Lean Manufacturing and Implications to Procurement

Peter TyszewiczVP-Manufacturing & Product Development

BC Supply Chain CouncilSeptember 23, 2004

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Introduction to “Lean”

History & Definition Lean Thinking and TechniquesLean and Procurement FocusLean SimulationImplementation & PhilosophyResources

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An Evolution From Mass to Lean ProductionNot entirely Japanese

1900

2000

1915

1935

1945

1973

1983

Time and MotionF. Taylor

Interchangeable PartsE. Whitney

Mass ProductionHenry Ford

JidokaS. Toyoda

Toyota Production SystemTaiichi Ohno

Just-In-TimeK. Toyoda

Supermarket System

U.S. Productivity andQuality Seminars

Japanese industry recognizesTPS and dissemination begins

U.S. consumers look for smallercars; Big 3 market share decline begins

1st Oil Shock

“Today andTomorrow,”1926

United States Japan

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PRODUCTPRODUCTSHIPMENTSHIPMENT

Time

Business as UsualWasteCUSTOMERCUSTOMER

ORDERORDER

PRODUCTPRODUCTSHIPMENTSHIPMENT

CUSTOMERCUSTOMERORDERORDER

Time (Shorter)

Waste

Lean Manufacturing

QualityCost

Lean is a philosophy that recognizes WASTE as the primary driver of cycle time, cost, and quality and employs techniques to continually drive out the waste in processes

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• Customers will pay for value, increasingly they will not pay for waste.

What is Waste?VALUE:

An activity that transforms or shapes raw materials or information to meet customer needs

WASTE: Activities that consume time, resources and space, but do not contribute to satisfying customer needs

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Storing

Rework

Invoicing

Loading/Unloading

Receiving Report

Repackaging

Creating ScrapReturns to Supplier

Inspecting

Expediting

MovingCounting Sorting

Acknowledging Orders

What Value is Added by:

Value and WasteTypically, where is effort directed? Of the time material is in the plant, what is the typical % of value added processing time?

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Types of WasteCategorized

1. Overproduction 2. Excess inventory 3. Defects 4. Non-value added processing 5. Waiting 6. Excess motion 7. Transportation8. Underutilized people

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Attributes of Lean-Accompanied by many proven techniques-

Operational StabilityJust-In-TimeStandardization & Continuing ImprovementBuilt In Quality

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A Model of Lean Manufacturing

Standardization & Continuing

Improvement“The drivers of lean

production”

• Standardized Work• Continuous

Improvement Activity• Waste Recognition &

Elimination-VSM• People Enabling

Systems

Just-In-Time“The right partat the right time

in the right amount”

• Material Control - Pull System or Kanban

• Level Production• Flexible Operations• Quick Change-Over

/SMED• Continuous-One

Piece Flow• Small Lot/Batch

Production

Built In Quality “Quality in the Process”

• Manual & Automatic Line Stops

• Andon System• Error Proofing• Poka-Yoke• Visual Management

Shortest Lead Time

Lowest Cost

Best Quality

Operational StabilityEquipment

• Total Productive Maintenance• Labor-Machine Efficiency

• Robust Products & Processes

People• Cultural Awareness• Supplier Involvement• Workplace Organization-5S

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Thinking Lean

Specify value can only be defined by the ultimate customer

Identify the value stream exposes the enormous amounts of waste

Create flow reduce batch size and WIP

Let the customer pull product through the value stream make only what the customer (internal/external) has ordered

Seek perfection continuously improve quality and eliminate waste

From Lean Thinking by Womack and Jones

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Storage Machine Storage Assemble StorageTransportInspect

Q/T: 180 min.

WIP: 60.

MCT: 5 min.

Set-up: 180 min.

Batch size: 15

Scrap: 4.5%

Rework: 2.3%

Q/T: 14400 min.

WIP: 105

C/T: 35 min.

Set-up: 60 min.

Batch size: 15

Scrap: 1.5%

Rework: 8.3%

Q/T: 28800 min.

WIP: 150.

Q/T: 3 min.

WIP: 60.

Q/T: 30min.

WIP: 45.

Yield: 88%

3 hrs 5 mins. 30 mins. 3 mins.10 days 35 mins. 20 days

Mapping the Current State for Manufacturing-Minimize/eliminate non-value add processes-

Value Stream Mapping (VSM)Applicable to manufacturing, administration or service

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Storage AnalyzeData Storage Format

Report StorageTransportApproval

Q/T: 180 min.

WIP: 60.

MCT: 5 min.

Set-up: 180 min.

Batch size: 15

Scrap: 4.5%

Rework: 2.3%

Q/T: 14400 min.

WIP: 105

C/T: 35 min.

Set-up: 60 min.

Batch size: 15

Scrap: 1.5%

Rework: 8.3%

Q/T: 28800 min.

WIP: 150.

Q/T: 3 min.

WIP: 60.

Q/T: 30min.

WIP: 45.

Yield: 88%

3 hrs 5 mins. 30 mins. 3 mins. 10 days 35 mins. 20 days

Value Stream Mapping (VSM)Applicable to manufacturing, administration or service

Mapping the Current State for Admin or Service:Issuing PO, Issuing Checks, Requisition, Processing a Claim

-Minimize/eliminate non-value add processes-

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Inventory / WIP 96 Modules 32 Modules 66%

Part Travel Distance 2.3 Miles 320 Feet 97%

Lead Time 27 Days 2 Days 93%

Assembly Operations 8.5 Hours 6 Hours 29%

Before After Improvement

Creating Spaghetti ChartThe VSM Process

Before After

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The advantage of continuous flow, small batch processing;• Processing production run in batches of 10 requires 30 minutes• Processing production run in batches of one requires only 12 minutes

The advantage of continuous flow, small batch processing;• Processing production run in batches of 10 requires 30 minutes• Processing production run in batches of one requires only 12 minutes

Total Batch A Processing Time: 30 minutes for 10 parts21 minutes lead-time for the first part

Batch Processing

Continuous Flow, Small Batch Processing

Total Processing Time: 12 min. for 10 partsOnly 3 minutes for 1st part

A production run that requires three processes with a tact time of one minute each

Just In Time-Batch Issues Continuous One Piece Flow and Small Batch Production

Process 1: Cycle Time is 10 minutes for 10 part batch. Process 2:: Cycle Time is 10

minutes for 10 part batch. Process 3: Cycle Time is 10 minutes for 10 part batch.

Process 1: Cycle Time1 minute per part.

Process 2: Cycle Time1 minute per part.

Process 3: Cycle Time1 minute per part.

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Excess WIP

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DELAY IN DELIVERIES

GENERATING DEFECTIVEPRODUCTS

POOR HOUSEKEEPING

MACHINEBREAKDOWNS

LONGSET UPS

REWORK

MIXED MATERIALS

DECREASINGINVENTORYLEVEL

Lean Gets rid of the rocks and the expensive inventory!

Inventory Hides True Production Problems and NVA Activities

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5S Policy StatementTools and techniques available to support 5S

It is the responsibility of all the employees, located at all facilities and offices to implement 5S and to maintain it through a regular audit

procedure.

5S DefinedSorting (SEIRI ):

clearly distinguish needed items from unneeded items and eliminate items causing

clutter.Systemize (SEITON ):

keep needed items in the correct place to allow for easy and immediate use.

Shine (SEISO) :keep work areas clean and tidy.

Standardize (SEIKETSU):use agreed methods for consistency.

Sustain (SHITSUKE ):QuestAir will provide the time and tools for

continuous improvement.

QuestAir Technologies Inc.S 3S Checklist Date: Auditor(s):

Department: Score CommentsUnnecessary items or inventory

S Any objects on walkwaysO Storage areas for defective or used itemsR Storage areas for future productionT Any unneeded documents and drawings

Are there current work cell visuals in placeTotal Score /30

S All storage areas establishedY Storage spaces clearly labeledS Cabinets and shelves orderlyT Production, lab. areas and walkways litE All hand tools storage properly identifiedM Bulk materials appropriately storedI Sufficient signage throughout the areaZ Tools for cleaning visible and accessibleE All safety zones clear and unhindered

Total Score /45

S Walkways, entrances and floors cleanH Walls and windows cleanI Washrooms and trash cans cleanN Machines free of debris, oil and dirtE Puddles of oil, water or any liquids anywhere

Total Score /25Auditor's comments:

GRAND TOTAL of 100Score rating: 1 - POOR, 5 - BEST

Audit Schedule: 1-st week of the month - Laminate Area2-nd week - Machine Development3-rd week - Seal Development and Office Areas 4-th week - Prototype testing area

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Evidence of 5S

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In Need of 5S

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Benefits of 5SReducing tool change time

equipment cleanliness = shorter tool change timeclearing space = tools @ machinelogical storage of tools/dies with

visual statusImprove customers’ investors & suppliers’ perception

first impressions importantgrocery or hospital mentalityevidence of 5S is typical of world class or best in class operations

Signifies stability & controltrust and respect are gained from employees & customerssign of discipline and prideestablishes credibility with stakeholdersdenotes a growth orientated company

Supporting ‘zero’ defect initiativesdefects hard to see when there is clutterdesignated storage reduces tool/part selection errorsclean equipment tends to operate more consistently

Lower ‘waste’ levelsfree up space for VA’edactivitiesbuying too many of everything

Reduce process delaysvisible conditionsless wasted motion / movementreduce potential injurysafety hazards identified quickerexits are kept clear

Reduce mechanical breakdown“crud” causes failures

abnormalities are visibleregular checking = reduced downtime

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Lean -Focus on Procurement-

Visual Material ManagementVMI

Simple-bin replenishmentElegant-link into ERP

Partnerships and CollaborationsJoint DFMA reviews

Lean AssessmentHow good is your supplier? Which “Lean”attributes do they apply?

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Project Rooms X-Functional Lean Project Management

• Project Management

•Charters

•Schedules

•Risk Assessment

• Manufacturing

•PFMEA

•Value Stream

• Engineering

•DFMA

•DFMEA

•Exploded Views

• Testing

•Results

•Purchasing•Exploded Actual Costs

•Targets Costs

•Suppliers & performance

•DFMA Reviews

• Sales

•Benchmark

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Pictures of Metrics board not shown

VisualsBusiness Unit Operating Metrics

Job • BOM, labour Cost• Warranty Cost

Customer• Open NCRs

Manufacturing• Interruptions

Engineering• Hours per job

Sales• Types of inquiries• Quote response• Reasons for lost sales• Sales to date

Purchasing• Supplier Performance

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VisualsPurchasing and Material Management-Kanban

2-Bin Kanban System Once bin is empty, second bin moves down

Kanban from empty bin is remove

Order is place into ERP systemParts arrive and Kanban is then put back into full bin

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VisualsPurchasing and Material Management-Kanban

2 Crate Kanban –Supplier receives one and must fill in all the components for a kit prior to return

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VisualsPurchasing and Material Management-VMI

Vendor Managed Inventory Moderate value purchased parts & multiple users

-User scans part -supplier notified of consumption-part cost is charged automatically to appropriate project code and G/L-Supplier

replenishes and reconciles

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VisualsPurchasing and Material Management-VMI

Low Value Items

• Fasteners, screws etc

• Cost to order typically exceeds value of order

Supplier visits and maintains “top up” of bins

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VisualsMaking Scrap Visual-to employees and suppliers

Automotive Radiator Water Pipes

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QuestAir Manufacturing Approach-Supplier Collaboration for non-core-

Focus on Core StrengthsLaminate StructuresValve DesignPackagingTesting

Development Partnerships for Non Core

Local SuppliersTier 1 & 2 Auto-parts suppliersProcess equipment suppliersVolume manufacturers

IntegrationNew Product Development & Project Management Processes to integrate core and non core aspects

Machine not shown

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Manufacturing Approach-Supply Chain Leverage &Pre-Fabricated H-3200 Modules-

As received from supplier

Assembled & tested with beds,

valves and remaining ROP

Package and ShipPrepare for shipping

Pictures not shown

Pictures not shown

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Manufacturing ProcessesDocumented process flow and procedures to eliminate errors & to capture lessons learned

Pictures not shown

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Simulation

“Understand by doing”For further information on the simulation that was conducted, please contact me directly.I can also suggest other sources for more extensive Lean Simulations.

Waste

Lean

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Implementing Lean

Executive Support Identify and support “Lean” champions

Perform an assessment tied to company strategic, operational, and marketing plans

Identify priority areasDevelop strategic lean “roadmap”Leverage readily available Lean training materials and resources to learn techniques

Don’t rely on the consultant for “implementation” or long-term Use consultants that have varied industry experience to get you up the learning curve

Get an early win applying a Lean Technique-then promote it! 5S, Manufacturing Cell, Set-Up Reductions, Inventory Reductions, Work Standardization

Establish improvement teams to progressively “Blitz” highest priority areas in the company

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The Lean StartImplementing Lean is Counterintuitive and “challenging” to implement:

Small flexible rather than large “economies of scale machines”Shutting down equipment when no requirement is “pulled”

There is no step-by-step “cook book”Varies from organization to organization Requires an assessment of the company in order to map out the strategy

Company culture plays a big partToyota 14 Principles Stresses “It’s a way to work”

Lean procurement is an inherent element of Lean Manufacturing

Suppliers need to be aligned or selected for their ability to work in a Lean environmentPurchasing professionals should be thinking “Lean”Traditional EOQ approaches need to be challenged

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Supplier AssessmentsDo you recognize Lean in your Supply Base?

Mini-Lean AssessmentGeneralSales/yr Margins Lab$/yr Raw Mat/yr SqFt Cap %

CommunicationGoals/Obj QC Probs Targets Visuals The Wall Empl Locations

MeasurablesPareto Scrap/QC Downtime Perf M/C Up Suplr Qual

PeopleX-Training Flexibility Teams/Contimpr Training

ProductionBalance WIP Bottlenecks Movement Ded'ed Cells ID NVA

MaintenancePM Sch

Set-UpTime Freq Scheduled Flex Equip

OtherSRED M&A Error Proof Poke-Yoke DFMA co-op VSM

MaterialFINV Raw Pull Storage Supermrkts Recv'g Windows

HousekeepingClean Clutter Std Vis Cntrls

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Lean ResourcesSources:

http://www.superfactory.com/http://www.sme.org/cgi-bin/getsmepage.pl?/new-sme.html&&&SME&www.lean.orghttp://www.cme-mec.ca/http://www.ame.org/http://www.advancedmanufacturing.com/leanmanufacturing/leanmanufacturing.htmhttp://www.productivitypress.com/cgi-local/SoftCart.exe/?E+scstorehttp://www.ocapt.com

Local Lean Community/CME Affiliates:BC Manufacturing Consortium (CME) Contact:

Werner Knittel-VP BC Div. (604) 713-7800David Chao-Managing Director/Lean Sensei (604) 785-1800

High Performance Manufacturing (HPM)-Ontario, Cooperates with CMEDavid Hogg-President 519-893-6260https://www.hpmconsortium.com/index.asp

Good Primers:

Lean Manufacturing and Implications to Procurement

Peter TyszewiczVP-Manufacturing & Product Development

tyszewicz@questairinc.com604-453-6972-office604-763-6800-cell

Ed Wolosezky- Manager-Quality and PurchasingJason Penner-Purchaser