sgc white paper : using lean principles to improve profitability and quality

7/31/2019 SGC White Paper : Using Lean Principles to Improve Profitability and Quality

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Many companies in China today are facing competitive pressures that they have not felt in the

past. The slowing of the world wide economy and the large increase in costs both in manpowerand energy over the last 10 years has cut into many companies profitability.

Saks-Gloweli is teaching its customers how to use lean manufacturing principles to reduce direct

and indirect manpower costs, reduce energy uses, and to give an under pinning of a system so

that the result are sustainable. Sustainability is the key!! It is easy to give short term results but

sustaining the system is the most important part of ensuring the companies continues to get

excellent financial results.

Background: Most clients team members have a limited knowledge of Lean Tools, i.e. time

studies, line balancing, as well as statistical tools. The theoretical underpinning of these tools is

not well understood. Without a strong understanding of the theory behind Lean Manufacturing

(LM) and its components (Statistical Analysis, One Piece Flow, Systems Thinking), gains in

productivity, throughput, labor cost reduction and quality improvement will be marginal.

Using Lean Principles to Improve Profitability and Quality

Authored by : David Collins, Kenneth Stem, Stephen Browne & Sid Mewara

Saks Gloweli Consulting is a management strategy consulting firm based out of Shenzhen and Hong Kong that

helps clients grow their business . www.saks-gloweli.com

SGC Lean Manufacturing Consulting

Lean Mfg

Statistical Analysis

One Piece Flow

Systems Thinking

Increased Productivity

labor Cost Reduction

Quality Improvement Increased Profitability

Lean Methodologies:

Value Added Time (this is not efficiency) as a proportion of Cycle Time is an important measure

that will give a clear picture of the level of improvement that is possible. Using Toyotas

measure of Value Added Time per minute, a typical manufacturing plant will be between 3 and9 seconds. Over time, an expectation of 53 seconds is a worthy goal although this will take

time. The point is that teaching an understanding of just how little Value Added Time exists in

most processes allows us to focus attention on reducing all wasted time, especially the time

when product waits with nothing occurring. This concept can also be done with support staff

based on how much needed time it takes to do their jobs. This is the same concept as used

with Value Added Time on the line.
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Standard Work is a management tool that should be understood as separate and unrelated

to either SOPs or Work Instructions. Standard Work is a tool that measures the elemental

times for each step in a process and states the standard time involved in the process being

measured.


together. 5S begins with the idea of having

all materials and tools placed in the most

efficient locations for use by operators. All

other activities within 5S exist to draw

attention to non-standard activities in order

to study and eliminate them. 5S is not

making sure the plant is clean, although

that has a part.

In other words, in the assembly of a board,

standard work would be the total cycle time for one

unit, completed by only one person. This is the total

process time . Once this time has been calculated,

any number of resources can be reasonably

calculated once customer demand is taken into

consideration. This is a powerful management

tool that allows for accurate predictions of eachstep within the process as well as being able to

know when and where resources are needed.

5S is another tool that is based on eliminating waste. 5S and Standard Work are best used

SUSTAIN

SORT

SET IN

ORDER

SHINE

STANDA

RDIZE

Additionally management can monitor the process during the shift to determine if only

standard activities are taking place or if there are non-standard activities that need to be

examined and eliminated. Again the same practice can be used with indirect labor.


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Strategy

1. Increase the understanding of the 7 wastes.

1. Raise the understanding that each production line is a system and that each piece is

linked to the others.

a. There are disconnects between the processes in the plant.

b. Currently are all batch operations without continuous flow.

c. Many parts are held in different places with much use of additional packaging.

d. Testing needs to be updated and other parts of the process need to be reviewed

for pinch points.

2. Learn to see the waste in the organization so that an emphasis will be placed on its

elimination.

a. There are currently large wait times for the units. The actual production time

compared to the output is small.

b. There is waiting time for each unit during assembly, Test and packaging

3. Begin to use measurement systems that uncover the waste in the organization so that

it is no longer invisible and is therefore treated as inevitable.

4. Set up a maintenance program with preventative and predictive pieces to reduce

unplanned downtime and ensure process quality.





Over

production

Transportation

Motion

Waiting

Processing

Inventory

Defects

The 7 Wastes are the root of all unprofitable activity, and all tools of lean production should

be focused on getting rid of waste


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Proposed action plan

1. Begin to teach the understanding of Lean throughout the organization using bothformal classes and on the floor mentoring.

a) Target audience is production managers, leaders and manufacturing engineers.

b) Second is to get operators, 1st level IL, and maintenance involved

2. Gather data that demonstrates the extent of the current level of waste in

manufacturing.

a) Wait time during operations. i.e., assembly, test

b) Wait time between operations.

3. Begin to implement one piece flow including. .

4. Implement 5S in a more effective manner. 5S should be a means to an end(elimination of waste), not an end in itself.

a) Teach the reasons for 5S.

b) Establish 5S

c) Develop and implement a plan for 5S sustainment.

1. Develop Standard Work for each operation to be used as a management tool. Some

Standard Work currently exists but it must be improved.

a) Establish Standard Work for each process throughout the organization.

b) Develop Supervisor and Management Standard Work for sustainment.

1. Analyze and improve all processes. This would be done by analyzing processes and

gathering data in a systematic manner designed to gain insight into the process toward

improvement. This would be accomplished by doing the following:

a) Begin with the quality issues that are the most costly to the facility.

b) Analyze the data in such a manner as to gain insight into the process.

c) Develop and test theories based on the data analysis.

d) Determine what the root cause of the problem is and where in the value

stream it exists.

e) Test solutions and confirm those solutions.f) Implement the solutions.

g) Develop a sustainment plan to ensure no recurrence.


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Justification:

Productivity and throughput improvement of 60 to 100% is likely. This equates to many

thousands of dollars reduction in costs as well as increasing plant capacity. These savings

would go on year after year. These improvements will translate into increased business

profit and potentially new business.

Space will be saved and can be freed for other projects so that additional facility might not

be needed.

Process and quality improvements will also lower labor costs per unit produced through

less rework, less scrap and more time spent on value added activities.

Increased capacity gives much greater flexibility. More models can be built under the same

roof and with the same equipment.

Overall these techniques along with an understanding of corporate goals and objectives,while also considering the use of a balanced scorecard, will give sustainable results to your

company.


Skills Understanding: (accomplished primarily by mentoring through project reviews)

1. Understand how to develop and use Standard Work toward process improvement.

(See above explanation)

2. Understand how to develop and use 5S effectively. (See above explanation)

3. Understand how to develop a detailed action plan.

a. Develop a Gantt chart with dates, resources and responsible parties.

b. Use this plan to gauge progress and to address problems before they

significantly affect the project.

4. Understand how to engage all involved parties in any improvement projects.a. No improvement is ever done within single department or area.

b. Involvement with all parties is critical to ensure satisfactory outcomes.

sgc white paper : using lean principles to improve profitability and quality

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