LEAN and AGILE approaches to manufacturing and process improvement

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LEAN and AGILEapproaches to manufacturingand
process improvement
Centre for Strategic Manufacturing

• Dr Peter Ball
• Centre for Strategic Manufacturing
• www.dmem.strath.ac.uk/csm/
• p.d.ball_at_strath.ac.uk

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The frog!
Uh oh!
Rebbit!
Rebbit!
Poikilothermic ( dont try this at home)
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A Lean and Agile Manufacturing

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

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Lean Thinking roots in Toyota Philosophy

• Doing it all for the Customer
• Levelled production
• Pull system
• Continuous-flow production
• Takt time
• Multi-skilling
• TQM
• TPM
• Poka Yoke
• SPC
• Standardised work
• Kaizen

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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

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Lean Characteristics Benefits

• Characteristics Benefits (higher )

Customer Driven
Profit Driven
Team Based
Fewer Players
Devolved responsibility
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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

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Time based competitiveness - some rules

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

• 3 x 2
• Lean competitors enjoy x3 avg growth rate, x2
  profit margin

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What is World Class Manufacturing?
Being the best
Delighting the customer?
Being the lowest cost producer
Schonbergers agenda?
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What is World Class Manufacturing?
Flexibility control to satisfy customer on
time, every time
Managing through people, teams and aligning all
to goals
Reduction of waste in the manufacturing system
Product quality right first time, every time
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How to go lean
Objective
Method
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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
• Analyse the process map
• Focus on customer
• Identify value-added and non-value-added
  activities
• Calculate the value-add ratio
• Reduce and eliminate wasteful steps
• (several value streams exist in a value chain,
• e.g. key product line to key customer)

Many mapping tools (process activity, supply
chain response, quality filter, etc.)
Conduct all improvements in context of value-add
ratio
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Example of process map

• Note value-add time -vs- lead time

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Demand amplification mapping

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

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Capability of processes and the dangers
If your production planning function was likely
to produce infeasible plans occasionally would
you 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
• You have capable machines
• etc.

See roots of lean thinking slide
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Capability / variance

• 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

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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

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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

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Different views on lean -vs- agile
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Establishing Foundations for Lean, Agile

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

Culture change
Use of champion
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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

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OEE Example Calculation
Performance G. Total dozens produced
3869 dozen H. Balanced Speed (180
BPM0.067) 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
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Cost benefit analysis

• Costs Benefits (higher )

Investigation
Customer Satisfaction
Implementation
Profitability
Project specific
Greater Control
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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

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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
• (EVAEconomic Value Add -gt sustainable
  investment)
• Openness of data systems!

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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
• Sales up 30, same headcount
• Phase 2 (underway)
• Production processes focus
• Introducing OEE
• Focus on waste
• CI, include quick changeovers
• Ambitious, achievable targets
• Self-managed work teams

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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

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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!)

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LEAN and AGILEapproaches to manufacturingand
process improvement
These slides can be downloaded from www.dmem.stra
th.ac.uk/csm/
Centre for Strategic Manufacturing

• Dr Peter Ball
• Centre for Strategic Manufacturing
• p.d.ball_at_strath.ac.uk