Introduction to Kaizen, Kyosei and Obeya How to be Creative, Innovative, Fast & Flexible

Dr. John Blakemore Principal Innovation Blakemore Consulting Intrernational National President Manufacturing Society of Australia Advisor to Australian Government on Innovation and Research and Development

What is Lean Manufacturing?

1. Lean manufacturing is a Japanese Pull System which maximises throughput and profit with minimum inventory and waste. 2. This method is employed with great success by Toyota, Honda, Canon, Panasonic, and all globally competitive manufacturers. 3. This method employs, Value stream mapping, pull systems, SPC, Six Sigma and other Deming techniques.

4. The key words are

KAIZEN & KYOSEI &

OBEYA.

Kaizen & Kyosei & Obeya

Kaizen = Continuous Improvement

Kyosei = Living and Working

Together for the common good

Obeya = Big Room

Waste
Expenses (P&L Bal Sheet)

Resources ($,Plant, People,

Material etc) Planning System

Aims of Lean Manufacturing

1. Develop a Pull System with Continuous Flow 2. Enhance People skill, flexibility and Teamwork 3. Achieve Shorter Lead Times 4. Have Less Inventory and Waste 5. Use capital more effectively 6. Maximize Value Added 7. Improve Quality 8. Have Less Defective Product and Process 9. Reduced Time to Market for new Products 10.Improve Information and data flow

Lessons from The Best Companies in the World

1. John Blakemore in Sept and Oct 2006, visited some of the best companies in the world including, Honda, Toyota, Canon, Mazda, Kawai, Panasonic as part of an investigation to add to our understanding of Lean Manufacture. 2. These lessons can be applied to all manufacturers. 3. To the list of Lean we now need to add Kyosei, (inc Karakuri and the German Meister system).

Value Chain
Service Value Creation
Strategic Advantage for Winning

Value Creation

Customer

Core Process

Customer Value

Buying Decision

People Marketing&Sales Innovation Finance Operations

S U P P L Y

The Magic of Pull

Pull Systems: 1. Reduce and cap Work In Process(WIP) 2. Make by Replacement or MTO 3. Aim at limiting cycle time variability 4. Aim at Continuous WIP (CONWIP) 5. Kanban = linked processes 6. CONWIP = pull from FG Supermarket 7. MRP = push to FG 8. CONWIP is the most Robust System

Continuous Flow
1. Once value is added to a product, the product must continue to have value added. 2. No queuing, idle time or stopped flow 3. Remove or speed up the bottlenecks 4. Synchroniselook at a Formula 1 pitstop

Minimise Waste
Waste can be in the form of : Material Time (total, lead etc) Space Money Tampering ( Changing ) Double Handling Breakdowns Band-Aid Solutions Setups, Cleanups, Idle Time, Inventory (RM, WIP, FG)

Japanese Inventory

Lead Time Reduction

Effectiveness

Key Performance Indicators

1. Quality, Cost, Delivery (OTD)

2. Lead Times 3. Stock Turns 4. Working Capital 5. Waste % 6. Quality Indices 7. Time to Market 8. Net Tangible Value 9. ROI, RONA, 10. EBIT, VA

Pirelli ..Output & Defectives

140 120

Output
100 80

60

40

20

Defectives
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

Months

Maximise Value Added

1. Keep the product moving to customer 2. Run Time/ Total Time maximised 3. Maximise use of Tools and Jigs 4. Use clear labels 5. Eliminate non value added steps 6. Push to Pull

Value Added
PROCESS PARTS (6) 1 1 2 3 4 5 6 2 3 4 5 6

Setup(Preparation) Run(The Value Added Step) Maintenance (Preventive) Breakdown(Errors & rework) Idle(available to run but not utilised Cleanup

VA = 2,(3)? = Run + Preventive Maintenance Eliminate Breakdown Idle Setup? ( SMED) Cleanup Concurrent Engineering

120

Costs in the Supply Chain Labour

A Now B OS Labour C QR 1 D QR 2

100

Costs as Percentage of Sales

80

60

40

20

0 Sales Gross Profit Expenses Net Profit Before Tax

Elements

Manufacturing or Service?
There is no such thing as a pure Manufacturing Company All companies are Service Driven

The Solution

Customer Service Driven Cooperative Culture Strong Relationships Team Cross Functional Structure High Velocity Accurate Information Short Time Periods Synchronised Processes Pull not Push Dynamic not Static

Lean

Recent Achievements
1. Hazard: 800% productivity gain in 18months 2. Pirelli : Output doubled, NP from 5% sales to 15% profit 3. CSFB: $40M fr WC , OT D 32% to 95%, Loss to $40M EBITA 4. Tannery: Colour defects eliminated from 15% defective 5. Steel Fabricator: Plant redesign, Mat Handling $ halved 6. Computer Supplier: Loss $60,000 to profit $1.0M I year 7. Aluminium Fabricator: Productivity doubled in 6 months 8. Speedo: QR to retailer, inventory down, service up. 9. 14 Plastics Companies: All increased bottom line in 1 yr. 10.Geelong Cement: Productivity Gain of 25% in 6 months 11.Warkworth Mine: Productivity Gain of 16% in 6 Months 12. BHP to PVA: RM Inventory reduced from $1.5M to $60,000

What Has Been Done (Shaw Australia) $300M T/O

EBITA for 6 Months Periods
25

20

15

Millions of Dollars

10

0 July Dec2001 Jan-June2002 Jul-Dec2002 Jan-June2002 Jul-Dec2003 Fcast

-5

6 Months Period

Lean Production, Pirelli (Italy, Australia) (Loss to Profit then Float)

140 120

Output
100 80

60

40

20

Defectives
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

Months

Removing Variation, Cr in Effluent (Saving a Tannery)

CHROMIUM(Cr) CONTENT(ppm) EFFLUENT
60 50

PARTS PER MILLION(ppm)

40

30

20

10

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 TWO WEEK INTERVALS

The End