Centre for Strategic Manufacturing

LEAN and AGILE

approaches to manufacturing and process improvement

Dr Peter Ball Centre for Strategic Manufacturing www.dmem.strath.ac.uk/csm/

p.d.ball@strath.ac.uk

DMEM

The frog!

Rebbit! Rebbit!

Uh oh!

10OoC

5OoC

OoC

Poikilothermic (= dont try this at home)

A Lean and Agile Manufacturing

What are they? What are the benefits? How to do it? Case studies Sources of further information

Lean Thinking roots in Toyota Philosophy

Item Qnty Doing it all for the Customer Runner 100 Repeater 27 Levelled production Stranger 5 Load 132 Capty 135 Pull system Continuous-flow production K K kanbans work Takt time replacement centre Multi-skilling TQM TPM Poka Yoke lf Se nt SPC e vem pro im r us etito nuo Comp Standardised work nti Co Kaizen average Competitiveness
change Present Uncompetitive

Day 1 20 7 27 27

Day 2 20 7 27 27

Day 5 20 5 25 27

store withdraw & process

work centre

batches

Upper action limit Upper warning limit time

action?

Competitive Time

What is Lean Manufacturing?

Builds on roots but with specific focus on: Lead time reduction
Regular production New products

Flexibility improvement Variability reduction Cost reduction

Lean Characteristics & Benefits

Characteristics
Customer Driven Customer Driven Profit Driven Profit Driven Team Based Team Based Fewer Players Fewer Players Devolved responsibility Devolved responsibility Customer Satisfaction Customer Satisfaction Profitability Profitability Greater Control Greater Control

Benefits (higher )

Improving business performance

Increase turnover
Sell more Charge more

Reduce cost
Reduce direct material cost Improve production efficiency/effectiveness Increase the rate of adding value

Time based competitiveness - some rules

0.05 to 5
Value actually added between 0.05% - 5% of total time

3/3
Why no value being added: Waiting for completion of batches Waiting for physical / intellectual rework Waiting for management decision

1/4 - 2 - 20
For every quartering of total time, productivity doubles, costs reduce by 20%

3x2
Lean competitors enjoy x3 avg growth rate, x2 profit margin

Source: survey of industry (by Boston Consulting Group?)

What is World Class Manufacturing?

Being the best Delighting the customer?

Being the lowest cost producer Schonbergers agenda?

What is World Class Manufacturing?

Flexibility & control to Flexibility & control to satisfy customer on satisfy customer on time, every time time, every time Managing through Managing through people, teams and people, teams and aligning all to goals aligning all to goals Reduction of waste Reduction of waste in the manufacturing in the manufacturing system system Product quality right Product quality right first time, every time first time, every time

How to go lean
Objective 1
Understand customers and what value they want Define the internal value stream Eliminate waste, make info & products flow, pulled by customer needs Extend the definition of value outside your company Continually aim for perfection

Method
Setting the direction, targets and checking results An internal framework for delivering value Appropriate method to make necessary change Externalise the value focus to the whole value stream Strive for perfection in the product and in all processes and systems

Cornerstone of Lean Manufacturing

Value stream mapping
Construct process map of the value stream Avoid using existing maps, may be out of date or have misconceptions Many mapping tools (process activity, Many mapping tools (process activity, Analyse the process map supply chain response, quality filter, etc.) supply chain response, quality filter, etc.) Focus on customer Identify value-added and non-value-added activities Calculate the value-add ratio Reduce and eliminate wasteful steps

Conduct all improvements in context of value-add ratio

(several value streams exist in a value chain, e.g. key product line to key customer)

Example of process map

Note value-add time -vs- lead time

Demand amplification mapping

Many tools exist including demand amplification mapping Concerned with batching and response time Spreadsheet example from IOM publication shows effect

Capability of processes and the dangers

If your production planning function was likely to If your production planning function was likely to produce infeasible plans occasionally would you produce infeasible plans occasionally would you trust them?! trust them?! Need to establish capability in all processes
Need capable machines Need capable suppliers etc.

Danger is that you can base lean on poor foundations

Focus on assembly area when machine shop is not capable Focus on production processes when supplier is not capable

Need to be careful with available literature, can assume

You have sales and operations planning See roots of lean You have capable machines thinking slide etc.

Capability / variance
Lower specification limit Upper specification limit Defects 1350 parts per million Defects 0.001 ppm
Nominal

3 6

Variation of output of a process can give rise to defects internally and/or passed onto customer Aim to reduce process variation to increase reliability of a process This is the foundations of Six Sigma methodology

Six Sigma
A complete methodology for improving the business or simply a process reliability concept? Key to Motorola, GE and other businesses at all levels
Executive vision Executive vision Assess & kickoff Assess & kickoff Deploy strategy Deploy strategy
oj Pr ti ec pl m em ta en n tio

Select champions Train and set up structure Map, id critical input/output variables Determine variance Design of experiments Use control charts

Measurement Measurement Analysis Analysis

Improvement Improvement Control Control

Agile a step on from lean?

Roots of agile in America defence industry developing the ability to react and reorganise to successful equipment bids Lean and agile have common components
See Lean Thinking Roots slide (quality, reliability, improvement, etc) But lean is process focused, agile is boundary focused

Ability to thrive in constant, unpredictable change Key attributes of agile

Customer value focus (solutions not products) Flexibility to adapt to fundamental market changes Not simply changes in product mix Competing from multiple fronts, possibly virtually Organisational knowledge, including ability to adapt IT systems to support new processes

Different views on lean -vs- agile

The journey Traditional Traditional A spectrum of companies Lean Lean
Make to stock Low variety Mass, repetitive Cost minimiser

Lean Lean

Agile Agile

Agile Agile
Make/Engineer to order, High variety, Service culture Product Innovator? Customer intimate?

Complementary
Make to forecast

Material suppliers

Lean Lean
Upstream variation

Stock (to decouple)

Make to order

Agile Agile
Downstream variation

customer

Establishing Foundations for Lean, Agile

Need the classic pre-requisites for any programme
Strategy Culture Commitment change Objectives Communication Empowerment Establish framework Activity plan, cost, time and execution Measurement and evaluation system

Use of champion

Key to Lean Manufacture is measurement

Need clear, objective focus on value Example: OEE (Overall Equipment Effectiveness)
A composite measure of the ability of a process to carry out value adding activity OEE = % availability x % output achieved x % perfect output If change to a process increases OEE it is worthwhile
Actual Available Production Time Theoretical time minus planned downtime and shutdowns This is the realistic best available production time (100%) Planned Downtime PM, Shutdowns, Holidays

Machine Running Time Actual production hours minus downtimes This is possible production if 100% performance

Unplanned Losses Breakdowns, HR, Set-up time

Availability

Net Operating Time Machine speed against theoretical speed This is the possible output if 100% quality

Speed losses Idling, minor stopages performance

Performance

OEE

Useful Production Time Material in minus product out This is the real output

Quality Losses, adjustments, Set-up waste

Quality

OEE Example Calculation

Loading Time A. Working Time B . Line Off Time C. Loading Time (A-B) Availability D. Downtime E. Operating Time (C-D) F. Availability (E divided by C x 100) = 525 mins = 30 mins = 495 mins = 190 mins = 305 mins = 62%
Line Off Time Lunch break 30 mins Asset Care 0 mins Downtime Start up 30 mins Shut down 20 mins Breakdown 40 mins Changeovers 90 mins Materials Supply 10 mins

Performance G. Total dozens produced = 3869 dozen H. Balanced Speed (180 BPM=0.067) = 0.067 I. Performance (HxG / Ex100) = 85% Quality J. Rejects during operating time = 20 dozen K. Rate of quality products (G-J / Gx100) = 99% Overall Equipment Effectiveness OEE (F x I x K / 10000) = 52%

Cost benefit analysis

Costs Benefits (higher )

Investigation Investigation Implementation Implementation Project specific Project specific

Customer Satisfaction Customer Satisfaction Profitability Profitability Greater Control Greater Control

Summary
Strategy that encompasses business [profit] objectives and customer order winning [and maintaining] criteria Achieve short-term, KPI-driven improvements consistent with strategy Plan and act for sustainable change

Example: Rolled metal manufacture (batch)

Major initiative to remove waste
Significant formal education and training Targeted specific product stream From supplier to customer Mapped out processes and established measures

Result
Major quality improvements, 60% drop customer complaints Other significant financial benefits Short / long term EVA moved negative to neutral

(EVA=Economic Value Add -> sustainable investment) Openness of data systems!

Example: Bottled water (process)

Phase 1
Education and training of teams Use of DTI funding via TCS Programme (tcd.co.uk) Full integration of sales, purchasing, manufacturing Improved management information system (Soft) greater teamwork, responsiveness From 80% to 100% peak season stock cover DEPALLETISER Sales up 30%, same headcount
RINSER FILLER CAPPER LABELLER OCME (S/wrapper) HANDLE APPLICATOR PALLETISER STRETCHWRAPPER

Production processes focus Introducing OEE Focus on waste CI, include quick changeovers Ambitious, achievable targets Self-managed work teams

FILLING HALL

Phase 2 (underway)

TOPSTAR/DUBUITT

CASE ERECTOR CASE SEALER CASE PACKER

BOTTLING HALL

Example: Whisky bottling (process)

Use of OEE as key measure Specific focus on bottling lines
Low OEE Start / stop Breakdowns Introduced asset care 5S Sort, Straighten, Sweep, Standardise, Self discipline Quick changeovers Reliability centred maintenance

Asset care programme brought 0.5m savings in 6 months

Useful sources of information

www.competitiveSCOTLAND.com
Seminars, resources & discussion for Scottish manufacturing

Centre for Strategic Manufacturing web site

dmem.strath.ac.uk/csm/ (this presentation, resources, lean courses)

James Womack & Daniel Jones, Lean Thinking: Banish Waste and Create Wealth in your Corporation (Simon & Schuster, 1996) John Bicheno, The Lean Toolbox, 2nd edn (Picsie Books, 2000) http://www.picsie.co.uk/ (10?) Peter Hines & David Taylor, Going Lean: a guide to implementation (Lean Enterprise Research Centre, Cardiff Business School, 2000) Institute of Operations Management (IOM)
Papers and courses on Lean, Agile, etc, see iomnet.org.uk Seminars (e.g. Recently: Lean at Boots, 5S at Ratheon)

Pande, Neuman, Cavanagh, R.R. 2000 "The Six Sigma Way, McGraw-Hill ISBN 0-07-135806-4 (20)
For knowing about it without actually dealing with the detail

Breyfogle 1999 "Implementing Six Sigma - Smarter Solutions Using Statistical Methods" Wiley-Interscience ISBN 0-471-29659-7 (60)
Good for detail if you actually want to implement it

Agile
http://www.agility.co.uk/ or internet search for agile (care with agility!)

LEAN and AGILE

Centre for Strategic Manufacturing

approaches to manufacturing and process improvement

These slides can be downloaded from: www.dmem.strath.ac.uk/csm/

Rebbit!

Dr Peter Ball Centre for Strategic Manufacturing

p.d.ball@strath.ac.uk

DMEM