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?
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