Lean Metrics

“Data is of course important in manufacturing but I place the greatest emphasis on facts”

Taiichi Ohno

Lean Metrics

Objectives

Understand the importance of measurements to each level of operations and management

Understand measurables◦ Meanings, calculations, importance

Understand how to use them in a production environment

Lean Metrics

Example Police in Alexandria, Virginia (outside

of Washington, DC, USA) were told that they had a quota of 25 traffic tickets per officer per month.

What do you think was the result? Did this improve traffic safety?

True Metrics

“Tell me how I will be measured, and I’ll tell you how I’ll perform”

-People will perform to how they are measured(if you want to improve an area, pay attention to it)(Hawthorn principal)

-Traditional methods cause resistance to change > 'Old' metrics provide comfort> Metrics often used as basis for incentive

Importance of Measures

What do we do with measures?-Take time for metrics FOR A REASON-measuring only for a report is MUDA-If no action is taken from metric

results, no metric should be taken

Actions need to be in positive direction-Are we managing problems or “shooting the messenger”?

Importance of Measures

Measurement Link to Customer Value

Performance measurement must tie directly to the goal of creating value for customers

A change in the value of a performance measure should be felt by the customer of the process◦ If metrics show a change and

the customer doesn’t perceive a difference, then we’re not measuring the right things or we’ve defined our customer incorrectly

Performance measures act as both identifiers and quantifiers of improvement

opportunities

Purpose of Performance Measures

Measure

Understand

Solve

Improve

• Measurement promotes understanding

• Solutions to issues enable improved performance

• Understanding supports the generation of good solutions

Good performance measures are:1.Simple – Use metrics that are easy to capture,

compile, and update. Complex calculations or excessive work may lead people to avoid them

2.Directly impacted – Process changes should have a clear and measurable affect on the chosen measures

3.Informative – Suitable metrics may not always reveal the source of an issue, but they need to alert us when problems exist

4.Limited in number – Each area should have only 2-3 key measures

5.Visually displayed – Results should be posted for all to see

Principles for Performance Measures

Alignment: Everyone can understand if they are supporting the goals.

Feedback and Control: share information in real time to catch problems before they affect customer.

Performance improvements: metric records are basis for PDCA improvement activities.

What is our Purpose in Measuring?

Go to see the actual place Make first hand observation Talk to the people Look for current measurement tools and

methods Know the real situation - don’t rely on old

data or reports (or even new ones). Insist problems are defined from facts.

Genchi Gembutsu - Go Beyond the Numbers

Quality – First Time Through (FTT) Delivery – Build to Schedule (BTS) Flexibility – Lead Time Total Cost

Productivity Material Use Machine effectiveness (oee)

Downtime

Measurables

Definition:Measure ability to produce defect free products the first time without repair.

Key Requirements: Implementation of well-defined standards Stable/ capable processes Sound maintenance of equipment Empowered and skillful workforce

First Time Through (FTT)

1. Defect: Loss or something cannot be repaired. Example: B or C grade components/shoes

2. Rework: Any part produced out of standard, that must be repaired offline or online with/without stoppage is considered rework. (rework inside of Takt time is not included)

First Time Through (FTT)

Core Value Stream FTT=Quality Rate (Cutting) x Quality Rate (Prefit) x Quality rate (stitching) x Quality rate (Stockfit) x Quality rate (Final Assembly)

Quality rate of Cutting : Measuring in pieces

First Time Through

Total # pieces produced

Total # pieces produced – (Defect+ Rework)Quality Rate =

Total # pieces = Daily target x # of pieces per pair

Total # half pairs produced

Total # half pairs produced – (Defect + Rework)Quality Rate =

Quality rate of Stitching , Stock fit & Final Assembly: Measuring in half pairs

Quality rate of Prefit: Measuring in piecesFor embroidery, HF, Upper Molding and the like, include in Prefit…and for those that come from a “supplier” or a brown-field part of the factory – just measure the bad parts received as defects.

First Time Through

Total # pieces produced/received

Total # pieces produced/received – defectsQuality Rate =

Bottom Process FTT: = Quality Rate (Outsole) x Quality Rate (PU) x Quality rate (PH)

First Time Through

Total # half pairs produced

Total # half pairs produced – (defects + Rework)Quality Rate =

Cutting:Total # pieces produced: 10,000Defect: 10Rework: 0 =9990

Prefit:Total # pieces produced: 8,000Defect : 5Rework: 42 =7953

Stitching:Total # half pairs produced: 998Defect : 2Rework: 120 =876

Stockfit:Total # half pairs produced: 978Defect 5Rework 140 =833

Outsole:Total # half pairs produced: 1,000Defect : 22Rework: 0 =978

PU:Total # half pairs produced: 1,000Defect : 48Rework: 60 =892

Phylon:Total # half pairs produced: 1,000Defect : 98Rework: 0 =902

Final Assembly:Total # half pairs produced: 973Defect 10Rework 150

=813

Daily Customer demand: 500prs/dayFirst Time Through

Definition:Measure the ability to produce products to a plan which considers volume, mix and sequence.

Key RequirementsNo OverproductionProcess capabilityReliable material deliveryEmpowered and skillful workforce

Build To Schedule (BTS)

BTS = (volume performance) x (mix performance) x (Sequence performance)

Volume Performance = actual # of units produced

scheduled # of units

Mix Performance = actual # of units build to mix

actual # of units produced

Sequence Performance = actual # of units build to sequence

actual # of units produced

Build To Schedule

Build To Schedule

Volume Performance = actual # of units produced

scheduled # of units

Actual # of units produced = 95, Scheduled # of units = 100

Volume performance = 95/100 = 0.95

Production Plan

A.CL BW Xcellerator A.Trblnc 9

Schedule 20 30 50

Actual Production

Xcellerator A. Trblnc 9 A. Cl BW

Actual 30 60 5

Build To Schedule

Production Plan

A.CL BW Xcellerator A.Trblnc 9

Schedule 20 30 50

Actual Production

Xcellerator A. Trblnc 9 A. Cl BW

Actual 30 60 5

Mix Performance = actual # of units build to mix actual # of units produced

Actual # of units build to mix = 5+30+50= 85, Actual # of units produced = 95

Mix performance = 85/95 = 0.89

BTS = (volume performance) x (mix performance)

Volume performance =0.95 Mix performance = 0.89

BTS = 0.95 x 0.89 = 0.85 = 85%

Build To Schedule

Definition: Measure the time required for material and

products to flow through the plant from raw material warehouse to finished goods warehouse.

Key Requirements: Continuous material and information flow A focus on plant/operation constraint areas Work groups focused on waste Level /sequenced production Reduction in inventory levels Small batch size More frequent material delivery/withdrawals

Lead time

Raw MaterialWarehouse

Raw Mat’l Storage Manufacturing Lead Time FG Storage

FinishedGoodsCut Stitch

Asse

mbl

e

PackWIP

WIP

WIP

WIP

WIP

Lead time - “Dock to Dock”

Upper Value Stream L/T: Lead time of (R/M Storage W/H + Cut +Prefit + Stitching + Stockfit +Final Assembly + F/G W/H)

Outsole L/T: Lead time of (O/S + S/F + F/A + F/G W/H) PU L/T: Lead time of (PU + S/F + F/A + F/G W/H) PHYLON L/T:Lead time of ( PHYLON + S/F + F/A + F/G W/H) Total DTD is the longest of the 4 measures above.

Upper Value Stream L/T: LT of ( Raw Mtrl Storage W/H + Cut + Prefit + Stitching + Stockfit + F/A + F/G W/H)

IF/GW/HII IWIP

Cutting

WIP

Prefit

WIP

Stitching

WIP

F/A

Raw MtrlStorage area

Lead time

Outsole L/T: LT of (Outsole + Stockfit + F/A + F/G W/H)

PU L/T: LT of (PU + Stockfit + F/A + F/G W/H)

Phylon L/T:LT of ( Phylon+ Stockfit + F/A + F/G W/H)

I IIWIP

P/U

WIP

S/F

WIP

F/A

IIWIP

O/S

WIP

S/F

WIP

F/A

I

I IIWIP

P/H

WIP

S/F

WIP

F/A

F/GW/H

F/GW/H

F/GW/H

Lead time of Cutting : 4 hours ( 0.5 day ) Lead time of Prefit: 2 hours (0.25 day) Lead time of Stitching : 6 hours ( 0.75 day ) Lead time of Stockfit: 2 hours (0.25 day) Lead time of Outsole: 5 hours ( 0.62 day) Lead time of PU: 4.5 hours (0.56 day) Lead time of Phylon: 4.5 hours (0.56 day) Lead time of Assembly : 2 hours ( 0.25 day ) Lead time of F/G W/H : 1.5days

* Daily customer demand is 3,000 pairs / 8 hours working day

Upper Value Stream Lead Time:0.5 + 0.25 + 0.75 +0.25 + 0.25 + 1.5 = 3.5 days

Outsole Lead Time:0.62 + 0.25 + 0.25 + 1.5 = 2.62 days

PU Lead Time:0.56 + 0.25 + 0.25 + 1.5 = 1.06 days

Phylon Lead Time:0.56 + 0.25 + 0.25 + 1.5 = 2.56 days

Total DTD is the longest of the 4 measures: 3.5days

Lead time

Definition: Measure the actual cost to produce a unit

of production. Note : Toyota focuses on the process of waste elimination.

Cost reduction is an outcome. Key Requirements: All production system tools (physical and cultural) Activity based focus

Total Cost

Total Cost per Unit: {material + Labor + overhead + B grades + customer returns }

# of good units produced in a given period

Total Cost

Notes:

Material Cost :all material actually used (not the specification or FOB calculation) including additional issued material.

Non-material cost : Labor + Overhead + B grades + Customer returns