Integrating Six Sigma and Lean Manufacturing The Challenges & Benefits

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Integrating Six Sigma and Lean Manufacturing The
Challenges Benefits

• Frank Garcia
• ADVENT DESIGN CORPORATION

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SIX SIGMA or LEAN MANUFACTURINGNeed to lower
costs reduce lead time?

• Material flow is poor
• Error rate is high
• Cant deliver ontime
• Equipment too slow

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Six Sigma or Lean Manufacturing?
LEAN MANUFACTURING Reduce Lead Time by
eliminating waste in the Value Stream Provides
the Game Plan and Plays
SIX SIGMA Reduce process
variation Provides the Play by Play Analysis
and Instant Replay
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Six Sigma or Lean Manufacturing?
LEAN MANUFACTURING Flow Focused Lean
cannot bring a process under statistical control
SIX SIGMA Problem Focused Can not
dramatically improve process speed or reduce
invested capital
NEED BOTH!
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Integrating Six Sigma with Lean Manufacturing

• Increases customer satisfaction
• Improves profitability competitive position
• Has historical integration problems
• Requires a different system model
• Requires implementation sustaining plans

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Lean Manufacturing System

• Goals are
• Highest quality
• Lowest cost
• Shortest lead time
• Achieved by eliminating waste in the value stream
• Industry benchmark Toyota Production System
  (TPS)
• TPS is applied I.E. and common sense
• Principle organization supports the value adder

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Definition of Value -Added

• Value is added any time the product is physically
  changed towards what the customer is intending to
  purchase.
• Value is also added when a service is provided
  for which the customer is willing to pay (i.e.
  design, engineering, etc.).
• If we are not adding value, we are adding cost or
  waste.

90 of lead time is non-value added!
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Value Stream

• The value stream is the set of all the specific
  actions required to bring a specific product
  (good or service) through the critical management
  tasks of any business
• 1. Information Management
• 2. Transformation

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The EIGHT Wastes

• Inventory (more than one piece flow)
• Overproduction (more or sooner than needed)
• Correction (inspection and rework)
• Material Movement
• Waiting
• Motion
• Non-Value Added Processing
• Underutilized People

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Six Sigma System

• A defined management process and CTQ goal (3.4
  ppm) 3 sigma is 66,807 ppm!
• Driven from the top
• Focused on Voice of the Customer
• A data analysis and problem solving methodology
• Strong focus on variation reduction
• Supported by highly trained problem solvers

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Uncovering Qualitys Hidden Costs
Traditional (Tip of the Iceberg)
5 to 8
15 to 20
Warranty
Scrap
Rejects
Rework
Lost Opportunities
Additional Costs of Poor Quality
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Six Sigma Variation Reduction
Process Variation Should be Less Than Specs
Variation Reduction is Cost Reduction
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Six Sigmas (?) Focus Reducing Variance
A process mean tells us how the process is
performing while the variance gives us an
indication of process control.
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What is Six Sigma (?) Quality?
Population mean (?) or average
With 6 ? Quality, approximately 3.4 items in a
population of 1,000,000 items would be
unacceptable.
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Six Sigma System
Improving Profitability A 1 Sigma Improvement
Yields..

• 20 margin improvement
• 12 to 18 increase in capacity
• 12 reduction in number of employees
• 10 to 30 reduction in capital

Source Six Sigma - Harry Schroeder
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Six Sigma Financial Impact Areas The Savings
Categories

• Cost Reduction (including cost at standard and
  costs not included in standard cost)
• Cost Avoidance (can be difficult to document)
• Inventory Reduction
• Revenue Enhancement
• Receivables Reduction

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Six Sigma System
A culture characterized by..

• Customer centricity What do they value?
• Financial results
• Management engagement involvement
• Resource commitment 1 to 3 of staff full time
• Execution infrastructure black green belts,
  teams

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Six Sigma Problem Solving Steps
Process
Breakthrough Strategy
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The DMAIC Cycle
Six Sigma In Action
SDCA
Define
Measure Analyze
Plan-Do-Study-Act Teams Benchmark Analysis
tools ID variability
Management Commitment
SDCA
Employee Involvement
Improve Plan-Do-Study-Act
Control
Design of Experiments
SDCA Standardize-Do-Check-Adjust
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Six Sigma Tools
Check Sheets Checklists of what is to be
accomplished,etc..
Scatter Diagrams A graphical representation
between two measurements (variables).
Fishbone or Cause and Effect Diagrams Provides
a starting point for problem analysis. Problems
are diagrammed into categories of Machinery,
Material, Methods and Labor (Manpower).
Pareto Charts A method for organizing errors
based on the number of errors created by a
particular attribute (ex. Machine, Supplier,
Product, Individual, etc.).
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Six Sigma Tools
Process Maps or Flowcharts Graphical
representation of a process or system showing
process or product transformation. In other
words, what is being done, by who and what
choices are being made.
Ideally process maps should include cycle times,
defect information, etc.
X-Y Matrix A ranking method used to prioritize
process inputs (Xs) to process outputs (Ys).
FMEAs (Potential Failure Mode and Effects
Analysis) A detailed document which identifies
ways in which a process or product can fail to
meet critical requirements.
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Six Sigma Tools - Process Maps or Flowcharts
What are the Xs (Input variables) at each
process step? What are the Ys (Output Variables)
at each process step?
Remember Y f (x)

• Remember Valued Added versus Non-Value Added

• Remember Cycle Times and Defects

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Traditional Six Sigma Implementation- Who is
Involved
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Six Sigma Information Flow
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The Bad NewsSix Sigma Program Implementation
Issues

• Some of the facts
• 80 of Six Sigma Implementations fail.
• Traditional Six Sigma implementations have
  largely been attempted at large Fortune 500
  Companies due to the large investment in people,
  training and overall support.
• Training costs alone for a wave of 25 people
  can cost 250,000 for this 4 to 6 month training
  period. Training costs and personnel requirements
  can overwhelm many smaller organizations.

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Need for Six Sigma Lean
External - Satisfying Customers..

• Quality, Warranty, and Cost
• Customers Require Six Sigma
• Customers Require Lean Manufacturing
• Competitors are implementing Lean Six Sigma
• Staying in business

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Need for Six Sigma Lean
Internal - Improving Profitability through..

• Operational Cost Reduction
• Improve Productivity
• Reduce Scrap and Rework
• Reduce Inventory WIP
• Engineering Design Cost Reduction
• Define-Measure-Analyze-Design-Verify (DMADV)
• Stabilize Quantify Process Capability
• Input for Product and Design Process

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Lean Six Sigma Model
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You Can Apply Six Sigma Techniques to Complement
Existing Lean Capabilities
Lean Training Implementation
VSM
Waste Reduction
Process variation
Inventory Reduction Control
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Lean Six Sigma Implementation
Historical Implementation Problems

• Only Six Sigma or Lean Implemented - big
  savings but money left on the table
• Separate Six Sigma Lean initiatives competing
  for best resources
• Difficulty in sustaining the gain

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Lean Six Sigma Implementation
Some Solutions.

• Need to implement in the correct order
• Policy deployment to align business objectives
  (Flow, Waste Variation Reduction)
• Focus on shop floor results, not class room
  skills
• Experienced teachers coaches
• Standardized work to institutionalize the gains

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The Lean Six Sigma Strategy

• Lean 6? is a CHANGE STRATEGY for accelerating
  improvements in processes, products, and services
  to improve a companys performance leading to
  improved financial performance and
  competitiveness of the organization.
• Goals

• Improved Customer Satisfaction
• Increased Profits
• Improved Process Capability by Reducing Variance
• Increased Market Share
• Support Continuous Improvement
• Sustained Gains for Completed Projects

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Lean and the 6 ? Structure
FULL TIME COMMITMENT
Problem solver, Teacher, Mentor. Expert in use of
the tools
M.B.B
Black Belt
Problem solver,Proficient with tools
Problem solver, assists Black Belt. Working
Knowledge of tools
Yellow and Green Belt
25-50
Functional 6Sigma Team Member. Familiar with tools
Problem Solving
Problem Solving Team Members Waste reduction and
Continuous Improvement
LEAN Manufacturing Practices
Training Costs- up to 2,500 Week (excludes
lodging, travel and salary)
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Why Not Rent a Belt (Black, Yellow or Green) Pay
for only What You Need to Solve Real Business
Problems?

• Easier for Small Business to Justify
• Focused on Solving Companies Problems
• Joint Problem Solving and Knowledge/Skill
  Transfer
• Easier to Meet Customer Mandates to Use Lean Six
  Sigma Techniques
• Provides Evolutionary Approach to Lean/Six Sigma
  Implementation and Training

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How Do We Use Lean Six Sigma Techniques

• Get Management commitment
• Assess the operation understand the Process
  using a Value Stream Map (Product families
  Production data)
• Identify lean improvements kaizens without
  automation
• Implement lean improvements using VSM plan
• Identify processes requiring Six Sigma analysis
• Analyze, eliminate, and control variation
• Start the cycle again!

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The Lean Six Sigma Cycle
VSM
Commitment Assessment
Recommended Solutions
Set Up Layout Cells Visual
Continuous Improvement
Variation Reduction
Implementation Plan
DO IT!
Information Systems
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Understanding the Process The 1st Step and
Foundation of Lean Six Sigma
Y f(X)
are a function
The Lean Six Sigma process attempts to control
the outputs by controlling the inputs (those
Critical to Quality or CTQs)
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Value Stream Map An Assessment Tool

• The value stream map follows the production path
  from beginning to end and shows a visual
  representation of every process in the material
  and information flows
• Shows how the shop floor currently operates
• Foundation for the future state

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Using the Value Stream Mapping Tool
product family
current state drawing
Understanding how the shop floor currently
operates. The foundation for the future state.
future state drawing
Designing a lean flow
plan and implementation
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Value Stream Map (Current State)
Orders Every 2 Weeks
Production Control
New Jersey Porcelain (Round Stones)
Randomly Placed Orders (Various Sizes)
Various Customers
Andrea Aromatics (Scented Oils)
Alanx (Shaped Stones)
Order as Needed
Average of 6,000 Stones per Day in Various
Size Orders (8 to 20 case 200 to 400 case range
mainly)
30 Cans of Oil Every 2 Weeks
59,000 Stones Every 2 Weeks
50,000 Stones Every 2 Months (via stringer)
Bi-Weekly Production Schedule
Daily Shipping Orders
Daily Shipments
Existing Work Cell
Soak Dry
Packaging
Labeling
Case Packing
Cartoning
Shipping
APAI Automatic Stapler
Ameripack Flow Packager
Manual
Manual
Multiple Batch Tanks
I
I
I
I
I
I
up to 250 stones in WIP
0
0
1 Operator
1/2 Operator
1 Operator
1 Operator
1/2 Operator
125 Cans of Oil 20,640 Round Stones 49,000 Shaped
Stones
4290 Stones
90,504 Stones
C/T 25 - 65 min. C/O 10 min. Rel. 100
C/T 1 sec. C/O 5 min. Rel. 85
C/T 3 sec. C/O 2 min. Rel. 80
C/T 1 sec. C/O N/A Rel. 100
C/T 2 sec. C/O N/A Rel. 100
11.6 Days
0.7 Days
15.1 days
27.4 Days Lead Time 65 minutes, 7 seconds
Value-Added Time
65 min.
7 seconds
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Value Stream Map (Future State)
Orders Every Week
Production Control
New Jersey Porcelain (Round Stones)
Randomly Placed Orders (Various Sizes)
Various Customers
Andrea Aromatics (Scented Oils)
Alanx (Shaped Stones)
Monthly Order
Average of 6,000 Stones per Day in Various
Size Orders (8 to 20 case 200 to 400 case range
mainly)
Bi-Weekly Production Schedule (large orders)
12 to 16 Cans of Oil Once a Week
30,000 Stones Once a Week
25,000 Stones Once a Month (via stringer)
Daily Shipping Orders
Daily Shipments
4 Cases
Existing Work Cell
Soak Dry
Packaging
Labeling
Case Packing
Cartoning
Shipping
APAI Automatic Stapler
Ameripack Flow Packager
Manual
Manual
Multiple Batch Tanks
I
I
I
I
I
up to 250 stones in WIP
0
0
1 Operator
1/2 Operator
1 Operator
1 Operator
1/2 Operator
75 Cans of Oil 40,000 Round Stones 25,000 Shaped
Stones
4290 Stones
30,000 Stones in a supermarket type
arrangement with stocking levels by shape and
scent
C/T 25 - 65 min. C/O 10 min. Rel. 100
C/T 1 sec. C/O 5 min. Rel. 85
C/T 3 sec. C/O 2 min. Rel. 80
C/T 1 sec. C/O N/A Rel. 100
C/T 2 sec. C/O N/A Rel. 100
Increase Reliability
10.8 Days
0.7 Days
5.0 days
16.5 Days Lead Time 65 minutes, 7 seconds
Value-Added Time
65 min.
7 seconds
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Questions to Ask About the Value Stream

• Is the step valuable?
• Is the step capable?
• Is the step available?
• Is the step adequate (capacity)?
• Is the step flexible?

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Lean ManufacturingConcepts Techniques

• Flow Setup Reduction, Cellular Manufacturing,
  Batch Size Reduction, Visual Workplace, Layout
• Pull Kanban Systems, Supply Chain Management,
  Point of Use
• Perfection Quality Systems including variation
  reduction, Training

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Road Map to Lean Six Sigma
Lean to improve flow and reduce inventory lead
timeSix Sigma for Process Variation in Value
Stream
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Low Productivity Electrical Device AssemblyThe
Challenge in Two Steps

• Client wanted wave soldering and robotic pick and
  place
• Functional operational layout
• Reject rate 5 to 8
• Extensive material staging
• No space
• Initially, 13 people in Aurora cell
• Low output 300 units/day

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Lean Six Sigma Techniques Used

• Process mapping
• Cellular Manufacturing Layout
• Balance Cycle Times Between Work Stations
• Reduce Batch Size parts staging
• Quality Data Collection Analysis (Reduce Reject
  Rate)

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Cellular Assembly Layout
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Cell Changes
REJECT DATA
AFTER CHANGES WORKSTATION CYCLE TIME 25sec.,
1.25 min. PER 3 UNITS
TEST SAMPLES
4
1
2
3
5
6
ATTACH BACK COVER, STAKE STRAP ATTACH STRAP
ASSEMBLY 1 COLD STAKE TEST PCBs
CONTACTS ASSEMBLY SOLDER
BUTTON BATTERY ASSEMBLY LABEL
GLUE SWITCH/ ATTACH STRAP
PACK
PCBs from supplier
INSERT SWITCH ACTIVATOR
REJECT DATA
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Lean Six Sigma Changes

• Cold staking fixtures
• Powered screw drivers
• Light test Soldering fixtures
• Quality data tracking via defect control chart
  (p chart)

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With Lean Six SigmaThe Results

• Balanced cell at 24 sec per work station
• Two U-shaped cells
• 3 piece flow
• 1000 units/day per cell vs 300
• 6 people per cell vs 13
• Faster identification of quality problems
• Operating at 5 to 6 sigma
• Better teamwork
• No backlog

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Reducing WIP Improving Quality Wire Extrusion
FinishingThe Challenge

• Client wanted to reduce WIP by 50
• Extrusion rejects (7)
• Material flow problems
• Little data collection

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Lean Six Sigma Techniques Used

• Value Stream Mapping
• Cellular Manufacturing Layout
• Kanban Trigger Board
• 5S
• Quality Data Collection Analysis (Reduce Reject
  Rate)

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Reducing Lead Time Improving Quality Steel
Panel FabricationThe Challenge

• Client wanted to reduce lead time to less than
  one week
• Automated equipment had been installed but had
  problems
• Panel rejects rework (5)
• Material flow problems
• Few process controls or data collection

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Value Stream Map (Current State)
Blanket Annual Purchase Order with Daily Releases
Production Control (normally working 24 to 48
hours ahead of promised shipment)
Randomly Placed Orders (normally single unit
orders)
Various Distributors ( 24 for Smith Corp.
6 for Jones Systems
Sheet Galvanized Steel (4 by 8 or cut)
Sheet Galvanized Steel (4 by 8 or cut)
Sheet Galvanized Steel (4 by 8 or cut)
Sheet Galvanized Steel (4 by 8 or cut)
Average volume of 1000 systems per month in
peak season. Customers are mainly distributors.
There are a few dealers.
Daily Production Reports
Daily Production Reports
Up to an average of 130,000 lbs daily in
peak season
Daily Shipping Schedule
Daily Shipments
In Straight Panel Dept.
Shear
Notch
Corner Punch
Stake Label
Bend
Shipping
Add Z Brace
Rack
Specialty Punch
Radius Band
1 Accurshear Automated Shear (P-3)
1 Manual Notcher (S-23) 1 Automated Notcher
(R-3)
3 Semi-Auto Punches (S-1, S-2, S-3)
1 Manual Brake (R-7) 1 Automated Brake (R-13)
1 Automated Machine (R-8)
1 Automated Machine (ACR)
1 Manual Table, 1 Jig-less Machine (R12), 1
Jig Machine (R1)
4 Semi-Auto Punches
I
1 Material Handler
2 to 5 days depending on pre-cut size
1 Operator
1/2 Operator
1 Operator
2 Operators
1/2 Operator
1/2 Operator
1/2 Operator
2 Operators
0 Operators
C/T 4 min. C/O N/A Rel. 99
C/T 2 min. C/O 4 min Rel. 95
C/T 2 min. C/O up to 30 min. Rel.
99
C/T 2 min. C/O N/A Rel. 99
C/T 5 min. C/O 30 to 60 sec.
Rel. 90
C/T 7 min. C/O N/A Rel. 98 to
99
C/T N/A C/O N/A Rel. 100
C/T 2 min. C/O N/A Rel. 99
C/T 8 min. (average) C/O 2 to 30
min. Rel. 80 to 100
2 to 5 Working Days, Lead Time 32
minutes, Value-Added Time
2 to 5 days
4 min.
2 min.
2 min.
5 min.
2 min.
7 min.
8 min.
2 min.
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Lean Six Sigma Techniques Used

• Value Stream Mapping
• Process flow diagrams
• Setup time Analysis
• Quality Data Collection Analysis (Reduce Reject
  Rate Variability)

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INITIAL IMPROVEMENT CONCEPTS
Improve reliability and changeover capability of
R1 and R12 machines. Reduce panel reject
rate. Work to 1 to 2 days lead time
Radius Band
1 Manual Table, 1 Jig-less Machine (R12), 1
Jig Machine (R1)
Rack
1 Material Handler
2 Operators
C/T N/A C/O N/A Rel. 100
C/T 8 min. (average) C/O 2 to 30
min. Reject rate 5 Rel. 80
to 100
2 to 5 Working Days, Lead Time
8 min.
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6 Foot Long Custom Radius Panel Fabrication
Trumpf Area
Straight Panel Dept.
Notch Punch (Trumpf Machine)
Panel Material
Bend Stake
Add Z Brace(s) (if required)
Raw Material Stock
14 Ga. Galvanized Steel (pre-cut 53-15/16 by
63-15/16 sheets)
Radius Band (R12 - Jigless Machine)
Ship
Label
Rack
WIP Stock
16 Different Panels with Various Cutouts
Custom Panel Dept.
Band Material
Shear Cut
Raw Material Stock
Partially finished panels are stocked in sixteen
different configurations. Panels are finished to
order. Work is done in three different areas as
noted.
11 Ga. Galvanized Steel (4 by 8 standard
sheets)
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Process ImprovementsSeparating Process Machine
Issues

• Common setup procedure
• Replace measurement gages
• Established process capability
• Implemented process controls for panel dimensions
• Identified realtime data requirements
• Completed identified maintenance actions
• Implemented PM program

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Why Lean Automation?

• After implementing lean improvements such as
  cellular manufacturing and setup reduction,
  selective automation can add value and reduce
  human variability.
• Richard Schonberger, June 2002

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New Radius Bending Machine R13

• Automated band cutting
• Servo driven adjustments from panel bar codes

• Online radius measurement and tracking

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R13 Capabilities After Lean Six Sigma

• Operates as a cell
• Runs two product families
• Changeover in less than 5 sec. within and between
  product families
• Cycle time reduced from 5 min. to 1.8 min.
• Realtime auto check of each panel with data
  collection
• Operating at 6 sigma

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Lean Six Sigma in the Fast Lane!
As lead time decreases..
the need for realtime data increases!
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Automation Provides Realtime Data to Control
Variation for Six Sigma

• Enhances Define-Measure-Analyze-Improve-Control
  methodology (DMAIC)
• Online measurement of process parameters
• Direct data input into control charts
• Provide realtime controls as control limits are
  understood

Process Control
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R13 Process Controls System Status
Realtime Data Collection for Six Sigma Analysis
Diagnostics for Rapid Identification of Problems
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Realtime Data From R13
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How Do We Use Lean Six Sigma Techniques

• Get Management commitment
• Assess the operation using a Value Stream Map
  (Product families Production data)
• Identify lean improvements kaizens without
  automation
• Implement lean improvements using VSM plan
• Identify processes requiring Six Sigma analysis
• Analyze, eliminate, and control variation
• Start the cycle again!

70
Lean Six Sigma
Methodology that maximizes shareholder value by
achieving the fastest rate of improvement in..
Customer satisfaction
Operating costs

Process speed(lead time)
Inventory invested capital
Quality
Operating flexibility
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Contact Information Advent Design
Corporation Canal Street and Jefferson
Ave. Bristol, PA 19007 www.adventdesign.com 800-9
59-0310 Frank Garcia, Director Planning
Producttvity frank.garcia_at_adventdesign.com