"Make Green, Go Green, by Going Lean

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"Make Green, Go Green, by Going Lean

• Presented By Paul V. Burnett
• October 2007

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Paul V. Burnett, BSME, MBA

• IBM
• John Deere
• Ford Motor Company
• Detroit Diesel Corporation
• Applied Materials
• Sanmina-SCI
• RSM McGladrey

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• How to Go Green?
• How to Go Lean?
• Why?

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Doing nothing is not an option!

• Governor Arnold Schwarzenegger signed into law
  emission reduction targets for California
  
• By 2010, reduce GHG emissions to 2000 levels,
• By 2020, reduce the GHG emissions to 1990 levels,
  
  
• By 2050, reduce GHG emissions to 80 percent below
  1990 levels

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Green and Lean

• 15-30 of a manufacturing companys monthly
  energy bill creates greenhouse gases.
  
• The energy management within a facility -
  benchmark competitors.
  
• Lean methodologies can be used to reduce waste in
  the consumption of energy within a manufacturing
  facility.
  
• The ultimate goal - eliminate equipment not
  needed in the process.
  
• If elimination is not possible, minimize the use
• plot energy consumption to predict maintenance
  schedules and replacement cycles.
  

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Analysis of Electric Industry CO2 Impacts

• The electric industry cannot provide substantial
  reductions in CO2 emissions in the near future to
  meet goals
  
• Limited potential to switch to greener energy
  near-term
  
• CO2 reduction must come from reducing demand
• supported by new energy efficient technologies
• conservation programs
• A market-based collaborative systematic approach
  to demand reduction is a critical success factor
  (profit potential)

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The Economic Case For Change

• Asset performance management can reduce energy
  consumption by 6 to 11.
  
• DOE has established a minimum 10 energy
  reduction guideline as attainable through the
  application of proper maintenance and technology
  solutions.

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G.A.S. Index Global Asset Sustainability Index

• G.A.S. Index Availability Performance
  Quality Energy Efficiency
  
• Availability All downtime / Scheduled time
• Performance Actual output for scheduled time /
  Design output for scheduled time
  
• Quality Total production minus defects or
  rework / Total production
  
• Energy Efficiency Design energy
  consumption/Actual energy consumption

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Example Motor Efficiency
76,000 Watts
1HP .746 kWatts
15,400 Watts (17.4)
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Motor Efficiency Savings

• Energy Savings 90kW x 8,000 hrs./year x
  (1-(.828/.94)) 87,336 kWh/yr.
  
• At an average cost of 11 cents per kWh, the
  estimated savings would be 9,607 per year.
  
• Motor operating cost
• (100 HP x .746 kW/HP x 8,000 hrs. x .11/KWh ) /
  .94 efficiency 69,838 per yr.

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Repair v. Buy

• Break even analyses must be based on the
  increased cost of purchasing a new, more energy
  efficient equipment versus the energy consumption
  reduction.
• The cost energy today ranges from 10-13 cents per
  kilowatt-hour.
  

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Lean Definition

• A philosophy of production that emphasizes the
  minimization of the amount of all the resources
  (including time) used in the various activities
  of the enterprise.
• - APICS
  Dictionary, 10th ed.

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Lean Enterprise

• An enterprise with a focus on waste elimination
  and the customers needs in all parts of its
  operations, manufacturing and administration.
  Emphasis is given to lean structures and
  processes, flexibility of response and methods
  and techniques to continually seize new
  opportunities as they arise.
• - APICS Lean
  SIG
  

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Early Lean Processes

• Mass Production
• Early 1900s
• Ford Motor Company was a pioneer
• Assembly line production
• High volume production
• Limited number of products
• Significant cost reductions

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Today

• More than 96 of all U.S. companies have less
  than 250 employees
  
• Global competition / low cost labor
• Demands by customers
• Higher quality
• Innovation
• Mass customization
• Flexibility
• Lower Costs
• Limited resources
• Source U.S. Bureau of Census, 2004

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What is Lean?

• It is NOT
• Collection of techniques or a methodology
• Reduced staffing or low inventories
• It IS
• A philosophy of manufacturing
• Totally different way of thinking
• A different value system
• Seeks to eliminate waste (non-value added
  activities to the customer)
  
• Emphasis on flow manufacturing

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What is Lean?
Lean Production
Total Quality Management (TQM)
Six Sigma Cellular Manufacturing Business Proces
s Improvement (BPI) Just in Time Theory of Const
raints Zero Defects SPC TQC Kanban
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Lean Characteristics

• Focus is on the improvement of resource
  utilization
  
• ? Equipment setup time reduced
• ? Scheduled machine maintenance
• ? Orderly, clean workplace
• ? Pull production being used
• ? JIT inventory control
• ? Factory layout in work cell arrangement by
  products
  
• ? Active error elimination
• ? Improved quality, etc.

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The Importance of Waste Elimination

• Lean deals with the elimination or reduction of
  many types of non-value-added activities, often
  referred to as waste
  
• ? The driving force for waste elimination is
  improved value in the products and services
  customers buy

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Seven Popular Wastes

• Overproduction
• Waiting
• Excessive transportation
• Inappropriate processing (the hidden factory)
• Unnecessary inventories
• Unnecessary motion
• Defects

- Taiichi Ohno Toyota Production System
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The Nature of Wastes

• 1. Overproduction
• Target and achievement unclear
• Processes not statistically capable
• 2. Waiting
• Operators waiting
• Operators slower than production line
• 3. Excessive Transportation
• Widely spaced equipment waiting
• Forklifts not available when needed

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The Nature of Wastes (continued)

• 4. Inappropriate Processing
• Variability in operators performance
• Processes not statistically capable
• 5. Inventory
• Large safety stocks
• Variable procurement lead times

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The Nature of Wastes (continued)

• 6. Motion
• Double handling
• Non-standard layouts
• Equipment widely spaced from each other
• 7. Defects
• Low material yields
• Excessive process variability

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Correcting Wastes

• 1. Overproduction
• Eliminate by reducing setup times.
• Synchronizing quantities and timing between
  processes.
  
• Make only what is needed now.
• 2. Waiting
• Eliminate through synchronizing work flow.
• Balancing uneven loads with flexible workers and
  equipment.

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Correcting Wastes (continued)

• 3. Excessive Transportation
• Establish layouts and locations to make transport
  and handling unnecessary, if possible.
  
• 4. Inappropriate Processing
• Why should this item be made?
• Why is each process necessary?
• Are any processes being performed that are not
  part of the work flow?

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Correcting Wastes (continued)

• 5. Inventory
• Reduce by shortening setup times.
• Improving work skills.
• Smoothing fluctuations in demand for the
  product.
  
• Reducing all the other wastes reduces the waste
  in stocks.
  
• 6. Motion
• Study motion for economy and consistency.
• Economy improves productivity, and consistency
  improves quality.
  
• Improve the motions, then mechanize or automate.
  Otherwise, there is a danger of automating waste.

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Correcting Wastes (continued)

• 7. Defects
• Develop the production process to prevent
  defects.
  
• Eliminate the need for inspection. At each
  process, produce no defects.
  
• Design processes to be failsafe (Poka yoke).
• Quality processes yields quality products
  automatically.

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• Can you think of other actions to eliminate waste
  in your company?

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Leadership Function

• Initiate needed change by identifying a vision
• Aligning employees to that vision
• Motivating to achieve that vision

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Leadership
Lean Change Infrastructure
Champion CEO Plant Management/President Vice Pr
esident
Project Training Plans ________________________
__________________________________________________
__________________________________________________
_______________________________________________
Vision Lean Strategy Value No Waste

Flow Pull Standard Work JIT
Sponsors Manufacturing Engineering Quality
Lean Office
Facilitator
Facilitator
Facilitator
Team
Team
Team
Team
Team
Team
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Transparent Workplace
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Transparent Workplace

• Define Processes
• Value-Added Activities
• A Value-Added Step
• Value versus Non-Value-Added
• Value-Stream Mapping
• Typical Process Flow Analysis
• Visual Order The Five Ss
• Visual Control

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Transparent Workplace
Processes Definition

• A particular method of doing something which
  involves a number of steps, activities, or
  operations
  
• Processes are found in manufacturing service
  industries
  
• Example

Manufacturing
Grind
Turn
Mill
Drill
Office
Type Contract
Obtain Signature
Type Envelope
Mail
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Process Map
Total Time 10 Days Value-Added Time 6 minutes
2
Production Control
Weekly Orders
Weekly Orders
1
Supplier
Customer
Weekly Schedule
Daily
Daily
4
Stamping
Weld
Assembly
Paint
Shipping
3
I
I
I
I
Staging
1 Day
1 Day
2 Days
3 Days
1 Day
2 Days
50 sec
40 sec
90 sec
120 sec
60 sec
5
Process Time Line
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Transparent Workplace
Value-Stream Mapping Process

• Map customer requirements (orders)
• Map order information flows
• Map physical product/material flows
• Map plant/office information flows
• Add a process time line
• Summarize current state
• Ask questions at each step to determine waste or
  non-value-added areas

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Transparent Workplace
Summarize Current State

• The of value-creating time
• The number of units of inventory required to
  support a production unit
  
• Total travel distance versus value-creating
  distance
  

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Transparent Workplace
What Are Value-Added Activities?

• Add value to products services that customers
  are willing to pay for
  
• Improvements that change a products or services
  form, fit or function
  
• Other activities use resources but add no value
• Some non-value-added activities may be necessary
• Based on current knowledge or technology
• Long term goal - Eliminate
• Remaining non-value-added activities should be
  eliminated now!

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Transparent Workplace
A Value-Added Step

• A process that physically changes the work
  passing through it that makes it more valuable to
  the customer
  
• A step requested by the customer - they are
  willing to pay for it

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Transparent Workplace
Value versus Non-Value-Added

• Value-Added Activities
• Entering order
• Ordering materials, supplies
• Preparing drawings
• Assembling
• Shipping to customers
• Processing customer deposits
• Examining patients
• Filing insurance claims
• Dispensing event tickets
• Fueling airplane

• Non-Value-Added Activities
• Waiting/sorting
• Moving
• Kitting/staging
• Counting
• Inspecting
• Checking
• Recording
• Obtaining approvals
• Testing
• Reviewing
• Copying
• Filing
• Revising/reworking
• Tracking work

• Charlene B. Adair Bruce A. Murray,
• Breakthrough Process Redesign

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Value Stream Costing
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Traditional Accounting and Lean Controls
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Costs Outside the Value Stream

• Identify tasks not related to the Value Stream
• Exp. - ISO 9000
• These costs are not allocated to the Value
  Stream
  
• They are treated as sustaining costs of the
  business
  
• Budgeted
• Controlled
• No need for full absorption costing
• Value Stream costing proves relevant, accurate
  cost info about the Value Stream

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Transparent Workplace
Value-Stream Mapping (VSM)

• Observe record the flows of orders, materials,
  goods and information for a product family
  
• Product family A group of product variants
  passing through similar processing steps that use
  common equipment
  
• Mapping identifies waste situations for
  improvements

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• What are some value-added
  non-value-added activities
  at your company?

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Transparent Workplace
Visual Order The Five Ss

• To eliminate waste, you must first find it
• Visual order makes waste evident and is a good
  starting point for managing resources
  
• Toyota Production - Five Ss as the method for
  exposing waste poor utilization of resources

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Transparent Workplace
Visual Order The Five Ss

• Sort
• Set in order
• Shine
• Standardize
• Sustain

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Transparent Workplace
Lockheed Boeings Six Ss
SORT
SUSTAIN
6 S
STRAIGHTEN
SAFETY
SHINE
STANDARDIZE
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Transparent Workplace
The Six Ss

• Sort Classify tools, parts, instructions into
  necessary unnecessary
  
• Set in Order Make it visible easy to use 3
  Es easy to see, easy to get easy to return
  
• Shine Conduct cleanup to identify
  abnormalities
  
• Standardize Put a system in place to readily
  identify abnormal conditions
  
• Safety Identify eliminate dangerous
  hazardous conditions
  
• Sustain Make a habit of properly maintaining
  following standard practices

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Transparent Workplace
Visual Control

• Awareness of whats happening
• Manpower Skill levels, performance, continuous
  training
  
• Machines Develop Maintenance schedules and use
  them
  
• Materials Demand Signals indicating shortages
  shadow boards for location of tools
  
• Methods Standard Worksheets and Operating
  Procedures
  
• Measurements Performance trends
• Display schedule
• Quality targets
• Reductions in setup lead times

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Pull versus Push Production Strategy

Lean Principles
Value
Value Stream
Flow
Pull
Perfection
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Pull

• No one upstream should produce any good or
  service until the customer downstream asks for
  it
  
• Kanban

Lean Principles
Value
Value Stream
Flow
Pull
Perfection
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Push

• Build product to forecast
• Excess inventory
• Poor utilization distribution of product
• Filled distribution channels
• 50 of all books manufactured are shredded

Lean Principles
Value
Value Stream
Flow
Pull
Perfection
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Pull

• Design
• Schedule based on actual demand signals
• Produce exactly what the customer wants
• Flow takes place throughout the supply chain, not
  just inside your production facility
  

Lean Principles
Value
Value Stream
Flow
Pull
Perfection
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Pull

• Benefits
• High throughput
• Excellent protection against stock-outs
• Higher flexibility
• Less congestion
• Shorter lead times
• Higher customer service

Lean Principles
Value
Value Stream
Flow
Pull
Perfection
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Perfection

• Begins with visualizing the perfect process
• Continuous process to remove waste by eliminating
  effort, time, space and defects
  

Lean Principles
Value
Value Stream
Flow
Pull
Perfection
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Final Thoughts Lean and Green

• There is a social responsibility component to
  saving energy and reducing the amount of CO2
  emissions.
  
• Green as a marketing tool.
• Select an small area with high visibility and a
  manageable number of variables for the first
  G.A.S. Assessment and Lean project.
  
• The journey is never-ending and definitely not
  easy (especially at first) but the results are
  well worth the effort.
  

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• QUESTIONS?

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• Paul V. Burnett, BSME, MBA
• RSM McGladrey, Inc.
• Senior Consultant - Operations and Financial 
• 221 3rd Ave SE, Suite 300
• Cedar Rapids, IA 52401
• 319.298.5298