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
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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
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LEAN modules
JITPeople
involvment
JIDOKABuilt in
KAIZENWaste elimintaion
JIT involvmentBuilt inquality
LEAN thinking, culture
Visual mgmt. 5SStandardization
TPMSTABLE OPERATION
LSM
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Application of Lean Practices
Strategic GoalsGoals
Values,Principles
LEAN BehaviourPractices
ProcessesStandards
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Factors
PracticesPractices ResultsResults
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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 *
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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
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Exc
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est
Pra
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1 –
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2 –
25%
of t
he a
reas
3 –
50%
of t
he a
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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
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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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How
long
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0
– N
ot k
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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: [email protected]
Web: www.kvalikon.hu
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