Wealth Creation through Lean Manufacturing Concepts

1
Wealth Creation
through
Lean Manufacturing
( Concepts, Tools, Techniques and Applications)

2
Learning Objectives
How waste erodes wealth and affects survival ?
Introduction to Lean System Thinking
Typical wastes in Organizational / Manufacturing Process
Typical Tools and Techniques to eliminate/ reduce waste
 Implementation challenges and change management
 Application of OEE measurement on productivity Improvements
 Potential waste elimination opportunities

3
Introduction to Lean / Lean manufacturing

4
What is Lean ?
Lean is achieving “More with LESS”.
It means
 achieving more with given resources or
 achieving more with less resources .
Mainly it is elimination or reduction of waste in the entire value chain .

5
What is Lean Manufacturing ?
Lean manufacturing system can be understood by relating to the human body. If
the person appears “lean”, then general assumption is that he/she is free from
unnecessary FAT in the body, hence free from unnecessary side effects like BP,
Pain in joints, laziness etc. And the person is perceived as healthy, more flexible,
active etc..
The same way ,Lean manufacturing means , manufacturing system is free from
unnecessary fats like high inventory, high rejection, high breakdowns or line
stoppages factors etc which leads to more flexible in delivery, less lead time,first
time right , low cost of manufacturing and free flow of communication etc .

6
What is Lean System Thinking ?
Similarly, Lean System or Lean Organization means free from unnecessary
waste in the entire value chain starting from extended supply chain system
to customer, even after sales service system .
Lean system Thinking is more than application of Tools and Techniques.
It is a culture of continuous improvement or a way of working or winning
mindset of everyone working for the organization.

7
Misconception about Lean / Lean Manufacturing

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Misconception about Lean?
There are some misunderstandings about lean and its application .Some of the
misconception about lean are
•Lean means cost cutting
No. Cost cutting means cutting down the expenses whether it is essentially required or
not .Lean is focusing more on cutting down the waste or unnecessary expenses, which
is not adding value to customer ,inturn to business.
•Lean is for manpower productivity
Partially true. Lean is focusing on waste elimination or reduction in any form like man,
machine, material, and method. By eliminating or reducing wasteful activities in
format, manpower, material, machine, or process efficiency is improved. Hence, it is
not only on manpower productivity alone.but for all factors of manufacturing.
•Lean is applicable for manufacturing organization only
No. As said, lean is all about waste elimination. As long as activities are there in any
organization, waste will be present .Wherever waste is there, Lean is applicable. It is
not only applicable for manufacturing.

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•Lean can be implemented only in large organization
No. One of the assumptions is that implementing lean requires investment and only
large organization can afford .Actually, understanding the lean concept, tools, and
techniques is easy and does not require investment. Lean thinking and practices can
be implemented in any size of the organization. In fact, Lean can be easily
implementable in small and medium scale organization because of its size and
activities involved.
•Lean is all about 5S and Visual Boards
No. Most of the people think that doing Housekeeping (5S) and putting display
boards is lean manufacturing. Ofcourse fundamental requirement for waste
elimination is housekeeping , ie keeping the workplace in order ,but that alone is
not constituting Lean system. Lean is beyond implementing housekeeping practices.
Similarly visual management is one of the elements of lean system in which display
and control boards are part of it. Hence, Lean is beyond 5S and visual boards or
even it is beyond any lean tools and techniques. It is philosophy and way of
conducting daily management.

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•Lean is for during lean seasons
One of the most misconception is that lean implementation is for not peak season
as everyone is busy with activities and lean is for during lean season. Lean is
nothing do with the busyness of people either peak or lean period. Lean is for
waste elimination or reduction. In fact, implementing and practicing lean concepts
during peak period may give more savings.
•Lean can be useful during recession
Same as above assumption. There is no right time as recession or booming
economic environment. In fact, if Lean is understood well and lean thinking is
implemented internally, external factors will not affect the organization much.

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•Lean is only for automobile and ancillary organizations
No. As said, Lean is not specific to any industries. Wherever there are activities
involved, Lean can be implementable. Why it is popular in auto and ancillary
industries, because the lean concept was evolved and tested first in auto industries.
•Lean implementation is time bound
No. No organization can claim that they implemented lean system thinking
,because fundamental of lean is zero waste, zero accident , zero defects and it is
impossible to achieve and thus it calls for continuous improvement or excellence
journey .Lean implementation is a process or journey .. It is not a destination.

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Where can i apply Lean concepts ?
Typical Foundry Process

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Origin and Brief history of Lean / Lean Manufacturing

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Foundation
of Toyota
Jidoka
JIT –
World War II 1950 1960 1970 1980 1990 2000
TPS as System
Supplier Development
Transplants

Source : Toyota
1933
The “founders” of Lean: History of Toyota and their production system TPS
1924 : Sakichi Toyoda developed an automatic loom with quality stop1924 : Sakichi Toyoda developed an automatic loom with quality stop
1933 : Kiichiro Toyoda (son) left the Toyoda Automated Loom
Company and founded the Toyota Motor Corporation
1933 : Kiichiro Toyoda (son) left the Toyoda Automated Loom
Company and founded the Toyota Motor Corporation
1939: Faced with a small and highly diversified Japanese automotive
market and low capital – especially after the Second World War
1939: Faced with a small and highly diversified Japanese automotive
market and low capital – especially after the Second World War
1950 :Taiichi Ohno (Production Manager) developed the “Toyota
Production System”, which main focus is on “Just-in-time,” Jidoka
(Intelligent Automation), and Kaizen (Continuous Improvement)
1950 :Taiichi Ohno (Production Manager) developed the “Toyota
Production System”, which main focus is on “Just-in-time,” Jidoka
(Intelligent Automation), and Kaizen (Continuous Improvement)
Toyota Motor Company achieved efficiency in mass production in an
environment that is highly diversified and marked by low piece numbers.
Toyota Motor Company achieved efficiency in mass production in an
environment that is highly diversified and marked by low piece numbers.
Sakichi Toyoda
Kiichiro Toyoda
Taiichi Ohno

1515
The “founders” of Lean: History of Toyota and their production system TPS

1616
Why Lean / Lean Manufacturing ?

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Why there is need for Lean in today’s context ?

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 Globalization
 Competition
Technology
Variants
On time delivery
 No inventory
Speed
 Towards Zero defect

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Internal Challenges for organization…
Reduce
Cost
Improve
Quality
“Cheaper”“Faster”
Reduce
Lead Time
“Better”
Net Margin
Production Costs

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What is Purpose of Organization ?

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Maximizing Value to Stakeholders
Value is different for each stakeholder !!!

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Understanding Value / Waste in manufacturing

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In Manufacturing Context ,
Value is defined thru Waste

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Definition of Waste
 Useless Consumption or Expenditure
 Use of Resources without adequate return
Waste is alternatively termed as NON VALUE ADDED

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Customer - ask
for Product /
Service
Customer - get
Product / Service
Activities adding
value from
Customer’s view &
ready to pay
Activities needed for
statutory regulations
& customer not ready
to pay.
Activities are not
needed and wasteful.
customer not ready
to pay
Example:
change shape of
material ,
aesthetic improvement ,
protection
Example:
business process
automation, documentation,
accounting ,auditing
certification
Example:
storage , moving ,
inspection,
rectification
Lead Time =Money
Customer to Customer Process

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Customer - ask
for Product /
Service
Customer - get
Product / Service
Activities adding
value from
Customer’s view &
ready to pay
Activities needed for
statutory regulations
& customer not ready
to pay.
Activities are not
needed and wasteful.
customer not ready
to pay
Lead Time =Money
Goal is maximize VALUE ADDED and eliminate NON VALUE ADDED (WASTE)
activities In Customer to Customer processes
Customer to Customer Process

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“Value addition” in Shop Floor

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Let us understand Value Chain ……

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Material
cost
Process
Cost
Factory
Fixed cost
Quality
Cost
Non
Factory
Fixed Cost
Logistics
Cost
TAX
Profit MRP
Typical Value Chain in Manufacturing setup

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Material
cost
Process
Cost
Factory
Fixed cost
Quality
Cost
Factory
Non Fixed
Cost
Logistics
Cost
TAX
Profit
MRP
Rs 500 Rs 350 Rs 2500Rs 300Rs 250 Rs 200 Rs 100 Rs 300 Rs 500
Where do Manufacturing
have control ???

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Material
cost
Process
Cost
Factory
Fixed cost
Quality
Cost
Factory
Non Fixed
Cost
Logistics
Cost
TAX Profit MRP
By competition & demand /
supply
By Statutory and Tax
regulations
Always on pressure to meet
Stakeholders ExpectationPartial Control by Factory
Where do Manufacturing have control ???

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Material
cost
Process
Cost
Factory
Fixed cost
Quality
Cost
Factory
Non Fixed
Cost
Logistics
Cost
TAX Profit MRP
Rs 500 Rs 350 Rs 2500Rs 300Rs 250 Rs 200 Rs 100 Rs 300 Rs 500
Typically 45-65 % of Value Chain Cost –under manufacturing Control

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How to improve value in value chain ?

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Excellence in Manufacturing
Through
Lean Concepts and application

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How we achieve excellence in Manufacturing ….
5 S
Lean Manufacturing
TPMTQM
Continuous Improvement (Kaizen)
Leads to VALUE Maximization to Stakeholders
Key Initiatives :
Six sigma Q
Total Employee Involvement

3737

High Productivity

Consistent Quality

Cost-effective

On time Delivery

Safe for people to work

High People Morale
Measure of Excellence -PQCDSM

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Strength of chain
depends on the
weakest link of the chain

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Typical waste in manufacturing process / setup

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Typical Wastes in Manufacturing System
1. Over production
2. Over processing
3. Defective Product / Rejection/ Rework
4. Material and Man Movement
5. Inventory
6. Idle Equipment
7. Delay / Waiting for material / man / decisions
8. Unnecessary motion in workplace operations
Mostly all the wastes are interrelated

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Type
of Waste
Description / Examples Causes for Waste
Over
Production
Producing more than demand
Producing faster than required speed
Long Setups in Equipments ,
Unbalanced Processes
Over Production

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Type
of Waste
Over
Processing
Processing more than specification or
requirement
Process not defined well,
communication gap ,lack of work
standardisation
Over Processing

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Type of
Waste
Inventory Either in WIP or as finished goods
Unbalanced processes ,Time
delay, Unrealistic demand /
supply, Quality issues , Unreliable
Equipment, scheduling
Inventory

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Type of
Waste
Movement
Moving the product from one location
to another .
Process layout ;
Centralized storage
Material or Man Movement

45
Type of
Waste
Motion
Unnecessary Operator Motion in
workplace
Poor Workplace Layout, Non
standardized work methods,Lack
of ergonomic designed workplace
Motion in workplace

46
Type of
Waste
Defectives /
Rework /
Rejections
Inspect ,segregate , rework and
Rejection
Incapable processes / equipment,
Lack of trained people , Poor
maintenance
Quality issues

47
Type of Waste Description /
Examples
Causes for Waste
Idle
Equipment
Equipment not performing value
added process or underutilized
Over capacity , Poor maintenance,
scheduling variability, Changeover
loss
Idle Equipment

48
Type of Waste Description / Examples Causes for Waste
Delay or
waiting
People not working or idle due to
waiting for material / machine /
decision or planning problems
Unbalanced process or schedule
variability
Delay or waiting

49
Type of Waste Description / Examples Causes for Waste
Over Production Producing More than demand
Producing soon than required speed
Long Setups in Equipments , Unbalanced
Processes
Inventory Either in WIP as finished goods Unbalanced processes ,Time delay,
Unrealistic demand / supply, Quality
issues , Unreliable Equipment,
scheduling
Transport Moving the product from one location to
another
Process layout ;Centralized storage
Motion Unnecessary Operator Motion Poor Workplace Layout, Non
standardized work methods
Quality issue Inspect ,segregate , rework and Rejection Incapable processes / equipment, Lack
of
trained people , Poor maintenance
Idle Equipment Equipment not performing value added
process or underutilized
Over capacity , Poor maintenance,
scheduling variability
Delay or waiting People not working or idle Unbalanced process or schedule
variability
Summary of wastes

50
Typical Lean Tools for eliminating / reducing waste in
manufacturing process / setup

51
Housekeeping and Visual Management
Quick Changeover Methodologies
Flow Manufacturing
Mistake Proofing Techniques
Application of Problem Solving Methodologies, Tools and Techniques
Application of Ergonomics

52
Tool / Technique Description Purpose
5S
Systematic approach for housekeeping that
ensure the parts , tools are in right place with
right identification
To reduce waste on Motions and searches .also to
ensure safe work environment
Cellular Manufacturing Organizing work group of 3 to 15 people in
manufacturing family of products from end to
end.
Simple workflow usually results in improvement in
quality, lead-time and inventory.
Continuous flow It is a concept of moving a product
throughout value chain at constant rate
rather than in batches
Synchronized production .no delay or temporary
storage results in other side effects
Quick Changeover Uses work simplification of each setup
process and reduce waste and time. Also
makes the changeover process as more
predictable
To reduce changeover time and then encourage low
batch production. Also improves the availability time
of equipment or facility
Mistake Proofing Uses wide variety of technique to prevent
mistake in process
To avoid rejections or rework and also enhances the
availability
TPM Uses predictive and preventive maintenance
technique with problem solving approach
To increase availability , process capability of facility
Lean Tools

53
Overall Equipment Effectiveness

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OEE provides simple, consistent, and proven way of measuring the
effectiveness of any productivity initiatives or lean manufacturing
programmes or TPM programmes

55
What is OEE?
Overall Equipment Effectiveness (OEE) is one of the best METRIC used for monitoring
and improving the Efficiency of manufacturing processes.
The manufacturing processes can be machining, fabrication, assembly line etc
OEE is a simple, holistic, and powerful metric.
OEE takes into account the typical sources of manufacturing productivity losses and
groups them in THREE categories like AVAILABILITY, PERFORMANCE, and QUALITY.
By grouping so in different categories, it distills the complex manufacturing losses into
simple metrics .It helps us to understand the losses with clarity and helps to choose
the right lean tool for each loss. In addition, it helps us to verify the effectiveness of
action against each manufacturing productivity losses

56
Elements of OEE :
Availability:
It measures manufacturing productivity losses from down time .i.e. the events that
stops planned production like machine breakdown, changeover, material not
available, operator not available etc.
Performance:
It measures manufacturing productivity losses from slow cycles .i.e. the factors that
cause the process to operate at less than the standard or possible speed.
Quality:
It measures manufacturing productivity loss from manufactured parts do not meet the
specification or quality requirements.
Together all three measure like Availability, Performance and Quality combine into
one FACTOR as OEE Score .This one complete measure OEE reflects the
manufacturing efficiency and effectiveness.

57
World class OEE for discrete manufacturing process
Generally, world class OEE for discrete manufacturing process is considered 85 % or
greater than 85 %
It is arrived from Availability (90 %) * Performance (95%) * Quality (100 %) = 85 %
Generally, from the study, it is indicated that average OEE score for discrete
manufacturing process is around 60 %.If we aim for excellent OEE standard of 85 %,
then we can realize that there is so much opportunity to move from 60 % to 85 %
through loss elimination or reduction initiatives.

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Calculating OEE
OEE is calculated from three categories like availability, performance, and quality
OEE = Availability * Performance * Quality
Pl note that OEE is not calculated as addition or average of three categories, it is
calculated by multiflying three categories
For example
Availability = 75 %
Performance =90 %
Quality = 89 %,
Then
OEE= 75 % * 89 % * 90%
= 60 %

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Availability:
Availability is the ratio of actual operating time to planned operating time ….
It measures the downtime loss
Availability = Operating Time / Planned Operating Time
Operating time = planned operating time – downtime loss
For example
Availability =Operating Time (300 min) / Planned Operating Time (400 min)
=75 %
Planned Operating time:
Available time per shift – planned shutdown time
Available time per shift
Say 8 hrs i.e. 8 * 60 = 480 min

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Planned shutdown time
It is planned shutdown for valid reasons like morning meetings, lunch break; refresh
break, scheduled maintenance check etc
For example ,
Morning meeting – 10 min ; Lunch break – 30 min ;Refresh break – 20 min
Scheduled maintenance check – 10 min
Hence planned shutdown time = 10 + 30+20+ 10 =70 min
Hence, planned operating time is 480 -70 = 410 min
Actual Operating Time
Planned operating time – down time
=410 – 110
=300 min

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Break up of down time (110 min ) can be
Machine breakdown -20 min
Operator not available – 30 min
Material not available – 10 min
Changeover loss – 50 min
Hence,
Availability = actual operating time / planned operating time
=300/ 410
= 73 %
Performance:
Performance is the ratio of actual qty produced during operating time / standard qty
can be produced during operating time.
From above example,
Actual operating time = 300 min

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Say std time per piece = 3 min
So standard qty can be produced during operating time = 300/3 =100 pieces
Suppose, in a given operating time, actual qty produced is 270 pieces, then
Performance = 270 / 300
=90 %
Quality:
Quality is the ratio of good qty produced to total qty produced.
For example,
Total qty produced = 270 pieces
Good qty = 240 pieces
Quality = 240 / 270
=89 %

63
Important Steps in OEE Improvement Process
•Identify the facility or equipment or line to be measured
•Understand the current OEE level
•Collect shift wise/ day wise data for specified period
•Identify the loss pattern
•Classify the losses in each category
•Prioritize the losses
•Choose the right lean tool for elimination or reduction of losses
•Implement the solution
•Monitor the OEE trend and loss

64
Sample OEE Tracking format
Location : Machining / Press /Assembly / Heat treatment
1
Shift A
Shift
B
Shift C
Utilisation
Reason for Non Utilisation
Setting chaneover in min 20 30
Machine Breakdown in min 35 54
Operator not available in min 35 34 57
Material not available in min 40
…..
……
Total Non Utilised min 130 64 111
Total available time min 480 480 480
Utilisation % 0.73 0.87 0.77
Performance
No of minutes machine used 350 416 369
Standard Tonnage / used
minutes 10 11.8 10.54
Actual Tonnages produced 8 9 10
Reason for Performance loss
……
…….
Performance % 0.8 0.76 0.95
Quality
Total Tonnages produced 8 9 10
Quality acceptable Tonnages 6 8.2 9
Reason for Quality Issues
…..
…..
Quality % 0.75 0.91 0.9
OEE 43.75 60.23 65.63
Sample OEE format

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Why do lean Implementation fail ?

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Lack of CEO and Top Management involvement
Not Educating or creating awareness about Lean and its purpose
Delegation to down without support
Changing priority based on the production volume
Not understanding the Big Picture of organizational problem
Keen on technical knowhow of tools and not on implementation
Lack of people involvement or engagement
No Indepth implementation of tools
Lack of facilitation and patience
Aversion to experimentation and trial

67
10 Commandments for Transformative Results ..
1. Challenge Fixed ideas
2. Think how it can be done rather it won’t
3. Deny status quo
4. Don’t seek perfection
5. Correct Mistakes as soon as they found
6. Innovation does not need money
7. Problems are opportunities
8. Ask WHY
9. Ideas of 10 are better than knowledge of 1
10.Innovations never ends

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Steps in implementing lean initiatives

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Steps in Implementing Lean Initiatives
Awareness creation on the need
Commitment and demonstration by Leaders and Senior Management
Selection of Champions or External Facilitator
Set Key Performance Indicators and Targets
Training and education on Concepts ,Tools and Techniques
Implementation and Handholding the team
Review the KPI’s and Facilitation

70
Some Turn around case examples in our clients business
Industry Results delivered
Casting and Machining •Business turnover increase by 45%, From loss making to
profitability;
•Customer service improvement from 60 % to > 85%
Auto component machining •Manufacturing cost reduction by 7 %
•Inventory reduction by 50 %
Auto Vehicle manufacturing 40 % reduction in delivery lead time
Casting and Machining 35 % growth in sales turnover
Auto chain manufacturing 15 % increase in plant output in 4 months
Casting and machining Profitability increase by 3 times
Machined comp manufacturing Increase in profitability by 2% despite sales volume drop

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Thank you for your Interest
To understand more about its relevance to your business, please mail us to
ganesh@winningmindssolutions.com
mobile : +91 90259 33666
For Business and Life Excellence articles and case studies
please visit website : www.winningmindssolutions.com

Wealth Creation through Lean Manufacturing Concepts

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