Strategic Lean Manufacturing to Maximize Operations
Andrew L. Lux, Ph.D.
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MANUFACTURING STRATEGY DEVELOPMENT
Build it “inside” or outsource
Criteria
Product TypeCapability Capacity Modular Integral
No No Yes Very RiskyYes No Yes Partnership
DependentNo Yes Yes Very RiskyYes Yes No No
• Integral = related components customized for the product
• Modular= comprised of interchangeable and independent components, interface between components are standardized
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DEFINITIONS / OUTPUTS
• Manufacturing Network = distribution centers, manufacturing facilities, offices, research facilities
• Focused Factory = production system that produces most/all products in product family
Factories
Factory Manufacturing Outputs
Cost
Quality
Performance
DeliveryTime
FlexibilityReliability
Innovativeness
Manufacturing Network Outputs
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MANUFACTURING OUTPUT MEASURES
Manufacturing Output MeasuresCost Product cost (COGs)
Inventory turnsProductivityCapacity, utilizationYield
Quality Cost of Quality (A,P,F)
Performance # of standard features# of advanced features# of ECOMTF
Delivery on-time deliveryInventory accuracyOE time
Flexibility # of products in product line# of optionsMin order size, lot size# of products produced by a group of machines# of parts produced by group of machines/total# processed by factory
Innovativeness ECO/yearNew products/year
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LAYOUTS
• FUNCTIONAL
• CELLULAR - Family
• LINE - Individual
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PRODUCTION SYSTEMS
Production System: Type of ProductsManufacturing outputs
Production System: Product/Vol: layout/flow (PV:LF)
Production System Product/Vol Layout/Flow
Job Shop Many Functionalfew ext. varied
Batch flow Many Cellularlow varied & patterns
Operator-paced line flow Many Linemedium paced via operators
Equipment-paced line flow several Linehigh equipment paced
Continuous flow Few Linehigh rigid to continuous
JIT Many Linemedium operator paced
FMS (flex-manufacturing system) Very many Cellular or linelow equipment paced
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CHARACTERISTICS OF THE SEVEN PRODUCTION SYSTEMS
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CHARACTERISTICS OF A MANUFACTURING PROCESS:
• Production Systems Number of products Volume PV:LF layout flow
• Factory Production Outputs Cost Quality Performance Delivery Flexibility Innovativeness
• Manufacturing type Craft Production
Job shop Batch flow
Mass Production Operator paced line flow Equipment paced line flow Continuous flow
Lean Production JIT FMS
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MFG OUTPUTS PROVIDED BY WELL-MANAGED PRODUCTION SYSTEMS
Poor Good
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MANUFACTURING LEVERS
Average (2.0) World Class (4.0)
Human Resources -Unskilled -Employees are investment-Employees are expensive -Multi-skilled
-Problem I.D. solutions
Organization -centralized -flatstructure & controls -cost accounting driven -competitive performance measures
Production -centralized, complex -small # of suppliersplanning and control -detailed monitoring of -partnership
resource usage -critical capabilities
Process Technology -mature tech. -developed internally-developed externally -provides MFS outputs-reduce cost
Facilities -large, infrequent changes -focused-capital appropriation driven -frequent changes
-improve capabilities
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CUSTOMER NEEDS & EXPECTATIONS
• Market Qualifying• Order Winning• Does not apply
Defines:• Production system• Level of
Manufacturing capabilities of production system
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MANUFACTURING STRATEGY DEVELOPMENT
Competitive Analysis
Customer Requirements
Manufacturing outputs
Target levels for each output defined
Production system to hit target levels
Programs to adjust
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FRAMEWORK FOR STRATEGY DEVELOPMENT
1. Determine Current location on PV/LF MatrixAssess level of capabilities of each lever
2. Competitive AnalysisDefine the required market qualifying and order winning outputs
3. Determine ideal PV:LF Matrix Define Adjustments needed at each manufacturing lever
Adjustments converted into projects.
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IMPROVEMENTS PER THE STRATEGY
•INTRODUCTION TO VALUE STREAM MAPPING
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VSM APPROACH
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VSM EXAMPLE – CURRENT STATE MAP
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VALUE STREAM MAPPING
• VSM Helps you visualize more than just a single-process level, i.e. assembly, filling, packing. You can see the flow
• Mapping helps you see the sources of waste in a value stream
• Provides a common language for talking about manufacturing processes.
• Forms the basis of an improvement plan
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WHAT DOES THE CUSTOMER NEED?
What is the customer willing to pay for?
What are the key Quality Requirements as defined by the customer?
How often is it required?
What are the current Product Complaint Levels?
What are the Current KPI associated with COQ
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SEE WHAT IS HAPPENING AT ALL LEVELS OF PROCESS
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HOW IS INFORMATION FLOWING TO AND FROM THE PROCESS?
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VALUE STREAM MAPPING
• It shows the linkage between the information flow and the flow of material
• It forms the basis of an implementation plan. By helping you design how the whole door to door flow should operate.
• VSM is a qualitative tool by which you describe how the facility should operate in order to create flow
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VSM EXAMPLE – CURRENT STATE MAP
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VSM EXAMPLE FUTURE STATE MAP
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WHAT TO DO WHERE FLOW IS NOT POSSIBLE
Where flow is not possible, implement supermarkets to match upstream process to down stream customers. Yields similar benefits as continuous flow
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BUILD TO SUPERMARKET OR SHIPPING?
How will the process be linked to customer demand?
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WHERE CAN WE USE CONTINUOUS FLOW?
Continuous flow improves yield, improves quality, reduces defects, and improves response to customer
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SCHEDULE 1 POINT IN THE VS
Feed customer requirements to a single spot in the value stream, and let other process be pulled by the flow created
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VSM BENEFITS
• Knowledge is obtained walking the actual process flow
• Information is captured while walking the flow, not from engineering standards.
• The process uses pencils and paper, there is no steep learning curve.
• Process is interactive and engages diverse skill sets.
• Action plans developed tie directly to strategic goals
• Improves cost, quality, delivery and ultimately customer satisfaction
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VALUE STREAM MAPPING
• How does a VSM Drive process improvement
Value Stream Map
Do ItsItems identified which can be changed
immediately
ProjectImprovements with longer lifecycles or complexity
Kaizen Events1 piece flow / Standard work / 6S / Pull
Systems
Improvements Identified
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VALUE STREAM MAPPING
• Six Sigma and Lean Projects
Value Stream Map
ProjectImprovements with longer lifecycles or
complexity
Six Sigma ToolsEvaluate project for 6 Sigma execution
Improvements Identified
1. Identify Improvement
2. Scope Projects
3. Define Goal
4. Evaluate Project and goal against Six Sigma Filtering Criteria
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VALUE STREAM MAPPINGPROCESS IMPROVEMENT EXECUTION
• Process Improvements must have;-Clear Measurable Goals-Assigned responsibility and review dates
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VALUE STREAM MAPPINGPROCESS IMPROVEMENT EXECUTION EXAMPLE
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Project Leader: Keith Martin Project: RCD1 - Reusable Clip Deployment Date: 1/2/13
Major Tasks 1 Initial Feedback from EU and US A B 2 Prototoype initial concepts A B C 3 Determine marketing specifications A 4 Project Kick-Off meeting A 5 Business Plan A 6 Feasibility Testing B A C 7 Finalize Design - TDR1 A 8 Select Vendor for deployment tool A B
9 Detailed Design work A 10 Deployment tool development A B 11 Drawing Updates A
12 Confirm Design Concept A B 13 Tooling Phase - TDR2B A C B
14 MFG validation activities (IQ/OQ/PQ) B A C 15 Test Method Validations B A C
16 Design Control Doc updates TDR3 A C B 16 Build EP devices A B 17 Design Verification Testing A C B 18 Submit 510(k) A
19 Build MP devices B A 20 Design Control Doc updates TDR4 A C B 21 User Preference Evaluation A
Risks, Qualitatives, Other MetricsA Business Plan (sales price and marketing strategy)B FDA submission date: early JuneC Low Cost of Goods
Project 15% Complete
Aug
ust
Sep
tem
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Oct
ober
Ste
fan
Febr
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Mar
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Apr
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May
June July
Livy
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Josh
Project Objective: Reusable Clip Deployment System (Tool and Cartridge) targeted in OUS and US markets
Schedule Owner / Priority
Des
ign
Ver
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tion
test
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MFG
Val
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activ
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Nov
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Dec
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rJa
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2013
Just
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Eva
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Millions
Aug
ust
Sep
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Oct
ober
Ste
fan
Febr
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Mar
ch
Apr
il
May
June July
Livy
n
Josh
Des
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Ver
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test
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MFG
Val
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activ
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Nov
embe
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Dec
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rJa
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2013
Just
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dce15Labels Budgeted ExpendedOther -$ -$ Capltal -$ -$ Expenses 180,000$ 25,000$
Millions
Project Scope: To create a cost effective Reusable Clip deployment system (Tool and Cartridge)A version of the existing Miltex tool design has been selected during the Concept/Feasibility phase.Business Plan: It will be important to finalize the Business Plan and marketing strategy for this tool.
Des
ign
Ver
ifica
tion
test
ing
MFG
Val
idat
ion
activ
ities
Eva
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esig
n. Major Tasks
Summary & Forecast
Sub-Objectives
Target Dates
Costs and Metrics
$-
$-
$180,000
$-
$-
$25,000
Other
Capltal
Expenses
Expended Budgeted
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SUMMARY
• Strategic business plan
• Strategic/Tactical Plant plan
• Identify the opportunities via business needs
• Identify waste areas
• Internal benchmarking & goal setting
• “As is” = VSM
• Lean improvements via Kaizen methods
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•Thank you!
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Dock to Stock
Vendor Kanban
Vendor Reduction/
Management
Demand Pull(K-Loops)
Lean Manufacturing
Labor Variance Improvement
Labor Variance Improvement
RGA Mgt
BV Repair Depot
Product StockingProduct Stocking
Manufacturing Process Improvements StrategyManufacturing Process Improvements Strategy
Black Belt Program
DFSS
2012 2013
2014
DONE
Barcode
Time Matrix
Visual Management
Facilities Upgrades
Skill Set Certification
Key Performance
Indicators
BV Inventory Management
Internal Kanban
Process ControlProcess Control
Cost Reduction5% / yr
Inventory10 Turns
Delivery100%
Cost of Quality 8% of Revenue
Gross Margin Improvement
SPC
MVDA
Parts Cleaning Room Upgrades
Label Printer Implementation
Factory Physics
Lot Size Optimization
WIP Optimization
Labor Force Reduction
Input / Output Analysis
Make/Buy Analysis
Strategic Sourcing
Fixture Deployment Inventory
Reduction
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VALUE STREAM PROCESS
• Creation of the Current State Map– Visual representation of material and information
flow as seen while walking the value Stream
• Creation of Future State Map– Application of LEAN concepts to Current State
VSM to develop the future look of the process
• Development of Improvement Plan– Summarize and prioritize activities (Kaizens,
Supermarkets, 5S improvements etc.) required to move from the current state to the future state.
– Improvements are ranked based on impact, ease of implementation , and availability of resources
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VALUE STREAM MAPPING – SIX SIGMA FILTERING
1. Does the project involve solving a problem orimproving a system through collection and analysis of data? Yes
2. Is the root cause or solution known? No
3. Is the problem factual or perceived? Factual
4. Is the issue being addressed elsewhere? No
5. Does the project focus on the CTQ’s (Critical to Quality)? Yes
6. Does the project focus on Revenue Growth? Yes
7. Does the project focus on Cost Reduction? Yes
8. Can the project be completed within 2-4 Months? Yes
9. Is the project contained within the boundaries of the organization? Yes
10. Does the project have management sponsorship? Yes
11. Does the project have adequate resources? (i.e. staffing and expertise) Yes
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VALUE STREAM MAPPING
• What is Value Stream Mapping (VSM)
– Visual representation of the current process that includes both value added and non-value added activities required to bring a product from raw material to the arms of the customer.
– A Value Stream Map includes Materials and Information flow.
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