Introduction to Kaizen, Kyosei and Obeya

How to be Creative, Innovative, Fast & Flexible

Dr. John Blakemore

Principal Innovation Blakemore Consulting Intrernational

National President Manufacturing Society of Australia

Advisor to Australian Government on Innovation and Research and Development

1. Lean manufacturing is a Japanese Pull System which maximises throughput and profit with minimum inventory and waste.

2. This method is employed with great success by Toyota, Honda, Canon, Panasonic, and all globally competitive manufacturers.

3. This method employs, Value stream mapping, pull systems, SPC, Six Sigma and other Deming

techniques.

4. The key words are KAIZEN & KYOSEI & OBEYA.

What is Lean Manufacturing?

Kaizen & Kyosei& Obeya

• Kaizen = Continuous Improvement

• Kyosei = Living and Working Together for the common good

• Obeya = Big Room

Waste

• Expenses (P&L Bal Sheet)

• Resources ($,Plant, People, Material etc)• Planning System

1. Develop a Pull System with Continuous Flow2. Enhance People skill, flexibility and Teamwork3. Achieve Shorter Lead Times4. Have Less Inventory and Waste5. Use capital more effectively6. Maximize Value Added7. Improve Quality8. Have Less Defective Product and Process9. Reduced Time to Market for new Products10.Improve Information and data flow

Aims of Lean Manufacturing

Lessons from The Best Companies in the World

1. John Blakemore in Sept and Oct 2006, visited some of the best companies in the world including, Honda, Toyota, Canon, Mazda, Kawai, Panasonic as part of an investigation to add to our understanding of Lean Manufacture.

2. These lessons can be applied to all manufacturers.

3. To the list of Lean we now need to add Kyosei, (inc Karakuri and the German Meister system).

BuyingDecision

ServiceValue

Creation

CoreProcess

StrategicAdvantage

forWinning

Value CreationValue Chain

Customer

PeopleMarketing&SalesInnovationFinanceOperations

CustomerValue

SUPPLY

Pull Systems:1. Reduce and cap Work In Process(WIP)2. Make by Replacement or MTO3. Aim at limiting cycle time variability4. Aim at Continuous WIP (CONWIP)5. Kanban = linked processes6. CONWIP = pull from FG Supermarket7. MRP = push to FG8. CONWIP is the most Robust System

The Magic of Pull

1. Once value is added to a product, the product must continue to have value added.2. No queuing, idle time or stopped flow3. Remove or speed up the bottlenecks4. Synchronise…look at a Formula 1 pit-stop

Continuous Flow

Minimise Waste

Waste can be in the form of :• Material• Time (total, lead etc)• Space• Money• Tampering ( Changing )• Double Handling• Breakdowns• Band-Aid “Solutions”• Setups, Cleanups, Idle Time,• Inventory (RM, WIP, FG)

Japanese Inventory

Lead Time Reduction

Effectiveness

1. Quality, Cost, Delivery (OTD)2. Lead Times3. Stock Turns4. Working Capital5. Waste %6. Quality Indices7. Time to Market8. Net Tangible Value9. ROI, RONA, 10. EBIT, VA

Key Performance Indicators

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Months

Output

Pirelli ..Output & Defectives

Defectives

Maximise Value Added

1. Keep the product moving to customer2. Run Time/ Total Time maximised3. Maximise use of Tools and Jigs4. Use clear labels5. Eliminate non value added steps 6. Push to Pull

PROCESS PARTS (6)

1 2 3 4 5 6

1 - Setup(Preparation) 2 - Run(The Value Added Step)3 - Maintenance (Preventive)4 - Breakdown(Errors & rework)5 - Idle(available to run but not utilised6 - Cleanup

VA = 2,(3)? = Run + Preventive Maintenance

Eliminate • Breakdown • Idle • Setup? ( SMED) • Cleanup Concurrent Engineering

Value Added

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Sales Gross Profit Expenses Net Profit Before Tax

Elements

Cos

ts a

s P

erce

ntag

e of

Sal

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A Now

B OS Labour

C QR 1

D QR 2

Costs in the Supply Chain Labour

Manufacturing or Service?

There is no such thing as a pure Manufacturing Company All companies are Service Driven

The Solution

Lean Customer Service Driven•Cooperative Culture•Strong Relationships•Team Cross Functional Structure•High Velocity•Accurate Information•Short Time Periods•Synchronised Processes•Pull not Push•Dynamic not Static

1. Hazard: 800% productivity gain in 18months2. Pirelli : Output doubled, NP from –5% sales to 15% profit3. CSFB: $40M fr WC , OT D 32% to 95%, Loss to $40M EBITA4. Tannery: Colour defects eliminated from 15% defective5. Steel Fabricator: Plant redesign, Mat Handling $ halved6. Computer Supplier: Loss $60,000 to profit $1.0M I year7. Aluminium Fabricator: Productivity doubled in 6 months8. Speedo: QR to retailer, inventory down, service up.9. 14 Plastics Companies: All increased bottom line in 1 yr. 10.Geelong Cement: Productivity Gain of 25% in 6 months11.Warkworth Mine: Productivity Gain of 16% in 6 Months12. BHP to PVA: RM Inventory reduced from $1.5M to $60,000

Recent Achievements

EBITA for 6 Months Periods

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July Dec2001 Jan-June2002 Jul-Dec2002 Jan-June2002 Jul-Dec2003 Fcast

6 Months Period

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s o

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What Has Been Done (Shaw Australia)$300M T/O

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Months

Output

Lean Production, Pirelli (Italy, Australia) (Loss to Profit then Float)

Defectives

CHROMIUM(Cr) CONTENT(ppm) EFFLUENT

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TWO WEEK INTERVALS

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pm

)

Removing Variation, Cr in Effluent (Saving a

Tannery)

The End