Contents
Preface………………………………………………………………………………….. xi
About The Author……………………………………………………………………xv
1 Introduction……………………………………………………………………….1
Who Should Use This Book………………………………………………………………1
How to Use This Book……………………………………………………………………..2
Brief History of Lean Manufacturing…………………………………………………..3
The Philosophy of Lean Manufacturing and Business Systems……………..5
Why Do We Need Lean Manufacturing and Business Systems?…………….7
2 Fundamentals of Lean Production and Business Systems…………9
Nine Critical Wastes in Business………………………………………………………..9
Concerning Elimination of Waste……………………………………………………..11
Fundamentals of Lean Manufacturing……………………………………………….11
The Five Whys……………………………………………………………………………….13
Critical Importance of Management Commitment……………………………..14
Establish Your Lean Team and Lean Leader………………………………………15
The Lean Coach………………………………………………………………………16
Lean Coach and Consultants…………………………………………………….18
Lean Team………………………………………………………………………………18
Lean Production and Your Employees……………………………………….19
Some Will Leave Us (Making the Really Tough Decision, Removing
Human Roadblocks)………………………………………………………………………..21
Lean Systems versus Six Sigma………………………………………………………..22
3 Tools for Continuous Improvement……………………………………..25
Step 1: Hands-On……………………………………………………………………………25
Example: Order out of Chaos:…………………………………………………..25
Housekeeping: 5S……………………………………………………………………………26
4 Beginning Your Journey…………………………………………………….33
Waste Walk…………………………………………………………………………………….33
Plant Manager: Waiting (Idle Time)……………………………………………34
Materials Manager: Excess Inventory………………………………………….34
Finished Goods: Overproduction………………………………………………34
Production Manager: Overproduction………………………………………..36
Quality Manager: Defects………………………………………………………….36
Purchasing Manager: Environmental………………………………………….36
Planning Manager: Transportation……………………………………………..36
Manufacturing Engineering Manager: Excessive Motion………………36
Lean Leader: Overprocessing…………………………………………………….37
Current Lean Status…………………………………………………………………………37
5 Value Stream Maps: The Amazing Tool
(Critical to Your Success)……………………………………………………39
What a Value Stream Map Is and Why You Need It…………………………..39
Why a Value Stream Map Is Critical to Your Success…………………..40
How to Create a Value Stream Map………………………………………………….41
Current State Map…………………………………………………………………….41
Creating the Map……………………………………………………………………..41
Gather Your Data…………………………………………………………………….42
How to Read a Value Stream Map……………………………………………………54
Future State Map……………………………………………………………………..54
Creating the Future State Map………………………………………………………….61
Next, Compare the Current State Map to the Future State Map…………..72
6 Identify Your Projects………………………………………………………..77
Continuous Improvement Projects……………………………………………………77
Identifying Your Projects from Your Maps…………………………………………78
Which Project to Do First?……………………………………………………………….79
Machine Tools and Takt Time………………………………………………………….86
Smoothing the Flow of Production…………………………………………………..87
Balancing Product Mix in the Work Cell…………………………………………..89
Implementation………………………………………………………………………………90
Audits…………………………………………………………………………………………….91
Who Should be Audited?…………………………………………………………………92
Stabilizing Your Processes……………………………………………………………….94
7 Your First Kaizen Project Team…………………………………………..97
What Is a Kaizen Event (Continuous Improvement Event)?…………………97
Team Makeup…………………………………………………………………………………98
Kaizen Event Process………………………………………………………………………98
SMART Goals………………………………………………………………………………. 101
Plan–Do–Check–Act……………………………………………………………………..107
Using Plan–Do–Check–Act and A3…………………………………………………108
Kaizen Toolbox…………………………………………………………………………….112
8 Continuous Flow…………………………………………………………….. 117
Introduction…………………………………………………………………………………. 117
Step 1: Determine Family Mix……………………………………………………….. 117
Step 2: Build First Production Cell…………………………………………………. 118
Step 3: Create Goals and Results Chart…………………………………………… 118
Stabilizing Your Process…………………………………………………………………120
Standing in the Circle……………………………………………………………………121
Standardized Work………………………………………………………………………..122
Using Standardized Work………………………………………………………..123
Reducing Variability………………………………………………………………………124
Leaders’ Standard Work versus Work Instructions……………………………125
Team Leader’s Standard Work…………………………………………………126
Manager’s Standard Work……………………………………………………….127
Accountability……………………………………………………………………………….129
Daily Production Meetings…………………………………………………………….130
9 Work Cell and Factory Layout……………………………………………133
Work Cell Layout…………………………………………………………………………..133
Ergonomic Design…………………………………………………………………………134
Work Cell Material Handling Design………………………………………………135
10 Creating Your Lean Road Map (Strategy Deployment)………….137
Introduction………………………………………………………………………………….137
Strategic Lean Manufacturing Plan………………………………………………….138
Visual Controls and Visual Management…………………………………………143
Visual Management Displays and Controls……………………………….143
Andon Display………………………………………………………………………. 147
11 Production Scheduling……………………………………………………. 151
Introduction…………………………………………………………………………………. 151
MRP and Lean Complement Each Other………………………………………… 152
What Finished Goods Inventory Should You Stock?………………………… 153
Types of Pull Systems…………………………………………………………………… 156
Organizing and Controlling Finished Goods Warehouse………………….158
12 How to Schedule the Production Line (Value Stream)…………..163
Introduction………………………………………………………………………………….163
Pacemaker Process………………………………………………………………………..164
Efficiency versus Changeover…………………………………………………………166
Supermarket (Warehouse) Location in the Factory…………………………… 167
Signaling Material Withdrawal from the Market………………………………. 170
Batch Production Signal Kanban……………………………………………………. 172
Production Capacity versus Changeover Time………………………………… 173
Determining Production Lot Size…………………………………………………… 174
Reorder Trigger Point……………………………………………………………………. 175
Working without Work Orders………………………………………………………. 176
Labor and Material Accuracy…………………………………………………………. 176
Work-Â�Order Back-Â�Flushing…………………………………………………………….177
Cycle Count Inventory…………………………………………………………………..177
13 Material Management………………………………………………………179
Raw Material Inventory Management……………………………………………… 179
Loading the PFEP………………………………………………………………………….182
What Data to Input First………………………………………………………………..185
Equations Used with the PFEP……………………………………………………….185
Planning Minimum Inventory Levels………………………………………………186
Value of Frequent Deliveries………………………………………………………….186
Quantity of Containers Required……………………………………………………187
Material Reorder Points………………………………………………………………….187
Updating and Editing the PFEP………………………………………………………187
Creating the Raw Material Market…………………………………………………..189
Organizing the Warehouse…………………………………………………………….190
Layout of the Supermarket……………………………………………………… 191
Creating the Supermarket……………………………………………………….192
How Do I Expedite Parts?…………………………………………………………….. 192
Timed Delivery Routes…………………………………………………………………. 193
Basic Material Handling Information………………………………………………194
Creating Your Timed Delivery Routes………………………………………195
Point-Use Rack Design………………………………………………………..196
Pull Signal for Material……………………………………………………………198
Coupled versus Decoupled Routes: What Is the Difference?……….198
Determining the Number of Pull Signals………………………………….199
Kanban-Loop……………………………………………………………….200
Sustaining the Material Handling System…………………………………………201
Supplier Replenishment to Your Warehouse……………………………………201
Getting Started……………………………………………………………………….202
Finished Goods Replacement………………………………………………….205
Tying Finished Goods Warehouse to the Production Floor………..205
Packaging Schedule Board…………………………………………………………….206
How to Use the Packaging Schedule Board……………………………..206
Sequence of Operation…………………………………………………………..207
14 Standardized Problem-Â�Solving Method………………………………211
Problem Solving…………………………………………………………………………… 211
Recognize You Have a Problem………………………………………………212
Elevate to the Next Higher Level……………………………………………..212
Evaluate the Severity of the Problem……………………………………….212
Control the Expansion of the Problem……………………………………..212
Containing the Problem………………………………………………………….213
Preventing a Recurrence…………………………………………………………213
Inspect Every Job………………………………………………………………….. 214
Mistake-Â�Proofing………………………………………………………………………….. 215
Where Do You Start Error-Â�Proofing?……………………………………….. 217
General Inspection………………………………………………………….218
100% Inspection…………………………………………………………….. 219
Error-Â�Proofing Devices……………………………………………………. 219
Immediate Feedback……………………………………………………….220
Statistical Process Control and Mistake-Â�Proofing……………………….221
15 Working with Suppliers and Partners………………………………..223
Introduction………………………………………………………………………………….223
Looking for Suppliers…………………………………………………………………….224
Seven Characteristics of Supplier–Customer Partnering…………………….225
Outsourcing Products……………………………………………………………………228
Group Suppliers by Capability………………………………………………………..229
16 Lean Accounting……………………………………………………………..231
Show Me the Money……………………………………………………………………..231
Performance Goals………………………………………………………………………..232
Box Scores……………………………………………………………………………………233
What You Get for Your Effort…………………………………………………………236
Profit and Loss (Income) Statements……………………………………………….236
Cash- Cash Cycle……………………………………………………………………….241
Calculate Cash-ÂCash Cycle…………………………………………………..242
17 Achieving a Higher Level of Lean………………………………………245
Culture Change: Learning to Stop and Fix the Problem……………………245
Changing the Cultural Change……………………………………………………….246
Key Ingredients in Cultural Change…………………………………………247
Team Leader and Stopping the Production Line………………………..250
Creating a Culture That Will Stop and Fix Problems (Get Out of
Fire Fighting)……………………………………………………………………………….. 251
Using Metrics to Track Change……………………………………………………….252
To Change a Culture, Change a Behavior………………………………………..253
18 Final Thoughts………………………………………………………………..255
What Have We Learned?………………………………………………………………..255
Sustaining Lean Conversion……………………………………………………………256
The Human Factor………………………………………………………………………..259
Goals and Measurements………………………………………………………………259
Rewards Help……………………………………………………………………………….259
Where Do You Find People with Lean Business Knowledge?……………260
Conclusion……………………………………………………………………………………261
Glossary……………………………………………………………………………….263
References……………………………………………………………………………269
Preface
This book is designed to walk companies through the implementation of Lean manufacturing within their companies. We start with the fundamentals and build upon them to teach all the tools and processes needed to implement Lean manufacturing based on the Toyota Production System (TPS). We teach how to determine and calculate the waste in business and manufacturing systems, as well as how to use continuous improvement to implement the changes needed to eliminate wasteful steps and processes. We explain how to remove variations within business and manufacturing processes to achieve a steady continuous flow of product through a system that more efficiently delivers product on time to customers. Time is spent on how to design factories for Lean manufacturing, emphasizing how to use customer order demands to schedule the production floor rather than using estimated production schedules, which can lead to excess inventory and inflexibility in meeting customer demand. New methods and tools are discussed that focus on reducing inventory, improving inventory turns, and improving raw material flow through the factory. Companies are taught how to work and partner with suppliers and customers. One chapter is dedicated to the accounting process and how to improve your cash-cash cycle time. All the chapters in this book, when implemented, will result in a culture change within your company that will improve business and turn your company into a continuously improving and learning organization that never stops eliminating waste and improving processes.
All of this allows companies to grow, without adding the cost of additional space or hiring more people, to become more competitive in the markets they serve. Think about how exciting it is to achieve new levels of success with very little or no outlay of cash. Many small- to mid-�sized manufacturing firms see significant improvements in the following areas:
- Productivity improvements a•⁄ 20% to 30%
- Improved inventory turns 100% to 200%
- Facility space savings a•⁄ 20% to 30%
- Lead time reductions a•⁄ 10% to 50%
- Product cost reductions a•⁄a•⁄ 5% to 15%
I began thinking about this book in 2005 when I started to realize that unlike many of the large corporations I had worked for, many small companies were not being given the opportunity to utilize the significant advantages of Lean manufacturing as described and documented by James Womack, Jeffery Liker, PhD, and others who had studied the TPS in depth. As I grew more knowledgeable about the advantages of the system and studied more about small business, I became convinced there was an application for TPS within these types of companies.
After leaving a career spent at companies of varying sizes, I decided to focus on consulting for small business. I wanted to teach and help them transform their organizations into cultures of continuous improvement and learning by using TPS, which would result in improved profits and growth for the company. What I found was that companies were very interested in improving their business and manufacturing processes but were without the financial resources to hire consulting help to achieve the transformation. It is important to remember that these tools, methods, and ideals can be used in any industry and although the process is typically called Lean manufacturing, it can be used in any part of your business—from manufacturing to sales to human resources.
In today’s business atmosphere, competition is fierce and the cost of doing business is high! Companies need to differentiate their product from the rest of the field but need to have a business structure that is extremely cost efficient, quick to respond to customer demand, and an efficient producer of high-Âquality products. After spending many years working in manufacturing, I began to notice that the same issues were being revisited with surprising regularity. Some of the issues were cyclical in nature while others would manifest themselves based on who the new managers were, and where they placed their emphasis in trying to improve the business. Everyone had an idea on how to fix the problems!
The problem was that everyone was learning from their previous experiences, as well as what was being taught in business or engineering schools. They were not looking and listening with an open mind or seeking new and creative ways to improve their companies. In the 1980s, the University of Michigan embarked on a study of the U.S.–Japan automobile industry; what they found was a company in Japan called Toyota. Toyota had taken many of the manufacturing and management processes developed over the years and combined them with new concepts into an outstanding management and production system dedicated to the elimination of waste. American automobile manufacturers were the first to take advantage of this new found system.
I became fascinated by what I was learning about the Toyota Production System and began applying some of the methods and strategies to manufacturing in the early 1990s while working at Graco, Inc., a manufacturer of spray painting systems for the automotive industry. When I moved on to Sanofi Diagnostics Pasteur, a manufacturer of specialized medical equipment, I implemented some of these same strategies within the instrument manufacturing group and found the same amazing results. I am not aware of any other book that has focused its efforts to consolidate the TPS/Lean manufacturing systems into one concise location where you can go to see, learn, and use the actual tools and procedures that make up the fundamental processes that have made Toyota and other companies so successful.
I would like to thank the people who provide me with support as I continue my journey of learning with TPS. They are Jennifer Klettheimer and Chuck Streeter of Harris Lean Systems, and Dennis Edwards of the Allsteel division of Hon Industries. I would also like to thank my friend Dennis Strand for his help and support in preparing this book.
As your company becomes a learning organization focused on people, process, and flow, I am certain you will find your Lean journey as exciting and fulfilling as I have. Assuredly, it is one of continuous learning that never ends as your company continues to perfect its knowledge and skills with the Toyota Production System.
Michael J. Elbert