Six Steps of Kaizen by Operational Excellence Consulting

2. © Operational Excellence Consulting. All rights reserved. 2 Learning Objectives 1. Understand the principles and key concepts of kaizen 2. Acquire in-depth knowledge on the six basic steps of kaizen 3. Understand the application of the key tools of kaizen 4. Define the critical success factors in developing and sustaining a kaizen culture

3. © Operational Excellence Consulting. All rights reserved. 3 Outline 1. Introduction to Kaizen 2. Step 1: Discover Improvement Potential 3. Step 2: Analyze the Current Methods 4. Step 3: Generate Original Ideas 5. Step 4: Develop an Implementation Plan 6. Step 5: Implement the Plan 7. Step 6: Evaluate the New Method 8. Critical success factors Copyrights of all the images used in this presentation are held by their respective owners. NOTE: This is a PARTIAL PREVIEW. To download the complete presentation, please visit: http://www.oeconsulting.com.sg

5. © Operational Excellence Consulting. All rights reserved. 5 What is Kaizen? • Kaizen means improvement. Improvements without spending much money, involving everyone from managers to employees, and using much common sense. • The aspect of Kaizen is that it is on-going and never- ending improvement process.

7. © Operational Excellence Consulting. All rights reserved. 7 The Importance of Kaizen • Increasing competition • High customer expectations • Customers want value for money • Product innovation • Supply chain efficiency • Need for continuous improvement

9. © Operational Excellence Consulting. All rights reserved. 9 Five Ways to Increase Production How to Increase Productivity? Quantitative Approach More Workers More Machines Work Longer Qualitative Approach Work Harder Eliminate Waste & Simplify Current 1 Man 1 Machine 100 Units 1 Hour Future 1 Man 1 Machine 120 Units 1 Hour TPS Goal

10. © Operational Excellence Consulting. All rights reserved. 10 Processing Methods Affect Cost A B C INVENTORY INVENTORY INVENTORY MATERIALS FINISHED PRODUCTS FINISHED PRODUCTS A CB MATERIALS Traditional System  When Process A completes its work, it hands the product off to Process B, where it is stored until needed. Pull System  Process B is responsible for getting parts and supplies from Process A as they are needed. There is no intermediate storage. Leaders need to identify more efficient ways of doing things.

12. © Operational Excellence Consulting. All rights reserved. 12 Eight Types of Waste Over-production Producing more than what the customer needs Inventory Building and storing extra products the customer has not ordered Transportation Moving product from one place to another Defects Reprocessing, or correcting work Over-processing Adding excess value when the customer does not require it Motion Extra physical/mental motion that doesn’t add value Intellect Not using employees full intellectual contribution Waiting Employees waiting for another process or a machine/tool Waste

13. © Operational Excellence Consulting. All rights reserved. 13 Cost Reduction Principle Cost Plus Principle COST 1 SALES PRICE 1 PROFIT 1 Present COST 2 PROFIT 2 Future SALES PRICE 2 Cost Reduction Principle COST 1 SALES PRICE 1 PROFIT 1 Present COST 2 PROFIT 2 Future SALES PRICE 2 Higher profit is achieved by increasing sales price Higher profit is achieved by reducing cost (waste) while maintaining sales price

15. © Operational Excellence Consulting. All rights reserved. 15 Six Steps of Kaizen 1. Discover Improvement Potential 2. Analyze the Current Methods 3. Generate Original Ideas 4. Develop an Implementation Plan 5. Implement the Plan 6. Evaluate the New Method KAIZEN

16. © Operational Excellence Consulting. All rights reserved. 16 Six Steps of Kaizen DESCRIPTION  Learn to see waste or improvement potential around the work areas.  Develop mindset and attitude required for people to be successful in process improvement.  Analyze current methods of various work-related processes.  Examples of analytical methods include work analysis, motion analysis, time study, standardized work, machine loss analysis, and material flow analysis.  Apply techniques for stimulating original ideas and synthesizing solutions.  Create effective plan for implementation, including communication and tracking purposes. When possible, make changes quickly and effectively as the situation allows.  Create a positive atmosphere and attitude toward implementing kaizen.  Communicate thoroughly with affected parties in the organization.  Follow up on implementation as needed Discover Improvement Potential Analyze the Current Methods Generate Original Ideas Develop an Implementation Plan Implement the Plan  Evaluate the results of the action items performed in order to verify the actual level of improvement.  Standardize work practices and follow up to ensure gains are sustained. Evaluate the New Method Source: Kato & Smalley 1 2 3 4 5 6

17. © Operational Excellence Consulting. All rights reserved. 17 Kaizen versus Problem Solving • Problem solving  Centers on the fundamental notion of “gap” or “deviation” from standard (e.g. cost, quality, delivery) • Kaizen  Focuses on achieving a new standard or level of performance Standard – what should be happening Current situation – what is actually happening Gap = Problem

18. © Operational Excellence Consulting. All rights reserved. 18 Kaizen Attitude Kaizen Attitude  Get the facts from the source  Don’t be swayed by preconceived notions  Practice through observations (5 Why Thinking)  Calm attitude (be rational)

19. © Operational Excellence Consulting. All rights reserved. 19 Methods Comparison Scientific Method Problem Solving Six Steps of Kaizen  Make Observations  Define Problem  Identify Improvement Potential  Gather Information  Analyze Causes  Analyze Current Methods  Form Hypothesis  Set a Goal  Generate Original Ideas  Perform Experiment to Test Hypothesis  Implement Corrective Actions  Develop an Implementation Plan  Analyze Data  Check Results  Implement Action Items  Draw Conclusions & Summarize  Follow Up / Standardize  Evaluate Results / Standardize

21. © Operational Excellence Consulting. All rights reserved. 21 Basic Methods for Uncovering Waste & Identifying Improvement Opportunities • There are five basic methods for uncovering waste: 1. Compare Performance to Standards 2. Production Analysis Board 3. Using the Back Door 4. Five S 5. The Eight Deadly Wastes

23. © Operational Excellence Consulting. All rights reserved. 23 5W 1H & ECRS Step 3: Develop The New Method Eliminate Combine Rearrange Simplify 5W 1H Questions ECRS Framework Why? What? Where? When? Who? How?

24. © Operational Excellence Consulting. All rights reserved. 24 Equipment Loss Analysis Source: Japan Institute of Plant Maintenance (JIPM) Equipment Loss Analysis & OEE Equipment Losses Availability Breakdowns Changeover Time Performance Cycle Time Minor Stops Quality Scrap or Rework Startup or Yield Losses Six Equipment Losses

25. © Operational Excellence Consulting. All rights reserved. 25 • Creates an end-to-end view of the production system • Demonstrates interaction between material/work and information flow • Provides a common visual language for understanding a complex system Supplier Management Control Customer Work & Information Flow Information flow A Value Stream Map Provides an Overview of the End-to-end Production Process

26. © Operational Excellence Consulting. All rights reserved. 26 The Value-added Flow Chart • The value-added flow chart is a mechanism to improve cycle times and productivity by visually separating value- adding from non-value-adding activities. The process is very straightforward, as outlined in this section.

27. © Operational Excellence Consulting. All rights reserved. 27 Figure 1 Total Cycle Time = 116.5 Hours Steel Coil Stock Inventory (96 Hr.) Stamp Steel (0.3 Hr.) Buffer Inventory (8.0 Hr.) Inspection & Rework (0.2 Hr.) Paint Cabinet (0.5 Hr.) Test & Rework (0.2 Hr.) Final Assembly (3.0 Hr.) Buffer Inventory (5.0 Hr.) Buffer Stock (3.0 Hr.) Inspection & Rework (0.1 Hr.) Cabinet Construction (0.2 Hr.) Steel Coil Stock Inventory (96 Hr.) Stamp Steel (0.3 Hr.) Buffer Inventory (8.0 Hr.) Inspection & Rework (0.2 Hr.) Paint Cabinet (0.5 Hr.) Test & Rework (0.2 Hr.) Final Assembly (3.0 Hr.) Buffer Inventory (5.0 Hr.) Buffer Stock (3.0 Hr.) Inspection & Rework (0.1 Hr.) Cabinet Construction (0.2 Hr.) Total Value-Added Time = 4.0 Hours Total Non-Value-Added Time = 112.5 Hours Figure 2 Value-Added Non-Value-Added 3% 97% Cycle Time Analysis Value-Added Non-Value-Added Figure 3

28. © Operational Excellence Consulting. All rights reserved. 28 Methods for Developing Innovative Ideas 1. Brainstorming 2. Listing Faults 3. Listing Wishes 4. Listing Characteristics 5. The Gordon Method 6. Osborn’s Checklist 7. 5W1H & ECRS 8. Brainwriting 9. Nyaka Method 10. NHK Method 11. SCMAPER 12. What If? 13. Rules for Motion Economy

29. © Operational Excellence Consulting. All rights reserved. 29 Implement the Plan • A good strategy is of no use if it is not executed properly. Plans on paper have to be translated into specific and effective action items on the shop floor that result in change for the better. • There are three key points for successful implementation of the plan 1. Effective communication 2. Training and instruction 3. A positive and energetic attitude

30. © Operational Excellence Consulting. All rights reserved. 30 Effect Confirmation – Example of ‘Before’ and ‘After’ a process improvement comparison Restaurant Complaints Before After 33% Reduction in Wait Time ILLUSTRATIVE

31. © Operational Excellence Consulting. All rights reserved. 31 Kaizen Summary Sheet Before After Reasons project chosen: • Difficult to move around a cluttered office • Difficult to find information and supplies Tools used on project: • Cleaning equipment and tools • 5S principles Results: • Unwanted materials were discarded • Less waste – e.g. transportation, motion, waiting, etc. • Improved staff morale Next steps: • Conduct monthly 5S audits • 5S for other common areas Project type: 5S Area: Sales & Marketing Office Team Leader: John Smith

32. © Operational Excellence Consulting. All rights reserved. “A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves.” Lao Tzu

34. © Operational Excellence Consulting. All rights reserved. 34 About Operational Excellence Consulting • Operational Excellence Consulting is a management training and consulting firm that assists organizations in improving business performance and effectiveness. • One of our unique strengths is going beyond a tools-focused approach to seamlessly integrate people, processes, technology and continuous improvement initiatives to suit the specific needs and situations of our clients. • We provide corporate learning programs and management advisory services to assist our clients to achieve breakthrough in business performance and effectiveness. Our aim is to support our clients in designing, managing and executing lasting beneficial change.

Six Steps of Kaizen by Operational Excellence Consulting

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