How to Improve Your Bottom-Line Using
Lean Six Sigma October 1st, 2014
Presented by: Luis Socconini, CEO of Lean Six Sigma Institute
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Free Offer
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increasing your organization’s effectiveness through Lean
Six Sigma.
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Objective
Understand how important is to develop lean companies in order to be competitive and improve your bottom-line.
A radical way to success!
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Some concerns
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Causes
Market has
changed to
high mix and
low volume
Only 2 % of
forecasts are accurate
Functional
structures with
little interaction
Poor Planning
Rigid budgets
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Do We know?
What is the rate at which customers buy?
What is the supply chain capacity?
What is the demand level of variation?
What is the bottleneck in the supply chain?
Do we all know the same?
Productivity
Productivity = Outputs
Inputs
PROCESS
inputs Customer outputs/
inputs
PROCESS outputs
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Productivity
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Lean Company
R&D Sales Purchasing Operations Delivery Accounts
receivable
R&D Sales Purchasing Operations Delivery Accounts
receivable
Time
Cost
Time & Cost
Lean
Manufacturing
Service Lean
Accounting
Lean Office
Lean
Design
Lean
Logistics Lean
Logistics Lean
Sales
Lean Company
Processes Lean contribution
Management Strategy, Box score, Project management, budget
Human Resources Talent development and value stream structure
Design Faster design process and designed for six sigma
Finance Managerial, Cost, Financial
Commercial Sales and marketing integrated
Logistics Agile planning, programing, purchasing, warehousing, transportation
Manufacturing / Service High quality Products and services, fast delivery time
Quality Quality lightweight processes and effective.
Maintenance High reliability in equipment and facilities.
InformationTech. Only the necessary technology and information available.
Lean Green All the above processes : low energy waste, less pollution, etc
It´s the integration of the key processes of the company, eliminating all types of
wastes, variation and overburden.
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Management tools
Hoshin Kanri
Box score
Value stream structure
Lean cost accounting
Talent development
Lean Management Leaders designing the future
16 hours total
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Basic tools Housekeeping (5 S´s)
Visual management (Andon)
Standard work
Teamwork
Time management
White Belt Every body hands on
8 hours total
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1 Define A3
Gantt chart
2 Measure and Map Data collection
Value stream map
3 Analysis Spaghetti diagram
Balance chart
Waste analysis
Yellow Belt: Lean Practiotioner
• 4 Improvement – Cellular work
– Quick setup
– Total productive maintenance
– Kanban
• 5 Control – Standard work audits
– Poka Yoke
40 hours total
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1 Define QFD
Kano Model
Needs tree
2 Measure and Map SIPOC diagram
Sampling
Gauge R&R
3 Analysis FMEA
Basic statistics
Hypothesis testing
Histogram
Probability distributions
Process capability
DPMO
Sigma level
Green Belt: Lean Six Sigma Practioner
• 4 Improvement – Brainstorming
– Basic design of experiments
– Prioritization matrix
– Box plots
• 5 Control – Control charts
– Control plan
80 hours total
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Train Trainers
Lean Accounting advanced
1 Define Project management
Financial project analysis
2 Measure and Map Cross-functional diagram
3 Analysis Variance analysis
Regression analysis
Multi-vari analysis
4 Improvement Pugh Matrix
Advanced design of experiments
Theory of constrains
Heijunka
5 Control KPI trees
Standard work for leaders
Gemba walks
Project report
Black Belt: Lean Six Sigma Expert
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Advanced tools
Change management Business process model advanced project
management Lean layout Lean green
Master Black Belt: Lean Six Sigma Leader - Trainer
• 1 Define – Project
– Target cost
• 2 Measure and Map – Voice of the customer
– Product measurements
– Map the design process
• 3 Analysis – Design FMEA
– Functional analysis (value engineering)
– Pugh matrix
• 4 Design – TRIZ
– Design for manufacturing
– Design of experiments advanced
• 5 Validation – Validate design
120 hours total
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How to implement lean supply chain into a lean enterprise
Key elements ◦ knowledge of current demand
◦ Inventory accuracy > 99%
◦ Value stream structures
◦ Internal process improvements
◦ Continuous interaction throughout the supply chain
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What is a lean supply chain?
Work philosophy to remove all waste from the supply
chain.
The supply chain includes sourcing processes, from
obtaining the materials, production, distribution
center to deliver the product or service
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What is Lean in the Supply chain?
Synchronize the rate of consumption and replenishment cycle.
To develop a flexible logistics service process that never stops manufacturing or service from lack of materials or information.
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What to measure?
Sem 1 sem 2 Sem 3 Sem 4 Sem 50
Units per person 36.16 42.05 51.39 Ontime delivery 98.00% 94.00% 98.00%
Backlog value $22,022 $76,824 $28,168 Delivery time 23.58 20.5 16.5
First time yield 96% 92% 98% Cost of poor quality $12,133 $2,134
Average cost per unit $388.46 $348.66 $316.91 Inventory accuracy 97% 97% 99% Inventory turnover 8 9 24
Total effectiveness of supply chain 49% 51% 75% Accounts receivable 34.5 37 35
Demand 3616 3998 4250 Capacity 5000 5000 5580
Available capacity 28% 20% 24%
Revenue $1,101,144 $1,280,400 $1,408,440 Cost of material $462,480 $512,160 $535,207 Conversion cost $250,435 $231,884 $208,696
Supply chain profit $388,229 $536,356 $664,537 Return over sales 35% 42% 47%
Inventory value $593,008 $577,987 $255,000
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Implementation plan
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Example: Unit parts Co.
Proveedor Fábrica Distribuidor Tienda Cliente
Average 1353 668 477 395 201
Lead Time 4.5 4.06 3.5 3.2
Std. Dev. 1091 397 158 69 25
Variation 81% 129234 59% 14567 33% 11092 17% 4874 12%
Inventory (days) 95 22 23 12
0
500
1000
1500
2000
2500
3000
3500
4000
1 3 5 7 9 11 13 15 17 19 210
50
100
150
200
250
300
1 3 5 7 9 11 13 15 17 19 21
0
100
200
300
400
500
600
1 3 5 7 9 11 13 15 17 19 210
100
200
300
400
500
600
700
800
1 3 5 7 9 11 13 15 17 19 21
0
200
400
600
800
100 0
120 0
140 0
1 3 5 7 9 11 13 15 17 19 21
Excess inventory throughout the supply chain.
Not everybody has the same information, especially regarding consumer's demand.
Supplier Factory 2 Store Distributor Factory 1
Promedio 1353 668 477 395 201
Lead Time 25.7 5 9.25 3.3
Desv Est. 1091 397 158 69 25
Supplier Factory 1 Factory 2 Distributor Customer
Inventario dias 95 22 23 12
Variación 81% 129234 59% 14567 33% 11092 17% 4874 12%
Días 94.0 10.3 14.9 7.6
0
2000
4000
135791113151719210
500
1000
1500
13579111315171921
0
200
400
600
800
13 5 7 91113151719210
200
400
600
135791113151719210
100
200
300
13579111315171921
Average
For more information, call 416.216.1067
Example: Actions
Define:
Select team (internal/ext
ernal) & objectives.
Measure:
Supply chain´s value
stream map.
Analyze:
Identify waste &
bottlenecks.
Improve:
Kaizen improvement
s.
Control:
Training & follow up.
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Current Value Stream Map
Current state analysis with Supply Chain´s Value Stream Map.
PASOSTotal=73
PasosVA=8
Estatores
Almacen (TEXAS)
Estatores QAPI
Guadallajara
RM336h.
WIP110h.FG48h____3turnos___5dias_____EPE=3DiasDefectos=
2000ppm
Magnecom
Monterrey
Rollosdecobre
Alternadores Unit Parts Co
RM56h.
WIP41h.FG12h____2turnos___5dias_____EPE=1DiasDefectos=
400ppm
2 x
Semana
6 x
año
500millas__
Loteembarcado=72rollos
Defectos=8%
2 x
Semana
2xaño
1500millas__
Loteembarcado=36pallets
Defectos=6%
1 x
Día
5 x
año
100millas__Loteembarcado=12palletsDefectos=6%
1 x
Día
100millas__
Loteembarcado=6pallets
Defectos=3%
.3días 4.0días .25días .25días
20.6días 4.6días
1 (3131seg) 1 1.0días 1 (30seg) 1
22(3) 4 21(3)
Controldeproducciónde
laOC
MRP
Controldeproducción
MRP
14días
6días
14días
Guadalajara
Oklahoma
OklahomaOK
PlantaBetaControldeproducción
MRP
6días
ControldeproduccióndelaOCdeUPCo.
MRP
6días
ClevelandOH
1xSem.
semanalmente
1xSem
1xSem
2xsem
1xsem
2xsem
1xsem
1xdía
1xdía1xdía
1 x
Día
2xaño
Elpaso,TX
TiempoTiempototal=44.3diasTiempoenplanta=31diasTiempodetransporte=13.3diasTiempoVA=54.7min,3281seg
EstatoresBetaCross-Dock
AlphaMotrosCross-Dock
Tiendas
960/día640A426ST214HT320B
213ST107HT
Ditribución
Colorado
RM50h.
WIP2h.FG14h____2turnos___5dias_____EPE=1DiasDefectos=
5ppm
600millas__
Loteembarcado=6pallets
Defectos=3%
1 x
Día
2000millas__
Loteembarcado=6pallets
Defectos=3%
Oklahoma
1xsemana
500millas__
Loteembarcado=1Tren
Defectos=1%
4.0días 4.0dias .5dias
2.8dìas
.5días 1 .5días 1 (120seg) 1
4 4 11(2)
14días
Controldeproducciónde
laOCdeclientes
MRP
10días
Colorado
BancodeRecepcióndeOTdeALPHA
MRP
ControldeproducciónenlaplantadeALPHA
MRP
6días
Controldematerialesdela
plantadeALPHA
MRP
1xSem
1xdía
1xSem 1xSem
1xdía
1xdía
1xSem
1xdía
For more information, call 416.216.1067
Example: Waste & Value Analysis
Rawmaterialsupplier.
1.-Shipping,twiceweek. 10min
Transportconnection1.
2.-DirectShipment. 8hours
Supportsupplier.
3.-Unloadmaterials. 10min
4.-Registerandticketimpression. 10min
5.-Warehousingmaterial. 14days
6.-Movematerialtoproductionareas. 10min
7.-Loadrawmaterialonmachine. 5min
8.-Stamping1. 1 1sec 1sec
9.-Accumulatestampedparts. 4hours
10.-Movestampedinventorytowarehouse. 10min
11.-Warehousingstampedpieces. 48hours
12.-Movethestampedinventorytomachine2. 10min
13.-Loadpartsintothemachine2. 10min
14.-Secondstampingprocess. 2 10sec 10sec
15-Accumulatestampedparts. 4hours
16.-Movestampedinventorytowarehouse. 10min
17.-Warehousingpieces. 48hours
18.-Movepiecestopaintwarehouse. 10min
19.-Placepiecesonpaintingmachine. 3 130min 52min
20.-Removepaintedpieces,inspectandpilethemonpallet. 2hours
Valueadded
stepsTotalsteps Totaltime
Value
addedtime
For more information, call 416.216.1067
Example: Summary of actions
73 8
44.3 days
54.7 min
TOTAL Value aded
Steps
Time
Value aded %
11%
.08%
For more information, call 416.216.1067
Example: Future Value Stream Map
Logistic process redesigned, based on “Pull” system.
Bancoderecepciónde
ordnesPEPBOYS
ControldeMateriales
UP
Controldeproducc.
UP
Centro de Distribución PEP
BOYS
Minessota
Cleveland
960día640A320B
1xDía
1xdía
1xdía
1xdía
CTRL.deproducc.
QAPI 1xdía
MAGNECOMcentrodeproducc.
1xdía1xdía
Magnecom
Monterrey
Rollosdecobre
oxox
oxox
1xdía
Uniit Parts
OklahomaTiempoTiempototal=15.8diasTiempoenplanta=6.5diasTiempodetransporte=9.3diasTiempoVA=54.7min,3281seg
500millas__
Loteembarcado=960vehiculos
Defectos=1%
RM=15WIP=2FG14
2TURNOS5días
EPE=1díaDefectos=5ppm
Magnecom QAPI
RM=15WIP=0FG12
2TURNOS5días
EPE=1díaDefectos=5ppm
RM=24WIP=62FG12
3TURNOS5días
EPE=1díaDefectos=250ppm
1800millas__
Loteembarcado=6pallets
Defectos=1%
1500millas__
Loteembarcado=6pallets
Defectos=2%
500millas__
Loteembarcado=24rollos
Defectos=3%
GuadalajaraMonterrey
.3días 4días 4.5días .5días
1 4días(3131s) 1 1.2días(30s) 1 1.3días(120s) 1
20(3) 1 7(2)
1xdía1xdía
1xdía
For more information, call 416.216.1067
Example: Actions
Continuous flow in production processes.
Housekeeping (5 S´s) on warehouses and production.
Takt time & capacity boards.
Quick changeovers on production and expedition areas.
Leveling the work load on production and expedition areas.
Setting up buffers/kanbans with suppliers and customers.
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Example: Achievements
Average 228 220 216 203 201
Lead Time 4.5 1.86 0.8 0.5
Std. Dev. 63 57 64 27 25
Variation 28% 129234 26% 14567 29% 11092 13% 4874 12%
Inventory days 567 66 51 24
Kanban 1310 515 224 115
Days 6.0 2.4 1.1 0.6
0
100
200
300
400
500
1 4 7 10 13 16 190
100
200
300
400
500
1 4 7 10 13 16 19
0
100
200
300
400
500
1 4 7 10 13 16 190
50
100
150
200
250
300
1 4 7 10 13 16 190
50
100
150
200
250
300
1 4 7 10 13 16 19
Down stream Up stream
Proveedor Fábrica 1 Fabrica 2 Distribuidor Tienda Supplier Factory 1 Store Distributor Factory 2
Supplier Factory 1 Factory 2 Distributor Customer
Lead Time 4.5 1.86 0.8 0.5
Desv Est. 63 57 64 27 25
KANBAN 9.5 5.1 3.1 1.5
Variación 28% 26% 29% 13% 12%
0
100
200
300
400
500
135791113151719210
100
200
300
400
500
135791113151719210
100
200
300
400
500
135791113151719210
50
100
150
200
250
300
13579111315171921
0
50
100
150
200
250
300
13579111315171921
For more information, call 416.216.1067
Requirements
Conclusion
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We are standing in front of a unique opportunity to become more productive, by transforming the Supply Chain and achieving our
strategic goals.
Conclusions
7 Dimensions Actions to take
1. Demand Management Following real demand, agile budgeting, weekly mindset.
2. Inventory Management Pull system (kanban).
3. Warehousing Minimize looses, stock breakouts and obsolescence.
4. Batch size Quick changeovers, Leveling (heijunka).
5. Speed Managing bottlenecks, continuous flow (cells).
6. Quality Management Mistake proof (poka-yoke), Six Sigma, SPC.
7. Transportation Distribution network plan.
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QUESTIONS?
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Free Offer
We’re offering a free 30-minute Consultation about
increasing your organization’s effectiveness through Lean
Six Sigma.
Contact Maysa to take advantage of this exclusive offer!
416.216.1067