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Lean and the Strategic Plan

H. David Paris, C.P.M., CFPIM, CIRMV.P. Training

Industrial Solutions, Inc. (ISI)

R. Henry Migliore, Ph.D.Professor Emeritus /Northeastern State University

President, Managing for Success

SUCCESSFUL IMPLEMENTATIONS

• An enterprise must conduct change from the top

• If strategic vision does not include the Lean philosophy, radical changes taking place will not follow the predetermined path of the enterprise

• Most US companies fail to implement Lean because of wavering leadership

• Use the strategic plan to drive successful implementation

MODEL FOR PROVEN APPROACH

STRATEGIC PLANNING FOR EACH FUNCTION

• PURCHASING

• MATERIALS

• LOGISTICS

• QUALITY

• FINANCIAL

• HUMAN RESOURCES

• DESIGN ENGINEERING

• MARKETING

• SALES

• SAFETY

• MANUFACTURING

PURCHASING

• Support production with the uninterrupted flow of material without excess inventory

• Established through contracts with suppliers

• Use MRP output for forecasting only

• Track commodities our factory uses

• Track commodities used by suppliers

• Match purchased lot sizes with manufacturing lot sizes

• A-B-C analysis for inventory turns

MATERIALS

• Balance customer requirements and manufacturing capacity

• Lean implementation of visual pull systems

• Drive MPS and support the S&OP

• Drive MRP output for forecasting capacity constraints

• Control the shop floor through visual signals not through MRP

• Produce to supermarkets

LOGISTICS

• Cease buying truckloads of one part number, and fill the same truck with a smaller quantity of several part numbers

• Consolidate shipments

• Imported product can be held in local warehouses at the supplier’s expense

QUALITY

• Identify problems as they occur, not final inspection

• Prevention activities include 6 sigma problem solving Run charts CEDAC

• Verify process control Simple process capability (Cp) Process capability to a central tendency (Cpk)

• Functionality check

• Continuous improvement

FINANCIAL

• Cost accounting Identify cost of each product Maximize return on investment (ROI) Maximize contribution

• Fixed cost will remain the same

• Improve the difference between revenue and variable cost to increase profit

• Optimize the mix within constraints Sales possibilities Capacity constraints

FINANCIAL MEASURES

• Optimize the mix through linear programming % of optimum sales

• % adherence to the production plan

• Variable cost variation

• Purchase price variation (PPV)

HUMAN RESOURCES (HR)

• Excellent hiring practices Background checks Literacy test Minimum education

• Training programs Cross training Job mapping

• Continuous improvement program Eliminate waste Improve processes Increase safety Reward efforts

DESIGN ENGINEERING

• All functions must be linked during the design stage to insure compatibility More likely to meet target completion date More likely to function properly More likely to meet objectives

Size - Weight - Capabilities

• Quality Functional Deployment (QFD)

• Failure Mode Effect Analysis (FMEA)

• Design For Manufacturability (DFM)

• Design For Assembly (DFA)

MARKETING AND SALES

• Marketing concentrates on Long term planning New product development

• Sales Leads the sales and operations process (S&OP)

Production plan by family Monthly production for 12 to 18 months

Prepare all functions for fluctuations in demand Promotions New product growth Competition

SAFETY• Comply with OSHA regulations

Training is a must

• Post charts depicting Attendance Training Accidents Lost time accidents

• Deploy safety to every level Safety must be a part of every employee’s job

MANUFACTURING• Radical changes outlined by value stream

maps

• Stop pushing large lots through production

• Start pulling small lots (1-piece) through production

• Relocate some equipment to support Flow – Repetitive – Cellular Production

MANUFACTURING• If possible, always flow production

Balanced Operations – Close Layout – Mixed Models - POUS – Visual Management

Schedule the pacemaker process and flow to product completion

• If not flow, then pull Unbalanced operations Distanced layout Setup long Uptime problems

MANUFACTURING• Environments for flow and pull systems

MTS ATO MTO DTO

Supplier

RawMatl

ProcessA

ProcessB

Fin. Goods

ProcessC

Customer

FIFO LANE

MTS: PULL WITH BALANCED FLOW

Information Flow

Supplier

RawMatl

ProcessA

ProcessB

ProcessC

Customer

Fin. Goods

MTS: PULL WITH IMBALANCED FLOW

Information Flow

MATERIAL FLOW

Kanban Locations

Supplier

RawMatl

ProcessA

ProcessB

Fin. Goods

CustomerProcess

C

ATO: PULL WITH BALANCED FLOW

Information Flow

FIFO LANE

Kanban Locations

Information Flow

RawMatl

ProcessA

ProcessB

Fin. Goods

Kanban Locations

ProcessC

Customer

Parts Flow

Supplier

ATO: PULL WITH IMBALANCED FLOW

Supplier

RawMatl

ProcessA

ProcessB

ProcessC

CustomerFin.

Goods

MTO - DTO

Information Flow

FIFO LANE

CONCLUSION

• Implement Lean through the strategic plan Management lead All functions can work together Better financial support Common goals and objectives

H. David Paris, C.P.M., CFPIM, CIRM

DParis@isiworld.net

R. Henry Migliore, Ph.D.

hmigliore@aol.com

E10 Lean and the Strategic Plan

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