Page 264 - How To Implement Lean Manufacturing

242 Cha pte r S i x tee n

• With 5 percent less raw materials, they could produce more product, and quality
leakage to the customer was also reduced. Raw materials costs dropped
dramatically.
• The financial performance of each line was increased by an average of over
20 percent, with all factors taken into account. Line 9, which, when we started,
was about 30 percent in the red, had turned the corner and was now in the
black, making money.

The Financial Results Put in Perspective
The financial results are even more impressive when put into perspective. Prior to the
initiative, the process engineers were working almost solely on solving quality prob-
lems. If they were able to improve the quality yield by 1 or 2 percent on a yearly basis,
that was considered good progress. So, figure it out. At about $0.50/unit, making 30,000
units per day, a 2 percent increase meant an incremental gain of over $100,000/yr to the
bottom line. That was their definition of “good progress.”
We had completely changed the paradigm of achievable progress. Now we were
making progress at not 2 percent per year, but 20 percent, and in less than six months.
This was ten times as much in less than half the time. Our rate of improvement was now
20 times larger!

How Did the Quantity Control Activities Work Out?
Besides working on OEE, during this period we carefully implemented some other
Lean techniques on Line 9. For example, on Line 9, which had a particularly problem-
atic process flow, several changes were made.

• Several work stations were modified and two were eliminated by combining
with other work stations. This involved process simplification and improved
flow.
• Kanban were installed to connect the “island processing scheme.” This resulted in
improved flow, using pull systems with vastly improved inventory controls.
• We slashed the size of the kanban containers (transfer lot size). Here, the Lean
technique was that the minimum lot size was reduced to accelerate flow, this
reduced the manufacturing lead time from 38 to 4.5 hours.
• The final goods inventory was recalculated, set up with cycle, buffer, and safety
stocks. A heijunka board using production kanban was installed to complete the
pull system.
• There had been a materials delivery position that was staffed during only part
of the shift. We made it a full-time position and added the kanban movement to
his/her duties. We formalized both a materials delivery route and a schedule.
• In addition, we prepared a present state and a future state VSM for Line 9.

Were They Now Ready for Quantity Control?
Following our third eight-week plan, we completed another assessment on the Five
Precursors. These three lines received scores of 12 to 13.5, with no Precursor scoring less
than 2. We weren’t yet done, but we had already made huge progress. Each line still had
a huge upside, just in the precursors alone. Look at the chart in Table 16-5 to see the
huge remaining opportunities—and all this without any major capital expenditures.