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Saturday 18 July 2015



Chapter I| LEAN

Together with the plant manager in Chicago, at first it can be painted that he was really uninterested to the Enterprise Resource Planning (ERP) system that was introduce by the IT representative from his Lean Shop. It was then two months earlier, the IT firm was hired to install the new ERP system to the North American operation with several plants from Canada to Mexico. Each plant have specialized employees but rarely communicated with peers because each sites are far from each other. Each site has their own business practice that follows. All these plants are owned by a parent company and wanted to standardize all plants but everyone refuse. Hoping that ERP will serve as the beginning to make all sites connected, sharing ideas and produce a competitive advantage of producing a coordinated supply chain in service to national accounts.
            On the meeting of I.T. firm with the management team of each site, they were more interested on Chicago’s plant operations. They started with their Lean operation that produces a quality goods but mountains of inventory. Then they try the MRP system, but according to them it only produces an incapable scheduling process. So then they again return to Lean operation and continue to work with and do improvements like simple kanban system or simple ordering system and the like. They hired a Lean consultant and switched off the old MRP system. Doing much effort and even using kanban system they were far from reaching their inventory reduction target. Or even when there are two much inventory they experience out of stock resulting to late deliveries and disorder in shop. That’s why their inventory ups and down.
            The I.T. representative try to explain what ERP can do but still the plant manager insisted thinking that it would make more work to the site. Relying only to the continuous improvement of Lean transformation but also admitted that they were not perfect since they have no computerized planning and scheduling or software to support Lean operations. He also added that he will not allow any other to introduce new ones.
            According to the plant manager what he needs is an ATP or (Aim to Promise) needed for the ordering system. It will help manage customer expectations, so that they can maintain productions and avoid stock-outs. The I.T. representative wasn’t surprise because that is a common ordering processes and he already knew it. The plant manager didn’t know that to support this ATP for order system it will needs production planning and scheduling and also required a software that will support the entire design for delivery. Didn’t Chicago plant manager say that he will not let another outsider to allow new one. Therefore the I.T. representative was convinced that whatever Chicago plant manager do more effort for his site he will become effortless indeed.

  • 1.      Kaizen project – philosophy of ongoing improvements.
  • 2.      Kanban system – order card: card bearing an order of goods.
  • 3.      ATP – maintain level of production and avoid stock-outs.
  • 4.      MRP system – the old system used by Chicago plant manager, that according to them it only produces an incapable scheduling process.
  • 5.      ERP system – system or software that support and resolve production planning and scheduling like what the Lean operations currently struggling. 

Chapter 2| LEAN: Reaizing the Value of Lean

What is waste?
  • ü  Waste is anything your customer would not be willing to pay for.
  • ü  Is any activity that you would rather not tell your customer about? If you’re inclined to conceal it, then it’s probably a waste.

Waste elimination

ü  is one  of the most effective ways to increase the profitability of any business. Processes either add value or waste to the production of a good or service. The seven wastes originated in Japan, where waste is known as “muda." "The seven wastes" is a tool to further categorize “muda” and was originally developed by Toyota’s Chief Engineer Taiichi Ohno as the core of the Toyota Production System, also known as Lean Manufacturing. To eliminate waste, it is important to understand exactly what waste is and where it exists. While products significantly differ between factories, the typical wastes found in manufacturing environments are quite similar. For each waste, there is a strategy to reduce or eliminate its effect on a company, thereby improving overall performance and quality.

*      Muda is the Japanese word for waste; another common term is Non-Value-Added Activity (NVA).
*      Non-Value-Added activity (NNVA)
ü  Any activity which clearly creates no value, which can be removed                         immediately with minimum or no capital       investment, and with no                                 detrimental effect on end value.
*      Non-Value-Added activity (NNVA)
Ø  Any activity which again creates no value but is unavoidable, given the current operating constraints of technology, production assets, and operating procedures.

The Seven Forms of Waste

*      Inventory - Excess raw material, WIP, or finished goods.
-          Accountants define inventory as an asset, Lean accountants consider it a liability.  Excess inventory ties up cash and creates  waste in many forms including storage facilities, tracking, transactions, movement,         damage, obsolescence,  and the physical counting and adjustment of         records.
*      Delay: According to Ohno and Shingo, after inventory the next waste to focus upon is delay, the unnecessary wait time that occurs throughout the      production process. In particular, they emphasized setup time reduction. Setup time represents a primary fixed cost component of the manufacturing equation, and it is the basis for the economy of scale assumptions that have justified mass production since the start of the Industrial Revolution. Unnecessary wait time may be caused by improper scheduling, causing people, tools, and materials not to appear in the right place at the right time.
*      Motion: Unnecessary human motion—the ergonomics of walking, bending, reaching, twisting, lifting, handling, requiring two hands instead of one—not only wastes effort, but may cause health and safety issues. This form of waste also includes unnecessary machine motion, which causes additional maintenance, energy cost, and machine wear, leading to quality problems.
*      Transportation - Unnecessary movement of materials, supplies, and resources is waste.                Material may move from receiving to a storage location, from one   storage location to another, or from storage location to the point of          use, before it is finally consumed in production.
*      Overproduction - Overproduction waste is caused by making more and/or sooner than the customer demands. This may be caused by improper demand planning, long setup times, large batch sizes, inappropriate kanban sizing, or quality rejects.
-          leads to consumption of too many resources people, machines, inventory, storage space, energy, and cash tied up in these assets.
*      Overprocessing - is caused by performing unnecessary work. Processing waste may be caused by using wrong or poorly maintained tools, improper work     instructions, and inadequate training. Processing waste may also be due to inappropriate product design caused by a lack of communication between design and production engineering.

*      Defects - This is the cost of poor quality that may result from faulty product design, insufficient training, lack of standardized work methods and instructions, improper tooling or work center preparation, unnecessary inspection and quality countermeasures, and excess      processing caused by repair and rework.
-          Defect waste includes interrupted schedules, missed due dates, uneven production flow, inspection to catch defects, and unnecessary setup and runtime caused by unscheduled repair and rework. Quality problems are often concealed by excess inventory and large batch sizes.

The Elusive Eighth Form of Waste

Eighth Form of Waste
-          Define as complexity, the harm caused by processes and information systems that are more complicated than necessary.
-          “Loss of Human Potential”


*      Dr. W. Edwards Deming  is considered by many as the father of the quality
            Revolution. He taught a systematic and team-based quality management technique            that became the foundation for continuous improvement. In the late 1940s he     traveled to Japan, a country ravaged by war and starved for resources, to assist in             reconstruction. He taught that most quality problems are caused by process, policy, and procedure issues, rather than by people.

Four Steps of Deming– Shewhart Cycle of Continuous Improvement

*      The first is to plan a change of whatever you’re trying to improve.
*      The second is to carry out the change on a small scale.
*      The third step is to observe the results.
*      The fourth step is to study the results and decide what you’ve learned from the change.
      The Deming–Shewhart Cycle of Continuous Improvement is such a method of inquiry and discovery. It is iterative, meaning that it repeats, building upon each new fact and insight gained from the last experiment. And it is a continuous discovery process, leading to incremental improvement. The Deming–Shewhart cycle has become popularly known as the Deming Plan–Do–Check–Act (PDCA).

The Deming PDCA Cycle of Continuous Improvement
            The PDCA Cycle is a checklist of the four stages which you must go through to get from `problem-faced' to `problem solved'. The four stages are Plan-Do-Check-Act, and they are carried out in the cycle illustrated below.

Implementing the PDCA Cycle

The PDCA Cycle encourages you to be methodical in your approach to problem solving and implementing solutions. Follow the steps below every time to ensure you get the highest quality solution possible.

Step 1: Plan: First, identify exactly what your problem is. You may find it useful to use tools                   like Drill Down, Cause and Effect Diagrams, and the 5 Whys to help you really                        get to the root of it. Once you've done this, it may be appropriate for you to                                map the process that is at the root of the problem. Next, draw together other
                        information you need that will help you start sketching out solutions.

Step 2: Do: This phase involves several activities:
ü  Generate possible solutions.
ü  Select the best of these solutions, perhaps using techniques like Impact Analysis to scrutinize them.
ü  Implement a pilot project (test, prototype) on a small scale basis, with a small         group, or in a limited geographical area, or using some other trial design          appropriate to the nature of your problem, product or initiative.
            The phrase "Plan Do Check Act" or PDCA is easy to remember, but it's important you are quite clear exactly what "Do" means. ""Do" means "Try" or "Test". It does not mean "Implement fully." Full implementation happens in the "Act" phase.

Step 3: Check: In this phase, you measure how effective the pilot solution has been, and   gather together any learning’s from it that could make it even better. Depending on       the success of the pilot, the number of areas for improvement you have identified,            and the scope of the whole initiative, you may decide to repeat the "Do" and "Check"       phases, incorporating your additional improvements. Once you are finally satisfied             that the costs would outweigh the benefits of repeating the Do-Check sub-cycle any         more, you can move on to the final phase.

Step 4: Act: Now you implement your solution fully. However, your use of the PDCA Cycle        doesn't necessarily stop there. If you are using the PDCA or Deming Wheel as part of        a continuous improvement initiative, you need to loop back to the Plan Phase (Step       1), and seek out further areas for improvement.
*      Kaizen Strike
-          is a spontaneous exercise begun the moment a problem is detected. For example, a machine shuts down or begins performing out of specifications, and a team quickly gathers to troubleshoot the problem. Although a Kaizen Strike may start and finish in just minutes or hours, it must be a well-organized event, and it requires a leader and a disciplined problem-solving methodology.
*      Kaizen Blitz
-           is a planned event usually completed in less than a week. It is important to have a specific problem for an effective Kaizen Blitz, for example, the reorganization of a troublesome stockroom. Quick changeover or quality improvement on a single work center may also qualify as a Kaizen Blitz, and may be used to generate momentum and ideas before launching a longer-term improvement initiative.
*      Kaizen Event
-          is a carefully planned event that may require several weeks or months to complete, often focused on an area where problems are not clearly understood. Selection of the project focus is important: If you ask the wrong question, you may receive a correct but useless answer. The team should invest sufficient time in grasping the situation and analyzing the problem before doing, checking, or acting. It’s compelling but usually counterproductive to pursue the first because that comes to mind, as that cause may be only a symptom of an underlying root cause.
*      Theory of Constraints
-          Every system contains a bottleneck (primary constraint) that limits the throughput of the entire system. Theory of Constraints (TOC) advises you identify the constraint, understand it, then minimize or eliminate it. When you have done this; another primary constraint moves up to take its place. You should eliminate each new constraint in turn, increasing throughput and Revenue potential of the entire system with each step.
*      Six Sigma
-          is a rigorous application of the scientific problem-solving method to a large and complex problem domain, emphasizing disciplined project management, measurement, and analysis.
-          Six Sigma uses the Define–Measure–Analyze–Improve–Control (DMAIC) methodology, which is similar to but more rigorous than the Deming PDCA cycle. The foundation for Six Sigma is information, according to the authors of What is Lean Six Sigma?:

v  What is Six Sigma?

Ø  The Six Sigma approach starts with the assumption that even our experience may not be adequate to really understand what’s going on. Therefore, there’s much more emphasis on gathering hard data about the causes and the background of the problem, and to try to base conclusions and solutions on a little harder data edged analysis.

            In short Lean is very important. Implementing Lean is an act to eliminate waste on business processes of common businesses todays to improve its production. Therefore business intelligence (Lean) must be realized because it was based on edged of business analysis.

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