process improvement basics astpl 2012
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Process Improvement BasicsWhy, How, Tools & Approach, Case StudyLearn how to double your profits in simple steps...TRANSCRIPT
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ArmstrongFuture Perfect
Process Improvement
Basics
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Agenda
• Process Improvement (5W 2H)
• Perspectives
• Program v/s Culture
• Lifecycle of Process Improvement Drive
• Criteria for Success (6 ‘C’s)
• Common Tools & Approach
• Case Studies
• What’s Next
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PROCESS IMPROVEMENT (5W 2H)
Definition, Need, Location, Ownership, Timing, Tools & Approach
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• What
• Why
• Where
• Who
• When
• How
• How Much
Making things better, not just fighting fires or managing crises
A way of looking at how we can do our work better
Better Safety, Lesser wastage of resources, More competitive
Not only shop floor / workshop but throughout the organization
Management, Staff, Workmen, Process Improvement Leader
NOW
Communicate Vision, Equip with the right tools, Manage Change
Continuous & Gradual Improvement, Stabilize and Sustain
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Process Improvement (5W 2H)Definition, Need, Location, Ownership, Timing, Tools & Approach
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Process Improvement Making a Case
Cost to Customer
Cost to Company
Profit
Incr
eas
e t
he
Pro
fit
Cost to Customer
Cost to Company
ProfitNewProfit
a) Increase Cost to Customer
Cost to Customer
Cost to Company
b) Decrease Cost to Company
ProfitNewProfit
•New Product•Higher S.P.•Premium
•Process Imp.•Waste Redn
•Alternates
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Process Improvement Making a Case
Cost Implementation
De
gree
of C
on
trol*
High
High
Low
Low
New Product
Unique ProductCharging PremiumHigher Selling Price
Alternate Site
Alternate Source
Process Improvement
Wastage Reduction
* On acceptability by Market
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Process Improvement Where’s the Money, Honey?
• Let’s assume a case of a company 100Cr company earning a 5% profit i.e. 5Cr per annum. They want to double the profit.
• Traditional strategy is to double the revenue i.e. 200Cr to generate 5% i.e. 10Cr = 2 x 5Cr.
• But this also means, they have to incur cost to double company’s capability.
• Another strategy is to target 10-30% of the company’s revenue being spent on generating waste.
• Improving the processes by 10% would earn (10% of 95Cr) 9.5Cr of extra profit, without extra headcount or additional capital in many cases.
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PERSPECTIVES
Management, Staff, Process Improvement Leader
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PerspectivesManagement, Staff, Process Improvement Leader
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Just another Initiative. Not going to work
here…Nothing for me!
Process Improvement can generate more
money for me?
Workmen / Staff
Management / Owner
How do I drive PI?How many belts?
How to bridge the gap?
Process Improvement Leader
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PROGRAM V/S CULTURE
Should we drive it as a program or try to imbibe as a culture?
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Program v/s CultureShould we drive it as a program or try to imbibe as a culture?
• Program: A program provides impulsive moment in theorganization which is important to communicate change and gaininitial success. One time initiative. Need continuous push.
• Culture: A state of organization where values, processes and peopleare aligned with the methodology in whatever they do. It gives theinitiative the required acceptability and sustainability.
• “Process Improvements need to be driven into culture of anorganization. Then it will enable us to continuously seekimprovement in whatever we do. Right from design stage toprocurement, planning, manufacturing, dispatch, sales, service andmarketing, it will be a common thread and language of a LearningOrganization” …Armstrong
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LIFECYCLE OF PROCESS IMPROVEMENT DRIVE
Understand Implement Engrain
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Lifecycle of process Improvement driveUnderstand Implement Engrain
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Understand
• Aim
• Consult
• Learn
• Teach
Implement
• Plan
• Do
• Check
• Act
Engrain
• Change
• Raise
• Sustain
• Challenge
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CRITERIA FOR SUCCESS (6 ‘C’S)
Commitment, Communication, Consultation, Cost, Consistency, Challenge
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Criteria for Success (6 ‘C’s)Commitment, Communication, Consultation, Cost, Consistency, Challenge
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CommitmentManagement must commit tothe process improvement drive.Clarify priorities and goals.
CommunicateThe drive, goals and programmust be communicated andcascaded till bottom of pyramid
ConsultationInternally with employees tomanage change and involveExternally with experts to drive
CostSow something to reap in futureInvest in tools & training peopleRewards & Recognition drive
ConsistencyDrive it continuously and withsteady rigor. Take a step everyday however small it may be.
ChallengeChallenge Status-quo & improveDon’t limit yourchallenges, challenge yourlimits. Sustain the Change
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COMMON TOOLS & APPROACH
Lean, Six Sigma, IE
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Common tools & approachLean, Six Sigma, IE
• Lean Thinking– Attacking waste, VSM, 5s, Flow, Pull, Kaizen, VF
• Six Sigma– Attacking variability, DMAIC Approach, C&E diagram, 5Why
• TQM– PDCA (Plan-Do –Check-Act)
• Industrial Engineering (IE)– Time, Motion Study, BPR, Facility Mapping etc.
• Waste Management– Seven waste framework, w-VSM, CONC analysis
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CASE STUDIES
Bicycle Manufacturing Plant
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Bicycle Manufacturing PlantLayout
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Customer Counter
QA
Casting
Assembly
Planning
Painting
Storage
Fork Lift
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Bicycle Manufacturing PlantDecision Variables
Station / Object Decision Variable
Customer Counter Move
QA Move, Sell Station
Casting Move, Configuration (Smart Mode / FIFO), QA@Source (Y/N)
Fork Lift Sell, Batch Setting (Min. how many items to be moved at a time)
Planning Move, Schedule (Forecast/Current Demand), PM (Y/N)
Storage Move
Painting Move, Batch Setting, QA@Source (Y/N)
Assembly Move, QA@Source (Y/N)
Customer Counter Planning
FG Storage
Casting Assembly Painting
QA
RM Storage
Rejection Storage
Customer
Check in FG, If N
If Quality not acceptable
If Quality meets standards
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Bicycle Manufacturing PlantSimulations
Changes Made…
• Casting: Smart mode, QA@Source
• PM, Assembly QA@Source
• Layout changes
• Painting: Batch setting=1, QA@Source
Results…
• Earning increased by 27%
• Earning increased by 4.6%, Defects reduced by 7%
• Earning increased by 8.4%
• Earning increased by 8.6%
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Almost 50% increase in Earning and Profit
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WHAT’S NEXT
Building Case for Action, Gap Analysis, Plan, Engage
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What’s NextBuilding Case for Action, Gap Analysis, Plan, Engage
• Building Case for Action– Aim at Stars, At least you’ll land on the Moon
– Set yourself targets e.g. 20% cost reduction, 30% waste reduction
• Do a Gap Analysis– As-Is v/s To-Be state modeling
• Plan– Make a 5 years Road Map with desired targets and timelines
– Map all required programs and tools
• Engage– Identify and allocate projects to employees
– Continuously review and re-invest
– Manage change and participate
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