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Implementing Lean in Distribution
ANNUAL CONFERENCE 2006 Implementing Lean in Distribution Walt Willis MTD Products, Inc. May 8, 2006 ANNUAL CONFERENCE 2006 Personal Information • BS Mathematics, FHU • BS Mechanical Engineering, UM • MBA, MSU • Six Sigma Blackbelt • 100+ Kaizen Teams • HON (Shingijutsu) • United Technologies 2 ANNUAL CONFERENCE 2006 MTD… • Founded in 1932 • Headquartered in Valley City, OH • Privately owned • Diversified brands – Cub Cadet – Troy-Bilt – Yardman – Ryobi • Plants in U.S., Mexico, Canada & Europe 3 ANNUAL CONFERENCE 2006 History of Lean at MTD • Benchmarking (1998) • University of Michigan (1999) • Kaizen at Tupelo, MS (2000) • CAMP (2001) • Six Sigma (2001) • CAMP (2002) • Simpler (2002 – present) 4 Startup Lessons Learned • Choose an experienced Sensei • Choose the correct improvement philosophy • Communicate a consistent message often • Gain top leadership commitment • Empower employees • Link and focus measurements ANNUAL CONFERENCE 2006 Delivery Cost Improvement Sales and Profits Quality Customer Satisfaction Why do Lean? Growth 6 ANNUAL CONFERENCE 2006 What is Lean at MTD? “Lean is a systematic approach to identifying and eliminating waste (non-value-added activities) through continuous improvement by flowing the product at the pull of the customer in pursuit of perfection” The worst waste of all is realizing that you have waste and doing nothing about it. 7 ANNUAL CONFERENCE 2006 Lean Thinking • Key principles of “Lean Thinking”: – – – – – VALUE - what customers are willing to pay for VALUE STREAM - the steps that deliver value FLOW - organizing the Value Stream to be continuous PULL - responding to downstream customer demand PERFECTION - relentless continuous improvement (culture) (from Lean Thinking, Womack and Jones, 1996) • Think about 4 key performance goals: "on-demand, defect-free, one-by-one, lowest cost" 8 ANNUAL CONFERENCE 2006 All Activities Are… • Value-adding: – Any activity that physically changes the material being work on (not rework/repair) • Drilling • Designing • Loading • Painting • Non-value adding: – Any activity that takes time, material, or space but does not physically change the material • Sorting • Stacking • Counting • Checking ANNUAL CONFERENCE 2006 8 Wastes Manufacturing Administrative Injuries Underutilization/Stress Defects Correction Inventory Inventory Overproduction Overproducing Waiting Waiting Motion Motion Transportation Transportation Processing Processing 10 ANNUAL CONFERENCE 2006 VA vs NVA Traditional Manufacturing Value Adding 95 % NVA 5% Order Total Lead Time to Customer After typical ‘Engineering’ improvements Value Adding 97.5 % NVA 2.5% Order Total Lead Time to Customer 11 ANNUAL CONFERENCE 2006 How Are We Implementing? • Rapid Improvement teams • 7-week process • Dedicated resources at each plant • 8 to 10 teams per month per site • Everyone must participate 12 ANNUAL CONFERENCE 2006 Step 1: Value Stream Maps • Created by plant management • Completed in 2-3 days • Use Current State / Future State • Develop 12 month implementation plan • Develop 6 month work plan • Establish measurements / incentives / goals 13 ANNUAL CONFERENCE 2006 Value Stream Map Example Ideal State Tupelo Scheduling Corporate Production Master Schedule MRP forecast only when On pull Graphics Make to Order ٛ ٛ ٛ ٛ Elec tro ni c In fo rm atio On-Demand Defect Free 1-By-1 Lowest Cost n Make To Order Pacemaker process Value Stream Customer Handlebar Mach. Engines Vertical Value Stream Color Paint Transfer Bay Supermarket Receiving & Inspection Carton L3 Clinch Stud 3P Sequenced Pull Mower Assy. New Paint Systems SMED Distribution Std. Work SP H.A. 3P Black Paint Supermarket Std. Work Automatics Pull Systems Steel Weld Shop Point Of Use Complete TPM Chore Assy. Lane 7 C.A. Inbound FG Receiving Tiller Paint OBI Press Other Wrapper Stacker 3P Chipper VV Stream Std. Work Tiller Wheel Milk Run Pull Systems 5 Vendor Pull System SS Presses Plater Alternate Coating 3P Pull Systems 14 ANNUAL CONFERENCE 2006 Step 2: Rapid Improvement Events • Event topics developed from VSA • Team based • 3-5 days of full-time team activity • Focuses on a specific topic • Clear measurements and goals • Team accountable for impact by end of event 15 ANNUAL CONFERENCE 2006 Rapid Improvement Teams… • Made up of 6 to 10 people • Cross-functional • Dedicated for 3 to 5 days • Focused on one topic • Accountable for measurable improvement “Understanding theory in the head is NOT the problem. The problem is to remember it in the body, to make it instinctive. To have the spirit to endure the training is the road toward the winning in competition.” Taiichi Ohno, “The Evolution of the Toyota Production System”, Unpublished manuscript 16 ANNUAL CONFERENCE 2006 7 Week Process • 3 weeks before - preparation & communication • 2 weeks before - preparation & communication • 1 week before - preparation & communication • • • • • day 1 - current conditions day 2 - big changes day 3 - run the cell day 4 - standard work day 5 - presentation • 1st week after - all or nothing • 2nd week after - don’t relax • 3rd week after - sustain 17 ANNUAL CONFERENCE 2006 Implementation Lessons Learned • Communicate, communicate, communicate • Top management MUST be on teams • Preparation and follow-up are keys • Must involve everyone as needed • Lean must be made a part of everyone’s goals • Monitor the speed of implementation; sustain before moving forward 18 ANNUAL CONFERENCE 2006 Continuous Improvement Results 19 ANNUAL CONFERENCE 2006 Number of Teams 700 Total: 2750 600 500 400 300 200 100 0 2002 2003 2004 2005 2006 (YTD) 20 ANNUAL CONFERENCE 2006 Lean Honor Roll 700 600 500 400 300 200 100 0 2003 Gold (15 Teams) 2004 Silver (10 Teams) 2005 2006 (YTD) Bronze (5 Teams) 21 ANNUAL CONFERENCE 2006 Team Participation 2000 1800 1600 1400 1200 1000 800 600 400 200 0 2002 2003 Hourly 2004 Salary 2005 Other 2006 (YTD) Supplier 22 ANNUAL CONFERENCE 2006 Redeployments 400 Total: 949 350 300 250 200 150 100 50 0 2002 2003 2004 2005 2006 (YTD) 23 ANNUAL CONFERENCE 2006 Wheeled Goods Volume 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 24% 1,500,000 1,000,000 500,000 0 2003 2004 2005 24 ANNUAL CONFERENCE 2006 Lean Tool Usage SMED 4% 6S 8% TPM 8% Pull 8% Admin 6% 3P 5% PFMEA 4% VSA 4% VVS 4% CA 12% Std Work 37% 25 ANNUAL CONFERENCE 2006 Productivity Improvement 0.7 0.6 0.5 0.4 0.3 68% 0.2 0.1 0 2000 2001 2002 2003 2004 2005 Units / Hour 26 ANNUAL CONFERENCE 2006 Productivity Improvement $200 Revenue per Hour $180 $160 $140 40% $120 $100 $80 2000 2001 2002 2003 Fiscal Year 2004 2005 27 ANNUAL CONFERENCE 2006 Safety Improvement 60 50 40 71 % 30 20 10 0 2000 2001 2002 2003 2004 2005 Lost Time 28 ANNUAL CONFERENCE 2006 Quality Improvement 1.6 1.4 1.2 1 0.8 0.6 0.4 32% 0.2 0 2000 2001 2002 2003 2004 2005 Defects per Unit 29 ANNUAL CONFERENCE 2006 What’s Next? ONE BY ONE LOWEST COST Load-Load LotSize 1 Takt Time Output Setup Reduction 1-Piece Standard Work Flow 6-S Quality Checks Zero Defects DEFECTFREE Pull Systems TPM Leveling ON DEMAND 30 ANNUAL CONFERENCE 2006 Reasons Why Implementations Fail • Management is unwilling to take the risk or is not committed and as a result, sabotage the process • No one perceives or acknowledges the existence of a competitive threat to the business • Managers want to hit “home-runs” before building a solid foundation for change • Performance measures are used that drive non-Lean behavior • Political and organizational barriers get in the way • No commitment to being a learning organization • Perceived as a “manpower reduction” 31 ANNUAL CONFERENCE 2006 Thank You! Walt Willis V.P. Continuous Improvement MTD Products, Inc. [email protected] Please drop your completed session evaluation in one of the evaluation boxes throughout the halls. WERC conference sessions are noncommercial. Speakers have agreed to refrain from direct promotion of their product or services. 32
