International Lean Manufacturing Lessons

National Localization Indaba

Balázs Németh, Phd.Kvalikon Consulting

DAC – Annual Grand Meeting5 June 2014

Competition

2

Competing for

Customer

Resources(Capital, Raw Material,

Energy, HR)

3

CustomerMarkets

TechnologyInnovation

Areas of competition

Delivery

Cost

Quality

4

Flexibility Volume

Flexible adaptation is key

Cost Cutting Actions

Demand

5

Waste!

Capacity

Sources of Flexibility

People

� People are the most flexible element of the System

� They are able to handle� Exceptions,

Processes

� Should help to adapt to changes� Standardized Processes help to

manage � General situations

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� Exceptions, � Changes, � Problems

� Continuously improving and learning

� Make Decisions

� General situations� Exceptions

� Should be continuously improved

� PDCA Cycle, Continuous feedback on performance

Process Flexibility

CustomerSupplier

Procurement

VarietyPredictabilityChangeability

Order QuantityReliabilityAvailability

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� Where is the bottle neck?� Which is the „Pace Maker”

(Controlled) Process? � Where should be inventory?� How much inventory?

� How much does it cost? � To dedicate resources?� Not serving your customer?� Serve the Customer later?� To hold inventory?

� When do I get the money?

Component Production

Subcomponent Assembly

Assembly DistributionProcurement

Inbound Logistics

LEAN - TOYOTA – Sources of competitiveness

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Toyota Production System

Taichi OhnoShigeo Shingo

„All we doing is looking at the timeline from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time by removing non value added wastes.” Taichi Ohno

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Lean approach

Material received Product delivered

Material ordered Lead time of transformation system

Lead time of order fulfillment

10

Order PaymentMaterial payment

Lead time from order to payment

Lead time from cash to cash

5 Principles of Lean Management

1. Specify value from the standpoint of the end customer by product family.

2. Identify all the steps in the value stream for each product family, eliminating whenever possible those steps that do not create value.

3. Make the value-creating steps occur in tight sequence so the product will flow smoothly toward

Value

Value stream

sequence so the product will flow smoothly toward the customer.

4. As flow is introduced, let customers pull value from the next upstream activity.

5. Pursue perfection. As value is specified, value streams are identified, wasted steps are removed, and flow and pull are introduced, begin the process again and continue it until a state of perfection is reached in which perfect value is created with no waste.

(Daniel Jones, James Womack)

Flow

Pull

Perfection

11

LEAN modules

JITPeople

involvment

JIDOKABuilt in

KAIZENWaste elimintaion

JIT involvmentBuilt inquality

LEAN thinking, culture

Visual mgmt. 5SStandardization

TPMSTABLE OPERATION

LSM

12

Application of Lean Practices

Strategic GoalsGoals

Values,Principles

LEAN BehaviourPractices

ProcessesStandards

13

Factors

PracticesPractices ResultsResults

14

ConditionsConditions

Results

Performance measure, indicator Value

Trend of the measure in the last 3 years

+ (improving) - (declining)

0 (stagnating) Revenue (1000 Ft)

Finished goods inventory (1000 Ft)

Work in process inventory (1000 Ft)

Raw materials inventory (1000 Ft)

Customer PPM *

15

Delivery reliability (OTD) *

Average order fulfillment lead time (hours)*

Average manufacturing lead time (hours)*

Supplier PPM *

OEE (%) *

Number of suggestions implemented (suggestion / person / year)

Training hours / person / year *

Labour turnover (%) *

Cost saved by continuous improvement (Kaizen) activities (1000 Ft)

Practices

Application Extension

Lean methods

0 –

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ucce

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ffect

ive

4 –

Exc

elle

nt, B

est

Pra

ctic

e

1 –

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are

as

2 –

25%

of t

he a

reas

3 –

50%

of t

he a

reas

4 –

Eve

ry a

rea

(100

%)

How

long

is it

app

lied?

Strategic Approach

Lean implementation program

Value Stream Mapping

Lean Audit

Supplier Development

Pull principle

JIT, production scheduling based upon takt time

16

Kanban system

One piece flow

FIFO inventory management

Supermarket

Continuous Flow

Heijunka

Line balancing

Synchronized production

SMED

Zero Defects (JIDOKA)

Built in quality, in process quality checks

POKA-YOKE

SPC

FMEA

Andon

DOE (Design of experiments)

Practices

Application Extension

Lean methods

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of a

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dom

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How

long

is it

app

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0

– N

ot k

now

m, n

ot

Continuous improvement (KAIZEN)

Systematic Problem Solving, (8D, 7 steps..)

Suggestion System

„5 Whys?” method

PDCA cycle

Systematic waste reduction

Data collection and problem identitfication sheets

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Kaizen workshops (1 week Kaizen actions)

Basic Stability

5S

TPM

Standard work (SOP)

Controlled and documented processes

Visual Management

Flexible workforce, and involvement

Team-work, Quality circles

Cellular Manufacturing

Cross functional training matrix, multi-skilled employees

Empowerment, (eg.: The employee can stop the line..)

Operator trainings

Conditions

Conditions, Environment 0 - No 1 – Few, Little, - Seldom

2- Medium, Stabile,

Continuous

3 - Strong, Full, High

level

Important

Top management participation

External pressure (customer, headquarters)

Availability of Human Resources

Availability of Financial Resources

Lean coordinator

Lean champion, top management supporter

Lean training program

Lean implementation program (project plan..)

Supporting organizational

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Supporting organizational structure

Lean expert

Lean Audit

Dedicated leaders to manage Lean

Company News paper

Management and employee empowerment

External consultant support

Controlled process, Stabile operations

Stabile, solid market (demand), orders

Supporting software

Partners (Customers, Suppliers) cooperation, participation

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76,5%82,4%82,4%82,4%82,4%82,4%82,4%82,4%82,4%82,4%

88,2%88,2%88,2%88,2%88,2%

94,1%94,1%

Systematic waste elimination„5 Whys?” method

Standard work (SOP)

Data collection sheets5S

FIFO inventory management

Suggestion SystemPDCA cycle

FMEA Teamwork, Quality Circles

Empowerment

Built in QualityCross fuctional training, multi-skilled labourSystematic Problem Solving (8D, 7 steps..)

Operator trainingsControlled and documented processes

Application frequency of Lean methods

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35,3%41,2%

47,1%52,9%52,9%52,9%52,9%

58,8%58,8%58,8%

64,7%64,7%64,7%64,7%

70,6%70,6%

76,5%76,5%76,5%76,5%

0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% 80,0% 90,0% 100,0%

DOE (Design of experiments)

Heijunka Lean Audit

Andon

Lean implementation program Line balancing

SupermarketOne piece flow

Synchronized production

Cellular ManufacturingKanban System

Value Stream Mapping

SMED Kaizen workshops

JIT production scheduling

SPC TPM

Supplier DevelopmentPOKA-YOKE

Visual Management

The interrelationship between the use of different methods

� The application of tools is clustered around two philosophies Lean Management and TQM.

� At those companies, where the Lean is not applied in a structured way yet, but the TQM philosophy is strongly applied, the Stability, 0 defects, continuous improvement and people involvement - flexible workforce methods are applied on a higher level.

� At those companies, where the Lean Management is applied in a

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� At those companies, where the Lean Management is applied in a systematic way, besides the previous 4 areas, the strategic approach, Pull principle, and, Continuous Flow methods are also applied on a higher level.

� The following methods can be applied effectively independently (without the use of other tools): Supplier Development Systematic Problem Solving, Controlled and documented processes, TPM, operator trainings.

Correlation of the results (performance measures) and the methods

� Sales/revenue

� Lean implementation program, � JIT production scheduling, � One-piece flow, � FIFO inventory handling, � Line balancing,

� Inventory turnover

� Lean implementation program� Supplier development, � JIT production scheduling, � Kanban System� One-piece flow

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� Line balancing,� Synchronized production, � SMED, � POKA-YOKE � 5S.

� One-piece flow� Supermarket� Line Balancing� Synchronized production, � SMED, � Andon.

So, if you want to improve inventory turnover, the methods of the strategic approach, Pull principle and Continuous flow should be applied better.

Correlation of the results (performance measures) and the methods

� Delivery reliability

� Methods of pull principle � Kanban� One piece flow� Supermarket� Synchronized production

� Empowerment

� Lead time� Lean implementation program� Lean Audit� JIT production scheduling� FIFO inventory handling� Line balancing � Systematic problem solving

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� Empowerment � Standard work� Supplier Development� Suggestion system� Cellular Manufacturing

� Systematic problem solving� Synchronized production� Built in Quality� PDCA Cycle� 5S � Cross functional training

Lead time and OTD improvement requires an integrated effort where you first improve basic stability, apply the pull principle, involve people and apply the methods of continuous improvement, and then the continuous flow.

Correlation of the results (performance measures) and the methods

� Customer PPM

� 0 defects concept� Built in Quality � Poka-Yoke � ANDON

� Continuous improvement (KAIZEN) PDCA cycle

� OEE� Systematic Waste elimination� 5S� Empowerment � Standard Work � Team work, Quality Circles

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� PDCA cycle � Data collection sheets � 5 Whys

� 5S � Visual Management � JIT production scheduling

If you want to improve PPM and reduce defects, build a system where people can recognize and eliminate problems

� Suggestion implemented� 5S, Visual Management� 5 Whys � Systematic Problem Solving� Kaizen workshops

50,0%

50,0%

50,0%

56,3%

56,3%

62,5%

68,8%

75,0%

75,0%

81,3%

81,3%

Lean training program

Supporting organizational culture

Controlled process, Stabile operations

Management and employee empow erment

Supporting softw are

Dedicated leaders to manage Lean

Stabile, solid market (demand), orders

Availability of Financial Resources

Partners (Customers, Suppliers) cooperation, participation

Top management participation

Availability of Human Resources

The frequency of finding the conditions important

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25,0%

31,3%

31,3%

37,5%

37,5%

43,8%

43,8%

43,8%

50,0%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

External consultant support

Lean coordinator

Lean Audit

Lean implementation program (project plan..)

Company New s paper

External pressure (customer, headquarters)

Lean champion, top management supporter

Lean expert

Lean training program

Conditions

The conditions considered to be the most important at those firms, who are on a higher level in application of Lean methods.

� Management Participation *� Availability of Human Resources *� Availability of Financial Resources *� Lean coordinator

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� Lean coordinator � Lean champion, top management supporter� Lean training program � Supporting organizational culture� Lean expert� Dedicated leaders to manage Lean *� Empowered employees� Stable, secure market (demand), orders � Partners (Customers, Suppliers) cooperation, participation *

* - indicates the 5 most important conditions

Preconditions of Lean management implementation� At the most successful companies in Lean implementation the

following preconditions are prevalent� Lean implementation program, � Lean coordinator, � Lean training program,� Strong top management support and participation

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� External pressure (customer, headquarters)� Sound organizational background� Availability of human and financial resources� Empowered leaders and employees� Contribution of Lean expert� Stabile and controlled processes� Supplier development � Appropriate organizational culture

Lean implementation program

5.0 Transformation process - Gemba Kaizen Actions

5.2 ContinuousFlow

5.2 ContinuousFlow

5.4 JIDOKA 0 deffects

5.4 JIDOKA 0 deffects

5.3 Pull System5.3 Pull System

5.1 LayoutOptimization5.1 LayoutOptimization

1.0 Lean Philosophy and Culture

2.0 Lean Strategy and Vision (Future Value Stream)

4.0 Create Basic Stability – 4M

3.0 Lean infrastructure (organization)

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Lean implementation steps� Gain Top Management commitment � Introduce and train the Lean philosophy and methods� Case for Change� Prepare Lean implementation program� Prepare the organization for Lean implementation (OD program)� Build strong foundation (Create Basic Stability, 5S, standard work,

visual control)

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visual control) � Prepare Current State Map of the Value Streams� Identify improvement points and opportunities (Bottlenecks) � Set up Kaizen System, involve and empower people� Proceed step by step (pilot project, Kaizen workshops) � Follow the 5 Lean principles (while improving the pilot areas)! � Continuously improve the System � Involve the Suppliers

Lean Assessment, Value Stream Mapping

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LEAN AUDIT category results

3

3

3

3

33

3

3

0,56

2,14

1,94

2,13

1,20

2,702,43

2,70

2,50

3

0,00

1,00

2,00

3,00

4,00Pull system, continuous flow

Production - Effectiveness

Visual Control

Standard work

Disciline, TransparencyPDCA, corrective actions,

improvement

Flexible, motivated workforce

0 deffects, Built in Quality

Management support,conditions

Actual score Goal

Elements of effective Kaizen mechanism

expe

ctat

ions

, Sta

ndar

ds

Identify the FindingProblem Implementation Evaluating

Problem centric„good sheperd” approach

proc

esse

s, p

ract

ice

Lean, Kaizen knowledge, methods, coordination

Empowermentdecisions, resources

Accountability, Recognition

Goa

ls, e

xpec

tatio

ns Identify theproblem

Findingsolution

Problemanalysis

ImplementationPDCA

EvaluatingThe results

Data collectionProblem catalogueFailure cardsBrain storming

Value Stream MappingKaizen workshop, 7 QC tools5 Why? 7 MUDA, 3MU, 4M..Structured problem solving

Sta

ndar

ds,p

roce

sses

, pra

ctic

e

Lean KPIsSPS AuditLayered Audit

Kaizen diaryMonitoring

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Sources of competitiveness

� Innovation – Good Products (Market in)� Strong Company Culture � Excellent Processes� Quality of and Access to Resources (HR, � Quality of and Access to Resources (HR,

Financial, Natural, Technical)

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Conclusions, Learnings

� Strategic Focus� Improve processes � Competency Development (Improve people

capabilities)� People Involvement� People Involvement� Systematic Approach � Learning by Doing (Kaizen)� Knowledge (Best Practice) Sharing� SDCA – PDCA Cycle

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Further Information

Kvalikon Consulting Ltd.

Budapest, HU-1125 Istenhegyi út 63/B

Telephone: (+36-1) 201 12 35, 489 0003Telephone: (+36-1) 201 12 35, 489 0003

E-mail: nemeth.balazs@kvalikon.hu

Web: www.kvalikon.hu

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