Lean T Any Type of Business

Growing Your Business Through Lean Process Improvement
Applying Lean to any Type of style Click to edit Master subtitle Business
Quantum Associates, Inc
The Cost Reduction Principle

Traditional thinking dictates that you set your
selling price by calculating your cost and adding on a margin for profit the price and you dont have the luxury of adding a profit margin
In todays competitive market the customer sets
The only way to remain profitable and grow your
business is to eliminate waste from your value stream, thereby reducing costscost reduction principle
22

Traditional Thinking Price Profi t Cost Lean Thinking
Price cost = profit
Cost + profit = price
Pric e
Price Profi t Cost
Price
33

Determine the price customers are
willing to pay, and subtract your cost to determine what your profit will be customers not only set the price, but they also demand price reductions
Eliminating waste is important because
44
What is Lean Process Improvement?

Is it skinny? Is it less people? Is it working harder? Is it making less? What is Lean?
55

Lean is a continuous improvement methodology
focused on managing processes, and improving them by compressing time, rather than sweating assets primary processes that create value and secondary processes that support them (office and administrative functions)
Every business is a collection of processes
Processes are sequences of steps that must be
carried out to create value for customers and managed as a whole, not separately
66 Quantum Associates, Inc
Lean and Profitability
77
Growth Through Lean

T o t a l C o s t s
Sales/Product Family
Lean reduces total costs enabling you to maintain or lower your prices and increase market share, thereby growing your business.
88

Lean emphasizes the prevention of
waste: any extra time, labor or material spent producing a product or service that doesnt add value to it. methods can help you reduce costs, achieve faster delivery and shorten lead times
Leans unique tools, techniques, and
Lean fosters a culture in which all
99
employees continually improve their skill levels and processes thereby increasing morale Quantum Associates, Inc

Because lean systems are customer
driven, products and services are created and delivered in the right amounts, to the right location, at the right time, and in the right condition for a specific customer order rather than being added to inventory
Products and services are produced only
10 10
Goals of Lean Process Improvement

Improve Quality Eliminate Waste Reduce Lead Time Reduce Total Costs
11 11

Improve Quality
Quality is the ability of your product or
services to meet or exceed your customers requirements
Eliminate Waste
Waste is the activities that take up time,
12 12
resources and space but does not add value to a product or servicecustomers do not want to pay for non-value-added activities Quantum Associates, Inc

Reduce Lead Time
Lead time is the total time it takes to complete
a series of tasks within a process. Some examples:

Period between the receipt of a sales order and the
time payment is received finished goods
The time it takes to transform raw materials into The time it takes to introduce new products after the
Long lead times undermines your business. Reducing design phase is completed lead times can help you dominate your market. The time it takes to complete a quote or submit a proposal
13 13 Quantum Associates, Inc

Reduce Total Costs Total costs are the direct and indirect
costs associated with the production of a product or service

You must continually balance your products
and services prices and your operating costs to succeed.
If your prices and operating costs are too To reduce total cost a Lean process must
high you will lose market share and profits eliminate waste and reduce lead times.
14 14
Benefits
Implementing lean tools and techniques will
enable your company to meet customer demand for a quality product or service at the time they need it and for a price they are willing to pay. efficient business and manufacturing processes. its total costs and provide a fair ROI to its stakeholders.
Lean management methods create flexible and Lean practices will help your company manage
15 15
Waste
Waste is anythingtime, cost or work
that adds no value in the eyes of the customer activities
Waste exists at all levels and in all Lean shows us how to recognize and
eliminate waste and not simply accept it as the way work is done around here
16 16
The Seven Deadly Wastes
17 17
The ultimate lean target is the total elimination of waste. Waste, or muda, is anything that adds cost or time without adding value. Seven deadly waste have been Quantum Associates, Inc identified over the years. Recently an eighth

Inventory Excess inventory that is not directly
required for current customer orders

Manufacturingexcess raw materials, WIP
and finished goods

Office/Serviceunneeded files, extra
supplies, unnecessary copies, excessive unread emails, etc.
18 18

Overproduction Excessive use of resourcesproducing
too much of something, faster than needed, or before it is needed

Manufacturingunits made for stock or
inventory
Office/ServiceProducing reports before
they are needed, performing more analysis than required

19 19

Over-processing
Extra operations, such as rework,
reprocessing, handling and storage that occurs because of defects, overproduction, and too much or too little inventory, includes redundant activities, such as checking someone elses work. Obtaining multiple signatures, or excessive reviews features which are irrelevant to the customer
Manufacturingreworking defective product Office/servicemultiple approval signatures,
The time spent producing product/service
20 20
entering data in multiple systems and or stand Quantum Associates, Inc alone spreadsheets for reporting purposes

Transportation
Unnecessary movement of materials such as
WIP, materials being transported from one operation to another. Transporting something further than necessary, or temporarily locating, filing, stocking, stacking, or moving materials, people, information or paper.
Manufacturingmoving sub components from one
work process to another

Office/serviceFiling/saving documents that will
never be used again, updating customer records in different systems
21 21
Quantum Associates, Quantum Associates, Inc Inc

Motion
Extra steps taken by employees and
equipment to accommodate inefficient process layout, defects, reprocessing, overproduction. More walking, reaching or bending than necessary contribute added value to the product or service
Any movement of people which does not
Manufacturingoperators having to walk back and forth to
retrieve tools or materials not stored in the immediate work area
22 22
retrieve previous information, searching for misplaced files Quantum Associates, Inc
Office/serviceselecting additional keystrokes and fields to

Waiting
The period of inactivity in a downstream
process that occurs because an upstream activity does not deliver on time.
Manufacturingwaiting for parts or subcomponents
to complete a job
Office/servicedelays in getting
feedback/approvals/decisions from peers or top management
23 23

Defects (Rework)
Refers to all processing required creating a
defect or mistake and the additional work required to correct it
Manufacturingdefective units of product Office/serviceincorrect/missing information
on a form, handling a report numerous times

Do it again!
24 24
Eighth Waste
Underutilization of People - is a result of not
placing people where they can (and will) use their knowledge, skills, and abilities to the fullest
Assigning an employee to two jobs due to
understaffing
Having employees perform a task that is politically
motivated
Not cross training employees
25 25
Three Types of Process Activities
Value-added activities Business value-added
activities Non-value added activities

Value-added Activities
Those steps the customer is willing to
pay for
To qualify as value-added an activity
must meet the following criteria:

the customer desires
It changes the form, feature, or function that It must be done right the first time
27 27
It is the customer who determines what a The customer is business is. What willing to pay for it the customer thinks he is buying, what he considers value, is decisiveit determines what a business is, what Associates, Inc Quantumit produces and whether it will prosper. Peter Drucker
Business Value-added Activities

Activities the customer isnt
willing to pay for but must be done to comply with regulations, organizational policies, and so on
You must periodically examine
28 28
these activities to make sure they are necessary, if not eliminate them Quantum Associates, Inc
Non-value-added Activities
Those activities the customer is
not willing to pay for and can be avoided

Your goal should be to
eliminate these activities because they are WASTE
29 29
Understanding Waste
What would you be willing to pay for when ordering a
___ Meat hamburger? ___ Dough ___ Ketchup ___ Electricity to run ovens ___ Electricity to run outdoor lights left on accidentally ___ Person paid to inspect takeout orders 30 30 ___ Cost of hamburgers not sold Quantum Associates, Inc ___ Distribution Center ___ Cost of radio, TV, web ads ___ Cost of delivery truck signs ___ Cost of store manager ___ Cost of cleaning ___ Cost of menus ___ Employee training ___ Profit Quantum Associates, Inc
What Are Value Streams?

A Value Stream is all the actions, both value-added and non-value-added required to bring a product or service from concept to launch and from order to delivery.
31 31
Types of Value Streams

Whenever there is a product (or service) for a customer, there is a value stream. The challenge lies in seeing it.
There are three value streams for each product family that overlap and flow together:
Concept to Launch (engineering/design) Raw Materials to Customer (manufacturing)
32 32
Quantum Associates, Inc Order to Cash (administrative functions )
Value Stream Mapping

Value Stream Mapping the process of identifying and charting the flows of information, processes, and goods or services across the entire supply chain from the supplier to customer possession
Includes both value-added and non value-added activities Allows for seeing areas of waste in current state Future state is roadmap and apt to change Create icons specific to your business or industry Maps should be the plan for 6 months 2 years Maps many types
33 33
Value Stream Mapping
Customer Queue/Wait
Data Box
Information Flow
Processes
34 34
Step Graph
Attributes
Value Stream Map

30 Year Fixed Mortgage Application Value Stream C urrent State Map
Client
Pre -application
8 hrs .
Application
80 hrs .
Approval /Title
80 hrs .
Closing Prep
40 hrs .
Financial data Credit Report Determ ine prgm
15 15 120
min min min
Verify em ply assets Underwriting Yield
&
60 120 70
min min %
O appraisal der & title File paperwork pending Yield
20 5 80
min min %
Notify parties & confirm Schedule location Print docs
120 5 120
min min min
(1 day ) 8 hrs
(10 days ) 80 hrs
(10 days ) 80 hrs
(5 days ) 40 hrs
150
min
180
min
25
min
245
min
Queue time = 208 hrs Value -added time =10 hrs (600 minutes ) Total lead time = 218 hrs (27 .25 days )
G adget Data
35 35
PCE = 4.6%
Value Stream Map

O rtho p ed ic P atien t C u rre n t S tate V alu e S trea m M ap
W ait tim= 2 00 m in u tes e V alu ea d de d tim = 1 0 4m in u tes e T ota l L e ad tim e 0 4 m inu tes =3 (5.06 ho u rs ) S hift= 1 2 ho urs
P a tien t
R e g is tratio n
1 5 m in s
T ria ge
3 5 m in s
E m e rge n c y R o om
2 0 m in s
R a dio lo g y
4 5 m in s
E m e rg e nc y R oo m
4 5 m in s
E R C a s tin g
4 0 m in s
D is c h a rge
Ve rify In s
m in m in m in
Vita ls C h ie f cm p l M ini e vl D ispe n se m eds
3 2 4 4
m in m in m in m in
R e che ck vita ls 3 M in i a ssm t C hie f cm p l Assess 3 2 5
m in m in m in m in
P o st p st O b ta in xra y P r ocess
3 5 15
m in m in m in
R e a ssess O btain xr ay Ict hc D ia g no sis
3 3 5 5
m in m in m in m in
C a st p t P t e d uc
30 5
m in m in
R e tu r n Ap p t 2 D isch a rg e re cp t 5
m in m in
U p da te Info 4 P ro cess 3
1 5 m in s
3 5 m in s
2 0 m in s
4 5 m in s
4 5 m in s
4 0 m in s
1 0 m ins
1 3 m ins
1 3 m in s
2 3 m in s
16 m in s
35 m in s
7 m ins
36 36
PCE =34%
Value Stream Map

Current State: 6-day lead time as shown
Weekly shipments: 700,000 lineal 50,000 pieces
5,350 finished pieces/day 5 From F/J: % 9 0 5 % % Sta gin g
Lam
I Crew #1 size: speed 58 Run 4 ft/min 500 Output: pieces/hr C/T= 7.2 sec 5 - 25 C/O= min % Crew:days= 100% swing = 0% % Reliability = 98% Waste = 1/2% Sec available 27,000 Weekly hr = 5
Resaw (4 saws) Crew size: 1 1/3speed 184 Run ft/min. Output:1,584 pieces/hr C/T= 2.3 sec 7 - 30 C/O= min % Crew Days =100% Swing =0% % Reliability = 95% Wa ste Sec available = 108,000 Weekly hr = 31.6
Molde r Crew #4 size: speed 300 Run 4 ft/min Output:1,285 pieces/hr C/T= 2.8 sec 5 - 45 C/O= min % Crew:days= 100% swing = 0% % Reliability = 98% Waste = 1/2% Sec available27,000 Weekly hr = 38.9
1 0 9 % 0 % I
2 6 8 pi ec es
4, 50 0 pi ec es
9 0 p 0 c 0 s
9 pi , ec 0 es 0 0
Pr Crew i size: speed: 3,15 l Run 3 m ft/min e O 1,350

ut pieces/hr C/T= 1.3 pu sec 1 min t: C/O= 1 hr % Crew:days =100% swing = % Reliability =73% Waste = 3% Sec available 27,000 Weekly hr = 18.5
VA Ratio 1:311
. 5 h r 1,034 sec
4 8 h r 230 sec
4 8 h r 280 sec
4 8 h r 130 sec
Production lead time = 521,874 sec Value-added time 1,674 sec
37 37
Value Stream Map

Future State: 1-day lead time as shown
Free up $50,625 inventory 96% improvement in lead time quality feedback Instant
95 % From F/J: 5 %
Weekly shipments: 700,000 lineal 50,000 pieces
5,350 finished pieces/day
Stagin g
Lam
I Crew #1 size: speed 58 Run 4 ft/min 500 Output: pieces/hr C/T= 7.2 sec 5 -25 C/O= min % Crew:days= 100% swing = 0% % Reliability = 98% Waste = 1/2% Sec available 27,000 Weekly hr = 5
Primed lineal cell Crew size: speed 300 Run 6 ft/min 1,285 Output: pieces/hr C/T= 2.8 sec 10 - 20 C/O= mins % Crew days =100%
% Reliability = 95 % Waste = 1.2% Sec available 27,000 Weekly hr = 38.9
268 pieces
4 ,pi 5 ec 0 es 0
. 5
3 h r
. 2 h r
VA Ratio =1:12 Production

lead = time 3.7 hr Value-added time 1,233 sec
38 38
h r
1,034 sec
199 sec
DecisionsDecisions Decisions
Is my company too small for Lean Process
Improvement?
Isnt Lean a manufacturing process? I am a
service business. Improvement?

All of these industries have successfully applied Lean to their processes
Can I afford to implement Lean Process
39 39
Lean Success Stories

Lean Dentist--A dentist in Jacksonville, FL used Lean Tools to achieve the following benefits Patient Hygienists Assistants Dentists Cubicles Year Hrs/Wk
available time for to dentists complete treatment 77 hours 99 days
2005 2006 Benefits
3 2 +33%
5 3 +40%
3 3
10 6
140 hours 38 days +82% +81%
No Change+40%
40 40

Lean Landscapersan Atlanta
landscaping company used Lean tools to achieve the following results:

Reduced the cycle time of financial
statements from 22 days to 5 days and critical errors from 7 to zero 36% at a 60 residential home complex reduced man hours from 56.2 hours/week to 35.9 hours/week
Boosted productivity of its maintenance crews
41 41

Construction Veridian Homes, Madison,
WI
Veridians Lean efforts have accomplished the
following:
Model-homes sold cycle time reduced from 32 to 15
days
Drafting time per model reduced by more than one
hour
Estimating time per home reduced by 32%
They achieved all this with a very small investment in siding ,and 30% for trim kaizen events.
42 42
Paperwork Inc Quantum Associates, processing decreased by 208 hours per
Material variance reduced 20% for lumber, 24% for
year

Lean Office
RB Royal, Fond-du-Lac, WI used Lean tools to
improve their quote process from 15 30 days to an average of 3 days. Some quotes are completed in 24 hours.
43 43
We Offer the Following Lean Implementation Options

Fast Track Lean 2 days For the tight budget- occasional help from a Lean facilitator
who works with your designated process expert.
Train-the Trainer 4 - 6 months Lean expert teaches and mentors in-house Lean Agent and
improvement team
Rapid Improvement Events 1 week

3-5 day commitment of your in-house team facilitated by a Lean
expert and focused on improving a particular process/value stream. Quick results method.
Walking the Gemba 3 weeks

Lean assessment of your organization by Lean experts and your in-
44 44
Quantum Associates, Inc Lean Office Simulation
house process expert to identify the improvement opportunities. This approach is useful when staffing is tight.
Getting Started
Value Stream Maps
The roadmap to problem identification Going from the current state to the future
state is the driver for eliminating waste

Your ultimate goal is to achieve the ideal
state-once you reach your future state let that become the new current state and create a new future state, and so on eliminate waste from your value streams
Waste is the enemy. Always strive to
45 45
Getting Started
Value Stream Maps
For support and administrative processes
Determine what data to include by the question you
are trying to answer about your value stream or process

Define the product produced by the process
Example: If your goal is to reduce days in receivable, you would define invoices as the product and identify the total number of invoices issued, cycle time and queue time for processing and collection, and total cycle time.
From this information you can determine where the
46 46
bottlenecks most likely occur and eliminate areas of waste in your future state map.
Getting Started
Kaizen
Synonymous with continuous improvement Associated with events that
Quickly implement Lean tools and techniques to
eliminate waste
Improve work flow Improve productivity Train workers in lean tools and techniques
It is the Lean technique that will move your

value stream from current state to future state
Conclusion
Lean is a proven, company-wide systematic
approach to eliminate/minimize waste resulting in the production of a good or service at the lowest possible cost confined to shop floor employees
It is not just a manufacturing program Lean is every system, every process, and
every employee within the organization
If you are the low cost producer of a good or service you have a competitive advantage and will be able to grow your business. Lean is the tool to reduce your costs.
LOOK INTO THE FUTURE
DO NOT BE AFRAID, MY FRIEND
chang es

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Growing Your Business Through Lean Process Improvement

Quantum Associates, Inc

The Cost Reduction Principle

In todays competitive market the customer sets

The only way to remain profitable and grow your

Quantum Associates, Inc

The Cost Reduction Principle

Cost + profit = price

Price Profi t Cost

Quantum Associates, Inc

The Cost Reduction Principle

Eliminating waste is important because

Quantum Associates, Inc

What is Lean Process Improvement?

Quantum Associates, Inc

What is Lean Process Improvement?

Every business is a collection of processes

Processes are sequences of steps that must be

Lean and Profitability

Quantum Associates, Inc

Growth Through Lean

Quantum Associates, Inc

What is Lean Process Improvement?

Leans unique tools, techniques, and

Lean fosters a culture in which all

What is Lean Process Improvement?

Products and services are produced only

Quantum Associates, Inc

Goals of Lean Process Improvement

Quantum Associates, Inc

Goals of Lean Process Improvement

services to meet or exceed your customers requirements

Goals of Lean Process Improvement

a series of tasks within a process. Some examples:

time payment is received finished goods

Goals of Lean Process Improvement

costs associated with the production of a product or service

and services prices and your operating costs to succeed.

Quantum Associates, Inc

Quantum Associates, Inc

that adds no value in the eyes of the customer activities

Quantum Associates, Inc

The Seven Deadly Wastes

The Seven Deadly Wastes

required for current customer orders

and finished goods

supplies, unnecessary copies, excessive unread emails, etc.

Quantum Associates, Inc

The Seven Deadly Wastes

too much of something, faster than needed, or before it is needed

Office/ServiceProducing reports before

they are needed, performing more analysis than required

The Seven Deadly Wastes

The time spent producing product/service

The Seven Deadly Wastes

work process to another

never be used again, updating customer records in different systems

Quantum Associates, Quantum Associates, Inc Inc

The Seven Deadly Wastes

Any movement of people which does not

Manufacturingoperators having to walk back and forth to

retrieve tools or materials not stored in the immediate work area