Productivity related Vital Measures through simulations

Concept Note
“Simulated Work Environment”
Learning 7 Vital Measures of any Production System
through
Lean Simulation Exercise.
Sameer Kumar
3TP-Jan 2011(IIMA)
sameercar@gmail.com
Mob 00-91-9650024171
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Before We start..
1983 v/s 2015
Then & Now
Let us start with a story
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What was then?
Year- 1983
Price of New Maruti 800- Rs 47,500/=
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What is Now?
It simply tells that “it is possible to deliver things
“more quicker and more qualitative at reduced cost”
Non AC
Manual Steering
Manual Window
Noise
Less Mileage
Delivery 60-180days
*0.47Lakhs become 7.6Lakhs in 2015
AC
Power Steering
Power Window
Low Noise
Improved Mileage
Delivery 0-3days
1983 v/s 2015
Maruti 800 (0.47 Lakhs)* Maruti Alto (2.7 Lakhs)
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What has changed & What are the Challenges?
Bajaj
Piaggio
Yamaha
Honda
TVS
Mahindra
Hero Moto
Corp
Suzuki
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Then & Now

What has Changed & What are the Challenges?
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What was “Then” ?
Cost Profit
Cost
Profit
Price
Customer was not
having many choice
and was bound to
pay this price.
Cost Plus
Over the years the worldwide the manufacturing industries has been following a practice
where they would add up their costs and they add on profit percentage and would sell to
customer on leave it or take it basis.
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What is “Now”?
Cost
ProfitPrice
Customer is having
many choices and
can pay this price or
lower price.
Price
Price Minus
Now the scene has changed, the competition is there and customer has many
choices and he wants to pay what he/she wants.
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Changes & Challenges?
Price
Price
Then Now
Customer was
having lesser
choices Customer is
having many
choices
Prices has also come down
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Who Wants What?
Price Profit Cost
What to Do?
Customer Manufacturer
Customer
Manufacturer
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Price Profit Cost
What to Do?
Reduce Price, Maximize Profit & Reduce cost
100 - 20 = 80
90 - 20 = 70
90 - 25 = 65
Can We bring down the cost from 80 to 65?
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Challenges- Can we bring the cost down?
Reduce the cost by relentlessly eliminating waste and improving
information and material flow.
Challenges- How to train ourselves to identify waste and problems?
“Yes”
We need to make at the cost which customer is willing to pay.
But How?
We need to train our eyes to Identify waste and problems.
But How?
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Challenge-How to train our eyes?
Answer lies in Simulation
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Where to train our eyes “quickly”, ”accurately” and
at “lesser cost”?
We have two options to train our selves
Option-1
At Actual Workplace
Option -2
At Simulated Work Environment

Challenge-How to train our eyes?
At Actual Work Place
At Simulated Work
Environment
Ad/Dis Advantages
Disturbance/Disruption
Slow & Time consuming
Quick
Accurate
Low Cost
Options
We need to choose “Simulated Work Environment” as it is
quick, accurate and at lesser cost
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What to do in simulation?
We need to train our selves on Data Analysis and Problem Solving
and do improvements.
We have limited time for improvement and we need to use these
precious time wisely
We need to identify our most expensive problems
We Need to solve these most expensive problems
We want to standardize i.e. we will not solve the same problems
many a times
Answer lies in “Data Analysis” and “Problem Solving”
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Where is Data and What are the Problem?

What do we want to Improve?
Reduction in Accident
Elimination of Pollution
Productivity Improvement
Reduction in number of unplanned failures
Improvement in Equipment Operating Time
Reduction in Product defects
Reduction in customer claims
Reduction in Manufacturing Cost
Increase in employee engagement
no of employee suggestions
Safety, Health
& Environment
Productivity
Quality
Cost
Morale
Where is Data & What are the problems? 7VmEe

Reduction in Accident
Elimination of Pollution
Productivity Improvement
Reduction in number of unplanned failures
Improvement in Equipment Operating Time
Reduction in Product defects
Reduction in customer claims
Reduction in Manufacturing Cost
Increase in employee engagement
no of employee suggestions
Safety, Health
& Environment
Productivity
Quality
Cost
Morale
0
0
1.5 to 2 times
1/10 to 1/250
1.5 to 2 times
1/10
1/4
20-30%
2-3 times
8-10 times
Effectiveness of Lean Simulations
Can Simulations be effective? How much? 7VmEe

Intangible benefits of Lean Simulations
• After going through the lean simulation the participant
understands his/her role in productivity improvement and take
care of their equipment and processes themselves without
being ordered to.
• With achievement of zero losses, zero downtime and zero
defects the participants get new confidence in their own
abilities
• Workplace safety gets improved and looks neat, clean and
pleasant.
• The organization image gets improved which gets greater
business.
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We are ready to train our Eyes.
We are ready to train ourselves through Lean
Simulations.
We have Data
Challenge- What to analyze? What to measure?
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Analyze data to know our most expensive problems and
solve them through problem solving and then
standardize.
What to Analyze? What to Measure?
What to measure?
What all are most expensive problem?
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What to Measure in a Production System?
In simulation or in any production system there are inputs and
outputs. The inputs are men, machines and materials and the
outputs are quality, cost and delivery.
Input
Men
Material
Machines
Process
Output
Quality
Cost
Delivery
What to Measure Input, Process or Output (Results) ?
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Results

We must measure results
QCD (Quality, Cost & Delivery)
Quality - Is the correct quality as specified of the customer( and
no better because of the cost implication)
Cost - Is the right cost for the business, reducing year on year. It is
made up to materials,labour and overhead.
Delivery-is the right quantity, at the right time, to the right
quality, time after time. The customer remembers the last time the
supplier did not deliver. Not all the time delivery was made)
It is vital for any organization to measure how well it is managing
these outputs.
Our lean simulation production system tracks all of these vital measures.
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The Vital Measures
Our lean simulation covers these vital measures that any
manufacturing/business person must be aware of.
These “vital measures” can be applied to an entire factory, a value
stream, a cell or even one process. They can be used together or
separately to identify where to apply focused efforts (lean
/improvement).
These Vital measures are for measuring Quality ,Cost & Delivery
1. Right First Time (RFT %)
2. Overall Equipment Effectiveness( OEE %)
3. Stock Turns
4. Delivery Schedule Achievement (DSA%)
5. People Productivity (PPOH-Parts Per Operating Hour)
6. Value Added Per Person(VAPP, Rs.)
7. Floor Space Utilization
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What to Measure in a Production System?
• Various organizations measures many factors to understand
their manufacturing systems and try to improve on the factors.
• Most of them measures downtime, up time, cycle time, overall
equipment efficiency & inventory turns etc.
• Through the lean simulation, we too can learn art of
measurement in Production Systems and will measure them on
the “7 Vital Measures ” which are exhaustive and more
effective.
What to measure?
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Lean Simulations- The 7 Vital Measures
3. Stock Turns
How to measure?
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Right First Time (RFT %)
Right First Time (RFT %) =
Total Quantity of Parts Made
Quantity of Good Parts Made
X 100
Measures our ability to meet the quality specification at first attempt, this can be
used to measure one process, one cell, one value stream or a complete business.
Unit - %
Q C D
RFT- Right First Time %
Measures Units
Desired
Trend
Impact
Strong Impact Secondary Impact
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Overall Equipment Effectiveness( OEE %)
Overall Equipment Effectiveness (OEE %) = Availability % X Productivity % X RFT %
Availability % =
Total Time
Operating Time
X 100
Productivity % =
Operating time
Ideal cycle time x total parts run
X 100
Right First Time (RFT %) =
Total Quantity of Parts Made
X 100
OEE is a measure of How well our equipment resources are being utilized.
Operating Time = Total Time- Total Down Time
Unit - %
Q C D
OEE- Overall Equipment Efficiency %
Measures Units
Desired
Trend
Impact
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Stock Turns
Measures our ability to control over our manufacturing process, if we are not in
control we need plenty of stock to protect the process against the problems.
If we have high stock turns, we are flowing material quickly through the factory and
less money is tied at shop floor and shorter lead time for our customers.
Stock Turns =
Value of Raw Material+ WIP+ Finished Goods
Sales Turnover of Parts
Unit - Number
Q C D
ST-Stock Turn Numbers
Measures Units
Desired
Trend
Impact
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Delivery Schedule Achievement (DSA%)
Measures how well a supplier matches the planned delivery needs of the customer.
DSA can be used in internal as well as external deliveries.
Number of Planned deliveries
Number of
planned deliveries
DSA % =
- ( Number of
not on time
Number of incorrect
quantity deliveries
)+
Unit - %
Q C D
DSA- Delivery Schedule Achievement %
Measures Units
Desired
Trend
Impact
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People Productivity (PPOH-Parts Per Operating Hour)
This Measure helps us to control the people cost of making the products.
We can improve the result either by making more good parts for the same time or
taking less time to make the same quantity of good parts or do both .
PPOH =
Total direct Operator hours
Unit – Parts per Hour
Q C D
PPOH-People Productivity Parts per hour
Measures Units
Desired
Trend
Impact
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Value Added Per Person(VAPP, Rs.)
VAPP shows us that how well people are used to convert raw materials in to finished
goods.
Value Added Per Person (VAPP )=
Output Value- Input Value
Number of Direct Employees
Output Value- Sales Value of the unit after Production
Input Value- Value of the Raw Material Before Production
Direct Employees- Those without which the process can not run
Unit – Rs per Person
Q C D
VAPP-Value Added per person Rs per Person
Measures Units
Desired
Trend
Impact
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Floor Space Utilization
The floor space is an very expensive fixed cost and we need to utilize this to the
fullest. FSU measures how well are we using the valuable floor space to generate the
sales. This makes us focus on minimizing the space taken up by the production
process.
Sales Turnover from the Floor Space Area
Square Meters of the Floor Space Area
Floor Space Utilization (FSU) =
Unit – Rs per Sq Meter
Q C D
FSU-Floor Space Utilisation Rs per Sq Meter
Measures Units
Desired
Trend
Impact
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3. Stock Turns
We would like to know about the relationship of these 7 vital measures with
or Quality, Cost & Delivery
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3. Stock Turns
We would like to know about the relationship of these 7 vital
measures with
or Quality, Cost & Delivery
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Strong Impact
Secondary Impact
Lean Simulations- The 7 Vital Measures & their Impact
on QCD ( Quality , Cost & Delivery)
Q C D
RFT- Right First Time %
OEE- Overall Equipment Efficiency %
ST-Stock Turn Numbers
DSA- Delivery Schedule Achievement %
PPOH-People Productivity Parts per hour
VAPP-Value Added per person Rs per Person
FSU-Floor Space Utilisation Rs per Sq Meter
Measures Units
Desired
Trend
Impact
Can we measure these “7 vitals” in our Areas?
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How to measure these “7 Vitals” through Lean
Simulation?
Answer lies in “simulated work environment for lean”
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Let us learn through
“exercise”
Can we create Simulated Environment?
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Let us Create “simulated work environment-Lean”?
We will plan an exercise where an envelope manufacturing company will be set up.
This company will make paper envelope of given specification and sample and will
supply to Customer in specified quantity and specified time.
This company uses land, raw material, capital equipment, utilities, consumables,
manpower etc. to make envelopes.
This company also hires consultant/professional for identifying and eliminating wastes
and make improvements.
This company has 6 manpower and the persons needs to play role of team member,
team leader, group leader & manager.
Every resource has a cost associated with it .
The 1st round of the simulation lasts for 60 minutes, in which one team needs to deliver
30 good quality envelopes in specified quantity and specified time.
After completion of the 1st round, every team is asked to calculate the 7 vital measures
and present them to other teams.
These teams needs to identify the problem areas and plan for improvements in 2nd
round.
The improvements can be changes in layout, changes in roles, changes in
processes,increasing,decreasing no of work stations etc. etc.
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The teams are asked to participate in 2nd round. With an target to improve these 7
vitals at least by 40%
In 2nd round customer again wants 30 envelopes to be delivered in 60 minutes
duration.
In 2nd round customer wants good quality product in specified quantity and at
specified time.
After completion of the 2nd round the teams are asked to
1.calculate these 7 vitals and explain the difference in 1st and 2nd round.
2.Explain 7 type of waste and example in own simulation
3.Explain 3 Kaizens/Improvements they did.
4.Explain importance of Lean.
5.How the same can be standardized.
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Let us create “simulated work environment-Lean”?
Team Formation
-Maximum 3 teams can participate
One team can have maximum 6 members and minimum 4 members.
There must be at least one Team leader in a team.
The team has a hierarchy of manager-group leader-team leader- team member
The team need to identify the direct employees .
The team will have choice to have Manager/Group Leader.
The team must identify clear roles and Responsibilities of each one.
The team must have a clear training plan and skill assessment of their team members.
The team will have 30 minutes time before starting of each round to form their
strategies.
The team needs make their standardized operating plan and work as per written plan.
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Trainer/Facilitator(1)-
• Brief the teams about Then & Now Business Scenario and importance of Lean
Simulation.
• Brief the teams about SQCDM Rules.
• Brief the team about lean simulation lay out and process steps.
• Brief the team about high level roles and responsibility of TM,TL,GLs and Manager.
• Facilitate the team with raw material, capital equipment,pencils,scissors etc.
• Facilitate the team by setting up time alarm .
• Build 3 teams.
• Ask them to choose one Group Leader and identify role of each participant.
Customer(1)-
• Brief the teams about his requirement, show them sample, show them defects.
• Tell the teams about what time and how much quantity of the products he wants.
• He shares all information with clarity and takes feedback whether team has
understood his requirement.
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Participating Teams(3)-
• Follows the instruction by trainer/facilitator/customer.
• Follows SQCDM Rules.
• Follow time lines and quantity requirement by customer.
• Respect each others .
Volunteer(1)-
• Support Trainer/Facilitator.
• Distributes Raw Material, Capital, Equipment, Consumable etc.
• Raise alarms related to time, & SQCDM rules.
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10mm
20mm30mm
112mm+- 0.5mm
90mm+- 0.5mm
90mm+- 0.5mm
FLAPView
220mm+1mm-1mm
112mm+- 0.5mm
220mm+-1mm
90mm+- 0.5mm
112mm+- 0.5mm
FoldedView
20mm
CustomerRequirement30Envelopsperhour
PriceperenvelopcustomerreadytopayRs20perenvelop
Detailed Specification of the “envelope” & one sample each given to each team
Customer Requirement 30 Envelops per hour
Price per envelop customer ready to pay Rs 20 per envelop
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Raw
Material
Marking Inspection Cutting Folding Pasting Inspection
Time RM Marking Insp-1 Cutting Folding Pasting Insp-2
Start 2pm
2.10pm
2.20pm
2.30pm
2.40pm
2.50pm
3.00pm
Process Flow and Inventory at Stages
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Raw Material Paper A3 Sheets Rs.8 per piece
CAPITAL Scissor Rental Rs 2 per hour
Consumables Glue Stick Rs.10 per piece
CAPITAL Ruler scale Rental Re 1 per hour
Consumables Pencil Rs.5 per piece
Consumables Eraser Rs.5 per piece
CAPITAL Sharpener Rental Re 1 per hour
Consumables Study Material Rs.20 per set
Consumables Works Instruction Blank Fomat Rs. 6 per piece
Consumables paper a4 sheets Rs 5 per piece
Rs.0.5 per square feet per hour
max 18feet x 2 feet for one team
Team member Rs.9 per hour
Team Leader Rs.12 per hour
Group Leader Rs 15 per hour
Manager Rs. 18 per hour
Work in Process (WIP) Rs 2 per piece
Finished Goods(FG) Rs 20 per piece
Scrap no of loose pieces
Rate Sheet
Land Floor Rental
Every thing has a cost.
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Customer has asked to deliver following quantities at following
interval- This is required for Delivery Schedule Achievement (DSA)
calculation.
No of Pcs Ok OK accu No of Pcs Ok OK accu No of Pcs Ok OK accu
1 11.00am-11.03am 5
2 11.05am-11.08am 5
3 11.10am-11.13am 5
4 11.15am-11.18am 5
5 11.20am-11.23am 5
6 11.25am-11.28am 5
1 3.00pm-3.03pm 5
2 3.05pm-3.08pm 5
3 3.10pm-3.13pm 5
4 3.15pm-3.18pm 5
5 3.20pm-3.23pm 5
6 3.25pm-3.28pm 5
Round-2( Starts at 2.30pm, customer wants first lot at 3pm)
Sl Time Planned
Team-1 Team-2 Team-3
Round-1( Starts at 10.30am, customer wants first lot at 11am.)
Sl Time Planned
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Round-1 Starts
Team deliver their good quality envelopes to customer as per
specified time and make entry of details in the following table.
This is required for Delivery Schedule Achievement (DSA)
calculation.
1 11.00am-11.03am 5 3 1 1 1 0 0 1 1 1
2 11.05am-11.08am 5 5 3 4 2 2 2 2 2 3
3 11.10am-11.13am 5 5 4 8 5 4 6 4 3 6
4 11.15am-11.18am 5 5 3 11 5 5 11 5 5 11
5 11.20am-11.23am 5 5 5 16 3 2 13 5 2 13
6 11.25am-11.28am 5 5 3 19 5 2 15 5 4 17
Team-3
Round-1( Starts at 10.30am, customer wants first lot at 11am.)
Sl Time Planned
Team-1 Team-2
The team also notes down
Downtime, Costs, Inventories, No of Persons Direct and Indirect,
Floor Space, etc.
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After Completion of the Round-1 the data is analyzed and 7 vital
measures are calculated.
Q C D United Prints Mount Craft
RFT- Right First Time % 29.41 44
DSA- Delivery Schedule Achievement % 30 36.6
PPOH-People Productivity Parts per hour 0.83 4.33
ST-Stock Turn Numbers 0.255 4.78
OEE- Overall Equipment Efficiency % 16.66 32
VAPP-Value Added per person Rs per Person -13 -4.5
FSU-Floor Space Utilisation Rs per Sq Meter 19.04 13.34
ROUND-1(4th June15)
Measures
Desired
Trend
Units
Impact
The teams explains each vital measure and how they performed.
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Briefing is done for Round-2
The teams are asked to improve these vital measures & the way
they will improve this?
The teams brain storms and get ready for the improvements.
They are encouraged to make any changes in
roles,responsibility,layout,inventory level,automation,processes
etc.
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Round-2 Starts
Team deliver their good quality envelopes to customer as per
specified time and make entry of details in the following table.
This is required for Delivery Schedule Achievement (DSA)
calculation.
The team also notes down
Downtime, Costs, Inventories, No of Persons Direct and Indirect,
Floor Space, Example of 7 wastes, Kaizens/Improvements
1 3.00pm-3.03pm 5 4 3 3 4 4 4 4 3 3
2 3.05pm-3.08pm 5 4 4 7 4 4 8 5 5 8
3 3.10pm-3.13pm 5 5 3 10 5 4 12 5 5 13
4 3.15pm-3.18pm 5 5 4 14 5 5 17 5 5 18
5 3.20pm-3.23pm 5 5 5 19 5 3 20 5 4 22
6 3.25pm-3.28pm 5 5 5 24 5 3 23 5 5 27
Round-2( Starts at 2.30pm, customer wants first lot at 3pm)
Sl Time Planned
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After Completion of the Round-2 the data is analyzed and 7 vital
measures are calculated.
The teams explains each vital measure and how their team
performed.
Q C D United Prints Mount Craft United Prints Mount Craft
RFT- Right First Time % 29.41 44 88 50
DSA- Delivery Schedule Achievement % 30 36.6 73 66
PPOH-People Productivity Parts per hour 0.83 4.33 3.14 1.9
ST-Stock Turn Numbers 0.255 4.78 5.78 1
OEE- Overall Equipment Efficiency % 16.66 32 72 50
VAPP-Value Added per person Rs per Person -13 -4.5 55 45
FSU-Floor Space Utilisation Rs per Sq Meter 19.04 13.34 53 36.36
ROUND-1(4th June15) Round-2(4th Jun15)
Measures
Desired
Trend
Units
Impact
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From the above table. For Team1 United Prints. The RFT got
improved from 29.41% to 88%, DSA got improved from 30% to 73%

The teams knows and have the vital measure.
They know their most expensive problems
Now
They use “ problem solving tools” and other improvement
technique to make improvement in Vital measures
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The teams take these leanings to their actual work place.
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For more details
Please contact
Sameer Kumar
Mob 9650024171
sameercar@gmail.com
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Productivity related Vital Measures through simulations

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