QUALITY IN THE TRIANGLE 2007

1. QUALITY IN THE TRIANGLE 2007

2. Welcome! “Value Stream Mapping” Presenter: Pauline Campbell May 22, 2007

3. Logistics • Starting/Ending Time • Presentation • Questions/Answers

4. Objectives To use “Value Stream Mapping” to identify waste and areas of improvement in any process and apply Lean/World Class Manufacturing tools to eliminate the waste and improve the process.

5. The Global Economy Business Model • Jobs • Profits • Customer Satisfaction • Teamwork - KEY

6. Contents • What are Value Streams? • Origins of VSM • Identifying the Value Streams • Value Stream Mapping • The Current State • The Future State • Implementing Change • Roadblocks

7. What Are Value Streams? A Value Stream is the set of all actions (both value added and non value added) required to bring a specific product or service from raw material through to the customer.

8. Types of Value Streams “Whenever there is a product (or service) for a customer, there is a value stream. The challenge lies in seeing it.” • 3 enterprise value streams: • Raw Materials to Customer – Manufacturing • Concept to Launch – Engineering • Order to Cash - Administrative Functions

9. Origins of VSM Henry Ford is credited with introducing process mapping as early as the 1920’s to graphically display all of the things happening in a series of operations. The Japanese, and Toyota in particular, are credited with refining and perfecting Value Stream Mapping, which they also refer to as “material and information flow maps.”

10. Identifying the Value Stream • The starting point is to learn to distinguish value creation from waste in your whole value stream • By putting on waste glasses! • By choosing a product family • By assembling the team and taking a walk together up the value stream • And drawing a map of what you find!

11. process level single plant (door to door) multiple plants across companies Identifying the Value Stream Start Here

12. Value Stream Improvement vs. Process Improvement Value Stream Process Process Process Customer Assembly Cell Stamping Welding RawMaterial Finished Product

13. What is Value Stream Mapping? • A method of creating a “one page picture” of all processes from the time a customer places an order until the customer has received the product • A visual representation of the flow of material and information across all of the processes - both value adding and non-value adding

14. Using the Value Stream Mapping Tool Product/Service “Family” Understanding how things currently operate. Our Baseline! current state drawing future state drawing Designing a lean flow. Our Vision! plan and implementation The goal of mapping!

15. Value Stream Mapping Icons

16. Four Steps to Value Stream Mapping 1) Pick the product or product family to map (improve). 2) Create the “Current State” VSM. 3) Create the “Future State” VSM. 4) Develop an action plan to make the FS VSM the CS VSM.

17. Step #1 Pick the Product or Product Family • Criteria for selection: • Competitive pressures are high OR • Customer satisfaction is low OR • Product represents the largest share of the sales volume

18. Step #2Creating the “Current State” VSM • Form a team and select a team leader • Educate the team in VSM • Decide the scope of the Value Stream Map. Brainstorm an initial map. • Agree upon the symbols, icons, and data to use • Go see the process

19. Step #2Creating the “Current State” VSM • Determine Missing Information the VSM Requires • Make Assignments to Gather and/or Create As Much Information About Waste As Possible. • Build The Current State VSM • Use Problem Solving Tools As Needed • Make NO Assumptions

20. C/T - Cycle Time C/O - Change Over Time Uptime (% machine is available) Top Three Reasons for Unplanned Downtime Production Batch or Transfer Batch Size Number of People: by type, classification, at each operation Number of Product Variations at each operation Pack Size/Standard pack Quantity Operating or Working Time Available (minus breaks, etc.) Scrap Rate Rework Percentage First Time Capability (FTC) Top Three Defect Causes Average Days Supply in Inventory between operations Queue Time between operations Source of Schedule - Information for each operation Distance between operations Time for material to travel between operations Over time worked by operation (average weekly or monthly) PM’s planned versus completed by operation What Data Does the Team Need?

21. 8 General Types of Business Waste • Defect • Over Production • Waiting • Non-utilized Human Resources • Transportation • Inventory • Motion • Extra Processing

22. “Eliminating manufacturing waste is not the problem, identifying it is.” Taiichi Ohno, Developer of the Toyota Production System (TPS)

24. Professional Electric - OEMCurrent State Value Stream Map

25. The Current State • Typical Results • 80 – 90% of total steps are waste from standpoint of end customer. • 99.9% of throughput time is wasted time. • Demand becomes more and more erratic as it moves upstream, imposing major inventory, capacity, and management costs at every level. • Quality becomes worse and worse as we move upstream, imposing major costs downstream. • Most managers and many production associates expend the majority of their efforts on hand-offs, work-arounds, and logistical complexity.

26. What Is Value Added Criteria? 1. The Customer is willing to Pay for it. 2. Physically changes the Part or the Process. 3. MUST be done RIGHT the first time.

27. Cost/Benefit Analysis • The intent here is to prioritize the improvement opportunities.

28. Step #3Create the Future State VSM • Focus on “low cost” or “no cost” improvements • Identify all potential improvements with “lighting bolts” • Verify management support and gather ideas from the Team • Develop goals for each targeted area of improvement • Draw the future state map

29. Step #3Create the Future State VSM • Activities aligned with our business strategy • Efforts focused on NET improvements for the company • Metrics supportive of fundamental change • Simple, constant communication of our plans and achievements as an enterprise

31. Professional Electric - OEM

32. Current State: # of Steps: 30 # of Forms: 13 Non-Value Add: 2,931.952 – Good Distance: 2,542 sq. ft. People (IDL): 8 Floor Space: 1,560 sq. ft. Handoff’s: 15 Areas: 9 Future State: # of Steps: 24 # of Forms: 7 Non-Value Add: 2,607,112 - Good Distance: 1,212 sq. ft. People (IDL): 4 Floor Space: 1,560 sq. ft. Handoff’s: 6 Areas: 4 MRO Purchasing Process VSM Deliverables – Metrics % Improvement: 20 % 46 % 11 % 52 % 50 % 60 %

33. Step #4Develop the Action Plan • Teams created to work on various improvements may or may not include members of the VSM Team • Emphasize having the right members on the Team to complete various projects • Initially, use great care to ensure teams are supported with a skilled facilitator and the resources to meet the goals.

34. Step #4Develop the Action Plan Often Overlooked Tasks: • Conduct regularly scheduled meetings for all participants • Provide a structure for the Team to work on problem solving and to complete tasks • Verify progress on goals and support for the process continuously • Information on progress needs to be collected and periodically reviewed with top management

35. Implementing Change • Don’t Wait! • You need a plan! • Tie it to your business objectives. • Make a VS Plan: What to do by when by whom. • Establish an appropriate review frequency. • Conduct VS Reviews walking the flow.

36. Implementing Change Typical Results • Throughput time falls from 44 days to 6 (87%) • Wasted steps fall from 65 to 27 (60%) • Transport distance falls from 5300 miles to 1100 miles • Inventories shrink by 90% percent • Defects are reduced to the same rate at the start of the process as at the end • Throughput time shrinks to within customer wait time, meaning all production is to confirmed order

37. Implementing Change • The map is just a picture of ideas! • The fundamental change is in how we choose to manage the value stream as an integrated system of decisions and tasks.

38. Roadblocks • 75 years of bad habits • Financial focus with limited cost understanding • A lack of system thinking and incentives • Metrics supporting a 75 year old model • Limited customer focus • Absence of effective operating strategies

39. Roadblocks • Margin squeezing rather than true cost reduction. • Persistent shortfalls in quality and delivery reliability. • Low-ball bidding and the engineering change game. • Collapse of “partnership” and “trust” in economic downturns (2001!), replaced by “survival of the fittest”.

40. QUESTIONS? THINK LEAN!