Waste Elimination

Module Objectives
By the end of this module, the participant will be able to: Explain the History, Benefits and Role of Lean in Eliminating Waste Discuss potential improvements from implementing Lean Identify value added activities Discuss the Five Principles of Lean Review potential metrics for Lean

Merrill Lynch Six Sigma Focuses On Four Specific Objectives

Service
Growth Engines Eliminate Redundancies Develop Talent

Merrill Lynch Six Sigma Integrates Powerful Approaches to Better Achieve These Objectives

Growth

Service
Growth Engines Eliminate Redundancies

Eliminate Waste

Develop Talent

Reduce Variability

Merrill Lynch Six Sigma is a System of Proven Methodologies

DFSS

Growth

Service
Growth Engines Eliminate Redundancies

Eliminate Waste
LEAN

Develop Talent

Reduce Variability
DMAIC

DMAIC = Define, Measure, Analyze, Improve & Control 5 DFSS = Design For Six Sigma

It Is a Network of Processes Backed by a Set of Robust Tools

DFSS
TRIZ
QFD Supplier Capability Marketing & Sales

Growth

Predictive Modeling Axiomatic Design

Product Development

Visual Controls Balanced Work Standardize JIT

Systems Thinking

Service
Growth Engines Eliminate Redundancies Develop Talent
Problem Solving

Process Capability

SPC Reliability Process Mapping DOE

Eliminate Takt Waste 5S

Value Steam Mapping

Reduce CTQ Variability

C&E Matrix Mistake Proofing FMEA

Unpredictable Demand

LEAN

DMAIC
Lets look at the first of these 3 Key Components
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Lean Thought Leaders

Historically, firms have been organized, based on functional silos and poorly defined processes. They are loaded down with non-value-added waste Based on the successes of Toyota and other highly efficient firms, the authors of The Machine That Changed the World and Lean Thinking have defined an idealized model for operational efficiency, and a means to pursue that ideal Lean or as we describe it at Waste Elimination, amongst other things, is also known as Toyota Production System, Ford Production System and Demand Flow Technology Lean demands an organizational culture that is intolerant of waste in all forms

Benefits of Lean
Significantly reduced process cycle-time Elimination of costly non-value-added activities Enhanced value creation and team focus Reduced non-recurring and indirect costs Improved utilization of scarce resources Maximized synergy among all related processes

The Role of Lean

The methods of Lean provide an efficient way to reduce operational waste, save time, save cost, and extend capacity of valuable resources
A typical waste-filled value stream...
Unnecessary Task

Desired Outcome

Error-Correction Loop

Task Waits in Queue Approval Cycle Deliverable Created

...and a lean value stream for the same process:

Desired Outcome

Lean Removes Obstacles to Improvement

Poorly defined organizational roles and responsibilities Chaos resulting from fire fighting and expediting Habit of managing through a functional organization Lack of well-defined and efficient processes Poor utilization of valuable human and capital resources Lack of metrics focused on client value-added processes Lack of productivity enhancing work methods Lack of uniform prioritization of work

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New Competition - New Standards!

Percent Increase in Productivity (1997-2001)

Source: Business Week January 8, 2001

80 70 60 50 40 30 20 10 0

Dramatic Improvement In Just the Last Four Years!

Improved work methods have enabled significant productivity improvement in virtually every industry... Dont get left behind!
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How Lean Do You Think You Are?

The Opportunity* 20% - 60% Reduction in Process Cycle Times >50% Improvement in Resource Utilization 10% - 50% Increase in Gross Margins >30% Gain in Process Capacity Dramatic Improvement in Schedule Predictability

* Based on reported results from firms spanning several industries, 1999 - 2000
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Definition of Value
Any activity or task that transforms the deliverables of a process in such a way that the client is both aware of it, and willing to pay for it, is value-added Based on this (strict) definition of value, we can divide the tasks and activities of any process into three categories Value-added (essential) tasks Type 1 Waste - Non-value-added (NVA), but currently necessary Type 2 Waste - Non-value-added (NVA), and not necessary

Our goal is to eliminate Type 2 activities wherever possible, and minimize the waste in Type 1s through the use of lean methods.
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Value-Added Quiz
In which category should the following activities be placed?
Activity Attending a weekly team coordination meeting Filtering through your daily e-mail list Reporting status to upper management Gaining multiple approvals on documents Gaining management approval for routine actions Expediting a document through the approval list Writing formal policies and procedures Writing brief work-method instructions Gaining regulatory or agency approvals Creating ISO 9000 documentation Hunting for needed information to do your job Building a best practices database Holding a lessons learned meeting Spending time on process improvements Value Added Type 1 Type 2

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The Five Principles of Lean

Lean can be summarized in five principles*: Principle 1 - Precisely specify the value of a specific process Principle 2 - Identify the value stream for each process Principle 3 - Allow value to flow without interruptions Principle 4 - Let the client pull value from the process Principle 5 - Continuously pursue perfection

. . . Provides a Framework for Waste Elimination

* Womack, J. P. and D. T. Jones, 1996, Lean Thinking, Simon & Schuster
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Principle #1 - Specify the Value

Increased Value of Process Output

Point of Optimized Output Value

Missed Value Opportunities

Too Much Information, Unnecessary Features, Etc.

Cost of Process Output

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Principle #2 - Identify the As-is Value Stream

Customer Meetings C/T = 14 days W/T = 2 days VA/T = 1 day

Iterate
Assign Buyer C/T = 3 days W/T = 4 hours VA/T = ~ 0 Gather Strawman Requirements C/T = 14 days W/T = 2 days VA/T = 1 day Verify Customer Requirements C/T = 14 days W/T = 2 days VA/T = 1 day Consult With Manufacturing Engineer C/T = 5 days W/T = 2 days VA/T = 4 hours Create Preliminary RFQ C/T = 5 days W/T = 2 days VA/T = 1 day

Revise Triggering Event

Review and Approval Cycle C/T = 5 days W/T = 1 day VA/T = ~ 0

The Value Stream is the ideal sequence of valuecreating steps that lead from a triggering event to a final deliverable without waste.
C/T = Calendar Time W/T = Work Time VA/T = Value-Added Time

Measurable Deliverable Continue Continue

Review and Approval Cycle C/T = 5 days W/T = 1 day VA/T = ~ 0 Release RFQ C/T = 2 days W/T = 1 day VA/T = 2 hours

Create Final RFQ C/T = 5 days W/T = 2 days VA/T = 1 day

As-Is Process Cycle Time*: C/T = 58 days W/T = ~14 days VA/T = 5 days

Revise

* Assumes no revisions!
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Principle #3 - Eliminate Obstacles to the Flow of Value

Value Functional Departments/Inadequate Resources

Unnecessary Documents and Approvals Unnecessary Queues and Wait Times

Excessive Inventory Batch Processes There can be many obstacles to the flow of value! Client
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Principle #4 - Let the Client Pull Value

If every activity within a process has a deliverable, and... every deliverable must be received by some client Then the best way to ensure a satisfied client is to have them define the format and content of their deliverables. For recurring production Build to demand Kanban/pull linkages JIT material flow For business processes Client defined deliverables Linked tasks JIT information flow
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Principle #5 - Continuously Pursue Perfection

Waste constantly invades every work process Disorder tends to naturally increase (entropy effect) Constant vigilance is essential to maintain lean production and lean business processes! It takes about a week for THIS to look like THIS!

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Some Examples of Waste and Associated Lean Methods

Lean Business Processes Process Looping Long Cycle Time Capacity Bottlenecks Poor Communication Missing Information

Straw manning/Feed-Forward Transaction Time Reduction Global Task Prioritization Visual Communication/Control Centralized Information Access

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Metrics of Lean
Any or all of these measures can be used to quantify progress toward lean business processes:
Consistency of Delivery Capacity to Handle New Work Process Cycle-Time

Profit Margin on Sales

Measurable Improvement

Length of Process Queues

Productivity per Employee Return on Capital Investment

Level of Employee Multi-tasking

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Module Objectives
By the end of this module, the participant will be able to: Explain the History, Benefits and Role of Lean in Eliminating Waste Discuss potential improvements from implementing Lean Identify value added activities Discuss the Five Principles of Lean Review potential metrics for Lean

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Reference Material Waste Elimination Cheat Sheet and Key Questions to Ask

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The Five Principles of Lean

Key Concepts Value Any activity or task that transforms the deliverables of a process in such a way that the client is both aware of it, and willing to pay for it, is value-added.

1. Precisely specify the value of a specific process 2. Identify the value stream for each process 3. Allow value to flow without interruptions; eliminate obstacles 4. Let the client pull value from the process 5. Continuously pursue perfection
Value Stream Mapping 1. Mapping the process allows us to understand process to improve 2. Value stream is all actions required to bring a specific product/service through three critical tasks: Problem solving Information management

Value Stream Mapping Questions Who was involved in the creation of the value stream maps? Was it a cross-functional team? What was your method for measuring process time observations (cycle time, lead time, work or touch time, calendar time, etc.)? Did you walk the process to validate the value-stream map? How did you create the future state value stream map? Can we remove those process steps that do not add value? What are the baseline metrics (RTY, takt time, failure rates, defect types, etc)?
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Physical transformation 3. Identify value-added activities 4. Define opportunities to remove non-value-added steps 5. Value Stream Map of the ideal process (future state)

The Eight Types of Waste 1. 2. 3. 4. 5. 6. 7. 8. Overproduction Inventory Waiting Transportation Motion Making Defects Over-processing Human Capability

Tools to Make Waste Visible 1. Workplace Organization 5S Visual Workplace 2. Spaghetti Chart 3. Process Flow Diagram 4. Pareto Chart 5. Cause and Effect Diagram Five Whys 6. Process Reports and Assessments

Contributors to Waste

1. Unevenness 2. Overburden 3. Current Methods and Processes

Key Concepts

Waste Identify types and contributors of waste in operations. Lean demands an organizational culture that is intolerant of waste in all forms

Key Concepts TAKT Time Demand Profile Establishment ("takt" time) A German term that refers to the tempo set by the conductor of an orchestra, it is a calculation that sets the rate of production equal to the average client demand.

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Questions on Making Waste Visible

What tools to make waste visible have you used and how were they helpful? Was a waste chart useful in identifying times for storage, handling, inspection and processing(SHIP)? What interim actions have you taken to eliminate waste? Was a formal 5S conducted? Were safety items identified? Actions? Did this have any impact on operator/administrator morale? Does the spaghetti chart indicate potential changes to the layout? Are additional techniques required? Has a FMEA (Failure Modes and Effects Analysis) been completed to identify potential risks of changing the process? What are your improvement plans and next steps to get there (including timing, responsibility and expected results)? How did the spaghetti chart change before and after changes? Did the more detailed process flow diagram illustrate more than one way of doing things? Hidden factory?

Growth

Eliminate Waste

Reduce Variability

Six Sigma Elements

The methods of Lean provide an efficient way to reduce operational waste, save time, save cost, and extend capacity of valuable resources.

Process Blitz or Kaizen

Were expectations set for the Kaizen based on earlier findings? Was a plan in place to meet the expectations? What techniques were used? How many Kaizens were conducted? Did actions create a positive attitude towards change and success? How did before and after change metrics compare? Was it a base hit or a grand slam?

Key Concepts

Waste Elimination Report-Out Questions and Key Concepts

Implementation Biased for IMMEDIATE action

Just do it mindset
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CONTROL PHASE
Document procedures Standardized Operations
For the control on this stage of your project: What are your next steps toward achieving your improvement targets? Can we lean the process more or is it necessary to reduce variability first? Can value-added activities flow better? Was additional employee training necessary? What process controls are being implemented to ensure we sustain the gains? Has the process owner taken responsibility for maintaining the process after the team completed its project? Is there a plan to revisit this process in the future or have controls been established to ensure the new capability level is maintained? What is the expected improvement in terms of cost reduction? Has finance been involved in the project? How did the level of cooperation and support that you received during the project compare to your previous history of making change? What should we do differently to better support the next process blitz? Did you present and celebrate the accomplishments? What rewards (pins, cups, polo shirts, hats, etc.) were distributed to participating team members? Were the process changes properly documented? Were improvements made part of standard operations?

Growth

Eliminate Waste

Reduce Variability

Six Sigma Elements

The methods of Lean provide an efficient way to reduce operational waste, save time, save cost, and extend capacity of valuable resources.

Key Concepts

Strive for perfection Improvement issues should be continuous

Waste Elimination Report-Out Questions and Key Concepts

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