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Lean Manufacturing and Implications to Procurement
Peter TyszewiczVP-Manufacturing & Product Development
BC Supply Chain CouncilSeptember 23, 2004
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Introduction to “Lean”
History & Definition Lean Thinking and TechniquesLean and Procurement FocusLean SimulationImplementation & PhilosophyResources
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An Evolution From Mass to Lean ProductionNot entirely Japanese
1900
2000
1915
1935
1945
1973
1983
Time and MotionF. Taylor
Interchangeable PartsE. Whitney
Mass ProductionHenry Ford
JidokaS. Toyoda
Toyota Production SystemTaiichi Ohno
Just-In-TimeK. Toyoda
Supermarket System
U.S. Productivity andQuality Seminars
Japanese industry recognizesTPS and dissemination begins
U.S. consumers look for smallercars; Big 3 market share decline begins
1st Oil Shock
“Today andTomorrow,”1926
United States Japan
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PRODUCTPRODUCTSHIPMENTSHIPMENT
Time
Business as UsualWasteCUSTOMERCUSTOMER
ORDERORDER
PRODUCTPRODUCTSHIPMENTSHIPMENT
CUSTOMERCUSTOMERORDERORDER
Time (Shorter)
Waste
Lean Manufacturing
QualityCost
Lean is a philosophy that recognizes WASTE as the primary driver of cycle time, cost, and quality and employs techniques to continually drive out the waste in processes
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• Customers will pay for value, increasingly they will not pay for waste.
What is Waste?VALUE:
An activity that transforms or shapes raw materials or information to meet customer needs
WASTE: Activities that consume time, resources and space, but do not contribute to satisfying customer needs
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Storing
Rework
Invoicing
Loading/Unloading
Receiving Report
Repackaging
Creating ScrapReturns to Supplier
Inspecting
Expediting
MovingCounting Sorting
Acknowledging Orders
What Value is Added by:
Value and WasteTypically, where is effort directed? Of the time material is in the plant, what is the typical % of value added processing time?
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Types of WasteCategorized
1. Overproduction 2. Excess inventory 3. Defects 4. Non-value added processing 5. Waiting 6. Excess motion 7. Transportation8. Underutilized people
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Attributes of Lean-Accompanied by many proven techniques-
Operational StabilityJust-In-TimeStandardization & Continuing ImprovementBuilt In Quality
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A Model of Lean Manufacturing
Standardization & Continuing
Improvement“The drivers of lean
production”
• Standardized Work• Continuous
Improvement Activity• Waste Recognition &
Elimination-VSM• People Enabling
Systems
Just-In-Time“The right partat the right time
in the right amount”
• Material Control - Pull System or Kanban
• Level Production• Flexible Operations• Quick Change-Over
/SMED• Continuous-One
Piece Flow• Small Lot/Batch
Production
Built In Quality “Quality in the Process”
• Manual & Automatic Line Stops
• Andon System• Error Proofing• Poka-Yoke• Visual Management
Shortest Lead Time
Lowest Cost
Best Quality
Operational StabilityEquipment
• Total Productive Maintenance• Labor-Machine Efficiency
• Robust Products & Processes
People• Cultural Awareness• Supplier Involvement• Workplace Organization-5S
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Thinking Lean
Specify value can only be defined by the ultimate customer
Identify the value stream exposes the enormous amounts of waste
Create flow reduce batch size and WIP
Let the customer pull product through the value stream make only what the customer (internal/external) has ordered
Seek perfection continuously improve quality and eliminate waste
From Lean Thinking by Womack and Jones
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Storage Machine Storage Assemble StorageTransportInspect
Q/T: 180 min.
WIP: 60.
MCT: 5 min.
Set-up: 180 min.
Batch size: 15
Scrap: 4.5%
Rework: 2.3%
Q/T: 14400 min.
WIP: 105
C/T: 35 min.
Set-up: 60 min.
Batch size: 15
Scrap: 1.5%
Rework: 8.3%
Q/T: 28800 min.
WIP: 150.
Q/T: 3 min.
WIP: 60.
Q/T: 30min.
WIP: 45.
Yield: 88%
3 hrs 5 mins. 30 mins. 3 mins.10 days 35 mins. 20 days
Mapping the Current State for Manufacturing-Minimize/eliminate non-value add processes-
Value Stream Mapping (VSM)Applicable to manufacturing, administration or service
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Storage AnalyzeData Storage Format
Report StorageTransportApproval
Q/T: 180 min.
WIP: 60.
MCT: 5 min.
Set-up: 180 min.
Batch size: 15
Scrap: 4.5%
Rework: 2.3%
Q/T: 14400 min.
WIP: 105
C/T: 35 min.
Set-up: 60 min.
Batch size: 15
Scrap: 1.5%
Rework: 8.3%
Q/T: 28800 min.
WIP: 150.
Q/T: 3 min.
WIP: 60.
Q/T: 30min.
WIP: 45.
Yield: 88%
3 hrs 5 mins. 30 mins. 3 mins. 10 days 35 mins. 20 days
Value Stream Mapping (VSM)Applicable to manufacturing, administration or service
Mapping the Current State for Admin or Service:Issuing PO, Issuing Checks, Requisition, Processing a Claim
-Minimize/eliminate non-value add processes-
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Inventory / WIP 96 Modules 32 Modules 66%
Part Travel Distance 2.3 Miles 320 Feet 97%
Lead Time 27 Days 2 Days 93%
Assembly Operations 8.5 Hours 6 Hours 29%
Before After Improvement
Creating Spaghetti ChartThe VSM Process
Before After
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The advantage of continuous flow, small batch processing;• Processing production run in batches of 10 requires 30 minutes• Processing production run in batches of one requires only 12 minutes
The advantage of continuous flow, small batch processing;• Processing production run in batches of 10 requires 30 minutes• Processing production run in batches of one requires only 12 minutes
Total Batch A Processing Time: 30 minutes for 10 parts21 minutes lead-time for the first part
Batch Processing
Continuous Flow, Small Batch Processing
Total Processing Time: 12 min. for 10 partsOnly 3 minutes for 1st part
A production run that requires three processes with a tact time of one minute each
Just In Time-Batch Issues Continuous One Piece Flow and Small Batch Production
Process 1: Cycle Time is 10 minutes for 10 part batch. Process 2:: Cycle Time is 10
minutes for 10 part batch. Process 3: Cycle Time is 10 minutes for 10 part batch.
Process 1: Cycle Time1 minute per part.
Process 2: Cycle Time1 minute per part.
Process 3: Cycle Time1 minute per part.
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DELAY IN DELIVERIES
GENERATING DEFECTIVEPRODUCTS
POOR HOUSEKEEPING
MACHINEBREAKDOWNS
LONGSET UPS
REWORK
MIXED MATERIALS
DECREASINGINVENTORYLEVEL
Lean Gets rid of the rocks and the expensive inventory!
Inventory Hides True Production Problems and NVA Activities
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5S Policy StatementTools and techniques available to support 5S
It is the responsibility of all the employees, located at all facilities and offices to implement 5S and to maintain it through a regular audit
procedure.
5S DefinedSorting (SEIRI ):
clearly distinguish needed items from unneeded items and eliminate items causing
clutter.Systemize (SEITON ):
keep needed items in the correct place to allow for easy and immediate use.
Shine (SEISO) :keep work areas clean and tidy.
Standardize (SEIKETSU):use agreed methods for consistency.
Sustain (SHITSUKE ):QuestAir will provide the time and tools for
continuous improvement.
QuestAir Technologies Inc.S 3S Checklist Date: Auditor(s):
Department: Score CommentsUnnecessary items or inventory
S Any objects on walkwaysO Storage areas for defective or used itemsR Storage areas for future productionT Any unneeded documents and drawings
Are there current work cell visuals in placeTotal Score /30
S All storage areas establishedY Storage spaces clearly labeledS Cabinets and shelves orderlyT Production, lab. areas and walkways litE All hand tools storage properly identifiedM Bulk materials appropriately storedI Sufficient signage throughout the areaZ Tools for cleaning visible and accessibleE All safety zones clear and unhindered
Total Score /45
S Walkways, entrances and floors cleanH Walls and windows cleanI Washrooms and trash cans cleanN Machines free of debris, oil and dirtE Puddles of oil, water or any liquids anywhere
Total Score /25Auditor's comments:
GRAND TOTAL of 100Score rating: 1 - POOR, 5 - BEST
Audit Schedule: 1-st week of the month - Laminate Area2-nd week - Machine Development3-rd week - Seal Development and Office Areas 4-th week - Prototype testing area
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Benefits of 5SReducing tool change time
equipment cleanliness = shorter tool change timeclearing space = tools @ machinelogical storage of tools/dies with
visual statusImprove customers’ investors & suppliers’ perception
first impressions importantgrocery or hospital mentalityevidence of 5S is typical of world class or best in class operations
Signifies stability & controltrust and respect are gained from employees & customerssign of discipline and prideestablishes credibility with stakeholdersdenotes a growth orientated company
Supporting ‘zero’ defect initiativesdefects hard to see when there is clutterdesignated storage reduces tool/part selection errorsclean equipment tends to operate more consistently
Lower ‘waste’ levelsfree up space for VA’edactivitiesbuying too many of everything
Reduce process delaysvisible conditionsless wasted motion / movementreduce potential injurysafety hazards identified quickerexits are kept clear
Reduce mechanical breakdown“crud” causes failures
abnormalities are visibleregular checking = reduced downtime
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Lean -Focus on Procurement-
Visual Material ManagementVMI
Simple-bin replenishmentElegant-link into ERP
Partnerships and CollaborationsJoint DFMA reviews
Lean AssessmentHow good is your supplier? Which “Lean”attributes do they apply?
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Project Rooms X-Functional Lean Project Management
• Project Management
•Charters
•Schedules
•Risk Assessment
• Manufacturing
•PFMEA
•Value Stream
• Engineering
•DFMA
•DFMEA
•Exploded Views
• Testing
•Results
•Purchasing•Exploded Actual Costs
•Targets Costs
•Suppliers & performance
•DFMA Reviews
• Sales
•Benchmark
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Pictures of Metrics board not shown
VisualsBusiness Unit Operating Metrics
Job • BOM, labour Cost• Warranty Cost
Customer• Open NCRs
Manufacturing• Interruptions
Engineering• Hours per job
Sales• Types of inquiries• Quote response• Reasons for lost sales• Sales to date
Purchasing• Supplier Performance
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VisualsPurchasing and Material Management-Kanban
2-Bin Kanban System Once bin is empty, second bin moves down
Kanban from empty bin is remove
Order is place into ERP systemParts arrive and Kanban is then put back into full bin
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VisualsPurchasing and Material Management-Kanban
2 Crate Kanban –Supplier receives one and must fill in all the components for a kit prior to return
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VisualsPurchasing and Material Management-VMI
Vendor Managed Inventory Moderate value purchased parts & multiple users
-User scans part -supplier notified of consumption-part cost is charged automatically to appropriate project code and G/L-Supplier
replenishes and reconciles
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VisualsPurchasing and Material Management-VMI
Low Value Items
• Fasteners, screws etc
• Cost to order typically exceeds value of order
Supplier visits and maintains “top up” of bins
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QuestAir Manufacturing Approach-Supplier Collaboration for non-core-
Focus on Core StrengthsLaminate StructuresValve DesignPackagingTesting
Development Partnerships for Non Core
Local SuppliersTier 1 & 2 Auto-parts suppliersProcess equipment suppliersVolume manufacturers
IntegrationNew Product Development & Project Management Processes to integrate core and non core aspects
Machine not shown
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Manufacturing Approach-Supply Chain Leverage &Pre-Fabricated H-3200 Modules-
As received from supplier
Assembled & tested with beds,
valves and remaining ROP
Package and ShipPrepare for shipping
Pictures not shown
Pictures not shown
Pictures not shown
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Manufacturing ProcessesDocumented process flow and procedures to eliminate errors & to capture lessons learned
Pictures not shown
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Simulation
“Understand by doing”For further information on the simulation that was conducted, please contact me directly.I can also suggest other sources for more extensive Lean Simulations.
Waste
Lean
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Implementing Lean
Executive Support Identify and support “Lean” champions
Perform an assessment tied to company strategic, operational, and marketing plans
Identify priority areasDevelop strategic lean “roadmap”Leverage readily available Lean training materials and resources to learn techniques
Don’t rely on the consultant for “implementation” or long-term Use consultants that have varied industry experience to get you up the learning curve
Get an early win applying a Lean Technique-then promote it! 5S, Manufacturing Cell, Set-Up Reductions, Inventory Reductions, Work Standardization
Establish improvement teams to progressively “Blitz” highest priority areas in the company
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The Lean StartImplementing Lean is Counterintuitive and “challenging” to implement:
Small flexible rather than large “economies of scale machines”Shutting down equipment when no requirement is “pulled”
There is no step-by-step “cook book”Varies from organization to organization Requires an assessment of the company in order to map out the strategy
Company culture plays a big partToyota 14 Principles Stresses “It’s a way to work”
Lean procurement is an inherent element of Lean Manufacturing
Suppliers need to be aligned or selected for their ability to work in a Lean environmentPurchasing professionals should be thinking “Lean”Traditional EOQ approaches need to be challenged
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Supplier AssessmentsDo you recognize Lean in your Supply Base?
Mini-Lean AssessmentGeneralSales/yr Margins Lab$/yr Raw Mat/yr SqFt Cap %
CommunicationGoals/Obj QC Probs Targets Visuals The Wall Empl Locations
MeasurablesPareto Scrap/QC Downtime Perf M/C Up Suplr Qual
PeopleX-Training Flexibility Teams/Contimpr Training
ProductionBalance WIP Bottlenecks Movement Ded'ed Cells ID NVA
MaintenancePM Sch
Set-UpTime Freq Scheduled Flex Equip
OtherSRED M&A Error Proof Poke-Yoke DFMA co-op VSM
MaterialFINV Raw Pull Storage Supermrkts Recv'g Windows
HousekeepingClean Clutter Std Vis Cntrls
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Lean ResourcesSources:
http://www.superfactory.com/http://www.sme.org/cgi-bin/getsmepage.pl?/new-sme.html&&&SME&www.lean.orghttp://www.cme-mec.ca/http://www.ame.org/http://www.advancedmanufacturing.com/leanmanufacturing/leanmanufacturing.htmhttp://www.productivitypress.com/cgi-local/SoftCart.exe/?E+scstorehttp://www.ocapt.com
Local Lean Community/CME Affiliates:BC Manufacturing Consortium (CME) Contact:
Werner Knittel-VP BC Div. (604) 713-7800David Chao-Managing Director/Lean Sensei (604) 785-1800
High Performance Manufacturing (HPM)-Ontario, Cooperates with CMEDavid Hogg-President 519-893-6260https://www.hpmconsortium.com/index.asp
Good Primers:
Lean Manufacturing and Implications to Procurement
Peter TyszewiczVP-Manufacturing & Product Development
Ed Wolosezky- Manager-Quality and PurchasingJason Penner-Purchaser