1. © 2006-2009 OpStat Group Inc. All rights reserved. 1 JimCurry@OpStat.comJimCurry@OpStat.com www.OpStat.comwww.OpStat.com A Lean Analysis Methodology Using Simulation February 20, 2009 AUTOMATION IN MANUFACTURING Leading-Edge Technologies and Applications

2. © 2006-2009 OpStat Group Inc. All rights reserved. 2 SME Technical Communities

3. © 2006-2009 OpStat Group Inc. All rights reserved. 3 Production & Operations Analysis MSMOT Courses Supply Chain Design Manufacturing Process Design Lean Improvement Methodology Statistical Analysis Simulation Optimization

4. © 2006-2009 OpStat Group Inc. All rights reserved. 4 FORBES.com Innovation During The Great Disruption “Another shining light is likely to be companies that have made substantial progress in their efforts to make innovation systematic. Companies that have already placed their bets on innovation can double down, creating multi-year gaps over their competitors. For example, PROCTER & GAMBLE (nyse: PG - news - people ), JOHNSON & JOHNSON (nyse: JNJ - news - people ), …. have all made public commitments to growth through innovation.”PG news people JNJ news people Innovation During The Great Disruption Scott Anthony, 01.16.09,

5. © 2006-2009 OpStat Group Inc. All rights reserved. 5 What is “Lean” / Why Simulation? The term goes back to the Toyota Production System’s Just-in-Time techniques Lean Manufacturing expanded to Lean Six Sigma & Lean Supply Chain: to optimize cross-functional processes Simulation allows us to: Evaluate things other tools cannot, such as impacts of product mix and setups, for complex operations with many products Analyze impacts of variability in processes and demand, with real-world time sensitive parameters Develop replenishment & inventory strategy across locations, Analyze impacts of process and capacity changes on performance.

6. © 2006-2009 OpStat Group Inc. All rights reserved. 6 Simulate Replenishment Planning

7. © 2006-2009 OpStat Group Inc. All rights reserved. 7 Key Metrics Can Be Compared For Multiple Scenarios Results of Multiple Simulations are Compared on the Same Graph Cycle Times Inventory Levels

8. © 2006-2009 OpStat Group Inc. All rights reserved. 8 Repair Centers Repair Centers Case Study: Lean Simulation Model Test a New Demand Pull Process Extrusion Laminating & cutting Packaging Demand 60 + finished products MRP Push 3 Passes on the same equipment Limited storage space 5 days/week7 days/week Each work center operates on a different work schedule. Before Model for Laminated Plastic Manufacturing Process

9. © 2006-2009 OpStat Group Inc. All rights reserved. 9 Lean Techniques in Model Kanbans One-Piece Flow EPEI (Every Part Every Interval) Constant Work In Process (CONWIP) Batch Schedules When to Authorize Production Downtime Setups / Changeovers Yield Scrap Lead Times Incorporate Variability Setup Reduction Shared Equipment Resources Skilled Labor Work Center Schedules Test Factory Changes Takt Times / Rates OEE (Overall Equipment Effectiveness) Cycle Times Metrics

10. © 2006-2009 OpStat Group Inc. All rights reserved. 10 Pull Process: Scheduling & Structured Replenishment Rules After Model with Best Practice Just-in-Time Techniques

11. © 2006-2009 OpStat Group Inc. All rights reserved. 11 “Every Product Every Interval” (EPEI) ~60 total products; in 6 product groups As demand arrives for each product, the production order is assigned to the next available cycle spot Fairly complex setup rules between product groups Make every product within this cycle: -Sets the maximum lead time -Dictates inventory turns & working capital

12. © 2006-2009 OpStat Group Inc. All rights reserved. 12 Before: throughput/service problem Packaging operation is sometimes starved Not meeting demand

13. © 2006-2009 OpStat Group Inc. All rights reserved. 13 After: Increased & consistent flow Improvement in Packager utilization Better Demand fulfillment

14. © 2006-2009 OpStat Group Inc. All rights reserved. 14 Some Real Benefits Postponement strategy ( the Dell method ) - 30% inventory reduction; with service improvement to 97+% Synchronized flow - reduced cycle time 18 to 13 weeks Kanbans – inventory reduced 20% across a network Demand pull – delayed need for major capacity upgrade Focus on continuous improvement A traditional method such as value-stream mapping becomes dynamic A model is a tool for kaizen teams and six sigma black belts

15. © 2006-2009 OpStat Group Inc. All rights reserved. 15 Hierarchical blocks for each plant or work center Each work-center has flow logic for material, and schedule input Each line has logic for each equipment set Hierarchical Model Building Excel interfaces for all inputs & outputs provides ease of use

16. © 2006-2009 OpStat Group Inc. All rights reserved. 16 Job Shop Simulation Model SetupProcess Jobs from multiple sources Each Job assigned a Job Type Each Job Type creates a series of Job IDs to be executed Each Job ID has parameters that define resources & duration SkillsEquip Resources Completed Jobs

17. © 2006-2009 OpStat Group Inc. All rights reserved. 17 Job Shop Example Statistical Outputs Confidence intervals for results, e.g., end-to-end time & utilization

18. © 2006-2009 OpStat Group Inc. All rights reserved. 18 A Takeaway