Engineering

MSE507
Management Lean Manufacturing

Chapter 1
Customer Value

"There is only one boss: the customer. And he

can fire everybody in the company, from the
chairman on down, simply by spending his
money somewhere else." Samuel M Walton
 Key Point

Value is defined by the customer

Whenever there is a product for a customer,

there is a value stream.
The Challenge lies in seeing it
 Module Goals

Know
Your external customers
Your internal customers
Feel
Capable of talking to your customer
Do
Identify what your customers value
Measure the delivery of value to your customers
 Results
Profitable Sales

Functional Silos Profitable

Sales
Quality Growth

Voice of Delivery
The
Customer Cost Control Customer
Satisfaction
Design

Knowing what your customers value enables you to

build loyalty - penetrate deeper, retain more longer
win new accounts - keep them
make transactions easier, faster
add services, support - higher value
develop new products, services - higher value
enhance marketing programs
help customers succeed
 What do Customers Value?

The technical performance or quality of a product is no longer

the primary determinant of customer value.
Customers evaluate other "value factors such as:
Delivery
Total cost of ownership
Data and information
Value or solution bundles
Business expertise

What does your customer value?

More importantly, what are you doing about it?
7 Types of Waste
 7 Types of Waste

1. Overproduction - The primary waste

Making parts faster than is required
Excess Inventory
Time wasted, that could be used to make product that is
required

2. Waiting
An operator waiting for a long machine cycle to end

3. Transportation
Moving parts and products does not add value - it just adds cost
 7 Types of Waste

4. Unnecessary Processing
Booking work into a store and then having to book it back out
again to use.

5. Inventory
There is a cost to the Company for carry inventory
There is always the risk it can become obsolete
It covers up other inefficiencies
e.g. Long set-up times
 7 Types of Waste

6. Unnecessary Motion
Any motion of a person that does not add value
Operators / Setters looking for tooling

7. Correction
Reworking defective materials

Things to remember about waste

It is a symptom rather than a root cause of the problem
It points to problems within the system, at both process and value
stream levels
We need to find and address the causes of the waste
 Basic Roadmap

Identify Customer Value

Understand and Define

Entire Value Streams
Vision (Strategic Business Plan)
Deploy Key Business Objectives
- Measure and target (6 metrics)
- Align and involve all employees
- Develop and motivate
Continuous Improvement (DMAIC)
Define, Measure, Analyze, Improve
Identify root causes, prioritize, eliminate waste,
make things flow and pulled by customers

Control
-Sustain Improvement
-Drive Towards Perfection
 Cautions
Never, ever assume that
You already know what the customer wants.
Marketing and sales people know the customer
Unless they have a defined program of regularly asking the
customer what they want.
Customers requirements are the same as always
They will change over time
We need to monitor and track
You understand why customers do what they do.
What drives them?
Ask customers directly; do not assume you know.
 Quiz Time
Do you

Have management commitment and involvement?

Have a defined list of your customers?
Ask your customers what they value?
Ask your customers the importance of those values?
Ask your customers how you perform?
Map the flow of value to the customer?
Measure your performance in delivering value?
Know how your performance affects the company?
Know your competitive advantage?
Use this information to prioritize OpEx projects?
Have a defined program for continuous improvement?
 Basic Plan

Identify your customers

Ask the customers what they value
Map your value stream
Measure the delivery of value
Make continuous improvements
 Identify Your Customers

External
Consumers
Distributors
OEMs
Internal
Next process
Shipping
Management
Inspection/audit
Other
Employees
Suppliers
 Be Customer Focused

Make a list of all customers

Put the list in order of priority to your process
The most important customer is often the next process
Post the list in the work area
Be aware of all customers
 Ask the Customer
Ask Yourself 3 Questions

1. What do you want to know?

2. Who do you want to know it from?
3. What are you going to do with the information?

If you cannot answer question 3, you should not bother asking

questions 1 and 2.
 Ask the Customer
General Questions

What is most important to them?

What would make their day?
What would utterly delight them?
What would differentiate you from the competition?

Use open-ended questions.

 Ask the Customer
Standard Questions

How important to you is [OTD]?

What do you mean by [OTD]?
How do we perform on [OTD]?
What do you do if we dont perform?
What impact does non-performance have on you?

Ask for each factor of interest to you.

Use a scale of 1 (low) to 9 (high)
 Ask the Customer
Process

Openly state your purpose for asking questions

Do more listening than talking
Do not be defensive, take criticism graciously
Probe for explanations; ask why five times
Do not try to sell the customer, just gather data
 Ask the Customer
Report Findings 2x2 Grid
Customer Ratings
OTD Leadtime Quality Cost
Importance to Customers

We're Better ----- They're Better

 Map Your Value Stream
6 WEEK Production 90/60/30 day
Forecast Control Forecasts Customer

Suppliers MRP Order Entry

Demand = 45 per day
Orders/day 2 shifts
= 36 Takt Time
Lead Time - 34 Days Queue = 18.2 Minutes
WEEKLY SCHEDULE = 1.5 Days
Competitive Lead Time
= 3 Days

1X
Daily

I
Coils Stamping S. Weld # 1 Assembly Test Shipping
5 days I I
342 I I I
81 122 90
202
CT=1sec CT=3 min CT= 15 min CT= 67 min CT= 4 min Lead Time
Co=1 hr. Co=10 min. Co=0 min. Co= 23 min Co=0 =23.6 days
Uptime=85% Uptime=70% Uptime=100% FTY = 67% Uptime=100%
2 shifts 2 shifts Touch Time
1 shift 1 shift 2 shifts
= 89 min

5 days 7.6 days 1.8 days 2.7 days 4.5 days 2 days
1 sec 3 min 15 min 67 min 4 min

Transducers Current State Map 2002-07-15

Current State- Foundry Process Measurements:
Coils:
Raw Supplier Dielectric
Resistance
Materials Washington Buy Customer Rotor & Stators:
Suppliers Machine Shop / Critical Dimensions
Buyer Service OEM
Report Shipping Resistance at sub-
assembly level
Epoxy coating coverage at PO Release by Buyer, Kanban, Min-Max
OEM
y

supplier level Bins supplier filled

h

Customer
l

Daily Man Valves

n

Cores
t

Carrier
o
M

Man
Foundry / MRP Order Entry Process
thru contracts into
Oracle

Scheduler Valves Receiving Work Order Releases by Planner

Oracle
(Central Insp if req'd)
Daily
Schedule
Relieves
Molding Core Setting Hot List Inventory Monthly Schedule Purchase Order by Planner

2 3 Stores
Shipment
Report

CT =45 sec CT = 12-27 sec

CO = 5 min CO = 0 min Sort Grinding Inspect &Tag
Melting Blast
UT = 70% UT = 100%

I
5 Shift = 2
Pouring
Shift = 2
Shake Out I
1 I
2 I
15 I
1 Ship Date is close

CT = 12 sec CT = 24-40 sec CT = 47 sec CT = 95 sec CT = 15 sec Measurements:

1
Carrier
s

2
SPC Data taken at:
CO = 0 hr 220 CO = 1.8 min 2700 CO = 0 hr 0-100 CO = 0 hr
150 CO = 20 min
y

?Transducer final test

a

CTS:
D

Measurements:
Kit
UT = 95 % I UT = 95% UT = 100% UT = 100% UT = 100% Quantity of kits assembled vs. the OTD FTY Data taken at:
4

CTQ: Transducer final test

4

EPE= 1 Day CT = 24 sec Shift = 2 Shift = 2 Shift = 2 Shift = 1

4

number of correct kits

CT = 12-18 sec No handling damage OTD
1

OEM Returns
CO = 0 hr CO = 0 hr Working Unit to customer spec

UT = 100% UT = 100%
Shift = 2 Shift = 2 Measurements:
Coils:
Stator teeth diameter
14 Days 0 9 Hours 4 Hours 6 Hours 3 Days 2 Hours
Work Order
Stator bearing diameter RPM - 0-2000 <2PPM
45 sec Stator bearing T.I.R. Hz - 2Hz-300KHz <2 PPM
Rotor Bearing diameters
12 sec (Pacemaker) 24-40 sec 47sec 95 sec 15 sec Rotor bearing T.I.R.
OscilloscopeVoltage - 5m/div -20v/div, +/-3%
Dielectric Tester and Megger, 60Hz
Rotor Teeth T.I.R. VDC 0-750 +/- 10% FS
Alignment of Rotor and Stator
Process Lead Time = 17 days, 21 hrs, 3minutes, 45 sec. teeth
VAC RMS 0-750 +/- 10% FS
mA, 0-10 +/-5% FS
Measurements:
Laser:
Shipper
with W/O
MOHOMS, 0-300 +/-5% FS Within specification laser
Process Time = 3 mins, 45 sec. Resistance Ohmmeter, Ohms, 150-250 +/-1%
FS
identifications
D efi ne
M easur e Key 1) Stator Winding Installation of Transducer FF
Stator Rotor Housing Transducer Laser
A nal yze CT=Cycle Time 2) Coating connector & Shipment Final Inspection Shipping
Takt Time = 54 sec. CO=Changeover Time
Assy 3) Weld exciter ring Assy torque
mount
Test (if needed)
process to Final
I mpr o ve
C o nt r o l UT= Up Time
 Measure the Delivery of Value
First Time Yield

Percent
400 101%

100%
350
99%
300
98%

250
97%
Hydro-Aire
Qty Tested - 39-353 Cell Date
Qty

200 96%
Production
Qty Passed Schedule - Orders for March 2001
1. 39-353 4. 7. 10. Crew Size
95% % Passed Plan Actual
150
2. 5. 8. 11. 1
94%
100 3. 6. 9. 12. Takt Time 32 m ins
93%
Time Work Interval Cum ulative Comments
50 Start Stop Min Plan Pcs Actual Plan Pcs Actual Variance
92%
6:45 9:00 2:15 4 4
0 91%
9:00 9:15 0:00 0 4 Break
APRIL MAY JUNE JULY AUG SEPT
Month 9:15 11:25 2:10 4 8
11:25 12:05 0:00 0 8 Lunch

12:05 13:20 1:15 2 10

13:20 13:35 0:00 0 10 Break

13:35 15:00 1:25 3 13

15:00 15:15 0:00 0 13 Clean up

Total 7:05 13 13
Make Continuous Improvement
ON TIME DELIVERY - Los Angeles
Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Target 94.0% 94.2% 94.4% 94.6% 94.8% 94.9% 95.0% 95.1% 95.2% 95.3% 95.4% 95.5%
Actual 94.1% 95.8% 93.0% 95.5% 95.5%
Definition
The percentage of sales order line items that ship complete on or before the original customer promise date, for all line items shipped in the month at the Los Angeles
location.

Pareto of Causes
Reason % effect
Late Supplier 31.3% Causation is the top 5 reasons for late items using the January data (1st level from 9:00 Team Meeting)
Intercompany late 15.0%
Cell over-capacity 18.8%
Supplier Quality 6.3% Click here to insert new row to add additional "Reasons"
Engineering Drawing/Design 6.3%
Remaining % Unassigned 23.0%
Top 5 Action Items
Original Due Current Due
Action Action Description Status Status Description Owner Date Date
Supplier On time performance Improved response On track Quality issues are impacting but Thomas /
overall, there is still improvement Pravin /
Gerhard
SSPS product line transfer Quality and delivery issues of Problem No work done due to softness of Rod 4/30/2003 12/31/2003
UDS-7 vs. PS-7 US sales.

ASV Cell Capacity Cell capacity, Headcount, and Caution Reviews are complete. Quality Vartan / 7/1/2003
efficiency issues are hurting overall view of Rod
labor. Looking at June build rate
Supplier Quality Overall improvement in MRR On track DPM is rising due to excessive Albert 9/1/2003
decrease and Supplier DPM rejections of high quantity receipts.
increase SQE was derailed by ATEX

Engineering Drawings Review PCO for adequate On track Test for electronic PCR system Tony/Rod 7/1/2003
response and Supplier was not completed. Will attempt
Notification trial in June

Man OEM OEM

Cores Customer
Suppliers Man Machine Shop /
/ MRP Service Shipping
Washington Buy
Raw Buyer Valves
Report
Materials
Cores Foundry
Scheduler
System Daily
Schedule
The BOM will be the Relieves
KanBan

Inventory
Molding backbone
Core Setting of the
2 scheduling
Down Time 3 system
Cell
CT =45 sec and
CT =automate
12-27 sec the core
CO = 5 min CO = 0 min
Melting Blast Sort Grinding Inspect &Tag
UT = 70% ordering
UT = 100% process
I
5 Shift = 2
Pouring
Shift = 2
Shake Out
1 2 15 1
CT = 12 sec CT = 24-40 sec CT = 47 sec CT = 45 sec CT = 15 sec
1Day CO = 0 hr
UT = 95 % 2 I
1 CO = 20 min
UT = 95%
CO = 1.8 min
UT = 100%
CO = 0 hr
UT = 100%
CO = 0 hr
UT = 100%
EPE= 1 Day CT = 24 sec Shift = 2 Shift = 2 Shift = 2 Shift = 1

344
CT = 12-18 sec
CO = 0 hr CO = 0 hr
UT = 100% UT = 100%
Shift = 2 Shift = 2
Melt Deck
1 Day 0Overtime 9 Hours 45 sec 4 Hours 6 Hours <8hrs <2 hrs
12 sec (Pacemaker) 24-40 sec 47sec 45 sec 15 sec
Process Lead Time = < 2 days 4 hrs, 3 minutes, 45 sec.

Process Time = 3 mins,

Key
Kaizen CT=Cycle Time
Activities Takt Time = 54 sec.
CO=Changeover Time
UT= Up Time
 Class Exercise - Customer Interview

Pair up
Scenario 1 (two minutes)
Person A (customer) is interested in a new car
Person B find out what Person A values in a new car
Scenario 2 (two minutes)
Person B (customer) is selecting a restaurant to eat at
Person A find out what Person B values in a restaurant
Group discussion
Any surprises?
Any difficulties?
 Lean Manufacturing Cycle
SPECIFY
VALUE
1 IDENTIFY THE
VALUE STREAM
2

CONVERT 4
PUSH TO PULL
3
FLOW
Step 5 CONTINUOUSLY IMPROVE
Getting value to flow faster exposes hidden muda in the value
stream.
The harder you pull, more obsticles to flow are revealed so they can
be removed.
Integrating the Lean Enterprise
 Homework Assignment
1. What is considered as value in the eyes of customers.
Why?
2. What are the seven types of waste? Give examples for
each one.
Read Lean Thinking Chapter 2
The Value Stream
Pages 37-49
Questions? Comments?