increasing speed of service: basics of lean application

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Stand

Increasing Speed of Serviceusing Lean Principles

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agenda

Lean thinking

• Theory of Constraints

• Identify Value

• Map the Value Stream

• Create Flow[takt time, cycle time, OEE, standard work, spaghetti diagram, cellular processing, SMED]

• Establish Pull [Kanban]

• Seek Perfection5S

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history of Lean

Sold patents on automatic power loom to Platt Bros• concept of Jidoka• 5-why problem solving

Founded Toyota Motors

Taiichi Ohno

‘Father’ of TPS (aka Lean)• concept of muda (waste)• concept of Kanban

Eiji Toyoda

Kiichiro ToyodaSakichi Toyoda

Toured Ford Rouge plant in early 1950s (after WW II)

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Lean v traditional COGS

A Lean operation produces, procures & delivers

• Just What Is Needed

• When It Is Needed

• Delivered Where Needed

“Traditional”

“Lean”

Removing waste results in one piece flow & lowest total cost.

Tota

l Un

it C

ost

Lot Size

Economic Order Quantity

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one-piece flow

10 minutes

10 minutes

Batch Processing

30 min. for total order

21 min. for first piece

10 minutes

ProcessA

ProcessB

ProcessC

12 min. for total order

3 min. for first piece

ProcessB

ProcessA

ProcessC

One Piece Processing 3 step process1 min / part / stepNeed 10 parts

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benefits of one-piece flow

• Reduced cycle time

• Immediate identification of quality problems (not buried in piles of WIP)

• Reduced inventories

• Reduced variation in delivery performance – improved ability to plan and schedule

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Lean process

Lean

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holistic OpEx deployment

+

Leverage Six Sigma as needed to minimize variation that causes

waste

Deploy Lean to increase speed of

service, by focusing on waste elimination

As speed increases, waste is visible

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agenda

Lean thinking

Theory of Constraints

• Identify Value





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what is theory of constraints?

The theory of constraints (TOC) is an management philosophy introduced

by Eliyahu M. Goldratt in his 1984 book titled The Goal.

A system's throughput is limited by a constraint

Only by increasing flow through the constraint can overall throughput be increased


TOC process

1. Identify the system's constraint(s).

2. Exploit the system's constraint(s).

3. Subordinate everything else to the above decision(s).

4. Elevate the system's constraint(s).

5. Repeat for next constraint in system.

Do not allow inertia become the system constraint


TOC example

IdentifyHerbie is slow

SubordinateEveryone at Herbie’s slow pace

ElevateReduce Herbie’s loadto increase his pace


focus on the constraint

Sales120 accts/day

Procurement180

Installation80

Activation150

Only Investmentat Constraint will increase sales.

Theory of Constraint and Lean are compatible


agenda

Lean thinking


Identify Value





Value

Value Stream

Flow

Pull

Perfection


Defining Value

Start by clearly defining value for a product/service from the customer

perspective…..

Value = activities that a customer will pay for

…..all other activities are non-value added or

waste and can be targeted for removal; step by step.


time value analysis

SOW Contract

FinanceReview

Rework

Waiting

ProposalSigned Contract

Value-Added

Non-Value-Added

Pricing

LegalReview

TIME


types of activities

1. Value Adding Those activities within a company or supply chain that directly contribute to satisfying end consumers: those activities consumers would be happy to pay for.

2. Necessary non-value addingNon value adding activities which are necessary under the present operating system. They are likely to be difficult to remove in the short term but may be possible to eliminate in the medium term by changing equipment or process

3. Non-value addingThose activities within a company or supply chain that do not directly contribute to satisfying end consumers’ requirements. Useful to think of these as activities the consumer would not be happy to pay for.

Environment VA NVA N-NVA

Manufacturing 5% 60% 35%

Information 1% 49% 50%

Lean Enterprise Research Center


typical organization

salesfinance contract

Organized by Function


work in functional organization

Numerous Handoffs


identifying value stream(s)

Group into products using similar processesThere are 3 possible value streams (focus factories)

A B C D E F G H I

1 X X X X X X

2 X X X X X X X X X

3 X X X X X X X

4 X X X X

5 X X X X X X

6 X X X X X X X X

7 X X X X X X X

8 X X

9

PRODUCTS

PR

OC

ES

S S

TE

PS


Lean organizationsales finance contract

Value Stream is the set of all the actions required to deliver product to the customer


work in a Lean organization

Numerous Handoffs Reduced Handoffs


agenda

Lean thinking


Identify Value

Map the Value Stream




Value

Value Stream

Flow

Pull

Perfection


why value stream map?

Benefit

• It visualizes the flow

• Identifies sources of waste

• Make decisions about flow obvious

• Links material flow to information flow

• Establish the foundation for improvement activities

DefinitionValue stream mapping is a method of creating a “one page picture” of high-level processes + information flow + material flow that occur from the time a customer places an order for a product, until the customer has received that product.


value stream map v process map

Value Stream Map(similar to SIPOC)

Process Map 3Process Map 2Process Map 1

Process Step AProcess Step B

Macro ViewStrategicLeadership led

Detailed ViewTacticalFrontline led


VSM icons

Process Step

Dept.

PT (process)

CT (cycle)

# workers

FPY %

Info Flow(by paper)

Info Flow

(electronic)

Customer

Transportation

Kaizen

Operator

KanbanPush

Super Market(safety stock)

Whenever there is a Product for the Customer, there is a Value Stream;

The Challenge lies in seeing it. - Rother & Shook. Learning to See

LookSee

Inventory

Inventory


before beginning VSM-1

VSM is Art + Science

Don’t Strive for Perfection80% is Good Enough



Tools of the TradeGemba

• Go to the Actual place where work is performed

• Talk to the Actual people involved in the process and get the real facts

• Observe and chart the Actual process



# Process StepNumber

OperatorsCycleTime

Lead Time

FPY,%Inventory

BeforeInventory

AfterComments

VSM data collection worksheet


VSM step 1

Customer

Process 1

Dept. A

Process 2

Dept. A

Process 3

Dept. B

Limit number of process steps to < 10Use Verb + Noun format. What happens to WhatAdd Material & Data Flow


VSM step 2

Customer

Process 1

Dept. A

Process 2

Dept. A

Process 3

Dept. B

Add Information Capture / Flow


VSM step 3

Customer

Process 1

Dept. A

Process T

Cycle T

# workers

FPY %

Process 2

Dept. A

Process T

Cycle T

# workers

FPY %

Process 3

Dept. B

Process T

Cycle T

# workers

FPY %

Add Process DataAdd WIP information to highlight bottlenecks

10


first pass yield

A Quality metric that measures proportion of incoming information that can be used “as-is” without need for

– Correct information or material is supplied– Added information that should have been supplied– Clarify information that is supplied

Determined by the customer - the person receiving the informationMeasures quality of supplier - the person providing the information

Process 1

90%

Process 2

90%

Process 3

90%= 73%

Rolled Throughput Yield measures the cumulative effects of poor quality found throughout the process

X X


VSM step 4

Customer

Process 1

Dept. A

Process T

Cycle T

# workers

FPY %

Process 2

Dept. A

Process T

Cycle T

# workers

FPY %

Process 3

Dept. B

Process T

Cycle T

# workers

FPY %

Add time data [process + idle]

½ hr. 4 hr. 2 hr.2 d 1 d 8%

10


VSM Current State

Customer

Process 1

Dept. A

Process T

Cycle T

# workers

FPY %

Process 2

Dept. A

Process T

Cycle T

# workers

FPY %

Process 3

Dept. B

Process T

Cycle T

# workers

FPY %

½ hr. 4 hr. 2 hr.2 d 1 d 8%

Info

rmat

ion

Flo

wM

ate

rial

(d

ata)

Flo

wTi

me

10

The Value Stream Starts & Ends with the Customer!


Waste


waste in manufacturing

1. Transportmoving material unnecessarily, resulting in damage, loss and increased cost

2. Inventorytoo much stock of raw materials, work-in-progress (WIP), or finished goods

3. Motionexcessive & unnecessary walking or movement of people or equipment

4. Waitingpeople or equipment waiting for material to process

5. Over Processingperforming more work on a piece than required by the customer

6. Over Productionproducing more product than required at that time by customer (large batch)

7. Defectscreation of defects resulting in extra costs for rework, rescheduling

8. Waste of human talentunder-utilizing capabilities of the employees


waste in service

1. Duplicationhaving to re-enter data, answer same queries from the same organization

2. Incorrect inventorybeing out-of-stock, unable to get exactly what is required (make-do)

3. Unnecessary Movementqueuing at different departments to get service

4. Delayin providing the customers with information, product or a service (on hold)

5. Unclear communicationunclear instructions creating confusion over product or service use

6. Lost opportunity to retain or win customers being rude or unfriendly. lacking basic knowledge to help customer

7. Defectsnot receiving expected service. errors in service received

8. Waste of human talentunder-utilizing capabilities of the employees


waste walk worksheet

DATE: OBSERVER NAME:

List two observations of each type of waste observed

T1. abc

2. abc

I1. abc

2. abc

M1. abc

2. abc

W1. abc

2. abc

O1. abc

2. abc

O1. abc

2. abc

D1. abc

2. abc


agenda

Lean thinking


Identify Value


Create Flow[takt time, cycle time, OEE, standard work, spaghetti diagram, cellular processing, SMED]



Value

Value Stream

Flow

Pull

Perfection


Takt & Cycle Time


what is takt time?

If Customer Value describes what the customer wants, then

takt time describes how often they want it.

Takt German word for meter

1Takt

Takt Time =Available Work Time

Average Customer Demand

In Lean, Takt time is the DRUM BEAT of Production


takt time example

Available Work Time

Working Days Per Month 22

Shifts Per Day 2

Minutes Per Shift 480

Planned Breaks (minutes) 60

Available Work Time 18,480

Average Customer Demand

Month Qty

Jan 1034

Feb 1055

Mar 1048

Apr 1072

May 1064

Jun 1043

Jul 1025

Aug 1017 18,480

Sep 1074 1,048

Average 1048

Takt Time = 17.6 minutes/part=

1 Determine Time Available

2 Determine Average Demand

3 Calculate Takt time


@ Process Level

At the individual process level, 3 metrics are used to identify issues.

1. Takt time (How often does customer want product)

2. Cycle Time (How fast can we make product)

3. OEE (Overall Equipment Effectiveness)

SOW Contract

Review FinanceReview

Rework

Waiting

StartProposal

Signed ContractCycle Time

Pricing

LegalReview

TIME


What is Cycle Time?

Cycle Time is the time required for the process to complete one part or batch

• It begins when the part is removed from the incoming inventory

• It ends when the part is place into the outgoing inventory and is available for the next process step

If parts are processed as a batch, then the cycle time of the entire batch must be considered.

DO NOT USE AN AVERAGE CYCLE TIME

when baking a batch of 24 muffins for 30 minutes, all 24 muffins must wait 30 minutes before they are availableAn average cycle time (i.e. 1.25 min/muffin) is meaningless


Little’s Law

$100K / w

WIP$2000K

Cycle Time =2000

100= 20 w

From queuing theory, in a stable, steady-state system

CT =WIP

THwhere CT = avg. cycle time

TH = avg. through put (units / time)WIP = avg. work-in-progress

WIP increases Cycle Time


OEE


what is OEE?

Expected Output

Actual Output Slow Speed

a

b

c

d

e

f OEE = (b/a) x (d/c) x (f/e)

Expected Production Time

Actual Production Time Down Time

Actual Output

ReworkAccepted Output

OEE (Operational Equipment Effectiveness)is a ‘loss measurement’ metric that allows us to assess and compare the efficiency of the various process steps

OEE = Availability X Performance X Quality


OEE quiz

Case

Customer

Takt

(part / min)

Total Parts

Produced

Process

Yield

(%)

Downstream

Yield

(%)

Available

time (min)Problem?

1 1 100 100% 100% 100

2 1 100 95% 100% 100

3 1 106 95% 100% 100

4 1 106 95% 90% 100

5 1 118 95% 90% 100


balance & flow

Flow will only occur when [cycle time*OEE] for ALL process steps are “under” Takt time

0

10

20

30

40

50

60

70

80

90

1 2 3 4

Tim

e

Work Station

Cycle

Takt

0

10

20

30

40

50

60

70

80

90

1 2 3 4

Tim

e

Work Station

Cycle

Takt


Standard Work


what is standard work?

It is the documented best practice that results in the least amount of variation from workers & equipment

Benefits

• Documents the process

• Provides training aid

• Reduces variation in the process

• Creates flexibility among the work force

• Allows balance of work across all processes

• Minimizes waste


work analysis

Takt Time

1 2 3 4 5

Cyc

le T

ime

Work Station

Takt Time

1 2 3 4 5

Cyc

le T

ime

OperatorIndividual Task

Standard Work begins by breaking process into individual tasks of specified duration

Shifts the focus from workstation to operator


line balance

Takt Time

1 2 3 4 5

Cyc

le T

ime

Operator

Takt Time

1 2 3 4 5

Cyc

le T

ime

Operator

Improved Balance

Less work

Takt Time

1 2 3 4 5

Cyc

le T

ime

OperatorPhysical layout, Lack of skills may prevent certain combinations


Time

Step Time 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95

Get Part from "input" rack 1 5

Load Part onto fixture 1 5

Run Machine 1 30

Unload Machine 1 5

Put part onto "outgoing" rack 1 5



Run Machine 2 50

Unload Machine 2 5




Run Machine 3 60

Unload Machine 3 5




Run Machine 4 50

Unload Machine 4 5


Overall Takt time = 85 minutes

Op

era

tio

n 1

Op

era

tio

n 2

Op

era

tio

n 3

Op

era

tio

n 4

Takt T

ime

standard work example


standard work example

Time

Step Time 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90




Run Machine 1 30

Unload Machine 1 5





Run Machine 2 50

Unload Machine 2 5




Run Machine 3 70

Unload Machine 3 5




Run Machine 4 50

Unload Machine 4 5


Op

era

tio

n 1

Op

era

tio

n 2

Op

era

tio

n 3

Op

era

tio

n 4

Takt T

ime

Preps for next cycle

previously preped by Op#1

Part from Previous cycle


Spaghetti Diagram


what is a spaghetti diagram?

A method of documenting actual flow of people and material through the factory

Helps visualize distances travelled and the number of stations that work has travelled.

Illustrates waste within the process

1. Become the Product2. Walk the process to construct

a Spaghetti Diagram3. Draw a line for every trip4. Color code to distinguish

different people / products5. Look for differences – by time

of day, person, etc.


spaghetti diagram in service environment

Instead of ‘distance traveled’ count number of handoffs


Cell Layout


what is cell manufacturing?

Cellular configuration is a lean strategy used for building a variety of products with as little waste as possible

Benefits

• Produce high mix of products

• Produce in smaller lot sizes

• Increase utilization of labor

• Reduce waste (travel, defects, etc.)

• Reduced lead-time

• Self-managing teams of cross-trained employees


cell design considerations

The “right” option depends on the particular combination of people, products, and processes

Integrate with the overall product flow“Islands” of lean cells add little value

A cellular design allows for optimized work force


cell design considerations

Can be applied to the ‘office’ environmentMost effective if ‘diversity’ is included


SMED


what is changeover?

• One of the most common disruptors of flow, and preventer of pull is changeover time

• Long changeover times “force” us into large batch sizes in order to maintain capacity

• Quick changeover techniques allow us to drastically reduce changeover times and process in small batches

Changeover

AdjustSet-up

Last good part

of PO #1

First good part of PO #2


quick changeover

1. Observe current process & separate all activities into internal & external work

o Internal Work: Work that can only be performed when the process is stopped.

o External Work: Work which can be performed while process is running.

2. Ensure all external work is performed when process is running

3. Convert Internal work to External work as much as possible

4. Streamline & simplify internal & external work

5. Document new process and Repeat

Ext Ext Ext

Int Ext Ext Ext

Ext Ext Ext Ext

IntInt Ext Ext

ExtInt IntExt Int

Int Int Ext IntInt

Int

Int Int

3

Int

41 2 3b


benefits of quick changeover

• Reduced cycle time from Order Entry to shipment to the Customer.

• Reduce Inventory

• Improved responsiveness to changes in customer demand.

• Improved product quality.

• Free up to total capacity and resources.

• Increased Sales $.

Changeover Production

C/O Production C/O Production

C/O Production C/O Production C/O Production

50%

33%


traditional v Lean

“Traditional”

“Lean”

Tota

l Un

it C

ost

Lot Size

“EOQ”


agenda

Lean thinking


Identify Value



Establish Pull [Kanban]


Value

Value Stream

Flow

Pull

Perfection


push v pull system

Push System:

– Releases are scheduled. Throughput determined by a Master

Production Schedule linked to orders or forecasts (upstream info)

Pull System:

– releases are authorized. A signal based on system status

determines whether a release is allowed or not.

A pull system is controlled by downstream information.

Benefits of Pull System:

– Production is based on actual consumption

– Bottleneck set the pace

– Shorter lead-times

– Simpler scheduling, frees up schedulers, expediters, planners.


what is a kanban?

It is a visual scheduling signal that tells the operator

- how much to run, when to stop and when to change over

A true Kanban system must have the controls to only run

production to replenish consumed product

Kitchen Burger regulator Tills Customer


kanban in service industry

Backlog Goals & Queue In Progress Done

Urgent Now Team Member 1

High Value 2d Team Member 2

Regular 3d Team Member 3

Low Value 5d Team Member 4

30

51 52

53 54

55 56

57 58

59 60

61 62

20

31

35

1 7

2 8

3 9

4 10

5 11

6 12

32 33 34

21

22

24

23

25

KAIZEN BOARD

From PUSH To PULL


VSM Current State

Customer

Process 1

Dept. A

Process T

Cycle T

# workers

FPY %

Process 2

Dept. A

Process T

Cycle T

# workers

FPY %

Process 3

Dept. B

Process T

Cycle T

# workers

FPY %

½ hr. 4 hr. 2 hr.2 d 1 d 8%

Info

rmat

ion

Flo

wM

ate

rial

(d

ata)

Flo

wTi

me

10


VSM Future State

Customer

Process 1

Dept. A

Process T

Cycle T

# workers

FPY %

Process 2

Dept. A

Process T

Cycle T

# workers

FPY %

Process 3

Dept. B

Process T

Cycle T

# workers

FPY %

½ hr. 4 hr. 2 hr.2 d 1 d 8%

Info

rmat

ion

Flo

wM

ate

rial

(d

ata)

Flo

wTi

me

Eliminate

Kanban

Std Work

Co-Locate A & B

10

Hire Data Entry


agenda

Lean thinking


Identify Value



Establish Pull [Kanban]

Seek Perfection5S

Value

Value Stream

Flow

Pull

Perfection


what is 5S?

Originally a Japanese methodology that describes how to organize a work space for efficiency and effectiveness by

identifying and storing the items, maintaining the area and items, and sustaining the new order.

Translated from Japanese as

"sort“, “set-in-order", "shine", "standardize" and "sustain“

Today “safety” & “security” are often added to this list


5S benefits

1. Scrap Reduction

2. Productivity increases

3. Reduced set-up and change-over times

4. Lower maintenance costs, higher up-time

5. Less work-in-process and fewer supplies

6. Improved employee safety

7. Improved customer perception


Seiri (sort)

Remove unnecessary items and dispose of them properly

Make work easier by eliminating obstacles

Reduce chance of being disturbed with unnecessary items

Prevent accumulation of unnecessary items


Seiton (set in order)

Includes everything to get the work done

A place for everything & everything in its place

Make it easy to find and pick up necessary items

Things are marked so it is easy to know where they belong

Improves safety, cost, quality and working conditions


something we can ALL 5S


Seiso (shine)

Clean your workplace completely (not make pretty)

Use cleaning as inspection

Prevent machinery and equipment deterioration

Keep workplace safe and easy to work


Seiketsu (standardize)

Establish standards and procedures (post work instructions, best practices & techniques)

Maintain cleanliness and orderliness according to standards


Shitsuke (sustain)

Translates as "do without being told“

Keep in working order / Sustain the gains(accomplished by monthly 5S audits)

Everyone feels responsible for condition of workplace

Most difficult of the five Ss

increasing speed of service: basics of lean application

Business