Improving the organization's performance by using Lean Six

Sigma methodology

Rodica Ghinea

July 2013

when talking about Performance = evaluating the financial performance

July 2013

Performance = a comprehensive approach including both financial and non-financial aspects

In the late 1950’s

currentlycurrently

LEANLean Manufacturing =

Sistemul de Productie Toyota (TPS)

improving the processes by eliminating waste

Six SigmaSix Sigma- Motorola

set of tools and strategies for improving the quality

LEAN- Six Sigma a combination of the two methodologies for improving the

performance of a process / company through systematic application of tools, strategies and politics for continuous improvement

+

+

July 2013

To build a company's Development Plan

started with the company processes

To determine the structure of the

business (product distribution)

July 2013

In order

For that:

Know the business

July 2013

Analyze current processes in Supply Chain

Analyze current processes in manufacturing

Build the actual VSM

Build the future VSM

Improve services

And that means:I. Build VSM

II. Establish the activities that bring add value

Kanb

an

build

ing

map

v

alue

Rem

ove

was

te

III. Through the stock management

Use

wor

k st

anda

rd

Supp

ly C

hain

July 2013

Made an analysis of business structure

A = high runner = 73 products bring 80 % turnover

B = repeater = 130 products bring 19% of turnover

C= stranger = 66 products bring 2 % of turnover

Tool used: Paretto Diagram

July 2013

A B C0

20

40

60

80

100

120

140

73

130

66

number products

1761066 RON

7511953 RON

76581 RON

Which helped to make the decisions:

July 2013

Automatizations

Lean Cells

Customizedproduc

ts

For A products (high runners)

For B products (repeaters)

For C products( strangers)

I. Build VSM

July 2013

Performance before implementation:

7 activities; OFR = 90%; MTPT = 140 days; OEE = 65% LT = 25 daysEfficiency = 65% Tact time = 5.7 sec

Based on data collected has been built the future status for VSM

July 2013

FUTURE STATUS

After implementation of the new VSM expect to:

July 2013

reduce the number of the activities to 4;

with an OFR = 95%; and rotate the material stock at each 100 days (MTPT = 100 days); with a rate of using the equipments of 85 % ( OEE)

and delivering the A products in 5 days (LT = 5 days)

To obtain this performance needs to implement the VSM- action plan

July 2013

Action Product type responsible data

Implement the cells layout B HS mar.13 Kanban implementation inter-

operational A, B VA dec.13 Implementation Kanban finish

product A, B DC ian.14

Implementation Kanban-secondary operations

A, B SN sep.13

Implement work standard for each product family

A, B BB nov.13

Design and implement Kanban for primary parts

A, B CB mar.14

Standardise the box for parts A, B GH aug.13

Implement a conveyor between packaging and verification B GI may.14

“U” CELL

July 2013

price

New layout 300 euro/pcs

II. Status of waste (MUDA)

July 2013

Work time: 8 h

Production time : 2.75 h

Defects or purchasing activities : 4.25 h

manufacturing

defects

purchasing

waste distribution (hour)

waste

waste

adding value

2,75

1,25

3

About 70% of work time is lost.

To increase the value added need to be implemented the

following activities:

July 2013

Activity Price Responsible statusDesign and implement a new assemble table

600 eur BU Manager Implement standard work

0 Engineer

Kanban implementation

0 Engineer

July 2013

75

150

131

Productivity after implementation

manufacturing through Kanban implementa-tionthrough work standard

After implementation the productivy will increase as:

July 2013

1. Increase productivity

2. OFR = 92%

3. OEE = 85%

4. Decrease stock by 20%

5. Increase workplace ergonomics

6. Released a surface of 300 square meters

before implemen-tation work stan-

dard

after 1 month after 6 monts0

50

100

150

200

250

300

350

152

240

300

Evolution productivity

Series1Linear (Series1)

After implementation :

Red- crises situation- not enough time to bring in time !

Yellow - warning signal- a good moment for ordering

Green – enough parts for production

Code of colour:

July 2013

Kanban: Card that contains all identifiers landmark for an article/ sub-assembly / finished product, such as: code, quantity, position, destination provider.

III. Kanban

delay in deliveries

Model: Design Kanban

July 2013

III. Kanban

monthly

consumption min max box type A box type B box type C

anti-drill plate 13206 4052 10129 10

2.5" SH cap 3VL 1935 484 1209 2

2.5" SH cap5VL 7163 1791 4477 4

2.5" SH cap 5BA 659 165 412 1

2.5" SH cap 5E 863 216 539 1

2.5" SH cap 5OV 3046 762 1904 4

3" SH cap 3VL 1935 484 1209 2

3" SH cap 5VL 3112 778 1945 4

3" SH cap 5BA 659 165 412 1

3" SH cap 5E 863 216 539 1

3" SH cap 5OV 762 762 1904 4 4

III. Supply Chain To understand the situation, it has used another tool- the Ishikawa Diagram:

Iulie 2013

July 2013

III. Supply Chain

hours %0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

22.7 55.3

17.3 44.7

Supply Chain structure

MUDAvalue added

The activities developed into the Supply Chain Department have been analysed. Around 44.7% of weekly work time it is lost.

July 2013

III. Supply Chain To improve the performance of department has been established an action plan to improve purchasing services

ActionA P

C D

A P

C D

A P

C D

A P

C D

A P

C D

A P

C D

A P

C D

A P

C D

implemen tthe matrix communication with clients and / or suppliers

establish responsible for purchasing on group materials

make decision buy/not buy in max 48 h

build a new and simplified map of processes for supply chain

Status

group documents by category

standard implementation for organizing shelves

processing orders based on FIFO principle

implementing standardized document for purchasing indirect materials and for services

July 2013

< 3 months (3:6]months (6:12]months (12:24]months > 24 months0

5000

10000

15000

20000

31141118

31351113 998

12117

2118

5086

1126

88

4543

1737

3024

308

635

985

00

Stock Distribution

merch.

selling

raw mat.

indirect ma-terials

components

packaging

(*10

00) R

ON

Has developed an analysis to understand the distribution of stock:

July 2013

1. Implement an working standard for procurement process

2. Introduce the order into the ERP operating system-max 48h

3. appointment responsible for articles category purchasing

4. Construction ERP interface easily accessible without risk

Strategic actions:

1. Reduce the variant of type packaging

2. Implementing Kanban to the supplier for components and raw materials

3. identifying new suppliers in Romania / Europe

Based on the analysis has been established the action plan

Results after implementation

July 2013

< 3 m

onths

(3:6]months

(6:12]months

(12:24]months

> 24 m

onths0.0

2500.0

5000.0

7500.0

5048.8

882.62119.2

0.0 0.0

1892.8

723.8

1260.0

0.0 3.3

stock trend after implementation

merch.sellingraw mat.indirect materialscomponentspackaging

(x10

00)

RON

packag

ing

componen

ts

indirect

materia

ls

raw m

at.

merch.

0

5000

10000

15000

20000

25000

Stock trend after implementation

beforeafter

Conclusions

July 2013

KPI before trend after

OFR (%) 90 95

MTPT (days)

140 100

OEE (%) 65 95

Stoc (%) 45 15

LT (days) 25 5

Performance

Company

For:- questions- helping to save your company- helping to develop your company/department- guidance for developing performance project

write to me on : ghinearodica@yahoo.com

July 2013

Some slides were removed from the initial presentation.

Thank You!

July 2013