The Lean Audit utilizes a set of manufacturing principles related to the world-class Toyota Production System (TPS), commonly referred to as Lean manufacturing practices. The audit is used as an evaluation tool for job shops and small manufacturing companies as well as larger manufacturing plants. It sets the baseline to perform a Lean gap analysis by targeting and monitoring areas for improvement.
Manufacturing facilities that perform non-repetitive as well as repetitive type work must apply focused and diligent Lean concepts and tools to compete globally and to grow. When you compare your current state to a Lean future state, everyone in your facility can discern how Lean manufacturing principles and tools can get you where you strive to be. Once a baseline is set, you can monitor progress.
The audit is not meant to replace bottom-line metrics, such as work-in-process, inventory turns, scrap reduction, percentage of value-added time, and cycle-time analysis. However, it will allow your organization to use a common visual tool to communicate using a standard Lean language.
World-class performance can never be achieved without the inclusion of front office Lean practices. The audit includes measures for front office Lean tools and concept applications.
WHAT IS LEAN?
Lean incorporates a different way of thinking and is much more than just a series of programs or techniques. It encompasses a holistic, systems-approach to business, both on the shop floor and in the front office, in order to create a new operating philosophy. This philosophy focuses on eliminating as many non value-added activities as possible, from order entry to receipt of payment.
Lean manufacturing is a team-based, systematic approach to identifying and eliminating wasteful activities within an organization. In essence, Lean organizations focus on getting the right things to the right place at the right time, the first time, while minimizing waste and being open to embracing change.
WHY BECOME LEAN?
Employing the principles of Lean manufacturing helps improve quality, On-Time-Delivery (OTD), and customer satisfaction by eliminating waste in all of the work processes. In turn, this helps to drive down operational expenses and leads to improved quality, increased productivity, enhanced customer satisfaction, reduced operating costs, growth, and increased throughput.
(Editor Note for Webpage: SEE "BEING LEAN" information below for insertion as a block of info on page in this area)
Being Lean means...
Quickly identifying potential problems, addressing them early in the process, and minimizing rework improves the overall quality of the end-product. Our experience tells us that companies can typically reduce defects by at least 55% per year.
Lean techniques increase production using existing resources by eliminating non value-added activities. Our experience tells us that companies can typically increase productivity by up to 35%.
Enhanced Customer Satisfaction
Lean enterprises deliver the quality products customers demand, on time, every time. Our experience tells us that companies can typically help to increase customer satisfaction by reducing lead-time by more than 70% and increase On-Time-Delivery to almost 100%.
Reduced Operating Costs
Improving quality, productivity, and customer satisfaction can substantially reduce operating costs. For example, by eliminating or streamlining WIP inventory, companies can typically reduce inventory by more than 75%.
By focusing on the Lean initiatives laid out in this Audit, there is a tremendous opportunity to grow and to remain consistently competitive as the market changes.
By continually working to eliminate non value-added activities, lead-times will be dramatically reduced.
WHY DO AN ASSESSMENT?
An assessment helps identify breakdowns in business planning, business processes, and business operations that impact customers by creating unnecessary costs. Such breakdowns may include non value-added steps, unnecessary beaurocracy, poor communication, process inconsistencies, and process confusion.
These costly problems can be resolved only if they are objectively identified, clearly defined, and subsequently quantified and fixed. Praestar's Lean Audit provides a powerful tool for senior management teams to help identify areas for improving lean practices. Valuable references and resources go beyond the Praestar Lean Audit "grade" to provide ongoing help as you continue your journey to becoming Lean.
WHO SHOULD CONDUCT AN ASSESSMENT?
The most unbiased method of conducting a Lean Audit is to have it performed by an external consultant. The consultant provides a quantitative baseline without concern for organizational politics. After completion of the audit, the consultant can review with senior management as well as other management teams and stakeholders, depending on the wishes of senior management.
WHAT AREAS ARE MEASURED IN AN ASSESSMENT?
During a Lean Audit, Praestar will evaluate several key elements of manufacturing performance. These elements will provide a comprehensive overview of the capability and opportunity for improvement of the manufacturing organization.
Operational Excellence is an element of organizational leadership that stresses the application of a variety of principles, systems, and tools toward the sustainable improvement of key performance metrics.
Much of this management philosophy is based on earlier continuous improvement methodologies, such as Lean Manufacturing, Six Sigma, and Scientific Management. The focus of Operational Excellence goes beyond the traditional event-based model of improvement toward a long-term change in organizational culture.
The 5S Program is a prerequisite to all Lean improvements and can be implemented quickly with very little cost. "Workplace Organization," "Housekeeping," or other titles are sometimes used for 5S, but the overall purpose is the same – creating a workplace that is clearly organized, free of clutter, with tools/items//paperwork neatly arranged. 5S is about establishing an environment in which employees are proud to work and customers are happy to visit.
Many businesses ignore the principles of 5S because they appear to represent simple and obvious common sense. However, a formal 5S program can improve profitability, efficiency, service, and safety. It does this by:
- reducing wasted time and materials
- reducing maintenance and downtime
- improving efficiency and productivity
- improving morale
- simplifying the work environment
- engaging all employees in practicing Lean
• QUALITY PROCESS
All companies strive to deliver a quality product at a competitive price within a timeframe defined by the customer. Organizations must strive to continually improve processes in product quality, productivity, and cost through effective data-driven management decision making. By focusing on key measureables, such as DPPMs, and the application of various tools, such as problem solving, SPC, PPAP, etc., continuous improvement can be managed within the quality process.
• WORK CELLS / AREAS
Work cells are the heart of Lean manufacturing practices. A work cell is a work unit bigger than an individual machine or workstation, but smaller than a usual department. Grouping processes or products (or services) to determine associated costs and profitability creates a work cell profit center. Allocating costs to small areas of work tracks efficiency of the cell and relates it to a company's profitability.
Work cells typically have less interdependent moves, shorter travel distances, fixed route structure, shorter queues, shorter through-put time, faster response time, higher inventory turns per year, easier supervision, immediate problem identification and enhanced teamwork than traditional non-lean work environments.
• VISUAL CONTROLS
Visual cues about work processes help workers identify what needs to be done, what is being worked on, and what is out of place. Workplace standards such as safety requirements, production throughput, material flow, quality metrics, and other information can be communicated using a variety of visual controls. In a visual factory or office, all work areas are set up with signs, labels, color-coded markings, lights, flags, as well as other visual indicators of performance.
• STANDARD WORK
Standard work is considered the Holy Grail of Lean manufacturing. Explicit standard work rules for manufacturing are not synonymous with engineering work standards. Work steps are not just a tool from which to train; they are a documented method with a high degree of repeatability and predictability. The more you analyze the work or process, the better you will be able to improve it and be as precise as possible in its execution.
Standard work is a major component of kaizen, or teaming activities, and it forms the baseline for continuous improvement. Real Just-In-Time cannot operate without it.
• TOTAL PRODUCTIVE MAINTENANCE
Total Productive Maintenance (TPM) is used to maintain and sustain a manufacturing process that ensures a high level first-time capability, minimizes unscheduled machine downtime, and promotes process efficiency. If the production equipment breaks down or fails to produce at the expected rate or quality, product lines can suffer. TPM principles can also be used in administrative areas in reference to computer networks, internet and intranet access, as well as computer program revision updates.
Total Productive Maintenance goals are:
- maximize equipment and program effectiveness
- develop a system of productive maintenance for the life of equipment
- involve all departments that plan, design, use, or maintain equipment
- promote TPM through autonomous small group activities
Just in time (JIT) is a production strategy that strives to improve a business' return on investment by reducing in-process inventory and associated carrying costs. To meet JIT objectives, the process relies on signals or Kanban between different points, which are involved in the process, which tell production when to make the next part. Kanban are usually 'tickets' but can be simple visual signals, such as the presence or absence of a part on a shelf. Implemented correctly, JIT focuses on continuous improvement and can improve a manufacturing organization's return on investment, quality, and efficiency. To achieve continuous improvement key areas of focus could be flow, employee involvement and quality.
JIT relies on other elements in the inventory chain as well. For instance, its effective application cannot be independent of other key components of a lean manufacturing system or it can "end up with the opposite of the desired result."
• CONTINUOUS FLOW
Operations are continuously flowing when the product is pulled from the previous operation as it is needed. Only quality parts or services that are completed for that process are allowed to move to the next operation. Advantages to continuous flow processing include shorter lead times, minimum or no work-in-process inventory, and ease in identifying defecgts and/or problems before they get to the customer.
The goal of world-class organizations is having processes linked with minimal WIP within the main production (or work) flow.
• PULL SYSTEMS
The name pull system (also known as kanban system) implies that raw materials, parts, supplies, information, etc. are pulled from the upstream process to the downstream process, where they become a product or service to meet a customer demand. Work efforts are focused on the necessary resources required to keep the process moving. In contrast, a push system is driven by a master schedule to push production or work from one operation to the next, whether it is needed or not.
More revealing of a pull system's (kanban's) simplicity is the fact that it is often still called the supermarket system. While the system was formalized in Japan the concept was taken directly from the American supermarket.
Toyota executives observed the way American supermarket shelves were replenished. The customer withdraws a product from a limited stock of items on a shelf and then the stock clerk / material handler replenishes only those taken. The first pull signal was generated by the customer who withdrew the inventory and this indicated how many items needed to be replenished by the stock clerk.
The more the workflow varies, the greater the likelihood of creating waste. Levelling reduces the variability in a production line and enables a facility to make several different products in various lot sizes. Or in an administrative environment, several value streams can be coordinated through multiple processes that ensure timely processing.
Many people think that levelling refers to only capacity and load. In Lean, levelling means thoroughly levelling (smoothing) out production types and volumes in accordance with customer needs. Heijunka, or production levelling, attempts to minimize the impact of peaks and valleys in customer demand. It includes levelling production or work by volume and by variety.
Levelling production or work by volume begins by breaking down production output into small (usually daily) units. The daily volume of a product is compared with the operating hours to calculate how many minutes it will take to turn out a product unit. This unit of production is called cycle time, and can be used to calculate capacity and people requirements.
Levelling production by variety is the frequent changing of the model mix to be run on a given line or different set of administrative processes that require the same resource. Instead of running large batches of one model after another, levelling advocates mall batches of many models over short periods of time. This requires faster change-over, but results in smaller lots of finished goods that are shipped frequently.
• QUICK CHANGEOVERS
A key component of Just-in-Time manufacturing is one-piece or optimal (small) lot flow, which can require frequent setups and quick changeovers.
Production workers need to fully understand internal and external operations with regard to changeovers. This overall concept can also relate to administrative procedures that require different database programs that a worker may access during the course of the day or hour.
In a Lean Manufacturing environment, no resource is as valuable as the people who participate in the system. This includes both blue- and white-collar team members. Indirect and direct labor are included in our lean manufacturing team. Their behaviour, but perhaps more importantly their attitudes, drive the results that are most important to us. We must examine both internal and external customers during the assessment to best understand how well the organization's processes are working.
• CONTINUOUS IMPROVEMENT
Running a lean organization embraces the Lean manufacturing philosophy of excellence that includes the elimination of waste (non value-added activities) while creating a process for continuous improvement. The building blocks, tools, and concepts used in this assessment must be sustained in production, as well as front office environments, providing people with opportunities to contribute ideas for improvement on a regular basis. It is this process of continuous improvement that eliminates waste and allows companies to globally compete.
Continuous training is mandatory for continuous improvement. In Lean organizations, effective training is provided in Lean thinking principles, as well as cross functional job skills that improve the flexibility of the workforce. Training can be informal, such as job aids, on-the-job training, and peer support, or it can be formal classroom instruction as the work site or an education and training organization. Effective training programs have at least three elements: there must be a formal training plan for each employee with specific goals and objectives; training must be well documented and accessible to those that need to schedule manpower across multiple functions; the training plan must contribute to making all employees multi-functional, allowing them to do many jobs and making them more valuable to the company because of their flexibility.
• SUPPLIER / CUSTOMER ALLIANCES
Customer and supplier relationships affect day-to-day business up and downstream of the organization. Large upstream customers in the value chain issue many directives or cost reduction requirements. At the same time, downstream demands are being made from larger suppliers who provide materials or work that is needed. This can leave the organization caught in the middle with little or no real opportunity to negotiate or offer value.
Forming alliances and being proactive with the customer while also being proactive with your suppliers is a key to success. It is important to realize no matter what the position of the organization is in the supply chain, there are tools that can be utilized for leverage that position to improve margins and increase capability.
WHAT DO THE RESULTS OF THE ASSESSMENT TELL ME?
The Lean Audit provides two key pieces of information. First, the audit shows relative strengths and weaknesses within the organization of various Lean aspects. The output radar chart clearly identifies areas for improvement within the firm relative to other areas. Second, the audit provides comparison to World Class Manufacturers from around the world. Praestar Consulting has worked with over 1500 manufacturers during its tenure as the leading manufacturing consulting firm in the United States. This work has included both foreign and domestic operations of American manufacturers. Through careful research and data analytics, Praestar has developed key standards for Lean initiatives and performance. Using these standards, Praestar can indicate areas that, despite being relative strengths for the Firm, are weak in comparison to global performers. Knowing the areas for improvement is critical. Often manufacturers believe their strengths are as strong as they could ever be – this may simply not be the case.
WHAT ARE THE NEXT STEPS AFTER AN ASSESSMENT?
After completion of a Lean Audit, Praestar consultants will provide detailed action planning assistance. The action plan is broken into three categories:
- General Managers, Directors, and Owners (those that provide the vision)
- Supervisors, Team Leaders, and Managers (those that supervise and direct others)
- Operators, Associates, and Process Workers (those directly working the process)
Praestar Consulting can then facilitate and manage the action implementation or simply provide adequate reporting and documentation. This decision is made entirely by the client firm's senior management. Ultimately, based on the results of the Lean Audit, a manufacturer will develop improved operations and measurable results.