Lean Metrics

Data

is of course important in manufacturing

but I place the greatest emphasis on facts

Taiichi Ohno

Objectives

Understand the importance of measurements to each level of operations and management Understand measurables

Understand how to use them in a production environment

Meanings, calculations, importance

Example

Police in Alexandria, Virginia (outside of Washington, DC, USA) were told that they had a quota of 25 traffic tickets per officer per month. What do you think was the result?
Did this improve traffic safety?

Tell me how I will be measured, and Ill tell you how Ill perform
-People will perform to how they are measured (if you want to improve an area, pay attention to it) (Hawthorn principal) -Traditional methods cause resistance to change > 'Old' metrics provide comfort > Metrics often used as basis for incentive

What do we do with measures?

-Take time for metrics FOR A REASON -measuring only for a report is MUDA -If no action is taken from metric results, no metric should be taken

Actions need to be in positive direction -Are we managing problems or

shooting the messenger?

Performance measurement must tie directly to the goal of creating value for customers A change in the value of a performance measure should be felt by the customer of the process

If metrics show a change and the customer doesnt perceive a difference, then were not measuring the right things or weve defined our customer incorrectly

Performance measures act as both identifiers and quantifiers of improvement opportunities

Solutions to issues enable improved performance Understanding supports the generation of good solutions Measurement promotes understanding

Improve

Solve

Understand

Measure

Good performance measures are: 1. Simple Use metrics that are easy to capture, compile, and
update. Complex calculations or excessive work may lead people to avoid them and measurable affect on the chosen measures

2. Directly impacted Process changes should have a clear 3. Informative Suitable metrics may not always reveal the
source of an issue, but they need to alert us when problems exist measures

4. Limited in number Each area should have only 2-3 key

5. Visually displayed Results should be posted for all to see

Alignment: Everyone can understand if they are supporting the goals. Feedback and Control: share information in real time to catch problems before they affect customer. Performance improvements: metric records are basis for PDCA improvement activities.

Go to see the actual place Make first hand observation Talk to the people Look for current measurement tools and methods Know the real situation - dont rely on old data or reports (or even new ones).

Insist problems are defined from facts.

Quality First Time Through (FTT) Delivery Build to Schedule (BTS) Flexibility Lead Time Total Cost
Productivity
Material Use Machine effectiveness (oee)

Downtime

Definition:
Measure ability to produce defect free products the first time without repair.

Key Requirements:

Implementation of well-defined standards Stable/ capable processes Sound maintenance of equipment Empowered and skillful workforce

1. Defect: Loss or something cannot be repaired. Example: B or C grade components/shoes

2. Rework: Any part produced out of standard, that must be repaired offline or online with/without stoppage is considered rework. (rework inside of Takt time is not included)

Core Value Stream FTT=

Quality Rate (Cutting) x Quality Rate (Prefit) x Quality rate (stitching) x Quality rate (Stockfit) x Quality rate (Final Assembly) Quality rate of Cutting : Measuring in pieces Total # pieces produced (Defect+ Rework) Total # pieces produced Total # pieces = Daily target x # of pieces per pair
Quality rate of Stitching , Stock fit & Final Assembly: Measuring in half pairs

Quality Rate =

Total # half pairs produced (Defect + Rework) Quality Rate = Total # half pairs produced

Quality rate of Prefit:

Measuring in pieces

For embroidery, HF, Upper Molding and the like, include in Prefitand for those that come from a supplier or a brownfield part of the factory just measure the bad parts received as defects.
Total # pieces produced/received defects

Quality Rate =

Total # pieces produced/received

Bottom Process FTT:

= Quality Rate (Outsole) x Quality Rate (PU) x Quality rate (PH)

Quality Rate =

Total # half pairs produced (defects + Rework) Total # half pairs produced

Daily Customer demand: 500prs/day Cutting:

Total # pieces produced: Defect: Rework: 10,000 10 0 =9990

Outsole:
Total # half pairs produced: Defect : Rework: 1,000 22 0 =978

Prefit:
Total # pieces produced: Defect : Rework: 8,000 5 42 =7953

PU:
Total # half pairs produced: Defect : Rework: 1,000 48 60 =892

Stitching:
Total # half pairs produced: Defect : Rework: 998 2 120 =876

Phylon:
Total # half pairs produced: Defect : Rework: 1,000 98 0 =902

Stockfit:
Total # half pairs produced: Defect Rework 978 5 140 =833

Final Assembly:
Total # half pairs produced:
Defect Rework

973
10 150 =813

Definition:

Measure the ability to produce products to a plan which considers volume, mix and sequence.

Key Requirements
No

Overproduction Process capability Reliable material delivery Empowered and skillful workforce

BTS = (volume performance) x (mix performance) x (Sequence performance)

Volume Performance =

actual # of units produced scheduled # of units

Mix Performance =

actual # of units build to mix

actual # of units produced

Sequence Performance = actual # of units build to sequence actual # of units produced

Production Plan Schedule

A.CL BW 20

Xcellerator 30

A.Trblnc 9 50

Actual Production Actual

Xcellerator

A. Trblnc 9

A. Cl BW

30

60

Volume Performance =

actual # of units produced scheduled # of units

Actual # of units produced = 95, Scheduled # of units = 100 Volume performance = 95/100 = 0.95

Production Plan Schedule

A.CL BW 20

Xcellerator 30

A.Trblnc 9 50

Actual Production Actual

Xcellerator

A. Trblnc 9

A. Cl BW

30

60

Mix Performance =

actual # of units build to mix actual # of units produced

Actual # of units build to mix = 5+30+50= 85, Actual # of units produced = 95 Mix performance = 85/95 = 0.89

BTS = (volume performance) x (mix performance) Volume performance =0.95 Mix performance = 0.89 BTS = 0.95 x 0.89 = 0.85 = 85%

Lead time
Definition:
Measure the time required for material and products to flow through the plant from raw material warehouse to finished goods warehouse.

Key Requirements:

Continuous material and information flow A focus on plant/operation constraint areas Work groups focused on waste Level /sequenced production Reduction in inventory levels Small batch size More frequent material delivery/withdrawals

Lead time - Dock to Dock

Raw Matl Storage

Manufacturing Lead Time

FG Storage

Raw Material Warehouse

W I P

Cut

W W I Stitch I P P

Assemble

W W I Pack I P P

Finished Goods

Lead time

Upper Value Stream L/T: Lead time of (R/M Storage W/H + Cut +Prefit + Stitching + Stockfit +Final Assembly + F/G W/H) Outsole L/T: Lead time of (O/S + S/F + F/A + F/G W/H) PU L/T: Lead time of (PU + S/F + F/A + F/G W/H) PHYLON L/T:Lead time of ( PHYLON + S/F + F/A + F/G W/H) Total DTD is the longest of the 4 measures above.

Upper Value Stream L/T: LT of ( Raw Mtrl Storage W/H + Cut + Prefit + Stitching + Stockfit + F/A + F/G W/H)

Cutting Raw Mtrl Storage area

Prefit

Stitching WIP

F/A WIP F/G W/H

WIP

WIP

Outsole L/T: LT of (Outsole + Stockfit + F/A + F/G W/H)

O/S S/F F/A WIP F/G W/H

WIP

WIP

PU L/T: LT of (PU + Stockfit + F/A + F/G W/H)

P/U

S/F

F/A
WIP

WIP

WIP

F/G W/H

Phylon L/T:LT of ( Phylon+ Stockfit + F/A + F/G W/H)

P/H F/A WIP F/G W/H

S/F

WIP

WIP

* Daily customer demand is 3,000 pairs / 8 hours working day Lead time Lead time Lead time Lead time Lead time Lead time Lead time Lead time Lead time of of of of of of of of of Cutting : Prefit: Stitching : Stockfit: Outsole: PU: Phylon: Assembly : F/G W/H : 4 hours ( 0.5 day ) 2 hours (0.25 day) 6 hours ( 0.75 day ) 2 hours (0.25 day) 5 hours ( 0.62 day) 4.5 hours (0.56 day) 4.5 hours (0.56 day) 2 hours ( 0.25 day ) 1.5days

Upper Value Stream Lead Time: 0.5 + 0.25 + 0.75 +0.25 + 0.25 + 1.5 = 3.5 days Outsole Lead Time: 0.62 + 0.25 + 0.25 + 1.5 = 2.62 days

PU Lead Time: 0.56 + 0.25 + 0.25 + 1.5 = 1.06 days Phylon Lead Time: 0.56 + 0.25 + 0.25 + 1.5 = 2.56 days

Total DTD is the longest of the 4 measures: 3.5days

Definition: Measure the actual cost to produce a unit of production.

Note : Toyota focuses on the process of waste elimination.

Cost reduction is an outcome.

Key Requirements:

All production system tools (physical and cultural) Activity based focus

Total Cost per Unit: {material + Labor + overhead + B grades + customer returns }
# of good units produced in a given period

Notes:

Material Cost :all material actually used (not the specification or FOB calculation) including additional issued material. Non-material cost : Labor + Overhead + B grades + Customer returns