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Productivity related Vital Measures through simulations

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Productivity related Vital Measures through simulations

  1. 1. Concept Note “Simulated Work Environment” Learning 7 Vital Measures of any Production System through Lean Simulation Exercise. Sameer Kumar 3TP-Jan 2011(IIMA) sameercar@gmail.com Mob 00-91-9650024171 7VmEe
  2. 2. Before We start.. 1983 v/s 2015 Then & Now Let us start with a story 7VmEe
  3. 3. What was then? Year- 1983 Price of New Maruti 800- Rs 47,500/= 7VmEe
  4. 4. What is Now? It simply tells that “it is possible to deliver things “more quicker and more qualitative at reduced cost” Non AC Manual Steering Manual Window Noise Less Mileage Delivery 60-180days *0.47Lakhs become 7.6Lakhs in 2015 AC Power Steering Power Window Low Noise Improved Mileage Delivery 0-3days 1983 v/s 2015 Maruti 800 (0.47 Lakhs)* Maruti Alto (2.7 Lakhs) 7VmEe
  5. 5. What has changed & What are the Challenges? Bajaj Piaggio Yamaha Honda TVS Mahindra Hero Moto Corp Suzuki 7VmEe Then & Now
  6. 6. What has Changed & What are the Challenges? 7VmEe
  7. 7. What was “Then” ? Cost Profit Cost Profit Price Customer was not having many choice and was bound to pay this price. Cost Plus Over the years the worldwide the manufacturing industries has been following a practice where they would add up their costs and they add on profit percentage and would sell to customer on leave it or take it basis. 7VmEe
  8. 8. What is “Now”? Cost ProfitPrice Customer is having many choices and can pay this price or lower price. Price Price Minus Now the scene has changed, the competition is there and customer has many choices and he wants to pay what he/she wants. 7VmEe
  9. 9. Changes & Challenges? Price Price Then Now Customer was having lesser choices Customer is having many choices Prices has also come down 7VmEe
  10. 10. Who Wants What? Price Profit Cost What to Do? Customer Manufacturer Customer Manufacturer 7VmEe
  11. 11. Price Profit Cost What to Do? Reduce Price, Maximize Profit & Reduce cost 100 - 20 = 80 90 - 20 = 70 90 - 25 = 65 Can We bring down the cost from 80 to 65? 7VmEe
  12. 12. Challenges- Can we bring the cost down? Reduce the cost by relentlessly eliminating waste and improving information and material flow. Challenges- How to train ourselves to identify waste and problems? “Yes” We need to make at the cost which customer is willing to pay. But How? We need to train our eyes to Identify waste and problems. But How? 7VmEe
  13. 13. Challenge-How to train our eyes? Answer lies in Simulation 7VmEe Where to train our eyes “quickly”, ”accurately” and at “lesser cost”? We have two options to train our selves Option-1 At Actual Workplace Option -2 At Simulated Work Environment
  14. 14. Challenge-How to train our eyes? At Actual Work Place At Simulated Work Environment Ad/Dis Advantages Disturbance/Disruption Slow & Time consuming Quick Accurate Low Cost Options We need to choose “Simulated Work Environment” as it is quick, accurate and at lesser cost 7VmEe
  15. 15. What to do in simulation? We need to train our selves on Data Analysis and Problem Solving and do improvements. We have limited time for improvement and we need to use these precious time wisely We need to identify our most expensive problems We Need to solve these most expensive problems We want to standardize i.e. we will not solve the same problems many a times Answer lies in “Data Analysis” and “Problem Solving” 7VmEe Where is Data and What are the Problem?
  16. 16. What do we want to Improve? Reduction in Accident Elimination of Pollution Productivity Improvement Reduction in number of unplanned failures Improvement in Equipment Operating Time Reduction in Product defects Reduction in customer claims Reduction in Manufacturing Cost Increase in employee engagement no of employee suggestions Safety, Health & Environment Productivity Quality Cost Morale Where is Data & What are the problems? 7VmEe
  17. 17. Reduction in Accident Elimination of Pollution Productivity Improvement Reduction in number of unplanned failures Improvement in Equipment Operating Time Reduction in Product defects Reduction in customer claims Reduction in Manufacturing Cost Increase in employee engagement no of employee suggestions Safety, Health & Environment Productivity Quality Cost Morale 0 0 1.5 to 2 times 1/10 to 1/250 1.5 to 2 times 1/10 1/4 20-30% 2-3 times 8-10 times Effectiveness of Lean Simulations Can Simulations be effective? How much? 7VmEe
  18. 18. Intangible benefits of Lean Simulations • After going through the lean simulation the participant understands his/her role in productivity improvement and take care of their equipment and processes themselves without being ordered to. • With achievement of zero losses, zero downtime and zero defects the participants get new confidence in their own abilities • Workplace safety gets improved and looks neat, clean and pleasant. • The organization image gets improved which gets greater business. 7VmEe
  19. 19. We are ready to train our Eyes. We are ready to train ourselves through Lean Simulations. We have Data Challenge- What to analyze? What to measure? 7VmEe
  20. 20. Analyze data to know our most expensive problems and solve them through problem solving and then standardize. What to Analyze? What to Measure? What to measure? What all are most expensive problem? 7VmEe
  21. 21. What to Measure in a Production System? In simulation or in any production system there are inputs and outputs. The inputs are men, machines and materials and the outputs are quality, cost and delivery. Input Men Material Machines Process Output Quality Cost Delivery What to Measure Input, Process or Output (Results) ? 7VmEe Results
  22. 22. We must measure results QCD (Quality, Cost & Delivery) Quality - Is the correct quality as specified of the customer( and no better because of the cost implication) Cost - Is the right cost for the business, reducing year on year. It is made up to materials,labour and overhead. Delivery-is the right quantity, at the right time, to the right quality, time after time. The customer remembers the last time the supplier did not deliver. Not all the time delivery was made) It is vital for any organization to measure how well it is managing these outputs. Our lean simulation production system tracks all of these vital measures. 7VmEe
  23. 23. The Vital Measures Our lean simulation covers these vital measures that any manufacturing/business person must be aware of. These “vital measures” can be applied to an entire factory, a value stream, a cell or even one process. They can be used together or separately to identify where to apply focused efforts (lean /improvement). These Vital measures are for measuring Quality ,Cost & Delivery 1. Right First Time (RFT %) 2. Overall Equipment Effectiveness( OEE %) 3. Stock Turns 4. Delivery Schedule Achievement (DSA%) 5. People Productivity (PPOH-Parts Per Operating Hour) 6. Value Added Per Person(VAPP, Rs.) 7. Floor Space Utilization 7VmEe
  24. 24. What to Measure in a Production System? • Various organizations measures many factors to understand their manufacturing systems and try to improve on the factors. • Most of them measures downtime, up time, cycle time, overall equipment efficiency & inventory turns etc. • Through the lean simulation, we too can learn art of measurement in Production Systems and will measure them on the “7 Vital Measures ” which are exhaustive and more effective. What to measure? 7VmEe
  25. 25. Lean Simulations- The 7 Vital Measures 1. Right First Time (RFT %) 2. Overall Equipment Effectiveness( OEE %) 3. Stock Turns 4. Delivery Schedule Achievement (DSA%) 5. People Productivity (PPOH-Parts Per Operating Hour) 6. Value Added Per Person(VAPP, Rs.) 7. Floor Space Utilization How to measure? 7VmEe
  26. 26. Lean Simulations- The 7 Vital Measures Right First Time (RFT %) Right First Time (RFT %) = Total Quantity of Parts Made Quantity of Good Parts Made X 100 Measures our ability to meet the quality specification at first attempt, this can be used to measure one process, one cell, one value stream or a complete business. Unit - % Q C D RFT- Right First Time % Measures Units Desired Trend Impact Strong Impact Secondary Impact 7VmEe
  27. 27. Lean Simulations- The 7 Vital Measures Overall Equipment Effectiveness( OEE %) Overall Equipment Effectiveness (OEE %) = Availability % X Productivity % X RFT % Availability % = Total Time Operating Time X 100 Productivity % = Operating time Ideal cycle time x total parts run X 100 Right First Time (RFT %) = Total Quantity of Parts Made Quantity of Good Parts Made X 100 OEE is a measure of How well our equipment resources are being utilized. Operating Time = Total Time- Total Down Time Unit - % Q C D OEE- Overall Equipment Efficiency % Measures Units Desired Trend Impact Strong Impact Secondary Impact 7VmEe
  28. 28. Lean Simulations- The 7 Vital Measures Stock Turns Measures our ability to control over our manufacturing process, if we are not in control we need plenty of stock to protect the process against the problems. If we have high stock turns, we are flowing material quickly through the factory and less money is tied at shop floor and shorter lead time for our customers. Stock Turns = Value of Raw Material+ WIP+ Finished Goods Sales Turnover of Parts Unit - Number Q C D ST-Stock Turn Numbers Measures Units Desired Trend Impact Strong Impact Secondary Impact 7VmEe
  29. 29. Lean Simulations- The 7 Vital Measures Delivery Schedule Achievement (DSA%) Measures how well a supplier matches the planned delivery needs of the customer. DSA can be used in internal as well as external deliveries. Number of Planned deliveries Number of planned deliveries DSA % = - ( Number of not on time Number of incorrect quantity deliveries )+ Unit - % Q C D DSA- Delivery Schedule Achievement % Measures Units Desired Trend Impact Strong Impact Secondary Impact 7VmEe
  30. 30. Lean Simulations- The 7 Vital Measures People Productivity (PPOH-Parts Per Operating Hour) This Measure helps us to control the people cost of making the products. We can improve the result either by making more good parts for the same time or taking less time to make the same quantity of good parts or do both . PPOH = Total direct Operator hours Quantity of Good Parts Made Unit – Parts per Hour Q C D PPOH-People Productivity Parts per hour Measures Units Desired Trend Impact Strong Impact Secondary Impact 7VmEe
  31. 31. Lean Simulations- The 7 Vital Measures Value Added Per Person(VAPP, Rs.) VAPP shows us that how well people are used to convert raw materials in to finished goods. Value Added Per Person (VAPP )= Output Value- Input Value Number of Direct Employees Output Value- Sales Value of the unit after Production Input Value- Value of the Raw Material Before Production Direct Employees- Those without which the process can not run Unit – Rs per Person Q C D VAPP-Value Added per person Rs per Person Measures Units Desired Trend Impact Strong Impact Secondary Impact 7VmEe
  32. 32. Lean Simulations- The 7 Vital Measures Floor Space Utilization The floor space is an very expensive fixed cost and we need to utilize this to the fullest. FSU measures how well are we using the valuable floor space to generate the sales. This makes us focus on minimizing the space taken up by the production process. Sales Turnover from the Floor Space Area Square Meters of the Floor Space Area Floor Space Utilization (FSU) = Unit – Rs per Sq Meter Q C D FSU-Floor Space Utilisation Rs per Sq Meter Measures Units Desired Trend Impact Strong Impact Secondary Impact 7VmEe
  33. 33. Lean Simulations- The 7 Vital Measures 1. Right First Time (RFT %) 2. Overall Equipment Effectiveness( OEE %) 3. Stock Turns 4. Delivery Schedule Achievement (DSA%) 5. People Productivity (PPOH-Parts Per Operating Hour) 6. Value Added Per Person(VAPP, Rs.) 7. Floor Space Utilization We would like to know about the relationship of these 7 vital measures with or Quality, Cost & Delivery 7VmEe
  34. 34. Lean Simulations- The 7 Vital Measures 1. Right First Time (RFT %) 2. Overall Equipment Effectiveness( OEE %) 3. Stock Turns 4. Delivery Schedule Achievement (DSA%) 5. People Productivity (PPOH-Parts Per Operating Hour) 6. Value Added Per Person(VAPP, Rs.) 7. Floor Space Utilization We would like to know about the relationship of these 7 vital measures with or Quality, Cost & Delivery 7VmEe
  35. 35. Strong Impact Secondary Impact Lean Simulations- The 7 Vital Measures & their Impact on QCD ( Quality , Cost & Delivery) Q C D RFT- Right First Time % OEE- Overall Equipment Efficiency % ST-Stock Turn Numbers DSA- Delivery Schedule Achievement % PPOH-People Productivity Parts per hour VAPP-Value Added per person Rs per Person FSU-Floor Space Utilisation Rs per Sq Meter Measures Units Desired Trend Impact Can we measure these “7 vitals” in our Areas? 7VmEe
  36. 36. How to measure these “7 Vitals” through Lean Simulation? Answer lies in “simulated work environment for lean” 7VmEe
  37. 37. Let us learn through “exercise” Can we create Simulated Environment? 7VmEe
  38. 38. Let us Create “simulated work environment-Lean”? We will plan an exercise where an envelope manufacturing company will be set up. This company will make paper envelope of given specification and sample and will supply to Customer in specified quantity and specified time. This company uses land, raw material, capital equipment, utilities, consumables, manpower etc. to make envelopes. This company also hires consultant/professional for identifying and eliminating wastes and make improvements. This company has 6 manpower and the persons needs to play role of team member, team leader, group leader & manager. Every resource has a cost associated with it . The 1st round of the simulation lasts for 60 minutes, in which one team needs to deliver 30 good quality envelopes in specified quantity and specified time. After completion of the 1st round, every team is asked to calculate the 7 vital measures and present them to other teams. These teams needs to identify the problem areas and plan for improvements in 2nd round. The improvements can be changes in layout, changes in roles, changes in processes,increasing,decreasing no of work stations etc. etc. 7VmEe
  39. 39. Let us Create “simulated work environment-Lean”? The teams are asked to participate in 2nd round. With an target to improve these 7 vitals at least by 40% In 2nd round customer again wants 30 envelopes to be delivered in 60 minutes duration. In 2nd round customer wants good quality product in specified quantity and at specified time. After completion of the 2nd round the teams are asked to 1.calculate these 7 vitals and explain the difference in 1st and 2nd round. 2.Explain 7 type of waste and example in own simulation 3.Explain 3 Kaizens/Improvements they did. 4.Explain importance of Lean. 5.How the same can be standardized. 7VmEe
  40. 40. Let us create “simulated work environment-Lean”? Team Formation -Maximum 3 teams can participate One team can have maximum 6 members and minimum 4 members. There must be at least one Team leader in a team. The team has a hierarchy of manager-group leader-team leader- team member The team need to identify the direct employees . The team will have choice to have Manager/Group Leader. The team must identify clear roles and Responsibilities of each one. The team must have a clear training plan and skill assessment of their team members. The team will have 30 minutes time before starting of each round to form their strategies. The team needs make their standardized operating plan and work as per written plan. 7VmEe
  41. 41. Let us Create “simulated work environment-Lean”? Trainer/Facilitator(1)- • Brief the teams about Then & Now Business Scenario and importance of Lean Simulation. • Brief the teams about SQCDM Rules. • Brief the team about lean simulation lay out and process steps. • Brief the team about high level roles and responsibility of TM,TL,GLs and Manager. • Facilitate the team with raw material, capital equipment,pencils,scissors etc. • Facilitate the team by setting up time alarm . • Build 3 teams. • Ask them to choose one Group Leader and identify role of each participant. Customer(1)- • Brief the teams about his requirement, show them sample, show them defects. • Tell the teams about what time and how much quantity of the products he wants. • He shares all information with clarity and takes feedback whether team has understood his requirement. 7VmEe
  42. 42. Let us Create “simulated work environment-Lean”? Participating Teams(3)- • Follows the instruction by trainer/facilitator/customer. • Follows SQCDM Rules. • Follow time lines and quantity requirement by customer. • Respect each others . Volunteer(1)- • Support Trainer/Facilitator. • Distributes Raw Material, Capital, Equipment, Consumable etc. • Raise alarms related to time, & SQCDM rules. 7VmEe
  43. 43. 10mm 20mm30mm 112mm+- 0.5mm 90mm+- 0.5mm 90mm+- 0.5mm FLAPView 220mm+1mm-1mm 112mm+- 0.5mm 220mm+-1mm 90mm+- 0.5mm 112mm+- 0.5mm FoldedView 20mm CustomerRequirement30Envelopsperhour PriceperenvelopcustomerreadytopayRs20perenvelop Detailed Specification of the “envelope” & one sample each given to each team Customer Requirement 30 Envelops per hour Price per envelop customer ready to pay Rs 20 per envelop 7VmEe
  44. 44. Raw Material Marking Inspection Cutting Folding Pasting Inspection Time RM Marking Insp-1 Cutting Folding Pasting Insp-2 Start 2pm 2.10pm 2.20pm 2.30pm 2.40pm 2.50pm 3.00pm Process Flow and Inventory at Stages 7VmEe
  45. 45. Raw Material Paper A3 Sheets Rs.8 per piece CAPITAL Scissor Rental Rs 2 per hour Consumables Glue Stick Rs.10 per piece CAPITAL Ruler scale Rental Re 1 per hour Consumables Pencil Rs.5 per piece Consumables Eraser Rs.5 per piece CAPITAL Sharpener Rental Re 1 per hour Consumables Study Material Rs.20 per set Consumables Works Instruction Blank Fomat Rs. 6 per piece Consumables paper a4 sheets Rs 5 per piece Rs.0.5 per square feet per hour max 18feet x 2 feet for one team Team member Rs.9 per hour Team Leader Rs.12 per hour Group Leader Rs 15 per hour Manager Rs. 18 per hour Work in Process (WIP) Rs 2 per piece Finished Goods(FG) Rs 20 per piece Scrap no of loose pieces Rate Sheet Land Floor Rental Every thing has a cost. 7VmEe
  46. 46. Customer has asked to deliver following quantities at following interval- This is required for Delivery Schedule Achievement (DSA) calculation. No of Pcs Ok OK accu No of Pcs Ok OK accu No of Pcs Ok OK accu 1 11.00am-11.03am 5 2 11.05am-11.08am 5 3 11.10am-11.13am 5 4 11.15am-11.18am 5 5 11.20am-11.23am 5 6 11.25am-11.28am 5 No of Pcs Ok OK accu No of Pcs Ok OK accu No of Pcs Ok OK accu 1 3.00pm-3.03pm 5 2 3.05pm-3.08pm 5 3 3.10pm-3.13pm 5 4 3.15pm-3.18pm 5 5 3.20pm-3.23pm 5 6 3.25pm-3.28pm 5 Round-2( Starts at 2.30pm, customer wants first lot at 3pm) Sl Time Planned Team-1 Team-2 Team-3 Round-1( Starts at 10.30am, customer wants first lot at 11am.) Sl Time Planned Team-1 Team-2 Team-3 7VmEe
  47. 47. Round-1 Starts Team deliver their good quality envelopes to customer as per specified time and make entry of details in the following table. This is required for Delivery Schedule Achievement (DSA) calculation. No of Pcs Ok OK accu No of Pcs Ok OK accu No of Pcs Ok OK accu 1 11.00am-11.03am 5 3 1 1 1 0 0 1 1 1 2 11.05am-11.08am 5 5 3 4 2 2 2 2 2 3 3 11.10am-11.13am 5 5 4 8 5 4 6 4 3 6 4 11.15am-11.18am 5 5 3 11 5 5 11 5 5 11 5 11.20am-11.23am 5 5 5 16 3 2 13 5 2 13 6 11.25am-11.28am 5 5 3 19 5 2 15 5 4 17 Team-3 Round-1( Starts at 10.30am, customer wants first lot at 11am.) Sl Time Planned Team-1 Team-2 The team also notes down Downtime, Costs, Inventories, No of Persons Direct and Indirect, Floor Space, etc. 7VmEe
  48. 48. After Completion of the Round-1 the data is analyzed and 7 vital measures are calculated. Q C D United Prints Mount Craft RFT- Right First Time % 29.41 44 DSA- Delivery Schedule Achievement % 30 36.6 PPOH-People Productivity Parts per hour 0.83 4.33 ST-Stock Turn Numbers 0.255 4.78 OEE- Overall Equipment Efficiency % 16.66 32 VAPP-Value Added per person Rs per Person -13 -4.5 FSU-Floor Space Utilisation Rs per Sq Meter 19.04 13.34 ROUND-1(4th June15) Measures Desired Trend Units Impact The teams explains each vital measure and how they performed. 7VmEe
  49. 49. Briefing is done for Round-2 The teams are asked to improve these vital measures & the way they will improve this? The teams brain storms and get ready for the improvements. They are encouraged to make any changes in roles,responsibility,layout,inventory level,automation,processes etc. 7VmEe
  50. 50. Round-2 Starts Team deliver their good quality envelopes to customer as per specified time and make entry of details in the following table. This is required for Delivery Schedule Achievement (DSA) calculation. The team also notes down Downtime, Costs, Inventories, No of Persons Direct and Indirect, Floor Space, Example of 7 wastes, Kaizens/Improvements No of Pcs Ok OK accu No of Pcs Ok OK accu No of Pcs Ok OK accu 1 3.00pm-3.03pm 5 4 3 3 4 4 4 4 3 3 2 3.05pm-3.08pm 5 4 4 7 4 4 8 5 5 8 3 3.10pm-3.13pm 5 5 3 10 5 4 12 5 5 13 4 3.15pm-3.18pm 5 5 4 14 5 5 17 5 5 18 5 3.20pm-3.23pm 5 5 5 19 5 3 20 5 4 22 6 3.25pm-3.28pm 5 5 5 24 5 3 23 5 5 27 Round-2( Starts at 2.30pm, customer wants first lot at 3pm) Sl Time Planned Team-1 Team-2 Team-3 7VmEe
  51. 51. After Completion of the Round-2 the data is analyzed and 7 vital measures are calculated. The teams explains each vital measure and how their team performed. Q C D United Prints Mount Craft United Prints Mount Craft RFT- Right First Time % 29.41 44 88 50 DSA- Delivery Schedule Achievement % 30 36.6 73 66 PPOH-People Productivity Parts per hour 0.83 4.33 3.14 1.9 ST-Stock Turn Numbers 0.255 4.78 5.78 1 OEE- Overall Equipment Efficiency % 16.66 32 72 50 VAPP-Value Added per person Rs per Person -13 -4.5 55 45 FSU-Floor Space Utilisation Rs per Sq Meter 19.04 13.34 53 36.36 ROUND-1(4th June15) Round-2(4th Jun15) Measures Desired Trend Units Impact 7VmEe From the above table. For Team1 United Prints. The RFT got improved from 29.41% to 88%, DSA got improved from 30% to 73%
  52. 52. The teams knows and have the vital measure. They know their most expensive problems Now They use “ problem solving tools” and other improvement technique to make improvement in Vital measures 7VmEe
  53. 53. The teams take these leanings to their actual work place. 7VmEe
  54. 54. For more details Please contact Sameer Kumar Mob 9650024171 sameercar@gmail.com 7VmEe

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