Process Improvement Basics By Armstrong

ArmstrongFuture Perfect

Process Improvement

Basics

Agenda

• Process Improvement (5W 2H)

• Perspectives

• Program v/s Culture

• Lifecycle of Process Improvement Drive

• Criteria for Success (6 ‘C’s)

• Common Tools & Approach

• Case Studies

• What’s Next

2© Armstrong STPL - Confidential

PROCESS IMPROVEMENT (5W 2H)

Definition, Need, Location, Ownership, Timing, Tools & Approach


• What

• Why

• Where

• Who

• When

• How

• How Much

Making things better, not just fighting fires or managing crises

A way of looking at how we can do our work better

Better Safety, Lesser wastage of resources, More competitive

Not only shop floor / workshop but throughout the organization

Management, Staff, Workmen, Process Improvement Leader

NOW

Communicate Vision, Equip with the right tools, Manage Change

Continuous & Gradual Improvement, Stabilize and Sustain


Process Improvement (5W 2H)Definition, Need, Location, Ownership, Timing, Tools & Approach


Process Improvement Making a Case

Cost to Customer

Cost to Company

Profit

Incr

eas

e t

he

Pro

fit

Cost to Customer

Cost to Company

ProfitNewProfit

a) Increase Cost to Customer

Cost to Customer

Cost to Company

b) Decrease Cost to Company

ProfitNewProfit

•New Product•Higher S.P.•Premium

•Process Imp.•Waste Redn

•Alternates


Process Improvement Making a Case

Cost Implementation

De

gree

of C

on

trol*

High

High

Low

Low

New Product

Unique ProductCharging PremiumHigher Selling Price

Alternate Site

Alternate Source

Process Improvement

Wastage Reduction

* On acceptability by Market

Process Improvement Where’s the Money, Honey?

• Let’s assume a case of a company 100Cr company earning a 5% profit i.e. 5Cr per annum. They want to double the profit.

• Traditional strategy is to double the revenue i.e. 200Cr to generate 5% i.e. 10Cr = 2 x 5Cr.

• But this also means, they have to incur cost to double company’s capability.

• Another strategy is to target 10-30% of the company’s revenue being spent on generating waste.

• Improving the processes by 10% would earn (10% of 95Cr) 9.5Cr of extra profit, without extra headcount or additional capital in many cases.


PERSPECTIVES

Management, Staff, Process Improvement Leader


PerspectivesManagement, Staff, Process Improvement Leader


Just another Initiative. Not going to work

here…Nothing for me!

Process Improvement can generate more

money for me?

Workmen / Staff

Management / Owner

How do I drive PI?How many belts?

How to bridge the gap?

Process Improvement Leader

PROGRAM V/S CULTURE

Should we drive it as a program or try to imbibe as a culture?


Program v/s CultureShould we drive it as a program or try to imbibe as a culture?

• Program: A program provides impulsive moment in theorganization which is important to communicate change and gaininitial success. One time initiative. Need continuous push.

• Culture: A state of organization where values, processes and peopleare aligned with the methodology in whatever they do. It gives theinitiative the required acceptability and sustainability.

• “Process Improvements need to be driven into culture of anorganization. Then it will enable us to continuously seekimprovement in whatever we do. Right from design stage toprocurement, planning, manufacturing, dispatch, sales, service andmarketing, it will be a common thread and language of a LearningOrganization” …Armstrong


LIFECYCLE OF PROCESS IMPROVEMENT DRIVE

Understand Implement Engrain


Lifecycle of process Improvement driveUnderstand Implement Engrain


Understand

• Aim

• Consult

• Learn

• Teach

Implement

• Plan

• Do

• Check

• Act

Engrain

• Change

• Raise

• Sustain

• Challenge

CRITERIA FOR SUCCESS (6 ‘C’S)

Commitment, Communication, Consultation, Cost, Consistency, Challenge


Criteria for Success (6 ‘C’s)Commitment, Communication, Consultation, Cost, Consistency, Challenge


CommitmentManagement must commit tothe process improvement drive.Clarify priorities and goals.

CommunicateThe drive, goals and programmust be communicated andcascaded till bottom of pyramid

ConsultationInternally with employees tomanage change and involveExternally with experts to drive

CostSow something to reap in futureInvest in tools & training peopleRewards & Recognition drive

ConsistencyDrive it continuously and withsteady rigor. Take a step everyday however small it may be.

ChallengeChallenge Status-quo & improveDon’t limit yourchallenges, challenge yourlimits. Sustain the Change

COMMON TOOLS & APPROACH

Lean, Six Sigma, IE


Common tools & approachLean, Six Sigma, IE

• Lean Thinking– Attacking waste, VSM, 5s, Flow, Pull, Kaizen, VF

• Six Sigma– Attacking variability, DMAIC Approach, C&E diagram, 5Why

• TQM– PDCA (Plan-Do –Check-Act)

• Industrial Engineering (IE)– Time, Motion Study, BPR, Facility Mapping etc.

• Waste Management– Seven waste framework, w-VSM, CONC analysis


CASE STUDIES

Bicycle Manufacturing Plant


Bicycle Manufacturing PlantLayout


Customer Counter

QA

Casting

Assembly

Planning

Painting

Storage

Fork Lift


Bicycle Manufacturing PlantDecision Variables

Station / Object Decision Variable

Customer Counter Move

QA Move, Sell Station

Casting Move, Configuration (Smart Mode / FIFO), QA@Source (Y/N)

Fork Lift Sell, Batch Setting (Min. how many items to be moved at a time)

Planning Move, Schedule (Forecast/Current Demand), PM (Y/N)

Storage Move

Painting Move, Batch Setting, QA@Source (Y/N)

Assembly Move, QA@Source (Y/N)

Customer Counter Planning

FG Storage

Casting Assembly Painting

QA

RM Storage

Rejection Storage

Customer

Check in FG, If N

If Quality not acceptable

If Quality meets standards

Bicycle Manufacturing PlantSimulations

Changes Made…

• Casting: Smart mode, QA@Source

• PM, Assembly QA@Source

• Layout changes

• Painting: Batch setting=1, QA@Source

Results…

• Earning increased by 27%

• Earning increased by 4.6%, Defects reduced by 7%

• Earning increased by 8.4%

• Earning increased by 8.6%


Almost 50% increase in Earning and Profit

WHAT’S NEXT

Building Case for Action, Gap Analysis, Plan, Engage


What’s NextBuilding Case for Action, Gap Analysis, Plan, Engage

• Building Case for Action– Aim at Stars, At least you’ll land on the Moon

– Set yourself targets e.g. 20% cost reduction, 30% waste reduction

• Do a Gap Analysis– As-Is v/s To-Be state modeling

• Plan– Make a 5 years Road Map with desired targets and timelines

– Map all required programs and tools

• Engage– Identify and allocate projects to employees

– Continuously review and re-invest

– Manage change and participate


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Process Improvement Basics By Armstrong

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