Lean Sigma Supply Chain » Lean Sigma

SMED applied to Plan Maintenance – recent case study

Lawrence Loucka — Sat, 22 May 2010 20:02:26 +0000

Oil Production

Issue: Oil producer was experiencing long and unpredictable plant maintenance turnarounds. Outage durations consistently exceeded plans and budgets resulting in lost production and excessive maintenance costs.
Solution: Applied lean techniques including:
- SMED (task separation, conversion, and simplification to complete outage tasks outside the outage window),
- Constraint Reduction (e.g., dramatically improved critical path management),
- Visual Controls (e.g., optimized Outage Command Center),
- Streamlined Collaborative Planning (e.g., earlier and greater involvement of contractors and cross functional personnel), and
- High impact metric capture and utilization (e.g., shift in focus from “Cost only” to Cost and Duration).
Result: Greater Profits – More stable outage planning and execution process with a reduction in outage durations of 10-15% resulting in increased production valued at $25 million increase in annual profit. Reduced Costs – Decrease in outage costs valued at $2-3 million annualized. Improved Collaboration – Significantly improved collaboration among all groups, greater performance reporting transparency, and improved continuous improvement through capture and application of lessons from one outage to another.

z-Table

Lawrence Loucka — Thu, 20 May 2010 16:24:04 +0000

It’s time for Hoshin: Annual Operating Plan

Lawrence Loucka — Thu, 10 Sep 2009 00:00:18 +0000

Well its getting to be that time of year again… What did I promise to deliver this year, what do we need to do next year?

The annual operating plan sometimes is developed and displayed using the X-Matrix. Establish the results of goals for next year, take the strategies and tie them to tactics, make sure the tactics can be measured (targets) and have individuals assigned ownership of tactics and targets.

Little gets done without marching orders, i.e. a Charter. The basic document of the hoshin process is the team charter. The A3 format connects the targets (goals) to the tactics and provides another level of critical thinking about execution. The team charter is a contact between the company to provide support and resources and the team and team members to do the hard work of problem solving, applying the scientific method, and running experiments on the management operating system.

What gets measured gets better, and so we set plans and track key performance indicators.

Ready to make your hoshin for next year?

How many kanban do you need?

Lawrence Loucka — Sat, 05 Sep 2009 14:00:13 +0000

Kanban is a system that supports level production by helping maintain stable supply and efficient operations. The question of how many kanban are needed is at the core of designing and running a kanban system. If your business process performs mostly standard, repeated operations the number of kanban can be calculated as follows:

Number of kanban = (Daily Demand * (Replenishment Time + Safety Margin))/Standard Container Quantity

Daily Demand = monthly orders / work days in the month;
(Can use historical actual orders if demand is stable, may need to use current booked orders or forecast)
Replenishment Time = sum of all the processing, transportation, handling, and queue times from freshly empty container to full container back to empty again
Safety Margin = either a statistical calculation to accommodate variation in demand and/or supply, or an intuition to add zero to a few extra days
(Regardless of which approach you pick, once up and running begin removing kanban one at a time until you’ve gone too far, then add one back and spend some time to figure out the cause – i.e. lower the water level and expose a few rocks.)
Standard Container Quantity is where we often have the greatest latitude. We usually can’t change the daily demand. Speeding up the replenishment time takes time. Selecting the right size container we can do right now. Sometimes we’ll turn the equation around and instead of solving for the number of kanban we’ll pick the number of kanban and then determine the right container size, like so …

Standard Container Quantity = (Daily Demand * (Replenishment Time + Safety Margin))/Number of Kanban

Rule of thumb: try to keep the number of kanban between 2 and 10 by adjusting the size of the kanban container.

Total Landed Cost Project Plan

Lawrence Loucka — Wed, 19 Aug 2009 11:03:37 +0000

Let’s see, DMADV should work …

Define	Form a small team and agree on the goals of the project in a written charter with the sponsor, customers, and stakeholders. The overall intent should be clear. Deliverables and milestones should be established. Cross functional turf issues should be addressed up front.
Measure	Quantify the customer needs as well as the goals of management. Determine “What will project success look like and how will we know?”
Analyze	Each of the cost categories of Price, Transportation, Customs, Inventory, Overhead, and Risks need to be mapped and taken to another level of detail. For each element we need to study the inputs, outputs, alternatives, existing reporting processes to determine the accuracy and timeliness.
Design	Create, test,and document the new data collection and reporting process
Verify	Confirm by sensitivity testing, simulation or otherwise, the performance of the total landed cost reporting design and its ability to meet the target needs

Lean Sigma Tools for Supply Chain, part 2

Lawrence Loucka — Sun, 09 Aug 2009 15:28:51 +0000

Here are a few more lean and six sigma tools that can be applied in supply chain. Have any additions, comments, or examples to share?

**Lean Sigma Tools for Supply Chain**
Lean Sigma Tool	Definition	Supply Chain Application
Location Checksheet	A common visual quality data display in manufacturing is to take a product drawing and make a mark or place a sticky dot on the location of a defect or touch up. After a period of time you’ll often see clusters. Then we use good old Pareto and focus our team based problem solving skills on the areas of interest.	Plotting the physical location of inventory accuracy errors can often be a clue for getting to the bottom of and eliminating a significant source of wasted time. Similarly marking the location of packaging damage can help identify problems with overhang, pallet specification, strapping, and handling.
Sampling	Manufacturing process and quality engineers have been taking product and process samples for over 50 year as a routine part of statistical process control or designed experiments. 100% inspection is actually less accurate in quality control than is a well designed sampling plan and the use of descriptive statistics. As an aside the US Census could stand to use more sampling and less door to door canvasing.	A full physical inventory count or ‘stock take’ is also less accurate that a well designed cycle counting program. But even a cycle counting program is a waste of time if the errors discovered aren’t studied for root cause and permanent corrective action taken. Whether its an annual full inventory or a daily cycle count if all we do is adjust ‘the book’ then we aren’t doing anything to improve our future.
Statistical Distributions	The widely known ‘bell shaped curve’ of the normal distribution is often a good approximation of the spread we find in machining operations. Paint thickness, electrical resistance, tensile strength can vary plus or minus around a mean or average. Descriptive statistics such as mean and standard deviation help us understand and describe the behavior of the systems we are studying.	Caution Will Robinson. Playing with statistics without the proper training can be dangerous. Real example: when calculating safety stock and expected inventory we often need to consider the supplier lead time. Like any variable measurement there is always some spread, the expected 10 days could be 9 days or 15. Lead time is almost never bell shaped. Suppliers are rarely early. So which distribution to use? Find a good black belt and give’m a job.
Control Charts	Control Charts are how we display the behavior of a process and help process operators decide when to make an adjustment, stop the process, or start an investigation. We plot data taken from periodic samples and then follow SPC rules to determine if there has been a change in the process since the last sample.	Kanban are containers or cards used to control the replenishment, supply, production of product. The number of Kanban in circulation can be calculated based on the average consumption, replenishment time, and container size. A single card or container then has an expected lifecycle from empty to empty. By periodically sampling the time the container last passed through a ‘tollgate’ we can get an early warning on shifts in demand or replenishment time, hopefully in time to avoid a stock out.
5 Whys	First impressions are sometimes wrong, so when we are brainstorming or investigating a situation we’ll ask about the cause of the cause of the cause. A method for pushing our thinking beyond superficial solutions that don’t really solve the problem.	Took 20 minutes to get started picking this morning. Why? Because the printer was jammed? Why was the printer jammed? I guess the rollers were dirty. Why where the rollers dirty? … You get the idea? We keep asking Why until we get to something we can do something about like adding a weekly printer maintenance task to our TPM schedule and assigning responsibility for doing it.
Pull Systems	Trying to predict (forecast) what to make and when is tough to do in many industries. Toyota found great advantage in only making what was needed when needed, that is to replenish only what was consumed. Ideally a supplying operation would hand off one piece at a time to the down stream consuming operation. But when supplier and customer can’t be in close physical proximity we need some way to communicate what is needed and when. 2 Bin, kanban, FIFO flow lanes are just a few types of pull systems common in manufacturing.	Some have tried using pull thinking in distribution inventory management, only replacing stock at customer facing warehouses when product is shipped out (Toyota accessories for example). The traditional approach is to forecast the demand and then make or buy a batch large enough to cover the future demand, and hope you didn’t plan too much or too little. Pull works well in some industries and not at all in others. Most warehouses regardless of industry can use pull techniques for resupply of packaging, fresh pallets, wave picking period.

Lean Sigma Tools for Supply Chain, part 1

Lawrence Loucka — Sat, 08 Aug 2009 00:24:15 +0000

Not all of the lessons from Toyota and Motorola translate well into health care, project management, product development, services but many easily do. Here’s a partial list for supply chain. Have any additions, comments, or examples to share?

**Lean Sigma Tools for Supply Chain**
Lean Sigma Tool	Definition	Supply Chain Application
Brainstorming	Generate a wide range of ideas around any topic.	Why not get the warehouse pickers together from time to time to engage them in a discussion on safety, accuracy, or productivity improvements?
Affinity diagrams	Sort the post-its in to logical groups, and give each cluster a name.	Start or end of shift crew meetings can have a team problem or improvement board. Sorting suggestions, brainstorm ideas, or process defects in a public forum is a great way to engage the warehouse or office.
Multivote	One way to prioritize or narrow down a list of alternatives.	Instead of the squeaky wheel, or the boss’ mandate, allowing the folks to set their own priorities for continuous improvement is one way to foster engagement and buy-in.
Process mapping	Come in a variety of styles: flow charts, swimming lanes, spaghetti, etc. A visual model of the process.	Helpful training aid. For many a flow chart is easier to comprehend than a standard operation procedure text.
Process observation	Gain a deep understanding of a process in action by planning what you want to capture and how you plan on doing it. Most processes have too much going on all at one to be able to ‘see’ what’s really happening, so we focus on one ‘actor’ at a time and usually start by watching what happened to the product or service, then is a separate session observe the machines or technology, and then only after really understanding product and process to we observe the people and what they are doing. Reason? People are almost always victims of the processes and products others designed.	In supply chain there are a number of challenges. First hurdle is recognizing that there is a process. What is the product or service supply chain provides? Is it movement of goods or processing of information or both?
SIPOC	Supplier, Inputs, Process, Outputs, Customer – a visual table or chart to help define process boundaries and stakeholders.	Every new WMS or TMS project should start with a charter, project plan and a SIPOC to get all the players calibrated on who is who and why. Surprising the confusion often found around understanding who the customer is and what happens up and down stream.
Spaghetti map	Stable yourself to a order or component and follow it through the process, always enlightening, often embarrassing when plotted on a facility layout	Pick path maps often show problems: location inaccuracies, split lots, poor slotting. Your WMS may direct traffic, even if it does it can be worthwhile to follow a picker around and watch for dead ends, reversals, treasure hunts.
Swim lanes	Flow chart arranged with rows or columns to show functional handoffs.	From customer order through sourcing, planning, scheduling, receiving, putaway, pick, pack, ship the number of times the order and product are touched, adjusted, queued, handed off, and acted on is the start at recognizing waste and variation in supply chain management.
VA Analysis	Breaking down a process into activities and then deciding if the customer would think each task was valuable.	Most of Supply Chain is non value added. Just moving product from here to there doesn’t change the product. Some will argue that the end customer is willing to pay to move product, so any activity that doesn’t move the product closer to the customer is waste. Does the customer care if you have to inspect the paperwork, or put the pallet in and out of a rack?
7 Wastes	A way to categorize non value-added activities and help us see waste: overproduction, defects, transportation, waiting, inventory, motion, processing. Also known as ‘muda’.	Overproduction – unnecessary packaging Defects – inventory record errors, shipping damage, mislabeled Transportation – shipping from the wrong DC Waiting – queuing up orders Inventory – excess, slow moving, obsolete Motion – rearranging a split pallet, reaching for supplies Processing – unnecessary tasks
Check sheets	Simply a list of tasks, hopefully unambiguous and logically sequenced. A memory aid.	Wouldn’t want an airplane pilot to take off with out running through the preflight checklist, why conduct a physical inventory without one?
Frequency plot	Also known as a histogram. Helps to see the distribution of a set of data. A statistical tool.	More picking errors on small orders or large, or early in the shift or at the end? Collect some data and plot it to find out.
Measurement System Analysis	Statistical study to determine if the accuracy of an measure is adequate.	Many warehouses have labor productivity goals or standards. How accurate and reliable is the record keeping? If the case pick to powered pallet jack is standard 52 lines an hour should a picker be concerned about achieving only 50, or feel great about hitting 54?
Total Productive Maintenance	An approach to maximizing the effectiveness of facilities used within a business. Total productive maintenance, or TPM, aims to improve the condition and performance of particular facilities through simple, repetitive maintenance activities. Based on a culture of teamwork and consensus, TPM teams are encouraged to take a proactive approach to maintenance. A team is made up of operators and those involved in the setting up and maintenance of the facilities.	Got to keep the lifts running, batteries charged, printers printing … Does equipment downtime ever become an excuse? Don’t let the equipment decide when to take a break, schedule the maintenance on your own terms. Factories have figured this out why not the warehouses?
DMAIC	Project planning mnemonic – define, measure, analyze, improve, and control	Why not use this outline on any change initiative?
FMEA	Failure Modes and Effects Analysis – often used in postmortem, best used to prevent.	Better to anticipate what could go wrong with the new WMS installation than to have to deal with the clean up after the meltdown.
Gemba	Go see. Don’t theorize from the front office, instead to to where the issue, problem, value lives and look at it.	Looking in the racks, using the white glove test (how thick is the dust on the slow moving stock?), observing the housekeeping is all part of the visual management and servant leadership culture of lean sigma in supply chain.

Lean Six Sigma Certification Game

Lawrence Loucka — Sat, 01 Aug 2009 21:26:06 +0000

A friend and colleague, Bill Bentley, writes about the use of professional certifications in the recruiting industry.

I had a long talk with a senior IT professional in Chicago last week expressing his deep frustration that despite his long and distinguished professional career, he could not get interviews without certain certifications despite being able to teach the topics himself.

Many of you looking for jobs are facing the same problem whether you know it or not. Certifications are being used to screen out candidates because of the huge numbers of applicants. An $8/hr person or worse, a computer program, is being used to scan resumes into the little pile that the hiring manager will look at and the big pile that gets thrown away.

Certifications which are being used A LOT for this purpose are Six Sigma, Lean, PMP and increasingly in the IT field, ITIL. In some cases the companies truly want these skills but in many cases they are nothing more than `wish list’ skills and objective facts that can be easily used by the resume screener for sorting.

If the jobs that you look at have these topics listed in the job descriptions you can be quite sure that without them, your resume is much more likely to end up in the big pile than the little pile. …

So do you really need that certification just to get the job? Often an organization is trying to upgrade its bench strength by requiring certification, but how do you know it’s not just a charade and a meaningless recruiting filter. Maybe you want to be sure your prospective employer is serious, and that might take some digging and fortitude to be able to walk away from a company that’s just pretending.

A cynic’s view of Lean Six Sigma

Lawrence Loucka — Tue, 28 Jul 2009 17:29:15 +0000

The Scratching Post has a jaded but honest collection of views of how movements become evil or how half enlightened fanatics can misapply the best of intentions. Here are a few pearls …

Killing Innovation with Lean Six Sigma

Why Lean Six Sigma Works Only Sometimes

Lean Six Sigma is a Fraud for Engineering Consultancies

Another Lean Sigma Failure

A Post Morten on a Lean Six Sigma Training Disaster

Lean Six Sigma Feeds Itself

Green and Lean

Lawrence Loucka — Sun, 26 Jul 2009 21:08:39 +0000

Combining the questions of green and sustainability with the application of lean thinking to supply chain and logistics I offer these current publications for your consideration.

Hot, Flat, and Crowded, by Thomas Friedman, author of The World is Flat, presents two cases 1) the impact of global warming, population growth, rise of a global middle class through globalization, and 2) America’s loss of focus and national purpose since 9/11, combine to ever greater instability. The rise of new powerful economic nations is completely changing the way the world works. Whether you buy in to the doom and gloom you might give some thought to how solving these problems present the greatest economic opportunity of our time.

Streamlined: 14 Principles of building & Managing the Lean Supply Chain by Mandyam M. Srinivasan stresses systems thinking. It integrates two management philosophies: the theory of constraints and lean thinking, and illustrating how they complement and reinforce each other to create the smooth flow of goods and services through the supply chain. Thought provoking.

End-to-End Lean Management by Robert Trent describes a broad array of waste that affects all supply chains and shows how to make lean performance improvement a reality across your entire supply chain. Trent he explains and details key lean objectives, including standardization, flow, optimization, and waste elimination. An easy read.