Demystifying Lean

Presented in partnership with:

Presented by:
Chad
Metcalf
President

©2006 Value Stream Solutions Inc.

 What is Lean?
Definitions
• Lean: A Philosophy and Practice of
identifying and eliminating waste. •
Value Added: Any activity that
transforms material or information
into what the customer wants to pay
•
for.Non-value Added: Any activity that
does not transform material or
information into what the customer
wants.
 What is Lean?
The types of activities:
• Activities that actually add value.

• Type I Muda (waste): Activities

that add no value but are currently
necessary.
• Type II Muda (waste): Activities
that add no value and are not
necessary. Pure Waste!
Before Lean Application
Activity
that
adds
value

Pure Activity that

Waste does not add
value,
but
cannot
be
avoided
Elimination of Waste!

The Seven Deadly

Wastes •
Overproduction
• Inventory
•
Transportatio
n
• • MotionOver
processing •
• Waiting
Defects
During Lean Application

Pure
Waste

Activity Activity
that does that adds
value,
not addbut
cannot
value
be
avoided
Elimination of Waste!

How do we eliminate the

waste? • Use the Lean

Principles to guide you! • Use

the right tools at the right time!

• Never stop the journey!

 5 Principles of Lean
Keep them in order!

• Specify and create value for the

customer. • Define the Value
• Stream.
Make it Flow.
• Develop pull
systems. • Create
perfection.
Value Stream Mapping
• Defining Value.
• What is a Value
Stream? • The
Current
• State.
Managing Value
Streams. • The Future
State.
• Tools of
Implementation. •
Office Value Streams.
 A Value Stream
Raw
Materials
Process A Process B Process C

Customer

A value stream is:

All of the steps, both VA and NVA to
turn raw materials into finished
products for the customer.
Current State Map
Value Stream Management

•Focuses on the whole value

stream not individual
departments or processes.
•Reportsaccountability
•Has to top manager onforsite.the
implementation of Lean Value
Streams.
•Measures value stream
performance. (ie: lead time)
 Value Stream Mapping
Developing a Future State
• What is the takt time?
•Will we build to ship or to a supermarket?
• Where can we continuously flow?
• Where do we need to pull?
•At what single point will we trigger production?
How
• will we level the production mix at the pacemaker?
What
• increment of work will we schedule and take away?
What
• improvements are necessary to make all of this possible?
Future State Map
 Future State Tools
Connect the tool with the outcome
• Total Productive • Cleaner, more organized
Maintenance workplace
• Five S - Visual Workplace • Mixed production, smaller
batches
• Quick Changeover
• Fast reaction to problems
• Cell Design
• Control without scheduling
• Kanban Pull System • Reliable equipment
• Andon System, Pitch • One piece continuous flow
Beyond the Shop Floor

What additional types of waste will

we see in the office?
Value Stream Mapping
Office Spaghetti

John Jill
Jim
Mary Molly Mack
Larry
Bill Grant Bill
Brian
Sue Susie Steve
Debbie
Barb Bob
 Lean Misconceptions
Lean
• is about cost reduction and therefore ‘people’
reduction.
There
• is only one way to implement Lean.
•Lean only works in manufacturing.
•Lean only works in high volume ‘widget’
manufacturing.
We’re
• already Lean, we all wear 10 hats.
• Lean takes too long.
Implementing
• Lean increases worker pressure and
stress.
 Case Studies

The following are some selected

examples of Lean process improvements
implemented in organizations in several
process types including Manufacturing,
Sales, Engineering, and Administration.
Case Study #1 - Mfg.
Problem: Exchange rates highlighted a
cost problem threatening loss of customers.
Current State: Value Stream Mapping
identified that the process was highly batch
oriented in order to keep three workstations
busy when running these lower volume, higher
mix products. Process lead-times were 4 to 6
weeks and caused major disruptions to other
product value streams due to the labour
content required to staff the workstations.
 Case Study #1 - Mfg.
Solutions:
Study customer demand and align the
production to that demand.
Combine three workstations into a single
workstation for one person to operate versus
the three it took before. Have each product
start the process and finish in the customer
package before the next one starts (one piece
flow).
Modify workstation for ease of use so that
‘strength’ was not a requirement limiting who
could do the work.
 Case Study #1 - Mfg.
Results:
•Production lead-time of 1
week. •Single piece flow,
one operator.
•Other value streams continue to operate
since only one employee is needed for this
one.
•Cost analysis showed the eroded
margins due to exchange rates now
returned to previous levels.
Case Study #2 - Sales
Problem: Quoting new RFQ’s was taking too
long. Win rates were 30%. Customers were
complaining. Current State: Value Stream
Mapping identified that the process of quoting
jobs in this small job shop involved five
handoffs as the quote file passed from process
to process. The people who quote are also
those that ensure production gets done on
confirmed orders. Time to get quotes back to
customers was 2 to 4 weeks.
 Case Study #2 - Sales
Analysis:
Found that even on the most difficult quotes a
total of five hours of work was required. It
was the handoffs and lack of communication
that resulted in weeks of time elapsing.
Solutions:
Created quote file FIFO lanes to keep files
visible to everyone and allow better
tracking.
 Case Study #2 - Sales
Results:
•Reached a 5 day turn around on quotes
. •Win rates went from 30% to 70% and
had a better opportunity to quote better
•Lessjobs.
interruptions of the people in the process.
Case Study #3 - Engineering
Problem: Engineering processes slowed
down the ability to quote customers a price for
a machine design. Current State: Value
Stream analysis identified that the process of
quoting jobs in company required significant
engineering to design machines. Customer
service struggled to respond to customers in a
timely manner and chased engineering for the
quotes. Significant time was lost in the
handoffs from customer service, design and
purchasing.
 Case Study #3 - Engineering
Analysis: Quotes historically have taken two
weeks. The layout of the building was not
conducive to teamwork or communications
from person toFIFO
Solutions: person.
lanes of job files were
created in the common hallway.
A very creative correlation was found by
asking “dumb” questions.
This addressed 85% to 90% of all customer quotes.
Case Study #3 - Engineering
Results:
•85% to 90% of all quotes now done by
Customer Service while the customer is on the
phone without the need for Engineering to be
involved.
•Engineering now focused on more difficult
quotes and current production issues with far
less interruption by Customer Service.
Case Study #4 - Admin.
Problem: Material requisitions took up to
three weeks to pass through the system and
many required multiple signatures or checks
before purchase orders were cut. Current
State: All employees unhappy with process
as most material requisitions are for things
needed within one week. Cost of creating a
P.O. calculated out to $53 (US). Purchasing
personnel constantly interrupted by those
frustrated and wondering where their materials
are when most of the time the P.O. had not yet
been completed.
Case Study #4 - Admin.
Analysis: Each material requisition through
to P.O. required three separate functions.
Much of the delays were created by handoffs
in the process and interruptions. 20 to 30
material req.’s per day requiring 3 minutes
each.
Solutions: Created a one piece flow
workcell. Changed the function of people to
include reporting to the workcell at 9am.
All material req.’s from the day before were
processed the next morning.
 Case Study #4 - Admin.
Results:
•24 hour turnaround on material
requisitions. •Less interruptions of
purchasing personnel. •More
organized processing.
•Accountable to a team.
•All three were able to get more work
done in a day. •Happier workforce, less
blame.
 Questions?

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©2006 Value Stream Solutions Inc.