Presented by: Mike Discenza, CMA

Transcription

1 Presented by: Mike Discenza, CMA

2 Hw many f yu: Have less than 8 hurs f wrk per day? Have new things at wrk yu wuld like t d and have adequate time t get them dne? Are pleased because yu r yur assciates talents are being utilized t their fullest because all f their wrklad is valuable and meaningful? Have plenty f time t get mre experience fr yurself r yur assciates?

3 What is Lean? What is Six Sigma? What are sme Lean tls? Hw des Lean apply in finance? A lk at Lean Accunting.

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5 A philsphy, with crrespnding practices, that fcuses n: Eliminating waste T make prcesses run mre efficiently T deliver mre custmer value A business philsphy characterized by eliminating nn-value added activities (NVAs) which are any activity that: Adds cst withut adding value t the prduct, service, r custmer. An rganizatin that is Lean systematically eliminates waste (NVAs) in their peratins t get the jb dne timely, by minimizing: Labr (Effrt) Materials Cash Machines Space

6 US rganizatins traditinally fcus prductivity and cst imprvement effrts n enhancing value added activities (VAs) e.g. Buying new sftware r autmatin While it is true that technlgical advances d help perfrmance, it is by eliminating NVAs, that cmpanies realize the mst cst imprvement. In fact, mst prcesses cntain as much as 75%-90% NVAs!

7 Value Added T be a value added actin, the actin must meet all three f the fllwing criteria: The custmer is willing t pay fr this activity. It must be dne right the first time. The actin must smehw change the prduct r service in sme manner.

8 1. Identify the Value 2. Map the Value Stream 5. Seek Perfectin 3. Create Flw 4. Establish Pull

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10 Six Sigma is a business initiative started at Mtrla by an engineer named Bill Smith in the 1980 s. At the time, grwth within Mtrla was stagnant and the cmpany was spending up t 20 percent f revenues crrecting pr quality. With up t $900 millin each year ging twards finding and crrecting defects, executives at Mtrla came t believe that higher quality prducts shuld actually cst less. Six Sigma was initiated as an attempt t reduce the csts f pr quality that resulted frm rejected material, rewrk, inspectin prcesses, lst revenue, and ther hidden csts assciated with nt ding it right the first time.

11 Simply defined, Six Sigma is a systematic apprach t reducing variatin within prcesses. Fllwing a methdlgy knwn as DMAIC, prject teams wrk t: Define the prblem as perceived by the custmer Measure the perfrmance f the prcess Analyze data t determine rt causes f prblems Imprve the prcess Cntrl the imprvements

12 Sigma ( ) is a letter in the Greek alphabet used in statistics t describe variability. A sigma quality level is used as an indicatr f hw ften defects are likely t ccur. The higher the sigma quality level, the less likely a prcess is t create defects. A Six Sigma quality level, which is cnsidered wrld class, is apprximately 3.4 defects per millin pprtunities (examples f almst Six Sigma quality level fllw). In rder t achieve higher sigma quality levels, and thus lwer defect rates, we need t cntinuusly drive ut variatin frm ur prcesses.

13 99% Gd 20,000 lst articles f mail per hur Unsafe drinking water almst 15 minutes per day 5,000 incrrect surgical peratins per week 2 shrt r lng landings at mst airprts each day 200,000 wrng drug prescriptins each year N electricity fr almst 7 hurs per mnth

14 All prcesses have waste All prcess inputs vary Outputs are the sum f the variatin in the inputs plus the value added and nn-value added (waste) activities in the prcess Traditinal imprvement methds have fcused n fixing the utputs (fire-fighting) withut addressing the inputs and surces f waste.

15 Three types f variatin 1. Cmmn Cause Variatin Natural backgrund variatin r prcess nise. Always present and inherent t the system. This is small scale variatin. 2. Special Cause Variatin Large scale variatin that may permanently change the prcess. The cause is assignable and external. 3. Systematic Variatin Large scale variatin that systematically changes the prcess mean and is inherent t the prcess.

16 If a prcess exhibits nly cmmn cause variatin we say it is stable. If a prcess exhibits special r systematic variatin we say it is unstable. Use a cntrl chart t measure the prcess ver time enabling us t see variatin.

17 The cntrl chart allws yu t watch yur prcess ver time and measure yur imprvements. Ntice the change arund perid 40. We intrduced a special cause t imprve the prcess.

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19 Cycle Time Errr Prfing (Pka-Yke) Standard Wrk & Standard Training SIPOC Value Stream Mapping & Prcess Mapping Vice f the Custmer (VOC)

20 Suppliers Inputs Prcess Outputs Custmers List f suppliers List f inputs t the prcess Prcess steps (see belw) List f utputs frm the prcess List f custmers Step #1 Step #2 Step #3 Step #4

21 Any activity that takes time, resurces, r space, but des nt add value t a prduct r service Transprting Items Inventry Mtin Waiting Over Prductin Over Prcessing Talent Defects

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23 Manufacturing Finance Transprting Items Relcating inventry t get t required material Printing reprts and getting them frm printers

24 Inventry Manufacturing Parts in line t be inspected Finance Capital requests waiting t be reviewed r apprved

25 Mtin Manufacturing Transferring material t the next prcessing unit Finance ing files fr thers t cmplete

26 Talent Manufacturing Using an experienced maintenance assciate t sweep flrs Finance Using a degreed accuntant t enter data manually fr a jurnal entry r reprt

27 Waiting Manufacturing Wrk in-prcess material Finance Waiting fr a jurnal entry t be cmpleted s clsing reprts can be run

28 Over Prductin Manufacturing Prducing mre than custmer rdered as a way t ptimize run size Finance Prducing reprts that are n lnger needed

29 Over Prcessing Manufacturing Multiple inspectins Finance Prducing extremely detailed reprts when a higher-level reprt wuld wrk

30 Defects Manufacturing Defective parts Finance Bad data frm databases

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32 Waste Tls Transprting Items Inventry Mtin Talent Waiting Over Prductin Over Prcessing Defects Cycle Time Errr Prfing Standard Wrk SIPOC Value Stream Mapping Vice f Custmer

33 Identify the value fr change Understand the current prcess and custmer needs Identify and eliminate the areas f waste in the prcess Prduce nly what is needed when it is needed First time right

34 Backgrund Yu have assciates that are either new t their jbs r new t the cmpany Yu have several prcesses that have nly 1 r 2 experts Yu have identified the need t crss-train assciates Hwever. Time t crss-train was nt readily available due t current wrklads

35 Wrk lnger t fit in training??? Add headcunt??? Skip crss-training due t wrklads???

36 Wrk lnger t fit in training??? Add headcunt??? Skip crss-training due t wrklads??? Or is there a way t crss-train withut just adding hurs t the wrkday r increasing headcunt????

37 Resurces being allcated t Value Added Wrk Fewer hurs needed t cmplete the same VALUE f wrk Mre satisfied custmers Crss-trained assciates Higher degree f jb satisfactin Higher mrale f assciates

38 Lean tls t use: SIPOC Value Stream Mapping Vice f the Custmer Prcess Mapping

39 Lean tls t use: Errr-Prfing Standard Wrk Cycle Time

40 Lean tls t use: Vice f the Custmer Standard Wrk Cycle Time

41 Lean tls t use: Errr-Prfing Standard Wrk

42 Prblem: Inaccurate cycle cunt data was creating inventry adjustments (a nn-deductible expense) and cnsuming assembly resurces. Opprtunity: Imprve accuracy t reduce taxes and increase prductivity.

43 But First Let s try an exercise 1. On yur piece f paper, draw a line 2. Make it an arrw by putting an arrw tip n it 3. Put a bx arund the line

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45 In the center f the page make a bx that is 4 inches by 4 inches Beginning in the upper right crner f the bx, draw a diagnal line dwn t the left crner, making sure t tuch bth crners Make the lwer left end f the line int an arrw by adding an arrw tip

46 Cause and Effect Diagram Material Scrapping - missing prcedure, scrapping based n phys. cunt in "red bx" - lsing crrect part number, jb n., etc. Methd Respnsibilities - VS respnsible persn is nt the same as the ne respnsible fr reprting mvements in VS Receipt x jb matching - there is n tl t identify what material shuld be used fr what jb r part, n lcatins in VS Envirnment Weighing differences Missing incmming inspectin frm QS and BS Machine MS and WIP clearing t VS Lw level f final inspectin after grinding causes high level f scrap and rewrk in ass embly Palstat x Oracle - part numbers d nt match - mistakes in rewrk jbs Descrapping - miss ing prcedure, n matching against previusly scrapped parts Missing verall prcedures fr material mvements and reprting in assembly VS transactins withut physical flw thugh assembly (.D and einzelteile) N reprting f hning rewrk - mixing with rdinary jbs in grinding Releasing Jbs fr assembly - nt in crrect rder ans qantities Lw persnnel training Mistakes in filling issue slips Missing refernce (is sue slip n.) in MS t VS transactins In time bking Rests - pssible OSMI Preassembly - n reprting Mixing part numbers - issue slips etc. Missing material flw cntrl increases the extent f VS and reduces pssibility f cntrl Flw f cmpnents nt accrding t the WIP prcedures Transactins - assembly t HV Clearing VS after returns t inventry - risk f mixing part numbers in 2 places Manpwer Assembly inaccuracy

47 Imprvement: Dcument wrk instructins, re-train n prcedures, enfrce standard wrk. Outcme: Reduced reprted shrinkage by $400k and generated cash savings f $131k.

48 Eliminated manual, reccurring entry f data fr mnthly reprts Saved 4 hurs per mnth in just 1 area!! Reduced the ptential fr errrs due t data entry Autmated the transfer pricing functin Eliminated 50% f an assciate s wrklad Reduced the time t train new assciates in prcess Reduced the ptential fr errrs Autmated the data transfer f clsing infrmatin needed fr jurnal entries Will reduce the time needed t cmplete mnth-end jurnal entries frm 8 hurs n Day 2 t ~30 minutes Will reduce ptential fr errrs ASSOCIATE MORALE

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50 A philsphy, with crrespnding practices, that fcuses n: Eliminating waste T make prcesses run mre efficiently T deliver mre custmer value A business philsphy characterized by eliminating nn-value added activities (NVAs) which are any activity that: Adds cst withut adding value t the prduct, service, r custmer. An rganizatin that is Lean systematically eliminates waste (NVAs) in their peratins t get the jb dne timely, by minimizing: Labr (Effrt) Materials Cash Machines Space

51 Investrwrds: The systematic recrding, reprting, and analysis f financial transactins f a business. Wikipedia: The measurement, disclsure r prvisin f assurance abut financial infrmatin primarily used by managers, investrs, tax authrities and ther decisin makers t make resurce allcatin decisins.

52 Lean Accunting is the methd f cntrl and measurement f financial infrmatin which supprts and drives cntinuus imprvement in a Lean Organizatin Lean Accunting eliminates wasteful transactins Lean Accunting fcuses n value, nt cst

53 Here are examples f paradigms that have traditinally cntrlled accunting: Prfit is maximized at full resurce utilizatin Excess capacity is a waste

54 Hw wuld Lean thinking treat these paradigms: Prfit is maximized by eliminating waste and ptimizing thrughput at the cnstraint Excess capacity prvides flexibility t meet changing custmer and market demands The prblem: the measurement and cntrl system (Accunting) is nt aligned fr Lean success

55 Traditinal Accunting: Utilizatin reprts Direct/Indirect rati Wh is absent frm these measures? What d they drive? Overprductin Waste f peple

56 Lean Accunting Thrughput / cycle time / flw days Delivery What d they drive Lwer inventry Increased value t custmer

57 Here is an example f hw standard csting wrks against Lean success: Raw Mat l 1,000 pcs. Typical manufacturing prcess A B C D E 10 min. 60 min. 20 min. 20 min. 40 min. Prcess Statistics: Ttal Labr Time = 150 minutes Labr Rate = $10.00 / hur Material Cst = $20.00 Overhead = $75 Ttal Labr = $25 Ttal Cst = $120 Inventry: 8 Weeks 15 Weeks 64% OTD

58 Lean imprvements are made: Imprved manufacturing prcess Raw Mat l 100 pcs. A C D E 40 min. 40 min. 40 min. 40 min. Prcess Statistics: Ttal Labr Time = 160 minutes Labr Rate = $10.00 / hur Material Cst = $20.00 Overhead = $80 Ttal Labr = $26.67 Ttal Cst = $ Inventry: 2 Weeks 5 Weeks 94% OTD

59 Lead time reduced 10 weeks Huge OTD imprvements Eliminated a prcess step Inventry drpped 6 weeks But Cst went up $6.67 Tw prcess steps take lnger Did we succeed?

60 P&L Befre Lean After Lean Net Sales 250, ,000 -Material - 20,000-20,000 -Cnversin Csts - 130, ,000 -Overheads - 90,000-90,000 -Inventry Change ,000 Ttal Cst - 240, ,000 Grss Prfit 10,000 (5,000)

61 Practical Lean Accunting: A Prven System fr Measuring and Managing the Lean Enterprise Brian H. Maskell and Bruce Baggaley Wh s Cunting? A Lean Accunting Business Nvel. Jerrld M. Slmn The Gal Eliyahu Gldratt & Jeff Cx

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