LeanSigma ® Facilitator Training Module 9 – Just in Time

Topics Just in Time Toyota Production System……………………………………………………..4 Continuous flow……………………………………………………………….7 – 10 Takt time……………………………………………………………………….11 – 18 Pull systems…………………………………………………………………

Lean Sigma has six steps to optimize processes. 3

Toyota developed a framework to house Lean principles – The Toyota Production System. Just-In-Time Principles Eliminate waste Establish Continuous Flow Operate to Takt Time (Pace) Leverage a Pull System / Kanban Process Smoothing 5S Capacity & Demand management Standard work Jidoka “Built in” Quality Root Cause Identification and Elimination (Abnormality Management) Mistake Proofing 4 Principles of LeanSigma ® Just in Time Just in Time Jidoka Process Smoothing Just in Time Just in Time Jidoka Process Smoothing Without all the elements, the house falls!

In this module, we’ll finish talking about Just- in-time principles. Just-In-Time Principles Eliminate waste (TIM WOOD) Establish Continuous Flow Operate to Takt Time (Pace) Leverage a Pull System /Kanban 5 Principles of LeanSigma ® Just in Time Just in Time Jidoka Process Smoothing Just in Time Just in Time Jidoka Process Smoothing

When you start removing wastes in a process, more issues become visible. 6 “Now You See It!” Most kaizens find the TIM WOOD wastes, but look further!

Continuous flow - uninterrupted movement Analyzing the flow of work: −Highlights any delays, breakdowns or bottlenecks −Leads to the reduction of end-to-end lead time −Facilitates standardized processes The IDEAL state is single item continuous flow performed by a minimum number of resources. 7 Just-In-Time Principles Eliminate waste (TIM WOOD) Establish Continuous Flow Operate to Takt Time (Pace) Leverage a Pull system / Kanban

Batch processes complete a group of items in one activity before passing it to the next activity. 8 Open Mail Batch Invoices Calculate Batch Total Enter Batch Stack and hold Voucher File Batch The client must wait longer to get a finished product.

One piece flow passes a completed item to the next activity immediately. 9 Open one envelope Enter one envelope File one The customer doesn’t wait as long for the process to complete because there is less waiting between the steps. Paper folding video

The most efficient method has one worker using single piece flow to do all the steps. 10 Open one envelope Enter Data File one invoice Using one worker to do all the steps avoids the waste of passing work from one person to another. However, some activities are specialized and can’t be done by everyone! In kaizens (and EZ Money), try expanding people’s roles to improve productivity.

Takt Time paces work to customer demand. The tempo sets the pace of any operation to match customer demand. The tempo of any operation is “Takt Time.” Can be compared to the conductor of an orchestra. 11 Takt time = Pace Just-In-Time Principles Eliminate waste (TIM WOOD) Establish Continuous Flow Operate to Takt Time (Pace) Leverage a Pull system Kanban Visa cafeteria video

Takt Time is calculated based on available time and demand. 12 Takt Time = Customer Requirements / Period* Net Operating Time / Period* *Time periods must be consistent (shift, day, week... )

Takt Time Example 13 For 1 shift / day: Takt Time = Customer Requirements / Period Net Operating Time / Period Takt Time = Items / day ÷ 20 # Working days/month Requirements: 9600Monthly requirements (items) Customer Cleanup: 5 minutes Breaks: 10 minutes Time Per Day: 480Shift: 480 minutes (1 shift/day) Net Operating Net operating time per day

Lead Time vs. Cycle Time Review 14 Lead TimeAssociate Cycle Time The time from the beginning of the transaction with the customer until the completion of the service The time it takes an associate to complete their portion of the process

Takt Time vs. Cycle Time Bar Chart is a basic tool for matching capacity to demand. Visually contrast staff cycle time and takt time (pace needed to meet customer demand) for a service Determine the proper number of staff for a service Visually display work load balance 15

The bar chart shows visually when cycle time exceeds takt time. 16 Time Employee ABCDEFGHIJKL Takt Time = 25 min  Cycle Times = 75 min # Staff =  Cycle Times Takt Time Employee B’s cycle time is longer than Takt time, so you won’t keep pace with customer demand. What could you do?

EZ Money – Let’s create a Takt time – cycle time bar chart for EZ Money. 17 Time Employee ABCDEFGHIJKL Takt Time = 25 min  Cycle Times = 75 min # Staff =  Cycle Times Takt Time What is the takt time for EZ Money? Hint: Average demand = 6 applications per day; 1 day = 5 min. or 300 seconds How many staff were needed at EZ Money before we began re-engineering the process?

EZ Money Cycle times Average Cycle times: −Sales: 78 sec. −Admin: 114 sec. −Data Entry: 35 sec. −Finance: 60 sec. −Accounting: 34 sec. −Training scheduler: 75 sec. −Ordering: 46 sec. 18

The objective of a Pull System is to deliver what the customer wants on demand at minimum costs. Overproducing is doing it faster than the customer needs it. Underproducing means the customer won’t get what they need when they need it. 19 Pull Systems satisfy customer demand with minimum effort. Just-In-Time Principles Eliminate waste (TIM WOOD) Establish Continuous Flow Operate to Takt Time (Pace) Leverage a Pull system / Kanban Orange juice video

Pull systems supply output just as the customer needs it. Dependent on a few simple rules – not on brute force, elaborate systems or expensive technology. Should be self-regulating and naturally adapts to schedule changes. There are clear “customer- supplier” linkages throughout the process. It is visual – not hidden in notebooks, files, computers, etc. 20 Predicting customer demand is critical to the pull system.

Kanban signals are visual cues that more output is needed in the pull system. Kanban is a pull system: - A visual signal that it’s time to replenish supplies or finished goods based on expected demand Examples: −Pizza dough has a short life span – it needs time to rise but quickly goes bad. By estimating demand by day of week and time of day, a pizza restaurant placed a flag on the dough racks indicating it was time to make more dough. −When UPC codes are scanned at Walmart, it sends a message to the storage room to put more product on the shelves. 21

Back to EZ Money… Work in your team to re-engineer EZ Money In addition to waste reduction, consider: −Optimizing flow −Pacing your process to customer demand (6 application in a 5 minute day) −How many employees do you need in your new process? Don’t make any significant changes to technology. −You still need to do data entry. −You cannot assume that applications now come electronically. 22