Lean Manufacturing

2. © Operational Excellence Consulting LEARNING OBJECTIVES 2 Acquire knowledge on the key concepts and principles of Lean Define the key roles in Lean deployment Describe the common Lean methods and tools for waste elimination and value creation Define the success factors for sustaining a Lean culture NOTE: This is a PARTIAL PREVIEW. To download the complete presentation, please visit: https://www.oeconsulting.com.sg

3. © Operational Excellence Consulting CONTENTS 3 INTRODUCTION TO LEAN MANUFACTURING KEY CONCEPTS & PRINCIPLES OF LEAN LEAN METHODS & TOOLS LEAN ROLES 01 04 03 02 SUSTAINING A LEAN CULTURE 05

4. © Operational Excellence Consulting THE CASE FOR LEAN MANUFACTURING 4 Maintain customer satisfaction and loyalty Develop a culture of continuous improvement and innovation Improve productivity Complicated processes and systems Rising cost of labor and materials Long delivery lead times High cost of poor quality Increasing market competition

5. © Operational Excellence Consulting WHAT IS LEAN? 5 Focus & Scope § Value stream as primary work unit § Focused on improving process performance § Clear view of end state Objective § Lean is a management philosophy based on the Toyota Production System (TPS) § Eliminate everything that does not add value (waste) in the customer’s eyes Approach & Tools § Wide range of Lean methods and tools are available § Learn-by-doing approach to performance improvement and capability-building

6. © Operational Excellence Consulting “ Lean production is not merely a set of techniques. By connecting to our whole being, it becomes a path, which creates energy, focus and longevity.” PASCAL DENNIS 6 Author of “Lean Production Simplified”

7. © Operational Excellence Consulting FIVE PRINCIPLES OF LEAN 7 Identify the value stream or process for each product or service and reduce or eliminate steps that do not add value Define value from the customer’s perspective and provide what they want Align the value-added steps so they flow continuously Allow the level of customer demand to pull the process, i.e., produce only what is ordered Pursue perfection through continuous improvement Define Value Identify the Value Stream Make Value Flow Let Customers Pull Value Pursue Perfection Source: Adapted from Lean Thinking by James P. Womack and Daniel T. Jones

8. © Operational Excellence Consulting LEAN IN A NUTSHELL – REDUCING THE TIME LINE FROM ORDER TO CASH 8 Source: Adapted from Taiichi Ohno CASH Reduce by removing non-value added activities ORDER TIME LINE

9. © Operational Excellence Consulting ● Laying off employees by the bus load ● Delivering less or working harder ● Outsourcing or offshoring ● A cost cutting program WHAT LEAN IS NOT ● Just a set of “tools” like 5S, kaizen events, etc. ● Automation or buying a monstrous ERP system ● Winning a Shingo Prize so as to look Lean 9

10. © Operational Excellence Consulting WHAT DOES LEAN IN MANUFACTURING & PROCESS INDUSTRIES LOOK LIKE? 10 Source: Operational Excellence Consulting Research APPLICATION COMMON ISSUES TYPICAL SOLUTIONS AUTOMOTIVE § Production § Inventory management § Throughput § Equipment downtime § Rework and re-inspection § Inventory costs § One-piece Flow/Pull systems § Equipment reliability § Elimination of defects § Inventory optimization AEROSPACE § Engine overhaul § Spare parts § Turnaround time § Obsolescence costs § Process streamlining § Standard operating procedures § Spare parts management PROCESS § Materials management § Asset management § Material wastages § Equipment availability § Elimination of defects § Reduction of unplanned downtime

11. © Operational Excellence Consulting LEAN THINKING REQUIRES A MINDSET CHANGE 11 Large batches Small batches Low unit costs Total system cost Work at full capacity Work at necessary capacity Tight schedules Flexible schedules High WIP inventories Low WIP inventories TRADITIONAL THINKING LEAN THINKING VS High level of specialization Cross-training Long cycle times Short cycle times

12. © Operational Excellence Consulting The Lean framework consists of five key elements: ● Stability ● Standardization ● Just-In-Time ● Jidoka ● Involvement LEAN MANUFACTURING FRAMEWORK (a.k.a. TOYOTA PRODUCTION SYSTEM) 12 Source: Adapted from Toyota Production System 1 2 3 4 5 Stability Heijunka Standardized Work Kaizen Just-In-Time • Continuous flow • Takt time • Pull system • Flexible workforce Jidoka • Separate man & machine work • Abnormality Identification • Poka-yoke • Visual Control Goals: highest quality, lowest cost, shortest lead times Involvement 1 2 3 4 5

13. © Operational Excellence Consulting TWO KEY PILLARS OF THE LEAN MANUFACTURING SYSTEM 13 JUST-IN-TIME § Refers to the manufacturing and conveyance of only what is needed, when it is needed, and in the amount needed § The ability to stop production lines in the event of problems such as equipment malfunction, quality issues, or late work § Jidoka helps prevent the passing of defects, helps identify and correct problem areas using localization and isolation JIDOKA Both the Just-In-Time and Jidoka pillars are required to function properly for the Lean system to be effective!

14. © Operational Excellence Consulting METHODS TO INCREASE PRODUCTIVITY 14 How to Increase Productivity? Quantitative Approach More Staff More Machines Work Longer Qualitative Approach Work Harder Eliminate Waste & Simplify Focus of Lean Let’s work smarter!

15. © Operational Excellence Consulting ● Consuming more resources than are necessary to produce the goods, or service, that the customer wants ● Pure Waste: Actions that could be stopped without affecting the customer ● Incidental Waste: Actions that need to be done based on how the current system operates but do not add value WHAT IS WASTE? 15 Value Add Non-Value Add: Incidental Waste Non-Value Add: Pure Waste

16. © Operational Excellence Consulting COST REDUCTION PRINCIPLE 16 COST PLUS PRINCIPLE Cost 1 Sales Price 1 Profit 1 Present Cost 2 Profit 2 Future Sales Price 2 COST REDUCTION PRINCIPLE Cost 1 Sales Price 1 Profit 1 Present Cost 2 Profit 2 Future Sales Price 2 Higher profit is achieved by increasing sales price Higher profit is achieved by reducing cost (waste) while maintaining sales price

17. © Operational Excellence Consulting WORK vs. WASTE 17 Value-added Activities § Transform or shape material or information § Customer wants it and willing to pay for it § Done right the first time Non-Value Add: Incidental Waste Non-Value Add: Pure Waste § No value created but required by current thinking § No value created but required by process limitations § No value created but required by current technology § No value created but required by government/ business regulations § Consume resources but creates no value for the customer § Could be stopped and it would be invisible to the customer

18. © Operational Excellence Consulting LEAN WASTES IN MANUFACTURING 18 OVERPRODUCTION Producing sooner, faster or in greater quantities than customer demand INVENTORY Building or storing extra products that the customer has not ordered TRANSPORTATION Unnecessary movement of people or parts between processes DEFECTS Work not done right the first time such as scrap and rework OVERPROCESSING Processing beyond the standard required by the customer MOTION Unnecessary movement of people, parts or machines within a process INTELLECT Not using employees’ full intellectual contribution WAITING People or parts that wait for a work cycle to be completed Wastes

19. © Operational Excellence Consulting ● Identify and eliminate all activities that are waste ● Focus on optimal flow throughout the process ● Focus on creating value for customers LEAN THINKING PHILOSOPHY 19 Current State Future State Eliminate Waste Identify Waste “True North” (Value Added Time = Lead Time) Full of Waste, Variation, and Rigidity

20. © Operational Excellence Consulting GO SEE, ASK WHY, SHOW RESPECT 20 Why must you go and see? Because you cannot know what’s going on in a problem situation, no matter how much experience you have, unless you have seen this specific problem in- depth. Why ask why? Why show respect? Because you need to question what you’re seeing. You need to be clear about what you are seeing by asking: Why is this happening? What do I need to know more about it? What do others here know that I don’t? In many ways, that’s the most critical step in solving a problem. If you don’t show respect to people doing the work, they are not likely to share what they know, and you don’t. Source: Adapted from Lean Enterprise Institute

21. © Operational Excellence Consulting ● Operations safely carried out with all tasks organized in the best known sequence and by using the most effective combination of resources ○ Man ○ Machine ○ Method ○ Material ● If the 4Ms are not stabilized, flow and pull is not possible 4Ms 21 © Operational Excellence Consulting. All rights reserved. 21

22. © Operational Excellence Consulting 5S – EXAMPLE 22 Before After An office desk before and after conducting 5S Sort, Set In Order and Shine. Clutter and unused items have been removed leaving only what is needed.

23. © Operational Excellence Consulting VISUAL MANAGEMENT – EXAMPLES 23 GAUGE LABELS Adding a simple gauge label enables any employee to easily detect abnormalities at a glance and at a distance. Without the label, only a trained inspector would know if the temperature or pressure setting is correct. OIL LEVEL INDICATORS Placing a green and red striped label behind the oil sight tube helps operators quickly detect when oil levels are too high or too low. Source: Brady 50 Lean Visuals Pocketbook REJECTS OR MATERIALS ON HOLD FOR QA Mark parts and products that need to be inspected, or that have been inspected and have been rejected as defective. It is recommended the color orange be used to indicate that inspection is needed before use; red can be used to indicate if the product has been rejected.

24. © Operational Excellence Consulting STANDARD WORK – EXAMPLES 24 Visual work instructions at the workstation help the operator to perform the steps in the right sequence. Standard work board at the manufacturing cell helps to coordinate work for operators manning different machines/equipment.

25. © Operational Excellence Consulting POKA-YOKE SYSTEMS – EXAMPLES 25 SAFETY COVER An example of a positive stop is on equipment that requires operators to perform a safety task before starting the machinery. To activate the power to the equipment, the operator must first close the cover so as to prevent operator injury or damage to the equipment. TOOL BOARD / DRAWER With a tool board/drawer, available tools can be easily accessed and tools after being used can be returned to their designated locations. As a visual display, any tool which is missing, in the wrong slot or being used can be easily noticed. RHYTHMIC MOVEMENT One application of poka-yoke devices is the way it supports the rhythmic movement of the operator when performing standard operating procedures at takt time. Any deviation in the movement or results of the operator’s “dancing hands” will be detected. They cannot forget if they have forgotten anything.

26. © Operational Excellence Consulting HOSHIN KANRI IS A POWERFUL SYSTEM FOR THE DEPLOYMENT OF ORGANIZATIONAL GOALS – VERTICALLY & HORIZONTALLY 26 § Alignment through entire company structure using top- down goal setting § Each subsequent goal supports the previous level’s goals Vertical alignment Organization Goals Department Objectives Individual Objectives Department Objectives Individual Objectives Individual Objectives Individual Objectives Horizontal coordination

27. © Operational Excellence Consulting ROLE OF LEAN STEERING COMMITTEE 27 Define Lean implementation roadmap Define the strategic goals and measures Create a vision for the Lean initiative Create an environment that will promote the use of the Lean methods and tools Identify and track projects and kaizens Establish rewards and recognition system Create awareness and publicity Make resources available – team members and budget

28. © Operational Excellence Consulting LEAN IMPLEMENTATION – A SIMPLE ROADMAP 28 Create Awareness Build Capability Operations Management & Improvement Lean Thinking Training Lean Leadership Training Build Lean Activity Board Kaizen #1: 5S Kaizen #2: Waste Elimination Value Stream Mapping for Key Processes Train-the-Trainer Training Information Sessions for Whole Organization Senior Management Awareness Kaizen #3: Standardization Month 1 Lean Methods & Tools Training Month 3 Month 2 Daily Management Meeting Lean Update in Monthly Newsletter & Intranet

29. © Operational Excellence Consulting SUSTAINING A LEAN CULTURE 29 Alignment to vision and mission Availability of resources Management commitment Address “what is in it for me” Management review Rewards and recognition Success measures and KPIs Managing resistance to change

30. © Operational Excellence Consulting Operational Excellence Consulting is a management training and consulting firm that assists organizations in improving business performance and effectiveness. Based in Singapore, the firm’s mission is to create business value for organizations through innovative design and operational excellence management training and consulting solutions. For more information, please visit www.oeconsulting.com.sg ABOUT OPERATIONAL EXCELLENCE CONSULTING

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