PMO Canada

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Hidden waste hidden cost

• The impact of non-value added activities

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Agenda Hidden Waste Hidden Cost
1. Identifying sources of waste
2. A link between quality waste?
3. Reduce waste with CI activities
4. Questions and Wrap-up
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Any activity or unproductive process step that
does not add value to the product (or service) is
considered wasteful.
Obvious Non-Value Added activities
Activities that add Value
Activities with hidden waste
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How many types of waste are there?

• Answer 7 (common) 2 (lesser known)
• Waste of Motion
• Waste of Waiting
• Waste of Conveyance
• Waste of Inventory
• Waste of Extra Processing
• Waste of Overproduction
• Waste of Repair
• Waste of unused talent
• Opportunity not exploited () business risks

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ENABLERS of WASTE
MAN
MATERIAL
METHOD
MACHINE
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Q Which is the worst Waste?

• OVERPRODUCTION
• Why? Because overproduction impacts all of the
  following
• Labour usage
• Equipment utilization
• Work flow

• Batch sizes
• Lead time (time from process start to finish)
• Conveyance
• Workplace layout
• Inventory R/M, WIP, finished goods

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Waste of Overproduction

• Any products produced ahead of or in excess of
  demand is considered wasteful
• Making extra photocopies of reports or meeting
  minutes
• Scheduling O/T to produce safety stock
• Large batch sizes (more than 1)
• Beating Takt time friendly competition

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Takt Time

• Takt time Daily time available for work
• Daily volume to meet demand
• 2 shifts, each with 7 hours of available time
  50400 sec.
• Demand is 250,000 units per year / 240 working
  days
• Takt time 50400 / (250,000/240)
• Takt time 48.4 seconds per part

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INVENTORY (cost not asset)

• Any materials purchased or produced in excess of
  the minimum number required for the operation or
  demand is considered wasteful.
• Unused supplies in office cabinets, stockroom or
  maintenance stores.
• Ordering and or holding safety stock
• Work in Process batches of unsold products
• FISH vs. FIFO (potential for obsolescence costs)
• Excess inventory is normally the result of poor
  planning (scheduling, estimating) or inefficient
  processes

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Inventory hides threats/risks

• Inventory is like the WATER that keeps the boat
  afloatbut it may also hide many risks.
• Obsolescence, spoilage, rust coat
• Unknown defects, inspection costs
• Inefficient ordering, scheduling, PM
• Borrowing costs interest, capital

As the level of inventory drops the more
apparent the threats become.
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Extra Processing (Gold Plating)

• Any non-standard methods or activities that adds
  lead time to the process.
• (typically 95 of all lead time is non-value
  added)
• Follow up calls to confirm that order information
  is correct
• Inspection activities re-test

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Extra Processing (Gold Plating)

• Adding costly items or work with no real benefit
  for the customer
• Hand-filing flash due to a poor trim die
  condition
• Setting acceptance standards beyond customer
  expectations
• Capital overspend on tools and equipment (budget
  spend it or loose it)
• Going Hi-Tech when Low-Tech will do just fine
  i.e. NASAs 1m Space Pen

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Poor Quality or Repair

• Repairing, replacement and disposing of
  substandard items can be very costly
• Printing to the wrong printer
• Order processing errors
• Wrong items used or shipped
• Adjustment errors exceeds spec. limits
• Set-up errors breaks tooling
• Design mistakes and oversights
• Warranty claims or recalls

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10 ways miztake are mayd

• Forgetfulness where are my car keys?
• Errors due to misunderstanding listen
• Errors in identification two items look similar
• Errors made by amateurs lack of experience
• Willful errors running the yellow light

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10 ways miztake are mayd

• Inadvertent errors missing the stop sign
• Errors due to speed/slowness delays in judgment
  braking too late for the red
• Errors due to lack of standards
• Surprise errors malfunction or tool breakage
• Intentional errors a deliberate act

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Group Exercise

• On the hand-out, list examples of mistakes that
  you have encountered or made
• Discuss why and how these mistakes happened
• Sources Work, home, school, relationships

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Common Failure Costs (COPQ)

• Warranty or returns
• Customer loss/bad will
• Environmental costs disposal fees
• Replacement costs
• Field Service
• Expedite costs

• Rework, sorting
• Delays, yard holds
• Re-design
• Shortages
• Re-test, inspection
• Downtime
• Downgrading

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Some Hidden Failure Costs

• Excessive overtime and Labour costs
• Service expenses / travel expenses
• Excess inventory costs
• Loss of excess or unused capacity
• Excessive IS system/communication costs
• Employee fluctuation/turn-over
• Development costs for design failures

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Conveyance Waste

• Any handling or transportation that increases
  the risk of product damage or delays
• Parts not stored near their point of use
• Poor Work flow spaghetti map for operations
• Cell design creates extra material handling
• Container or flow rack designs limit
  accessibility
• Conveyors that stretch long distances (create WIP
  between operations)

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Motion (Work Flow Ergonomics)

• People or equipment motion that does not create
  value
• When the work overburdens or becomes difficult
  for people - Muri
• When equipment is run at a rate greater than its
  designed capacity - Muri
• Work fluctuates or is unevenly distributed across
  people or production lines - Mura

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Motion (Work Flow Ergonomics)

• Not following standardized work adds work
• Poor ergonomics impacts productivity
• Work cell layout that creates unwanted walking or
  reaching motions
• Lengthy set-up or change-over processes
• Poor visual signals/controls leading to go and
  see motion
• Over complicated processes - streamline

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Delay (Waiting / Bottlenecks)

• The time wasted waiting for something
• Unplanned delays
• Waiting for approvals / information / phone call
  / e-mails
• Machine capacity lost due to longer cycle times
  machine plc logic
• Process starved and waiting for next part from
  load robot bottleneck at load.

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Talent not used

• Staff not challenged to be innovative
• Mundane work, no outlet for creativity
• No expectations to make suggestions
• Lack of involvement in problem solving
• Training not used nor shared
• Minimal development and coaching
• No Change Agents identified
• Tacit knowledge, stays with the individual

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Impact to the Bottom Line
Where to Improve
Improving the bottom line
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Continuous Improvement

• Error and Mistake Proofing
• Self-Inspection, in-line process verification
• Storage of product at point of use
• Quick changeovers Set-up methods
• Value Stream Mapping / process matrix
• Work and process instructions
• Cellular layouts optimize operations and work
  sequencing (balance burden)

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Error Proofing (Poka-yoke)
How many mistake proofing elements do you see? 2
4 6 more?
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Error Proofing (Poka-yoke)
How many error proofing elements do you see? 16
simple elements
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Poka-Yoke of dead/lost cell phone
Put car keys wallet in this shoe
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Teaching Poka-Yoke concepts
A very simple tool to teach error proofing
concepts orientation, size, location
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Self Inspection Tools
Individual simultaneously completes check-out
process and self-check
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Quick Change Over
Skate / clamps allow for quick set-up and easy
removal
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Quick Change Over
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Quick Change / Set-up
Ferrari will change all four tires in 3.8 seconds
70 L of fuel in 7 sec.
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Value Stream Map
All operations and process steps are presented in
order waste?
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Cellular Layout for Work Cells
Note that the button keys are located in logical
order Good ergonomics less wasted
motion Functions are grouped together Screen
provides instant visual feedback Audible feedback
functions included
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Continuous Improvement

• One piece flow smallest possible batch sizes
• Visual and Audible Indicators status at a
  glance
• Ergonomics for stations, flow racks, bins
• Effective change management
• Effective Project management
• Immaculate housekeeping

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VISUAL SIGNALS - ANDON
Too many
Too few
Go and see the problem
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KANBAN SIGNALS
KANBAN triangle is moved to signal rail once the
min. level of inventory is reached Produce part
number 15455 now / part number 15454 last to be
replenished
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KANBAN VISUAL INVENTORY
Inventory control at a glance replenishment and
rotation by date code
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INVENTORY CONTROL FOOTPRINT
Pack controls quantity, size/weight and grade,
orientation stems up
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DESIGN CHANGES FIX IT
New packaging design eliminates hassle of
removing brush from its wrapper
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Prevention Activities - COGQ

• Quality Planning / Engineering / Audits
• Supplier development / preparation
• Product reviews and design validation
• Error and Mistake Proofing (Poka-Yoke)
• Continuous Improvement teams
• Quality Improvement projects
• Quality awareness and Mind-set

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A new Mind-set Preventive Maintenance example

• Maintenance is rewarded for making quick repairs
  when breakdowns occur (reactive)
• Should be rewarded for effective PM and
  prevention of downtime before the event actions
  (pro-active)
• i.e. PM detects crack in main gear before it
  fails and halts the line.

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Effective planning for projects

• Risks also include opportunities a missed
  opportunity is also a waste.
• Do risk management risk assessment
• Effective planning results in shorter lead times

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PLANNINGD-C-A cycle
Long PDCA development cycle
DO
PLAN
CHECK
ACT
OPERATIONAL
Less lead time less waste
Shorter PDCA development cycle
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Questions, Comments

• Thank you.