LEAN MANUFACTURING: THE NEW NORMAL Leaning for Contract Packaging and Contract Manufacturing

Transcription

1 LEAN MANUFACTURING: THE NEW NORMAL Leaning for Contract Packaging and Contract Manufacturing K. DONALD THAM, Ph.D., P.Eng. Ryerson University, Toronto, Canada Professor of IE & Internship Coordinator Nulogy Corporation, Toronto, Canada Co-Founder

2 LEAN & CONTRACT PACKAGERS Who & Why The Storm Today s Business Riding Out & Context Leveraging the Storm What The Principles for Customer Leaning Focus How Fundamentals of Lean & Kaizen Measuring Progress When Get Lean or Get Out, Lean Supply Chain is The New What s Normal Next? Concluding Case Study

3 THE STORM Today s Business Climate has forced companies to ask

4 Where is the waste? Photo by D'Arcy Norman, 2009.

5 CPGs ARE FEELING PRESSURE As markets get tighter and more competitive, eliminating waste is critical to success Thousands of products line the shelves, and thousands more are lined up to replace those Brand-owners that must quickly bring successful products cannot compete! to market Focus on cost & waste cutting, and speed is now ESSENTIAL

6 LEAN PARTNERS CAN RELIEVE IT More and more are seeking to perform in house only their core functions, while outsourcing the noncore activities. In manufacturing, this means shedding a company s own plants and turning to domestic and international contract manufacturers. There is a tremendous growth opportunity for lean Contract Manufacturers and Packagers Lean principles are easy to immediately incorporate, no matter your personnel or level of sophistication Group Conclusion, CSCMP Leaders Forum, Chicago, June, 2009

7 DON T RIDE OUT THE STORM LEVERAGE IT! Leaning embodies key principles * to help Ride out and Leverage the Storm in the Potential Growth Market for Contract Packaging and Manufacturing. *value, value stream, flow, pull, continuous improvement

8 DON T RIDE OUT THE STORM LEVERAGE IT! Leaning is the do term defining one s striving towards customer value creation and waste elimination. VALUE WAST E

9 HAVE A CUSTOMER FOCUS Know what your customers want Know when they want it Eliminate waste or non-value activities from your internal processes for quick, on-time delivery of what your customers want If it doesn t ADD VALUE from your customer s perspective, it s WASTE.

10 YOUR CUSTOMER S HAVE 3 GOALS 1. Lower costs by outsourcing Leverage inexpensive labor and production with a community of diverse partners. 2. Increase product velocity across the supply chain Improve collaboration and product turnover with partners to lower production costs and increase speed to market. 3. Manage and mitigate risk All partners can continue to thrive and grow by contributing their expertise to the successful, final outcome.

11 LEANING HELPS MEET THESE GOALS Contract Packagers and Manufacturers must deliver value to their customers, without waste, through effective and efficient value streams that ensure swift flow of products and services, with diligent efforts toward continuous improvements.

12 KEY PRINCIPLES OF LEAN Value Defined from the Customer s perspective Value Stream Processes that delivers a product or service to the customer Flow Smooth progression of products or services Pull Each process step produces product or service when ordered by the next in-line customer Continuous Improvement A process by which activities create value and waste is eliminated

13 UNDERSTAND YOUR CUSTOMER I don t see a big difference whether you have 1,000 employees or 10 you still have the same struggles as a corporation everyone wants the same thing in terms of customer demand The primary solution to the challenge is getting the thinking right. Sustainable Lean, Jamie Flinchbaugh & Andy Carlino, Co-Founders, Lean Learning Center, Novi, MI.

14 LEAN FUNDAMENTALS 7 Wastes MUDA, elimination of waste/non-value added activity 5-S System Poka-yoke A place for everything and everything in its place Mistake proofing SMED Standardize Kanban Single Minute Exchange of Die (change-overs) Standardization of Best Practices and Processes Pull System / One Piece Flow

15 MUDA & THE 7 WASTES 7 Wastes 5 S Poka-yoke SMED Standardize Kanban MUDA = Waste Anything that does not add value to the produce or service for the customer. Any obstruction to smooth flow of an activity. Activity = Work + Muda Expenditure = Cost + Muda Cost For each activity there is work, and for any work there is a cost. Any expenditure on the Muda is a waste! Less Muda = More Happy Clients Muda negatively impacts quality, cost and delivery.

16 MUDA & THE 7 7 Wastes 5 S Poka-yoke SMED Standardize Kanban WASTES Inventory Any supply in excess of Customer Requirement Over-Production Producing more or faster than required Correction Necessary inspections and repairs Waiting Idle time resulting from non-synchronization Material Movement Any movement that does not support synchronized flow Motion Any movement of people or machines that does not add value Processing Any effort that does not add value to the product or service

17 5-S SYSTEM 7 Wastes 5 Ss S Poka-yoke A Place for everything and everything in its place. SMED Standardize Kanban

18 5-S SYSTEM 7 Wastes 5 Ss S Poka-yoke SMED Standardize Kanban Five dimensions of workplace optimization for quality, safety, organization & consistency: Sort Sort contents of an area and remove unnecessary items Set in Order/Stabilize Arrange necessary items for easy & efficient access Keep it that way Shine Clean everything, keep it clean Use cleaning to ensure area and equipment is properly maintained Standardize Create accessible guidelines to keep areas organized, orderly, and clean Sustain Education & communication to ensure everyone follows 5- Ss

19 ERROR-PROOFING OR POKA-YOKE 7 Wastes 5 S Poka-yoke SMED Standardize Identify and eliminate errors Develop processes and methods that help operators avoid mistakes in their Incorporate poka-yoke into work SOPs Kanban

20 SINGLE MINUTE EXCHANGE DIE 7 Wastes 5 S Poka-yoke SMED SMED Standardize Kanban Identify and separate internal and external set-up operations Convert internal set-ups to external operations which can be performed while the machine is running

21 SINGLE MINUTE EXCHANGE DIE How long does it take to change a tire? 7 Wastes 5 S Poka-yoke SMED SMED Standardize Kanban Photo by Kurt Nordstrom 2004

22 SINGLE MINUTE EXCHANGE DIE How long does it take to change a tire? 7 Wastes 5 S Poka-yoke SMED SMED Standardize Kanban Photo by Mohd Nor Azmil Abdul Rahman 2008

23 STANDARDIZATION 7 Wastes 5 S Poka-yoke SMED Standardize Kanban One Best Practice work method A Standard Operating Procedure (SOP) that delivers desired outputs for customer Why would you entertain the alternative: Less than Best Practice?

24 KANBAN PULL SYSTEM/ ONE-PIECE FLOW 7 Wastes 5 S Poka-yoke SMED Standardize Kanban Kanban Pull parts from one production stage into the next, as needed Continuous flow in one direction Immediate visual aids/feedback help control movement Provide of materials the customer between work with product stationsor service right the first time, when required The Kanban system helps minimize lead times, work-in-progress and production costs

25 KANBAN PULL SYSTEM/ ONE-PIECE FLOW Immediate visual aids/feedback help control movement of materials between work stations: 7 Wastes 5 S Poka-yoke SMED Standardize Kanban Kanban

26 KANBAN PULL SYSTEM/ ONE-PIECE FLOW Work Order Batch Processing The old, longer process. Step One Step Two Step Three 7 Wastes 5 S Poka-yoke SMED Standardize Kanban Kanban 30 min. 30 min. Total Process is 90 min. 30 min.

27 KANBAN PULL SYSTEM/ ONE-PIECE FLOW Flow (Kanban) Processing Step One 30 min. 7 Wastes 5 S Step Two 30 min. Poka-yoke SMED Standardize Step Three 30 min. Kanban Kanban Total Process is 50 min.

28 KAIZEN KAI = Change ZEN = Good (For the Better) KAIZEN = Continual Improvement

29 KAIZEN S CRITICAL EYE To Lean, we must understand what we commonly see Crammed warehouses, product lines, work-in-progress, storage racks Develop a Lean Eye Genchi Gembutsu or go see for yourself Learn to see one s plant and department in greater detail and understand how the different elements affect each other. Approach what you see with a QUESTIONING ATTITUDE

30 A QUESTIONING ATTITUDE What, How, Who, Where, When? Why? What is being done? Why is it being done? How is it being done? Why is it being done that way? Who is doing it? Why is that person doing it? Where is it being done? Why is it being done there? When is it being done? Why is it being done then?

31 A QUESTIONING ATTITUDE: Surprising Results Many Muda (waste) elements emerge Take Action to eliminate the waste & cost Congratulations! You have covered valuable ground in the journey toward lean Keep Looking with a Questioning Attitude As potential process improvements come to the fore-front, you are into Kaizen!

32 KAIZEN BLITZ TEAM Individuals who have Learned to See and Walk the Talk, follow this process: 1. Go to the workplace, where value is added 2. Check the Gembutsu (equipment & items) 3. Take temporary measures on the spot 4. Find & kill the root cause of waste 5. Standardize the process to prevent recurrent waste

33 MEASURE YOUR LEANING How well are you progressing? You cannot manage if you cannot measure Process Excellence / Sigma Six for KPI metrics Enables tracking of Leaning or Kaizening efforts Statistical measure of process (effective & efficient) capability Gives measure of the quality of your business products and E.g. services Six Sigma level of ~3 defects per million represents highest quality: virtually all products and business processes are defect-free

34 VALUE STREAM MAPPING In Lean thinking, processes are Value Streams Lead Time reduction & the flow of Value Streams are major areas of focus Value-stream mapping helps teams understand the flow of material and information as the product is processed through the organization This mapping creates a vision of the entire system

35 BE BOTH EFFECTIVE & EFFICIENT Effective: Doing the right thing Efficiency: Doing things right Processes may be efficient, but they may not necessarily be effective! A process may seem efficient as it always ensures things are If the done things right done right are not the right things, we may have an efficient process that is not effective Leaning with Kaizen, the right things done right every time!

36 GET LEAN OR GET OUT Pressures to Implement Lean, order of importance: 1. Operational Costs 2. Customer mandates 3. Global or horizontal supply chains 4. Corporate Revenue Goals 5. High volatility in demands 6. Inventory obsolescence My conclusions from 2009 surveys by SME, Aberdeen, AME, CSCMP

37 WHAT S NEXT? Exemplifying the Pursuit of Excellence We ve historically been monitoring the business impact of Lean initiatives but offline in Excel spreadsheets. We want to move to full integration by using our platform in tandem with the business intelligence tool instead of offline reporting to eliminate room for error. If it s in an online system you can almost guarantee accuracy. Ross Martin, Business Transformation ProgramDirector, National Foods (Australia) for Manufacturing Sector Insight: The Impact of Lean on Consumer Product Manufacturers, Aberdeen, 2007

38 WHAT S NEXT? Leaning with Business Intelligence What is needed is a new generation of BI tools and applications that are capable of integrating cross- and inter-enterprise processes and information. The resulting intelligence would enable CPG companies to make better operating decisions, increase company transparency, change business processes, and drive overall performance. Those enterprises that learn to effectively harness the vast quantities of information generated by their IT systems both within and outside Don Tapscott, BI for Consumer Packaged Goods: Actionable Insights for Business Decision Makers, 2008 the corporation will enjoy a substantial competitive

39 Aberdeen discussions with Jeff Slater, Operating Excellence Leader, Sonoco, CASE STUDY: SONOCO Company Problem Consumer packaging, rigid packaging, tubes and cores/paper, wire and cable reels, molded and extruded plastics In mid-1990s: projects returned less than average results Minimal tools outside of simple problem solving and voice of customer Any recommendations where taking 9 months, sometimes more more than a year, to implement

40 Aberdeen discussions with Jeff Slater, Operating Excellence Leader, Sonoco, CASE STUDY: SONOCO Solution Between : mentored 874 trainees and 580 Global leaders in Lean Each business unit has had to pave their own path to Operational Excellence and achieving true Customer Satisfaction

41 Aberdeen discussions with Jeff Slater, Operating Excellence Leader, Sonoco, CASE STUDY: SONOCO Outcomes Lean Six Sigma Greater understanding of value Continues to improve and develop customer involvement Support and recognition of work accomplished on Apply fact strategies based and and measureable tools with pull system results Better Leadership involvement Leadership Waste and Standard Work for Leaders, sharing with leaders how to walk the talk