LEAN MANUFACTURING is not a 10-step process to become lean, nor does it involve reduced inventories or staffing.
It is a philosophy of manufacturing that involves the removal of non-value-added tasks (waste) and focuses on flow, not batch and queue.
“It's a way of looking at any process to get rid of anything that's not value-added and making processes flow, as opposed to making a batch and then it waits,” said Dale Billet, director of operations consulting for RSM McGladrey Inc and a former director of materials and director of manufacturing for several manufacturers.
In “Tiptoeing Through the Minefield: Lean and Six Sigma for Mid-Size Companies,” Billet said the phases of lean include identifying activities that create value, identifying the value stream, making the process flow, pulling not pushing, and visualizing perfection.
He said identifying the activities that create value includes reviewing each activity and classifying it as value-added or non-value-added (most do not create value).
“It's not whether you think it has value,” he said. “It's whether your customer thinks it has value.”
What makes an activity value-added?
“Is the customer willing to pay for it?” he said. “Did the product change? Was the process done right the first time?
“You may think there's a step in the process where I need quality-control inspection because if it's not right here, it's going to cost money later to repair. Well, the customer isn't going to pay you to inspect that. The product isn't any better because you inspected it.”
He said the seven wastes of lean are:
“A defect could be material not manufactured to spec. But a defect also can be, ‘Did I deliver on time?’
“Am I making things that I don't need right now?”
“How far does it move? How many work stations? How many plants does it go to? Where does it go in and out?”
“If it's not being worked on, it's waiting somewhere.”
“Inventory isn't of value because nothing is happening to it. Whether it's work in process or finished goods, that's waste.”
He said value stream is a sequence of processes from beginning to end. As the value stream is mapped, hopefully most of the steps will be found to create value. Additional steps may be required but do not add value to the product or service. Many steps create no value and can be eliminated.
He said identifying the value stream means identifying and reviewing each non-value added process to try to eliminate. Some non-value-added processes cannot be eliminated (FDA, EPA, OSHA, etc).
He said companies should focus on the product and the activities from beginning to end.
Ignore the traditional boundaries of jobs, departments, functions, etc, and rethink work practices and tools to eliminate backflows, scrap, and all waiting so that the product proceeds continually.
To illustrate batch and queue, he used the example of a fast-food restaurant where a hamburger is grilled, placed on a bun, then toppings are added, it's wrapped, and placed in a warming bin until a customer places an order.
Conversely, in a flow system, the focus is on the movement of material through the process. At a Subway sandwich shop, no one produces a sandwich until the customer downstream asks for it.
He said “push” involves building to a forecast and filling distribution channels. The big three automakers are trying to move to “pull,” but have not gotten there, he said.
“Common sense tells us that good production management involves keeping every employee busy and every machine utilized to justify the capital expenditure,” he said. “Conventional, standard costing systems make machine utilization and employee utilization key performance measures, even though they build up WIP (work in progress) and FG (finished goods) inventory that may never be used.
“Visualize how the process should operate if you could eliminate all non-value-added activities. The ‘perfect’ vision should be transparent to the organization to focus on how their on-going activities move towards ‘perfection.’”
He said Six Sigma is a business strategy that must be embraced by top management and must become a way of life. It measures how effective we are in eliminating defects and variation in a process.
“It's also a big culture change,” he said. “But one thing that's different is that it's heavy on measurement — measuring how much variation in the process there is. Variation is bad because if you have it, typically you're not going to be within spec, which means it's either a defect or you're going to be disappointing to the customer or you're going to have unreliability in lead times and delivery.”
He said Sigma, a letter in the Greek alphabet, is used to designate the standard deviation of an average of any process or product. For business purposes, Sigma level refers to the process capability and represents deviation from the center of the process to the closest specification limit. When expressed as a number, the higher the number, the better. The Sigma level indicates how likely defects are to occur. The higher the Sigma level, the less likely defects are to occur. Six Sigma is a benchmark and a goal.
He said most companies are in the 3-4 range in their processes. A 3-level company has 66,807 defects per million, while a 4-level has 6,210 defects per million. Contrast those numbers with 5-level (233 defects) and 6-level (3.4), which means that 99.9977% of the work is non-defective.
The five phases of Six Sigma form DMAIC:
“What is our goal? How do we do our work? Where should we focus? Don't try to take everything at once. Don't say, ‘I want to get rid of all defects in all my processes. You can't possibly look at everything at once and fix it.”
“What measures are important? What does the data tell us? What are our improvement goals? If you can't objectively measure how the process is working, don't work on it, because if you can't measure it, you don't know what the effect of change is. Pick a process that can give you good data.”
“Why is our process performing the way it does? What's causing the problems? What will improve performance?”
“Start to fix what's wrong. Don't get bogged down in the analysis-paralysis phase, where you get lots of data and you spend all of your time trying to figure out what's going on. Change some variables. You won't always get the result you think. There might be a couple of steps forward and a step back in this process.”
“Make sure the improvements hold. Determine if you need additional improvements. What I see happen: You improve the process and everybody goes, ‘Whew, got through that.’ And if you're not looking at the measures, it tends to slide back to where it was before. Studies have shown that over time, it has about a 1½ Sigma decrease because the pressure is off of measuring it and controlling it and you're focusing on other activities.”
He said both lean and Six Sigma have significant benefits, but using either Six Sigma or lean independently will result in areas where improvement is not achieved.
Despite reducing variation in processes, using Six Sigma only does not result in dramatic reductions in process time or reduce invested capital. Non-value-added activities are not targeted for elimination but variation reduction is the focus.
If the company is using lean only, the process may have excessive variation or is out of control, and lean will not bring the process in control.
He said the organization of a large company is a complex structure consisting of numerous positions: corporate champion, business unit resource owner, master Black Belt, lean master, Black Belt, Brown Belt, Green Belt, and project team member. Many of these positions are fulltime.
He said the organization of a mid-sized company consists of combined roles, group education, few full-time team members, and greater outside assistance.
The scope of large companies is on multiple projects and formal approval processes, with each black belt generating over $500,000 annual savings. The scope of mid-sized companies is on one project, a single project team, narrow focus (especially in the beginning), an emphasis on achieving quick results, and the success of the first project is critical for buy-in and future projects.
What are the landmines that can prevent success?
An attitude of, “Give me the tools and turn me loose.”
“Improvement is looked upon as a project you do once, enjoy the gains, then it's business as usual (flavor of the month). There's early success but no continued improvement. The perception is that Lean/Six Sigma is a menu of tools and techniques to do the project. It is not a collection of techniques or a methodology, or a project with a beginning and an end. It is a philosophy of manufacturing, a totally different way of thinking, a different value system with emphasis on flow manufacturing, a never-ending journey to perfection, and a change in culture.”
Resistance to change.
“It's a natural component of change. People actively resist change when they feel their well-being is in jeopardy, and it can be expressed covertly or overtly.
“In the unknown phase of change, people ask, ‘What will happen? How will it affect me? How will I do my normal job and adapt to a new way of doing things? What is the purpose of the change? How much will it change? The quicker you move from the unknown, the better.
“In the adjustment phase, you begin to understand your role and how the change will affect you. You make adjustments and reorient yourself. Issues are defined and prioritized. It can be exciting and energizing.
“In the new-norm phase, it becomes easier to integrate the change into your routine. You see the change more clearly. The end is in sight. Fear diminishes, confidence increases. You celebrate successes and goal achievement.
“You as a leader need to be excited about it. If you're excited about it, the team's going to be excited about it. You have to make sure you support them. You want to make sure they don't feel like they're out there all by themselves, and if it doesn't work well, they're not the ones who are going to get shot. This is a team effort. We're all in this together.
“Change affects everyone differently. To the fearful, change is threatening because it means things might get worse. To the hopeful, change is encouraging because things may get better. To the confident, change is inspiring because the challenge exists to make things better. You will have people in every category.”
The lack of top management support.
“That's when it talks the talk but does not walk the walk. Ask yourself: Do staff meetings focus on efficiency and utilization or cycle efficiency and net present value? Are the best people selected for Lean/Six Sigma?
“Top management must be totally committed, unwavering, involved continually, and willing to make tough decisions to keep the process moving forward.”
“The project begins with ample resources and enthusiasm. Other issues surface as time goes on and resources are pulled from the improvement initiative. The remaining team members become overworked and discouraged. The implied message to the organization is, ‘This is not as important as other areas.’ The process becomes viewed as a failure: ‘We tried it and it did not work here.’”
Relying too much on Kaizens.
“Kaizen means to take apart (Kai) and to put back together (Zen). A Kaizen event is an event driven by narrowly focused improvement. Multi-functional team dedicated to making an incremental improvement in a specific process in a week or less period
“Kaizen is very good at rapid improvements, eliminating visible first-order waste, and focusing efforts. Kaizen is not very good at improving processes that involve multiple areas, identifying complicated causes that reside outside the area involved in the Kaizen, and reducing waste that is rooted in policies, procedures, and practices.”
Attempting to solve world hunger.
“Trying to solve too many problems at once and selecting an area that is too large with too many variables to analyze. This results in a long period of time before results are achieved, if they ever are. You must focus on defined areas with manageable data and variables that offer the most potential for improvement.”
A failure to identify customer value.
“The example I give is German manufacturing. There is unusual freedom due to the number of private or bank-controlled companies, a reduced emphasis on short-term financial performance, and detailed focus on processes and technology. There is poor definition of customer value. German engineering in some cases has become German over-engineering. It's unaffordable and engineering-driven. There is a complex product design with an untested concept with the ultimate customer. Daimler Benz, in its early startup days, limited production because key executives believed that chauffeurs could not be trained quickly enough to satisfy the number of projected car owners.
“The German manufacturing firms obtained their self-worth by pushing ahead with product complexities, thinking, ‘Customers will want it, once they understand it. Product failures were explained away by, ‘The customers weren't sophisticated enough to see the merits of the product.’ More complex product designs either drove, or were implemented with, more complex machinery and production processes.”
- Assess whether you are ready to begin the Lean / Six Sigma journey. If you are not, resolve the issues first.
- Identify the “landmines” and prevent them from destroying the project before you “step” on them.
- The journey is never-ending and definitely not easy (especially at first) but the results are well worth the effort.