Module 5 Discussion Question

 Module 5 Discussion: Flow and Pull.

Discussion Board: Flow and Pull

What Lean tools are used with pull, and how are they used?

Guidelines

  • Submit your initial post of at least 250 words by the due date at 11:59 p.m. ET.

Lean Six Sigma

Creating Flow

Flow – the Third Lean Principle Flow is the third of the 5 lean principles. Flow is how the product, patient, claim, service, or sandwich – or whatever you do – moves through the value stream. Where there is a physical output (a widget in manufacturing or a patient in the doctor’s office), it is easy to see the flow. In information-based or transactional environments (such as call centers or insurance claim processing), it is more difficult to see the flow. Whether it is a tangible product or an intangible output, flow is fundamental to Lean operations. In the absence of good flow, you have processes that are confusing, that perform poorly, that mask problems, and just generally are loaded with muda! Let’s explore a couple of examples.

Examples of Typical Situations The Doctor’s Office Visit We all occasionally go to the doctor’s office. From the initial contact to make an appointment to the final step (depending on what you define as the final step), the visit is a series of steps that are executed in some sort of flow. What might a typical visit look like?

• Call for appointment…and wait • Check in at desk…and wait • Nurse/tech takes vitals and gathers info…and wait • Doctor comes in, diagnoses, and prescribes • Send over to lab for test…and wait • Draw sample for lab test…and wait • And beyond!

You see lots of starts/stops and disruptions to the flow. Does this flow result in a satisfied customer/patient? The answer probably depends on the customer/patient expectations, but it is easy to see that there are opportunities for improvement once the value has been defined.

Lean Six Sigma

The Manufacturing Order Now, let’s look at a manufacturing order. In a current state process, the value-added (VA) steps are likely mixed in with many non-value-added (NVA) steps. If the flow is undefined, messy, or confusing, you can bet there will be opportunities for improvement with effective flow. What might a typical order look like?

• Customer asks for quote…and wait • Turn quote into production order…and wait • Parts ordered from supplier…and wait • First operation complete…and wait • Second operation machine down…and wait • Final operation complete…and wait • Find missing shipping info…and wait • And more!

Again, you can see many starts/stops and disruptions to flow. You can begin to imagine each of the different eight wastes residing somewhere in that flow. Both of these examples illustrate conditions where effective implementation of flow will produce great benefits, regardless of industry or type of process.

Two Kinds of Flow To better understand the power of flow, let’s break the flow topic into two different kinds of flow. They are:

• Streamlined flow – the path the product or service takes to completion • Continuous flow – once the product or service starts, it does not stop

Let’s look at each type of flow more closely. Streamlined Flow

Streamlined flow deals with the path in which the work moves. Think of a two-dimensional picture of the path of work – sounds like a spaghetti diagram!

Lean Six Sigma

What does the picture look like? Is it clear, concise, easy to understand, maybe even U-shaped? Or does it wind around, crisscross, go from one end of facility to the other end, and then back? We can look at the streamlined flow within a work area, within a facility, or even across an entire extended value stream. Once you start to study and document the condition of continuous flow in a process, you may find that it will be the first-time people working in and supporting the process have ever given consideration the flow. Continuous Flow

Continuous flow deals with the disruptions (or lack thereof) in the process. Let’s consider manufacturing situation where there are four operations to make the part. How many times do you pick it up and put it down? Does it move directly to the next operation, or does it go to warehouse or WIP (work-in-progress) location – or wherever there is some open space to sit and wait? The alternative is for the layout to be designed so the part is picked up at the first operation, then “handed” to the second operation without waiting and repeated until operations are complete. In the ideal state, the part never touches the ground and never stops. Talk about WIP reduction – throughput time decrease – and easy to control shop floor! Now, let’s consider a service industry example, the sit-down mid-level restaurant. What might the disruptions be to continuous flow in this environment? Did you have to wait – either because there was no capacity or because the empty tables have not been bussed? Is the server available promptly? Is there too much or too little time between the salad and the main course? Did some of the food have to go back to kitchen, which gets that person out of sync with rest of party? Or is there a smooth, calm, predictable, continuous flow that results in a satisfied customer? As with the rest of the lean ideas, continuous and streamlined flow transcend industry boundaries.

Lean Six Sigma

Slow Down to Speed Up? When was the last time your boss told you to slow down? This sounds counter-intuitive! But sometimes that is exactly what should be done. Consider a process with four operations again. If Operation #3 produces at 70% rate of the other three operations, what happens? Operation #2 buries Operation #3 because #2 is faster than #3, and Operation #4 is starved because it produces faster than #3 – resulting in lots of muda. So, what might the countermeasure be to achieve balanced streamlined one-piece continuous flow? Assuming that the pace Operation #3 is running is satisfactory to meet the customer demand, you could slow down the whole process to match the constraint (Operation #3). If the whole operation needs to run at the pace of Operations #1, #2, and #4, then you must figure out how to get more resource (capacity) for Operation #3 (after you have eliminated all the muda, or course!). In short, sometimes it does make sense to slow down to make the overall process more effective and efficient.

Batch and Queue Our traditional ways of operating with batch and queue practices automatically build in disruptions to flow. We take a batch of 5 or 50 or 500 parts or claims or patients – whichever is relevant to your industry. Batch and queue instills a very lumpy and disrupted process; that is one of our great opportunities for improvement! The following example Illustrates the impact batch and queue versus one-piece flow. Note that the batch of 10 takes 40 minutes for the entire 10 pieces to complete, while the one-piece flow takes 13 minutes for all 10 pieces to complete.

Lean Six Sigma

How Does Flow and Pull Affect Speed? Batch & Queue with Poor Flow

I Inv = 10

Oper. #1

Finished Goods

I Inv = 10

Oper. #2

I Inv = 10

Oper. #3

I Inv = 10

Oper. #4

• Lot of congestion and crossing intersections

• Difficult to see flow

• Introduces muda of transportation and motion

• Difficult to communicate between processes

Push!!!

How Does Flow and Pull Affect Speed? One-Piece Flow in U-Shaped Cell

I Inv = 1

Oper. #1

I In

v =

1

O pe

r. #2

I In

v =

1

O pe

r. #3

I Inv = 1

Oper. #4

Finished Goods

• U-shaped cell defines flow

• Easy to see the process

• Transportation and mo- tion muda reduced

• Upstream and down- stream operators can communicate Pull!!!

Lean Six Sigma

(Mfg Leadtime – Assuming Cycle Time = 1 Min and Use FIFO) Batch & Queue with Poor Flow One-Piece Flow in U-Shaped Cell

I Inv = 10

Oper. #1

Finished Goods

I Inv = 10

Oper. #2

I Inv = 10

Oper. #3

I Inv = 10

Oper. #4

MFG LT for 1 piece or entire lot = 10 + 10 + 10 + 10 = 40 min.

MFG LT for 1 piece = 1 + 1 + 1 + 1 = 4 min.

MFG LT for entire lot = 13 min.

I Inv = 1

Oper. #1

I In

v =

1

O pe

r. #2

I In

v =

1

O pe

r. #3

I Inv = 1

Oper. #4

Finished Goods

Lean Six Sigma

Spaghetti Mapping Spaghetti mapping is a tool in Lean Six Sigma that can be used to expose inefficient process layouts, unnecessary travel, and overall process waste. This Lean technique uses a line to trace the path of a person or object throughout a process to create a spaghetti diagram. The steps for aping a spaghetti diagram are as follows:

1. Create a map of the work area layout 2. Observe the current workflow and draw the actual work path from the very beginning of work to the end when products exit the work area 3. Analyze the spaghetti chart and identify improvement opportunities

Lean Six Sigma

Quick Changeover Introduction This lecture will discuss single minute exchange of die (SMED). At the end of this lecture, students should be able to:

• Discuss the history of SMED and its importance • Identify the eight steps of SMED implementation • Describe the different wastes addressed by SMED

Definition

Quick changeover refers to the amount of time it takes for operators to set up equipment to move from processing one type of product to another.

History

Shigeo Shingo working for Toyota, one of the architects of Toyota Production System (TPS), is recognized as the developer of single minute exchange of die (SMED).

• Observed that long changeovers resulted in long lead times, large lot sizes, and reduced utilization

Figure 2: Toyota Production System Model

Lean Six Sigma

• At the time, Toyota’s objective was to reduce set-up time by 59/60ths of a minute, or 1 (one) minute. SMED approach creates process for and expectation of changeover is less than 10 minutes.

• SMED is important because it adds value, reduces waste, and allows to produce optimum lots sizes based on the organization.

Changeover Time Definition • Last good part of previous run to first good part of next run • More than just sliding old die out – new die in. • Includes tweaking, finding tooling, and other NVA tasks

Importance of SMED • Changeover time is not value-added • Expensive resources not producing

Lean Six Sigma

• Opens capacity and relieves constraints • Allows to make what we need, not what is determined by economics of long changeover

8 Techniques to SMED

• As with many of the lean methods and tools, a defined approach or structure is helpful to be consistent and effective

• With SMED, there are eight steps or techniques • Each step builds on the previous step in a logical way

1. Separate Internal from External

• Internal is work done while the machine (or process) is stopped • Cannot unclamp die set while ram is still going up and down • Study the process to understand which is internal and which is

external • Capitalize on the low-hanging fruit!

2. Convert Internal to External

• Evaluate work that is internal for opportunities to convert to external

• Look for opportunities such as pre-set tools and robust locators to eliminate tweak/adjust

• Ideal changeover time is ZERO…through ideas like universal fixtures

3. Standardize

• Look for ways to standardize the changeover work • The way parts are fixtured, the way materials are presented, and

the way information is delivered might be done in standard ways • Standardization removes the need for judgement, second-

guessing, and confusion

Lean Six Sigma

4. Clamping and Fastening

• Securing the part(s) is essential to producing quality products (weld, machining, or assembling)

• Are clamps and fasteners manual (tightened by hand), or are they quick clamp pneumatic or magnetic?

• Are connections quick-connect/disconnect or individual threaded connections – manifold connector or one-at-a-time connectors?

5. Intermediate Positioning

• Look for ways to position the work prior to stopping the machine, especially for work that requires manual attention

• Use a duplicate jig or fixture to prepare the next work piece • Move some of the loading time from internal to external

6. Parallel Operations

• Sometimes, the changeover time can be reduced by having two people concurrently work

• Think of a machine or process where there are front and back sides

• Instead of one person going back and forth, have two work concurrently

7. Eliminate Adjustments

• Think of all the waste involved in set-up: run a piece, check the piece, adjust, run another piece, check the piece, adjust, and repeat!

• The Lean practitioner is always looking for ways to eliminate the adjustments since this may account for 50% of the internal changeover time

• Tool setting, positive locators, standard process, and proper training are all ways to reduce and eliminate adjustments

Lean Six Sigma

8. Mechanize and Automate

• The final step in SMED may involve spending capital, which is why the other steps should be done first

• Consider earlier industrial technology that may have required run, check, shim, and run again versus more current technology that can self-probe and adjust during a machine cycle

• Be creative with Steps 1 through 7 before spending money on Step 8

Recognizing the Eight Wastes • Understanding the eight wastes is foundation for the lean body

of knowledge

Lean Six Sigma

• You will see each of the eight wastes as you implement SMED and quick changeover

• Challenge the changeover task and look for solutions through the lens of eight wastes

Quick Changeover for Non-Manufacturing • Turnaround time for room in ER • Moving from last quote to next quote • Changing from breakfast menu to lunch menu

Lean Six Sigma

Using Takt Time and Cycle Time

Some Operational Questions Regardless of your industry, how do you answer these operational questions?

• How fast do we need to run? • Are operations balanced? • Where is the constraint? • Do we need to add a machine, person, or shift? • Can we meet our customers’ demand?

Is it anecdotal based on past experience? What does the “wisest” person in the operation think? Or what do the supervisors believe? Making these decisions with data instead of gut instinct is critical to a Lean operation. Takt time (TT) and cycle time (CT) help to make data- based decisions.

Definitions Are you a musician, or do you have family members who are musicians? If so, you can probably relate to the comparison of the metronome to takt time. Simply put, takt time is the pace you need to produce to meet your customer demand. The equation is takt time equals available time divided by units of demand. The result is time per unit of demand.

Cycle time is the pace you are really running at. A best practice when trying to understand cycle is to go to the gemba to “go see.” Also, it would be a good idea to take along a stopwatch to measure the cycle time firsthand. Takt time and cycle time are independent of one another, but, when together, tell a story. When the takt time (pace to meet customer demand) is compared to the cycle time (pace you

Takt Time = Available Time

Units of Demand

Lean Six Sigma

are actually producing at), you have the information to assess whether or not you can meet your customer demand. Chart 1: Takt Time / Cycle Time Chart

You can see that the takt time / cycle time chart pulls these critical and independent pieces of together in one place. Let’s assume this is a cell with three operations. The columns show the cycle times for Operations A, B, and C. The horizontal line shows the takt time for this example. An informed picture about the cell begins to emerge.

Observations include:

• Operation A’s cycle time is greater than takt time (cycle time = 90 seconds, and takt time = 70 seconds). That indicates a problem because Operation A cannot produce enough to meet demand

• Operation B and C cycle times are both at or below the takt time (Op. B cycle time = 50 seconds and Op. C cycle time = 60 seconds). You should be okay to meet the demand, although you might consider some line balancing to optimize the cycle time closer to the takt time

• Assuming the demand is fixed and that you cannot move part of Op. A’s work to Op. B and Op. C, then you must create more available time. This could be increased by adding another machine, person, or partial/extended shift, for example

The takt time / cycle time chart provides a visual representation of the data that is of utmost importance to the supervisor, planner, plant manager, and others who have a vested interest in the cell’s ability to produce what is needed to satisfy your customers.

0

20

40

60

80

100

A B C

Cy cl

r T im

e S

ec on

ds

Operation

Takt Time / Cycle Time Chart

Takt Time

Lean Six Sigma

Factors Influencing Takt Time The ingredients in the takt time calculation require decisions to operational matters that are often addressed in non-disciplined manners. The takt time calculation flushes out these issues and makes management/leadership input an absolute necessity. As you look at the factors that influence the takt time, you will take a more disciplined and “scientific” approach to managing the machine, work cell, or even the overall operation. Some factors that influence the available time (the numerator in the takt time equation) include:

• People-paced operation – the number of people. If you add one person for an eight- hour shift, then the available time increases, which results in takt time increase

• Machine-paced operation – If you pick up four hours from another machine that is under-utilized, then the available time increases and the takt time increases

• Shift adjustments – Add a shift, and available time increases • Overlapped work schedules – Change the shift time start and/or end so that you gain

additional clock hours during the workday Some factors that influence the units of demand (denominator in the takt time calculation) include:

• Variation in demand pattern during a period – For example, demand might be higher on Monday and Tuesday before tapering off during the rest of the week

• Seasonal demand differences – Classic example is a company that manufactures lawn care equipment. This company may have heavy demand in late winter and spring followed by light demand in late summer and fall

• Specific marketing or sales effort – This effort might artificially cause the demand to spike during the promotion effort, but might also influence a drop in demand if sales are artificially pulled forward

• Simply not knowing what the demand will be – This might happen with a new product launch. There may be differing opinions on the potential demand. Further, there may be hesitancy to commit to a level of demand for fear of repercussions if wrong

Each of these available time and demand scenarios must be thoroughly considered because any changes will affect the resulting takt time. You can see that some of the decisions required to address the available time and demand inputs should have the attention of management and leadership.

Lean Six Sigma

Optimal Staffing Once you have the takt time and cycle time information, you can use the optimal staffing calculation to determine a theoretical staffing level. This is useful in situations where there might be multiple operations in a cell or where you have multiple stations on an assembly line. The optimal staffing number provides a target level of staffing to work from. The calculation is optimal staffing equals the sum of the cycle times divided by the takt time. You have already either gathered or figured these values as you created the takt time / cycle time chart. The optimal staffing is an extension of the analysis.

Let’s continue the previous example and assume that the cycle times identified are valid. In this case, the optimal staffing for the cell is (90 seconds + 50 seconds + 60 seconds) divided by 70 seconds. The result is 2.9 people. This analysis could be useful when setting up a new cell or relocating an operation. The optimal staffing calculation helps to make the decision objective rather than subjective.

Example of Takt Time / Cycle Time Analysis Let’s consider a hypothetical situation. You have an assembly line that has eight assemblers in the current state operation. You are going to move the line into a new building and have decided to study the operation and make modifications prior to landing in the new spot. You have observed the operation and identified several obvious examples of muda (remember the eight wastes?). Using the lean methods, tools, and techniques you have learned throughout your lean journey, you reduced the cycle time on several operations by driving out the muda. As a result, the new cycle times by operation from Operation 1 through Operation 8 are:

OP CT 1 18 2 15 3 20 4 13

Optimal Staffing = Sum of Cycle Times

Takt Time

Lean Six Sigma

5 14 6 18 7 12 8 17

The demand for this product is consistently 20 units per day. You run a one-shift, eight hours/shift operation and have 40 minutes of planned downtime (20-minute lunch and two 10- minute breaks). Therefore, the takt time is 22 minutes/unit (Calculation is 440 minutes/day divided by 20 units/day.). The results are shown in Chart 2: Example Takt Time / Cycle Time Chart. Chart 2: Example Takt Time / Cycle Time Chart

Observations from the takt time / cycle time chart include:

• Takt time (the red line at 22 minutes) is greater than each of the cycle times. Therefore, you can meet your customers demand

• The operations are not balanced. The minimum gap between cycle time and takt time two minutes at Operation 3 and the maximum gap is 10 minutes at Operation 7. The other cycle times are spread between these two extremes

Now, you are faced with the question about staffing. Do you move the line “as is” with the eight assemblers, or do you try to optimize by using fewer fully loaded workstations? If you are going to dun with fewer, then what is the number? Is it four people, six people, or maybe seven people? This is where optimal staffing can help to set an objective target.

0

5

10

15

20

25

1 2 3 4 5 6 7 8

M in

ut es

Assembly Operation

Example Takt Time / Cycle Time Chart

Lean Six Sigma

The inputs to optimal staffing are sum of the cycle times (18 + 15 + 20 + 13 + 14 + 18 + 12 + 17 = 127 minutes). The takt time is 22 minutes. Optimal staffing is 127 minutes / 22 minutes = 5.8 people. In this case, you will round up to six people. With six people as your optimal staffing target, you will begin to look for ways to combine tasks, move tasks around, create shared work, or otherwise develop methods to move toward staffing with six or seven people. Without the takt time /cycle time and optimal staffing analysis, you may well have simply said (or listened to your production supervisor/manager say) we must stay at eight people!

Lean Six Sigma

Cellular Design

Terminology • Water spider: somebody who is supplying material to the cell

o The water spider is actually non-value-add. They are keeping the value-add employees inside of the cell, adding value at the highest possible percentage by supplying them with the material they need

• Work in process (WIP): a type of inventory o WIP is work in process inventory as well as finished goods

inventory o A good cellular design minimizes work in process inventory

• Takt time: takt is the German word from taktzeit, or the conductor’s baton or rhythm o Takt time is the customer demand rate or the rhythm we need

to produce • Single piece flow or single unit flow: the concept of having things

always flowing instead of making things in batches

Creating Flow A good cellular design is all about creating flow, and a good Lean system will create flow and eliminate waste. An excellent way to create flow is through a good cellular design. A cellular design is U-shaped, and the reasons for that are: • No corners. Corners impede flow, so that is why there are no corners

in a U-shape • With a U-shape, material can be delivered to, and finished goods can

be picked up from, the same point.

Lean Six Sigma

• The U-shaped cell points toward the aisle where material handlers can enter. We keep working and add value within the cell

• With a U shape, the space in between equipment can be minimized by keeping the equipment tightly grouped together, meaning there will not be a lot of room for inventory

• A U shape means there will be constant motion, so there is no waiting. Machines will not be waiting, operators will not be waiting, and inventory will not be waiting

Goals of Good Cellular Design • The goals of a good cellular design are flow characterized by

continuous motion and zero work between value-add operations • Single piece flow, not batches • The goal is to get to a single piece flow from step to step. That

means no waste or waiting • No operators waiting, no materials waiting, and no inventory

waiting. Minimal transportation and motion waste • The other advantage that comes with single piece flow is immediate

feedback to the previous operation • Errors are immediately identified at the next operation, and they are

contained by immediate feedback that says, “Stop, there’s a problem,” rather than making an entire batch of product and passing it on to the next operation

• When using cellular design and single piece flow, lead times are drastically reduced

• Smaller lot sizes are completed and passed on at each step • Lead times are drastically reduced because all operations are being

done in parallel instead of waiting and doing the entire batch

Lean Six Sigma

• This means we drastically improved productivity

Production Planning & Scheduling

Heijunka is a Japanese term for “leveling.” The concept is used for leveling the rate of production regardless of fluctuation in demand. It is meant to utilize maximum plant capacity and to maintain workforce levels. This can lead to stockpiling if customer demand drops off. So, care must be taken to prevent the waste of overproduction and inventory. A heijunka box is a visual scheduling tool used in production.

In traditional scheduling, parts or products are scheduled by day, batches, or lots, regardless of demand. This results in stockpiling inventory with the expectation of filling future orders. It takes neither changes in resources nor customer demand changes into consideration. Notice that specific parts or products are scheduled exclusively for a specific day. When using leveling, all parts or products are scheduled for each day, not at just one specific part or product per day. This allows for rapid adjustment in volumes and changes due to resource constraints, supplier issues, and customer demand. It allows adjustments that respond better to customer demand and results in less inventory. This levelling works with Kanban and pull systems to support Just-In-Time manufacturing.

Lean Six Sigma

Takt Time and Cycle Time Takt time is customer demand rate. Here is an example for how to calculate this.

• If an organization demanded 1,000 units a day and there were two shifts, each eight hours long, then that would be two times eight hours times 60 minutes

• However, if each shift took a 20-minute lunch break and two 10- minute breaks, that means there are 40 minutes in each shift that are nonproductive, or 80 minutes total

• So, subtract that from the total amount of available time and divide by a thousand, and that equals 0.88 of a minute, which is the takt time

• This is the rate at which that organization needs to be producing to keep up with customer demand. And it is crucial that you never round up with this number

Lean Six Sigma

Next, plan the cycle time, which should be something slightly faster than takt time, and that increase in speed depends on how much waste is in the system. The more waste and unplanned downtime there is, the faster the planned cycle time needs to be.

Workload Balancing and the Time Observation Form Workload balancing involves observing the process using a time observation form. Let’s talk about the steps to workload balancing, which is the real magic behind cellular design.

1. Watch the process go through a few cycles and record each of the steps down the left side of the form. Then, across the top, number 1, 2, 3, 4 for the number of cycles you are going to watch

2. You want to observe not less than 10 full cycles 3. Observe the process with a running stopwatch, recording the

time at which each step ends 4. Do the math to find out how long each step took. Take the

running time when that step finished and subtract the running time when the previous step finished. That is the cycle time for that step for that cycle

5. The goal of this is to get the lowest repeating amount of time that that step can be done in

6. Then repeat that as part of the standard work

Cycle Time Bar Chart Organizations use this data to create a cycle time bar chart. Here is an example. In this scenario, you observed a five-step process, and these

Lean Six Sigma

were the lowest repeating times that were achieved for the five steps: Step A, 70 seconds; Step B, 25 seconds; Step C, 60 seconds; Step D, 10 seconds; and Step E, 15 seconds. So here are the steps: 1. Create a bar chart with these five steps on it 2. Put a horizontal line at your takt time of 52.8 seconds 3. Put another horizontal line at your planned cycle time, which is 45 seconds 4. To rebalance the workload of the steps, combine steps D and E

into one bar, which would be 25 seconds long 5. Then, rebalance the workload across the remaining four steps, the

ABC and the DE combinations 6. Shift 20 seconds from Step C to the DE combination, take five

seconds from Step B and move it to Step C, and take 25 seconds from Step A and move it to Step B

7. By doing that, you have rebalanced all of the workload to 45 seconds for each of the four steps

Cross-Functional Teams When using and designing a good cell, it is important to use cross- functional teams. In order to rebalance the workload, organizations need to have employees who are cross-trained and able to do different jobs, different functions. So, it is critical that value-add employees from both within and outside the cell are part of designing the cell.

Kaizen Events • One method you might use to implement a good cellular design is a

five-day kaizen event

Lean Six Sigma

• It is not the only way to design and implement a cell, but it is something to consider

Cellular Design in a Service Industry • Let’s talk about a few examples. We used the manufacturing

example to go through the cycle time bar chart, but what if I worked in the service industry? Think about health care o For example, patients must continually flow from step to step

to step o We want to come in, get treated, and go out the door

• Do not dismiss cellular design just because you are not manufacturing parts

Conclusion

• Cellular design is characterized by a constant state of flow • Everything is always in motion. We have eliminated the waste of

waiting for inventory, machines, and people • The goals of a good cellular design include the elimination of the

waste of waiting, the virtual elimination of work in process inventory, and the drastic reduction in lead times

Lean Six Sigma

Overall Equipment Effectiveness (OEE)

Introduction Overall equipment effectiveness (OEE) is a performance measure that encompasses three elements of flow:

• Availability • Performance • Quality

It is a percentage of how much quality product a machine actually produced divided by the most quality product that equipment is capable of producing:

OVERALL EQUIPMENT EFFECTIVENESS

Lean Six Sigma

OEE = Number Produced/Number Capable of Being Produced • OEE can also be applied to work cells and departments as well

as people and manufacturing in the service industry. Availability = Number of Hours Running/Number of Planned Hours Running • Availability is the number of hours the equipment is running

divided by the total number of hours the equipment was planned to run:

Performance = Equipment Run Rate/MDPR

• While the machine or equipment is running, performance is the

average rate divided by its maximum demonstrated production rate (MDPR)

• One way to determine an MDPR is to look at a year’s worth of

data and determine which day this machine produced the most product. Just be sure it is consistent

• Then you lock that in as your MDPR. There are a couple of

different ways to do this, but as long as you are consistent, then your OEE will be useful

Quality (Yield) = Amount of Good Product/Total Product Produced

• Quality is the amount of good product divided by total product

produced

Lean Six Sigma

OEE is an important measure in Lean and Six Sigma, because each element of OEE affects flow:

• Availability stops flow o If the machine is not running, then product does not

move through it o This can block upstream suppliers and starve downstream

customers • Performance slows flow

o If a machine is not running as efficiently as possible, it can slow the customer down

o There are different ways to calculate. It is important to be consistent

• Quality reverses flow o If there is scrap, then you must start all the way over at

the beginning o If there is rework, you have products or clients that must

move backward in the process

Lean Six Sigma

Example: Credit Card Manufacturer A credit card manufacturer wants to know what yesterday’s OEE was for a work cell. The work cell applies the white plastic backing, the magnetic strip, and a protective coating. Here is the data associated with this example:

• The coating machine had one hour of unplanned downtime • The coating machine is the bottleneck, so that is how we will

measure availability • While the machine was running, it produced 95 cards per minute • The maximum demonstrated production rate of the machine is

100 parts per minute Here are how the numbers calculate:

• Availability: one hour of downtime o 23 hours of runtime/24 hours in a day = 96 percent

• Performance: while the machine was running, it was running at a rate of 95 cards per minute, and the MDPR is 100 cards per minute o 95/100 = 95 percent

• Quality: 128,000 good cards produced that day out of a total of 131,000 cards o 128,000/131,000 = 98 percent

• Multiply these together to get an overall equipment effectiveness of 89 percent.

Lean Six Sigma

Losses That Do Not Affect OEE There are two major losses that do not affect OEE performance:

1. Performance losses due to customer demand 2. Planned downtime for regular maintenance

OEE = 96% X 95% X 98% = 89%

Lean Six Sigma

For example, two hours of planned downtime for a server would be subtracted from the denominator in the availability calculation. If in the same day you had .1 hours of unplanned downtime, here is what it would look like:

• Your availability would be 22 hours minus the .1 hour of unscheduled downtime for 21.9 hours available.

• Your total hours in a day would not be 24 hours; it would be 24 minus the two hours of planned downtime: 21.9 divided by 22 is a 99.5 percent availability

Six Major OEE Losses In downtime, there is unplanned downtime, and then there is downtime due to product changeover.

1. Unplanned downtime is mostly controlled within the organization or within the department

2. Downtime due to product changeover is a commercial decision a. If commercial decides to make a new product, operations

needs to satisfy that need The next two major OEE losses are performance losses:

3. Small downtime a. Cleaning machines b. Bathroom breaks c. Waiting on an upstream or downstream process

4. Reduced performance or reduced speed a. Old and worn machines b. Inefficient operators

Two major loss categories within quality are: 5. Rejects due to product changeover

Lean Six Sigma

6. Quality losses during processing. Similar to downtime, we differentiate these two because one is associated with a commercial decision – rejects due to product changeover. Often, when a machine or a department is switched over from making one product to another, the first hour or so of product is off-grade or out-of-spec.

a. An example would be the first hour of changing a plan for making a non-ethanol-based fuel to an ethanol-based fuel

b. The first hundred tons may be off-spec. Quality losses during processing results in scrap and rework

In Conclusion, you can see how measuring and improving OEE helps improve flow and the process by improving availability, performance, and quality. These are the factors that stop, slow, or reverse flow. In addition, if your organization has the same machines or processes at multiple locations, OEE is a great way to benchmark performance and identify best practices between those locations.

Lean Six Sigma

Losses to Overall Equipment Effectiveness

(OEE) One of the great things about Lean is that the tools are like a project that has been done a hundred times before, probably more like a thousand. So, you do not have to reinvent the wheel every time an issue comes up. If you have lots of motion, use 5S. If you have lots of transport, use a spaghetti map. Overall, equipment effectiveness is the same. If you start measuring OEE and see that it is an issue, then you are already halfway to the solution because there are basically six root causes of OEE issues:

• Planned downtime, for any reason will impact availability o Maintenance o Changeovers o Breakdowns

• Minor stops will impact performance o Supervisor questions o Bathroom breaks o Any other unscheduled reason

• Speed law o Poor lubrication (for machines) o Fatigue (for people, OEE is not just for machines)

• Production rejects • Start-up waste

o Machines need to warm up or be calibrated before they get rolling

Lean Six Sigma

• A person can be subject to these same factors as well, especially if it is a critical function or a highly skilled individual

• Production rejects, another possible root cause of low overall equipment effectiveness

• Start-up waste – if a machine needs to warm up or be calibrated before it really gets rolling

Overall, equipment effectiveness is the same for machine or people. In conclusion, here are a few suggestions to improve OEE:

• Make an Ishikawa diagram, or a fishbone diagram, and label each of the major stems or bones with those six major categories of root causes. Then, use it to generate the sources

• When you are working with OEE, those six root causes help you identify solutions and improve your overall equipment effectiveness quickly

Lean Six Sigma

Theory of Constraints

Introduction The concept of “flow” embodies Lean’s focus on reducing waste and elevating value. In Lean, flow means moving materials, information, and people through a process as quickly and efficiently as possible without risking quality, customer satisfaction, or safety. Tools, such as The Theory of Constraints, help with the analysis, detection and management of flow. The Theory of Constraints places emphasis on addressing impediments to flow. Every process has a weakest, or slowest, link. This weak link could be a: • Process • Person • Machine • Policy • Procedure The Theory of Constraints is a five-step process with the goal of optimizing a process’ throughput time.

The Goal The Theory of Constraints is based upon a book by Eli Goldratt called The Goal. According to Fortune Magazine and Business Week, this book is one of the most important business books ever written.

• Goldratt’s method identifies the most limiting factor in the flow of work and focuses the attention of every worker on systematically removing that constraint

Lean Six Sigma

• Once the constraint is removed, workflow is again analyzed, the next constraint identified and removed, and the steps are repeated until the entire process is optimized

• This method achieves a high level of process optimization in a short period of time because every worker is focused on the same constraint; time and resources are not wasted on analyzing steps in the process, which are not problematic.

The steps, known as the Five Focusing Steps, for achieving this goal are these:

1. Identify: Find the step in the process that is the most significant impediment to flow. Think about what needs to be changed, how it should change, and what actions are needed to make the change. These three questions are called “The Thinking Processes”

2. Exploit: Find any immediate improvements that will improve flow 3. Subordinate and Synchronize: Look at upstream and downstream

processes and align them to help support the improvements 4. Elevate: Re-evaluate the constraint. If it has not moved, conduct

further, in-depth analysis to understand and remove the bottleneck. Continue until the step is no longer impeding flow.

5. Repeat: Look for the next most significant constraint and once again apply the five steps.

In conclusion, as with other improvement methods, the Theory of Constraints offers tools and tips to improve real-time workflow to the next step. This method achieves a high level of process optimization in a short period of time because it enlists the efforts of every worker.

Lean Six Sigma

Introduction to Pull Systems

Introduction The fourth principle of Lean is pull. Pull is responding to a request from a customer for a product or service (as opposed to pushing products and services onto them.) It could be an external customer or an internal customer. Overproduction is when you push more than people need and sooner than they need it. This can lead to all the other forms of waste. This section will go over kanban and other visual management tools that help to start pulling upon customer requests, rather than pushing unnecessary products or services. When pull is established, the customer decides when to receive the next product or service by pulling what’s needed when it is needed.

Lean Six Sigma

Lean Six Sigma

Scheduling Pull System

Introduction There are three basic types of pull systems: replenishment pull, sequential pull, and mixed pull.

• Replenishment pull is a signal used to show that there is a need for material. This is called a kanban. Kanbans are communication signals that control inventory levels, while ensuring even and controlled production flow

• A sequential pull system is when there is an overabundance of part numbers to hold in inventory. Products are made to order to minimize inventory. The scheduling department must define the correct mix and quantity of items in production

• A mixed pull is when a small percentage of part numbers account for the majority of production volume. Analysis is necessary to sort part numbers into high, medium, and low orders

Lean Six Sigma

In conclusion, there are three basic types of pull systems: replenishment pull, sequential pull, and mixed pull. Kanbans are communication signals that are used to control inventory levels.

Lean Six Sigma

Kanban

Definition

Kanban is a Japanese word that literally means “signboard” or “billboard”. It’s a signal to act. The term was developed by Taiichi Ohno, the father of Lean in the 1940s. He was inspired to create the concept while observing grocery stores in the United States. He noticed that, as people would buy things at the supermarket, the items would be replenished on the shelves.

Kanban

The wastes that are most affected by kanban are overproduction and inventory.

• Overproduction is virtually eliminated because a kanban system will only allow production or replenishment of what’s been consumed

• Inventory is minimized because a kanban system will control the amount of work in process (WIP) inventory

Types of Kanbans

• Replenishment kanban: reacts to a signal sent by the customer

– Indicates that the customer has consumed the product

– Creates an authorization for the supplying process to replace what has been consumed

• Transportation kanban: authorizes the product to be moved to the next step

– Usually comes from a planner saying that it is time to transport something

– May not be required if the consuming process and the producing process are in close proximity

Lean Six Sigma

Kanban Signals

• Kanban cards – production units are relatively large

• Kanban bins- products units are small, e.g. nuts, bolts, etc.

• Electronic signal that authorizes action to be taken, e.g. check-out scanners in stores

Rules for Kanban

1. The consuming process takes the number of items that are indicated on the kanban from the producing process.

2. The producing process makes items only in the quantity and sequence indicated by the kanban.

3. No items are produced or moved without a kanban. There is no action without the signal.

4. Always attach a kanban to the product. 5. Never pass defects along. It will distort the count from the kanban. 6. Reducing the number of kanbans increases the sensitivity of that system.

Lean Six Sigma

Lean Six Sigma

Kanban – Establishing A System

Kanban Signals: • In manufacturing, kanban systems are used to minimize and level

the work-in-process inventories that are on the production floor

o Kanbans signal that a customer has purchased a product and that downstream assemblies and materials must be replenished

o This is also known as “pull” • Level loading inventories ensure product is at the end of the line

when the customer needs it o Reducing work-in-process inventory reduces cycle

times and carrying costs

What Is the Material Doing When it’s in Inventory? • Kanban signals:

o Reduce work-in-process (WIP) inventory reduces cycle times and carrying costs

o Eliminate the waste, such as waiting o Result in servicing more clients in less time

• Assumes inventory is where you have created it. o If inventory is transported, there is even more waste. o The same is true for

service processes in healthcare, finance, and IT • Continuously flowing value to the client by load leveling

internal resources reduces waste

Lean Six Sigma

o Pulling WIP when ready for the next step reduces wait times and allows you to service more clients in less time

Steps to Establishing a Kanban System There are six steps to establish a kanban system 1. Conduct the Supply Survey, which:

• Lists the make and buy items in your process, given your industry

• Includes: o The item numbers o The description o The usage rates o Comments

2. Establish Reorder Quantities and Points

• Reorder quantity = your daily usage × your lead time in days • Reorder point = reorder quantity + your safety stock

Safety stock can be a percentage of your reorder stock, or it can be a function of usage variability plus or minus one standard deviation from the average.

SAFETY STOCK EXAMPLE • In our previous example, we consumed 21,000 resistors a month,

which roughly equates to 700 per day • The lead time for a resistor is seven days, and that means it takes

seven days to receive resistors from the factory once we place the order

Lean Six Sigma

• Therefore, the reorder quantity is 700 resistors per day times seven days, or 4,900.

• Now, calculate the reorder point, which is the inventory level where it will trigger a reorder. Remember, the reorder point is equal to reorder quantity plus some safety stock. Well, we know the reorder quantity is 4900, so let’s determine our safety stock.

• Assume we want at least two weeks of resistors in safety stock because they’re inexpensive and they’re easy to order. Safety stock is 700 × 14 days or 9,800 resistors.

• The reorder point equals 4,900. That’s the reorder quantity plus 9,800, our safety stock, or 14,700.

• We don’t count individual resistors, so let’s say 500 resistors per pack. Round up our reorder quantity to 10 packs in a reorder point of 30 packs.

3. Create the Supply Order Form

• A supply order form includes: o Part image o Part number with descriptions o Supplier location (internal or external) o Number of kanban cards in circulation o Replenish quantity in customer or consumer location

4. Create Kanban Cards • An example has a picture, the part number with the

description, the supplier location, how many kanbans exist, replenishment amount, and location(s) of where they are consumed.

Lean Six Sigma

5. Training • Elements of good kanban implementation training: o Include everyone involved in handling the kanban o Train by doing. Set up a demonstration or Gemba o Cross-train employees in one upstream and one

downstream process and use kaizen to continuously eliminate the waste

6. Implementation • Other factors in good kanban systems are:

o Continuously flowing value o Minimized inventory o Elimination of waiting o Pull instead of push

Conducting a Supply Survey Following the six steps, conducting supply surveys, establishing reorder points and quantity, creating a supply reorder form, creating kanban cards, training the affected employees, and implementing it will ensure your organization continually satisfies your customers.

CONCLUSION We learned that kanban systems reduce work-in-progress inventory, which improves flow and reduces costs. We also learned other benefits of implementing a kanban: it reduces inventory, exposes inefficiencies in the process, and is critical to achieving pull.

Lean Six Sigma

Visual Workplace

Introduction A visual workplace is a self-ordering, self-explaining, self-regulating, and self- improving work environment that utilizes visual cues.

Benefits of a Visual Workplace • Training is simplified

o Because the visual workplace and the work instructions are so easy to understand, training is simplified and takes less time

• Variation is reduced o The work is done the same way every time because there

are simple visual instructions and Standard Operating Procedures

• There is an impact on the 8 WASTES o Less variation equals less defects o Less variation and less defects allow processes to be more

predictable, resulting in less over-overproduction. o Less over-production results in a reduction in waiting

because scheduling is more predictable and customers aren’t kept waiting

o If there is a diverse workforce and English is not everyone’s first language, pictures depicting processes will be more easily understood than text, resulting in less over-production and defects. The old adage applies – A picture is worth a 1000 words

o Non-utilized talent is reduced because good visual workplace tools are developed and instructions are written by people who do the work

Lean Six Sigma

• The well-designed and implemented visual workplace results in less overproduction. The labor, time, and costs associated with transportation, inventory, motion, and extra processing are lessened because of a reduction in errors and rework.

Visual Workplace Examples • Tool shadow boards

o Cutouts of where every tool goes so employees can see what is missing

• Signage that is easy to see and understand o Process flow directions, exit signs, and fire extinguishers

• Work instructions that are posted right above the working surface o This could include pictorial work instructions that show what

happens in each step of the process • Performance metrics • Andon: A Japanese term literally translated as “paper lantern”

o In Lean, it’s a signal of manufacturing status. o It is usually used on pieces of equipment o It has a green, yellow, or red light, which tells employees the status

of the piece of equipment • Kanban: A Japanese manufacturing system in which the supply of components is regulated through the use of an instruction card sent along the production line

o Kanban can utilize electronic boards and other media. • Total productive maintenance and tool readiness

o Tools that are ready for use have a green tag on them o Tools that need work have a red tag on them with instructions

about what needs to be done to them • Cellular designs

o Job element sheets or visual work instructions abound in a good cell

Lean Six Sigma

Visual Workplace EXAMPLES

Visual workplace examples

Tool shadow boards

 Little cutouts of where every tool goes so employees can see what is missing

Performance metrics

 Key Performance Indicators

Work instructions that are posted right above the working surface

 This could include pictorial work instructions that show what happens in each step of the process

Kanban

Can be cards or empty tray which is then taken to be filled

Andon

 A signal for how things are performing

 Usually used on pieces of equipment

 Has a green, yellow, or red light, which tells employees the status of the piece of equipment

Kanban

 These can be cards or empty tray which are taken to be filled

Electronic Kanban

 Uses technology to replace traditional elements, like Kanban cards

 Provides real- time information

  • Module 5 Topic 1 – Creating Flow
    • Creating Flow
      • Flow – the Third Lean Principle
      • Examples of Typical Situations
      • The Manufacturing Order
      • Two Kinds of Flow
      • Slow Down to Speed Up?
      • Batch and Queue
  • Module 5 Topic 2 Spaghetti Map
  • MODULE 5 TOPIC 3 QUICK CHANGEOVER
    • Introduction
    • Definition
    • History
    • Changeover Time Definition
    • Importance of SMED
    • Recognizing the Eight Wastes​
    • Quick Changeover for Non-Manufacturing​
  • Module 5 Topic 4 Using Takt Time and Cycle Time
    • Some Operational Questions
    • Definitions
    • Factors Influencing Takt Time
    • Optimal Staffing
    • Example of Takt Time / Cycle Time Analysis
  • MODULE 5 TOPIC 5 CELLULAR DESIGN
    • Cellular Design
      • Terminology
      • Creating Flow
      • Goals of Good Cellular Design
      • Takt Time and Cycle Time
      • Workload Balancing and the Time Observation Form
      • Cycle Time Bar Chart
      • Cross-Functional Teams
      • Kaizen Events ​
      • Cellular Design in a Service Industry ​
      • Conclusion
  • MODULE 5 TOPIC 6 OVERALL EQUIPMENT EFFECTIVENESS OEE
    • Overall Equipment Effectiveness (OEE)
      • Introduction
      • Example: Credit Card Manufacturer
      • Losses That Do Not Affect OEE
      • Six Major OEE Losses
  • MODULE 5 TOPIC 7 LOSSES TO OEE
    • Losses to Overall Equipment Effectiveness (OEE)
  • MODULE 5 TOPIC 8 THEORY OF CONSTRAINTS
  • MODULE 5 TOPIC 9 INTRODUCTION TO PULL SYSTEMS
  • MODULE 5 TOPIC 10 SCHEDULING PULL SYSTEMS
  • Module 5 Topic 11 Kanban
    • Kanban
  • MODULE 5 TOPIC 12 KANBAN_ESTABLISHING A SYSTEM
  • MODULE 5 TOPIC 13 VISUAL WORKPLACE