Module BB2

Lean Six Sigma

Lean Six Sigma

Black Belt
What is Lean?

Lean is defined as application of the

following together:
1. Value - Elimination of non-value-added
activities.
2. Value Stream - Optimized value-stream
3. Flow - Smooth Flow of Processes and
information
4. Pull System
5. Perfection in what we do to be most Fit
6. Agility implementation speed

2
 Lean : 1 -Value
Resources Productivity
• VA – Value Add
• Better
• Automobiles
• Healthcare
• Service
• Cheaper
• Long Distance (Phone)
• Electronics
• Weapon Systems
How do these companies
• Faster achieve VA?
• Transportation • Disney
• Southwest Airlines
• Marriott
• Dell
• Wal-Mart
3
 Lean : 1 -Value

• NVA Non Value Add –

“MUDA”
• Non Value-add , waste –”Muda”
• Muda hides itself in a way that many times we can not
see it.
• It is also called FRICTION
• It may even look normal.
• Disguised in policies, we have been doing it
this way for….
• Greatest waste is the waste we don’t see
• It is the little things that are hard to see
4
Muda - Hidden cost of poor quality

5
 The Hidden Factory

OK
Inputs Operation Inspect Final Test
Yield
NOT
Rework OK
Hidden Factory
Scrap

Activities in the Hidden Factory box are ‘Non Value Added’

activities whose effect is not reflected in final test yield.

6
 Lean : 1 -Value

• Lean is commissioned to eliminate

Muda in the entire organization and
create a friction free enterprise.

• A waste-less enterprise
• JIDOKA – QC at source
Jidoka

7
 Seven Forms of Waste

1. Overproduction (Producing too much or too soon)

2. Waiting (Idle time)
3. Transportation
4. Unnecessary motion
5. Over-processing (Too many steps to complete a job)
6. Inventory (Too much stock on hand)
7. Producing defects

Eyes for Waste

8
 Lean : 1 -Value

• BVA – Business Value Add

• It may be essential to our way of doing

business.

9
 Lean : 1 -Value

• WCE – Work Cycle Efficiency

• Three days in the life of an F-16 main landing gear door

• Battle of VA with Muda

• What is our work cycle efficiency?

10
WCE – Work Cycle Efficiency

11
 Lean : 2- Value Steam
Suppliers Wholesale
Distributors Retailers

Manufacturers

Supplier Logistics Customer

Exchanges Exchanges Exchanges

Logistics
Virtual
Manufacturers Providers

Contract
Manufacturers Information Flows
Goods Flow

12
 Characteristics Of A Good Workflow
Value Stream Process

• Has a defined customer and supplier

• Delivers a defined work product or service
• Has defined and measurable customer requirements
• Adds value to the business and to our customer
• Satisfies the customer
• Has a recognizable owner

Value Stream

13
Order Fulfillment Process
Who Is Responsible For The Value Stream?

All the actions required to bring a product

through its main flows, door-to-door, from raw
material to the arms of the customers

14
 Lean : 3- Flow

• VA efforts should constantly flow to

add value.
• Do not interrupt the flow.
• Queue?

15
 Few High
Low Multiple Major Volume,
Volume, Products, Products, High
One of a Low Higher Standard-
Kind Volume Volume ization
I. Commercial Flexibility (High)
Job Printer Unit Cost (High)
Shop French Restaurant
These
Theseare
are
the
themajor
major
II. Heavy stages
stagesof
of
Batch Equipment product
productand
and
process
processlife
life
III. cycles
Automobile cycles
Assembly
Assembly
Line Burger King
IV.
Sugar
Continuous Refinery Flexibility (Low)
Flow Unit Cost (Low)
A Constant, Uniform Flow Requires
Balanced Work

Standard Work 17
Minimizing Waste:
Uniform Plant Loading (heijunka) Heijunka

Suppose
Supposeweweoperate
operateaaproduction
productionplant
plantthat
thatproduces
producesaasingle
single
product.
product. The
Theschedule
scheduleofofproduction
productionfor
forthis
thisproduct
productcould
couldbe
be
accomplished
accomplishedusing
usingeither
eitherof
ofthe
thetwo
twoplant
plantloading
loadingschedules
schedules
below.
below.

Not uniform Jan. Units Feb. Units Mar. Units Total

1,200 3,500 4,300 9,000
or

Uniform Jan. Units Feb. Units Mar. Units Total

3,000 3,000 3,000 9,000
How
Howdoes
doesthe
theuniform
uniformloading
loadinghelp
helpsave
savelabor
laborcosts?
costs?
18
 Lean : 4- Pull
Trigger
Supplier Point of use.
Purchasing Operator
E-Mails Dept E-Mails
Acknow-
Order

Pull
ledgement
of release Supplier
to blanket Trigger Board
?
PO .

Vs. Information
Inventory
Material is
Material

Push
shipped

Card information:
• Raw Material Code
• Card Quantity
Receiver
closes • Batch Size
release • Number of Cards

KanBan / Pull 1. Purchasing issues blanket P.O. (Purchase Order) for

material
2. Warehouse Associate will E-Mail appropriate supplier
System for Raw and Purchsing dept. a release for set quantity of material
3. Supplier E-Mails acknowledgement of release back to
Purchasing and Warehouse. (Compliance)
Materials 4. Supplier ships material within timeframe specified on
P.O.
5. Receiving Transaction closes this release upon receipt
of material.

19
Lean : 4- Pull -- OBJECTIVES

• JIT Defined
• The Toyota Production System
• JIT Implementation Requirements
• JIT in Services

20
Just-In-Time (JIT) Defined

• JIT can be defined as an integrated set of activities

designed to achieve high-volume production using
minimal inventories (raw materials, work in process, and
finished goods)

• JIT also involves the elimination of waste in production

effort

• JIT also involves the timing of production resources (i.e.,

parts arrive at the next workstation “just in time”)

21
 JIT and Lean Management

• JIT can be divided into two terms: “Big JIT” and “Little JIT”

• Big JIT (also called Lean Management) is a philosophy of

operations management that seeks to eliminate waste in all
aspects of a firm’s production activities: human relations,
vendor relations, technology, and the management of materials
and inventory

• Little JIT focuses more narrowly on scheduling goods

inventory and providing service resources where and when
needed

22
 Here
Herethe
thecustomer
customerstarts
starts
the
theprocess,
process,pulling
pullingan
an JIT Demand-Pull Logic
inventory
inventoryitem
itemfrom
from
Final
FinalAssembly…
Assembly…
Then
Thensub-
sub-
assembly Fab Vendor
assemblywork
workisis
pulled
pulledforward
forwardbyby
that
thatdemand…
demand… Sub
Fab Vendor
Customers Final
Assembly

The Sub Fab Vendor

Theprocess
processcontinues
continues
throughout
throughoutthe
theentire
entire
production
productionprocess
processand
and
supply
supplychain
chain Fab Vendor
The Toyota Production System

Based on two philosophies:

1. Elimination of waste

2. Respect for people

24
 These
Thesearearesmall
smallspecialized
specialized
Minimizing Waste: plants
plantsthat
thatlimit
limitthe
therange
range
Focused Factory of
ofproducts
productsproduced
produced
Networks (sometimes
(sometimesonlyonlyone
onetype
typeof
of
product
productforforan
anentire
entire
facility)
facility)

Some
Someplants
plantsin
in
Japan
Japanhave
haveasas
Coordination few
fewas
as30
30and
and
System Integration as
asmany
manyasas
1000
1000employees
employees
Minimizing Waste: Group Technology (Part 1)
Note
Notehow
howthe
theflow
flowlines
linesare
aregoing
goingback
backand
andforth
forth
•• Using
UsingDepartmental
DepartmentalSpecialization
Specializationfor
forplant
plantlayout
layoutcan
cancause
causeaalot
lotofofunnecessary
unnecessary
material movement
material movement

Saw Saw Saw Grinder Grinder

Heat Treat

Lathe Lathe Lathe Press Press Press

26
 Minimizing Waste:
Group Technology (Part 2)

•• Revising
Revisingby
byusing
usingGroup
GroupTechnology
TechnologyCells
Cellscan
canreduce
reducemovement
movementand
andimprove
improveproduct
product
flow
flow

Grinder
1 2
Saw Lathe Lathe Press

Heat Treat

Grinder
Saw Lathe A B Lathe Press

27
Minimizing Waste:
Uniform Plant Loading (heijunka)

Not uniform Jan. Units Feb. Units Mar. Units Total

1,200 3,500 4,300 9,000
or

Uniform Jan. Units Feb. Units Mar. Units Total

3,000 3,000 3,000 9,000

28
Minimizing Waste: Just-In-Time Production

WHAT IT IS WHAT IT DOES

• Management philosophy • Attacks waste

• Exposes problems and bottlenecks
• “Pull” system though the plant
• Achieves streamlined production

WHAT IT REQUIRES WHAT IT ASSUMES

• Employee participation
• Industrial engineering/basics • Stable environment
• Continuing improvement
• Total quality control
• Small lot sizes
29
Minimizing Waste: Inventory
Hides Problems

Example: By
Machine
identifying defective
downtime items from a vendor
early in the
Scrap Vendor production process
Work in delinquencies Change the downstream work
orders
process is saved
queues Engineering design Design
(banks) redundancies backlogs

Example: By
Paperwork Inspection Decision identifying defective
backlog backlogs backlogs work by employees
upstream, the
downstream work is
saved
30
Minimizing Waste: Kanban Production Control
Systems
This puts the
system back
Once the Production kanban is
received, the Machine Center Withdrawal were it was
kanban before the item
produces a unit to replace the
was pulled
one taken by the Assembly Line
people in the first place

Storage Storage
Machine Part A Part A Assembly
Center
Line

Production kanban
Material Flow
The process begins by the Assembly Line
people pulling Part A from Storage Card (signal) Flow
31
Determining the Number of Kanbans Needed

• Setting up a kanban system requires determining the

number of kanbans cards (or containers) needed
• Each container represents the minimum production lot size
• An accurate estimate of the lead time required to produce a
container is key to determining how many kanbans are
required

Kanban

32
 The Number of Kanban Card Sets
Expected demand during lead time + Safety stock
k=
Size of the container

DL(1 + S )
=
C
k = Number of kanban card sets (a set is a card)
D = Average number of units demanded over some time
period
L = lead time to replenish an order (same units of time as
demand)
S = Safety stock expressed as a percentage of demand
during leadtime
C = Container size
33
Example of Kanban Card Determination:
Problem Data

• A switch assembly is assembled in batches of 4 units from an

“upstream” assembly area and delivered in a special container to
a “downstream” control-panel assembly operation
• The control-panel assembly area requires 5 switch assemblies per
hour
• The switch assembly area can produce a container of switch
assemblies in 2 hours
• Safety stock has been set at 10% of needed inventory

34
 Example of Kanban Card Determination: Calculations

Expected demand during lead time +Safety stock

k =
Size of the container

DL (1+ S ) 5(2)(1.1)
= = = 2.75, or 3
C 4

Always round up!

35
 Respect for People

• Level payrolls

• Cooperative employee unions

• Subcontractor networks

• Bottom-round management style

• Quality circles (Small Group Involvement Activities or SGIA’s)

36
Toyota Production System’s Four Rules

1. All work shall be highly specified as to content, sequence,

timing, and outcome

2. Every customer-supplier connection must be direct, and

there must be an unambiguous yes-or-no way to send
requests and receive responses

3. The pathway for every product and service must be simple

and direct

4. Any improvement must be made in accordance with the

scientific method, under the guidance of a teacher, at the
lowest possible level in the organization

37
 JIT Implementation Requirements:
Design Flow Process

• Link operations
• Balance workstation capacities
• Redesign layout for flow
• Emphasize preventive maintenance
Lean Processes
• Reduce lot sizes
• Reduce setup/changeover time

38
JIT Implementation Requirements:
Total Quality Control

• Worker responsibility

• Measure SQC

• Enforce compliance

• Fail-safe methods

• Automatic inspection Failsafe

39
 JIT Implementation Requirements:
Stabilize Schedule

• Level schedule

• Underutilize capacity

• Establish freeze windows

40
 JIT Implementation Requirements:
Kanban-Pull

• Demand pull

• Backflush

• Reduce lot sizes

41
JIT Implementation Requirements:
Work with Vendors

• Reduce lead times

• Frequent deliveries

• Project usage requirements

• Quality expectations

42
JIT Implementation Requirements:
Reduce Inventory more and more…

• Look for other areas

• Stores

• Transit

• Carousels

• Conveyors

43
JIT Implementation Requirements:
Improve Product Design

• Standard product configuration

• Standardize and reduce number of parts

• Process design with product design

• Quality expectations

44
 JIT Implementation Requirements:
Concurrently Solve Problems

• Root cause

• Solve permanently

• Team approach

• Line and specialist responsibility

• Continual education Gemba

45
 JIT Implementation Requirements:
Measure Performance

• Emphasize improvement
• Track trends

Are we ready for Lean?

46
 JIT in Services (Examples)

• Organize Problem-Solving Groups

• Upgrade Housekeeping

• Upgrade Quality

• Clarify Process Flows

• Revise Equipment and Process Technologies

47
 JIT in Services (Examples)

• Level the Facility Load

• Eliminate Unnecessary Activities

• Reorganize Physical Configuration

• Introduce Demand-Pull Scheduling

• Develop Supplier Networks

48
Kanban

49
What is Takt?
Production/requirement rate for any process in mind

50
 Takt Time

• I.e.
• Parts/Min
• Sales/week
• Units produced/Hr.
• Min/Unit
• Flts/day
• Exits/shift

• Takt Rate:
• [(Desired time bucket)/(Time
To produce 1 part)]*PFD factor

• PFD:
• Personal, Fatigue, allowed
Takt Time
delays

51
 Lean : 4- Pull
• JIT – Just In Time
• SFM – Synchronous Flow
Manufacturing
• TOC – Theory Of
Constraints
• DBR – Drum-Buffer-Rope
• Metrics

52
 TOC – Theory Of Constraints

• Developed by Eli Goldratt

• Why Change?
• What to Change?
• What to Change To?

• Five Focusing Steps of TOC

1. Identify the constraint
2. Exploit the constraint
3. Subordinate
4. Elevate
5. Go back to step 1, but be aware of the inertia

• Measurement:
• Net Profit = T – OE; T: throughput, OE: Operating Expenses
• Return on Investment = T- OE/I; I: investment or Inventory
• Cash Flow = T- OE +/- ∆I;
53
Setup Reduction

54
Setup Reduction

Changeover

55
Setup Reduction

56
Set-Up Tools

57
Set-Up Tools

58
Set-Up Tools

59
Set-Up Tools

60
Set-Up Tools

61
Set-Up Tools

62
Set-Up Tools – Documentation worksheet

63
Set-Up Tools – Mapping worksheet

64
Set-Up Tools – Streamlining, Simplifying
work

65
Set-Up Tools – NO Tweaking - Adjustments

66
TPM – Total Preventive/Productive
Maintenance

67
Key Definitions

68
TPM process

69
7 Steps of TPM

Lean Equipment

* OEE: Operation Equipment Effectiveness

70
Step 1 Focus on Cleaning – Reduce down
time

71
Step 2

72
Step 2

73
Step 3

74
Step 4

75
Step 4

76
Step 5

77
Step 6

78
Step 7

79
Step 7 – TPM Metrics

80
 Exercise – 20 Min (module 3)

• The Model J Wagon is to be assembled on a conveyor belt.

Five hundred wagons are required per day. Production time
per day is 420 minutes, and the assembly steps and times
for the wagon are given as follows. Assignment: Find the
balance that minimizes the number of workstations, subject
to cycle time and precedence constraints.

81
Assembly Steps and Times for Model J
Wagon

82
JIT – Problem - module 2

83
 Lean : 5- Perfection

• Six Sigma
• Supply Chain
• Procurement
• Design
• Processes
• Logistics
• Financials

84
 What is Lean Six Sigma?

Lean Six Sigma means:

• Conversion of NVA to the bottom line profit.
• Aggressive non-stop pursuit of relevant excellence for
profitability.
• Total Commitment and support of Leadership to
systematically improve the desired results.
• Leading our work force to be the best at what they do by
inspiring them.
• “Pull” voluntary creativity and contribution from our
human capital for optimal results.
• Creating an environment that information, team work,
productivity flows smoothly without interruptions.

85
 LEAN, SIX SIGMA

What are the connections between these

approaches?
• Lean: Experiential, create the optimal flow
• Fast, meaningful solutions
• Six Sigma: Next level Lean - Perfection process
• Questions our experiences
• Pushes for hard data
• Doing Just SS may ignore experience and get lost in
data

• They are complementary and must be used with

common sense.
• Lean Six Sigma is the balance approach for
optimal results

86
 LEAN, SIX SIGMA

Customer Value
• Lean Six Sigma share a focus on customer value
• Lip service or commitment?
• Six sigma is built unlike Lean around cost savings
• Often cost savings are not the most customer-centric
activities.

• Six sigma at Executive level

• More strategic point of view
• Lean at grassroots level
• More operational point of view

• Lean Six Sigma together = customer view across the

organization
87
 LEAN, SIX SIGMA the balance

Balance point approach

• 75% Extremely focused on hard $

• 25% on improvements that are really going to

be felt by the customer

• “we’ve learned that everything we do that will

benefit our customer will come back to benefit
us.” Jack Welsh

88
 LEAN, SIX SIGMA
The Balanced Approach

Perfection
Six Sigma

Pull

Flow
Value Stream
Value

Visual Factory
5-S

89
 Lean Six Sigma 360º coverage

1. Ensures fast forward movement

2. Raises entry barriers
• Customer value leadership
• Quality leadership
• QFD
• Cost Leadership
• Market awareness

• Rapid design-to-market capabilities

• Defensively playing offence
3. Continuously optimized organizational profitability and
effectiveness

90
 Lean : 6- Agility
• Agility to
• Respond to customer
needs
• Changes internal or
external
• Communicate information
transparently
• Pull together, regroup,
launch efforts
• Design
• Market
• Make
• Support and service
• Innovate
• Win the race
91
 Kaizen – Continuous Improvement
through Sanmina Lean Six Sigma

What is Kaizen?

•“KAI” - Take apart and make anew

•“ZEN” - Think, make good the actions of others, do good deeds and help
others
•Kaizen - Make people’s jobs easier by taking them apart, studying them,
and making improvements

Kaizen = Continuous improvement

Definition
• A proven approach to improve specific processes in the factory or office
• A highly structured methodology, managed to ensure closure
• An intense, short-term effort with a bias for action
• Performed by a multi-function/level team
• Focused on the elimination of waste

Results Driven Kaizen

92
Kaizen – Continuous Improvement
through Sanmina Lean Six Sigma

93
F-22 Production

94
F-22 Production

Base line Improved

95
Lean Six Sigma

5 or 6 S

96
5 S+ Safety

97
 The 5 S Philosophy

"A company that cannot successfully implement the 5 Ss

cannot expect to effectively integrate JIT, re-
engineering, or any other large-scale change. Good
workplaces develop beginning with the 5S's. Bad
workplaces fall apart beginning with the 5 Ss."
- Hiroyuki Hirano, author of 5S: Five Pillars of the Visual Workplace

98
Application of Lean, 5S QC area Before

QC area After
99
 Application of Lean, 5S

Silver Plating Process

Cycle time= 7.5 days

Silver Plating Process –

Cycle time = 1 day, 86% improvement
100
Excellent safety & environmental control
Application of Lean, 5S

Cone VC drilling - Before

•Elimination of color coding
•Hole drilling accuracy
of 99.9998% from 85%.
•Improved drilling
re-sharpening and coating.
•Kanban buffer system.
•Controlled process.

Cone VC drilling - AFTER

101
Think LEAN
but
NOT
MEAN!

102
 Lean Six Sigma Processes
Goals

• To understand the nature of a Lean Six Sigma culture and to be able to

contribute substantially to its development

• To know what Lean Six Sigma is and to be able to apply Six Sigma
concepts for the purpose of improving the bottom line.

• Develop an appreciation for the need and use of statistics in process

improvement

• Be able to describe a process numerically

• Be able to use and apply the basic graphical tools and charting
techniques

• Understand the relationship between variation and the cost of poor

quality

• Get the Data – Show Me the Data

103
 Lean Six Sigma Processes
Goals

• Rules of Thumb to detect shifts in average and standard

deviation

• Be able to select the appropriate control chart to use, know

how to construct it, and be able to recognize out-of-control
symptoms

• Know the difference between process control and process

capability, and be able to compute process capability

• Be able to set up designs and conduct simple analysis

• Understand the advantages and disadvantages of different
variance reduction strategies

Use PF/CE-CNX/FMEA/SOP intensively

104
 Lean Six Sigma Journey
The triangle of Success

• To instill a permanent change in an

organization, 3 interconnected elements must
work together:

Business Mfg.
processes Processes

Sustainable
Lean Six Sigma

Culture

105
 Lean Six Sigma Journey
Leadership Roles

• Trained in Lean Six Sigma

• Develop a Lean Six Sigma Master Plan to accelerate Six Sigma performance
• Work with management sponsors to identify Lean Six Sigma Expert candidates
• Develop a focused curriculum
• Schedule training
• Serve as mentors for Lean Six Sigma Expert candidates
• Certify Lean Six Sigma Experts
• Identify Mentors
• Determine certification requirements
• Work with management sponsors on reward system and propagating success
stories
• Determine annual re-certification requirements and duration for Expert status
• Develop a Lean Six Sigma Network to enhance communications
• Review and improve the Lean Six Sigma Process
• Monitor project selection and progress to generate complete cultural change.

106
 Lean Six Sigma Journey
MANAGERS VS. LEADERS attributes

MANAGERS LEADERS
• Do with resources Develop all resources
• Efficiency Effectiveness
• Monitor, Maintain Move ahead, Gain momentum
• Define, Direct Dedicate, Delegate, Design
• Correct, Coach Consult, Challenge, Coordinate
• Intervene, Implement Improve, Innovate, Integrate
• Reactive, Responsive Proactive, Interactive
• Systematic = Orderly Systemic = Overall
• Enforce, Comply Encourage, Collaborate
• Control Consent
• Hands, Head Heart, Hope and Health
• Outward, Tangible Inward, Intangible
• Seen, Situation Felt, Spirit
• Desire Inspire

107
 Lean Six Sigma Journey
Statistical Tools for Continuous Improvement

• KISS (Keep It Simple Statistically)

• Cost of Poor Quality (COPQ)
• Process / Value Stream Mapping
• Cause and Effect Diagrams with CNX
• Standard Operating Procedures (SOPs)
• FMEA
• Confidence Intervals and Hypothesis Testing
• X-bar/R, X-bar/S, IMR, c and p charts
• Identifying a Project

108
 Lean Six Sigma Journey
implementation Strategy

• Identify Key Business Issues

• Baseline Major Processes (dpu, FPY (RTY), Cycle
Time, etc.)
• Evaluate Customer Perceptions
• Determine the Cost of Doing Nothing, i.e., the Cost
of Poor Quality (COPQ)
Rules of Thumb:
A 2σ- company has a .31 dpu, 69% FPY __ COPQ = 30-40% of Net Sales
A 3σ - company has a .07 dpu, 93% FPY __ COPQ = 20-30% of Net Sales
A 4σ - company has a .006 dpu, 99.4% FPY __ COPQ = 15-20% of Net
Sales
A 5σ - company has a .00002 dpu, 99.998% FPY __ COPQ = 10-15% of
Net Sales
A 6σ - company has a .0000034 dpu, 99.99997% FPY __ COPQ = < 10% of
Net sales
• Evaluate Executive Level "Buy-in"

109
Mission: Reducing Muda in form of
Variation

110
 Definitions

• Precision
• On-Target
• Variation

111
Mission: Find Muda –
Reduce Costs of Poor Quality

Appraisal Costs

External Failure Costs of

Costs Quality Prevention Costs

Internal Failure Lost Opportunity

Costs Costs

112
Relationship of COPQ and Sigma
Rating

113
 Defect, Muda Preventions

• List areas that you would like to prevent, eliminate,

reduce defects

114
 Obstacles to achieving quality goals

1. Lack of leadership by upper management

2. Lack of an infrastructure
• Not able to quantify results and tie into business needs
• Objectives not clearly determined prior to data collection Lean Culture
• Impact / feasibility not determined up front or leadership not
involved in decision

3. Failure to understand the skepticism about the “new quality

program”
4. An assumption by management that the exhortation
approach will work
5. Failure to “start small” and learn from pilot activities
6. Reliance on specific techniques as the primary means of
achieving quality goals
7. Underestimating the time and resources required

115
 Questions ? Comments?

Revision Date:
7-05
Revised by:
Russ Pirasteh 116