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Developing Effective Metrics

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1 Developing Effective Metrics
Presenter: Ryan Theodore, Manufacturing Engineer Date: 4/22/2014

2 Safety In case of an emergency Restrooms

3 Introductions VMA MED Attendees Presenter

4 Agenda Voice of the Customer Who, What, Where, When Daily Management
Genba Basic Process Measures 5S+ Lego Exercise What have you learned Wrap-up/Questions

5 Who are the customers? The customer is the one being served
A customer is someone looking for something to be provided to them The customer sets the expectations Customers can be internal and external

6 Voice of the Customer VALUE CAN ONLY BE DEFINED BY THE CUSTOMER!
VOC Must be surveyed, recorded and used as a key input to Quality Function Deployment activities and Continuous Improvement projects. The VOC has the: Wants Needs Necessities VALUE CAN ONLY BE DEFINED BY THE CUSTOMER! The VOC Defines the Inputs From the Customer Perspective.

7 The Voice of the Customer
Let’s define wants, needs and necessities: Wants: Customers overtly state that they want their product to do or perform. Needs: These are statements that are more urgent than the wants of the customer. Necessities: These are statements that are driven by legal or regulatory requirements. Capture VOC Early To Prevent “Scope Creep”

8 The Learning Curve Learning with Customers faster than the Competition
Expectation Customer Cycle Time Demands Capability Learnings Learning with Customers faster than the Competition

9 When a Customer Complains
The quality mushroom 4 COMPLAIN

10 Customer Loyalty

11 Introduction to Daily Management
Daily Management is the process to Manage Operations at the Genba There are Four Pillars (Components) of Daily Management DAILY MANAGEMENT Managing 5 KPI Drivers At the Genba Genba Visual Management Problem Solving Genba Genba Leadership Lean Conversion 5S/SW are part of the “Lean Conversion” and are the minimum foundation to support DM

12 How Do You Spend Your Time
Why Daily Management? How Do You Spend Your Time Site Leader Policy Deployment Operations Leader Kaizen Value Stream Leader Daily Management Front Line Performer of Work 0% 100% 50% Time

13 Daily Management Relationship to Policy Deployment
Once Breakthrough is achieved… process is standardized to Daily Management! Strategic Objective is Achieved! Policy Deployment Policy Deployment KAIZEN Improvement KAIZEN Policy Daily Deployment Mgmt Daily KAIZEN Mgmt Daily Foundation for PD Mgmt Daily Daily Mgmt Mgmt Year 0 Year 1 Year 2 Year 3 Year 4

14 Policy Deployment – Flows from the top
Global Regional Value Stream Site

15 Daily Management – The “HOW”
“Lean Conversion” is critical first step to drive results at Genba Each Plant is at different point in the “Lean Conversion” Basic 5S/SW is the foundation of Lean Conversion VM KPIs Continuous Improvement Lean Conversion Daily Management Lean Conversion Process and Daily Management Process are intertwined. To maximize improvement, you cannot do one without the other.

16 Five Key Performance Indicator (KPI) Drivers
(S) Safety (Q) Quality (D) Customer Service (I) Inventory (P) Productivity In Daily Management, we manage these at the Genba

17 Genba Japanese term “The place where the truth can be found."
“The value proposition" “Go and See” ”Learn to See”

18 Genba A Genba visit is often simply called a customer visit with unique characteristics. Main purpose is to observe (in silence) Many eyes, cross-functional, one thing Normal from abnormal conditions Abnormalities should be apparent and visible Visual management Occasionally question, rarely guide or direct

19 Genba Often the client (user or operator) is asked to describe what he/she is doing while he/she is doing it (5 why’s, etc) Open ended questions Moments of truth In the spirit of Continuous Improvement

20 Genba Genba occurs in the context where the product or service is used. This allows direct observation Of problems that arise (or have occurred) Workarounds that are applied Capabilities or services that are never used (waste).

21 Genba Outcomes Genba provides insight and deep understanding into the thought processes and problems which often reveal differences between the customer's mental model and the model of the developers or providers of the product or service.

22 Genba (project or service)
The customer (user, or operator) will often express wishes or needs while working in context that would be forgotten or suppressed in a different context such as a structured interview or sales meeting Common cases for a customer visit include: Rapidly Solve Problems Enhancing the features or usability of products (especially software) Enhancing the features of devices (especially ones aimed at very broad or very niche consumers)

23 Must Not Must Do Leaders Visual Guide Flex Muscles Blame the worker
Give up Genba the process Throw fits Kaizen your standard work Blame the Measure Think of at least 7 ways to do better Show Boat Tamper with the Measure Cover up Observe the process Find the Waste Have a vision Hide in the office Throw People at Problems Stress out Set the Strategy Create smoke screens Provide the right tools Set goals Grovel Be clueless

24 Managing the Five KPI Drivers
DAILY MANAGEMENT Managing 5 KPI Drivers at the Genba Genba Visual Management Genba Problem Solving Genba Leadership Lean Conversion Safety Quality Delivery Inventory Productivity

25 “Symptoms” Ask Yourself - Is your “Real Place” currently…
Managers rarely visit the shop floor. Safety Meetings take place in conference rooms. 5S discipline not apparent. Questions about Safety performance, cell metrics cannot be answered by either managers or Associates. Safety issues present. Safety Improvement is stagnant (no target). Associates not engaged, not participative. Minimal cross-training is taking place in jobs with repetitive motion. No Repeatable and Robust process for maintaining equipment. Associates not engaged in this process. Kaizens do not account for potential Safety concerns. Employees have no voice or no mechanism of reporting safety hazards.

26 Safety Define Safety KPI for facility and to be managed in each Cell
Define Jump off Point (Audit) for facility and each Cell Define Target for facility and each Cell Implement Visual Management for Safety KPI Communicate and Train

27 5S Train 5S broadly and deeply Target cells for 5S kaizen
Implement 5S Checklist and 5S Patrols in each Cell Monitor through 5S Checklist and Patrols and take Corrective Action DEFINITION: 5S: A process to ensure a clean, orderly, safe and productive workplace.

28 Associate Involvement
Each associate (operator/front line leader) must understand Safety Concerns and what their responsibility is to prevent and avoid Must have Safety KPI targets and actual posted Associates must be actively engaged with preventing accidents and unsafe conditions

29 Sort Set in Order Shine Standardize Sustain 5S Defined
5S relates to the beginning of five terms that begin with the letter S that describe workplace practices conducive to visual control and workplace organization. It is one of the foundations on which lean manufacturing is built. Sort Set in Order Shine Standardize Sustain 5S relates to the beginning of five terms that begin with the letter S that describe workplace practices conducive to visual control and workplace organization. It is on of the foundations on which lean manufacturing is built. Sort Set in Order Shine Standardize Sustain

30 5S Improved Safety Promotes Teamwork Improved Quality
SORT (Organization) Clearly distinguish needed items from unneeded items and eliminate the later SET IN ORDER (Orderliness) Keep needed items in the correct place to allow for easy and immediate retrieval STANDARDIZE (Standardized Cleanup) This is the condition we support when we maintain the first three 3S’s SHINE (Cleanliness) Keep the work area swept and clean SUSTAIN (Discipline) Make a habit of maintaining established procedures Benefits Improved Safety Promotes Teamwork Improved Quality Reliable Delivery Lower Cost Reduces Breakdowns Improved Moral The 5S system should be the foundation for any improvement activities. Without a clean well organized work area you can not expect other types of improvements to take hold. Some of the benefits are: Improved SAFETY Promotes Teamwork Improved Quality Reliable Delivery Lower Cost Reduces Breakdowns Improved Moral

31 Why Do 5S Plus? To survive and grow as a business we must reduce cost. Implementing “preventive controls” can and will stop the generation of defects and poor results before they take place. Benefits Improved efficiency Workplace visual controls Improved quality Workplace ownership and pride Improved safety and work environment 5S has proven to reduce waste and cost

32 8 Wastes Defects Overproduction Motion Material Movement Waiting
Inventory Processing Not utilizing Employee Talent The 8 Deadly Wastes Overproduction Overproduction is considered the worst of the 8 wastes because it helps to hide the other waste. Waiting waiting is also a waste, but of the 8, this one is the most desirable because it is the easiest to identify. Transportation transportation waste refers to the double and triple handling of parts moving them from one location to another. Process Processing waste is any set that does not add value such as setups. Scrap This is an obvious waste, any word that begins with “re-” is probably a waste ex: Re-work

33 The 5S System Seiri - Sort -Housekeeping.
Separate needed items from unneeded items. Keep only what is immediately necessary item on the shop floor. Seiton - Set in Order - Workplace Organization. Organize the workplace so that needed items can be easily and quickly accessed. A place for everything and everything in its place. Seison - Shine - Cleanup. Sweeping, washing, and cleaning everything around working area immediately. Seiketsu - Standardize - Consistant. Keep everything clean for a constant state of readiness. Shitsuke - Sustain - Discipline. Everyone understands, obeys, and practices the rules when in the plant. The 5Ss were originally Japanese words that have since been translated in similar English terms. Seiri - Sort -Housekeeping. Separate needed items from unneeded items. Keep only what is immediately necessary item on the shop floor. Seiton - Set in Order - Workplace Organization. Organize the workplace so that needed items can be easily and quickly accessed. A place for everything and everything in its place. Seison - Shine - Cleanup. Sweeping, washing, and cleaning everything around working area immediately. Seiketsu - Standardize - Cleanliness. Keep everything clean for a constant state of readiness. Shitsuke - Sustain - Discipline. Everyone understands, obeys, and practices the rules when in the plant.

34 Machine Shop Before After

35 Cell Workstation Before After

36 Plus – Safety All changes made during the implementation of 5S should be done with safety in mind An area that actively sustains 5S promotes a safe work environment Perform job safety analysis, set goals and targets, and continually monitor performance Safety Always!

37 5S Checklist

38 Managing the Five KPI Drivers
DAILY MANAGEMENT Managing 5 KPI Drivers at the Genba Genba Visual Management Genba Problem Solving Genba Leadership Lean Conversion Safety Quality Delivery Inventory Productivity

39 “Symptoms” Is Your “Real Place” Currently…
Large team of inspectors (10%) (Receiving, 1st piece, Final Part, Finished Goods) All inspection treated as indirect labor As material received, detailed receiving inspection performed Prior to parts being run, the set-up and first piece have to be signed off by an inspector Before parts go into stockroom, all material must undergo product inspection As finished goods complete, inspectors test and inspect the product again Quality Manual and Procedures available but not known to people on shop floor

40 Goal is quality at the source
PRODUCT PROCESS Establish process inspection; identify what to check, when to check, and how to check Train operators and quality technicians Establish statistical process control (SPC) charts as appropriate Where assembly cells are established: Put test and equipment in the cell Identify all points where checks/inspections are needed (Standard Work Sheet) Set up scrap bins as necessary Goal is quality at the source

41 S : ? P : ? C : ? S = Statistical techniques used to examine process variation P = Process, ANY Process C = Control: Controlling the process through active management Date of birth: 1920’s - Western Electric / Dr. Walter Shewhart Used to identify controlled & uncontrolled variation, also known as common & special causes of variations Tries to find the process signals in all of the noise Uses control charts as main tool So, Not Really New, but still efficient…

42 SPC Example The factory scrap level is at a year low of 2%.
APRIL… The factory scrap level is at a year low of 2%. Manager presents an award to the plant. Ceremony in the cafeteria: pizza and refreshments for all! “Everyone should be proud of what you’ve accomplished”. 3 Scrap Level (%) 2 Party Time 1 J F M A Assumption Is Not Always A Good Approach

43 A Turn For The Worse….. Three consecutive months of scrap increases.
Manager wishes he could take back the award. Recognition has backfired. Instead of holding the gains, scrap went right back up. Manager decides: “This group just needs tough management!” JUNE… 3 Scrap Level (%) 2 Manager wants to take back award 1 J F M A M J J Summer Vacation Effect?

44 Scrap War Scrap rises to a value of 2.6%.
Manager decides to take action. A “special meeting” is called to solve this problem once and for all. After a sound lecture on the importance of scrap, the manager leaves. Employees aren’t sure what to do. Besides, they have other metrics which have more importance. So… they do nothing. NOVEMBER… 3 Scrap Level (%) 2 No more “Soft Management” 1 J F M A M J J A S O N D Christmas Preliminary Effect ?

45 Scrap: A Life of It’s Own?
JUNE… A year later… Manager has seen reduced scrap levels since the end of last year. “Things are looking-up!” (although nothing had been done to change the system). His takeaway: “A tough management style gets results!” Manager concludes: “Tough love makes things happen” 3 Scrap Level (%) 2 1 J F M A M J J A S O N D J F M A M J No Celebration?

46 Let’s look at it with SPC eyes…
UCL 3 Scrap Level (%) 2 1 LCL J F M A M J J A S O N D J F M M J J A S O Manager “ Hey, I made my decision based on data - How can I go wrong ?” YOU: “Your decisions were made from observing high and low points as signals. When In reality, it was all variation. Look at the data, there was no significant change in the process.” Observe, Analyze, Understand, Then Decide…

47 Examples of Special Causes
Special causes are assignable and can include: Weather (season, time of day) Lighting Conditions Machine Type Machine Age Maintenance Supplier Operator Shift Material Lot etc… Process Response Special causes Time Unfortunately, There Are So Many…

48 Built in Quality Checks
Have operators/ assemblers doing the inspection Need to build quality into the cell and process Watch calibration and sensitivity of equipment in the cells

49 Poke-yoke Where appropriate and needed build mistake- proofing into the process If you have a toolroom, take advantage of their skill- set and creativity

50 Measure Quality Results Every Day
1st pass inspection by cell (# of defect/total production) normally expressed in PPM. Roll up yields can also be used. Make sure process is kept simple Review control charts and re-establish control limits as needed. Returns from customers measured in PPM Scrap $ Visual Bins normally red labeled “Scrap” Simple means that anyone can understand

51 Address Issues with Necessary Tools
Identify issues through KPI performance Consider volume, customer expectation, and impact when selecting projects Pareto issues and select Problem Solving tool needed Push process down. Have cell leaders, value stream leaders, and manufacturing engineers working with operators to improve If on-going action required, develop corrective action plans or countermeasures. Post in cell. Document corrective actions with visual aids. Use photos to assist with quality information Keep all associates involved with improvements and expectations

52 Managing the Five KPI Drivers
DAILY MANAGEMENT Managing 5 KPI Drivers at the Genba Genba Visual Management Genba Problem Solving Genba Leadership Lean Conversion Safety Quality Delivery Inventory Productivity

53 “Symptoms” Is Your “Real Place” Currently…
Commitments not made Lead times too long Past due dollars high Customer Service Dept. receiving many calls Customers waiting on phone and hanging up Hedge orders happening Operations spending lots of time furnishing Customer Service with promise dates (which don’t happen) Schedules changing daily and/or hourly Workbook Pg 17

54 On Time Delivery (OTD) On-time delivery is measured based on customer requested date with the three following rules Oldest orders are filled first (where possible) – i.e. once an order is missed it must be a priority to be filled over new “on-time” orders. (Missed orders are only counted against delivery on the day they are missed, not when shipped) Shipments missed due to Credit Holds “Count” as on-time delivery misses and should be highlighted in the pareto as appropriate All parts on consignment at the customer are considered to be delivery “hits” if the consignment levels remain between the min and max. If the consignment level falls outside the min/max levels it is considered a delivery “miss.” A Measure of Performance Against Customer Request

55 On – Time Delivery Exercise
Plant A ships 77 lines before they are due and 12 on the day they are due out of 121 total lines requested. What is the plant’s OTD? Plant B ships 10 orders that were on credit hold 2 days after they were to ship, 12 lines early, and 30 on the day they were due out of 65 lines requested. What is the plant’s OTD? Plant C ships 34 lines to the customer 1 day late, 12 lines two days late, 16 on the day the lines were due and 84 on-time. What is this plant’s OTD?

56 On-Time Delivery Solutions
Plant A ships 77 lines before they are due and 12 on the day they are due out of 121 total lines requested. What is the plant’s OTD? ( ) are on-time / 121 total lines = 73.5% OTD Plant B ships 10 orders that were on credit hold 2 days after they were to ship, 12 orders early, and 30 on the day they were due out of 65 orders requested. What is the plant’s OTD? ( ) are on-time / 65 total lines = 64.6% OTD (remember orders late due to credit hold “count” as an OTD miss) Plant C ships 34 lines to the customer 1 day late, 12 lines two days late, 16 on the day the lines were due and 84 on-time. What is this plant’s OTD? You really can’t tell with the data given here. How many total lines were requested? Always seek complete information! How many of you said %?, How many 68.4%?

57 Past Due Past due is defined as the monetary value of all orders with a customer requested due date earlier chronologically than the current date All Sales / Deliveries With A Requested Delivery Date Earlier Than Today!

58 Reduce Past Due Need information indicating Past Due by cell
Establish root cause of Past Due (paretos need to get to root cause) Need to be able to age past due Establish goals to reduce based on cell output now achieving Achieve goals for past due $ © All Rights Reserved

59 Establish Credibility by Making Your Commitments
Measure the OTD Measured against request dates (when the customer wants the product). Need system for measuring daily All info and measurements must be down to cell level Establish goals for OTD based on cell output. Outputs may have to be increased if improvements in OTD not occurring fast enough. Good daily visual for cell as to how performance going The OTD measurement must be used in conjunction with past due numbers “Listen to the customer” © All Rights Reserved

60 Measurement to CUSTOMER REQUEST
Identify true customer request date Understand how your organization captures what the customer wants Monitor progress-establish goals for Customer Request and Lead Times Monitor continued reduction of lead times Measure actual lead time for all orders “Understand importance of delivery for each customer type” © All Rights Reserved

61 Monitor Performance Continue to improve OTD against goal
Continue to reduce lead times Measure at the cell daily Understand root cause of why you missed each delivery © All Rights Reserved

62 Associate Involvement
Each associate (buyer/operator/cell leader) must understand standard work and what their responsibility is Must be able to see orders as they are entered Need to have a process so they can work to customer priorities Commitment to and understanding of goals Cell team needs to keep up with and have visibility of customer request date Use this time when lead times are being reduced as an opportunity to cross train operators. “The whole team needs to understand goals” © All Rights Reserved

63 Visual Management End of line output/ scorecards
Past due performance (actual vs goal by date) OTD performance (actual vs goal by date) Lead times – continue to reduce lead times (as velocity increases cost decreases) “End of line output – goal should be against customer demand (frequency, planned, actual and why you missed)” © All Rights Reserved

64 Managing the Five KPI Drivers
DAILY MANAGEMENT Managing 5 KPI Drivers at the Genba Genba Visual Management Genba Problem Solving Genba Leadership Lean Conversion Safety Quality Delivery Inventory Productivity © All Rights Reserved

65 “Symptoms” Is Your “Real Place” Currently…
Inventory replenishment based on a computerized system such as MRP System contains several modules such as routings, processing, BOM’s, order launching Orders that are issued daily/weekly are generated by demand from either firm orders, planned orders,or forecasted requirements Labor and overhead are tracked by order through each processing department As parts are completed they are entered into the system and stored in a warehouse Cycle counters maintain the accuracy of the inventory being stored. Transactions are made each time material comes in or goes out of warehouse Large staff of materials department required to perform these functions (planners, order launchers, warehouse personnel, material handlers, cycle counters, etc.) When finished goods are required, components are issued from warehouse to assembly. When complete, finished product is inspected and either goes to shipping or back to the warehouse. Workbook Pg 17 © All Rights Reserved

66 Establish JIT Orders with suppliers
Review expectation with supplier Establish annual requirements (+/-) Place blanket order with kanban being release method Negotiate reduced lead time (target is transport time) Negotiate supplier maintaining 2 kanban quantities on hand You will need to commit to some raw material and finished goods JIT © All Rights Reserved

67 Establish Inventory Goals
Primary Inputs and Outputs Defined: What is being put into the cell How much will be shipped out of the cell What is scheduled to be received Standard value of incoming material Other If based on above, ending inventory exceeds cell planned levels, additional actions needed: Have customer demands changed? Do kanban cards reflect latest lead times and safety stocks? Review all “A” parts Periodic reviews of Excess and Obsolete items Purchasing needs to work closely with production group © All Rights Reserved

68 Implement Inventory Management System
Develop shipping forecast Determine inventory reduction based on shipping forecast Review scrap, E&O, and material to be returned Establish the total inventory reduction $ Review kanban boards and determine $ volume of inventory to be received Compare output vs input Make adjustments Must have involvement at cell level Need to review weekly “This is an inventory management system” © All Rights Reserved

69 Measure results and take countermeasures
Inventory Measurement Measure by cell level if possible Set up measurements so that inventory dollar value is broken out by cell Establish inventory turns measurements © All Rights Reserved

70 Managing the Five KPI Drivers
DAILY MANAGEMENT Managing 5 KPI Drivers at the Genba Genba Visual Management Genba Problem Solving Genba Leadership Lean Conversion Safety Quality Delivery Inventory Productivity © All Rights Reserved

71 “Symptoms” Is Your “Real Place” Currently…
Time gathering systems throughout the plant May still have a dispatching system with time keeper Earning labor based on what goes into the warehouse Labor separated by indirect and direct Standards include classic definition of direct labor Indirect labor included in variable overhead Closed order variance reports issued well after orders completed Workbook Pg 17 © All Rights Reserved

72 Takt Time Understand and be able to determine where takt time comes from Relate takt time to your process Understand the difference between takt time and cycle time Understand the basics of cycle time analysis including the time observation form

73 Net time of operation per period* Customer requirements per period*
Takt Time Production is equal to the customer demand Proportion of daily production (in seconds per piece) Net time of operation per period* Divided by Customer requirements per period* * The periods of time must be consistent (shift, day, week…) The time requirements to make your customer happy

74 Example Calculation Net time Shift: 480 minutes 480
Operation per shift Break: 10 minutes -20 -10 Cleaning: 10 minutes Net time of operation 450 Customer requirements Monthly Requirements (units) 10,800 Amount of working days/month ÷ 20 Units / day 540 Net Time of Operations/Period = = 0.83 min Takt Time = Customer Requirements/Period 0.83 * 60 = 50 sec For one shift per day: Takt Time = 50” The periods of time must be consistent

75 Cycle Time T/T Machine Cycle Time Machine Automation Time
Unload / Load / Start Inspection Delay Pack Operator Cycle Time Cycle Time is different from Takt Time

76 Bar Chart of Takt Time Vs. Cycle Time
Operation Cycle Time 150 sec 50 sec 3 Op Number of Operations = = = Takt Time 60 Takt Time = 50 sec 50 Time 40 30 Operation Cycle Time = 150 sec 20 10 1 2 3 4 5 6 7 8 9 10 11 12 Operation Number Bar graphs visually show balance of operations

77 Using this tool provides:
Bar Chart of Takt Time Vs. Cycle Time Using this tool provides: Visual reference of operation cycle time and takt time of a specific cell Determine the suitable number of operators (operations) necessary for a line or cell Show what is necessary to balance the line

78 Perform Cycle Time Analysis
Observe tasks and group into small elements Establish lowest repetitive cycle time by operator Use to create standard work

79 No Observation Detected
Time Observation Form No Observation Detected Collect real data on the process

80 Time Observation Form Observation Times Omitted Observations
Lowest and Repeatable Consistency is key!

81 Labor Reporting Measure Labor Output End of cell scorecard
Pieces per time period as a plan Keep making improvements to attain goals Overall measurements Productivity Excess Labor (difference between actual and standard) Plant level measurements may/should be different than cell level MEASUREMENTS: PRODUCTIVITY: Sales $ per hour worked in cell Pieces produced per hour Sales $ per employee EXCESS LABOR Needed especially if sales $/ hour is the productivity measurement in cells where the price per unit can show large fluctuations © All Rights Reserved

82 OEE: Operational Equipment Effectiveness
Operational Equipment Effectiveness helps you see and measure a problem so you can fix it, and provides a standardized method of benchmarking progress. OEE is the framework for measuring the efficiency and effectiveness of a process, by breaking it down into three constituent components: Availability - takes into account Down Time Loss (events that stop planned production for an appreciable amount of time) Performance – takes into account Speed Loss (factors that cause the process to operate at less than the maximum possible speed, when running). Quality - takes into account Quality Loss (parts which do not meet quality requirements). Often it is more important to focus on the OEE Factors than the metric. Relentlessly Work to Eliminate OEE Losses

83 OEE – Calculation Tool Need to collect these 4 data points on each shift 85.0% Overall OEE 99.9% Quality 95.0% Performance 90.0% Availability World Class OEE Factor A Little Data Collection Can Lead to Big Opportunities for Improvement !

84 OEE Example 1 - Solution Availability: Planned Production time: 480 – 30 = 450 minutes Shift 8 hrs X 60 min = 480 minutes 2 breaks X 15 min = 30 minutes, Lunch is unpaid = 0 Downtime = 37 minutes Availability = Planned Production time – Downtime ( 450 – 37) Planned Production Time (450) = .918 X 100 = 91.8% Perf Eff: Ideal Cycles per minute = 15 test cycles per hour / 60 minutes = 0.25 test cycles per minute Processed Amount = 68 tests Actual Operating time = Planned Production time- Downtime = = 413 minutes Perf Eff = Processed Amount / Actual Operating Time (68/ 413) Ideal Cycles per minute (0.25) = .659 X 100 = 65.9% RQP: Processed Amount = 68 units Defects = 8 RQP = Processed Amount – Defect Amount ( 68-8) Processed Amount = .882 X 100 = 88.2% OEE = Availability X Performance Efficiency X RQP = % Now it is Obvious Where to Start Improvements!

85 Productivity – Calculation Tool

86 Standards to Match Revised Labor System
Charge all labor against cell (both direct and indirect) After a given period of time, compare the total labor to the previous standard labor Create a new ratio (total labor : standard labor) Multiply old standard by new ratio © All Rights Reserved

87 Measure Productivity and Excess Labor By Cell
REPORT PURPOSE Productivity by cell To measure change at lowest level Excess labor by cell Assist with variation in selling price and planning labor Kaizen funnel To know where attention needs to be focused VISUAL MGMT PURPOSE End of line output/scorecards To see how cells are performing as it is happening Productivity ($/hour, etc.) vs. goal To see how cell is performing to a goal Excess labor vs goal To see if labor is on track with plan © All Rights Reserved

88 Take Corrective Action at the Lowest Level
How to Improve Productivity Observe areas with issues (ie: quality, output, material flow, down-time, customer service, batching, etc.) These are areas where gains can be made quickly Implement root cause corrective actions and document on SQDIP board Have mfg engineer/Value stream leader/ cell leader address these specific areas. Take corrective actions quickly at the cell. “It is important to take action once problems are found” © All Rights Reserved

89 Use Kaizens to Address Major Issues
Schedule Kaizens with documented expectations where issues cannot be resolved quickly Keep emphasis on continued improvement in all cells For cells meeting plan, work with operators and cell leaders to set new level of expectation Use walk-arounds to follow-up and monitor KAIZEN “There is no such thing as status quo… If you’re not getting better, you’re getting worse” © All Rights Reserved

90 Use Productivity Information to Assist in Managing Plant
How to Use Labor Information Use $ sales/labor hour to assist with establishing manpower requirements by cell Determine where manpower needs to be shifted from one area to another Determine where cross-training needs to occur Use this information to develop forecasting Monthly forecast Annual operation plan Use to ensure correct head-counts and proper distribution of labor Use to calculate excess labor requirements © All Rights Reserved

91 Genba Visual Management
DAILY MANAGEMENT Managing 5 KPI Drivers at the Genba Genba Visual Management Genba Problem Solving Genba Leadership Lean Conversion © All Rights Reserved

92 Daily Management Visuals…Standardized Format
“At a Glance” view of Performance Pareto of issues “Everyday Kaizen” Countermeasures taken at Cell Level “Cell scorecard at the end of the cell indicates how the team is doing versus customer needs” Mandatory to use before going to next level of DM Visuals

93 Daily Management Visuals…Hourly Scorecard

94 Daily Management Visuals…Standardized Format

95 Visual Management Checklist
Charts & signs must be visible at a distance. Should be directed toward a group, not individuals where appropriate Visuals should communicate a Plan and Actual. Involve all employees in the visual management process. Do not use visual management as a means to control or punish…Drive to solve problems in a blameless environment. Should be understandable…consider the audience. Should be “At-a-glance” (think “three-second” rule). Should be standardized (over time). Everyone should know what they are looking at as they move from cell-to-cell and plant-to-plant. © All Rights Reserved

96 Visual Management Process
STAND UP MEETING (5 MINUTES) OPERATOR FILLS OUT CELL SCORECARD at GIVEN TIME INTERVALS TEAM LEADER AUDITS HOURLY Value stream leader AUDITS TWICE DAILY OPERATOR UPDATES SQDIP BOARD WALK THROUGH & REVIEW SQDIP BOARD BY MGMT TEAM ANALYZE RESULTS AND COUNTER- MEASURE PREPARE NEXT DAYS SCORECARD END OF SHIFT © All Rights Reserved

97 Genba Leadership Lean Conversion DAILY MANAGEMENT
Managing 5 KPI Drivers at the Genba Genba Visual Management Genba Problem Solving Genba Leadership Lean Conversion © All Rights Reserved

98 What do you need to lead in the Genba? Genba Leadership 5 KPI Drivers
Genba Visual Management Genba Problem Solving Genba Leadership Rigorous KPI Leadership Walk the Floor Stand up Meetings Walk-Around Meetings Auditing What do you need to lead in the Genba? © All Rights Reserved

99 Elements of Rigorous KPI Leadership
Define the Parameters Set People Up to Win Uphold the Parameters Lean Principles... No other option © All Rights Reserved

100 Leadership Element 1: Define the Parameters
Set Expectations Make it clear what Winning looks like Make it clear what Losing looks like Only define expectations that you are serious about © All Rights Reserved

101 Leadership Element 2: Set People Up to Win
Are they set up with the right resources, people, time, dollars, capital? How do you provide feedback to the associates? How do you communicate to them? How do you manage with positive expectancy? © All Rights Reserved

102 Leadership Element 3: Uphold the Parameters
Inspect what you expect React to what you find Consistency is critical across the factory Apply feedback that is: Immediate Specific Positive and negative Coach to Win The walk around process upholds parameters © All Rights Reserved

103 Genba – Leadership Style
High proportion of a Genba Style leader’s time is spent in the Genba (with users) so that supervisors and leaders can be intimately involved in issues as they arise. Their presence informs their decision making and speeds resolution of problems. This attitude is driven by the belief that all customer value is created in the Genba and it is therefore the qualities of the Genba (Genbatsu) which will determine the success of the company.

104 Genbatsu (現物) “The actual product”: Mindset teaching that when there is a problem somewhere, one should get as close to the problem as possible before proposing a solution. By observing the actual process or problem at the actual place (Genba) where it is occurring, the problem solver is able to obtain actual data or facts This will improve the chances for a better solution. This in in contrast to most Western thinking in which managers make decisions in a remote location (like behind a desk), armed only with second hand information from others.

105 Walk the Floor Walk the Floor EVERYDAY
Schedule time if necessary to ensure that you will walk the floor Reach ALL areas of the floor regularly – don’t just stay on the main isles Talk with Associates and Listen Observe how SQDIP can be improved Act immediately to implement issues that can be resolved short-term FLOOR DEFINITION: Could be production floor, office or any other place where work is done (Your Genba) © All Rights Reserved

106 Stand Up Meeting Why: Communicate key information to start the shift operations When: Daily (morning or shortly after shift start for every shift) Duration: 5 min. max per cell or collection of cells Where: Standing in the cell or team area Who: Value stream manager, cell leader, materials and technical support etc. © All Rights Reserved

107 Lego Exercise

108 4/13/2017 9:46 PM 108


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