QUANTIFYING LEAN MFG TECHNIQUES AND INITIATIVES

I recently conducted a Kaizen event for a Cellphone provider in their logistics department. By just applying the 5s in a small department of the company I evaluated the savings to amount to about $300,000.
They were doing some crazy things such as mixing good phones with defective. They use RF guns to scan the products, every time they scan a phone and it shows that it is a duplicate, they throw it in a big bin along with the damaged products and they later on sift the good products from the bad ones and put them back in inventory, by the time they do it, half of the good products are damaged.
I do not know what kind of business you are in but I am sure that there is a way to evaluate the benefits of Kaizen events if conducted properly.
Issa 

There are so many books that deal with that question, but none of them will give you a specific answer to your specific problem. You can go to Amazone.com or Barnes and Noble but I doubt that reading a book can in itself solve your problem.
The way I select my projects is this:
What department in a company is facing the most problems and needs urgent attention?
 I direct my resources (not necessarily financial) to that department. I gather a team composed of the stakeholders who can contribute to the problem solving including the line operators, even the janitors if they can be of some help. Armed with past data, we conduct brainstorming sessions and use all the quality tools at our disposal (Pareto analysis, Cause and effect analysis, regression analysis, control charts, process mapping, value stream mapping,… you name it), we work together in identifying the ways and means to improve the situation. We make projections on the financial impacts of the improvements because upper management usually likes it when you show bottom line improvement.
I hope that this will help.
Issa

I recently set-up a press area as a 5S unit. All items are labeled and put away carefully. This, and some aqttitude adjustments, have reduced set-up time from 2 hours to 15 minutes. This converts to dollars easily because we have an established burden rate. Let’s use $100 per hour for round numbers. 5S and Cycle Time Reduction reduced cost by $175 per Set-up. We usually have 2 set-ups per week on this press. Do the math, that adds up to a very significant savings for the small job shop I work for.

Kelly Thrasher,
If you want some real improvements in your bindery, then contact Mohammed  in Portland. He has done some wonderful things there using a mix of Six Sigma and Lean.
Good Luck,
Dr. Scott

What do you do with the residual time you save reducing cycle times; do you have sales to fill this time or are you able to reduce overtime, where is the real saving. And in what way do you show the benefit of hours saved; sales value or labour cost.
You said you have made savings on “In Run Make Ready” have these reduced material overusage, this would be a saving to the bottom line.
I quess the reason I’m a little sceptical is that I’ve worked on a large number of cost reduction projects, and in the early days the people who tend to count in business (accountants) could’nt find the benefits. These were usually on capacity improvement projects i.e. reducing cycle times, increasing equipment yields, but if the sales were not there to fill capacity released and with labour being a fixed cost accounts could’nt see the cash savings.
I’ve had consultants come into a business and free up capacity and show benefits calculated against sales. 
E.g. increased the running speed of an extruder which in turn increased unit output, this was then indexed against total available time to show a project benefit of £1.1M p/a. The only problem was that the additional sales were not there to fill this time, this is an example of a poorly defined project – there wasn’t a business need.
This is not to say that with this scenario the situation isnt any better, its just that the benefits are likely to be intangable. It does however put pressure on sales to find additional business.
Remember one of the seven original wastes; “overprocessing” making too much too soon adds real cost.
Mike.
 

Well, interesting discussion. However I agree and disagree at the same time, so you have put me in a world of termoil.
Firstly Mike, you have missed out the eighth waste, underutalisation of people’s ideas. It has been an observation that when we run 5S’s we have a higher return in people’s involvement and yield of people improving their processes and procedures that they are working on. This is something that can not be defined in a PDF or charter.
On another note, when you find that you can remove head count, it is not necessary to fire them in the true way of the western world, you simply don’t recruit in the future. An example of this is an automatic assembly for a product line has been proposed however the process is already under the takt rate required by the line, apart from the ROI calc being crap we loose the flexibility of that person.
The tools that we have in our armoury are only that, tools, they should be selectively used to reach our target or goal,  not everything should be done to improve the bottom line, there is also the future aspects of what we do.
On one of the projects I have a need for a 5S in an area, however i am attempting to distance myself of the dependancy for my running the 5S activities, so I am going to sign off a Requisition for £1500 for the two apprentices to 5S an area, knowing full well that there will be no return in hard savings. When these guys go and do a 5S in a more improtant area (in two weeks time) they will get it right, and then there will be hard benefits.
But I may be wrong.
T.

Hi Mike,
The wonder of writing on these things as e-mail is that meanings can be misinterpreted.
So what are the extra four? Also who came up with them?
Profit is indeed king! However, without the people you have no profit.
T.

Thanks for your positive words. Takt time reduction is crucial in large production. Many people confuse that with cycle time and end up with bottle necks or they complain about idle machines.
I’m at Superior Technical Ceramics

Manish,
Seven wastes, eight wastes…..12 wastes, its just a guide to a way of thinking.
If you feel that within communication there is activity that does not add value then challenge it. Its just a way of thinking……..Lean Thinking.
Mike.

we have 3 set ups a day !! Will you please elaborate on how you reduced set up time from 2 hrs to 15 minutes. A good work indeed !