Practical Lean - Improving Competitiveness

Who am I?

• Enterprise Ireland, Competitiveness & Lean Business Department Manager

• EU Japan Centre for Industrial Co-Operation

• European Benchmarking Network

• Advisor Internationally on Benchmarking and Best Practice

• Trinity College Dublin, Business School

• Author

Agenda

• What is Lean

• EI Lean Business Offer Overview

• Case Study examples

Process

Benchmarking

The Five S’s Total Productive

Maintenance

Overall

Equipment

Efficiency

Six Sigma

Business

Excellence

Value Analysis

&Management

Lean Production Target Cost

Management

Facilitated

Assessment

Benchmarking

Physical&Process

Flow in the Office

Physical&Process

Development

Production Control

Systems

Saving Time in the

Workplace

Maintenance Practical Quality

Tools

Team Building &

Culture

Sales and Growing

them

Financial

Management

Supply Chain &

Logistics

Innovation&

Design

Business Strategy Implementation

Self Assessment

Benchmarking

Physical Flow Process Flow Set Up Time

Reduction

Check Sheets Run Chart People & Teams Basic

Maintenance

Level 1

Level 2

Level 3Process

Benchmarking

The Five S’s Total Productive

Maintenance

Overall

Equipment

Efficiency

Six Sigma

Business

Excellence

Value Analysis

&Management

Lean Production Target Cost

Management

Facilitated

Assessment

Benchmarking

Physical&Process

Flow in the Office

Physical&Process

Development

Production Control

Systems

Saving Time in the

Workplace

Maintenance Practical Quality

Tools

Team Building &

Culture

Sales and Growing

them

Financial

Management

Supply Chain &

Logistics

Innovation&

Design

Business Strategy Implementation

Self Assessment

Benchmarking

Physical Flow Process Flow Set Up Time

Reduction

Check Sheets Run Chart People & Teams Basic

Maintenance

Level 1

Level 2

What do we mean by Lean?

• Lean is shorthand for Best Practice within a sector

• Helps People identify and deliver improvements in their businesses

• Provides a framework for competitiveness improvement by building the capability and competences of people to

QUICKER

BETTER

CHEAPER.........TOGETHER

What is Lean?

Focused on Effectiveness and Efficiency

Doing the right things well!

A War on Waste!!!

What is the alternative?

What is Lean?

• Based on the Toyota Production System

• “Understood” by American consultants

• Six Sigma – Developed by Motorolla Corp, statistically based approach

• Similar tools but:

– Lean focuses on continuous business processes

– Six Sigma focuses on discrete projects for improvement

• Driving and integrated into company strategy

Some Lean Principles….• Time

• Money

• Effort

Must want to compete…..

Rules1. Fairness

2. Firmness

3. Consistency

4. Look

5. See

6. Understand

7. Do

Dealing with People

Dealing with Processes

Five Fundamental Lean tools…..

• Process Mapping

• Physical Flow mapping

• Check Sheets – What is going wrong?

• Run Charts – Is it getting better or worse?

• Teams – People working together to improve their business

Key Lean Questions…..

• What are you doing?

• How are you doing it?

• Why are you doing it?

• Who is going to improve it?

• When?

Capture the FACTS!

Make things better…..

War on Waste-Absolutely Focused & Relentless

• Motion

• Transportation

• Processing

• Defects

• Waiting

• Over-production

• Inventory

• People

Lean - Action based on FACTS

• Benchmarking = Diagnosis

• Best Practice = Medicine

Why Benchmarking?

• Benchmarking allows us to :

– Analyse & Improve Key Business Processes-Qualitative and Quantitative

– Eliminate Waste

– Improve Performance

– Improve Profitability & Market Share

• Based on FACTS…..

Benchmarking is a continuous systematic process for comparing business processes for improvement...

Benchmarking for Success

Tool Use vs Company DevelopmentStage

Evolutionof Company

1 2 3

Diagnostic

Holistic

Process B/mark

Best in Class

Acceptable Standards are

constantly changing......

RESULTSSupplier PartnershipsWorld Class ManufacturingCompetitive Products and ServicesBusiness Process ManagementCustomer Partnerships

World Class

JIT

Employee Involvement

TQM

The Medicine

Layout / FlowsSet Up Time ReductionManufacturing Systems“Productive” ManagementJIT Supplies

JIT Manufacturing

Process CapabilityWaste EliminationTools of QualityCustomer FocusQuality Function Deployment

Total Quality Management

Employee Involvement =Expectation

EmpowermentPeople EffectivenessQuality AwarenessGroup problem SolvingImprovement Teams

Products and Services

Design for ManufactureDesign for OperationRegulatory ApprovalProduct Evaluation

Management

Effective Information TechnologyStructures and StrategiesPlans + Projectscts

Office Processes

World Class ProcessesLean Administrative SystemsContinuous ImprovementValue Added Process Identification

‘Lean’ companies – key characteristics:

– Foremost focus is on creating value for the customer.

– Processes are defined not just by cost but also by value to the customer.

– Eliminate wasteful activities (those which the customer would not pay for)

– progressive commitment of resources to change existing processes

– buy-in of senior management

– training staff to understand and use Lean tools and techniques

– Imbedding & sustaining a new company culture of continuously improving processes, products and services

‘Lean’ companies – key characteristics:Results:

– Quality and service is improved, delivery time is reduced and cost is reduced.

– =>increased and sustainable profitability and competitiveness

– Outperform their competitors

– =>expansion of sales and exports

Not a quick fix:

– Best begun as a ‘pilot’ project over several months which uses some simple Lean tools to achieve a visible performance improvement and cost benefit.

– Progression to company wide adoption of Lean is then made easier.

– Generally takes a number of years to embed fully into the business.

Lean Business Offer Overview

• Objective is to encourage clients to adopt lean business principles in their organisation to increase competitiveness.

• Based on 3 levels of intensity of interaction with clients:

– LeanStart: focus on value

– LeanPlus: performance improvement

– LeanTransform: business transformation

• Delivered by external consultants, methodology set out by EI

• Support funding from EI

Key features

• LeanStart

– introduce lean principles / agile processes– complete a specific cost reduction project.– 7 days consultancy, extending over typically 8 weeks.

• LeanPlus

– medium-scale business process improvement project– sustained use by the company of Lean techniques and related methodologies– significant measurable gains in company capabilities and competitiveness.– typically be not less than 6 months duration.

• LeanTransform

– extensive, holistic company transformation programme– embed the culture and competences necessary for sustainable competitiveness gains– across the business and its supply chain. – assignments will typically extend for at least 1 year.

SUMMARY OF LEAN BUSINESS OFFER

Eligible cost elements Clientcosts

EI grant

Lean-Start ‘Lean’ consultancy

fees at €900 per day€6300 €5000

Lean-Plus ‘Lean’ (& specialist )training fees

Cost of company‘lean project champion’.subject to EI assessment.

Up to €75 k

Up to50%

LeanTransform

Training fees

training costs

company staff costs and other costs as may be approved by EI

Typicallyover €100 k

As set by EI.

< 50%

Contact lean@enterprise-ireland.com

http://www.enterprise-ireland.com/en/Productivity/Lean-Business-Offer/

• Packaging: 16% reduction of packaging line cycle time

• Pet-food products: 14% cost reduction per unit

• Recycling: Sort line throughput up by 600%

• Insulation products: Reduction of the build time from 5 days to 0.8 of a day

• Packaging: Net margin increased from 5% to 15%

• Engineering: Labour productivity on fabrication line increased by 35%

• Food additives: 17.5% reduction in Labour costs

• Engineering: 20% Gross profit from current average of 9%

LeanStart - Sample Results

Case Study- Pet Food Ltd

• Sector: Food- Pet treats/dental chews

• Project Description: Cost reduction programme in packing. Value streams/problem areas defined.

• Measurable Success: 4% increase in output per direct employee

2.5% reduction in direct labour costs.

Labour costs as % of sales went from 23.5%-20%

Lead time reduced from 8-6 wks

Case Study- Analytical Systems Ltd

• Sector: Water treatment

• Project Description: Re-organisation of production area/ 5S/Value Streams/Planning schedules

• Measurable Success: Capacity increase 150% (2 -5 per wk)

New layout allowed for 15% more capacity

4 week lead time for all products achievable

LeanTransform Sample Results

• Flat Food – Over €10million savings made

• County Foods - “Game Changing” result

• Medical – 38% improvement on EBITDA

What can you see?

• How can you help?

• How can you add value to your clients, without conflicting on confidentiality?

• What about suggesting benchmarking to them?

– EI Company Health Check, free service, International sector comparisons, FACTS

– Contact: Jan.Gallagher@enterprise-ireland.com

• On the Floor....

– What is current state?

– Visuals for feedback

– Detailed use of tools

• Process

• Physical

• Check Sheets

• Run charts

• Teams

• In the Office....

– What is current state?

– Visuals for feedback

– Detailed use of tools

• Process

• Physical

• Check Sheets

• Run charts

• Teams

TEAM – Working Together

• For the Management.....

– Next Steps

– Absorption of tools and techniques

– Focus for the Business

Q and A