LEAN FOCUS BACKGROUNDER

November 8, 2002 Rich Rovito, Business Journal

Overview
Lean Manufacturing combines the principles of continuous improvement, Just in Time Production, and standardization of work processes. The overall goal of implementing Lean Manufacturing is to increase productivity, decrease costs, and ultimately, maintain and increase the competitiveness of the organization while maintaining total customer focus. Paranet, an organization of Wisconsin and Illinois manufacturing companies, has taken lean manufacturing several steps further. Beginning in 2003, Paranet will offer Lean Focus programs to its members. Paranet exists to provide its members a common forum and networked resources to solve their manufacturing problems. Paranet organizes its membership into small peer groups of about 15 members who meet on a continual basis. Paranet 2003 will have a Lean Focus with the following enhancements to its current program:

Paranet Lean Assessment

Paranet Members are at various stages of implementing lean principles throughout their organizations. It is apparent that members do not have a consistent measurement to know where they are in the lean process. Just how lean are you? Paranet members have developed an assessment tool to help each other determine where they stand with lean implementation relative to other Paranet Members. Members who participated on the Assessment Development Team included: Jerry McCormick, J. D. McCormick & Associates Don Siehoff, Johnson Controls Gar Kronhelm, Rockwell Automation Jeff Seegmiller, Deluxe Plastics Peg Roethle, Jordan Controls John Vosquil, Dentsply-MPL Dennis Gackowski, Kenall Brian Reetz, Strattec Chris Zuzick, Vrakas-Blum and Joe Swanson, Regal Ware.

Now you can participate in an assessment team and have a team visit your organization. Benchmark your organization against other Paranet members. This will be a great educational experience for all members involved in the Lean Assessment. Imagine the value of knowing where your weaknesses and strengths are relative to others in your lean journey. From the assessment Paranet can support your implementation efforts by putting you together with other companies who can help you go to the next level of lean implementation. We will celebrate the successes of companies who improve throughout the year. Companies who have demonstrated a high level of competency in any of the lean categories will be asked to share their story with others who are working to achieve a greater level of success.

Training & Education

Throughout the year we will have on-going workshops focusing on lean implementation. I.E. Kaizen, Kanban, 5 Ss, Value Stream

Mapping, Leadership, Cellular Manufacturing at very reasonable prices for Paranet member companies. We will also expose members to the lean educational programs, certifications and college credit courses that MSOE, IIT and WCTC have launched. Discounts may be available to Paranet members for these programs.

their advisory group doesnt meet. This type of group is for members who are willing to discuss the hard issues and ask the tough questions. Gathering from 7-9:00 a.m., members can still get to their facilities at a fairly reasonable hour. This is a great opportunity to get to know members outside of your normal advisory group. You must currently be in an Advisory Group to be eligible for the Lean Gangs of 5.

Agenda Focus on Lean

Each Advisory Group will devote time on their agenda to focus on lean implementation to share challenges, opportunities and good ideas. Paranet will edit and publish lean ideas on the web site so that all members can share in the benefit of all advisory group discussions on lean implementation.

Members Only Area in the Paranet Web Site

Each Advisory Group will have a private, password protected, area on the Paranet Web Site. Meeting calendars, rosters and meeting notes will be available exclusively to each group. Members will also have the ability to send out a group email to their Advisory Group.

Web Site Bulletin Board

Members will have access to a Paranet Member Only bulletin board available through our Web Site. You will be able to post questions and participate in a threaded discussion on topics that concern you. Network Requests, especially those requiring anonymity, will still be handled through our office as they have been in the past. But, this is just another level of service we hope to provide to get more information to you when you need it. These enhancements will complement our current program, which includes: Peer Advisory Group Placement Significant Interest Meetings Web Site ParaTours Paranet Executive Transition Group for Members in a Job Search Database Research Surveys: 1-Minute Industry Surveys and Interest & Experience Surveys Individual Network Requests Paranet Partners Expert Resource Directory Employment Opportunities

Lean Implementation Groups (Gangs of 5)

For those members who are driving lean implementation in their organization and would like to get together with others who are doing the same, we are introducing an informal group consisting of 4-6 members who meet for coffee during the months when

Why Lean?
Manufacturing companies adopt Lean principles for two main reasons: 2

1. 2.

To free the financial resources necessary to add value to products, reduce costs to customers, meet short lead times and be flexible to customers needs. Improve profitability by reducing expenses.

Roots of Lean Manufacturing

Although continuous improvement in its various forms has always been part of manufacturing, the real development of lean manufacturing can be traced in large part to Toyotas manufacturing operations of the 1950s and 1960s. Scholars and purists will want to read The Toyota Production System, although James Womack is probably the preeminent American Lean expert. His Lean Thinking and Learning to See are mustreads. On a local level, Jerry McCormick is probably the best recognized having transformed Milwaukee Electric Tool in the 1990s. Other Wisconsin companies that are well into their lean implementation include Johnson Controls (especially their Watertown facility) Milwaukee Electric Tool, HUI and Strattec, to name a few. Because of Toyotas early development of Lean principles, much of the lexicon of Lean are Japanese words and phrases. A glossary of lean terms follows this backgrounder.

Principles of Lean Manufacturing

Lean Manufacturing is based on several central principles: 1) Elimination of waste ( Total Quality Management or Kaizen) All things involved in the production process should be constantly improving. 2) Drive for total quality in companys in culture, structures, and systems. 3) Just in Time (JIT) production Producing just what is needed at the lowest possible cost. This involves Kanban. 4) Increasing delivery frequency smaller deliveries, more often helps reduce spoilage and cost associated with holding large amounts of inventory. 5) Supplier integration working closer with fewer suppliers by forming strategic partnerships and integrating systems with those suppliers. 6) Preventative maintenance working to ensure that equipment and systems are working at top performance and do not ever breakdown. 7) Organizing manufacturing process for maximum efficiency. 8) Continuous selling to help smooth fluctuations in demand. 9) Project management to foster teamwork, team input from all levels - from design to production.

Keys to Lean Success

Companies wishing to successfully implement a Lean Focus need to be aware of several key factors: A total organizational conversion includes organizing for change and planning for change. Management Commitment and Trust, which means Senior Management Involvement and the Motivation to Change to Cellular processes. A Lean Systems Approach in Accounting and IS (No WIP, Back Flush and the use of Rolling Averages). Design Engineering area, both Product Design and Process Design must have measurements in place and continuous improvement is yielding 2-4% per month 3

improvement for things like: time to market, sales from new products and on time delivery, etc. The factory must be designed with a One Piece Flow goal in both the factory floor (1/3 reduction of floor space is achieved) and the cell (material at point of use achieves 1-2% per mo. Improvement). Kanban Material Flow must be present in the Design Elements (Supply Chain few Suppliers with frequent deliveries) and Functional Elements with inventory t/o at 2/4% per month sustained improvement and on time delivery at 100%. Standard Work & Quality at the Source so that work methods and quality checks are at each station. Quality improvements are realized through problem solving, and achieves 2-4% per month sustained improvement. People Flexibility and Visual Management achieved through knowledge and motivation with pay systems changed to motivate lean practices and a visual factory that houses a flat organization where _ of the cells operate without a manager. Continuous Improvement through Kaizen to eliminate waste/non-value activity in all functions (i.e. accounting, budgets, LRP, HR, etc.) and a Continuous Improvement Director in place while achieving 2-4% per month improvement for at least 3 years.

Ten Principles of Continuous Improvement

1) Abolish old, traditional concepts. 2) Assume new methods will work. 3) Accept no excuses. 4) Do not expect perfection, but continually work toward as few defects as possible. 5) Correct mistakes immediately. 6) Do not spend money on improvement. 7) Empower everyone to think of ways to solve problems. 8) Ask/review questions five times before making decisions. 9) Get information/opinions from multiple people (more is better). 10) Improvement has no limits.

What can a company expect by implementing Lean principles?

Compressed time to get products to market. Reduced inventory levels for raw, WIP and finished goods. Reduction in defects and improved quality. Increased flexibility and responsiveness. A reduction in floor space needs. Customer focus. Decision-making pushed down to the people closest to the work. Direct positive effect on the bottom line.

Standardization of Work Processes

The goal of standardization is to produce quality [products and services], safely and less expensively, through efficient rules and methods of arranging people, products, and machines. This is based on what is know as the 5 Ss (all Japanese terms): Proper arrangement of people, products, and machines (Seiri) Orderliness of work area and inventories (Seiton) Cleanliness of work area (Seiso) Maintenance of equipment (Seiketsu) Discipline in following the rules and making them habit (Shitsuke)

Methods for Implementation of Lean Manufacturing

Lean Manufacturing involves: Implementing Operating Standards: The shop floor should be governed by the 5 Ss to be as efficient as possible, as safe as possible Implementing TQM in: Culture Leadership needs to be passionate about TQM and needs to be able to foster attitudes in the workforce that positively effect product and service quality Cross-functional teamwork and empowerment of employees are key Structure This involves distributing ownership of producing/ improving quality to all levels of the organization Management and technical support must be available to support the problemsolving process Workers should be cross-trained and have broader job functions Ownership for a problem should stay with the one who identified it not moved another individual or department Keep organizational structures relatively flat to allow for fast feedback cycles Provide mechanisms for continuous improvement (short daily meetings, Quality Circles, mentoring, on-going training, etc.) Systems Work to prevent problems (Taguchi Experiments, Design for Manufacture, Quality Function Deployment, Poka Yoke, Failure Modes and Effects Analysis, etc.) Detect existing problems (Statistical Process Control, Management by Walking Around, Surveys, Audits, Inspections, etc.) Analyze the root cause of problems (Pareto Analysis, measles charts, Ishikawa diagrams, etc.)

Fallacies of Lean
Lean Manufacturing leads to job cuts. Not necessarily true. Companies that successfully adopt lean principles usually dedicate several employees to focus on successful implementation. Also, successful, profitable companies are dynamic in nature and are focused on growth which leads to more jobs. Lean Manufacturing leads to consolidations and plant closures. This is only true when such decisions are necessary to increase efficiency, reduce costs and improve value to customers.

A Lean Glossary
Activity Based Costing a management accounting system that assigns costs to products based on the amount of resources used (including floor space, raw materials, machine hours, and human effort) in order to design, order or make a product. andon - a system of flashing lights used to indicate production status and alerting team members to emerging problems in one or more work centers; the number of lights and their possible colors can vary, even by work center within a plant; however, the traditional colors and their meanings are: green - no problems yellow - situation requires attention red - production stopped; attention urgently needed autonomation - Transferring human intelligence to automated machinery. See Jidoka below. Batch and queue The practice of making large lots of a part and then sending the batch to wait in queue before the next step in the production process as opposed to single piece flow. bakayoke - literally, 'fool-proofing', this term quickly fell into disuse as it was perceived by workers as being applicable to 'fools' (baka). A more descriptive term is poke-yoke (see below). cellular manufacturing the layout of machines of different types performing different operations in a tight sequence typically in a U-shape. Work centers are known as cells; cells have the total capabilities needed to produce an item or group of similar items; contrasts to setting up work centers on the basis of similar equipment or capabilities, in which case items must move among multiple work centers before they are completed. Chaku-chaku means load-load in Japanese. Process of conducting single piece flow where the operator proceeds from machine to machine, taking a part from the previous operation and loading it in the next machine, then taking the part just removed from that machine and loading it in the following machine...repeat, repeat. cycle time - the normal time to complete an operation on a product. If cycle time for every operation in a complete process can be reduced to equal TAKT TIME (see below), products can be made in single-piece flow. Cycle time is different than Takt time. error-proofing - a manufacturing technique of preventing production errors by designing the manufacturing process, equipment, and tools so that an operation literally cannot be performed incorrectly (see poke-yoke).

Five Ss - refers to the Japanese words seiri, seiton, seiso, seiketsu, shitsuke. These words are shorthand expressions for principles of maintaining an effective, efficient workplace seiri - eliminating everything not required for the work being performed separate needed tools, parts and instructions from the unneeded. seiton - efficient placement and arrangement of equipment and material ease of use seiso - tidiness and cleanliness conduct a cleanup campaign seiketsu - ongoing, standardized, continually improving seiri, seiton, seiso to maintain workplace in perfect condition shitsuke - discipline with leadership always follow the first 4 Ss.

Five Whys Practice of asking why five times in order to get to the root of the problem. flexible manufacturing system - an integrated manufacturing capability to produce small numbers of a great variety of items at low unit cost; an FMS is also characterized by low changeover time and rapid response time. Flow the progressive achievement of tasks along the value stream. heijunka - A production scheduling/leveling tool, essentially sequencing orders in a repetitive pattern to level the day-to-day variations in total orders to correspond to long term demand. Hoshin kanri a decision making tool for to help unify and align resources and establish measurable targets against which progress toward goals can be measured on a regular basis. jidoka - a Japanese word which translates as autonomation; a form of automation in which machinery automatically inspects each item after producing it, ceasing production and notifying humans if a defect is detected; Toyota expands the meaning of jidoka to include the responsibility of all workers to function similarly, i.e. to check every item produced and to make no more if a defect is detected, until the cause of the defect has been identified and corrected. jishu kanri - self-management, or voluntary participation. just-in-time - a production scheduling concept that calls for any item needed at a production operation - whether raw material, finished item, or anything in between, to be produced and available precisely when needed, neither a moment earlier nor a moment later. jutsu - to talk, or the art of (i.e., 'leanjutsu: the art of lean production'). kaikaku - A rapid and radical change process, sometimes used as a kaizen - the philosophy of continual improvement, that every process can and should be continually evaluated and improved in terms of time required, resources used, resultant quality, and other aspects relevant to the process.

Kaizen continuous, incremental improvement of an activity to create more value with less muda usually accomplished through the use of teams. kanban card system that regulates pull by signaling upstream production and delivery. kanban - card system that regulates pull by signaling upstream production and delivery; used to authorize production or movement of an item; as follows: 1. All production and movement of parts and material take place only as required by a downstream operation, i.e. all manufacturing and procurement are ultimately driven by the requirements of final assembly or the equivalent. The specific tool which authorizes production or movement is called a kanban. The word literally means card or sign, but it can legitimately refer to a container or other authorizing device. Kanban have various formats and content as appropriate for their usage; for example, a kanban for a vendor is different than a kanban for an internal machining operation. The quantity authorized per individual kanban is minimal, ideally one. The number of circulating or available kanban for an item is determined by the demand rate for the item and the time required to produce or acquire more. This number generally is established and remains unchanged unless demand or other circumstances are altered dramatically; in this way inventory is kept under control while production is forced to keep pace with shipment volume. A routine exception to this rule is that managers and workers are continually exhorted to improve their processes and thereby reduce the number of kanban required.

2.

3.

karoshi - death from overwork. lean - the philosophy of continually reducing waste in all areas and in all forms; lean manufacturing combines the principles of continuous improvement, JIT Production, and standardization of work processes to increase productivity, decrease costs and ultimately increase the competitiveness of the organization which maintaining a customer focus. mistake-proofing - a manufacturing technique of providing a signal when an error is about to be introduced into the production process. Also see Poka-yoke. mixed-model production - capability to produce a variety of models, that in fact differ in labor and material content, on the same production line; allows for efficient utilization of resources while providing rapid response to marketplace demands. mizusumashi - the classic 'water spider', who performs a wide range of tasks which allow workers to perform 'value-added' tasks. mokeru - the Japanese term for the industrial engineering, more properly translated as profit-making I.E.

muda (waste) -consumes resources but creates no value activities and results to be eliminated. There are 7 categories of waste: 1. 2. 3. 4. 5. 6. 7. Excess production and early production Delays Movement and transport Poor process design Inventory Inefficient performance of a process Making defective items

mura - inconsistency muri - unreasonableness nagara - smooth production flow, ideally one piece at a time, characterized by synchronization [balancing] of production processes and maximum utilization of available time, including overlapping of operations where practical. ninjutsu - the art of invisibility (applies to management) poka-yoke - 'mistake-proofing', a means of providing a visual or other signal to indicate a characteristic state. Often referred to as 'error-proofing', poke-yoke is actually the first step in truly error-proofing a system. Error-proofing is a manufacturing technique of preventing errors by designing the manufacturing process, equipment, and tools so that an operation literally cannot be performed incorrectly. pull system - a manufacturing planning system based on communication of actual real-time needs from downstream operations ultimately final assembly or the equivalent - as opposed to a push system which schedules upstream operations according to theoretical downstream results based on a plan which may not be current.

seiban - Seiban is the name of a Japanese management practice taken from the Japanese words "sei", which means manufacturing, and "ban", which means number. A Seiban number is assigned to all parts, materials, and purchase orders associated with a particular customer job, or with a project, or anything else. This enables a manufacturer to track everything related with a particular product, project, or customer. It also facilitates setting aside inventory for specific projects or priorities. That makes it great for project and build-to-order manufacturing. sensei a personal teacher one who provides a mastery of knowledge and information. setup time - work required to change over a machine or process from one item or operation to the next item or operation; can be divided into two types: 1. internal: setup work that can be done only when the machine or process is not actively engaged in production; OR 9

2. external: setup work that can be done concurrently with the machine or process performing production duties. shojinka - continually optimizing the number of workers in a work center to meet the type and volume of demand imposed on the work center; shojinka requires workers trained in multiple disciplines; work center layout, such as U-shaped or circular, that supports a variable number of workers performing the tasks in the layout; the capability to vary the manufacturing process as appropriate to fit the demand profile. SMED - abbreviation for Single Minute Exchange of Die; a series of techniques pioneered by Shingeo Shingo for changeovers of production. Literally, changing a die on a forming or stamping machine in a minute or less; broadly, the ability to perform any setup activity in a minute or less of machine or process downtime; the key to doing this is frequently the capability to convert internal setup time to external setup time; variations on SMED include: Single-digit setup: performing a setup activity in a single-digit number of minutes, i.e. fewer than ten. OTED: One touch exchange of die; literally, changing a die with one physical motion such as pushing a button; broadly, an extremely simple procedure for performing a setup activity.

takt time - takt, is a German term for rhythm. The available production time divided by the rate of customer demand. Takt time is the rate at which customers are demanding a product. This is NOT the same as cycle time. Throughput time the time required for a product to proceed from concept to launch, order to delivery, or raw materials into the hands of the customers. This includes both processing and queue time. teian - a proposal, proposition, or suggestion. A teian system can be likened to a system which allows and encourages workers to actively propose process and product improvements. Toyota - modification of Toyoda, meaning abundant rice field, by the Toyota marketing department. Toyoda is the family name of the founders. Total Productive Maintenance (TPM) a process to insure that every machine is a production process is able to perform its required tasks so that production is never interrupted. Value Stream the activities required to design, order, and provide product from concept to launch, order to delivery, and raw materials into the hands of the customer. Value Stream Mapping identification of all specific activities occurring along the value stream for a product or product family. Waste- (muda) The MUDA 7: 1. Excess production and early production 2. Delays 3. Movement and transport 10

4. 5. 6. 7.

Poor process design Inventory Inefficient performance of a process Making defective items

water spider - one who performs a wide range of tasks which allow workers to perform 'value-added' tasks. WCM world-class manufacturing is the philosophy of being the best, the fastest, and the lowest cost producer of a product or service. It implies the constant improvement of products, processes, and services to remain an industry leader and provide the best choice for customers, regardless of where they are in the process.

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