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Improving Your Bottom Line

Improving Your Bottom Line






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    Improving Your Bottom Line Improving Your Bottom Line Presentation Transcript

    • Improving Your Bottom Line Making Kentucky manufacturers more competitive
    • Why Manufacturing? 13% of the nation’s total Gross Domestic Product (GDP) Nearly 14.3 million employees Average annual wage of $45,916 Conducts two-thirds of all private sector R&D Every $1 in manufactured goods generates an additional $1.43 worth of economic activity
    • Competitiveness Challenges Rapidly advancing technology Customer demands – faster, better, cheaper Offshore competition from low wage countries – China’s average wages are: 25% of Mexico’s 10% of Hong Kong & Taiwan’s 3% of U.S.’
    • How Will Firms Compete? It’s all about ... Innovation …Productivity …Speed
    • 2 Key Tools for Competitiveness Lean Manufacturing / Lean Office Six Sigma
    • KMAC Mission: Increase the competitiveness of Kentucky manufacturers Private, not-for-profit corporation Statewide operations Industry-driven Board of Directors Kentucky affiliate of the national Manufacturing Extension Partnership (MEP) program
    • Productivity Improvement Lean Manufacturing / Lean for the Office Facilities Planning & Layout Process Improvement Problem Solving Training Employee Development Team Building & Team Leader Development
    • Quality Improvement Quality Systems ISO and QS/TS Standards Six Sigma Statistical Process Control Poka-Yoke / Error Proofing
    • Product Improvement New Product Development – Accelerate to Market for Small & Medium Enterprises (ATOM-SME) Value Engineering / Design for Manufacturability
    • Business Improvement Strategic Planning Meeting Facilitation Performance Measurement Financial Planning
    • Benefits Expertise – Staff of seasoned manufacturing professionals Results – Proven track record will all types of industry – A national leader among MEP Centers for delivering quantifiable, bottom-line impacts to clients Value – Clients realize significant returns on their investments in KMAC services
    • FY06 Client-Reported Results Increased Sales: $21 Million Retained Sales: $12 Million Annual Cost Savings: $4.8 Million New Investment: $27 Million
    • Lean Manufacturing Lean Office
    • What is Lean? A systematic approach to identifying and eliminating waste (non-value added activities) through continuous improvement by flowing the product at the pull of the customer.
    • Defining Value-Added Activities VALUE ADDED: Increases the market form or function of the product or service NON-VALUE ADDED: Does not add market form or function or is not necessary ESSENTIAL NON-VALUE ADDED: Cannot be eliminated completely
    • Lean = Eliminating the Wastes Value Added • Overproduction Non-Value Added • Waiting • Transportation • Non-Value Added Processing • Excess Inventory • Defects • Excess Motion • Underutilized People Typically 95% of all lead time is non-value added
    • Lean Tools Continuous Improvement Pull/Kanban Cellular/Flow TPM Quality at Source POUS Quick Changeover Standardized Work Batch Reduction Teams Value 5S System Visual Plant Layout Stream Mapping
    • Value Stream Mapping Visually document current material & information flow – Identify non value-added activities – Quantify non value-added lead time Create an ideal future state – Eliminate wastes & simplify processes Results in development of a Lean Implementation Action Plan – Prioritized improvement projects – Determines Lean Tools to be applied
    • 5S System Designed to improve workplace organization and standardization
    • Visual Workplace Simple signals providing an immediate understanding of a situation or condition – Kanban cards – Color-coded dies, tools, pallets
    • Plant Layout QC Ship Raw Stock Rec Screw QC Shear Stamp Machine Lathe Drill Brake Assembly Mill Weld Grind Finish Parts Stock
    • Standardized Work Tasks organized in the best known sequence Most effective combination of: – People – Materials – Methods – Machines
    • Batch Reduction The best batch size is: ONE PIECE FLOW Make One . . . Move One!
    • Teams More flexible Greater productivity & use of resources Collaborative & cross- functional More creative & innovative
    • Quality at the Source Quality built Operators inspect – Necessary equipment – Established standards – Process documentation
    • Point of Use Storage Materials are stored where used – Simplifies physical inventory tracking, storage, and handling
    • Quick Changeover Changing over a process to produce a different product in the most efficient manner
    • Pull/Kanban Push System – Production based on forecasts or schedules Pull/Kanban System – Production based on actual demand using Kanbans to signal replenishment
    • Cellular Flow Linking of manual and machine operations into the most efficient combination of resources – Flexible layout – Simplify flows – Minimize materials handling – Make use of people
    • Total Productive Maintenance Systematic approach to the elimination of equipment downtime as a waste factor Designed to maximize the productivity of equipment for Its entire life
    • Going Lean Training in Lean tools Using Lean tools in improvement events – Kaizen Events Organizational / Cultural changes – Move toward team environment – Defined problem-solving approach – Performance metrics that support Lean
    • Improvements Achieved with Lean 0% 25% 50% 75% 100% Lead Time Reduction Productivity Increase WIP Reduction Quality Improvement Space Utilization
    • Six Sigma
    • Definition of Six Sigma Methodology for disciplined quality improvement
    • History of Six Sigma Originated at Motorola in the early 1980s Process modified by others Implemented by IBM & Allied Signal Adopted by General Electric in 1995 – Broadly deployed – By 1998, GE claimed $750 million in net benefits
    • Goal of Six Sigma Optimize process capability by identifying and minimizing variation Virtual elimination of all defects – No more than 3.4 defects per million opportunities (DPMO) – 99.9996% acceptable
    • Cost of Poor Quality Scrap/Rework – Materials, labor costs, disposition costs Warranty Costs – Customer credits, return/restocking costs, penalties Lost Sales – Lost revenues, cost of gaining new customers
    • Competitive Performance Sigma Level Cost of Poor Quality Performance 2 >40% of sales Non-competitive 3 26% - 40% of sales 4 16% - 25% of sales Average 5 1% - 15% of sales 6 < 1% of sales World Class
    • Benefits of Improved Quality Bottom-line cost savings Greater customer satisfaction Increase in throughput Reduction in waste and rework Improvement in process capability
    • Six Sigma Core Philosophies Values defect-prevention over defect-detection Emphasizes reducing variation in processes – Tackles root causes of poor performance Is customer-focused by driving improvement in areas most important to your customers
    • Six Sigma Characteristics Defined, problem-solving approach Data-driven Project-based Commitment and support from the top level
    • Problem-Solving Approach Uses a defined approach (DMAIC) – Define the project – Measure the baseline process capability – Analyze when, where and how often defects occur – Improve process capability to reach a Six Sigma level – Control the process to maintain the gain
    • Data-Driven Based on data rather than perception Uses statistical tools during the DMAIC process Calls for training in “statistical thinking” for many; advanced statistics and project management for some
    • Project-Based Project selection is critical – Should advance organization’s strategic initiatives – Have impact on a Critical to Quality (CTQ) characteristic – Should have bottom-line financial impact – Begin and end with performance measure
    • Top Level Leadership Requires leadership, commitment and active support from top level management Leaders should use Six Sigma to drive strategic improvement – Six Sigma projects should support strategic goals
    • Six Sigma – The Players The Champion Black Belt Green Belt Quality Process Analyst
    • KMAC’s Approach to Six Sigma Developed specifically for small- and mid-sized manufacturers – Affordable – Flexible – Focuses on implementation of Six Sigma not just training – Emphasizes bottom-line results
    • Two Part Approach On-Site Deployment Planning & Mentoring – Helps the company gain the most benefit from implementing Six Sigma Online Six Sigma Training – Provides an affordable way to train Black Belts, Green Belts, and Quality Process Analysts
    • Lean and Six Sigma Two powerful tools to help a company improve: – Quality – Productivity – Bottom-line results
    • Lean & Six Sigma Together Use Lean to: – Reduce or eliminate non-value- added activities Use Six Sigma to: – Improve value-added activities – Solve complex problems uncovered by Lean or those requiring advanced analysis