Productivity Improvement Through Lean Management

- an Introduction
A Joint Program Delivered by

About APPC
Andhra Pradesh Productivity Council (APPC) is an autonomous tripartite non-profit making body set up in the year 1958 by the Government of Andhra Pradesh. The Council activities are guided by a Governing Body comprising of Govt. Representatives, Employees, Employers and Eminent Persons from Industry, Educational Institution. APPC has successfully completed 50 years of its existence and contributed to Productivity Practices and Knowledge Management among Industries, Agriculture, Rural Development, Services Sector and Education in the Country particularly in the State of Andhra Pradesh. Over the years, the APPC has spread its activities into various Sectors like Distance Education, Micro Enterprise Development, Employment Generation through Skill upgradation, Promotion and Strengthening of Women SHGs, Collaborative Arrangements with Foreign Universities, Establishment of innovative projects like Training Cum Production Centre (TCPC), Jan Shikshan Samsthan (JSS) etc. besides Techno Management Consultancy

Vision of APPC
Promotion of Productivity Awareness and Quality of Work Life towards improving resource utilization and standard of living for national growth

About Confluence
Confluence Business Solutions Pvt. Ltd. Is an eleven years old organization. We are into Consulting and training services We provide consulting on strategy deployment, breakthrough improvement, implementing Business excellence models and establishing various Management Systems We conduct in-house and open workshops on process improvements techniques likes 5S, Kaizen, LEAN,TPM,BSC and Six Sigma. Also we help in deployment of the same. Where any expertise is required by the client organization, Confluence augments its resources to help achieve the objectives. We are a team of ten people. Our Registered Office is in Padmaraonagar where as our Corporate Office at Habsiguda. Both in Secunderabad.

Vision
To become one of the best process consulting companies in the world.

Mission
Act as Catalyst for Client Organizations and individuals to help them realize potential and achieve their objectives HIGHER, FASTER and SURER Values

Being truthful in our deeds

Value entitlem ent to all our stakehol ders

Follow Ethical Business Practices

Service Portfolio
Consulting

Training and Certifications

Enabling Operational Excellence Strategy Deployment Balanced Scorecard Breakthrough Improvement Services such as Six Sigma, Lean, TPM, BPR, BPM Business Excellence Models Management Systems Implementation

Six Sigma Professional Certifications Customized Trainings Managerial Development Programs

Confluence

Resource Augmentation
Competent Resource Support for driving Breakthrough Improvement Initiatives

Objectives of this Program

Provide an Overview of Lean Management Concepts Appreciation of the concepts

Primary Training Goal To Understand the approach to Productivity Improvement through lean tools

Topics

1 2 3

About Management and Productivity Introduction to Lean Management Seven Wastes

4
5 6 7

Overview of Lean Tools

Benefits of Lean Management Implementation of Lean Management Philosophy Question and Answers and Feedback

Realizing More

MANAGEMENT AND PRODUCTIVITY

Meaning of Productivity
Oxford Dictionary Meaning: state or quality of being productive the effectiveness of productive effort, especially in industry, as measured in terms of the rate of output per unit of input

In Economics, Productivity is defined as: The amount of output per unit of input (labor, equipment, and capital).

Measures of Productivity
In a factory productivity is measured based on the number of hours it takes to produce a good. In the service sector productivity is measured based on the revenue generated by an employee per month/ annum or divided by his/her salary

Goal of a Business Organization

PROFITS Now and In Future

How to Generate Profits?

By selling the products and services to the customers to address their requirements (needs and expectations).

 and what else?

All actions in the organization needs to be productive.

Productivity is the act of bringing an organization closer to its goal. Every action that brings the organization closer to its goal is productive. Every action that doesnt bring the organization closer to its goal is not productive.

Profit Measurement

Net Profit = Sale Price Cost Price Net Profit = Sale Price (RM Cost + Operating Cost)

Profit Maximization

Net Profit =

Sale Price ( RM Cost

Operating Cost )

Not in our Control

Only thing to be Controlled

Profit Maximization

Operating Cost
Salaries and Wages Maintenance Expenses Depreciation Admin Expenses Financial Expenses Rentals Power Consumables

Profit Maximization

Is there any better way to reduce Operating Cost?

Improve Productivity

Productivity Improvement
How do we improve Productivity?

Importance of Productivity Improvement

Why Should we improve Productivity?

Why Should we Improve Productivity

Competition

Only the BEST Survives

The Jungle Principle

Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows it must outrun the slowest gazelle or it will starve to death.
It doesnt matter whether you are a lion or a gazelle when the sun comes up, you had better be running.

Self Assessment
Please list the activities and the time you spend on each of the activity on an average day. Be honest in your times, as the data you put in is important for identification of improvement goals.

Urgency Vs Importance
Immediate Dispatches, Emergencies, etc.

Urgent

Not Urgent

Planning, Analysis Improvement, etc.

Important

Crisis

High Productive

Not Important

Routines

Trivial

Reporting, reviews, approvals, etc.

Tea Breaks, Sudden Visitors, etc.

Urgency Vs Importance
Urgent Not Urgent

Important

Are reactive, cause stress & reduce Productivity

Result in efficient working and improve productivity

Routines
Not Important
Highly dangerous, as they give us a false feeling of being busy. Dont contribute to Productivity

Trivial
Time wasters and reduce productivity

What is Value?

Value Adding Activities

Activities which are essential as they result in transformation or change of products/ services. In other words for which customer is ready to pay. These activities include those which are done right first time. Examples of such activities include:
Production Procurement Research and Development

These are core functional activities

Non Value Adding Activities

Activities that are considered not required or not essential for production and delivering of product or services to customers to meet their needs and expectations. Typically these activities include those for which customer is not willing to pay. Examples of Non Value Adding Activities include:
Rejections Reworks/ Reprocessing Wastage Delays Movement Idling

Value Enabling Activities

These includes activities that are not essential to meet the customer needs and expectations but include those activities that help in performing value added activities better and more efficiently. Typically such activities include
Planning Analysis Improvements Goal setting Training and skill building

Imagine you get a lottery of lot of money.

What will you Do?

Investment Vs Spend
Investment gives returns in future Builds Wealth Spending or Expense doesnt give any return in future Reduces Wealth

All of us have one God Given Lottery

Time

What do we do with Time?

Urgency Vs Importance
Urgent Not Urgent

Important

Are reactive, cause stress & reduce Productivity

Result in efficient working and improve productivity

Invest your time

Routines
Not Important
Highly dangerous, as they give us a false feeling of being busy. Dont contribute to Productivity

Trivial
Time wasters and reduce productivity

Delegate Automate

Avoid

Productive Activities for Managers

Planning Analysis and identifying improvement opportunities Setting goals for self/ team Working focused improvement initiatives Self training Training team members Relationship building Motivating team members

Tools Used
Balanced Scorecard Lean Tools Six Sigma Tools TPM Tools Theory of Constraints Business Process Management

BLST2B Approach

Delivering More with Less

LEAN PHILOSOPHY

History of Manufacturing
Pre-industrial 1890 People
Craftsmen perform all aspects of task

Mass 1920
Employees contribute minimally to total product

Lean 1980
Clusters of employees working in teams

Self-taught or apprenticeship training

Training for limited skills

Management makes decisions Standardized, focused on volume not quality

Extensive, continuing training

Product

Customized, non-standard products Variation in quality Independence, discretion Variety of skills

Focus on internal/external customer

Work Environment

Limited skills and knowledge Repetitive, mind-numbing work Little discretion, simplified tasks

Responsibility

Some discretion, group effectiveness, empowerment, team accountability, work cells

Reduced Lead Time

One of the most noteworthy accomplishments in keeping the price of Ford products low is the gradual shortening of the production cycle. The longer an article is in the process of manufacture and the more it is moved about, the greater is its ultimate cost.

Henry Ford, 1926

About Lean Philosophy

Lean philosophy is about the principles, practices, and tools to create precise customer value goods and services with higher quality and fewer defects with less human effort, less space, less capital, and less time than the traditional system

Lean Tools
5S Value Stream Mapping Cross Functional Training Visual Management Spaghetti Chart Kaizen (means improvements, happens at process level) Kaikaku (means transformation, happens at system level) Standardizedwork Poka-Yoke (means mistake proofing)

and others

Defining Lean
Lean is: A systematic approach to identifying and eliminating waste (non-value-added activities) through continuous improvement by flowing the product at the pull of the customer in pursuit of perfection. The MEP Lean Network

Definition of Value-Added
Value-Added Any activity that increases the market form or function of the product or service. (These are things the customer is willing to pay for.) Non-Value-Added Any activity that does not add market form or function or is not necessary. (These activities should be eliminated, simplified, reduced, or integrated.)

Lean = Eliminating Waste

Value-Added Non-Value-Added Overproduction Inventory Waiting Motion Transportation Rework Over Processing

Typically 95% of all lead time is non-value-added.

Brainstorm Wastes
What wastes were apparent in your company?

Seven Wastes

Overproduction
Making more than is required by the next process
Making earlier than is required by the next process Making faster than is required by the next process Causes of overproduction:
Just-in-case logic Misuse of automation Long process setup Unlevel scheduling Unbalanced workload Over engineered Redundant inspections

Inventory Waste
Any supply in excess of a one-piece flow through your manufacturing process
Causes of excess inventory:
Need for buffer against inefficiencies and unexpected problems Product complexity Unleveled scheduling Poor market forecast Unbalanced workload Misunderstood communications Reward system Unreliable shipments by suppliers

Defects
Inspection and repair of material in inventory
Causes of defects:
Weak process control Poor quality Unbalanced inventory level Deficient planned maintenance Inadequate education, training, or work instructions Product design

Customer needs not understood

Over Processing Waste

Effort that adds no value to the product or service from the customers viewpoint
Causes of over processing waste:
Over-processing to accommodate downtime
True customer requirements not clearly defined Product changes without process changes

Lack of communication
Redundant approvals Extra copies or excessive information

Waiting Waste
Idle time created when waiting for?
Causes of waiting waste:
Unbalanced workload Unplanned maintenance Long process setup times Misuses of automation Upstream quality problems Unlevel scheduling

Motion Waste
Any movement of people or machines that does not add value to the product or service
Causes of motion waste:
Poor people or machine effectiveness
Inconsistent work methods Unfavorable facility or cell layout

Poor workplace organization and housekeeping

Extra busy movements while waiting

Waste of Transportation
Transporting parts and materials around the plant
Causes of transportation waste:
Poor plant layout Poor understanding of the process flow for production Large batch sizes, long lead times, and large storage areas

People Waste
The waste of not using peoples mental, creative, and physical abilities
Causes of people waste:
Old guard thinking, politics, the business culture
Poor hiring practices Low or no investment in training

Low pay, high turnover strategy

Lean Building Blocks

Continuous Improvement

Pull/ Kanban POUS

Cellular/ Flow

TPM

Quality at Source

Quick Changeover Teams Value Stream Mapping

Standardized Work

Batch Reduction

Visual

5S System

Plant Layout

Standardized Work
Operations safely carried out with all tasks organized in the best known sequence, and using the most effective combination of these resources:
People Materials Methods Machines

Work Place Organization

A safe, clean, neat arrangement of the workplace provides a specific location for everything, and eliminates anything not required.

Elements of a 5S Program
Seiri (Sort) Perform Sort Through and Sort Out, by placing a red tag on all unneeded items and moving them to a temporary holding area. Within a predetermined time the red tag items are disposed, sold, moved or given away. When in doubt, throw it out! Seiton (Set in Order) Identify the best location for remaining items, relocate out of place items, set inventory limits, and install temporary location indicators. Seiso (Shine) Clean everything, inside and out. Continue to inspect items by cleaning them and to prevent dirt, grime, and contamination from occurring. Seiketsu (Standardize) Create the rules for maintaining and controlling the first three Ss and use visual controls. Shit Suke (Sustain) Ensure adherence to the 5S standards through communication, training, and self-discipline.

Visual Controls
Simple signals that provide an immediate understanding of a situation or condition. They are efficient, self-regulating, and worker-managed. Examples:
Kanban cards Color-coded dies, tools, pallets Lines on the floor to delineate storage areas, walkways, work areas, etc. Andon lights

Plant Layout

Raw Stock

QC

Rec.

Ship

Shear

Stamp

Screw Machine

QC

Brake

Mill

Lathe

Drill

Assembly

Weld

Grind

Finish

Parts Stock

Lean Building Blocks

Standardized Work

Visual

5S System

Plant Layout

Lean Workforce Practices

Teams
With rotation of highly specified jobs

Cross-trained and multi-skilled employees

Who can work many operations within a cell and operations in different cells

Continuous improvement philosophy Process quality, not inspection Use of participatory decision-making
Quality Control Circles, team-based problem-solving, suggestion systems, etc.

Quick Changeover
Definition: The time between the last good piece off the current run and the first good piece off the next run. Before Shigeo Shingos Single Minute Exchange of Die (SMED) improvements, basic setup tasks and related time breakdowns:
Percent of time of changeover
Preparation, after-process adjustment, checking, storing, and moving materials, parts, and tools

30% 50% 5% 15%

Removing and mounting of parts and tools

Machine measurements, settings, and calibrations Trial runs and adjustments

Impact of Batch Size Reduction

Batch and Queue Processing
Process Process Process

10 min.

10 min.

10 min.

30+ min. for total order, 21+ min. for first piece

Continuous Flow Processing

Process

Process

Process

12 min. for total order, 3 min. for first part

Batch Size Reduction

The best batch size is one piece flow, or: make one and move one!

Point Of Use Storage (POUS)

Raw material is stored at workstation where used Works best if vendor relationship permits frequent, on-time, small shipments Simplifies physical inventory tracking, storage, and handling

Quality at the Source

Source Inspection: Operators must be certain that the product they are passing to the next work station is of acceptable quality. Operators must be given the means to perform inspection at the source, before they pass it along. Samples or established standards are visible tools that can be used in the cell for such purposes. Process documentation defining quality inspection requirements for each work station may need to be developed.

Lean Building Blocks

Pull/Kanban POUS

Cellular/Flow

TPM

Quality at Source

Quick Changeover Teams

Standardized Work

Batch Reduction

Visual

5S System

Plant Layout

Push versus Pull Systems

Push System Resources are provided to the consumer based on forecasts or schedules

Pull System A method of controlling the flow of resources by replacing only what has been consumed

Pull System

Pull System is a flexible and simple method of controlling or balancing the flow of resources Eliminating waste of handling, storage, expediting, obsolescence, repair, rework, facilities, equipment, excess inventory (work-inprocess and finished)

Pull System consists of: Production based on actual consumption Small lots Low inventories Management by sight Better communication

Pull System Flow Diagram

Supplier

Raw Matl.

Process A

Process B

Process Fin. C Goods

Customer

Information Flow Part Flow Kanban Locations

Cellular Manufacturing
Linking of manual and machine operations into the most efficient combination to maximize value-added content while minimizing waste.
Punch

Cut to size

De-burr

Package Sand

Form

Refining the Cell: Five Step Process

1. Group products 2. Measure demands establish Takt time 3. Review work sequence 4. Combine work in balance process 5. Design cell layout

Step 1: Group Products

Processing Steps
Insert Springs Insert Diodes Insert 1k Resistors Insert Light Insert 100k Resistors Test

Product

Red

Blue

Products with similar processing requirements are grouped into product families

Step 2: Establish Takt Time

Takt Time = Demand Rate Takt Time = (Work Time Available Number of Units Sold) Takt Time = (1200 seconds 115 units) = 10.4 sec/unit

Cycle Time Takt Time = Minimum Number of People

Goal: Produce to Demand

Step 3: Review Work Sequence

Observe sequence of tasks each worker performs Break operations into observable elements Identify value-added versus non-value-added (NVA) elements and minimize NVA Study machine capacity, cycle times and changeover times

Step 4: Combine Work to Balance Process

Unbalanced Line
20

Balanced Line
20

15

15

Seconds

Seconds

10

10

0 A B

Operations

Operations

Takt Time = 10 seconds

Step 5: Design and Construct Cell

Design goals:

Flexible layout
Lot size = 1 Point of Use Storage (POUS) Visual management Mixed models Simplify flow Integrate process operations Materials flow one way

Minimize materials handling Concentrate on valueadded motion Establish material replenishment procedure Make use of people 100% Promote visibility and flexibility Operators stand for flexibility

Lean Building Blocks

Pull/Kanban POUS

Cellular/Flow

TPM

Quality at Source

Quick Changeover Teams

Standardized Work

Batch Reduction

Visual

5S System

Plant Layout

Continuous Improvement
Old Adage:
If you always do what you always did, youll always get what you always got.

Competitive Corollary:
If the other guy gets better, youre going to get less.

Lean Building Blocks

Continuous Improvement

Pull/Kanban POUS

Cellular/Flow

TPM

Quality at Source

Quick Changeover Teams

Standardized Work

Batch Reduction

Visual

5S System

Plant Layout

Barriers to Improvement

If we all know we need to improve, the question becomes: why dont we?

Keys to Success
Prepare and motivate people Widespread orientation to Continuous Improvement and quality, train and recruit workers with appropriate skills Create common understanding of need to change to Lean Involve employees Push decision-making and system development down to the lowest levels Train and truly empower people Share information and manage expectations Identify and empower champions, particularly operations managers Remove roadblocks (i.e., people, layout, systems) Make system both directive yet empowering

Keys to Success (continued)

Execute pilot projects prior to rolling out culture across organization (e.g., model lines, kaizen blitzes): after early wins in operations, extend across entire organization Foster an atmosphere of experimentation Willingness to take risks (safety nets) Patience, tolerance of mistakes, etc. Install enlightened and realistic performance measurement, evaluation, and reward systems Do away with rigid performance goals during implementation Measure results, not number of activities or events Tie long-term improvements to key macro-level performance targets (e.g., inventory turns, quality, delivery, overall cost reductions)

Implementation Success Factors

Unyielding leadership Strategic vision, based on Lean Enterprise as part of company strategy Observation of outside successes and failures Ability to question everything Deep commitment to excellence

Benefits of Lean
Percentage of Benefits Achieved

0 Lead Time Reduction Productivity Increase WIP Reduction Quality Improvement Space Utilization

25

50

75

100

Typical Objections
How should you deal with these objections to Lean?
It takes too much discipline. It takes too long to implement. My process is too complex, I have to deal with too many uncontrollable variables, like late supplier shipments, sick people, etc. My process requires a large batch size. It doesnt make sense in my industry. Its unclear to me how Lean will work with my MRP system.

Getting Started Value Stream Mapping

A simple, visual approach to:
Focusing on a product family Creating a clear picture of current material and information flow associated with that product family Identifying Lean tools and techniques that can improve flow and eliminate waste Incorporating those ideas in a new picture of how material and information should flow for that product group Creating an action plan that makes the new picture a reality for that product family

Lean Building Blocks

Continuous Improvement

Pull/Kanban POUS

Cellular/Flow

TPM

Quality at Source

Quick Changeover Teams Value Stream Mapping

Standardized Work

Batch Reduction

Visual

5S System

Plant Layout

Conclusion
Lean
Traditional Complex Forecast driven Excessive inventory Speed up value-added work Batch production Long lead time Inspected-in Functional departments

Simple and visual Demand driven Inventory as needed Reduce non-valueadded Small lot size Minimal lead time Quality built Value stream managers

OEE Graph

Feedback +
Job production specific inputs Case studies to be included

Learning and then not acting on what you learn is like plowing and then never planting. - unknown Albert W. Daw Collection