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Using Lean Thinking to Increase Productivity in
Maintenance and Warehousing ActivitiesPresenter: Jason Sadovia
www.ontracksconsulting.com
November 25, 2009
For Audio:
Phone: 1-888-296-6500
Code:738859#
Agenda
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• What is Lean?
• What are the benefits to Lean?
• How is Lean applied?
• Example: warehouse/inventory improvement
• Question & Answer Period
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What is Lean?
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• A Lean Enterprise essentially eliminates waste throughout the business
• Waste costs resources and adds no value to the customers
• Lean principles are used to create precise customer value with
– Less human effort
– Less space
– Less capital
– Less time
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“Lean is a systematic approach to identifying and eliminating waste trough
continuous improvement, flowing the product at the pull of the customer in
pursuit of perfection”
A history of Lean
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1900 2008
1950 - 1985
Taichii Ono & Shigeo Shingo
Toyota Production System
Just in time
Stockless production
1900 - 1910
Frederick Taylor
Standardized work
Time study
1910 - 1920
Henry Ford
Assembly line
Flow lines
Manufacturing strategy
1940 - 1950
Edwards Deming
TPM
SPC
1990
James Womack
The Machine That Changed the World
Source: http://www.lean.org/
Lean principles
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Identify Customer Value
•Product or service customer desires delivered at the right time and cost
Document the Value Stream
• Identify the actions needed from product conception to delivery
Make it Flow
•Move away from mass production and focus on moving individual products through the value stream
Create Pull System
•Give customers what they need, when they need it
Continuously Improve
•There is always room for improvement
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The 7 (or 8) Wastes
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Over-Production
Waiting
InventoryMotion
Transportation
Defects
Over-ProcessingWaiting for…• Faxes• System to come up• Customer response• A handed-off file to come back
• Searching for files / handling paperwork• Gathering information• Extra key strokes• Handoffs
• Repeated manual entry of data• Use of inappropriate software• Use of outdated forms• Excessive approvals
• Data entry errors• Pricing/rate error• Missing information
• Open projects• E-mails unread• Office supplies• Unused records in database
• Retrieving or storing files• Going to get signatures• Going to copy machine or fax
• More information than customer needs• Creating reports no one reads• Making extra copies
Human Intellect• Underutilized
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Lean tools…a sample
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Lean
Kaizen
Standardized
work
Value
Stream
Mapping
KanbanCellular
Architecture
Balanced
flow
5S Visual Management
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What are the benefits to Lean?
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Increase in productivity
Improved flexibility in reacting to changes
High quality & reliability
Reduce defects
Reduce inventory costs
Reduced cycle time
Lower inventories
Reduction in order processing errors
Reduction of paperwork
Reduced staffing demands
Lead time reduction
Reduce floor space utilization
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The Lean secret
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• Most material in a process spends 95% most of its time waiting… waiting for someone to add value to it or waiting in finished goods inventory
• One of the reasons cost is reduced by lead time reduction is that slow processes are expensive processes
•These processes often see discounts, quality issues, large inventories
•These costs are often called the cost of poor quality (COPQ)
• COPQ is often two to four times that of direct labour and are caused by long process lead times and variability
Operating
Profit
8%
Labour
8%
Operating
Expense
21%
Material
37%Process
Overhead
and Quality
26%
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How to implement Lean?
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Project Selection
•Business Metrics: Quality/Cost/ Service
•Team Selection
Baseline Metrics
•VOC (Voice of the Customer)
•VSM (Value Stream Mapping)
•Pareto diagram
•Ishikawa (Fish Bone diagram)
Process Improvement
•Kaizen
•5S – Spaghetti diagram
•Heijunka (job levelling)
•Gemba (“the place where the value is added”)
Implement
•Poka-Yoke (Mistake Proofing)
•Visual Management
•Kanban
Standardize
•Standard Work
•Continuous Improvement
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Case Study – warehouse/inventory
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• Automotive parts re-manufacturer
• 28 global sites
• Implemented Lean to great success
• Focus on some of the inventory successes
Lean Assessment Initial Results
7
9.5
16.5
16.5
17
17.5
22.5
22.5
23
23.5
23.5
24.5
26
28.5
29.5
31
31.5
33.5
33.5
35
39
Tractech Warren
Alliance
Liberty
AB HD Motors
AB LD Motors
Dallas Engine Master
Franklin-engine
AB HD Alt
Church St Reed City
Peru
Kaleva Gen. Delphi
Gateway
Powrbilt, Mansfield
LCI
American Way
WTI Summerville
Franklin-IFS
Patterson (cs144)
Chantilly
DRM
WW Mexico
Required minimum - 31
45 is target
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Case Study – warehouse/inventory
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• Actions taken:• Movement of material only on replenishment basis • Delivery to Plant daily• A raw inventory Supermarket• No intermediate storage between operator and Supermarket• Timed, kitted delivery to operator’s parts presentation device
@ least every hour
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BEFORE
AFTER
BEFORE
AFTER
Case Study – warehouse/inventory
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• Supermarket of raw material
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First in
first out
Strike Zone
unload
Case Study – warehouse/inventory
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• Tugger equipment and parts “kitting”
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Small Lots
“Strike” Zone lifts
Returnable containers
Case Study – warehouse/inventory
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• Sample of results:• Inventory reduction of $3.8 M• Inventory Turns increased from 20 to 26• Warehouse space decreased from 64,000 ft2 to 51,800 ft2
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$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
$5,500,000
4/6
/2001
4/1
3/2
001
4/2
0/2
001
4/2
7/2
001
5/4
/2001
5/1
1/2
001
5/1
8/2
001
5/2
5/2
001
6/1
/2001
6/8
/2001
6/1
5/2
001
6/2
2/2
001
6/2
9/2
001
7/6
/2001
7/1
3/2
001
7/2
0/2
001
7/2
7/2
001
8/3
/2001
8/1
0/2
001
8/1
7/2
001
WIP Inventory
2584
2369
1964 2028
1747
1990
29932905
29602905 2875
2690
28252775
2625
27302663
2580
1000
1500
2000
2500
3000
3500
Jan-01
Feb
-01
Mar-01
Ap
r-01
Ma-01
Jun
-01
Jul-01
Au
g-01
Sep
-01
Oct-01
No
v-01
Dec-01
INV
EN
TO
RY
CO
ST ACTUAL
FORECAST
Inventory Holding Cost
Different kinds of Lean – same objective
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Lean Maintenance
Lean Office
Improve efficiencySaves costs
Simplify complex processRetains the knowledge within the organization
Effectiveness (what) and efficiency (how)Eliminating wasteful motionStandardize work routines
Lean Manufacturing
Eliminating all waste in manufacturing processes and aligning production with customer demand or consumption
Lean SourcingCoordination of the efforts between
Purchasing, Supply chain and the Operations in order to identify additional opportunities
Less Time
Less Space
Less Human efforts
Less
Capital
Objectives
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Keys to Lean success
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• Prepare and motivate people • Employee involvement • Share information and manage expectations • Identify and empower champions, particularly operations
managers • Atmosphere of experimentation • Installing and realistic performance measures, evaluation, and
reward systems • The need to execute pilot projects prior to rolling culture out
across the organization
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www.ontracksconsulting.com