Operational Excellence - The Path to World-Class

Your Gateway to Operational Excellence
© PSL 2009 All Rights Reserved
Operational Excellence
The Path to World-Class

World-Class Operations
• GROUP ACTIVITY
– Develop an agreed definition
of what a World-Class
printing business is.
– How would you measure
World-Class?
– What distinguishes a World-
Class printing business from
others in the market place?
This document is a partial preview. Full document download can be found on Flevy:
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World-Class Practices – what we do
F o u n d a tio n - B u s in e s s S tra te g y
M a n u fa c tu rin g
P ra c tic e s -
S c h e d u lin g , S a fe ty,
E q u ip m e n t a n d
R e s o u rc e s
L e a n P ra c tic e s -
5 S , J IT , K a n b a n , S M E D ,
W a s te R e d u c tio n , T P M ,
E rro r P ro o fin g e tc
O rg a n is a tio n a n d
C u ltu re P ra c tic e s -
T e a m w o rk , L e a d in g
a n d M a n a g in g C h a n g e
B iz In te g ra tio n
P ra c tic e s -
S tra te g y, S & O P ,
S u p p ly C h a in
P la n n in g , E R P ,
In ve n to ry
M a n a g e m e n t
Q u a lity P ra c tic e s -
S ta n d a rd is a tio n
B e s t M e th o d s
D e fe c ts F re e
fo c u s

Results – Self Assessment
0 – We do not measure any of these
2 – We are 20% or greater below our target objectives
4 – We are no greater than 10% below our target
6 – We meet the planned outcome
8 – We are no greater than 10% above our target
10 –We exceeded all targets, and actively seek to improve in all we do.
We can demonstrate results, and all our staff are actively involved. We
regularly review results and develop further action plans for
implementation
Results Score
DIFOT (On Time Delivery) 1 2 3 4 5 6 7 8 9 10
% Value Added Activities 1 2 3 4 5 6 7 8 9 10
Inventory Turns 1 2 3 4 5 6 7 8 9 10
% Defects / Scrap 1 2 3 4 5 6 7 8 9 10
Employee Morale or Turnover 1 2 3 4 5 6 7 8 9 10
Circle Your Score
Total
Average

What’s in it for your Staff?
• Simplified processes;
• Increased job satisfaction and
ease of work;
• Opportunity for additional career
path;
• Employability in other industry
sectors;
• Make contribution to more
sustainable business practices;
• Saves jobs – helps to reduce
costs and delivery lead times
which benefit the company and
customers.

Lean is not new …
• Different names
… but common
theme …
“Excellence”
• TQM
• WCM
• JIT
• Lean / TPS
• TOC
• Agile
• Flexible
• Synchronous
• Six Sigma
• Lean Sigma

Toyota (or Thinking?) Production System
It’s 20%
Tools and
80%
People
The Heart
of Lean:
Respect for
People and
Kaizen

The Lowest Possible Cost
“Cost Plus Principle vs. Cost Reduction Principle”
Price
Price
Profit
Cost
Price
Profit
Cost
Traditional ThinkingTraditional Thinking
Cost + Profit = Price
Lean ThinkingLean Thinking
Price – Cost = Profit
Price
To reduce cost you must:
• Distinguish between what is absolutely necessary and what is not absolutely
necessary.
• Realize that cost varies according to the production method being utilized.
Some methods of building a product are more costly than others.

Lean Operations - Guidelines
• Specify value from the standpoint
of the end customer.
• Identify value stream and
eliminate all non-value adding
(waste) steps.
• Make the value-creating steps flow
smoothly toward the customer.
• As flow is introduced, let
customers pull value from the next
upstream activity.
• Pursue perfection through
continuous improvement.
1990 1996
James Womack Daniel T. Jones

Some Documented Results
• Reduced Changeover Time – 25% per year;
• Cost Reduction – 5 to 10% per year;
• Reduction of Lead Time – Weeks to days;
• Reduction of Inventory and WIP – 24 turns vs. 2
turns;
• Doubled Productivity in 4 weeks.
““ Work smarter, not harderWork smarter, not harder””

VA versus NVA
What the customer sees
and pays for.
What the customer
actually pays for!

Defects
• Rejects, Scrap, Corrections etc
• Parts mismatch;
• Forgotten parts in assembly;
• Scratches on parts (material quality);
• Spoiled parts, useless because dirty, or
scratched...;
• Poor Instructions;
• Lack of Training;
• Not following the right sequence;
• Lack of Maintenance.

Non-Effective Use of Talent
• Under utilisation of
• Expertise;
• Skills;
• Creativity;
• Innovation;
• Leadership;
• Motivation;
• Drive.

Motion
• Movement of people which
does not add value
• Looking for tools;
• Looking for information;
• Non-use of POUS;
• Poor layout;
• No Standard methods;
• Poor house keeping;
• Poor process design.This document is a partial preview. Full document download can be found on Flevy:

Activity –Small Lot Manufacturing
Flow Simulation
Batch Size = 3
Avro Arrow Airplane Company

5S
• A systematic way of
creating a safe, efficient,
and highly visible
workspace for
employees;
•
• 5S is one of the pillars of
Lean Manufacturing, and
provides a starting point
for continuous
improvement.
– “If you can’t master 5S, forget all of the rest”
Taichi Ohno, Father of the Toyota Production System

Sort – How you do it?
Item
Sort
Useful
Storage
Unsure Useless
Dispose
Decision
Fix It
• Remove all
unwanted items
from the work
area
• Keep only the
bare necessities
• When in doubt
“Red-Tag” the
item

Standardising
• Standardising locks 5S
into permanent work
habits by:
– Taking responsibility
for tasks
– Making 5S part of
everyday activities
– Auditing progress
made in 5SThis document is a partial preview. Full document download can be found on Flevy:

Visual Management
A communications strategy
for the manufacturing
environment.
It is based on the premise
that a picture is worth a
thousand words.

Examples of Visual Workplace

Key Principles for Success
• The cornerstone is
standardized 5S
• Train teams
• Standardize visual metrics
across the organization
– Make the metrics
understandable
and purposeful to the
people viewing themThis document is a partial preview. Full document download can be found on Flevy:

Where is Setup Reduction Used?
• Wherever unacceptable setup times
exist
• Focal points include:
– Bottleneck or critical equipment
• Critical equipment, in the
case of Setup
Reduction, is that equipment
which is “critical” to the plant
or process based upon
production, service, or quality
reasons
– Areas looking to implement
production leveling (Heijunka)
– Areas in need of increased
production capacity

Setup Reduction Cycle
1. Identify Focus
Equipment or
Process
2. Study
Elements of
Setup Time
3. Attempt to
Eliminate Setup
Tasks
4. Move On-line
Tasks to Off-line
Tasks
5. Minimize
Duration of On
& Off-line Tasks
6. Implement
Ideas and Re-
examine

Case Study – Set-up Reduction
• 1 Hour per changeover.
• 40 C/O’s per week in a 24
hour operation.
• Reduced set-up by 10
minutes to 50 mins per C/O
which is a saving of 400
mins p.w. or 333 hrs p.a.
• Savings equal to over $700K
p.a.

Why Use TPM?
• Increases safety of
equipment
• Extends the life expectancy
of equipment
• Increases the amount of
time equipment produces
quality product
• Minimizes production time
losses due to equipment
down-time

OEE: A Tool for TPM
• Overall Equipment Effectiveness (OEE) – A tool
used to monitor the effectiveness of CRITICAL
equipment
• OEE = Production Time for Quality Parts
Available Production Time
• 6 Big Time Losses = Idle time, Setup time,
Equipment failure, Reduced speed, Process
defects, Miscellaneous
• Categorized losses will make failure points more
obvious and provide direction for concentration

• Simply implementing 5S will make
maintenance opportunities more
obvious
• Post visual reminders (i.e. pictures of
equipment with highlighted
inspection points) in work areas to
increase program flexibility
• Enforce workers’ responsibility and
ownership for equipment
• Properly train work personnel on the
concept of TPM and the maintenance
points that exist on equipmentThis document is a partial preview. Full document download can be found on Flevy:

The Costs of Quality
• The “cost of quality” isn’t the price of creating a quality
product or service. It’s the cost of NOT creating a quality
product or service;
• Every time work is redone, the cost of quality increases.
Obvious examples include;
• The reworking of a manufactured item;
• The retesting of an assembly;
• The rebuilding of a tool;
• The reworking of a service.
In short, any cost that would not have been expended if
quality were perfect contributes to the cost of quality.

Failure Modes & Effects Analysis
FMEA is a systematic method used to identify,
prioritize, and eliminate potential failures from the
system, design or process before they reach the
customer.
– Omdahl, 1988
• FMEAs are focussed on preventing defects, enhancing
safety, and increasing customer satisfaction.
• FMEA is part of a Comprehensive Quality System.
FMEA is a risk management tool used on Products
(designs) and Processes

RCA using 5 Why’s
Why?
Problem
or Effect
Direct
Cause
Why?
Contributing
(Intermediate)
Cause
Contributing
Cause
Why?
Contributing
Cause
Why?
Contributing
Cause
Why?
Root
Cause
Contributing
Cause
• Generally, 3-5 levels of “Why” is
sufficient to get to a reasonable Root
Cause
• Beyond 5 levels usually yields too
narrow or too specific details

Uses of Error Proofing
• Reduces chances of part defects,
which …
– Reduces customer complaints
– Reduces cost of scrapped
material
– Reduces employee and machine
time spent on rework and
repairs
• Lessens the chance of damage to
equipment
• Addresses the root cause of
problems to prevent recurrences
• Acts as a 100% inspection point

Case Study
• Quality Improvement
• Tools used –
– Brain Storming,
– Fish-Bone
– RCA
– Standardisation

Recap of Day 1
• Value and Waste
• 8 Types of Waste
• 5S
• TPM
• SMED
• Jidoka

Just-In-Time (JIT)
• Making what the customer needs, when
they need it, in the quantity needed.
• Uses the least amount of effort, materials,
equipment, machinery and space to get
the job done.
• Exposes hidden problems and the 7
Wastes of Operations.
• Just-In-Time is in essence three principles
– Takt Time
– Flow Production
– Pull Systems

Where is Takt Time Used?
• Where standard
products are built using
– Standard processes
– Standard components
• Where customer demand
can be closely forecast

Example (cont’d)
• How do you use it?
34 sec cycle time
18 sec takt time
= 2 workers needed
This is how resources are properly
allocated to meet customer demand:
•Anymore workers than 2 = Over production
•Any less than 2 workers = Not meeting customer demandThis document is a partial preview. Full document download can be found on Flevy:

Benefits of Production Leveling
• Drastically increases the
flexibility of production to
help smooth fluctuation in
customer demand
• Reduces inventory levels,
both raw material and
finished goods
• Supports the idea of a pull
system
• Reduces the “Feast or
Famine” effect associated
with batch production

Where is Production Leveling Used?
Where …
• There is high customer demand
variation
• There is high product model
variation
• Standard process times exist
– This will allow Takt time and
pitch to be calculated and
utilized
Note: Pitch is the Pack-Out Container Time, and is used where
single-piece lots are not economical for material movement

Leveling Examples

Benefits of Continuous Flow
• Minimizes Work In
Process (WIP) inventory
• Eliminates problems and
bottlenecks
• Eliminates build up of
defects
• Shortens lead times
• Uses cross-trained
workers efficiently
• Aids in the
implementation of
Standardized Work

Cellular Manufacturing
• Organizing a facility into
production cells containing
dissimilar, dedicated
equipment that is typically
arranged in a U-shaped
layout in the order of the
production sequence
• The goal is to move
production towards
continuous flow and allow
operators to operate
multiple machines

Cellular Manufacturing
Exit
Key: Product route
Worker route
Machines

Work Cells in Offices
Administrative areas can also be arranged in cells.

Push versus Pull

Everyday Example of Pull System

Pull System Example

Types of Kanban
• Withdrawal Kanban
– Similar to a voucher in that it is only
good for a specified number of parts
from the supermarket
– These parts are to be supplied
downstream
• Production Kanban
– Acts as an order in that it indicates
how many parts must be produced
to replace the parts that were used
downstream
• Signal Kanban
– Alerts personnel to the fact that a
re-order point has been reached for
a particular product
Production KanbanThis document is a partial preview. Full document download can be found on Flevy:

Typical Kanban Card Items
Part Number Origin / Supplier Number of Parts
per Card
Kanban Card
Number
Destination Reorder Point
Card information should be adjusted based on its
function and the individual needs of the business

• Never produce more product
than the amount taken by the
downstream process
• Only produce and convey when
there is a Kanban card
• Never send defective product
downstream
• Kanban cards must be attached
to the parts/containers and
should move with
them throughout the process
• Periodically review the number of
Kanbans in the system to ensure
they are the optimal quantities

Standardized Work
Method of developing a consistent process for
completing a task by identifying the ideal
combination of task elements, personnel,
equipment, and materials while minimizing waste
Time
Process
Performance
I
S
L
I = Improvement Completion
S = Standardization
L = Loss of Focus
S
S
L
L
I I
This tool is used to ensure continued success of process
improvements

Tools for Work Standardization
Chart allows user to:
• Determine adequacy of production volume by comparing cycle time to
takt time
• Identify amount of time wasted on conveyance
• Determine whether associates are being fully utilized

Examples of Standard Work
Clear visuals
and
descriptions
allow for
quick
referencing
to all
operators
entering an
areaThis document is a partial preview. Full document download can be found on Flevy:

Kaizen
An ideology which
revolves around the
fact that there is
always a need for
continuous
improvement.
This ideology must be
instilled in all staff
throughout the
company.

Where is Kaizen Blitz Used?
• On opportunities
discovered during
Value Stream
Mapping sessions
• In areas in need of
rapid improvement
All
organizational
functions
provide a
potential Kaizen
opportunity!

Toyota Production System

VSM – Current Trends

Points to Remember
• Get everyone involved
• Create two different maps
– Continually update the
Current State Map
– Create a Future State Map
as a goal
• After the completion of the VSM,
create an implementation and
control plan to ensure lasting
design changes
• Select and monitor proper
metrics

Toyota Production System
(5S, TPM)(5S and TPM)
The Heart
of Lean:
Respect for
People and
Kaizen
It’s 20%
Tools and
80%
People
Value
Stream Mapping

Roadmap to Achieving a
Lean Enterprise
• Assess the current process
• Understand the customer's true desires and future market
trends
• Obtain buy-in by senior management
• Develop sound knowledge of the manufacturing process
• Apply lean tools and techniques at the most critical processes
• Spread out the lean implementation to all auxiliary areas until
a fully integrated manufacturing process is obtained
• Implement lean with suppliers
• Implement lean with downstream supply chain organizations,
including customers
• Apply lean into off-line and nonmanufacturing areas
(Engineering, Design, Marketing, etc.)

Using the Balanced Scorecard
• Ties performance measures to corporate
strategy.
• “Balance” includes…
– short & long term objectives;
– financial and non-financial measures;
– external & internal measures;
– various perspectives.
• Purposes of the balanced scorecard
include…
– clarify & translate vision & strategy;
– communicate & link strategic
objectives & measures;
– plan, set targets & align strategic
initiatives;
– enhance strategic feedback &
learning.

NZ Workplace Engagement Levels
• Source – Gallup Polling 2005
Disengaged
15%
Apathetic
68%
Engaged
17%
Engaged Disengaged Apathetic

Champion Change
• Understand resistance to
change (fear)
• Break down barriers
• Determine the readiness
• Motivate to embrace
change
• Learn by doing
• Communicate X 3
• Celebrate milestones
• Deal with resistance
properly
• Create a culture of action

Lean – Formulae for Success
IDEAS
THE TEAM DEVELOPS IDEAS
ON HOW TO ELIMINATE WASTE
COMMUNICATION
MAKE SURE EVERYONE KNOWS
THE GOALS, THE CHANGES
BEING MADE, THE SUCCESSES,
AND THE FAILURES
CULTURE
CREATE A CONTINOUS
IMPROVEMENT CULTURE.
ALWAYS CONSIDER
NEW IDEAS
OBSERVE
ANALYZE THE CURRENT
SITUATION
TEAMWORK
FORM A TEAM OF PEOPLE,
THE PEOPLE THAT ACTUALLY
DO THE WORK
Top Management Commitment

Lean Assessment
OperationalExcellence Score
5S(Sort,Set-to-Order,Shine, Standardise,Sustain) 1 2 3 4 5 6 7 8 9 10
Quality Processes 1 2 3 4 5 6 7 8 9 10
Work Cells /Areas asProfitCentres 1 2 3 4 5 6 7 8 9 10
Visual Controls 1 2 3 4 5 6 7 8 9 10
StandardWork (PreciseProcessing) 1 2 3 4 5 6 7 8 9 10
Total ProductiveMaintenance 1 2 3 4 5 6 7 8 9 10
Just-in-Time
ContinuousFlow 1 2 3 4 5 6 7 8 9 10
Pull Systems 1 2 3 4 5 6 7 8 9 10
Production Levelling 1 2 3 4 5 6 7 8 9 10
Quick Changeovers 1 2 3 4 5 6 7 8 9 10
HumanResources
ContinuousImprovement 1 2 3 4 5 6 7 8 9 10
Training 1 2 3 4 5 6 7 8 9 10
Supplier / Customer Alliances 1 2 3 4 5 6 7 8 9 10
CircleYour Score

Keep it Clean, Green and Lean
Thank You!Questions & Answers

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