How to Improve Your Bottom-Line Using Lean Six Sigma
October 1st, 2014
Presented by: Luis Socconini, CEO of Lean Six Sigma Institute
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Objective
Understand how important is to develop lean companies in order to be competitive and improve your bottom-line.
A radical way to success!

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Some concerns

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Causes
Market has changed to high mix and low volume
Only 2 % of forecasts are accurate
Functional structures with little interaction
Poor Planning
Rigid budgets

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Do We know?
What is the rate at which customers buy?
What is the supply chain capacity?
What is the demand level of variation?
What is the bottleneck in the supply chain?
Do we all know the same?

Productivity
Productivity =
Outputs
Inputs
PROCESS
inputs
Customer
outputs/
inputs
PROCESS
outputs

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Productivity

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Lean Company
R&D
Sales
Purchasing
Operations
Delivery
Accounts receivable
R&D
Sales
Purchasing
Operations
Delivery
Accounts receivable
Time
Cost
Time & Cost
Lean
Manufacturing
Service
Lean Accounting
Lean Office
Lean
Design
Lean
Logistics
Lean
Logistics
Lean
Sales

Lean Company
Processes
Lean contribution
Management
Strategy, Box score, Project management, budget
Human Resources
Talent development and value stream structure
Design
Faster design process and designed for six sigma
Finance
Managerial, Cost, Financial
Commercial
Sales and marketing integrated
Logistics
Agile planning, programing, purchasing, warehousing, transportation
Manufacturing / Service
High quality Products and services, fast delivery time
Quality
Quality lightweight processes and effective.
Maintenance
High reliability in equipment and facilities.
InformationTech.
Only the necessary technology and information available.
Lean Green
All the above processes : low energy waste, less pollution, etc
It´s the integration of the key processes of the company, eliminating all types of wastes, variation and overburden.

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Management tools
Hoshin Kanri
Box score
Value stream structure
Lean cost accounting
Talent development
Lean Management Leaders designing the future
16
hours total

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Basic tools
Housekeeping (5 S´s)
Visual management (Andon)
Standard work
Teamwork
Time management
White Belt Every body hands on
8
hours total

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1 Define
A3
Gantt chart
2 Measure and Map
Data collection
Value stream map
3 Analysis
Spaghetti diagram
Balance chart
Waste analysis
Yellow Belt: Lean Practiotioner
•4 Improvement
–Cellular work
–Quick setup
–Total productive maintenance
–Kanban
•5 Control
–Standard work audits
–Poka Yoke
40
hours total

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1 Define
QFD
Kano Model
Needs tree
2 Measure and Map
SIPOC diagram
Sampling
Gauge R&R
3 Analysis
FMEA
Basic statistics
Hypothesis testing
Histogram
Probability distributions
Process capability
DPMO
Sigma level
Green Belt: Lean Six Sigma Practioner
•4 Improvement
–Brainstorming
–Basic design of experiments
–Prioritization matrix
–Box plots
•5 Control
–Control charts
–Control plan
80 hours total

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Train Trainers
Lean Accounting advanced
1 Define
Project management
Financial project analysis
2 Measure and Map
Cross-functional diagram
3 Analysis
Variance analysis
Regression analysis
Multi-vari analysis
4 Improvement
Pugh Matrix
Advanced design of experiments
Theory of constrains
Heijunka
5 Control
KPI trees
Standard work for leaders
Gemba walks
Project report
Black Belt: Lean Six Sigma Expert

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Advanced tools
Change management
Business process model
advanced project management
Lean layout
Lean green
Master Black Belt: Lean Six Sigma Leader - Trainer
•1 Define
–Project
–Target cost
•2 Measure and Map
–Voice of the customer
–Product measurements
–Map the design process
•3 Analysis
–Design FMEA
–Functional analysis (value engineering)
–Pugh matrix
•4 Design
–TRIZ
–Design for manufacturing
–Design of experiments advanced
•5 Validation
–Validate design
120 hours total

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How to implement lean supply chain into a lean enterprise
Key elements
◦knowledge of current demand
◦Inventory accuracy > 99%
◦Value stream structures
◦Internal process improvements
◦Continuous interaction throughout the supply chain

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What is a lean supply chain?
Work philosophy to remove all waste from the supply chain.
The supply chain includes sourcing processes, from obtaining the materials, production, distribution center to deliver the product or service

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What is Lean in the Supply chain?
Synchronize the rate of consumption and replenishment cycle.
To develop a flexible logistics service process that never stops manufacturing or service from lack of materials or information.

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What to measure?
Sem 1
sem 2
Sem 3
Sem 4
Sem 50
Units per person
36.16
42.05
51.39
Ontime delivery
98.00%
94.00%
98.00%
Backlog value
$22,022
$76,824
$28,168
Delivery time
23.58
20.5
16.5
First time yield
96%
92%
98%
Cost of poor quality
$12,133
$2,134
Average cost per unit
$388.46
$348.66
$316.91
Inventory accuracy
97%
97%
99%
Inventory turnover
8
9
24
Total effectiveness of supply chain
49%
51%
75%
Accounts receivable
34.5
37
35
Demand
3616
3998
4250
Capacity
5000
5000
5580
Available capacity
28%
20%
24%
Revenue
$1,101,144
$1,280,400
$1,408,440
Cost of material
$462,480
$512,160
$535,207
Conversion cost
$250,435
$231,884
$208,696
Supply chain profit
$388,229
$536,356
$664,537
Return over sales
35%
42%
47%
Inventory value
$593,008
$577,987
$255,000

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Implementation plan

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Example: Unit parts Co.
Proveedor Fábrica Distribuidor Tienda Cliente
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 21
0
50
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300
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600
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1 3 5 7 9 11 13 15 17 19 21
0
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800
100 0
120 0
140 0
1 3 5 7 9 11 13 15 17 19 21
Excess inventory throughout the supply chain.
Not everybody has the same information, especially regarding consumer's
demand.
Supplier Factory 1 Factory 2 Distributor Store
Promedio 1353 668 477 395 201
Lead Time 25.7 5 9.25 3.3
Desv Est. 1091 397 158 69 25
Supplier Factory 1 Factory 2 Distributor Customer
Inventario dias 95 22 23 12
Variación 81% 129234 59% 14567 33% 11092 17% 4874 12%
Días 94.0 10.3 14.9 7.6
0
2000
4000
1 3 5 7 9 11 13 15 17 19 21
0
500
1000
1500
1 3 5 7 9 11 13 15 17 19 21
0
200
400
600
800
1 3 5 7 9 11 13 15 17 19 21
0
200
400
600
1 3 5 7 9 11 13 15 17 19 21
0
100
200
300
1 3 5 7 9 11 13 15 17 19 21
Average

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Example: Actions
Define: Select team (internal/external) & objectives.
Measure: Supply chain´s value stream map.
Analyze: Identify waste & bottlenecks.
Improve: Kaizen improvements.
Control: Training & follow up.

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Current Value Stream Map
Current state analysis with Supply Chain´s Value Stream Map.
PASOS Total = 73 Pasos VA = 8 Estatores Almacen (TEXAS) Estatores QAPI Guadallajara RM 336 h. WIP 110 h. FG 48 h____ 3 turnos___ 5 dias_____ EPE= 3 Dias Defectos = 2000ppm Magnecom Monterrey Rollos de cobre Alternadores Unit Parts Co RM 56 h. WIP 41 h. FG 12 h____ 2 turnos___ 5 dias_____ EPE= 1 Dias Defectos = 400ppm 2 x Semana 6 x año 500 millas__ Lote embarcado = 72 rollos Defectos = 8% 2 x Semana 2 x año 1500 millas__ Lote embarcado = 36 pallets Defectos = 6% 1 x Día 5 x año 100millas__ Lote embarcado = 12 pallets Defectos = 6% 1 x Día 100millas__ Lote embarcado = 6 pallets Defectos = 3% .3 días4.0 días.25 días.25 días20.6 días4.6 días1(3131 seg)11.0 días1(30 seg)122(3)421 (3) Control de producción de la OC MRP Control de producción MRP 14 días 6 días 14 días Guadalajara Oklahoma Oklahoma OK Planta Beta Control de producción MRP 6 días Control de producción de la OC de UP Co. MRP 6 días Cleveland OH 1 x Sem. semanalmente 1 x Sem 1 x Sem 2 x sem 1 x sem 2 x sem 1 x sem 1 x día 1 x día 1 x día 1 x Día 2 x año El paso, TX Tiempo Tiempo total = 44.3 dias Tiempo en planta = 31 dias Tiempo de transporte = 13.3 dias Tiempo VA = 54.7 min, 3281 seg Estatores Beta Cross-Dock Alpha Motros Cross-Dock Tiendas 960/día 640 A 426 ST 214 HT 320 B 213 ST 107 HT Ditribución Colorado RM 50 h. WIP 2 h. FG 14 h____ 2 turnos___ 5 dias_____ EPE= 1 Dias Defectos = 5 ppm 600 millas__ Lote embarcado = 6 pallets Defectos = 3% 1 x Día 2000 millas__ Lote embarcado = 6 pallets Defectos = 3% Oklahoma 1 x semana 500 millas__ Lote embarcado = 1 Tren Defectos = 1% 4.0 días4.0 dias.5 dias2.8 dìas.5 días1.5 días1(120 seg)14411 (2) 14 días Control de producción de la OC de clientes MRP 10 días Colorado Banco de Recepción de OT de ALPHA MRP Control de producción en la planta de ALPHA MRP 6 días Control de materiales de la planta de ALPHA MRP 1 x Sem 1 x día 1 x Sem 1 x Sem 1 x día 1 x día 1 x Sem 1 x día

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Example: Waste & Value Analysis
Raw material supplier. 1.- Shipping, twice week.10 minTransport connection 1.2.- Direct Shipment.8 hoursSupport supplier. 3.- Unload materials.10 min 4.- Register and ticket impression.10 min 5.- Warehousing material.14 days6.- Move material to production areas.10 min 7.- Load raw material on machine.5 min 8.- Stamping 1.11 sec1 sec9.- Accumulate stamped parts.4 hours10.- Move stamped inventory to warehouse.10 min11.- Warehousing stamped pieces.48 hours12.- Move the stamped inventory to machine 2.10 min 13.- Load parts into the machine 2.10 min14.- Second stamping process.210 sec 10 sec15- Accumulate stamped parts.4 hours16.- Move stamped inventory to warehouse.10 min17.- Warehousing pieces.48 hours18.- Move pieces to paint warehouse.10 min19.- Place pieces on painting machine.3130 min52 min20.- Remove painted pieces, inspect and pile them on pallet.2 hoursValue added stepsTotal stepsTotal timeValue added time

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Example: Summary of actions
73
8
44.3 days
54.7 min
TOTAL
Value aded
Steps
Time
Value aded %
11%
.08%

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Example: Future Value Stream Map
Logistic process redesigned, based on “Pull” system.
Banco de recepción de ordnes PEP BOYS Control de Materiales UP Control de producc. UP Centro de Distribución PEP BOYS Minessota Cleveland 960 día 640 A 320 B 1 x Día 1 x día 1 x día 1 x día CTRL.de producc. QAPI 1 x día MAGNECOMcentro de producc. 1 x día 1 x día Magnecom Monterrey Rollos de cobre oxox oxox 1 x día Uniit Parts Oklahoma Tiempo Tiempo total = 15.8 dias Tiempo en planta = 6.5 dias Tiempo de transporte = 9.3 dias Tiempo VA = 54.7 min, 3281 seg 500 millas__ Lote embarcado = 960 vehiculos Defectos = 1% RM = 15 WIP = 2 FG 14 2 TURNOS 5 días EPE = 1 día Defectos = 5ppm Magnecom QAPI RM = 15 WIP = 0 FG 12 2 TURNOS 5 días EPE = 1 día Defectos = 5ppm RM = 24 WIP = 62 FG 12 3 TURNOS 5 días EPE = 1 día Defectos = 250 ppm 1800 millas__ Lote embarcado = 6 pallets Defectos = 1% 1500 millas__ Lote embarcado = 6 pallets Defectos = 2% 500 millas__ Lote embarcado = 24 rollos Defectos = 3% Guadalajara Monterrey .3 días4 días 4.5 días.5 días14 días (3131 s)11.2 días (30s)11.3 días (120s)120 (3)17(2) 1 x día 1 x día 1 x día

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Example: Actions
Continuous flow in production processes.
Housekeeping (5 S´s) on warehouses and production.
Takt time & capacity boards.
Quick changeovers on production and expedition areas.
Leveling the work load on production and expedition areas.
Setting up buffers/kanbans with suppliers and customers.

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Example: Achievements
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 19
0
100
200
300
400
500
1 4 7 10 13 16 19
0
100
200
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400
500
1 4 7 10 13 16 19
0
50
100
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1 4 7 10 13 16 19
0
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100
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300
1 4 7 10 13 16 19
Up stream Down stream
PrSouvpepeldieor r FaFcátborriyc 2a 1 FFaabcrtiocray 21 DDisisttrriibbuutiodro r TiSetnodrea
Supplier Factory 1 Factory 2 Distributor Customer
Lead Time 4.5 1.86 0.8 0.5
Desv Est. 63 57 64 27 25
KANBAN 9.5 5.1 3.1 1.5
Variación 28% 26% 29% 13% 12%
0
100
200
300
400
500
1 3 5 7 9 11 13 15 17 19 21
0
100
200
300
400
500
1 3 5 7 9 11 13 15 17 19 21
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1 3 5 7 9 11 13 15 17 19 21
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1 3 5 7 9 11 13 15 17 19 21
0
50
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150
200
250
300
1 3 5 7 9 11 13 15 17 19 21

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Requirements
Conclusion

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We are standing in front of a unique opportunity to become more productive, by transforming the Supply Chain and achieving our strategic goals.
Conclusions
7 Dimensions
Actions to take
1. Demand Management
Following real demand, agile budgeting, weekly mindset.
2. Inventory Management
Pull system (kanban).
3. Warehousing
Minimize looses, stock breakouts and obsolescence.
4. Batch size
Quick changeovers, Leveling (heijunka).
5. Speed
Managing bottlenecks, continuous flow (cells).
6. Quality Management
Mistake proof (poka-yoke), Six Sigma, SPC.
7. Transportation
Distribution network plan.

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QUESTIONS?

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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!
mhawwash@na.drakeintl.com
416.216.1067

Thank You for Attending
For Questions please contact Maysa Hawwash
mhawwash@na.drakeintl.com
416-216-1067