1. APICS is not responsible for statements or opinions expressed by individuals in its publications or at its meetings. The views expressed are solely those of the individual and are not necessarily endorsed by APICS. Lean and the Strategic Plan H. David Paris, C.P.M., CFPIM, CIRM V.P. Training Industrial Solutions, Inc. (ISI) R. Henry Migliore, Ph.D. Professor Emeritus /Northeastern State University President, Managing for Success

2. SUCCESSFUL IMPLEMENTATIONS An enterprise must conduct change from the top If strategic vision does not include the Lean philosophy, radical changes taking place will not follow the predetermined path of the enterprise Most US companies fail to implement Lean because of wavering leadership Use the strategic plan to drive successful implementation

3. MODEL FOR PROVEN APPROACH

4. STRATEGIC PLANNING FOR EACH FUNCTION PURCHASING MATERIALS LOGISTICS QUALITY FINANCIAL HUMAN RESOURCES DESIGN ENGINEERING MARKETING SALES SAFETY MANUFACTURING

5. PURCHASING Support production with the uninterrupted flow of material without excess inventory Established through contracts with suppliers Use MRP output for forecasting only Track commodities our factory uses Track commodities used by suppliers Match purchased lot sizes with manufacturing lot sizes A-B-C analysis for inventory turns

6. MATERIALS Balance customer requirements and manufacturing capacity Lean implementation of visual pull systems Drive MPS and support the S&OP Drive MRP output for forecasting capacity constraints Control the shop floor through visual signals not through MRP Produce to supermarkets

7. LOGISTICS Cease buying truckloads of one part number, and fill the same truck with a smaller quantity of several part numbers Consolidate shipments Imported product can be held in local warehouses at the supplier’s expense

8. QUALITY Identify problems as they occur, not final inspection Prevention activities include  6 sigma problem solving  Run charts  CEDAC Verify process control  Simple process capability (Cp)  Process capability to a central tendency (Cpk) Functionality check Continuous improvement

9. FINANCIAL Cost accounting  Identify cost of each product  Maximize return on investment (ROI)  Maximize contribution Fixed cost will remain the same Improve the difference between revenue and variable cost to increase profit Optimize the mix within constraints  Sales possibilities  Capacity constraints

10. FINANCIAL MEASURES Optimize the mix through linear programming  % of optimum sales % adherence to the production plan Variable cost variation Purchase price variation (PPV)

11. HUMAN RESOURCES (HR) Excellent hiring practices  Background checks  Literacy test  Minimum education Training programs  Cross training  Job mapping Continuous improvement program  Eliminate waste  Improve processes  Increase safety  Reward efforts

12. DESIGN ENGINEERING All functions must be linked during the design stage to insure compatibility  More likely to meet target completion date  More likely to function properly  More likely to meet objectives  Size - Weight - Capabilities Quality Functional Deployment (QFD) Failure Mode Effect Analysis (FMEA) Design For Manufacturability (DFM) Design For Assembly (DFA)

13. MARKETING AND SALES Marketing concentrates on  Long term planning  New product development Sales  Leads the sales and operations process (S&OP)  Production plan by family  Monthly production for 12 to 18 months  Prepare all functions for fluctuations in demand  Promotions  New product growth  Competition

14. SAFETY Comply with OSHA regulations  Training is a must Post charts depicting  Attendance  Training  Accidents  Lost time accidents Deploy safety to every level  Safety must be a part of every employee’s job

15. MANUFACTURING Radical changes outlined by value stream maps Stop pushing large lots through production Start pulling small lots (1-piece) through production Relocate some equipment to support  Flow – Repetitive – Cellular Production

16. MANUFACTURING If possible, always flow production  Balanced Operations – Close Layout – Mixed Models - POUS – Visual Management  Schedule the pacemaker process and flow to product completion If not flow, then pull  Unbalanced operations  Distanced layout  Setup long  Uptime problems

17. MANUFACTURING Environments for flow and pull systems  MTS  ATO  MTO  DTO

18. Supplier Raw Matl Process A Process B Fin. Goods Process C Custome r FIFO LANE MTS: PULL WITH BALANCED FLOW Information Flow

19. Supplier Raw Matl Process A Process B Process C Customer Fin. Goods MTS: PULL WITH IMBALANCED FLOW Information Flow MATERIAL FLOW Kanban Locations

20. Supplier Raw Matl Process A Process B Fin. Goods Custome r Process C ATO: PULL WITH BALANCED FLOW Information Flow FIFO LANE Kanban Locations

21. Information Flow Raw Matl Process A Process B Fin. Goods Kanban Locations Process C Customer Parts Flow Supplier ATO: PULL WITH IMBALANCED FLOW

22. Supplier Raw Matl Process A Process B Process C Customer Fin. Goods MTO - DTO Information Flow FIFO LANE

23. CONCLUSION Implement Lean through the strategic plan  Management lead  All functions can work together  Better financial support  Common goals and objectives

24. H. David Paris, C.P.M., CFPIM, CIRM DParis@isiworld.net R. Henry Migliore, Ph.D. hmigliore@aol.com E10 Lean and the Strategic Plan Please return your completed session survey to the room monitor or the collection boxes near the exit APICS programs are noncommercial forums. Speakers have agreed to refrain from the use of brand names and specific product endorsement whenever possible. Speakers understand that the association’s podium cannot be used as a place for direct promotion of the presenter’s product, services, or for monetary self interest.