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How to Improve Your Bottom-Line Using
Lean Six Sigma February 26th, 2014
Presented by: Luis Socconini, CEO of Lean Six Sigma,
and Maysa Hawwash, National Manager of Talent Management Solutions
Drake International
For audio, it is recommended you dial in A copy of the slides + recording will be available post webinar
AUDIO: 1-877-668-4493 Access Code: 666 050 929
Event Password: 1234 WebEx Support: 1-866-863-3910
For more information, call 416.216.1067 2
Free Offer
We’re offering a free 30-minute Consultation about
increasing your organization’s effectiveness through Lean
Six Sigma.
Contact Maysa to take advantage of this exclusive offer!
416.216.1067
For more information, call 416.216.1067
Background
3
• Currently, many companies have:
– Slow delivery of their products or services
– Constant rejections and/or customer complaints
– Inconsistent quality
– Poor customer service
– High prices and costs
– Poor internal communication
THESE COMPANIES ARE DESTINED TO DISAPPEAR
“It is not the big who eats the small… It is the fast who eats the slow”
Jason Jennings
For more information, call 416.216.1067
Lean Six Sigma Focus
4
“With lean six sigma, our monthly expenses are 40% less than before implementing this great philosophy”
Traditional Thinking Lean Six Sigma Thinking
Cost Cost
Profit Profit
Price Price
Cost + Profit = Price Price (fixed) - Cost = Profit
Price
Profit
Cost
John Darroch, CEO of Apollo Sprayers
For more information, call 416.216.1067
Evolution
5
TQC
Quality Circle
JIT
Supplier Dev.
TQM World Class
TPM
TOC
Lean
Lean Oper.
Six Sigma
Lean Company
70s 80s 90s 2000s 60s 50s 40s
50% of Fortune 500 companies
For more information, call 416.216.1067
Lean Six Sigma Focus
6
Non-value adding time
Value-adding time
Less: Time, Costs, Defects, Inventory, Space, Waste
Total Time
Total Time
More: Productivity, Customer Satisfaction, Quality, Cash Flow
For more information, call 416.216.1067
Why Implement Lean Six Sigma?
7
• LEAN = Speed
– Flexible processes
– Teamwork
– Stable processes
– Continuous flow
• SIX SIGMA = Quality
– Problem solving
– Processes without variation
– Redesign and innovation
• Cost reductions
• Improvements in quality
• Improvements in personal satisfaction
For more information, call 416.216.1067
Lean Six Sigma Applications
8
• Manufacturing
• Services
• Offices
• Hotels & Restaurants
• Government
• Healthcare
• Accounting
• Logistics
• Construction
• Bank
• IT
• Sports
For more information, call 416.216.1067
Impact Over Time
9
Lean Six Sigma offers a significant jump towards improvement.
Time
Traditional Improvement Methods
Baseline performance
Be
nef
its
With Lean Six Sigma
For more information, call 416.216.1067
Not Everyone Has the Same Focus
10
Planning Sales Safety Legal Design Cost Reduction
Engineering Production Packaging Marketing Installation Customer
For more information, call 416.216.1067
Productivity Model
11
Productivity = Output
Input
PROCESSES
Parameters
Products/ Services Quality Cost Response Time Safety Motivation Social Impact Environmental lmpact
Manpower Materials Methods Machines Mother Nature Measurements
The 6 M’s
Input Output
For more information, call 416.216.1067
Limitations to Productivity
12
Mu! 無 理
無 駄 Muri = Overburden
Mura = Variability
Muda = Waste
For more information, call 416.216.1067
OVERBURDEN = Muri
13
Overburden occurs when workers and/or machines are
required to produce beyond their natural limitations or
capacity.
Muri
Overburden
Stressors
TOO HEAVY!
DIRTY! DANGEROUS!
For more information, call 416.216.1067
VARIABILITY = Mura
14
ムラ
Mura
Variability
DEFINITION:
Total Variability = Material + Machinery + Methods + Manpower
MACHINERY METHODS
MATERIALS MANPOWER
EFFECT TOTAL VARIABILITY
For more information, call 416.216.1067
WASTE = Muda
15
1 Overproduction
2 Excess Inventory
3 Defects
4 Movement
5 Over Processing
6 Wait Time
7 Transport
Others:
8 Energy
9 Talent
Work that adds value
Work that does not add any value, but is necessary under current conditions
Work that does not add value
Muda
For more information, call 416.216.1067
Excess Inventory = Waste
16
Productivity Problems
Inventory
Long set-up times
Rework/Defects Work for Inspections
Variable Demand
Slow Production Time
For more information, call 416.216.1067
Lean Six Sigma Tool Kit
17
• Define
– Project management
– Gantt chart
• Measure
– Data Collection
– Histograms, sigma level
– SIPOC
– Gauge R&R
• Analyze
– Process Capability
– Hypothesis Testing
– Confidence Intervals
– Ishikawa Diagram
– FMEA
– Multivari, Box Plots
– Analysis of Variance (ANOVA)
• Improve
– Design of Experiments (DOE)
– Regression Analysis
• Control
– Statistical Process Control (SPC)
– Control Plan
Strategy ◦ Hoshin Kanri
Structure ◦ TPM ◦ Value Stream Management ◦ Talent Management ◦ Lean Accounting
Basic Tools ◦ 5S ◦ Andon ◦ Value Stream Map
Tools to Minimize Cycle Time ◦ Cellular work ◦ Quick set-ups
Inventory Control and Planning ◦ Kanban
Tools to Improve Quality ◦ Poka Yoke, Standardized Work
Problem Solving ◦ 8 Disciplines/A3
Six Sigma Lean
For more information, call 416.216.1067
Who Participates?
18
CEO, Director Directors Managers Company-wide 20 to 50% 10 to 20% 1 to 3% 1 out of 10 BB
Executive Champion Owner White Belt Yellow Belt Green Belt Black Belt Master BB
Training Lean Management 8 hrs. 8 hrs. 40 hrs. 40 hrs. 120 hrs. 240 hrs.
Drives LSS as a strategy ✔ ✔ ✔
Ensures resources ✔ ✔ ✔
Approves projects ✔ ✔ ✔
Guides improvement teams ✔ ✔ ✔
Provides resources and eliminates barriers ✔ ✔ ✔
Identifies and selects projects ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔
Understands the philosophy and principles ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔
Proposes improvement ideas ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔
Proposes and participate in improvements ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔
Masters basic tools ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔
Masters lean tools ✔ ✔ ✔ ✔
Masters Six Sigma tools ✔ ✔ ✔
Masters LSS specialties ✔
LSS works because everybody participates!
For more information, call 416.216.1067
Lean Company System
19
1. System/Process Design
2. Definition of Indicators
3.Implementation of System/Process
4.Measurement of Performance
7. Improve and Innovate
6. Corrective and Preventive
Actions
Opportunities
Comparison to Best Practices
(Benchmarking)
5. Analysis of Performance
PLAN
DO
CHECK
ACT
Adaptation cycles
Improvement cycles
Start
(Design and implementation)
Development
(Adaptation cycles)
Competent
(Improvement cycles +
benchmarking)
Reliable
(In control, improvement
cycles)
Lean Company
(Improvement cycles +
benchmarking + best in its class)
For more information, call 416.216.1067
Design
20
• Design Methodology
• Prototypes
• Introduction to Manufacturing
• Validation
For more information, call 416.216.1067
Commercial
21
• Marketing
– Surveys
– Strategy Development
– Campaign
Development
– Price Definition
Sales ◦ Customer Management
◦ Lean Sales Process
◦ Demand Driven Sales
For more information, call 416.216.1067
Logistics
22
• Planning
– Resource Planning
– Scheduling
• Shipping
– Shipping Preparation
– Transport Coordination
• Warehouse
– Warehouse Design
– Receiving Materials
– Materials Management
– Inventory Counts
• Purchasing
– Negotiation
– Cost Analysis
– Pull System
For more information, call 416.216.1067
Manufacturing/Service
23
• Layout Design
• Material Flow
• Work Sequence & Balancing
• Continuous Flow
• Quick Preparations
• Equipment Maintenance
For more information, call 416.216.1067
Accounting
24
• Management accounting
– Strategy Management
– Budget
– Product Profit
• Operational accounting
– Cost Accounting
– Payroll
– Inventory
– Value Stream Analysis
• Financial accounting
– Invoicing
– Accounts Payable
– Accounts Receivable
– Credit
– Financial Statements
For more information, call 416.216.1067
Quality
25
• Lean quality system
– Lean Documentation
– Quality Deployment
– Quality Plan
– Quality at the Source
– Supplier Certification
For more information, call 416.216.1067
Implementation
26
Preparation Pilot Deployment
• Diagnostic • Hoshin Kanri
Strategies Box score
• Implementation Plan • Promotion of LSS • Define Product/Service Families • Lean Management Training
•Training • WB, YB, GB, BB
• Lean Accounting • Talent Development
• Value Stream Mapping • Analysis of Opportunities • Kaizen Events
• Value Office • Work Cells • TPM • Andon & 5S • SMED • Kanban • Standardized Work • Poka Yoke
• Sigma Kaizen Events
• Organizational Structure Value Streams
• Application to Every Process • Mature Lean Accounting • Lean Design • Lean Office • Lean Logistics • Lean Service • Lean Quality • Culture Change
Knowledge Habits Attitude
3 to 6 weeks 4 to 6 months 2 to 5 years
For more information, call 416.216.1067
• Initial situation in car insurance
– 14 – 17 days to pay total loss
– Delivery time 40 – 45 days
– High internal cost per transaction
• Main actions
– Lean Service training
– Value stream map
– Service cell (capture, valuation, legal, payment)
• Results
– 24 hours payment for total loss
– Decrease of 75% cost per transaction
Insurance company
For more information, call 416.216.1067
Painting Machines
28
• Initial situation
– Delivery time 3 weeks + shipping
– Sales only cover expenses (no profit)
– High Inventory
– No Available Capacity
• Main actions
– Re-Layout
– Manufacturing Cells
– Complete Training System
• Results
– Delivery time 2 to 3 days + shipping
– Cost reduction 40% (consistent)
– Sales increase 20% average
– Inventory reduction 55%
For more information, call 416.216.1067
Logistic (Pharmaceutical)
29
• Initial situation
– Variable Demand
– High Inventory Levels
– Constant Back Orders
• Main actions
– Delivery Time Reduction (quick set up, cells, tpm)
– Kanban System Implementation in the Value Stream
• Results
• Total Inventory Reduction from 120 days to 15 days
• Cost Reduction for more than $50 million dollars
• Zero Back Orders
For more information, call 416.216.1067
Supply Chain Without LSS
30
Supplier Factory Distributor Retailer Customer
Average 1353 668 477 395 201
Lead Time 4.5 4.06 3.5 3.2
Std. Dev. 1091 397 158 69 25
Variation 81% 129234 59% 14567 33% 11092 17% 4874 12%
Inventory (days) 95 22 23 12
0
500
1000
1500
2000
2500
3000
3500
4000
1 3 5 7 9 11 13 15 17 19 210
50
100
150
200
250
300
1 3 5 7 9 11 13 15 17 19 21
0
100
200
300
400
500
600
1 3 5 7 9 11 13 15 17 19 210
100
200
300
400
500
600
700
800
1 3 5 7 9 11 13 15 17 19 21
0
200
400
600
800
100 0
120 0
140 0
1 3 5 7 9 11 13 15 17 19 21
For more information, call 416.216.1067
Supply Chain With LSS
31
Supplier Factory Distributor Retailer Customer
Average 228 220 216 203 201
Lead Time 4.5 1.86 0.8 0.5
Std. Dev. 63 57 64 27 25
Variation 28% 129234 26% 14567 29% 11092 13% 4874 12%
Inventory days 567 66 51 24
Kanban 1310 515 224 115
Days 6.0 2.4 1.1 0.6
0
100
200
300
400
500
1 4 7 10 13 16 190
100
200
300
400
500
1 4 7 10 13 16 19
0
100
200
300
400
500
1 4 7 10 13 16 190
50
100
150
200
250
300
1 4 7 10 13 16 190
50
100
150
200
250
300
1 4 7 10 13 16 19
Downstream Upstream
For more information, call 416.216.1067
Why Some Can and Other’s Can’t
32
Skills Vision Incentives Resources Plans Changes + + + + =
Confussion
Anxiety
Slow Change
Frustration
False Starts
Skills Incentives Resources Plans + + + + =
Vision Incentives Resources Plans + + + + =
Skills Vision Resources Plans + + + + =
Skills Vision Incentives Plans + + + + =
Skills Vision Incentives Resources + + + + =
For more information, call 416.216.1067 33
QUESTIONS?
For more information, call 416.216.1067 34
Upcoming Webinar
Register @
drake-webinars.com
March 19, 12pm EDT
How to Improve Your Safety Training
Through Online Delivery
Presented by: Dan Hannan, Corporate
Health and Safety Director of Merjent, Inc.
and Mitch Diamond, President of
Exponential-Impact, a Drake International
company
For more information, call 416.216.1067 35
Free Offer
We’re offering a free 30-minute Consultation about
increasing your organization’s effectiveness through Lean
Six Sigma.
Contact Maysa to take advantage of this exclusive offer!
416.216.1067