70%

I

I

II

Coils5 days

CT= 15 min

Co=0 min.

Uptime=100%

2 shifts

CT= 67 minCo= 23 min

FTY = 67%2 shifts

ShippingI

I81

202122

Assembly Test

90

1XDaily

90/60/30 dayForecasts

Order Entry

ProductionControl

MRP

6 WEEKForecast

Suppliers Weekly

Fax

WEEKLY SCHEDULELead Time - 34 Days

5 days

1 sec

7.6 days

3 min

1.8 days

15 min

2.7 days

67 min

4.5 days

4 min

2 days

Lead Time =23.6 days

1 shift1 shift

CT= 4 minCo=0

Uptime=100%2 shifts

Competitive Lead Time = 3 Days

Takt Time= 18.2 Minutes

Orders/day= 36

Queue = 1.5 Days

Touch Time = 89 min

Transducers Current State Map 2002-07-15

ShippingFinal InspectionTransducer FF

Shipmentprocess to Final

Laser(if needed)

Receiving(Central Insp if req'd)

Oracle

Carrier

Carrier

Customer

Order Entry Processthru contracts into

Oracle

Supplier

Shipperwith W/O

Work Order

TransducerTest

Installation ofconnector &

mount

ShipmentReport

Ship Date is close

Housingtorque

RotorAssy

Stores

Work Order Releases by Planner

PO Release by Buyer, Kanban, Min-MaxBins supplier filled

StatorAssy

Kit

1) Stator Winding2) Coating3) Weld exciter ring

Monthly Schedule Purchase Order by Planner

CTS: OTDCTQ: No handling damage Working Unit to customer spec

Measurements: SPC Data taken at:

?Transducer final test FTY Data taken at:

Transducer final test OTD OEM Returns

Measurements: Coils:

Dielectric Resistance

Rotor & Stators: Critical Dimensions Resistance at sub-

assembly level Epoxy coating coverage at

supplier level

Measurements: Quantity of kits assembled vs. the

number of correct kits

Measurements: Coils:

Stator teeth diameter Stator bearing diameter Stator bearing T.I.R. Rotor Bearing diameters Rotor bearing T.I.R. Rotor Teeth T.I.R. Alignment of Rotor and Stator

teethMeasurements: Laser: Within specification laser

identifications

RPM - 0-2000 <2PPMHz - 2Hz-300KHz <2 PPMOscilloscopeVoltage - 5m/div -20v/div, +/-3%Dielectric Tester and Megger, 60HzVDC 0-750 +/- 10% FSVAC RMS 0-750 +/- 10% FSmA, 0-10 +/-5% FSMOHOMS, 0-300 +/-5% FSResistance Ohmmeter, Ohms, 150-250 +/-1%FSD e fi n e

M e a s u r e

A n a l y z e

I m p r o v e

C o n t r o l

D e fi n e

M e a s u r e

A n a l y z e

I m p r o v e

C o n t r o l

C u r r e n t S ta te - F o u n d r y P r o c e s s

M a n M a n

/ M R P

P o u r in g

2

M o ld in g

2 3C o r e S e t t in g

S h a k e O u t

1I 1 2

B la s t S o r t

1 5G r in d in g

W a s h in g to nB u y e r

C T = 1 2 - 1 8 s e cC O = 0 h r

U T = 1 0 0 %

U T = 7 0 %C O = 5 m inC T = 4 5 s e c C T = 1 2 - 2 7 s e c

C O = 0 m inU T = 1 0 0 %

C T = 2 4 s e cC O = 0 h r

U T = 1 0 0 %

C T = 2 4 - 4 0 s e cC O = 2 0 m in

U T = 9 5 %

C T = 4 7 s e cC O = 1 .8 m in

U T = 1 0 0 %

C T = 9 5 s e cC O = 0 h r

U T = 1 0 0 %

1 5 s e c

P r o c e s s L e a d T im e = 1 7 d a y s , 2 1 h r s , 3 m in u t e s , 4 5 s e c .

P r o c e s s T im e = 3 m in s , 4 5 s e c .

M a c h i n e S h o p /S h i p p i n g

M a c h i n e S h o p /S h i p p i n g

K e yC T = C y c le T im eC O = C h a n g e o v e r T im eU T = U p T im e

T a k t T im e = 5 4 s e c .

M e lt in g

5C T = 1 2 s e c

C O = 0 h rU T = 9 5 %

E P E = 1 D a y

1In s p e c t & T a g

C T = 1 5 s e cC O = 0 h r

U T = 1 0 0 %

I I II

C u s to m e r S e r v ic e

F o u n d r y S c h e d u l e r

2 4 - 4 0 s e c 4 7 s e c 9 5 s e c1 2 s e c

S u p p l i e r sS u p p l i e r s

D a ily

Mon

thly

I2 7 0 01 5 0 0 - 1 0 02 2 0

344

9 H o u r s 4 5 s e c ( P a c e m a k e r )

3 D a y s

S h i f t = 2 S h i f t = 1S h i f t = 2S h i f t = 2

S h i f t = 2

S h i f t = 2S h i f t = 2

S h i f t = 2

4 H o u r s 6 H o u r s 2 H o u r s

H o t L is t

D a i ly S c h e d u le

O E M

V a lv e s

V a lv e s

O E M

B u y R e p o r t

C o r e s

R a w M a te r ia ls

R e l ie v e s I n v e n to r y

01 4 D a y s

14 D

ays

First Time Yield

0

50

100

150

200

250

300

350

400

APRIL MAY JUNE JULY AUG SEPT

Month

Qty

91%

92%

93%

94%

95%

96%

97%

98%

99%

100%

101%

Percent

Qty Tested

Qty Passed

% Passed

Measure the Delivery of Value

Hydro-Aire - 39-353 Cell Date

Production Schedule - Orders for March 20011. 39-353 4. 7. 10.

Plan Actual2. 5. 8. 11. 1

3. 6. 9. 12. Takt Time 32 mins

WorkStart Stop Min Plan Pcs Actual Plan Pcs Actual Variance

Total 7:05 13 13

09:15

9:15

9:00

11:25

Crew Size

Time Interval Cumulative Comments

6:45 9:00 2:15 4 4

4 Break

11:25 12:05 0

84

8 Lunch

10

13:2012:05

13:20 13:35

102

13

0

13:35 15:00 3

15:00 15:15 0

0:00

1:25

0:00 13 Clean up

Break

0:00

2:10

0:00

1:15

Make Continuous ImprovementON TIME DELIVERY - Los AngelesMonth Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Target 94.0% 94.2% 94.4% 94.6% 94.8% 94.9% 95.0% 95.1% 95.2% 95.3% 95.4% 95.5%Actual 94.1% 95.8% 93.0% 95.5% 95.5%

Definition

Pareto of CausesReason % effect

Late Supplier 31.3% Causation is the top 5 reasons for late items using the January data (1st level from 9:00 Team Meeting)Intercompany late 15.0%Cell over-capacity 18.8%Supplier Quality 6.3%Engineering Drawing/Design 6.3%Remaining % Unassigned 23.0%

Top 5 Action Items

Status OwnerOriginal Due

DateCurrent Due

Date

On track Thomas / Pravin / Gerhard

Problem Rod 4/30/2003 12/31/2003

Caution Vartan / Rod

7/1/2003

On track Albert 9/1/2003

On track Tony/Rod 7/1/2003

Quality issues are impacting but overall, there is still improvement

No work done due to softness of US sales.

Reviews are complete. Quality issues are hurting overall view of labor. Looking at June build rateDPM is rising due to excessive rejections of high quantity receipts. SQE was derailed by ATEX

Test for electronic PCR system was not completed. Will attempt trial in June

Engineering Drawings Review PCO for adequate response and Supplier Notification

ASV Cell Capacity Cell capacity, Headcount, and efficiency

Supplier Quality Overall improvement in MRR decrease and Supplier DPM increase

Supplier On time performance Improved response

SSPS product line transfer Quality and delivery issues of UDS-7 vs. PS-7

Action Action Description Status Description

The percentage of sales order line items that ship complete on or before the original customer promise date, for all line items shipped in the month at the Los Angeles location.

Click here to insert new row to add additional "Reasons"

Man Man

/ MRP

Pouring

2

Molding

2 3Core Setting

Shake Out

1

1 2Blast Sort

15Grinding

WashingtonBuyer

CT = 12-18 secCO = 0 hrUT = 100%

UT = 70%CO = 5 minCT =45 sec CT = 12-27 sec

CO = 0 minUT = 100%

CT = 24 secCO = 0 hrUT = 100%

CT = 24-40 secCO = 20 minUT = 95%

CT = 47 secCO = 1.8 minUT = 100%

CT = 45 secCO = 0 hrUT = 100%

15 sec

Process Lead Time = < 2 days 4 hrs, 3 minutes, 45 sec.

Process Time = 3 mins,

Machine Shop /Shipping

Machine Shop /Shipping

Takt Time = 54 sec.

Melting

5CT = 12 secCO = 0 hrUT = 95 %EPE= 1 Day

1Inspect &Tag

CT = 15 secCO = 0 hrUT = 100%

Customer Service

Foundry Scheduler

24-40 sec 47sec 45 sec12 sec

SuppliersSuppliers

I

344

9 Hours 45 sec (Pacemaker)

<8hrs

Shift = 2 Shift = 1Shift = 2Shift = 2

Shift = 2

Shift = 2Shift = 2

Shift = 2

4 Hours 6 Hours <2 hrs

Daily Schedule

OEMOEM

Buy Report

Cores

Raw Materials

Relieves Inventory

0

KeyCT=Cycle TimeCO=Changeover TimeUT= Up Time

I

1 Day

1 Day

Cores

System

Cell

Kaizen Activities

Valves

KanBan

Melt Deck Overtime

Down Time

The BOM will be the backbone of the

scheduling system and automate the core

ordering process

Class Exercise - Customer Interview

Pair up Scenario 1 (two minutes)

• Person A (customer) – is interested in a new car• Person B – find out what Person A values in a new car

Scenario 2 (two minutes)• Person B (customer) – is selecting a restaurant to eat at• Person A – find out what Person B values in a restaurant

Group discussion• Any surprises?• Any difficulties?

1

2

3

4

SPECIFY VALUE

IDENTIFY THE VALUE STREAM

FLOW

CONVERT PUSH TO PULL

Lean Manufacturing Cycle

Step 5 – CONTINUOUSLY IMPROVE• Getting value to flow faster exposes hidden muda in the value

stream. • The harder you pull, more obsticles to flow are revealed so they can

be removed.

Integrating the Lean Enterprise

Homework Assignment

1. What is considered as value in the eyes of customers. Why?

2. What are the seven types of waste? Give examples for each one.

Read Lean Thinking Chapter 2 The Value Stream

• Pages 37-49

Questions? Comments?