This document discusses strategies for enhancing global competitiveness using TOC-Lean-Six Sigma techniques. It begins by outlining workshop objectives of creating awareness of changing global market needs and introducing new approaches. It then provides an overview of the Theory of Constraints, focusing on identifying constraints limiting goals and improving the weakest link. Next, it covers Lean techniques for identifying and eliminating waste from business processes to reduce costs. Finally, it emphasizes specifying customer value, removing non-value adding activities, making value flow quickly to customers, and pursuing perfection.

1. Enhancing Global Competitiveness
TOC-Lean-Six Sigma Way

2. Workshop Objectives
 Create awareness of changing needs of global market
Introduce the new approach to enhance Global competitiveness
Provide effective technique to select Competitiveness
Improvement Projects
Develop knowledge and skill to manage Cost Reduction, Quality
Improvement Projects based on TLS (TOC-Lean-Six Sigma)
Techniques

3. Enhancing Global Competitiveness
TOC-Lean-Six Sigma Way
1.Goal of the
Organization?

4. Goal of the Organization
What is ultimate
Goal of a
Business
Organization ?

5. The ultimate Goal of Organization is….

6. Case Study: Growth of Steel industry
India: 1.0 Million Ton
China: 0.5 Million Ton
 1950: Steel production
- India: 1.0 Million Ton
- China: 0.5 Million Ton
 2008: Steel production
- India: 55.1 Million Tons
- China: 502 Million Ton

7. Global Steel Production

8. What makes China the market leader?

9. The key to Market Leadership?

10.  Quality
 Speed of delivery
 Experiences of customer
(during all transactions)
 Cost
Yardsticks to measure
Global Competitiveness?

11. The challenges before Management?
 Improve QUALITY
 Accelerate Speed
(Reduce Lead Time )
 Enhance Customer Value
 Reduce COST

12. What are the products made by your
Co.?
How competitive are your products in
Global market?
What’s your market share in Domestic &
Global market”
Can you remain globally competitive with
the current way of business
management?
What’s Global Competitiveness of your
Company’s Products?

13. Does your business suffers from . .  
 Higher cost compared to competitors
 Poor on-time delivery performance
 Long production lead-times
 High WIP and/or finished goods inventory
 Poor cash flow
 High overtime
 Lots of expediting and rescheduling
 Customer complaints
 Reluctance to take on new business
. . . then chances are good that your organization's constraint is the way that production (or
a production-like operation) is managed. If this is the case, then you will benefit from
investigating and implementing a constraint-based method of production management.
Assess the current status of your Co!

14. A problem cannot be solved
with the same consciousness
that created it.
- Albert Einstein
How to meet the Business Challenges?

15. Enhancing Global Competitiveness
TOC-Lean-Six Sigma Way
2.A new way of Thinking:
Theory of Constraints

16. What is The Theory of Constraints?
Developed by a Physicist
Eliyahu Goldratt
TOC is:
 Thinking Tool
 Not a set of solutions
 Focus for Change
 Whole systems approach
 Simple common sense steps

17. Theory of Constraints
“The core idea in the Theory of Constraints
is that every real system such as a profit-making
enterprise must have at least one constraint”.

18. What is TOC?
“There really is no choice in the matter.
Either you manage constraints or they
manage you. The constraints will
determine the output of the system
whether they are acknowledged and
managed or not”

19. How does TOC help companies?
 Focusing improvement efforts where they will have
the greatest immediate impact on the bottom line.
 Providing a reliable process that insures Follow
Through!

20. Finding the Focal Point
Before a company can properly
focus, one necessary condition is
that they answer the following
question:
 What is the Goal of a Business
Enterprise?

21. The Goal?
 To make more money now and in the future!

22. Measuring Progress
Once the Goal is identified, one necessary condition to
success in achieving the goal is to identify which
measurements will be used to judge progress.

23. What measurements should we use?
Conventional Wisdom
 Net profit?
 Efficiency?
 Utilization?
 Return on Investment?
 Cash Flow?
“Are you using the right measurements?”

24. What measurements should we use?
TOC Wisdom
 Throughput
 Inventory
 Operating Expense

25. Throughput (“T”)
The rate at which the system generates money through
sales. (Or, the money coming into the organization.)
 Building inventory is not throughput
 Only $ generated by the system get counted; e.g., raw
materials and purchased parts are not throughput.
 T = Selling Price - Materials

26. Inventory (“I”)
All the money the system has invested in purchasing
things which it intends to sell.
 Inventory is a liability (not an asset)
 Raw materials, work in process, finished goods and
scrap are “I”

27. Operating Expense (“OE”)
All the money the system spends in order to turn
inventory into throughput.
 All employee time is “OE” (direct, indirect,
operating, etc.)
 Depreciation of a machine is “OE”
 Operating supplies are “OE”

28. Where should we focus?
 Decreasing Operating Expense?
 Decreasing Inventory, or
 Increasing Throughput ?

29. Focus Priority Why?
#1
#2
#3
Exercise:
What is your Focus Priority & Why?

30. Chain Analogy
Marketing Bidding Purchasing Production Finishing Shipping
 A company can be compared to a chain. The businesses
activities are a “chain” of dependent events.
 For example; we don’t ship parts until they are packaged,
and we don’t package parts until they are manufactured,
etc.

31. Chain Analogy (continued)
Conventional Wisdom believes that…
Improvement of any link is an improvement to the chain.
Organizational improvement is the sum of the local
improvements.
Primary Measurement: Link Weight
Result: Every link wants/needs more resources all the time

32. Chain Analogy (continued)
Throughput Wisdom Approach believes that…
 Most of the improvements of most links do not improve
the the chain.
 Organizational improvement is NOT the sum of the local
improvements.
 Primary Measurement: Chain Strength
 Result: Resources are channeled to the weakest link

33. Chain Analogy (continued)
Marketing Bidding Purchasing Production Finishing Shipping
“Think Holistically. Take only those specific actions
that will strengthen the chain.”
Focus scarce resources on the constraint
Management & Resources

34. The “Conventional Wisdom” The “Throughput Wisdom”
Prime measurement:
Link Weight
 Any improvement of any link is
an improvement of the chain.
Organizational improvement =
sum of local improvements.
Prime measurement:
Chain Strength
Most improvements of most links
do not improve the chain.
Organizational improvement =
improvement in the constraint(s).
Conventional World vrs.
Throughput World

35. The “Conventional Wisdom” The “Throughput Wisdom”
Decreasing “OE” is definitely
#1 because we have relatively
high control of our expenses.
Increasing “T” is
unquestionable #1 because
it has the greatest potential
impact on the bottom line
Where should we focus?

36. Shifting Paradigms
New Priority
# 1: Increase T
# 2: Decrease I
# 3: Decrease OE
Throughput World
Current Priority
# 1: Decrease OE
# 2: Decrease I
# 3: Increase T
Conventional World

37. TOC Question...
 How do you manage a company in a world
where increasing Throughput is the #1
priority, reducing Inventory is #2, and
reducing Operating Expense is a tactic
only after serious efforts at #1 and #2?

38. TOC Summary
The theory of Constraints is about 2 things
 Focus
 Follow Through

39. TOC Summary: Focus
 A company must first know its Goal
 Then it must identify the thing(s),
the constraint(s), that are limiting
the level of achievement of that
Goal.

40. TOC Summary: Follow Through
The Process of On Going Improvement
 Identify the Constraint
 Find out the Root cause of Constraint
 Develop Solutions to eliminate the cause
 Implement the solution
 Resolve the constraint

41. Enhancing Global Competitiveness
TOC-Lean-Six Sigma Way
3.LEAN
a new approach to
Cost Reduction

42. What makes your products Costlier?
A B
Profit Margins
Who Controls the
Selling Price?
Company A : 5%
Company B : 10%
Selling Price

43. What do we do in our processes?
Marketing Bidding Purchasing Production Finishing Shipping
 In any business activity at any
moment of time, either we are adding
Value or creating Waste

44. What makes Your Products Costlier?
Cp Cp
P
P
Profit
= Cost of Product + Cost of Waste
Ex-factory
Cost
makes the
Products Costlier?
Cw
Cw
Selling Price
Ex-Factory
Cost
Ex-Factory
Cost

45. How to increase the Profit?
C/o
Waste
Waste
P
Cost
of
Product
Waste
P
Cost
of
Product
W
Selling
Price

46. Demystifying the Business
Process!
Genesis of Waste

47. Business as a Supply chain

48. Supply chain:
a link of Business Processes
Marketing Bidding Purchasing Production Finishing Shipping

49. Every process is a Black Box

50. Resources to produce and supply
Products
1. Materials
Products
4. Methods
2. Machines
3. Men

51. Resources to design & deliver Services
1.Information
4.Processes
(Office Procedures)
Services
2.Assests
(Office facilities)
3. People’s
Knowledge &Time

52. Four Basic Operations
1.Retention
2.Transportation
3.Processing
4.Inspection
1. Materials
Products
2. Machines
3. Men

53. In each operation we either Add Value or..
Value
2.Machines
Value:a capability provided to a customer at the right time at
an appropriate price, as defined in each case by the customer
1. Materials
Products

54. add value or Generate WASTE
Waste
2.Machines
“Muda”: Any business activity that absorbs resources, but adds no value
1. Materials
Products
1. Over production
2. Inventory
3. Defects/rejection/rework
4. Waiting
5. Inappropriate Processing
6. Unnecessary Motions
7. Transporting
8. Untapped human Potential

55. Where do you add Value?
1.Retention
2.Transportation
3.Processing
4.Inspection
1. Materials
Products
2. Machines
3. Men

56. Waste (“muda” in Japanese) is
‘anything other than the minimum
amount of equipment, materials,
parts, space, and worker’s time,
which are absolutely essential to
add value to the product.’
- Shoichiro Toyoda
Founder, Toyota
What is Muda (Waste)?

57. 1. Waste of Overproduction
 Producing more than
requirement, before time
or faster
 Produced to compensate
loss in production due to
absenteeism, equipment
break down, higher
rejection rate,
inconsistency in operation
 Instead of eliminating the
root cause companies go
for overproduction

58. 2. Waste of Inventory
 More than the required stock of
finished product, work-in process
and raw materials do not add
any value
 They add cost of operation by
blocking more money, increased
requirement of transportation,
storage and handling

59. 3. Waste of Defects
 Defects or rejects interrupt
production and require expensive
rework
 Rejects have to be scrapped
 Defective products may damage the
tools and jigs installed on machines

60. 4. Waste of Waiting
 Muda of waiting occurs when the
hands of the operator are idle
 Operator’s work is put on hold because
of line imbalances, lack of parts, or
machine downtime or operator
monitoring the machine when machine
is adding value to the job

61. 5. Waste of Processing
 Sometimes inadequate technology or design leads to
muda in processing
 Unproductive striking of the the press, de-burring of the
product, machine idling cause muda

62. 6. Waste of Motion
 Any motion of a person’s
body not directly related
to adding value is non
productive
 Any action such as lifting
or carrying a heavy
object, should be avoided

63. 7. Waste of Transport
 Transport is an essential part of operations, but
moving materials and products add no value
 Any process physically distant from main line adds
muda of transport
 Use of conveyors, fork lifts, trucks and other transport
system has to be minimized

64. 8.Waste of Untapped Human Potential
 The purpose of efficient system is
“to create thinking people” but most
organizations don’t use thinking
power
 No involvement in decision making
 Not utilizing experience of people
for improvement
 Example : Not using creative brain
power of employees, not listening,
thinking that only managers have
idea worth pursuing

65. Wastes appear in the following forms:
 Defective materials
 Wasted materials
 Excess consumption
 Unwanted inventory
 Demurrage
 Downtime of machines
 Unutilized capacity
 Productivity Loss
 Waiting time
 Yield loss
 Re-work
 Defective products/scrap
 Downgraded products
 Un-recovered bye- products
 Returned Material
 Warranty Claims
 Complaints
 Cancelled orders
 Excess transportation cost
 Delayed delivery
 ………………………….

66. Production Process Waste
Waste Category Production Process Waste Example
Overproduction Early delivery, producing more than demand, producing without
order
Inventory Unsold items, High inventory, Excess safety stock
Defect Scrap, Rework, Defective items, Nonconforming actions, errors
Waiting Idle operators, Slow speed, Late delivery, Excessive queue,
Machine down, Material not available
Inappropriate
processing
Un necessary steps in process, number of approvals, making
mandatory non value adding reports
Excess Motion Too much worker movement,Walking to/from copier, central filing,
fax machine ,Bending, excessive walking
Transportation Multiple handling, Fork lifts, Conveyors

67. Office Process Waste
Waste Examples
1. Over
production
Processing of non-priority purchase requests Causes long
lead times, downstream shortages
2. Waiting Paper not reached, Machine busy, Person not available
3.Transportation Transport of files, documents, equipment etc.
4.Over
processing
Doing more work than necessary: You don’t know what
customer wants, Allowing the NVA work to creep in process
5.Inventory physical pile of forms, pending e-mails, caller on hold, people
standing in line
6. Motion Too much worker movement, Poor office layout,
Ergonomically wrong designed furniture
7.Defects Missing information, Missing deadlines, Operator given
incorrect version of documents
8. Untapped
human potential
No suggestion system. No encouragement for innovation and
improvement

68. Exercise: Identify waste
 You have been hired by a Tea
Stall to eliminate waste from their
business processes. As per the
customers complaints, they have
to wait for 15 minutes to get Tea,
whereas in competing Tea Stall it
is delivered in five minutes. Shop
owners is having relatively lower
profit margin also.
 Draw a process map from order
taking to delivery of tea and
identify the types of waste
generated in the processes

69. Cost of Waste : Sigma level & Competitiveness
Sigma
Level
Defect Rate
PPM
Cost of
WASTE
(of Turnover)
Competitiveness
6 3.4 < 10%
5 233 10 - 15%
4 6210 15 - 20%
3 66807 20 - 30%
2 308537 30 - 40%
1 690000 > 40%
Industry
Average
Non
Competitive
World Class
15 - 30%

70. WASTE
1. Detect Waste
2. Eliminate Waste
3. Prevent Waste
How to Reduce Cost?

71. How to improve
Business Performance- the Lean way?
 Specify value from the standpoint of
customer (do they want goods and
services or an effective solution to
their problem?)
 Identify the value stream for each
product and remove wasted activities
 Make the value flow towards the
customer as quickly as possible
 Only at the pull of the customer
 Pursue perfection in the above four
steps

72. Enhancing Global Competitiveness
TOC-Lean-Six Sigma Way
4.Strategy for
Cost Reduction
Initiatives

73. Case Study
Nippon Autocomp Ltd
The CEO of company called all managers,
analyzed the situation and observed that there
has been 25% drop in business during last year
and 21% and 18 % in preceding two years.
Nippon Autocomp Ltd (NAL) is a producer of Fuel Tank
Brackets for leading automobile manufacturers.
It is operating since 1980, obtained ISO 9001 certificate in year
2002 & commanded a good market share till year 2005. With
the entry of global players in Indian market, since last few
years NAL started loosing business due to tough competition.

74. NAL: Reasons for Business drop
The CEO of company appointed a committee of HODs to find out the reasons of
business decline and to select an appropriate Improvement Methodology to
enhance the performance in a period of six months
The committee gone through records of last 3 years, interacted with clients, and
all concerned persons and arrived to a conclusion that NAL’s business declined
mainly due to two reasons:
-Higher cost of production & Longer lead time
The quality of NAL products were acceptable to customers but it’s prices were
5 – 7 % higher than competitors.The customers demand a lead time of 10 days,
whereas current lead time of NAL is 30 days
Committee decided to go for Radical Cost Reduction Intervention
Now your group has been selected as Consulting Team to facilitate
Performance Improvement in NAL, with clear objective; to reduce cost & lead
time within six months
•How would you make it happen?

75. NAL: Process Information
 Customer demand: 265 Brackets/day.
 Ex factory Price of Bracket : Rs.3000 per piece
 Plant operation 5 days/week, 8 Hrs/day, 50 weeks/yr
 Main Raw Material (for one Bracket): Steel plate ( 6mm
ThickX500mmX1000 mm) Weight: 30Kg, Cost Rs.900
 Process yield: Stamping- 95%, Welding- 90%, Deburring-
99%, Assembly-98%, Overall:Finished product to Input -
60% (by weight). Loss in form of scrap, trims, defectives.
 Industry Benchmark of overall yield:95%
 Inventory: Raw Material-10 days, Stamping-5425 pcs,
Welding-1400 pcs, Deburring -1225, Assembled : 0

76. NAL Process Data
Parameters Stamping Welding De-
burring
Assembly
Yield 95% 90% 99% 98%
Inventory R Mtl: 10 Shift
Finished:5425 Pcs 1400 Pcs 1225Pcs --
M/c Breakdown 30 Mnts/Shift 30 Mts/S 70 Mts/S 15Mts/S
Changeover Time 4 Hrs/3 Shift 10 Mts/S -- 5Mts/S
Lunch Break 30 Mts/S 30 mts/S 30 Mts/S 30 Mts/S
Cost of Inventory RMtl: Rs.900/Pc
FP; Rs.1000/Pc Rs.1500/ Pc Rs.1600/Pc Rs.2500/Pc
Machine Idle Cost Rs.6000/Hr Rs.6000/Hr Rs.6000/Hr Rs.6000/Hr

77.  Form a Team of 5 Consultants, brainstorm and develop
step by step approach to make NAL competitive through
Radical Cost Reduction (TLS) intervention
 Evolve strategy for reduction of Cost & Lead Time in NAL
 Present your findings in the following steps:
- Step 1,2,3…: Activities & Deliverables
- Strategy deployment schedule
Develop strategy, Not Solutions
Exercise : Strategy Development

78. Activities/Steps Deliverables
1.
2.
3.
4.
5.
6.
Strategy:
To Reduce Cost & Improve Delivery

79. Activity 1 2 3 4 5 6
1.
2.
3.
4.
5.
6.
Radical Cost Reduction
Intervention Schedule
Months

80. Steps Deliverables
1. Awareness of new Technique Mindset Change
2. Constraint Diagnosis Constraints in the system
3. Project Selection Projects for Improvement
4. Project Team Training Problem Solving Competency
5. Solution Development Improvement Action Plan
6. Implement Solution Reduced cost & Lead Time
Strategy to
Reduce Cost & improve Delivery

81. Activity 1
Month
2
Month
3
Month
4
Month
5
Month
6
Month
1. TLS Awareness Programs
2. Constraint Diagnosis
3. Project Selection
4. Project Team Training
5. Solution Development
6. Implement Solution
Radical Cost Reduction
Intervention Schedule

82. Enhancing Global Competitiveness
TOC-Lean-Six Sigma Way
5.Change
Management

83. The Law of Mind
 If you always do what you
have always done, you will
always get what you have
always gotten.
 If you want to bring
change in the cost, you
have to make changes in
causal factors.
 You have to Manage
Change

84. Change Management
1. What to change ?
(identification of problems)
2. What should be the content
of change? (developing
solutions)
3. How to make change
happen? (implementation of
solution)
4. How to sustain the change?
(cultural transformation)

85. Change Management - Overview
Change
Management
Objective Tool Activity
What to
change?
Identification of
Constraints?
TOC- Lean:
Diagnosis, VSM
Detection of
Waste
What should be
the content of
change?
Detailed
investigation &
solution
development
Lean -Six Sigma:
Define- Measure-
Analyze
Identification of
root-cause of
waste
Making change
happen!
Implementing
solutions
Lean -Six Sigma:
Improve
Elimination of
root-cause of
Waste
How to sustain
change?
Holding the gain Lean -Six Sigma:
Control
Prevention of
waste

86. Enhancing Global Competitiveness
TOC-Lean-Six Sigma Way
6.What to Change?
Select
Cost Reduction (or Quality
or Delivery Improvement)
Projects

87. Cost Reduction Projects
 Cost reduction is a change management activity
 The very first step of change management is to discover
“What to Change”?
 Change has to be done project-by-project
 How to select cost reduction project has to be a scientific and
objective activity.
 Criteria for selection of project is “that one, which is impacting
maximum on bottom-line”
 Such projects can be identified through a unique diagnostic
workshop based on the principles of “Theory of Constraints
(TOC) and Lean”
 We have to begin cost reduction activity through
“Constraint Diagnosis”

88. Waste are symptoms of Problems
Raw Materials
Information
Products
Services
1. Over production
2. Inventory
3. Defects
4. Unnecessary Motions
5. Inappropriate Processing
6. Waiting
7. Transporting
8. Untapped Human Potential

89. What Causes Waste?
Retention
Transportation
Processing
Inspection
Raw Materials
Product
s
1. Over production
2. Inventory
3. Defects
4. Unnecessary Motions
5. Inappropriate Processing
6. Waiting
7. Transporting
8. Untapped Human Potential

90. Constraints
 Constraints cannot be
perceived as good or bad
 There cannot be a constraint-
free world.
 Constraints are Facts of Life
 Constraints are opportunities
for improvement
For the continuity of business & Growth of
organization, Constraints must be resolved in time.

91. What is Constraint?
Process-1
 The weakest Link of your Business Process Chain
Process-2 Process-3 Process-4 Process-5 Process-6

92. Cutting Fabrication Assembly Finishing
Packaging
Shipping
Supplier
Customer
60 U/D 60 U/D 40 U/D 70 U/D 60 U/D
Example: A steel door fabrication company. Raw materials: steel
sections and sheets. Output: fnished steel doors
Maximum Throughput of Value Stream: ? Units/Day
Rate at which a system converts it’s inventory into money
Throughput of a Business System

93. Cutting Fabrication Assembly Finishing
Packaging
Shipping
Supplier
Customer
60 U/D 60 U/D 40 U/D 70 U/D 60 U/D
Throughput of Value Stream: 40 Units/Day
Any system can produce only as much as
It’s critically constrained processes
Constraint
Constraint of Business System

94. Steps to identify
waste and discover constraints!
1. Divide the Organization in to network of Business
Processes
2. Develop process map
3. Identify all types of wastes generated in each business
process
4. Measure the quantum of waste generated in each process
5. Evaluate the economic value of waste
6. Determine the saving potential
7. Compile the waste assessment report
8. Identify & prioritize the areas of constraints
9. Select cost reduction projects

95. Enhancing Global Competitiveness
TOC-Lean-Six Sigma Way
7.Constraint
Diagnosis

96. Areas of constraints resulting to waste?
Manufacturing Process:
In your factory, waste
may be related to:
5M+Q+S
 Material
 Machine
 Method
 Man
 Management
 Quality &
 Safety

97. Areas of constraints resulting to waste?
Office Process:
Office Waste are
related to:
 Information
 Asset
 Process
 People

98. Process Mapping
Process map is means of
Systematical diagnostic
activity and information flow.
To prepare Process Map:
 Establish the process boundaries
 Observe the process in operation
 List the outputs, customers, and their
key requirements
 List the inputs, suppliers, and your
key requirements

99. Process-1 V
W
Process-2 V
W
Process-3 V
W
Process-4
W
Product
V
Input
Macro level Process Map
Identify the waste generated at each process/process step

100. Process-1 V
W
Process-2 V
W
Process-3 V
W
Process-4
W
Product
V
Input
Micro level Process Map
Step-1 V
W
Step-2 V
W
Step-3 V
W
Input Output
Identify the waste generated at each process/process step

101. How to identify Waste?
Process-1 Process-2 Process-3 Process-4
Material
Machine
Method
Men
Managmt.
Quality
Safety
Type of
Waste

102. Identify the source of data
Sources of data:
 Production report
 Quality performance reports
 Cost sheets
 Customer complaints
 Audit reports
 Breakdown reports
 Maintenance records
 Warranty claims
 Shipping documents
 Customer orders
 ………………………

103. Data collection plan
 What data is required?
 Where the data is
available?
 Who should collect?
 When?
 How?
 Formats?

104. Quantum of waste?
 Identify the types of waste
 Develop metrics for
measuring the quantum of
waste
 Collect the quantum of
waste generated during
last 12 months period

105. Evaluate the Cost of Waste
 Identify the waste
 Decide its measurement unit
 Calculate the cost (loss) per
unit
 Evaluate the financial
impact during last 12
months period

106. Compile the data to identify the
constraints
 Compile the data in order of
their impact on bottom line
 Identify the areas of
constraints causing waste
(Material, Machines,
Methods/Process., People
etc.)
 Prioritize the Constraints to
be resolved on priority basis

107. Cost Reduction Project Selection
Waste Unit of
Measurement
Quantity
( per Annum)
Economic
Value
Priority
Process:_________________________________________

108. Selection of projects
 Decide what projects to
be taken up for Cost
reduction /Improvement?
 Criteria for selection:
- Customer satisfaction
- Competitiveness
- Profitability
 Get approval of
management
 Form project teams
 Decide the start &
completion dates
 Do it!

109. Exercise: Select Cost Reduction Projects
1. Draw NAL process map
2. Identify the types of waste generated in each
process
3. Quantify the waste generated per annum
4. Estimate the annual cost of waste based on
available information
5. Select cost reduction projects to be taken up by
your team

110. Exercise : Draw NAL Process Map

111. List of Waste
Waste Unit of
Measurement
Process:_________________________________________

112. Cost Reduction Project Selection
Waste Unit of
Measurement
Quantity
( per Annum)
Economic
Value
Priority
Process:_________________________________________

113. Enhancing Global Competitiveness
TOC-Lean-Six Sigma Way
8.Value Stream
Mapping

114. Value Stream Mapping
•Value stream mapping is one of the most powerful tool to
identify the problems which are causing higher cost, poor
quality and longer lead time.
•Conduct the Value Stream Mapping of the Bracket
production value stream

115. NAL: Production Process
•Production processes:
-Stamping,
-Spot Welding,
-De-burring,
-Assembly & shipping
•Process Metrics
-Cycle Time (C/T)
-Changeover Time (C/O)
-Equipment Reliability (Rel.)
-Fist Pass Yield (FPY%)
-Inventory
-No. of Operators

116. Customer Demand Rate
Calculate TAKT Time
 One shift operation
 Time 8 HrsX60= 480 Mts
 Lunch break: 30 Mts
 Tea Breaks 2X10 Mts: 20 Mts
 Production Meeting: 5 Mts
 Changeover time: 5 Mts
 Net available time: 420 Mts
 Demand rate: 265 Brackets/day
 TAKT Time: 420 Mts/ 265 Pcs/day = 95
Seconds
TAKT Time

117. Indian
Car Co
.
Daily
Bharat
Strips
Weekly
Stamping Spot Weld Deburr Assemble
C/T=1 sec
C/O= 4 hrs
Rel.= 98%
FPY = 95%
C/T=39 sec
C/O= 11 min
Rel.= 99%
FPY = 90%
C/T=17 sec
C/O= 0 min
Rel.= 80%
FPY = 99%
C/T=48 sec
C/O= 5 min
Rel.= 100%
FPY = 98%
=1 =1 =1 =2
Shared
2 Weeks 5,425 1,400 1,225
Prod Ctrl
MRP
Monthly
Weekly
30/60/90
Forecast
Weekly
Weekly Schedule
Daily
5300 pcs/mo.
265 pcs/day
10 days 20.5 days 5 days 4.5 days
1 sec 39 sec 17 sec 48 sec 105 sec
40 days
I
I I I
Current State Value Stream Map

118. Indian
Car Co
Daily
Bharat
Strips
Weekly
Stamping Spot Weld SW/Deburr/Assemble Assemble
C/T=1 sec
C/O= 4 hrs
Rel.= 98%
FPY = 95%
C/T=39 sec
C/O= 11 min
Rel.= 99%
FPY = 90%
C/T=17 sec
C/O= 0 min
Rel.= 80%
FPY = 99%
C/T=48 sec
C/O= 5 min
Rel.= 100%
FPY = 98%
=1
=4
Shared
3 Days
Prod Ctrl
MRP
Monthly
Daily
30/60/90
Forecast
Weekly 7,000 pcs/mo.
350 pcs/day
3 days 2 days 2 days
1 sec
91 sec
7 days
2 Days 2 Days
90 Sec
L/T 2 days
Daily
Schedule
C/O
C/O
C/O C/T
Future State Value Stream Map

119. Project Selection
Major factors for Higher
Cost
Cost Reduction
Projects
Time
Schedule
Stamping unit
Changeover time too
high
4 Hrs Reduce Changeover
time of Stamping unit
First Pass yield of
Stamping unit too low
90 % Improve quality of
stamping process
Reliability of De-burring
unit low
80 % Improve equipment
availability of de-
burring
Inventory too high 10700 Reduce Inventory

120. Value Stream Improvement Plan

121. Parameters Before Lean After Lean
Lead Time 40 days 7 days
Cycle Time 105 Sec 91Sec
Inventory 10,700 Pcs 1855 Pcs
Kaizen Events:
• Reduce stamping changeover
time
• Improve deburring reliability
• Improve spot wel quality
Other Lean actions:
• Operators multi-skill training
• Flexibility
• Reduce defects
Nippon Autocomp Ltd.
Impact after Lean Six Sigma Projects

122. Exercise: Select a Cost Reduction Project
from your functional area
 Write down brief description related to your process and
products/services
 Draw a process map and identify the waste generated
 Quantify the waste
 Assess the economic impacts of waste
 Select one of the problems from your process
 Title of your Project: ………………………………

123. Co. Description:
Products/Services,
Turnover
Selected Process:
Description
Process Map
Waste Generated
Quantity of Waste
(per year)
Economic Impact
of Waste
(per year)
Selected Project
Exercise: Select a Cost Reduction Project
from your process / organization