Problems Suppliers Footwear Industry by gmt16623


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									Lean Manufacturing

                Portland State University
            School of Business Administration
   ISQA 552: Managing Operations and the Value Chain

               Wednesday, March 8, 2006

Discussion Topics

1. Why the Need for Lean
2. Key Lean Concepts
3. Long-term View (Lean Enterprise)
4. Lean Application
5. Learnings, Issues and Challenges
6. Suggested Resources

                 Why The Need For Lean in the
                 Footwear Industry
                 •   Historically, the footwear industry has operated as a push system
                     focused on economies of scale, with large batches and long
                     assembly lines.
                      – Labor-intensive manufacturing processes require
                         manufacturing in low-cost countries.
                      – Focus on departmental efficiencies.

                 •   Customers’ increasing demands for a greater variety, more
                     frequent deliveries, and smaller order quantities; all at a lower

                 •   Ongoing need to demonstrate leadership in corporate
So what to do?        – Respect for workers
Benchmark the         – Safety and ergonomics
best.                 – Sustainability (elimination of waste)

                 •   Industry and shareholder pressure to improve margins and
                     reduce cycle time.

The Approach to Lean
   Start with a simple definition of Lean Thinking

        Deliver the most value

             From your customer’s perspective

                 While consuming the fewest resources

    Key Insights
    •   Focus on each product and its value stream rather than
        organizations, functions, assets, and technologies.

    •   Ask which activities are waste and which create value.

    •   Enhance the value and eliminate the waste to optimize
        the whole.

                  Ohno Manufacturing Model
      Inputs                        Outputs                  Targets
    Manpower                      Quantity              As per customer demand
    Machines     Method           Quality               In spec.
    Materials                     Cost                  Lowest total cost
                                   Safety                Zero injury
                                                             (With Profit)

                                        Lead Time
                               Non Value Added                          Value Added

                                               Non Value Added          Value Added

    “All we are doing is looking at the time line from the moment the customer gives us
    an order to the point when we collect the cash. And we are reducing that time line by
    removing the non-value-added wastes.”                     Taiichi Ohno,1988
           Value Stream Concept

    PROCESS              PROCESS          PROCESS         PROCESS
     Create Job                                           Make Offer
                         Resumes &          Conduct
     Posting &                                            & Negotiate
                          Schedule         Interviews
     Advertise                                             Package

                          VALUE STREAM
                                                              Product or Service
Intent or Need

                  Value Stream: All process steps, both VA & NVA,
                  required to deliver a product or service to the customer
                  from the point that the intent or need is identified.

                 Key Lean Concepts (to apply to Value
                                                                           Toyota Production System
A house is a                                    Best Quality                         TPS
structural                                Lowest Cost
system that is                                           Best Safety
strong only if                      High Morale
                                                        Shortest Lead Time
the roof,
pillars, and        4
foundation are           (Right product,       1                      3
strong. A                      Right               Highly                  Jidoka (Built-in
weak link                    Amount,               Motivated                     Quality)
                            Right Time)             People                • Andon
weakens the
                        • Takt Time                                       • Error proofing
whole system.           • Continuous          • Safety                    • In- station
                          Flow                • Teamwork                     quality
                        • Pull System         • Flexible                  • 5 Why’s
                        • Quick                 Workforce

                                       2      Operational Stability
                                      • Leveled Production
                                      • Standardized Work
                                      •    5S and Visual Management
                                      •    Total Productive Maintenance
                     Key Lean Concepts (continued)
“Brilliant process   1 Highly Motivated People
management is
our strategy.          •   Safety – concern for the worker has to be foremost to make the
We get brilliant
                           factory an environment where workers can contribute ideas.
results from
average people         •   Teamwork – a team environment in the plant enables the team to
managing brilliant         manage itself, including solving most problems on their own.
processes.                 Management needs to see itself as there to support the teams.
We observe that
our competitors        •   Flexible Workforce – workers need to be multi-skilled to be
often get average
                           redeployed when improvement occur.
results from
brilliant people
managing broken        •   Questions to consider:
processes.”                 – How do your incentive systems need to change?
                            – What are effective ways to involve all employees in the
Mr. Cho,                      business of improvement?
President Toyota
                       It’s the people who bring the system to life: working, communicating,
                       and resolving issues together. TPS encourages, supports, and in
                       fact demands employee involvement.
                Key Lean Concepts (continued)
“Losers have    2 Operational Stability
tons of           •     Level production (heijunka) – an advanced topic, but the simple
variety.                explanation is to do a little bit of everything, every day, throughout
Champions               the day. Make all varieties – all models and all sizes – so that we
                        are very very good at changing sizes and models.
take pride in
just learning     •     Standard Work – we need to identify and document the Best
to hit the              Way to safely make a quality part, every time within Takt Time.
same old                Then use that standard method by every operator, every time.
winners."         •     5S and Visual Management – A stable factory is well organized,
                        clean, and disciplined. It is clear and obvious what is supposed to
-Vic Braden             happen, and what is happening.

                  •     Total Productive Maintenance (TPM) – is basically about
                        maintenance of machines – and moving away from being
                        reactionary, to become preventative.

                      The idea is to move away from “just in case” behavior, and create a
                      boring factory, where the same thing happens every day – no
                      surprises, no accidents, no crisis.
                    Key Lean Concepts (continued)
                  3 Built-in Quality (Jidoka)
The focus is
quality at the       •   Andon Systems – basically a way for the operator to call for
source. The
                         help. If something is preventing them from making a quality part,
earlier an issue
                         they should activate the andon – which lights up a board showing
is found, the
less expensive           which operator needs help. The team lead is then alerted to
it is to fix.            come and provide support. The key idea is to empower the
                         operator to stop the line and call for help.
If you have to
throw                •   Error Proofing -- putting in processes that eliminates the
something                possibility of mistakes – a good example of error proofing is on
away, better to          computers – the jacks for plugging in various cables are all
do so before             different sizes and shapes – and they make them so that it is
you add a
                         impossible to plug in to the wrong place, or to put in upside down.
bunch of stuff
(value) to it.
                     •   5 Why – getting to root cause analysis when a problem arises,
                         not just addressing symptoms.

                    Key Lean Concepts (continued)
                  4 Just-in-Time (Right product, right amount, right time)
JIT, one of the      •   Takt Time – the speed at which material needs to move through
pillars of TPS,          that value stream. The concept represents a shift from
                         departmental silos in the plant, to thinking about Value Streams –
is a set of
                         the process to make a product from start to finish.
tools, and
techniques           •   Continuous Flow – inventory and information move through the
                         value stream at takt time. Continuous flow makes problems
that allows
                         visible because when a problem arises.
production and
delivery of
products in          •   Pull System – the customer ultimately creates a pull. So when
                         the customer wants a finished pair, we make one. But customer
                         is also thought of as “the next process.” So when final assembly
quantities with
                         needs a part, the upstream process produces one.
short lead
                     •   Quick Changeover -- If you want flexibility, we have to come up
                         with ways to reduce the changeover time, so that it’s possible to
                         change the line quickly and easily.

                   Long-term View (Lean Enterprise)
                   •   Most every company implementing lean has the long term goal of
                       establishing a lean enterprise. Why?
Toyota began
it’s innovative         – Diminishing returns from shop floor benefits. Can you save
                           your way to prosperity?
journey in
1945…. so               – Manufacturing represents less than one third of the total cycle
                           time for a product.
clearly there is
no finish line.         – Harvesting the benefits on the shop floor requires new ways of
                           thinking about logistics, production planning, order
                           management, purchasing, etc.

                   •   What is a lean enterprise?
                        – Lean thinking applied throughout the entire organization (not
                          just manufacturing)
                        – Continuous improvement as a way of doing business
                            • Performance measurements drive improvement
                            • Everyone involved in kaizen activities
                        – Extended lean efforts with suppliers, customers, and partners

                     Long-term View (Lean Enterprise)
Although only a         The Business Case for Lean Enterprise
relatively small
amount of costs
have actually
been expended
by the time a
product has
been designed,
a relatively large
amount of costs
(about 80
percent) have
been committed.

Thus, the
potential for cost
occurs during
the planning and
                     Source: OMR. OPTIMAL TARGET COSTING PRACTICES. June 2002

Lean Problem Solving Application

           Portland State University
       School Of Business Administration
          Wednesday, March 8, 2006

                Standardized problem solving
“Not            5 Whys to determine root cause
knowing the           ?
opinion and           ?
fact makes it         ?
difficult to          ?
make good

Marilyn Vos

                 •   Problems are opportunities to learn
                 •   Hiding problems undermines the system

Planning and Measurement

 Plan    Identify the problem
         Analyze for root cause
         Formulate countermeasures

 Do      Develop implementation plan
         Communicate plan
         Execute plan

 Check   Monitor progress of plan
         Modify plan if necessary
         Monitor results

 Act     Evaluate results
         Standardize effective countermeasures
         Start PDCA again
“A3” Proposal/Report Format

             PLAN                                 PLAN

   An A3 lays out an entire plan, large or
   small, on one sheet of paper.
   It should be visual and extremely concise.
                            Implementation Plan
   It should tell a story, laid out from upper      Do
   left-hand side to lower right, which anyone
   can understand.


Applying PDCA and One Page Report Writing

Exercise instructions:
1.   Break into teams

2.   Each team pick a topic from work or from school

3.   For each topic, work through as much of the A-3
     format as you can. Defining the business problem is
     a good place to start.

4.   Use visuals if possible. Use 5 why analysis to
     understand root cause. Note where you are making
     assumptions vs using facts.

5.   Brainstorm recommendations that address root

6.   Summarize your ideas in the A-3 format.

                           Title: ________________               Recommendation         What is your proposed
•                                                                •
•                                                                •
•                                                                •
Current Situation    Where do we stand? Where we need
                       to be?

•                                                                Plan      What activities will be required for implementation
•                                                                            and who will be responsible for what and

Goals         What is the specific change you want to            •
              accomplish now?

Analysis             What is the root cause(s) of the problem?
                                                                 Follow - up   How we will know if the actions have the
                     What requirements, constraints and
                                                                               impact needed? What remaining issues can be
                     alternatives need to be considered?

                  Learnings, Issues and Challenges
Some people        •   Physical changes are relatively easy; behavioral changes are
imagine that           difficult; cultural changes can take decades.
Toyota has put     •   Implementations must have the right expectations and right
on a new set           incentives.
of clothes, so     •   Although trade-off’s still exist between cost, time and quality, TPS
they go out            is a comprehensive approach to achieving improvements in all
and purchase           three.
the same outfit
                   •   Lean is a very people-centered initiative which makes it difficult to
and try it on.
                       predict results.
They quickly
discover that      •   Applying lean concepts in administrative areas is even more
they are much          difficult.
too fat to wear    •   Lean must be viewed as a long-term investment by the
it.                    organization.

Shigeo Shingo

Five Suggestions for You Today

1.   Learn the System, including the dirty details.

2.   Choose a place to begin your own project. Implement it
     as an integrated system.

3.   Use the Plan Vs. Actual to lead implementations of your
     Future States.

4.   Learn Standardized Work (“SWS”). Implement it by
     focusing on the operator. Eliminate waste in each
     operator’s job!

5.   Ensure clear ownership at the right level(s).

Closing Thoughts

“From the end customer’s standpoint none of the information
   processing steps creates any value. To test this assertion,
   just ask yourself whether you would be less satisfied with a
   product if it could be ordered and delivered to you with no
   management of production and logistics information.

Obviously you would not be less satisfied. Indeed you would
  be more satisfied if the cost savings from eliminating
  information acquisition and management could be passed
  along to you.

Yet in the modern era of automated information management,
   most managers have implicitly accepted the notion that
   information is good, more information is better, and all
   possible information is best. In fact, information for control
   of operations is necessary waste. Managers ought to be
   minimizing the need for it rather than maximizing its

               – Dan Jones and James Womack
                Suggested Readings
Suggestions        Lean Thinking : Banish Waste and
                   Create Wealth in Your Corporation by     Learning to See Version 1.3 by Mike
Tour a lean        James P. Womack, Daniel T. Jones         Rother, 1999.

See,      The Machine That Changed the World :     The Toyota Way: 14 Management
                   The Story of Lean Production by James    Principles From The World's Greatest,       P. Womack 1991.                          Manufacturer by Jeffrey Liker 2003.

                                                            The Gold Mine: A Novel of Lean
                   Toyota Production System: Beyond         Turnaround by Freddy Balle, Michael
                   Large-Scale Production by Taiichi        Balle. 2005.
                   Ohno. 1988

                   Decoding the DNA of the Toyota          Learning to Lead at Toyota by Steven J.
                   Production System by Steven J. Spear,   Spear. Harvard Business Review
                   H. Kent Bowen. September 1, 1999        Article, May 2004.


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