Lean Management - An Introduction - Slides

Productivity Improvement Through Lean Management

A Joint Program Delivered by

- an Introduction

About APPC

• Andhra Pradesh Productivity Council (APPC) is an autonomous tripartite non-profit making body set up in the year 1958 by the Government of Andhra Pradesh.

• The Council activities are guided by a Governing Body comprising of Govt. Representatives, Employees, Employers and Eminent Persons from Industry, Educational Institution.

• APPC has successfully completed 50 years of its existence and contributed to Productivity Practices and Knowledge Management among Industries, Agriculture, Rural Development, Services Sector and Education in the Country particularly in the State of Andhra Pradesh.

• Over the years, the APPC has spread its activities into various Sectors like Distance Education, Micro Enterprise Development, Employment Generation through Skill upgradation, Promotion and Strengthening of Women SHGs, Collaborative Arrangements with Foreign Universities, Establishment of innovative projects like Training Cum Production Centre (TCPC), Jan Shikshan Samsthan (JSS) etc. besides Techno Management Consultancy

Vision of APPC

Promotion of Productivity Awareness and Quality of Work Life towards improving resource utilization and standard of living for national growth

About Confluence

• Confluence Business Solutions Pvt. Ltd. Is an

eleven years old organization.

• We are into Consulting and training services

• We provide consulting on strategy

deployment, breakthrough improvement,

implementing Business excellence models and

establishing various Management Systems

• We conduct in-house and open workshops on

process improvements techniques likes 5S,

Kaizen, LEAN,TPM,BSC and Six Sigma. Also we

help in deployment of the same.

• Where any expertise is required by the client

organization, Confluence augments its

resources to help achieve the objectives.

• We are a team of ten people.

• Our Registered Office is in Padmaraonagar

where as our Corporate Office at Habsiguda.

Both in Secunderabad.

Vision

“To become one of the best process consulting companies in the world”.

Mission

Act as Catalyst for Client Organizations and individuals to help them realize potential

and achieve their objectives HIGHER, FASTER and SURER

Values

Being truthful in our deeds

Value entitlement to all

our stakehol

ders

Follow Ethical

Business Practices

Service Portfolio

Training and Certifications

Six Sigma Professional Certifications

Customized Trainings

Managerial Development Programs

Consulting

Confluence

Enabling Operational Excellence

Strategy Deployment –Balanced Scorecard

Breakthrough Improvement Services such as Six Sigma, Lean, TPM, BPR, BPM

Business Excellence Models

Management Systems Implementation

Resource Augmentation

Competent Resource Support for driving Breakthrough

Improvement Initiatives

Objectives of this Program

• Provide an Overview of Lean Management Concepts

• Appreciation of the concepts

Primary Training Goal – To Understand the approach to Productivity

Improvement through lean tools

Topics

1 About Management and Productivity

3 Seven Wastes

4 Overview of Lean Tools

5 Benefits of Lean Management

6 Implementation of Lean Management Philosophy

7 Question and Answers and Feedback

2 Introduction to Lean Management

MANAGEMENT AND PRODUCTIVITYRealizing More

Meaning of Productivity

Oxford Dictionary Meaning:

state or quality of being productive the effectiveness of productive effort, especially in industry,

as measured in terms of the rate of output per unit of input

In Economics, Productivity is defined as:

The amount of output per unit of input (labor, equipment, and capital).

Measures of Productivity

In a factory productivity is measured based on the number of hours

it takes to produce a good.

In the service sector productivity is measured based on the revenue

generated by an employee per month/ annum or divided by his/her salary

Goal of a Business Organization

PROFITS

Now and In Future…

How to Generate Profits?

• By selling the products and services to the customers to address their requirements (needs and expectations).

… and what else?

All actions in the organization needs to be productive.

Productivity is the act of bringing an

organization closer to its goal. Every action that

brings the organization closer to it’s goal is

productive. Every action that doesn’t bring the

organization closer to it’s goal is not productive.

Profit Measurement

Net Profit = Sale Price – Cost Price

Net Profit = Sale Price – (RM Cost + Operating Cost)

Profit Maximization

Net Profit =

Sale Price – ( RM Cost + Operating Cost )

Not in our Control Only thing to be

Controlled

Profit Maximization

Operating Cost

Salaries and Wages

Rentals

Power

Consumables

Admin Expenses

Financial Expenses

Maintenance Expenses

Depreciation

Profit Maximization

Is there any better way to reduce Operating Cost?

Improve Productivity

Productivity Improvement

How do we improve Productivity?

Importance of Productivity Improvement

Why Should we improve Productivity?

Why Should we “Improve Productivity”

Competition

“Only the BEST Survives”

The Jungle Principle

Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows it must outrun the slowest gazelle or it will starve to death.

It doesn’t matter whether you are a lion or a gazelle — when the sun comes up, you had better be running.

Self Assessment

• Please list the activities and the time you spend on each of the activity on an average day.

• Be honest in your times, as the data you put in is important for identification of improvement goals.

Urgency Vs Importance

CrisisHigh

Productive

Routines Trivial

Urgent Not Urgent

Import

ant

Not Im

port

ant

Planning, AnalysisImprovement, etc.

Tea Breaks, Sudden Visitors, etc.

Immediate Dispatches, Emergencies, etc.

Reporting, reviews, approvals, etc.


Urgent Not Urgent

Import

ant

Not Im

port

ant

Are reactive, cause stress & reduce

Productivity

Result in efficient

working and

improve

productivity

Trivial

Time wasters and reduce

productivity

Routines

Highly dangerous,

as they give us a

false feeling of being

busy. Don’t

contribute to

Productivity

What is Value?

Value Adding Activities

• Activities which are essential as they result in transformation or change of products/ services.

• In other words for which customer is ready to pay.

• These activities include those which are done right first time.

• Examples of such activities include:– Production

– Procurement

– Research and Development

• These are core functional activities

Non Value Adding Activities

• Activities that are considered not required or not essential for production and delivering of product or services to customers to meet their needs and expectations.

• Typically these activities include those for which customer is not willing to pay.

• Examples of Non Value Adding Activities include:– Rejections

– Reworks/ Reprocessing

– Wastage

– Delays

– Movement

– Idling

Value Enabling Activities

• These includes activities that are not essential to meet the customer needs and expectations but include those activities that help in performing value added activities better and more efficiently.

• Typically such activities include– Planning

– Analysis

– Improvements

– Goal setting

– Training and skill building

Imagine you get a lottery of lot of money.

What will you Do?

Investment Vs Spend

• Investment gives returns in future

• Builds Wealth

• Spending or Expense doesn’t give any return in future

• Reduces Wealth

Time

All of us have one God Given Lottery

What do we do with Time?


Urgent Not Urgent

Import

ant

Not Im

port

ant

Are reactive, cause stress & reduce

Productivity

Result in efficient

working and

improve

productivity

Trivial

Time wasters and reduce

productivity

Routines

Highly dangerous,

as they give us a

false feeling of being

busy. Don’t

contribute to

ProductivityDelegate

Automate Avoid

Invest your time

Productive Activities for Managers

• Planning

• Analysis and identifying improvement opportunities

• Setting goals for self/ team

• Working focused improvement initiatives

• Self training

• Training team members

• Relationship building

• Motivating team members

Tools Used

• Balanced Scorecard

• Lean Tools

• Six Sigma Tools

• TPM Tools

• Theory of Constraints

• Business Process Management

BLST2B Approach

LEAN PHILOSOPHYDelivering More with Less

History of Manufacturing

Pre-industrial 1890 Mass 1920 Lean 1980

Peo

ple

•Craftsmen perform all aspects of task

•Self-taught or apprentice-ship training

•Employees contribute minimally to total product

•Training for limited skills

•Management makes decisions

•Clusters of employees working in teams

•Extensive, continuing training

Pro

du

ct

•Customized, non-standard products

•Variation in quality

•Standardized, focused on volume not quality

•Focus on internal/external customer

Wo

rk

En

viro

nm

ent •Independence, discretion

•Variety of skills

•Responsibility

•Limited skills and knowledge

•Repetitive, mind-numbing work

•Little discretion, simplified tasks

•Some discretion, group effectiveness, empowerment, team accountability, work cells

Reduced Lead Time

“One of the most noteworthy accomplishments in keeping the price of Ford products low is the gradual shortening of the production cycle. The longer an article is in the process of manufacture and the more it is moved about, the greater is its ultimate cost.”

— Henry Ford, 1926

About Lean Philosophy

Lean philosophy is about the principles, practices, and tools to create precise customer value – goods and services with higher quality and fewer defects – with less human effort, less space, less capital, and less time than the traditional system

Lean Tools

• 5 S

• Value Stream Mapping

• Cross – Functional Training

• Visual Management

• Spaghetti Chart

• Kaizen (means improvements, happens at process level)

• Kaikaku (means transformation, happens at system level)

• Standardizedwork

• Poka-Yoke (means mistake proofing)

and others…

Defining Lean

Lean is:

“A systematic approach to identifying and eliminating waste (non-value-added activities) through continuous improvement by flowing the product at the pull of the customer in pursuit of perfection.”

— The MEP Lean Network

Definition of Value-Added

Value-Added

Any activity that increases the market form or function of the product or service. (These are things the customer is willing to pay for.)

Non-Value-Added

Any activity that does not add market form or function or is not necessary. (These activities should be eliminated, simplified, reduced, or integrated.)

Lean = Eliminating Waste

Typically 95% of all lead time is non-value-added.

Value-Added Non-Value-Added

• Overproduction

• Inventory

• Waiting

• Motion

• Transportation

• Rework

• Over Processing

Brainstorm Wastes

What wastes were apparent in your company?

Seven Wastes

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

• Causes of overproduction:

– Just-in-case logic

– Misuse of automation

– Long process setup

– Unlevel scheduling

– Unbalanced workload

– Over engineered

– Redundant inspections

Inventory Waste

• Any supply in excess of a one-piece flow through your manufacturing process

• Causes of excess inventory:

– Need for buffer against inefficiencies and unexpected problems

– Product complexity

– Unleveled scheduling

– Poor market forecast


– Misunderstood communications

– Reward system

– Unreliable shipments by suppliers

Defects

• Inspection and repair of material in inventory

• Causes of defects:

– Weak process control

– Poor quality

– Unbalanced inventory level

– Deficient planned maintenance

– Inadequate education, training, or work instructions

– Product design

– Customer needs not understood

Over Processing Waste

• Effort that adds no value to the product or service from the customers’ viewpoint

• Causes of over processing waste:

– Over-processing to accommodate downtime

– True customer requirements not clearly defined

– Product changes without process changes

– Lack of communication

– Redundant approvals

– Extra copies or excessive information

Waiting Waste

• Idle time created when waiting for…?

• Causes of waiting waste:


– Unplanned maintenance

– Long process setup times

– Misuses of automation

– Upstream quality problems

– Unlevel scheduling

Motion Waste

• Any movement of people or machines that does not add value to the product or service

• Causes of motion waste:

– Poor people or machine effectiveness

– Inconsistent work methods

– Unfavorable facility or cell layout

– Poor workplace organization and housekeeping

– Extra “busy” movements while waiting

Waste of Transportation

• Transporting parts and materials around the plant

• Causes of transportation waste:

– Poor plant layout

– Poor understanding of the process flow for production

– Large batch sizes, long lead times, and large storage areas

People Waste

• The waste of not using people’s mental, creative, and physical abilities

• Causes of people waste:

– Old guard thinking, politics, the business culture

– Poor hiring practices

– Low or no investment in training

– Low pay, high turnover strategy

Lean Building Blocks

Quick Changeover

Standardized Work Batch Reduction Teams

Quality at Source

5S SystemVisual Plant Layout

POUS

Cellular/ FlowPull/ Kanban TPM

Continuous Improvement

ValueStreamMapping

Standardized Work

Operations safely carried out with all tasks organized in the best known sequence, and using the most effective combination of these resources:

• People

• Materials

• Methods

• Machines

Work Place Organization

A safe, clean, neat arrangement of the workplace provides a specific location for everything, and eliminates anything not required.

Elements of a 5S Program

Seiri (Sort) — Perform “Sort Through and Sort Out,” by placing a red tag on all unneeded items and moving them to a temporary holding area. Within a predetermined time the red tag items are disposed, sold, moved or given away. “When in doubt, throw it out!”

Seiton (Set in Order)— Identify the best location for remaining items, relocate out of place items, set inventory limits, and install temporary location indicators.

Seiso (Shine) — Clean everything, inside and out. Continue to inspect items by cleaning them and to prevent dirt, grime, and contamination from occurring.

Seiketsu (Standardize) — Create the rules for maintaining and controlling the first three S’s and use visual controls.

Shit Suke (Sustain) — Ensure adherence to the 5S standards through communication, training, and self-discipline.

Visual Controls

Simple signals that provide an immediate understanding of a situation or condition. They are efficient, self-regulating, and worker-managed.

Examples:

• Kanban cards

• Color-coded dies, tools, pallets

• Lines on the floor to delineate storage areas, walkways, work areas, etc.

• Andon lights

Plant Layout

Brake

Screw

Machine

Raw Stock QC Rec. Ship

ShearQC

Assembly

Parts Stock

Stamp

Mill Lathe Drill

FinishWeld Grind


Standardized Work


Lean Workforce Practices

• Teams

– With rotation of highly specified jobs

• Cross-trained and multi-skilled employees

– Who can work many operations within a cell and operations in different cells

• Continuous improvement philosophy

• Process quality, not inspection

• Use of participatory decision-making

– Quality Control Circles, team-based problem-solving, suggestion systems, etc.

Quick Changeover

• Definition: The time between the last good piece off the current run and the first good piece off the next run.

• Before Shigeo Shingo’s Single Minute Exchange of Die (SMED) improvements, basic setup tasks and related time breakdowns:

Percent of time of changeover

15%

5%

30%

50%

Preparation, after-process adjustment,

checking, storing, and moving materials,

parts, and tools

Removing and mounting of parts and tools

Machine measurements, settings, and

calibrations

Trial runs and adjustments

Batch and Queue Processing

Impact of Batch Size Reduction

10 min. 10 min.

30+ min. for total order, 21+ min. for first piece

10 min.

Process

AProcess

B

Process

C

Process

BProcess

AProcess

C

Continuous Flow

Processing

12 min. for total order,

3 min. for first part

Batch Size Reduction

The best batch size is one piece flow, or: “make one and move one!”

Point Of Use Storage (POUS)

• Raw material is stored at workstation where used

• Works best if vendor relationship permits frequent, on-time, small shipments

• Simplifies physical inventory tracking, storage, and handling

Quality at the Source

• Source Inspection: Operators must be certain that the product they are passing to the next work station is of acceptable quality.

• Operators must be given the means to perform inspection at the source, before they pass it along.

• Samples or established standards are visible tools that can be used in the cell for such purposes.

• Process documentation defining quality inspection requirements for each work station may need to be developed.


Quick Changeover


Quality at Source


POUS

Cellular/FlowPull/Kanban TPM

Push versus Pull Systems

Push System

Resources are provided to the consumer based on forecasts or schedules

Pull System

A method of controlling the flow of resources by replacing only what has been consumed

Pull System

Pull System is a flexible and simple method of controlling or balancing the flow of resources

Eliminating waste of handling, storage, expediting, obsolescence, repair, rework, facilities, equipment, excess inventory (work-in-process and finished)

Pull System consists of:

• Production based on actual consumption

• Small lots

• Low inventories

• Management by sight

• Better communication

SupplierProcess

B

Fin.

Goods

Raw

Matl.

Process

ACustomer

Process

C

Pull System Flow Diagram

Kanban Locations

Part Flow

Information Flow

Cellular Manufacturing

Linking of manual and machine operations into the most efficient combination to maximize value-added content while minimizing waste.

Sand

Punch

Cut to size De-burr

FormPackage

Refining the Cell: Five Step Process

1. Group products

2. Measure demands — establish Takt time

3. Review work sequence

4. Combine work in balance process

5. Design cell layout

Step 1: Group Products

Products with similar processing requirements are grouped into product families

Processing Steps

Product

Insert Springs

Insert Diodes

Insert 1k Resistors

Insert Light

Insert 100k Resistors Test

Red × × × × ×

Blue × × × × ×

Step 2: Establish Takt Time

Takt Time = Demand Rate

Takt Time = (Work Time Available ÷ Number of Units Sold)

Takt Time = (1200 seconds ÷ 115 units) = 10.4 sec/unit

Cycle Time ÷ Takt Time = Minimum Number of People

Goal: Produce to Demand

Step 3: Review Work Sequence

• Observe sequence of tasks each worker performs

• Break operations into observable elements

• Identify value-added versus non-value-added (NVA) elements and minimize NVA

• Study machine capacity, cycle times and changeover times

Step 4: Combine Work to Balance Process

0

5

10

15

20

A B C D E

0

5

10

15

20

A B C D E

Takt Time = 10 seconds

Unbalanced Line Balanced Line

Operations

Seco

nd

s

Operations

Seco

nd

s

Step 5: Design and Construct Cell

• Design goals:

–Flexible layout

–Lot size = 1

–Point of Use Storage (POUS)

–Visual management

–Mixed models

• Simplify flow

– Integrate process operations

–Materials flow one way

• Minimize materials handling

– Concentrate on value-added motion

– Establish material replenishment procedure

• Make use of people 100%

– Promote visibility and flexibility

– Operators stand for flexibility


Quick Changeover


Quality at Source


POUS



Old Adage:

“If you always do what you always did, you’ll always get what you always got.”

Competitive Corollary:

“If the other guy gets better, you’re going to get less.”


Quick Changeover


Quality at Source


POUS



Barriers to Improvement

If we all know we need to improve, the question becomes: why don’t we?

Keys to Success

• Prepare and motivate people

– Widespread orientation to Continuous Improvement and quality, train and recruit workers with appropriate skills

– Create common understanding of need to change to Lean

• Involve employees

– Push decision-making and system development down to the “lowest levels”

– Train and truly empower people

• Share information and manage expectations

• Identify and empower champions, particularly operations managers

– Remove roadblocks (i.e., people, layout, systems)

– Make system both directive yet empowering

Keys to Success (continued)

• Execute pilot projects prior to rolling out culture across organization (e.g., model lines, kaizen blitzes): after early wins in operations, extend across entireorganization

• Foster an atmosphere of experimentation

– Willingness to take risks (safety nets)

– Patience, tolerance of mistakes, etc.

• Install “enlightened” and realistic performance measurement, evaluation, and reward systems

– Do away with rigid performance goals during implementation

– Measure results, not number of activities or events

– Tie long-term improvements to key macro-level performance targets (e.g., inventory turns, quality, delivery, overall cost reductions)

Implementation Success Factors

• Unyielding leadership

• Strategic vision, based on Lean Enterprise as part of company strategy

• Observation of outside successes and failures

• Ability to question everything

• Deep commitment to excellence

Benefits of Lean

Lead Time Reduction

0 25 50 75 100

Percentage of Benefits Achieved

Productivity Increase

WIP Reduction

Quality Improvement

Space Utilization

Typical Objections

How should you deal with these objections to Lean?• “It takes too much discipline.”• “It takes too long to implement.”• “My process is too complex, I have to deal with too many

uncontrollable variables, like late supplier shipments, sick people, etc.”

• “My process requires a large batch size.”• “It doesn’t make sense in my industry.”• “It’s unclear to me how Lean will work with my MRP

system.”

Getting Started —Value Stream Mapping

A simple, visual approach to:

• Focusing on a “product family”

• Creating a clear picture of current material and information flow associated with that product family

• Identifying Lean tools and techniques that can improve flow and eliminate waste

• Incorporating those ideas in a new picture of how material and information “should” flow for that product group

• Creating an action plan that makes the new picture a reality for that product family


Quick Changeover


Quality at Source


POUS



ValueStreamMapping

Conclusion

Lean• Simple and visual• Demand driven• Inventory as needed• Reduce non-value-

added• Small lot size• Minimal lead time• Quality built• Value stream

managers

Traditional

• Complex

• Forecast driven

• Excessive inventory

• Speed up value-added work

• Batch production

• Long lead time

• Inspected-in

• Functional departments

OEE Graph

Feedback

+ Job production specific inputs

Case studies to be included

Learning and then not acting on what you learn is like plowing and then never planting.

- unknown

Albert W. Daw Collection

Lean Management - An Introduction - Slides

Documents

Transcript of Lean Management - An Introduction - Slides