Lean Management and Six-Sigma: An Introduction The lean
Lean Management and Six-Sigma: An Introduction The lean management philosophy Types of waste; reducing waste Push vs. pull processes Types of waste; reducing waste Reducing waste through Value Stream Mapping Reducing waste through 5S tools Reducing waste through cellular layouts What is six-sigma? Lean vs. six-sigma 1 Lean Introduction to Lean: Relationship Between Setup Cost and Batch Size Consider Black & Deckers Hampstead plant. It produces
powdered metal parts. The first step is to compress the powdered metal to the part format (say a gear). Then, there is heat treatment. Consider the first step of the process to produce gear XY. Press setup cost is $100 (about 3 hours of labor). Usage rate (demand) for gear XY is 10,000 / year. Assume holding cost of $2/unit per year. What is the optimal batch size? Note: average inventory = batch size / 2 Batch Size (Q) Annual Holding Cost Annual Setup Cost 10,000 (10000/2)*2 = 10000 (10000/10000)*100 = 100 $10,100 1,000 (1000/2)*2 = 1000 (500/2)*2 = 500 (10000/1000)*100 = 1000 $2,000
(10000/500)*100 = 2000 $2,500 500 Total Cost Given setup cost = $100/setup, then the optimal batch size 2 Lean is 1,000 units (avg inventory = 500 units) How To Reduce Batch Sizes? By Decreasing Setup Cost (or Time) Batch size (and consequently average inventory) increases with setup cost (or setup time) To reduce batch size, you need to reduce setup time SMED Single Minute Exchange of Dies
This is a group of techniques applied to reduce setup (or changeover) times in manufacturing Starts with documenting (e.g., filming) the changeover process Then, one designs fixtures, trays, change layout, and other actions to avoid time wasted during setup May include activities as simple as positioning necessary tools for changeover closer to setup operation Illustration of SMED in action at Formula 1 / Indy 500: https://www.youtube.com/watch?v=UlIGI3laGAo 3 Lean What is the Lean Management Philosophy ? Speed is essential. Level the load (heijunka). GOAL: Low inventories Waste (muda) is undesirable. GOAL: Zero waste High quality is essential (jidoka, kaizen).
Jidoka: workers stop process immediately if defect is found Kaizen: relentless continuous improvement GOAL: Zero defects Any difficulty in achieving the above three goals provides an opportunity to improve the process. Rocks in the river analogy 4 Lean Uncovering Process Problems: Rocks in the River Analogy Water level must be lowered! Machine Breakdowns In-Process Inventory Workload Imbalances Worker Absenteeism Out-of-Spec Materials
Material Shortages 5 Process Problems Quality Quality Problems Problems Lean Lean Management, Just-in-Time (JIT), Toyota Production System Lean Management (Big JIT, Toyota Production System) is a philosophy of operations management that seeks to eliminate waste in all aspects of a firms production activities: human relations, vendor relations, technology, and the management of materials and inventory 6 Waste in Operations I: Things
Waste from overproduction Producing in large batches 25% of surgical supplies picked and returned to shelf Transportation waste WIP inventory moving from dept to another dept for process Trucking from one site to another Inventory waste Parts waiting to be processed Finished products waiting to be consumed 7 Waste in Operations II: People Waste of waiting time Operators waiting for parts to arrive Patients / doctors waiting on lab results Motion waste Staff walking large distances to get things done Patients walking from one department to another Processing waste
Unnecessary process steps Too much paperwork Patient going through unnecessary tests 8 Waste in Operations III: Quality Waste from defects Rework (defects caught before customer) Warranty claims, recalls Hospital infections 9 Lean Summarizing: The 7 Forms of Waste PEOPLE Motion Processing Fixing Defects TYPES OF WASTE Waiting
Inventory Moving Making Too Things Much 10 Lean Lean Component 1: Heijunka (Pull) The Planning Process Push System Resource Planning Rough-Cut Capacity Planning Detailed Capacity Planning Aggregate Production Planning Demand
Forecasting Production plan for product families Master Production Scheduling MPS Production plan for individual products Material Requirements Planning MRP Production plan for individual components Shop Floor Control Purchasing 11 Lean
Push vs. Pull Pull Is a Key Component of Heijunka Push Push Pull Pull Using some mechanism, work is scheduled and pushed through each stage in the process in order to meet specified delivery dates for finished products/services. Work at each stage in the production process is pulled through the system by actual demand for final products / services. 12 Lean Pull Systems? Kanban? Constant WIP Inventory? How does it all relate? Kanban
Means card in Japanese It is a pull (production) system Typical production control in lean / JIT It is a visual system of cards (a card signifies a quantity of WIP). Empty cards authorizes station upstream to work This maintains WIP in control and at a maximum level From Littles Law, there are only two ways to cut lead time in a process: Increase processing rate (capacity of bottleneck) Decrease work-in-process inventory Average Flow Time (W)= Average work-in-process inventory(L) Flow rate(r) 13 Lean Littles Law Example The independent distributors for a company needs to get proposal
information from the marketing dept in order to quote construction jobs. They want a reliable 3-day lead time. Data showed that, because of variation in the process, the marketing dept needs to aim for a 2.4 day average lead time in order to meet the reliable 3-day lead time. Data collected shows that the marketing department can complete 20 quotes per day. How many quotes the marketing department is allowed to keep in process in order to fulfill the 2.4-day average lead time? Avg. flow time (W)= W = 2.4 days L 2.4 20 Avg. work-in-process inventory(L) Flow rate(r) r = 20 quotes /day L = 48 quotes The marketing department cannot allow more than 48 jobs in process if it wants to meet the target 2.4 day average, or 3-day reliable lead time. Source: Michael George, Lean Six Sigma for Service 14 Problem # 2
How many babies are born in the U.S. per year? You have to apply Littles Law here. Avg. work-in-process inventory(L) Avg. flow time (W)= Flow rate(r) W = 75 years (average life expectancy) L = 300 M (U.S. population) r=? r = L / W = 300 M / 75 years = 4 M babies per year 15 Lean Process Flow Charts and Value Stream Mapping Process flow charts are graphical representations (mapping) of what happens in a process Examples: order fulfillment, product development, addressing a customer service call, implementing a sustainability project A quick introduction to process flow charts and process mapping https://www.youtube.com/watch?v=MrMURochE6Y
Now, lets see how to do that 16 Lean Process Flow Diagram Main Symbols Beginning or End of Process Storage areas or queues Activity Decision Point Direction of Flow 17 A Process Flow Chart 18 How to Reduce Waste? 1 - Value Stream Mapping Value Added activities (VA): activities in a process for which a customer is willing to pay for Nursing care, surgery, patient treatment A worker assembling a wheel in a car
Non Value Added activities (NVA): activities for which the customer is not willing to pay for, and are not necessary for business A nurse walking 50 ft to another room to search for supplies Retrieving inventory from warehouse Business Non Value Added (BNVA): activities for which the customer is not willing to pay for, but are necessary for accounting, legal, or regulatory purposes Preparing financial statements Disclosing information to regulatory agencies 19 Lean What is Value Stream Mapping? Essentially, a process flow chart, with activities being labeled as VA, BNVA, or NVA More information may be added
Changeover time Processing time per unit; cycle time Wait (queue) time Estimated cost Objective: look for waste reduction through removal or reduction of NVA activities 20 Lean Example: Value Stream Mapping Parts are sorted and logged into computer database Excess Processing / Inspection Defects YES Inspection Required? Parts are
transported to inspection area Parts pass inspection? NO Parts are moved to storage shelves Part are removed from shelf and placed in assembly Kit NO Parts are returned to supplier or scraped YES Excess Transportation Parts are transported to assembly line
technician Technician assembles product 21 Value Added NO Product passes inspection? YES Source: Quest team report, UMD Lean Process Efficiency Process Efficiency Time spent in value-added activities Total process time (Lead Time) Example: previous Value Stream Map Activity
Type Time (min) Transport parts to inspection area NVA 5 Inspect parts NVA 3 Move parts to storage shelves NVA 10 Remove parts from shelf and place in assembly kit NVA 15
Transport parts to assembly line technician NVA 5 VA 13 NVA 3 Assemble parts Inspect assembly Process efficiency 13 13 0.23 23% 5+3+10+15+5+13+3 56 22 Lean
VSM of Nurses at a Local Hospital How Do Nurses Spend Their Time? Nurse Time (8 hour-shift = 480 min) Other, 17 Personal, 25 Administrative, 35 Direct care, 204 Waste, 36 Documentation, 85 Indirect care, 78 23 Lean Nurses: Waste/Documentation Time Breakdown (1 Shift = 480 minutes) Waste Time, RN (Total = 36.2 minutes/shift) Retrieve supplies, 1.0
Retrieve equipment, 0.6 BNVA (Nec) Look for person, 1.9 Look for info, 2.1 Documentation Time, RN (Total = 85 minutes/shift) Look for supplies, 11.9 Media paperwork, 3.3 Waiting delay, 5.0 Teaching, 1.0 Writing care plan, 0.6 Discharge
paperwork, 3.6 Admit paperwork, 5.0 Look for equipment, 13.6 Transcribe orders, 16.1 Daily assessment, 36.2 NVA 24 Other document, 19.0 Lean 2 - Reducing Waste Through 5S 5S is a system of procedures that are used to organize and arrange the workplace, to optimize performance, cleanliness, safety Japanese S
English S Seiri Sorting Seiton Simplifying access (or, Set in order) Seiso Sweeping (or Shine) Seiketsu Standardization Shitsuke Self-Discipline (or, Sustain) 25 Lean Example of 5S Implementation (Black & Decker Plant at Hampstead, MD)
AFTER One place for each thing each thing at its place BEFORE 26 Lean Another 5S Example: Tech Cell Support After Before Some (Short) 5S Videos How to Set in Order https://www.youtube.com/watch?v=BqIOnpJ_crI How Kyocera has implemented 5S in its corporate office, in particular the Sustain https://www.youtube.com/watch?v=AUaJ9roHj2s
28 Lean Waste From Motion: Functional Layouts Functional layouts can cause a lot of unnecessary material motion Functional layouts can cause a lot of unnecessary material motion Note Notehow howthe theflow flowlines linesare aregoing goingback backand andforth forth Saw Saw Saw Grinder Grinder
Grinder Saw 1 2 Lathe Lathe Press Lathe Press Heat Treat Grinder Saw Lathe A B
30 Lean vs. Six-Sigma Lean: reduce or eliminate waste in process Six-sigma objective: reduce variability in processes DMAIC (Define, Measure, Analyze, Improve, and Control) Implemented through a system of blackbelts, greenbelts Makes extensive use of statistical techniques See next slide They are complementary Reducing variability improves quality (essential to lean due to leans low level of inventories) Reducing variability reduces waste (less rework) 31 Tools That Can Be Used in Each Step of Six-Sigma Step
32 Tools 1. Define (D) Surveys, focus groups, comment cards Process flow charts Benchmarking 2. Measure (M) Descriptive statistics Run charts Pareto charts 3. Analyze (A) Cause and effect (fishbone) diagrams Process flow charts Data analysis (linear regression, hypothesis testing) 4. Improve (I) Quality function deployment (QFD, house of quality) Project management tools Prototypes, pilot studies
5. Control (C) SPC (statistical process control) ISO 9000 certification Reporting system (dashboards) with various metrics https://www.youtube.com/watch?v=H4vZN-cMJyY Take Away: Lean Principles Lean is aimed at reducing waste (NO muda) Based on some general principles Kaizen: continuous improvement of processes Jidoka: stop the line if defects found during mfg. Heijunka: even flow, accomplished through pull production, and low inventories Lean toolkit: Value stream mapping (VSM) Kanban production control system (type of pull system) Cellular layouts (minimize transportation / moving)
5S (sort, set in order, shine, standardize, sustain) Six-sigma: another process improvement methodology designed to reduce variability in processes 33
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