Philosophy and Key Concepts The Lean Enterprise Philosophy and Key Concepts Thank all for their attendance. (Please retain the free lean site reference with the materials.) Lean Foundations Continuous Improvement Training freeleansite.com

Learning Objectives The purpose of this module is to present the 5 core principles of Lean; define value-added and non-valued added activity; define the 7 most common types of waste and their causes. Review a systematic approach to discover waste within a process. freeleansite.com freeleansite.com

First Step to understanding Process Analysis Learn the 5 Core Principles of Lean: 1) Specify value in the eyes of the customer 2) Identify value stream and eliminate waste 3) Make value flow at pull of the customer 4) Involve & empower employees 5) Continuously improve in pursuit of perfection Cover each bullet point with participants but, especially #5) Pursue perfection with a Continuous Improvement Mentality ! freeleansite.com freeleansite.com

Customer perceives value Value Added Activity An activity that changes the size, shape, fit, form, or function of material or information (for the first time) to satisfy the customer. Non-Value Added Activity Those activities that consume time or resources, but do not add value in the eyes of the customer. Describe Value Added (VA) as tasks performed during the production of a product or service that INCREASE its VALUE to the CUSTOMER. freeleansite.com freeleansite.com

Definitions Value Added Any activity or operation performed that helps transform a product or service from its raw state into its finished form. Completed right the first time. Any activity customer is prepared to pay for. Activity required to ensure that a product or service is delivered in conformance to specification. Non-Value Added Any activity that doesn’t help to transform a product or service into its final form. Activity not performed right. Activity customer not willing to pay for. This includes: Unnecessary process steps Movement of inventory, paperwork, etc. Re-work, corrections, etc. Storage between operations, batching inventory Wait times, delay times, idle times 3 “unique” parts of the VA definition… 1) TRANSFORMS PRODUCT/ SERVICE 2) DONE RIGHT the FIRST TIME 3) CUSTOMER WILLING TO PAY FOR freeleansite.com freeleansite.com

MUDA = non-value added activity (waste)… Identify and reduce: Defects (repair, rework, scrap) Overproduction (inventory) Transportation (conveyance) Waiting (queue time) Inspection (reliance on mass inspection/ verification) Motion (parts, paper, people) Process, itself (over-processing, long cycles) Facilitator Note: Might want to play the push vs. pull skit - post-it note (signature), Lego assembly, Airplane or “DOT” game here to illustrate the 7 wastes … “Commonly referred to as the 7W’s…” *7 common wastes of production (Shingo) freeleansite.com freeleansite.com

The Causes of Waste in most Processes Focus on reduction Types of Waste (7W’s) Problems/ Causes Incorrect layouts Lack of proximity of machines Off-line resources Waiting workers, machines, materials Long set-ups and lead times Large batches, raw material stocks High WIP, finished goods stocks Making for the sake of it Ignoring customer demands Long cycle times- process, itself Reduced efficiency- over processing High overall lead times Long delays for rectification Costly rework Dissatisfied customers Approvals of approvals High number of verification steps Reliance- Mass inspection techniques Unnecessary movement Extra handling Value Added Waste Motion Waiting time Overproduction Processing time Defects Inspection Transportation People Non- Value Added, but necessary Process This is probably the most important principle of LEAN THINKING and is based upon the categorization of activities into the following: Value added - Those activities that: 1) Alter the product; 2) Are completed right the first time and 3) The customer is prepared to pay for Non-value added - Those activities that are essential, but add no value to the product (payroll preparation or in-process quality inspection are examples) Waste - Those activities which do not add value and are not essential Progressive reduction of non-value added or elimination of waste activities places a greater focus on what is important to the customer. The waste activities can be addressed in several ways: through improved process layout, better product design from a manufacturability standpoint, improved production scheduling, and more efficient shop floor production techniques through adoption of best practice principles. In the following viewcells, which focus on the best practices in use today in manufacturing, the common thread is the focus on the elimination of waste. In Lean, you will often hear the term "continuous improvement" or "continuous process improvement." Continuous improvement aims at the gradual elimination of waste through improvements in product design, process design, production planning and production control. This concept is applied seriously by progressive manufacturers to their internal operations and with respect to their suppliers as well, whom they expect to adopt continuous improvement programs to improve the quality and reduce the costs of raw materials. Product freeleansite.com freeleansite.com

Product Lead-Time TIME Raw Finished Materials Goods Value Added Time Non- Value Added Time Timeline shows duration of non-value-added work. ASK participants where they might get that data from ?? (Timecards, Process Travellers, Value-stream Map) PERFECT Example: Day at Disneyland – wait an hour to ride a 1 minute ride,,, then wait an hour to ride a 90 second ride … etc etc or Post Office, DMV, Bank et al freeleansite.com freeleansite.com

Historically, improvement efforts have been focused here. Product Lead-Time 95% Non- Value Added Historically, improvement efforts have been focused here. IMPROVEMENT INITIATIVES have typically been focused in the 5 to 10% of the activities that “add value”… but - Lean focuses on the other side of the “time” equation… THOSE NON-VALUE ADDING activities. THIS IS WHY it is called a “time-based” improvement strategy. Value added percentages of total cycle times of 5% or less are common. I have found a procurement process (total cycle time) at another facility that had a value-added percentage of POINT THREE… 3/10ths of a percent. freeleansite.com freeleansite.com

Product Lead-Time 95% Non- Value Added Whereas, “Process Analysis” activities should Focus here - the Elimination of Waste (MUDA) freeleansite.com Analyzing a “Process” with the Lean tools… begins by identifying and eliminating those NON-VALUE ADDING steps. freeleansite.com

Identifying Waste Waste can take many forms; some causes of the most common forms of waste include: lack of adherence unnecessary approvals or signatures reviews of reviews multiple hand-offs transportation long setup time correction, and over-production These are common causes of waste… (what to look for when analyzing a process) freeleansite.com freeleansite.com

Identifying Waste Other causes of waste may include: poor maintenance lack of training poor supervisory skills ineffective production planning/ scheduling lack of workplace organization Supplier quality/ reliability In most cases, inventory is wasteful; more importantly, inventory hides all sorts of problems in the company More common causes, plus INVENTORY !! freeleansite.com freeleansite.com

Inventory Hides Problems Your Company Finished Goods Raw Material freeleansite.com When INVENTORY is lowered, it exposes the rocks in the river ! (Sources of waste in the VALUE STREAM.) freeleansite.com

Process Analysis to the Rescue … we have only begun to deal with issues involved in trying to tie everything together for a whole-system approach. Some of the problems that continue to confound us are the following: The way manufacturing works with Sales makes scheduling and running the plants difficult. We compound the above problem by the way we order from suppliers. Labor and management still don’t trust each other. The way we measure performance doesn’t provide information useful to running a plant and often encourages wrong decisions. Besides pure ‘logistics”… There are other issues as well - in striving to become “WORLD-CLASS” A lot of work ahead of us to do !! freeleansite.com freeleansite.com

How to Discover Waste . . . Look at the “3 Real Things” in every operation … Material Flow (or Business Steps i.e. transactional processes) Information Flow (data) Work-in-process (could be both…) We can, however, begin slowly and start to discover waste in our immediate operation. freeleansite.com freeleansite.com

? ? How to Discover Waste . . . Ask what? What is the operation doing? Ask why? Why is the operation necessary? Ask why at least 5 times to lead you to the root cause Everything that is not work is waste Once you know the function, you can identify as waste anything that does not execute that function Draft an improvement plan… Ask how? Here is an approach… don’t be afraid to ask questions! Especially the 5-why technique! Also, refer to the Module on ROOT CAUSE ANALYSIS (Root Cause/ Corrective Action) ? freeleansite.com freeleansite.com

Overburden/ Overdoing Unevenness Process methods How to Discover Waste . . . Be on the look-out for these 3 Major contributors … Overburden/ Overdoing Unevenness Process methods freeleansite.com freeleansite.com

Overburden/ Overdoing (muri) How to Discover Waste . . . Be on the look-out for these 3 Major contributors … Overburden/ Overdoing (muri) - waste caused by how work and tasks are designed Unevenness (mura) - waste caused by poor quality (process unpredictability) Process methods (muda) - waste caused by “DOT WIMP” freeleansite.com freeleansite.com

Machining % of person time Assembly % of person time The “Perfect” Targets . . . Remember, Value-added is the physical transformation of raw material. Machining % of person time Assembly % of person time Pure waste 0 Pure waste 0 NVA 100 NVA 20 VA 0 VA 80 World-class World-class This is the “IDEAL” – World-class targets !! OUR VISION – what we are striving toward. NOTHING CHANGES, unless you change something ! 1:15 person/machine  person/machine n/a set-ups less than 10 minutes  ‘0’ change-over time Step back and take an impartial look at your area. What are the barriers to adding value? freeleansite.com freeleansite.com

decrease cycle times What actions must we take? We must … reduce travel distances standardize our processes reduce scrap, rework and waste improve all of our business processes reduce the variation in our schedules provide a constant, steady supply of parts to production, assembly, and test Management has the responsibility to eliminate waste and provide job security. This sets the stage for an expectation to be discussed later – as “Lean Linking” takes hold and is used, which includes participation and input from affected areas within an organization – you must TRY IT… Change of magnitude required to overcome the current system is not easy. Disagreement is sure to happen, sometimes for good reason – based on facts, and sometimes for bad reason – based on opinion. Not all of the plans will be perfect the first time through. But improvements have already been made, and progress will continue. Don’t fall into “it won’t work here”, “we’re different”, or “we have already tried that”. freeleansite.com freeleansite.com

design products to match a stable, What actions must we take? We must … design products to match a stable, standard production process gain Market share - and - increase our competitiveness ! Now – how do we get there ?? LINK to DMAIC !! freeleansite.com freeleansite.com

Understand the Problem Utilize the process “DMAIC” … (Define, Measure, Analyze, Improve and Control) Understand the Problem Form the Team Understand the Process Gather Process Data Analyze the Process Identify possible Corrective Actions Screen/ Experiment to select best action Implement Action Verify Action Sustain Improvement DMAIC – the universal process - for Six Sigma or Lean techniques, doesn’t matter. freeleansite.com freeleansite.com

Producing what is needed, when it is needed, with a minimum amount of The Lean Enterprise is a Strategy … … for turning manufacturing and business processes into competitive weapons. Producing what is needed, when it is needed, with a minimum amount of materials, equipment, labor and space. “Prime Directive” - to continually seek out and eliminate waste and wasteful practices. Does the Machine or Machinist add value? (The machine – it physically transforms the product. Discuss.) Is in-process Inspection value added? (no) Automated Test Procedure (temp cycle, pressure, vacuum etc) is non-value added but required. It fulfills a Custom requirement, but does not physically transform the product. Is getting a tool from the tool crib value added? (no) Attaching a flange to a pump body is value added. Completing information blocks on a proposal form is value-added because information required by the customer (internal and external) is required AND necessary. Reviews and (certain) signatures on the form are non-value added. freeleansite.com freeleansite.com

Defining Project Criteria - Breakout (Optional) This breakout will give you the opportunity to apply the things you have learned. Each team is asked to brainstorm a list of criteria for a good KAIZEN (Process Analysis) project. These criteria could include Customer complaint, company culture issues, length of time to complete, area of Lean focus or anything else that the team feels is a important criteria to consider in Process Analysis type project selection. The team will have 20 minutes to brainstorm criteria and then we will discuss the results. OPTIONAL exercise… freeleansite.com freeleansite.com

Philosophy and Key Concepts The Lean Enterprise Philosophy and Key Concepts Thank all for their attendance and contributions. Lean Foundations Continuous Improvement Training freeleansite.com