1. Lean Manufacturing Takeaways SCLC / ECC Spring Meeting April 26 th, 2007

2. Waste Eliminated Lean constitutes a philosophy / culture of how to satisfy customers’ increasing demands for greater value. An ideal value-creation process exists when the fewest number of steps are properly sequenced and made to continually flow. Remember what Lean is?

3. PRODUCT SHIPMENT CUSTOMER ORDER Lean is a philosophy which shortens the time line between the customer order and the shipment by eliminating waste. Time Business as Usual Lean Manufacturing PRODUCT SHIPMENT CUSTOMER ORDER Time (Shorter) Waste

4. Basic Lean tools you will need… Kanban 5S’s and Visual Factory Pull Standardized Work Process TAKT time Error Proofing Value stream mapping Total Productive Maintenance

5. Implementing Lean - Leadership An inspired leader at the top is required, somebody who takes responsibility for change. An inspired leader at the top is required, somebody who takes responsibility for change. Operating managers need continual education and assessment to assure no backsliding. Operating managers need continual education and assessment to assure no backsliding. Change agent has to fully understand Lean Thinking. Change agent has to fully understand Lean Thinking. Remove the anchor draggers early. Small groups who simply can not accept new ideas. Remove the anchor draggers early. Small groups who simply can not accept new ideas. Make sure Upper Management drives the initiative. (Top Down approach is essential). Make sure Upper Management drives the initiative. (Top Down approach is essential).

6. No cookie cutter approach; needs to take into account current culture, resources, etc. No cookie cutter approach; needs to take into account current culture, resources, etc. Look upstream and downstream. Include entire organization (at some point in time). Look upstream and downstream. Include entire organization (at some point in time). Emphasize that lean is a process, don’t try to jump to an end solution. Focus on culture, not tools. Emphasize that lean is a process, don’t try to jump to an end solution. Focus on culture, not tools. Listen to consultant’s ideas and adapt them to your needs. Don’t follow all recipes exactly as presented. Listen to consultant’s ideas and adapt them to your needs. Don’t follow all recipes exactly as presented. Implementing Lean - Organization

7. A plan for lean is like a 1 year forecast. So the process needs frequent modification. A plan for lean is like a 1 year forecast. So the process needs frequent modification. Adapt tools as needed. Don’t force the use of a tool if there is no need. Adapt tools as needed. Don’t force the use of a tool if there is no need. Create a Lean accounting system (ABC is of great help) around value stream costing. You still need financial accounting for GAAP requirements. Create a Lean accounting system (ABC is of great help) around value stream costing. You still need financial accounting for GAAP requirements. Adjust metrics to support new culture. Adjust metrics to support new culture. Implementing Lean - Organization

8. Focus on matching execution & resources to capabilities. Careful with taking in too much. Focus on matching execution & resources to capabilities. Careful with taking in too much. Mapping processes raise awareness about current states and spark new ideas to improve. Mapping processes raise awareness about current states and spark new ideas to improve. Involve & inform all the stakeholders from the bottom up. Involve & inform all the stakeholders from the bottom up. Make small incremental changes constantly rather than one time change. Make small incremental changes constantly rather than one time change. Communicate the plan with clarity to all employees. Communicate the plan with clarity to all employees. Implementing Lean - Execution

9. Focus on results (key metrics)… Focus on results (key metrics)… Get data for the last 5 years. Get data for the last 5 years. Benchmark your plant against the best plants worldwide. Benchmark your plant against the best plants worldwide. Compare your results against your own history. Compare your results against your own history. If there is no perceived urgent need, people will not perceive the need to change and will not change. If there is no perceived urgent need, people will not perceive the need to change and will not change. Create scorecard to measure baseline metrics. Create scorecard to measure baseline metrics. Set goals and time frames for success criteria. Set goals and time frames for success criteria. Implementing Lean – Goal Setting

10. Have a communication strategy that includes: Have a communication strategy that includes: Mechanism to keep everyone informed. Mechanism to keep everyone informed. Mechanism to handle improvement ideas. Mechanism to handle improvement ideas. Establish Roles and Responsibilities clearly. Establish Roles and Responsibilities clearly. Audit the compliance of the roles and responsibilities. Audit the compliance of the roles and responsibilities. Teams must have authority and resources to exist. Teams must have authority and resources to exist. Establish PBL process for teams to structure proper meetings, to set accountability and focus on metrics. Establish PBL process for teams to structure proper meetings, to set accountability and focus on metrics. When designing work groups, try to have small teams. When designing work groups, try to have small teams. Implementing Lean – People

11. Certify your staff on Lean Management techniques, prior to implementation. Certify your staff on Lean Management techniques, prior to implementation. Spread lean techniques through intensive training across staff level. Spread lean techniques through intensive training across staff level. Cross train employees before implementation of module. Cross train employees before implementation of module. Train personnel on “soft skills” prior to the start of the pilot. Train personnel on “soft skills” prior to the start of the pilot. Implementing Lean – Training

12. Have a well defined group compensation system in place before implementation. Have a well defined group compensation system in place before implementation. Pay system has to achieve behavioral changes that impact bottom line business results. Pay system has to achieve behavioral changes that impact bottom line business results. Manage new pay system. Manage new pay system. Include indirects in your compensation scheme. Include indirects in your compensation scheme. Set non-monetary reward systems as well. Set non-monetary reward systems as well. Implementing Lean – Compensation

13. What you want to measure… Productivity Productivity Units produced per day per employee (all employees in the building). Units produced per day per employee (all employees in the building). Throughput Time (Dock to Dock) Throughput Time (Dock to Dock) Time (in days or hours) it takes for units to move from first dock (receiving raw materials) to the last dock (finished goods shipping area). Time (in days or hours) it takes for units to move from first dock (receiving raw materials) to the last dock (finished goods shipping area). Total Cost / unit Total Cost / unit Must include all costs in the garment. Overhead, variable cost, labor, materials, etc. Must include all costs in the garment. Overhead, variable cost, labor, materials, etc.

14. What you want to measure… WIP Cost for the system WIP Cost for the system Number of units inside the process times the value of the materials in the process. Number of units inside the process times the value of the materials in the process. First time through First time through Quality level at each step accumulated across all steps. % of the total that make it to the end with no re-work. Quality level at each step accumulated across all steps. % of the total that make it to the end with no re-work. Productive time, Non-productive time, Waiting time Productive time, Non-productive time, Waiting time Start by removing non-productive time into waiting time. It then moves from waiting to productive time. Start by removing non-productive time into waiting time. It then moves from waiting to productive time.

15. Lean Pilot Results Productivity25 pr/person40 pr/person60% Improvement Quality4.6% defects at final audit 2.1% defects at final audit 58% less defects Space102 sq. ft. per person 36 sq. ft. per person 64% less sq. ft. per person WIP4 units of WIP per unit produced. 0.3 units of WIP per unit produced 13 times less units in inventory Lead Time3.7 days0.27 days93% reduction Absenteeism3.2% daily2.1% daily33% reduction Variation in Process (Daily Schedule attainment) +/- 45% variation (Daily Schedule attainment) +/- 10% variation (Daily Schedule attainment) 88% more reliable process (Daily Schedule attainment) BEFOREPILOTIMPACT

16. Lean Improvements by team Productivity Productivity Before: 33 operators After: 27 operators

17. PDCA: Implementation of Lean Tools PDCA: Implementation of Lean Tools Associates received an award because of their participation in a PDCA targeted at reducing the defects in Seatseam Lean Improvements by team

18. Evidence of Progress toward Lean Increased capacity Increased capacity Higher inventory turns Higher inventory turns More available floor space More available floor space Improved workplace organization Improved workplace organization Improved quality: reduced scrap / re-work Improved quality: reduced scrap / re-work Reduced inventories: raw, WIP, FG Reduced inventories: raw, WIP, FG Reduced lead times Reduced lead times Greater gross margin Greater gross margin Improved participation & morale Improved participation & morale

19. Lean resources www.lean.org www.lean.org www.lean.org www.productivityinc.com www.productivityinc.com www.productivityinc.com www.productivitypress.com www.productivitypress.com www.productivitypress.com www.leanadvisors.com www.leanadvisors.com www.leanadvisors.com