Make green go green by going lean

"Make Green, Go Green, by Going Lean”

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How to Go Green?

How to Go Lean?

Why?

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Doing nothing is not an option!

Governor Arnold Schwarzenegger signed into law emission reduction targets for California:

• By 2010, reduce GHG emissions to 2000 levels,

• By 2020, reduce the GHG emissions to 1990 levels,

• By 2050, reduce GHG emissions to 80 percent below 1990 levels

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Green and Lean

• 15-30% of a manufacturing company’s monthly energy bill creates greenhouse gases.

• The energy management within a facility - benchmark competitors.

• Lean methodologies can be used to reduce waste in the consumption of energy within a manufacturing facility.

• The ultimate goal - eliminate equipment not needed in the process.

• If elimination is not possible, minimize the use– plot energy consumption to predict maintenance schedules

and replacement cycles.

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Analysis of Electric Industry CO2 Impacts

• The electric industry cannot provide substantial reductions in CO2 emissions in the near future to meet goals

• Limited potential to switch to “greener energy” near-term• CO2 reduction must come from reducing demand

– supported by new energy efficient technologies– conservation programs

• A market-based collaborative systematic approach to demand reduction is a critical success factor (profit potential)

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The Economic Case For Change

• Asset performance management can reduce energy consumption by 6% to 11%.

• DOE has established a minimum 10% energy reduction guideline as attainable through the application of proper maintenance and technology solutions.

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G.A.S. Index: Global Asset Sustainability Index

G.A.S. Index = Availability * Performance * Quality * Energy Efficiency

• Availability = All downtime / Scheduled time• Performance = Actual output for scheduled

time / Design output for scheduled time• Quality = Total production minus defects or

rework / Total production • Energy Efficiency = Design energy

consumption/Actual energy consumption

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Example: Motor Efficiency

90,000 Watts 100 HP 76,000 Watts

1HP = .746 kWatts

15,400 Watts (17.4%)

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Motor Efficiency Savings

• Energy Savings = 90kW x 8,000 hrs./year x (1-(.828/.94)) = 87,336 kWh/yr.

• At an average cost of 11 cents per kWh, the estimated savings would be $9,607 per year.

• Motor operating cost: – (100 HP x .746 kW/HP x 8,000 hrs. x $.11/KWh

) / .94 efficiency = $69,838 per yr.

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Repair v. Buy

• Break even analyses must be based on the increased cost of purchasing a new, more energy efficient equipment versus the energy consumption reduction.

• The cost energy today ranges from 10-13 cents per kilowatt-hour.

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Lean Definition

• “A philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise.”

- APICS Dictionary, 10th ed.

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Lean Enterprise

• “An enterprise with a focus on waste elimination and the customer’s needs in all parts of its operations, manufacturing and administration. Emphasis is given to lean structures and processes, flexibility of response and methods and techniques to continually seize new opportunities as they arise.”

- APICS Lean SIG

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Early Lean Processes

Mass Production• Early 1900’s• Ford Motor Company was a pioneer• Assembly line production• High volume production• Limited number of products• Significant cost reductions

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Today• More than 96% of all U.S. companies have less than

250 employees • Global competition / low cost labor• Demands by customers:

• Higher quality• Innovation• Mass customization• Flexibility• Lower Costs

• Limited resources

Source: U.S. Bureau of Census, 2004

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What is Lean?• It is NOT:

• Collection of techniques or a methodology

• Reduced staffing or low inventories

• It IS:• A philosophy of manufacturing

• Totally different way of thinking

• A different value system

• Seeks to eliminate waste (non-value added activities to the customer)

• Emphasis on flow manufacturing

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What is Lean?

Lean Production

Total Quality Management (TQM)Six Sigma

Cellular ManufacturingBusiness Process Improvement (BPI)

Just in TimeTheory of Constraints

Zero DefectsSPCTQC

Kanban

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Lean Characteristics

• Focus is on the improvement of resource utilization:

― Equipment setup time reduced

― Scheduled machine maintenance

― Orderly, clean workplace

― Pull production being used

― JIT inventory control

― Factory layout in work cell arrangement by products

― Active error elimination

― Improved quality, etc.

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The Importance of Waste Elimination

• Lean deals with the elimination or reduction of many types of non-value-added activities, often referred to as waste

― The driving force for waste elimination is improved value in the products and services customers buy

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Seven Popular Wastes

• Overproduction

• Waiting

• Excessive transportation

• Inappropriate processing (the hidden factory)

• Unnecessary inventories

• Unnecessary motion

• Defects - Taiichi Ohno Toyota Production System

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The Nature of Wastes

1. Overproduction– Target and achievement unclear– Processes not statistically capable

2. Waiting– Operators waiting– Operators slower than production line

3. Excessive Transportation– Widely spaced equipment waiting– Forklifts not available when needed

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The Nature of Wastes (continued)

4. Inappropriate Processing– Variability in operator’s performance– Processes not statistically capable

5. Inventory– Large safety stocks– Variable procurement lead times

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The Nature of Wastes (continued)

6. Motion– Double handling– Non-standard layouts– Equipment widely spaced from each other

7. Defects– Low material yields– Excessive process variability

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Correcting Wastes

1. Overproduction– Eliminate by reducing setup times.– Synchronizing quantities and timing

between processes.– Make only what is needed now.

2. Waiting– Eliminate through synchronizing work flow.– Balancing uneven loads with flexible

workers and equipment.

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Correcting Wastes (continued)

3. Excessive Transportation– Establish layouts and locations to make

transport and handling unnecessary, if possible.

4. Inappropriate Processing– Why should this item be made?– Why is each process necessary?– Are any processes being performed that

are not part of the work flow?

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5. Inventory– Reduce by shortening setup times.– Improving work skills.– Smoothing fluctuations in demand for the product.– Reducing all the other wastes reduces the waste

in stocks.

6. Motion– Study motion for economy and consistency.– Economy improves productivity, and consistency

improves quality. – Improve the motions, then mechanize or

automate. Otherwise, there is a danger of automating waste.

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7. Defects– Develop the production process to prevent

defects.– Eliminate the need for inspection. At each

process, produce no defects. – Design processes to be failsafe (Poka

yoke).– Quality processes yields quality products –

automatically.

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Can you think of other actions to eliminate waste in your

company?

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Leadership Function

• Initiate needed change by identifying a vision

• Aligning employees to that vision

• Motivating to achieve that vision

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Leadership –Lean Change Infrastructure

Project & Training Plans

________________________________________________________________________________________________________________________________________________________________

___________

Vision & Lean Strategy

Value –No Waste –

Flow –Pull –

Standard Work –JIT –

ChampionCEO

Plant Management/PresidentVice President

Sponsors:Manufacturing Engineering

Quality

Lean Office

FacilitatorFacilitator Facilitator

Team Team Team Team Team Team

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Transparent Workplace

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Transparent Workplace

• Define Processes• Value-Added Activities• A Value-Added Step• Value versus Non-Value-Added• Value-Stream Mapping• Typical Process Flow Analysis• Visual Order – The Five S’s• Visual Control

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• A particular method of doing something which involves a number of steps, activities, or operations

• Processes are found in manufacturing & service industries

• Example:

Transparent Workplace –Processes Definition

Grind

Type Contract

Turn Mill Drill

Obtain Signature

Type Envelope Mail

Manufacturing

Office

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Process Map

Supplier Customer

Stamping Weld Assembly Paint Shipping

Staging

Weekly Orders

Weekly Orders

Weekly Schedule

1

2

3

4

5

Production Control

I I II

Daily Daily

Total Time: 10 DaysValue-Added Time: 6 minutes

1 Day 1 Day 2 Days 3 Days 1 Day2 Days

50 sec 40 sec 90 sec 120 sec 60 sec

Process Time Line

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• Map customer requirements (orders)• Map order information flows• Map physical product/material flows• Map plant/office information flows• Add a process time line• Summarize current stateAsk questions at each step to

determine waste or non-value-added areas

Transparent Workplace –Value-Stream Mapping Process

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• The % of value-creating time• The number of units of inventory

required to support a production unit• Total travel distance versus value-

creating distance

Transparent Workplace –Summarize Current State

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• Add value to products & services that customers are willing to pay for– Improvements that change a product’s or

service’s form, fit or function

• Other activities use resources but add no value

• Some non-value-added activities may be necessary• Based on current knowledge or technology• Long term goal - Eliminate • Remaining non-value-added activities should be

eliminated now!

Transparent Workplace –

What Are Value-Added Activities?

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• A process that physically changes the work passing through it that makes it more valuable to the customer

• A step requested by the customer - they are willing to pay for it

Transparent Workplace –A Value-Added Step

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Transparent Workplace –Value versus Non-Value-Added

Value-Added Activities• Entering order• Ordering materials, supplies• Preparing drawings• Assembling• Shipping to customers• Processing customer deposits• Examining patients• Filing insurance claims• Dispensing event tickets• Fueling airplane

Non-Value-Added Activities• Waiting/sorting• Moving• Kitting/staging• Counting• Inspecting• Checking• Recording• Obtaining approvals• Testing• Reviewing• Copying• Filing• Revising/reworking• Tracking work - Charlene B. Adair & Bruce A. Murray,

Breakthrough Process Redesign

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Value Stream Costing

Value Stream

OperationalSupport

Facilities & Maintenance

All otherValue

Stream Costs

ProductionLabor

ProductionMaterials

ProductionSupport

Machines &equipment

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Traditional Accounting and Lean Controls

System/Issue Traditional Accounting

Lean

Production Inventory Control

• Work Order• Production tracking• Inventory Cycle Count

• Kanban• Visual signals• Five S

Procurement • Purchase order approval• Three way match in AP

• Key Suppliers• Master POs• Supplier Certification

Quality of Products • Detailed inspection• Rework or scrap

• Standardized work• Single-piece flow

Production Cost Control • Standard cost• Variance Reports• Analysis of Variance

• Cell/VS CSFs and measures• Analysis of Root Cause

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Costs Outside the Value Stream

• Identify tasks not related to the Value Stream– Exp. - ISO 9000

• These costs are not allocated to the Value Stream• They are treated as sustaining costs of the business

– Budgeted– Controlled

• No need for full absorption costing• Value Stream costing proves relevant, accurate cost info

about the Value Stream

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• Observe & record the flows of orders, materials, goods and information for a product family– Product family: A group of product variants

passing through similar processing steps that use common equipment

• Mapping identifies waste situations for improvements

Transparent Workplace –Value-Stream Mapping (VSM)

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What are some value-added & non-value-added activities at your company?

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• To eliminate waste, you must first find it

• Visual order makes waste evident and is a good starting point for managing resources

• Toyota Production - Five S’s as the method for exposing waste & poor utilization of resources

Transparent Workplace –Visual Order – The Five S’s

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Sort

Set in order

Shine

Standardize

Sustain

Transparent Workplace –Visual Order – The Five S’s

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Transparent Workplace –Lockheed & Boeing’s Six S’s

SORT SUSTAIN

STRAIGHTEN SAFETY

SHINE STANDARDIZE

6 S

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• Sort: Classify tools, parts, instructions into necessary & unnecessary

• Set in Order: Make it visible & easy to use; 3 Es = easy to see, easy to get & easy to return

• Shine: Conduct cleanup to identify abnormalities

• Standardize: Put a system in place to readily identify abnormal conditions

• Safety: Identify & eliminate dangerous & hazardous conditions

• Sustain: Make a habit of properly maintaining & following standard practices

Transparent Workplace –The Six S’s

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• Awareness of what’s happening– Manpower: Skill levels, performance, continuous

training– Machines: Develop Maintenance schedules and use

them– Materials: Demand Signals indicating shortages;

shadow boards for location of tools– Methods: Standard Worksheets and Operating

Procedures– Measurements: Performance trends

• Display schedule• Quality targets • Reductions in setup & lead times

Transparent Workplace –Visual Control

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Pull versus Push Production Strategy

Value Value Stream Flow Pull Perfection

Lean Principles

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Pull

• No one upstream should produce any good or service until the customer downstream asks for it

• Kanban


Lean Principles

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Push

• Build product to forecast

• Excess inventory

• Poor utilization & distribution of product

• Filled distribution channels

• 50% of all books manufactured are shredded


Lean Principles

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Pull

• Design

• Schedule based on actual demand signals

• Produce exactly what the customer wants

• Flow takes place throughout the supply chain, not just inside your production facility


Lean Principles

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Pull

• Benefits

• High throughput

• Excellent protection against stock-outs

• Higher flexibility

• Less congestion

• Shorter lead times

• Higher customer service


Lean Principles

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Perfection

• Begins with visualizing the “perfect” process

• Continuous process to remove waste by eliminating effort, time, space and defects


Lean Principles

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Final Thoughts – Lean and Green

• There is a social responsibility component to saving energy and reducing the amount of CO2 emissions.

• Green as a marketing tool.• Select an small area with high visibility and a

manageable number of variables for the first G.A.S. Assessment and Lean project.

• The journey is never-ending and definitely not easy (especially at first) but the results are well worth the effort.

Make green go green by going lean

Education

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