Implementation Roadmap
for Lean Implementation
Suhas Gokhale
Lean Manufacturing
suhasgo@gmail.com
Suhas_gokhale@rediffmail.com
+ 91 9881075056
www.SuhasGokhale.com
CLUSTER METHODOLOGY
• INTERVENTIONS are
– Common Trainings
– Hand Holding Visits
– Monthly Review Meetings
– Plant Visits
COMMON TRAININGS
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Topics of training based on the Roadmap
Common Training for all cluster members
Each Co. to nominate 3 – 4 members
CEO & Coordinator to attend training
Coordinators to train other employees
Training will be spread over 10 months
One hard copy of the training material
shall be given to each unit (Co.)
HAND HOLDING VISITS :
PURPOSE
• To elaborate and customize what has
been taught in Training programs.
• To help the units to identify improvement
projects / activities, in line with what has
been taught.
• Discuss on the implementing the
improvements identified and suggest
different options.
• Review progress on the work assigned.
HAND HOLDING VISITS :
METHOD
• The units will be visited by the LMC and
the facilitators from OE and Tier I on
agreed dates.
• The Unit owner and coordinator to be
available.
• The coordinator of the Unit to record all
points of action discussed during the visits
and commit target dates.
HAND HOLDING VISITS :
METHOD …..contd.
• The handholding visits will seek more
information about the units for providing
appropriate solutions and implementation
method.
• Transparency and cooperation is needed
in sharing the information.
• Digital camera is strongly recommended
for capturing and analyzing “Before and
After” situations.
INTERNAL MRMs
• It is very much essential that Unit owner
conducts formal internal MRMs before the
cluster MRM.
• The purpose of internal MRM is to review
the progress in a formal way, identify gaps
and action plan to fill the gap and record.
• It is suggested to have following persons
in the internal MRM. The Unit owner, the
coordinator, the zone coordinators and
team members.
MONTHLY REVIEW MEETINGS
• MRM is a monthly meeting of
• Unit owner and the coordinators from
Cluster member companies
• Coordinators and facilitators from OE and
Tier I.
• LMC or his representative.
• Special invitees based on the need
– Experts / Industrialists
PURPOSE OF MRM
• To share the experience among the Cluster
members.
• To review the progress and results of the Cluster
members.
• For conducting the Training programs for Cluster
members.
• To have direct interaction between all key
persons involved in the cluster activities.
• To give / receive feedback on implementation.
• To share concerns and suggestions.
CONDUCT OF MRMs
• Frequency : Monthly
• Dates : Last Thursday of every month
• Timing : 10 am to 2 pm in conference hall
(LEAR / Sharda Motor)
2 pm to 6 pm factory visit
(hosting member company)
• Coordination : LMC, OE and Tier I
• Hosted by : A cluster unit shall host the
MRM by rotation
CONDUCT OF MRMs….contd.
Requirement of Venue
• Should accommodate 30 – 40 persons
• A computer, LCD projector, white board,
marker, audio arrangements.
• Tea / coffee / Lunch / snacks as
appropriate
CONDUCT OF MRMs….contd.
• The sequence of MRM is on the next page.
• The agenda will be finalized and distributed to all
concerned by LMC in advance.
• Lear to take lead in organizing.
• The cluster members MUST come prepared with the
presentations in the prescribed formats in SOFT COPY.
• The host company to take care of safe & time bound tour
of factory and explanations through volunteers.
• CD of all presentations shall be compiled at the end of
the project for circulation in the cluster.
TYPICALSEQUENCE OF
MRMs
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
ABE Enterprises
:
Guru Enterprises
:
Jay Industries
:
Raj Industries
:
Shiv mfg company
:
Shri Udyog
:
Star Engine
:
Yash Engineering
:
Raj Engineering comp :
Ram Fastners
:
29th Dec’11
25th Jan’12
23rd Feb’12
29th Mar’12
26th Apr’12
31st May’12
28th Jun’12
26th July’12
30th Aug’12
27th Sept’ 12
SUCCESS OF MRMs
It highly depends on
• The Unit owner, his coordinators, cluster
members attending the MRMs REGULARLY.
• Proper and detail presentations (ppt) by the
Units. Zone wise achievements, Learning during
the month, case studies.
• Conducting internal trainings to all employees in
the unit by the coordinator.
• Conduct and record of internal MRMs.
KEY INDICATORS OF
OPERATIONAL PERFORMANCE
7 Primary Indicators
1. Product Quality
2. Labour productivity
3. Stock Turnover (Inventory Turn Ratio – ITR)
4. Delivery Schedule Achievement
5. Overall Equipment Effectiveness (OEE)
6. Floor Space Utilization
7. Value Added per Personnel Cost (VAPCO)
KEY INDICATORS OF
OPERATIONAL PERFORMANCE contd.
14 Secondary Indicators
1. 5 S scores
2. SMED Index
3. Inventory Quality Control (Red, Grey, Green inventory)
4. Floor Space saving
5. Safety
6. Absenteeism
7. OT hours
8. Suggestions per employee
9. Employees Involvement in Improvement activities
10. Machine breakdown hours
11. Machine breakdown frequency
12. Energy Cost Savings
13. Improvements implemented
14. Value Added per person (VAP)
1. PRODUCT QUALITY
• This indicator measures Product Quality
Levels
• Expressed in ‘No. of defective parts per
million’
• This indicator should decrease over time.
• There are three indicators
– Customer complaints (No.s)
– Customer returns(ppm)
– In process Rejection (ppm)
2. LABOUR PRODUCTIVITY
• This is a measure of Productivity
• This is measured as the ratio between the
no. of accepted units made and the total
no. of employees hours associated with
the mfg. of these units.
• It includes Direct, Indirect & Admin staff.
• This measure should increase over time.
3. INVENTORY TURNS RATIO
• This measures how frequently the stock of
raw material, work in process and finished
goods are turned over in relation to the
material cost in the Sales revenue.
• Inventory levels are the key indicators of
the ‘Leanness’ of the process and are
directly related to the simplicity of
production flows.
• This increase over time.
3. INVENTORY TURNS
RATIO… contd.
• Unit Company should define its method of
calculation of material cost, inventory
compilation.
• Unit Company should take a stock of the
inventory of RM, WIP, FG on the last day
of the month and calculate the ratio.
• Include all materials owned, at
subcontractors, warehouse etc.
3. INVENTORY TURNS
RATIO… contd.
Material cost of sales in a particular month
ITR = ------------------------------------------- x 12
Inventory of RM + WIP + FG as on date
4. DELIVERY SCHEDULE
ACHIEVEMENT
• This measures how well a supplier’s
dispatches match the planned delivery
requirement of the customers.
• Unit of this measure is %
• This should increase over time.
=
Total no. of dispatches achieved
------------------------------------------- x 100
Total no. of dispatches planned
5. OVERALL EQUIPMENT
EFFECTIVENESS (OEE)
• This is a composite measure of the
Equipment Performance.
• This includes Availability Performance,
Operational Performance & Quality
performance of the equipment.
• This should increase with time.
• Unit of measure is %
• OEE = Availability Rate x Performance Rate x Quality Rate x 100
6. FLOOR SPACE AREA
• This indicator is measured as a ratio of the Sales
Revenue generated to the Sq. M of the Unit Co.
• It should increase over time.
• Unit is Rs./ Sq.M
• Considers shop floor, WIP, FG, Tool room,
unutilized space for this indicator
Sales Value of Production
Floor Space Utilization = --------------------------------Shop floor in Sq.M
7. VALUE ADDED PER
PERSONNEL COST (VAPCO)
• This is a financial measure that relates the
value added with the cost incurred towards
the people involved in the value addition
process.
• Unit for this is Rs. / Rs.
• This should increase over time.
(Sales value of Production – Variable Cost)
VAPCO = --------------------------------------------------------Total Personnel Cost
SECONDARY INDICATORS
These are for improving the Operations
• The 5 S Audit cum Score sheet is used to
measure 5 S score of the Unit Co.
• Unit for this indicator is %
• It should increase over time.
• It is improved through
• 5 S audit
• WPP (Worst Point Photography)
• FPP (Fixed Point Photography)
SMED Index
• This indicator is a measure of flexibility and
agility of the shop floor.
• The purpose of this indicator is to implement
‘Quick Changeover’
• It should reduce over time.
• Make a monthly trend graph for this indicator.
• Unit for this indicator is %
No. of changeovers in less than 10 min
Formula =
----------------------------------------------------- x 100
Total No. of Changeovers
INVENTORY CONTROL
(Through Red, Grey, Green tags)
• Inventory shall be controlled for RM, WIP,
FG
• There are three inventory types
• Red
• Grey
• Green
-
Not Required (in this Qtr)
Not required today (but in Qtr)
Required today (monthly demand)
• Actions are suggested based on the type /
tag of the inventory
FLOOR SPACE UTILIZATION
• This indicator is measured thru the Sq.M
of floor space saved thru improvements
• It can be office space or shop floor
• It should increase over time
• Unit is Sq.M
• Formula : Space Utilization = Floor Space saved
SAFETY
There are two measures for safety
• Accident Frequency Rate – No. of accidents
occurring in the Co. due to unsafe practices/
conditions.
– Prepare monthly chart for it. It should reduce over
time.
No. of Accidents
= ----------------------- X 1 million
Total man hours
Man hours lost
• Accident Severity Rate = --------------------- x 1 million
Total man hours avl
Absenteeism & Overtime
• This indicator measures the willingness of
the employees to come to the workplace
and perform value added activities
• This indicator should decrease over time.
• Unit is % Absenteeism & Rs. for Overtime
• Company to prepare trend graph
SUGGESTIONS PER
EMPLOYEE
• This indicator measures the morale of the
employees and readiness to accept the
change initiatives within the work
environment
• Unit is No. / person
• This should increase over time
Total No. of employee suggestions
Formula : ---------------------------------------------Total no. of employees
MACHINE BREAKDOWN
• B’down includes machine stoppage due to
• Mechanical faults
• Electrical faults
• Electronic faults
• Unit of this indicator is hours & No.s
• It should decrease over time.
• Co. should make a monthly trend graph
ENERGY COST SAVINGS
• This indicator is a measure of energy input
cost reduction in the working of the whole
organization.
• Unit is Rs.
• Energy savings may be Electrical energy,
Fuel savings etc.
• It should increase over time.
• Co. should make a monthly trend graph
IMPROVEMETS IMPLEMENTED
• This indicator is a measure of employee
participation levels.
• Unit is No.s
• It should increase over period of time.
• Co. should make a monthly trend graph
VALUE ADDED PER PERSON
(VAP)
• This is a financial measure that relates the value
added with the No. of people involved in the
value addition process.
• Unit is ‘Rs. / Person’
• It should increase over period of time.
• Co. should make a monthly trend graph
(Sales value of Production – Variable Cost)
VAP = -------------------------------------------------------------Total No. of persons (Direct, Indirect & Admin)
Variable cost includes cost of RM, BO, Sub contracted
processing, consumables, power, payrolls etc.
Q&A
Thank You!