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Enhancing Global Competitiveness

TOC-Lean-Six Sigma
Way
Workshop Objectives

 Create awareness of changing needs of global market


Introduce the new approach to enhance Global competitiveness
Provide effective technique to select Competitiveness
Improvement Projects
Develop knowledge and skill to manage Cost Reduction, Quality
Improvement Projects based on TLS (TOC-Lean-Six Sigma)
Techniques
Enhancing Global Competitiveness
TOC-Lean-Six Sigma
Way

1.Goal of the
Organization?
Goal of the Organization

What is ultimate
Goal of a
Business
Organization ?
The ultimate Goal of Organization is….
Case Study: Growth of Steel industry

 1950: Steel production


India: 1.0 Million Ton- India: 1.0 Million Ton
China: 0.5 Million Ton- China: 0.5 Million Ton
 2008: Steel production

- India: 55.1 Million Tons


- China: 502 Million Ton
Global Steel Production
What makes China the market leader?
The key to Market Leadership?
Yardsticks to measure
Global Competitiveness?

 Quality
 Speed of delivery
 Experiences of customer
(during all transactions)
 Cost
The challenges before Management?

 Improve QUALITY
 Accelerate Speed
(Reduce Lead Time )
 Enhance Customer Value
 Reduce COST
What’s Global Competitiveness of your
Company’s Products?

What are the products made by your Co.?

How competitive are your products in


Global market?

What’s your market share in Domestic &


Global market”

Can you remain globally competitive with


the current way of business management?
Assess the current status of your Co!
Does your business suffers from . .  
 Higher cost compared to competitors
 Poor on-time delivery performance
 Long production lead-times
 High WIP and/or finished goods inventory
 Poor cash flow
 High overtime
 Lots of expediting and rescheduling
 Customer complaints
 Reluctance to take on new business
. . . then chances are good that your organization's constraint is the way that production (or
a production-like operation) is managed. If this is the case, then you will benefit from
investigating and implementing a constraint-based method of production management.
How to meet the Business Challenges?

A problem cannot be solved


with the same consciousness
that created it.
- Albert Einstein
Enhancing Global Competitiveness
TOC-Lean-Six Sigma
Way

2.A new way of Thinking:


Theory of Constraints
What is The Theory of Constraints?

Developed by a Physicist
Eliyahu Goldratt
TOC is:
 Thinking Tool

 Not a set of solutions

 Focus for Change

 Whole systems approach

 Simple common sense steps


Theory of Constraints

“The core idea in the Theory of Constraints


is that every real system such as a profit-making
enterprise must have at least one constraint”.
What is TOC?

“There really is no choice in the matter.


Either you
manage constraints or they manage you.
The constraints will determine the output
of the system whether they are
acknowledged and managed or not”
How does TOC help companies?

 Focusing improvement efforts where they will have


the greatest immediate impact on the bottom line.

 Providing a reliable process that insures Follow


Through!
Finding the Focal Point

Before a company can properly


focus, one necessary condition is
that they answer the following
question:

 What is the Goal of a Business


Enterprise?
The Goal?

 To make more money now and in the future!


Measuring Progress

Once the Goal is identified, one necessary condition to


success in achieving the goal is to identify which
measurements will be used to judge progress.
What measurements should we use?

Conventional Wisdom
 Net profit?
 Efficiency?
 Utilization?
 Return on Investment?
 Cash Flow?
“Are you using the right measurements?”
What measurements should we use?

TOC Wisdom
 Throughput

 Inventory

 Operating Expense
Throughput (“T”)

The rate at which the system generates money through


sales. (Or, the money coming into the organization.)
 Building inventory is not throughput

 Only $ generated by the system get counted; e.g., raw


materials and purchased parts are not throughput.
 T = Selling Price - Materials
Inventory (“I”)

All the money the system has invested in purchasing


things which it intends to sell.

 Inventory is a liability (not an asset)


 Raw materials, work in process, finished goods and
scrap are “I”
Operating Expense (“OE”)

All the money the system spends in order to turn


inventory into throughput.
 All employee time is “OE” (direct, indirect,
operating, etc.)
 Depreciation of a machine is “OE”
 Operating supplies are “OE”
Where should we focus?

 Decreasing Operating Expense?


 Decreasing Inventory, or

 Increasing Throughput ?
Exercise:
What is your Focus Priority & Why?

Focus Priority Why?


#1

#2

#3
Chain Analogy

 A company can be compared to a chain. The businesses


activities are a “chain” of dependent events.
 For example; we don’t ship parts until they are packaged,
and we don’t package parts until they are manufactured,
etc.

Marketing Bidding Purchasing Production Finishing Shipping


Chain Analogy (continued)

Conventional Wisdom believes that…

Improvement of any link is an improvement to the chain.


Organizational improvement is the sum of the local
improvements.
Primary Measurement: Link Weight
Result: Every link wants/needs more resources all the time
Chain Analogy (continued)

Throughput Wisdom Approach believes that…

 Most of the improvements of most links do not improve


the the chain.
 Organizational improvement is NOT the sum of the local
improvements.
 Primary Measurement: Chain Strength
 Result: Resources are channeled to the weakest link
Chain Analogy (continued)

“Think Holistically. Take only those specific actions


that will strengthen the chain.”

Focus scarce resources on the constraint

Management & Resources

Marketing Bidding Purchasing Production Finishing Shipping


Conventional World vrs.
Throughput World

The “Conventional Wisdom” The “Throughput Wisdom”


Prime measurement: Prime measurement:
Link Weight Chain Strength

 Any improvement of any link is Most improvements of most links do


an improvement of the chain. not improve the chain.

Organizational improvement = Organizational improvement =


sum of local improvements. improvement in the constraint(s).
Where should we focus?

The “Conventional Wisdom” The “Throughput Wisdom”


Decreasing “OE” is definitely #1 Increasing “T” is
because we have relatively high unquestionable #1 because it
control of our expenses. has the greatest potential
impact on the bottom line
Shifting Paradigms

Current Priority New Priority

# 1: Decrease OE # 1: Increase T
# 2: Decrease I # 2: Decrease I
# 3: Increase T # 3: Decrease OE
Conventional World Throughput World
TOC Question...

 How do you manage a company in a world


where increasing Throughput is the #1
priority, reducing Inventory is #2, and
reducing Operating Expense is a tactic
only after serious efforts at #1 and #2?
TOC Summary

The theory of Constraints is about 2 things

 Focus

 Follow Through
TOC Summary: Focus

 A company must first know its Goal

 Then it must identify the thing(s),


the constraint(s), that are limiting
the level of achievement of that
Goal.
TOC Summary: Follow Through

The Process of On Going Improvement

 Identify the Constraint


 Find out the Root cause of Constraint
 Develop Solutions to eliminate the cause
 Implement the solution
 Resolve the constraint
Enhancing Global Competitiveness
TOC-Lean-Six Sigma
Way

3.LEAN
a new approach to
Cost Reduction
What makes your products Costlier?
Company A : 5%
Profit Margins
Company B : 10%

Who Controls the


Selling Price?

Selling Price

A B
What do we do in our processes?

Marketing Bidding Purchasing Production Finishing Shipping

 In any business activity at any


moment of time, either we are adding
Value or creating Waste
What makes Your Products Costlier?
Ex-factory
Cost = Cost of Product + Cost of Waste

Profit

P
Selling Price
makes the
P
Cw Products Costlier?
Ex-Factory Cost

Cw
Ex-Factory Cost

Cp Cp
How to increase the Profit?

P
R e du c e
the Cos P

C/o Waste
Minimize / t
Waste

Eliminate

Waste
Selling Price

W
Cost of Product

Cost of Product
Genesis of Waste

Demystifying the
Business
Process!
Business as a Supply chain
Supply chain:
a link of Business Processes

Marketing Bidding Purchasing Production Finishing Shipping


Every process is a Black Box
Resources to produce and supply
Products
3. Men

4. Methods
1. Materials

Products
2. Machines
Resources to design & deliver Services

3. People’s
Knowledge &Time

4.Processes
(Office Procedures)

1.Informatio Services
n
2.Assests
(Office facilities)
Four Basic Operations
3. Men

1.Retention 3.Processing

2.Transportatio 4.Inspectio
1. Materials
n n
Products
2. Machines
In each operation we either Add Value or..

Value
1. Materials

Products
Value:a capability provided to a customer at the right
2.Machines
time at an appropriate price, as defined in each case by
the customer
add value or Generate WASTE
1.Over
1. Overproduction
production
2.Inventory
2. Inventory
3.Defects/rejection/rework
3. Defects/rejection/rework
4.Waiting
4. Waiting
5.Inappropriate
5. InappropriateProcessing
Processing
6.Unnecessary
6. UnnecessaryMotions
Motions
7.Transporting
7. Transporting
8.Untapped
8. Untappedhuman
humanPotential
Potential

Waste
1. Materials
Products
2.Machines
“Muda”: Any business activity that absorbs resources, but adds
no value
Where do you add Value?
3. Men

1.Retention 3.Processing

2.Transportatio 4.Inspectio
1. Materials
n n
Products
2. Machines
What is Muda (Waste)?

Waste (“muda” in Japanese) is


‘anything other than the minimum
amount of equipment, materials,
parts, space, and worker’s time,
which are absolutely essential to
add value to the product.’
- Shoichiro Toyoda
Founder, Toyota
1. Waste of Overproduction

 Producing more than


requirement, before time
or faster
 Produced to compensate
loss in production due to
absenteeism, equipment
break down, higher
rejection rate,
inconsistency in operation
 Instead of eliminating the
root cause companies go
for overproduction
2. Waste of Inventory

 More than the required stock of


finished product, work-in process
and raw materials do not add
any value
 They add cost of operation by
blocking more money, increased
requirement of transportation,
storage and handling
3. Waste of Defects

 Defects or rejects interrupt


production and require expensive
rework
 Rejects have to be scrapped
 Defective products may damage the
tools and jigs installed on machines
4. Waste of Waiting

 Muda of waiting occurs when the


hands of the operator are idle
 Operator’s work is put on hold because
of line imbalances, lack of parts, or
machine downtime or operator
monitoring the machine when machine
is adding value to the job
5. Waste of Processing

 Sometimes inadequate technology or design leads to


muda in processing
 Unproductive striking of the the press, de-burring of the
product, machine idling cause muda
6. Waste of Motion

 Any motion of a person’s


body not directly related
to adding value is non
productive
 Any action such as lifting
or carrying a heavy
object, should be avoided
7. Waste of Transport

 Transport is an essential part of operations, but moving


materials and products add no value
 Any process physically distant from main line adds muda of
transport
 Use of conveyors, fork lifts, trucks and other transport
system has to be minimized
8.Waste of Untapped Human Potential

 The purpose of efficient system is


“to create thinking people” but most
organizations don’t use thinking
power
 No involvement in decision making
 Not utilizing experience of people
for improvement
 Example : Not using creative brain
power of employees, not listening,
thinking that only managers have
idea worth pursuing
Wastes appear in the following forms:
 Defective materials  Re-work
 Wasted materials  Defective products/scrap
 Excess consumption
 Downgraded products
 Unwanted inventory
 Un-recovered bye- products
 Returned Material
 Demurrage
 Warranty Claims
 Downtime of machines  Complaints
 Unutilized capacity  Cancelled orders
 Productivity Loss  Excess transportation cost
 Waiting time  Delayed delivery
 Yield loss  ………………………….
Production Process Waste

Waste Category Production Process Waste Example


Overproduction Early delivery, producing more than demand, producing without
order

Inventory Unsold items, High inventory, Excess safety stock

Defect Scrap, Rework, Defective items, Nonconforming actions, errors

Waiting Idle operators, Slow speed, Late delivery, Excessive queue,


Machine down, Material not available

Inappropriate Un necessary steps in process, number of approvals, making


processing mandatory non value adding reports
Excess Motion Too much worker movement,Walking to/from copier, central filing,
fax machine ,Bending, excessive walking
Transportation Multiple handling, Fork lifts, Conveyors
Office Process Waste
Waste Examples
1. Over production Processing of non-priority purchase requests Causes long lead
times, downstream shortages
2. Waiting Paper not reached, Machine busy, Person not available
3.Transportation Transport of files, documents, equipment etc.
4.Over processing Doing more work than necessary: You don’t know what
customer wants, Allowing the NVA work to creep in process
5.Inventory physical pile of forms, pending e-mails, caller on hold, people
standing in line
6. Motion Too much worker movement, Poor office layout, Ergonomically
wrong designed furniture
7.Defects Missing information, Missing deadlines, Operator given
incorrect version of documents
8. Untapped human No suggestion system. No encouragement for innovation and
potential improvement
Exercise: Identify waste

 You have been hired by a Tea


Stall to eliminate waste from their
business processes. As per the
customers complaints, they have
to wait for 15 minutes to get Tea,
whereas in competing Tea Stall it
is delivered in five minutes. Shop
owners is having relatively lower
profit margin also.
 Draw a process map from order
taking to delivery of tea and
identify the types of waste
generated in the processes
Cost of Waste : Sigma level & Competitiveness

Sigma Defect Rate Cost of Competitiveness


Level PPM WASTE
(of Turnover)

6 3.4 < 10%

233 10 - 15%
World Class
5

4 6210 15 - 20%
Industry
3 66807 1520-- 30%
30% Average

2 308537 30 - 40%
Non
1 690000 > 40% Competitive
How to Reduce Cost?
1. Detect Waste

2. Eliminate Waste

WASTE

3. Prevent Waste
How to improve
Business Performance- the Lean way?

 Specify value from the standpoint of


customer (do they want goods and
services or an effective solution to
their problem?)
 Identify the value stream for each
product and remove wasted activities
 Make the value flow towards the
customer as quickly as possible
 Only at the pull of the customer
 Pursue perfection in the above four
steps
Enhancing Global Competitiveness
TOC-Lean-Six Sigma
Way

4.Strategy for
Cost Reduction
Initiatives
Case Study
Nippon Autocomp Ltd
Nippon Autocomp Ltd (NAL) is a producer of Fuel
Tank Brackets for leading automobile
manufacturers.
It is operating since 1980, obtained ISO 9001
certificate in year 2002 & commanded a good
market share till year 2005. With the entry of global
players in Indian market, since last few years NAL
started loosing business due to tough competition.
The CEO of company called all
managers, analyzed the situation and
observed that there has been 25%
drop in business during last year and
21% and 18 % in preceding two years.
NAL: Reasons for Business
drop
The CEO of company appointed a committee of HODs to find out
the reasons of business decline and to select an appropriate
Improvement Methodology to enhance the performance in a period
of six months
The committee gone through records of last 3 years, interacted
with clients, and all concerned persons and arrived to a conclusion
that NAL’s business declined mainly due to two reasons:
-Higher cost of production & Longer lead time
The quality of NAL products were acceptable to customers but it’s
prices were 5 – 7 % higher than competitors.The customers
demand a lead time of 10 days, whereas current lead time of NAL
is 30 days
Committee decided to go for Radical Cost Reduction
Intervention
Now your group has been selected as Consulting Team to
facilitate Performance Improvement in NAL, with clear
objective; to reduce cost & lead time within six months
NAL: Process Information
 Customer demand: 265 Brackets/day.
 Ex factory Price of Bracket : Rs.3000 per piece
 Plant operation 5 days/week, 8 Hrs/day, 50 weeks/yr
 Main Raw Material (for one Bracket): Steel plate ( 6mm
ThickX500mmX1000 mm) Weight: 30Kg, Cost Rs.900
 Process yield: Stamping- 95%, Welding- 90%, Deburring-
99%, Assembly-98%, Overall:Finished product to Input
-60% (by weight). Loss in form of scrap, trims, defectives.
 Industry Benchmark of overall yield:95%
 Inventory: Raw Material-10 days, Stamping-5425 pcs,
Welding-1400 pcs, Deburring -1225, Assembled : 0
NAL Process Data

Parameters Stamping Welding De-burring Assembly

Yield 95% 90% 99% 98%

Inventory R Mtl: 10 Shift


Finished:5425 Pcs 1400 Pcs 1225Pcs --
M/c Breakdown 30 Mnts/Shift 30 Mts/S 70 Mts/S 15Mts/S

Changeover Time 4 Hrs/3 Shift 10 Mts/S -- 5Mts/S

Lunch Break 30 Mts/S 30 mts/S 30 Mts/S 30 Mts/S

Cost of Inventory RMtl: Rs.900/Pc


FP; Rs.1000/Pc Rs.1500/ Pc Rs.1600/Pc Rs.2500/Pc

Machine Idle Cost Rs.6000/Hr Rs.6000/Hr Rs.6000/Hr Rs.6000/Hr


Exercise : Strategy Development

 Form a Team of 5 Consultants, brainstorm and develop


step by step approach to make NAL competitive through
Radical Cost Reduction (TLS) intervention
 Evolve strategy for reduction of Cost & Lead Time in NAL
 Present your findings in the following steps:
- Step 1,2,3…: Activities & Deliverables
- Strategy deployment schedule

Develop strategy, Not Solutions


Strategy:
To Reduce Cost & Improve Delivery

Activities/Steps Deliverables
1.

2.

3.

4.

5.

6.
Radical Cost Reduction
Intervention Schedule
Activity 1 2 3 4 5 6
Months
1.

2.

3.

4.

5.

6.
Strategy to
Reduce Cost & improve
Delivery
Steps Deliverables

1. Awareness of new Technique Mindset Change

2. Constraint Diagnosis Constraints in the system

3. Project Selection Projects for Improvement

4. Project Team Training Problem Solving Competency

5. Solution Development Improvement Action Plan

6. Implement Solution Reduced cost & Lead Time


Radical Cost Reduction
Intervention Schedule

Activity 1 2 3 4 5 6
Month Month Month Month Month Month

1. TLS Awareness Programs

2. Constraint Diagnosis

3. Project Selection

4. Project Team Training

5. Solution Development

6. Implement Solution
Enhancing Global Competitiveness
TOC-Lean-Six Sigma
Way

5.Change
Management
The Law of Mind

 If you always do what you


have always done, you will
always get what you have
always gotten.
 If you want to bring
change in the cost, you
have to make changes in
causal factors.
 You have to Manage
Change
Change Management

1. What to change ?
(identification of problems)
2. What should be the content
of change? (developing
solutions)
3. How to make change
happen? (implementation of
solution)
4. How to sustain the change?
(cultural transformation)
Change Management - Overview
Change Objective Tool Activity
Management
What to change? Identification of TOC- Lean: Detection of
Constraints? Diagnosis, VSM Waste
What should be Detailed Lean -Six Sigma: Identification of
the content of investigation & Define- Measure- root-cause of
change? solution Analyze waste
development
Making change Implementing Lean -Six Sigma: Elimination of
happen! solutions Improve root-cause of
Waste
How to sustain Holding the gain Lean -Six Sigma: Prevention of
change? Control waste
Enhancing Global Competitiveness
TOC-Lean-Six Sigma
Way

6.What to Change?
Select
Cost Reduction (or Quality
or Delivery Improvement)
Projects
Cost Reduction Projects
 Cost reduction is a change management activity
 The very first step of change management is to discover
“What to Change”?
 Change has to be done project-by-project
 How to select cost reduction project has to be a scientific and
objective activity.
 Criteria for selection of project is “that one, which is impacting
maximum on bottom-line”
 Such projects can be identified through a unique diagnostic
workshop based on the principles of “Theory of Constraints
(TOC) and Lean”
 We have to begin cost reduction activity through
“Constraint Diagnosis”
Waste are symptoms of Problems

1.Over
Overproduction
production
1.
2.Inventory
Inventory
2.
3.Defects
Defects
3.
4. Unnecessary Motions
4. Unnecessary Motions
5.Inappropriate
InappropriateProcessing
Processing
5.
6.Waiting
Waiting
6.
7.Transporting
Transporting
7.
Raw 8.Untapped
UntappedHuman
HumanPotential
Potential
Product
8.
Materials s
Information Services
What Causes Waste?

1.Over
Overproduction
production
1.
2.Inventory
Inventory
2.
Retenti Processin 3.3.Defects
Defects

on g 4.Unnecessary
4. UnnecessaryMotions
Motions
5.Inappropriate
InappropriateProcessing
Processing
5.
6.Waiting
Waiting
6.
7.Transporting
Transporting
Raw Transportati Inspecti
7.
8. Untapped Human Potential
Materials on on 8. Untapped Human Potential

Produ
cts
Constraints

 Constraints cannot be
perceived as good or bad
 There cannot be a constraint-
free world.
 Constraints are Facts of Life
 Constraints are opportunities
for improvement

For the continuity of business & Growth of


organization, Constraints must be resolved in
time.
What is Constraint?

Process-1 Process-2 Process-3 Process-4 Process-5 Process-6

 The weakest Link of your Business Process Chain


Throughput of a Business System
Example: A steel door fabrication company. Raw materials: steel
sections and sheets. Output: fnished steel doors
Maximum Throughput of Value Stream: ? Units/Day
Supplier
Customer

Packaging
Cutting Fabrication Assembly Finishing
Shipping

60 U/D 60 U/D 40 U/D 70 U/D 60 U/D

Rate at which a system converts it’s inventory


into money
Constraint of Business System
Throughput of Value Stream: 40 Units/Day

Supplier Constraint
Customer

Packaging
Cutting Fabrication Assembly Finishing
Shipping

60 U/D 60 U/D 40 U/D 70 U/D 60 U/D


Any system can produce only as much as
It’s critically constrained processes
Steps to identify
waste and discover constraints!
1. Divide the Organization in to network of Business Processes
2. Develop process map
3. Identify all types of wastes generated in each business
process
4. Measure the quantum of waste generated in each process
5. Evaluate the economic value of waste
6. Determine the saving potential
7. Compile the waste assessment report
8. Identify & prioritize the areas of constraints

9. Select cost reduction projects


Enhancing Global Competitiveness
TOC-Lean-Six Sigma
Way

7.Constraint
Diagnosis
Areas of constraints resulting to waste?
Manufacturing Process:

In your factory, waste


may be related to:
5M+Q+S
 Material
 Machine
 Method
 Man
 Management
 Quality &
 Safety
Areas of constraints resulting to waste?
Office Process:

Office Waste are


related to:
 Information
 Asset
 Process
 People
Process Mapping

Process map is means of


Systematical diagnostic
activity and information flow.
To prepare Process Map:
 Establish the process boundaries
 Observe the process in operation
 List the outputs, customers, and their key
requirements
 List the inputs, suppliers, and your key
requirements
Macro level Process Map
Identify the waste generated at each process/process step

Input Process-1 V Process-2 V Process-3 V Process-4 V Product

W W W W
Micro level Process Map
Identify the waste generated at each process/process step

Input Process-1 V Process-2 V Process-3 V Process-4 V Product

W W W W

Input Step-1 V Step-2 V Step-3 V Output

W W W
How to identify Waste?
Process-1 Process-2 Process-3 Process-4

Type of
Waste

Material

Machine

Method

Men

Managmt.

Quality

Safety
Identify the source of data
Sources of data:
 Production report
 Quality performance reports
 Cost sheets
 Customer complaints
 Audit reports
 Breakdown reports
 Maintenance records
 Warranty claims
 Shipping documents
 Customer orders
 ………………………
Data collection plan

 What data is required?


 Where the data is
available?
 Who should collect?
 When?
 How?
 Formats?
Quantum of waste?

 Identify the types of waste


 Develop metrics for
measuring the quantum of
waste
 Collect the quantum of
waste generated during
last 12 months period
Evaluate the Cost of Waste

 Identify the waste


 Decide its measurement unit
 Calculate the cost (loss) per
unit
 Evaluate the financial
impact during last 12
months period
Compile the data to identify the
constraints

 Compile the data in order of


their impact on bottom line
 Identify the areas of
constraints causing waste
(Material, Machines,
Methods/Process., People
etc.)
 Prioritize the Constraints to
be resolved on priority basis
Cost Reduction Project Selection

Process:_________________________________________
Waste Unit of Quantity Economic Priority
Measurement ( per Annum) Value
Selection of projects

 Decide what projects to be


taken up for Cost
reduction /Improvement?
 Criteria for selection:
- Customer satisfaction
- Competitiveness
- Profitability
 Get approval of
management
 Form project teams
 Decide the start &
completion dates
 Do it!
Exercise: Select Cost Reduction Projects

1. Draw NAL process map


2. Identify the types of waste generated in each
process
3. Quantify the waste generated per annum
4. Estimate the annual cost of waste based on
available information
5. Select cost reduction projects to be taken up by
your team
Exercise : Draw NAL Process Map
List of Waste

Process:_________________________________________

Waste Unit of Measurement


Cost Reduction Project Selection

Process:_________________________________________

Waste Unit of Quantity Economic Priority


Measurement ( per Annum) Value
Enhancing Global Competitiveness
TOC-Lean-Six Sigma
Way

8.Value Stream
Mapping
Value Stream Mapping

•Value stream mapping is one of the most


powerful tool to identify the problems which are
causing higher cost, poor quality and longer lead
time.
•Conduct the Value Stream Mapping of the
Bracket production value stream
NAL: Production Process
•Production processes:
-Stamping,
-Spot Welding,
-De-burring,
-Assembly & shipping
•Process Metrics
-Cycle Time (C/T)
-Changeover Time (C/O)
-Equipment Reliability (Rel.)
-Fist Pass Yield (FPY%)
-Inventory
-No. of Operators
Customer Demand Rate
TAKT Time
Calculate TAKT Time
 One shift operation
 Time 8 HrsX60= 480 Mts
 Lunch break: 30 Mts
 Tea Breaks 2X10 Mts: 20 Mts
 Production Meeting: 5 Mts
 Changeover time: 5 Mts
 Net available time: 420 Mts
 Demand rate: 265 Brackets/day
 TAKT Time: 420 Mts/ 265 Pcs/day = 95
Seconds
Current State Value Stream Map
Prod Ctrl
30/60/90 Monthly
Bharat .
Forecast MRP Weekly Indian
Strips Car Co
Weekly 5300 pcs/mo.
Weekly Schedule 265 pcs/day
Weekly Daily
Daily

Stamping Spot Weld Deburr Assemble


Shared
I I I I
2 Weeks =1 5,425 =1 1,400 =1 1,225 =2
C/T=1 sec C/T=39 sec C/T=17 sec C/T=48 sec
C/O= 4 hrs C/O= 11 min C/O= 0 min C/O= 5 min
Rel.= 98% Rel.= 99% Rel.= 80% Rel.= 100%
FPY = 95% FPY = 90% FPY = 99% FPY = 98%
10 days 20.5 days 5 days 4.5 days 40 days
1 sec 39 sec 17 sec 48 sec 105 sec
Future State Value Stream Map
Prod Ctrl
30/60/90 Monthly
MRP
Indian
Bharat Forecast Daily
L/T 2 days Car Co
Strips Weekly 7,000 pcs/mo.
Daily
Schedule 350 pcs/day
Weekly Daily

Stamping Spot Weld SW/Deburr/Assemble Assemble


Shared

=4
=1 2 Days
2 Days
3 Days C/T=1 sec C/T=39 sec C/T=17 sec C/T=48 sec
C/O= 4C/O
hrs C/O= 11 min C/O=C/O0 min C/O= 5 min
C/O C/T
Rel.= 98% Rel.= 99% Rel.= 80% Rel.= 100%
FPY = 95% FPY = 90% FPY = 99% FPY = 98%
3 days 2 days 2 days 7 days
1 sec 90 Sec
91 sec
Project Selection

Major factors for Higher Cost Reduction Projects Time


Cost Schedule
Stamping unit 4 Hrs Reduce Changeover
Changeover time too high time of Stamping unit

First Pass yield of 90 % Improve quality of


Stamping unit too low stamping process
Reliability of De-burring 80 % Improve equipment
unit low availability of de-burring

Inventory too high 10700 Reduce Inventory


Value Stream Improvement Plan
Nippon Autocomp Ltd.

Impact after Lean Six Sigma Projects


Parameters Before Lean After Lean
Lead Time 40 days 7 days
Cycle Time 105 Sec 91Sec
Inventory 10,700 Pcs 1855 Pcs

Kaizen Events: Other Lean actions:


• Reduce stamping changeover • Operators multi-skill training
time
• Improve deburring reliability • Flexibility
• Improve spot wel quality • Reduce defects
Exercise: Select a Cost Reduction Project
from your functional area

 Write down brief description related to your process and


products/services
 Draw a process map and identify the waste generated
 Quantify the waste
 Assess the economic impacts of waste
 Select one of the problems from your process
 Title of your Project: ………………………………
Exercise: Select a Cost Reduction Project
from your process / organization
Co. Description:
Products/Services,
Turnover

Selected Process:
Description

Process Map

Waste Generated

Quantity of Waste
(per year)

Economic Impact of
Waste
(per year)

Selected Project

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