Productivity Improvement Program Through Lean

Manufacturing

Presented By:
Boston Industrial Consulting, Inc.
 Agenda For Lean Manufacturing Program

1. Program Objective
2. What is Lean Manufacturing?
3. Pressures Requiring Companies to Become Lean
4. Typical Approach to Cost Reduction
5. Batch Manufacturing vs. Lean Manufacturing
6. Formula for Successful Implementation
7. Obstacles to Avoid
8. Expected Results of Lean Manufacturing
9. Boston Industrial Lean Manufacturing Program

1
 1.0 Program Objective

1.1 To understand the differences between Lean

Manufacturing Systems and the traditional Batch
Manufacturing approach.

1.2 To understand the key requirements of a successful Lean

Implementation Program.

1.3 To present an actual case study that has been successfully

executed by Boston Industrial Consulting; reviewing the
goals, approach, problems and the results achieved.

1
 2.0 What is Lean Manufacturing?

2.1 Lean is a Team Based continuous improvement process

designed for long term maximization of company
resources.

2.2 Lean is an approach to achieving manufacturing

excellence based upon the continued elimination of waste.
Waste is defined as activities that do not add value to the
product.

2.3 Lean Manufacturing utilizes techniques and principles that

improve efficiencies of value added activities.

1
 2.0 What is Lean Manufacturing?

2.4 Value Added Activities:

• Transform raw materials and information into parts or
products.

2.5 Non–Value Added Activities:

• Consume resources that do not contribute to the physical
change of the product.

1
 2.0 What is Lean Manufacturing?

2.6 Eliminating Waste

• Waste in Operations:
− Walking
− Searching
− Standby
− Rework
− Changeover

• Waste in Layout:
− Distances traveled
− Backtracking
− Crowded Conditions
− Redundant handling

1
 2.0 What is Lean Manufacturing?

2.6 Eliminating Waste

• Waste in Flow of Goods:
− Overproduction
− W.I.P.
− Failure to Meet Standard Output/ Hour/ Person

• Waste in Equipment
− Line stops
− Broken Down / Antiquated, Poor Production Yields

• Other Waste
− Poor Housekeeping Practices
− Damaged Materials
− Improper Tools
− Not Having the Right Information

Lead time reduction is achieved by identifying and eliminating

waste.
1
3.0 Pressures Requiring Companies To Become Lean

Past Conditions Current Reality

Sellers Market Buyers Market

Rapid Expansion Slower Growth & Shrinking Markets

High Unit Volume Flexibility

High Quality Higher Quality

Delivery & Service Quicker Delivery and Better Service

Financial Muscle Asset Utilization

3.0 Pressures Requiring Companies To Become Lean

3.1 High Costs

• Labor
• Material
• Burden - Overhead

3.2 Poor Quality

• Internal – between departments & processes
• External – rework due to vendors, O.V.S.’s

3.3 Late Delivery

• Internal Customers – on time to satisfy requirements
• External Customers – on time to satisfy requirements

1
 4.0 Typical Approach to Cost Reduction

5% 25%

Material
Burden
Direct Labor

70%

The primary focus has typically been on lowering direct labor to achieve
Cost Reduction Benefits.
 4.0 Typical Approach To Cost Reduction

10%

Material
Burden
Direct Labor
35%

55%

Most manufacturing costs are found in Materials: Raw Materials,

Purchased Parts, WIP, & Finished Good Inventory, Lean Manufacturing
seeks to focus on improving all areas, especially Material Cost Reduction.
 5.0 Batch Vs. Lean Manufacturing
FG
OP 3
5.1 Cost and Time:
OP 2 WIP

OP 1 WIP
RM
• Traditional Manufacturing Total
(Batch and Queue) Cost

Time
FG
OP 3
• Lean Manufacturing
OP 2
(One Piece Flow)
OP 1
(Cellular Manufacturing)
RM
Total
Cost
Costs increase the longer product is
moved, staged and stored.

Time
 5.0 Batch Vs. Lean Manufacturing

Batch Characteristics: Results:

• Expensive Machinery with • High Capital investment

high throughput capability.
• Overproduction
• Machine Utilization is usually
high; the machine runs • Lack of Flexibility to meet customer
whether there is a demand for demands
the part or not
• Long Lead –Times
• Long Setup Times which lead
to Large Lot Sizes • Excessive W.I.P.

• Push System are prevalent • Poor utilization of Floor Space

creating excessive W.I.P.
• Excessive Rework

1
 5.0 Batch Vs. Lean Manufacturing
Lean Characteristics:
• Kaizen – Quick Step
• Pull Systems
• Waste Elimination
• Tact Time/Line Balancing
• Point of Use / Kanban
• Work Cells – O.P.F.
• Error Proofing – Source
Inspection
• Visual Factory
• Flexible Low Cost Automation
Results:
• Reduced Costs
• Reduced inventory
• Reduced Obsolescence
• Reduced WIP
• Reduced Cycle Times
• Reduced Scrap
• Improved Quality
• Increased Productivity
• Improved Utilization of Space
• Reduced Lead – Times
• Reduced Material Handling
1
 6.0 Formula For Successful Implementation

1. Define the Goals & Establish a Baseline

2. Choose The Pilot

3. Study and Evaluate the Pilot Process

4. Operator Training

5. Pilot Implementation

6. Run Pilot and Refine

7. Full Implementation

1
 6.0 Formula For Successful Implementation

Step 1: Define Goals & Establish a Baseline

With management define the goals and objectives of the
program:
• Improve profit margin by 20%
• Improve lead time to the customer by 50%
• Improve quality by 30%
• Reduce inventory by 40%
• Increase productivity 30%

Identify obvious problems:

• Long Lead times
• Bottlenecks
• Excessive inventory
• Quality issues (internal & external)
• High Costs (labor materials & overhead)

1
 6.0 Formula For Successful Implementation

Step 2: Choose The Pilot

Pick an important product, product family, or customer.
Perform a Pareto Analysis:
• By Volume (QTY)
• By Sales Dollars
• By Scrap
• By Costs
• By Customer

Divide and Conquer:

• Based on Pareto Analysis choose 1 item for study
• Pick an Item with high probability of success

1
 6.0 Formula For Successful Implementation

Step 3: Study and Evaluate the Pilot Process

• Gather data
• Observe processes
• Flow Chart the Process
• Perform engineering studies: capacity analysis, labor analysis, Tact
time analysis, methods analysis, handling analysis, space analysis
and value engineering analysis
• Interview Key People and identify Key assumptions
• Identify Bottlenecks in the process
• Identify Waste in the process
• Brainstorm with key personnel
• Document short and long-term improvements
• Make recommendations
• Quantify savings and benefits
• Summarize Capital Costs
• Perform an R.O.I.
• Present to management for approval

1
 6.0 Formula For Successful Implementation

Step 4: Operator Training

• Expose required personnel to techniques of Lean

Manufacturing. View training films developed by professional
associations such as AME, SME, and IIE.

• Review proposed operating procedures, layouts and equipment

with personnel.

• Emphasize the expected savings and benefits.

1
 6.0 Formula For Successful Implementation

Step 5: Pilot Implementation

Establish Core Project Team For Implementation:

• Review scope and objectives for validation
• Select team leader
• Select team facilitator

Specify, Bid and Select Equipment:

• Develop detailed specs for equipment
• Source vendors for competitive bid
• Coordinate site visits with vendors
• Make recommendations in regard to equipment & vendors

1
 6.0 Formula For Successful Implementation

Step 5: Pilot Implementation

Develop Detailed Project Schedule:

• Establish detailed move sequence
• Coordinate in-house activities to plan
• Coordinate vendor activities to plan
• Conduct weekly / bi-weekly meetings as required

Install Equipment:
• Interface with vendors for proper installation
• Assure equipment conforms to customer specs
• Develop punch list

1
 6.0 Formula For Successful Implementation

Step 6: Run Pilot and Refine

• Run pilot for process validation, debug and training of

personnel

• Run production. Refine and make adjustments as

necessary.

• Identify opportunities for full implementation.

• Measure results

• Sign–off and approval

1
 6.0 Formula For Successful Implementation

Step 7: Full Implementation

• Integrate pilot project into total Lean Program.

• Define goals and objectives of the total Lean Program.

• Identify areas for improvement and study.

• Establish a baseline to measure expected savings and benefits.

• Perform detailed engineering studies and analysis to include

savings, benefits, costs and ROI.

• Document current conditions and area for improvement to

eliminate “waste”.

1
 6.0 Formula For Successful Implementation

Step 7: Full Implementation

• Establish “Project Team” and train in the techniques and
principles of Lean Manufacturing.
• Divide Lean Program into manageable and focused projects.
• Develop executive plan for each project.

• Facilitate weekly or bi-weekly team meetings to keep teams

focused on a schedule.
• Provide project management for full implementation of each
project.
• Monitor and measure each project after implementation,
measure and post results.
• Make the necessary revisions and adjustment to ensure
success.

1
 7.0 Obstacles to Avoid

7.1 Trying to do Too Much at One Time:

• Walk before you run
• Divide and conquer
• Minimize the scope of the program

7.2 Starting with a Tough Project:

• Choose a project with a high probability for success
• A tough project can stop momentum in its tracks

7.3 Setting Unrealistic Goals:

• Benchmark
• Compare to other departments in the same facility
• Compare to other facilities in the same company
• Compare to other companies within the same industry

1
 7.0 Obstacles to Avoid

7.4 Lack of a Detailed Execution Plan:

• Provides instruction and direction
• Helps maintain focus
• A road map to success

7.5 Lack of Leadership or a Champion

• A person that is committed to success
• A person that can motivate
• A person that can lead
• A person that can empower others
• A person that can sustain momentum

1
 7.0 Obstacles to Avoid

7.6 Employees That Are Not Exposed to Lean:

• An informed employee usually contributes
• An educated employee understands why it’s happening
• Cross training is essential

7.7 People and Resistance to Change:

• Unfreeze – explain why change is necessary
• Educate – expose to fundamentals of Lean
• Empower – make part of the decision making process
• Refreeze – strong belief in that Lean is the answer

1
 8.0 Expected Results of Lean Manufacturing

Areas For Improvement Expected Actual

Results Results
Reduced Raw Material On Hand 30%
Reduced W.I.P. 80%
Reduced F.G. Inventory 40%
Material Flow Distances & Space Reduction 50%

Reduction in Vendor Base 50%

Increased Productivity - Units/Employee 20%

Improved Quality (Scrap & Rework) 50%

Reduced Cumulative Lead Times decrease10x the

value added time
 8.0 Expected Results of Lean Manufacturing

8.1 A Dynamic Workforce that:

• Is Focused on Continuous Improvement

• Is Biased For Action

• Puts Creativity Before Capital

• Is Totally Involved

1
Boston Industrial – Lean Manufacturing Program

Step 1: Client Survey

• On-Site Survey Evaluation of All Manufacturing and Support

Areas

• Identify Obvious Processes

• Define Realistic Goals and Objectives in Letter Report to

Management

• Estimate of Effort: 3 to 5 Man-days

• Budget Costs: $3,000 - $4,000

1
Boston Industrial – Lean Manufacturing Program

Step 2 - 6: Pilot Program

• Pick the Pilot Work Center

• Study the Current Process

• Make Lean Recommendations - Layout, Process, Methods

• ROI / Cost Analysis

• Operator Training

• Implement Pilot Plan

• Estimate of Effort: 4 to 10 Man-days

• Budget Costs: $4,000 - $9,000

1
Boston Industrial – Lean Manufacturing Program

Step 7: Full Implementation

• Roll Out Pilot Plan into Total Manufacturing Operation

• Full Lean Staff Training

• Lean Recommendations - Layout, Process

• Physical and Process Implementation

• Training on New Process

• Estimate: Client / Operation Specific