"Make Green, Go Green, by

Going Lean

How to Go Green?
How to Go Lean?
Why?

Doing nothing is not an option!

Governor Arnold Schwarzenegger signed into
law emission reduction targets for California:
By 2010, reduce GHG emissions to 2000
levels,
By 2020, reduce the GHG emissions to
1990 levels,
By 2050, reduce GHG emissions to 80
percent below 1990 levels
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Green and Lean

15-30% of a manufacturing companys monthly energy

bill creates greenhouse gases.
The energy management within a facility - benchmark
competitors.
Lean methodologies can be used to reduce waste in the
consumption of energy within a manufacturing facility.
The ultimate goal - eliminate equipment not needed in
the process.
If elimination is not possible, minimize the use
plot energy consumption to predict maintenance schedules
and replacement cycles.

Analysis of Electric Industry CO2

Impacts
The electric industry cannot provide substantial
reductions in CO2 emissions in the near future to meet
goals
Limited potential to switch to greener energy near-term
CO2 reduction must come from reducing demand
supported by new energy efficient technologies
conservation programs
A market-based collaborative systematic approach to
demand reduction is a critical success factor (profit
potential)

The Economic Case For

Change
Asset performance management can
reduce energy consumption by 6% to
11%.
DOE has established a minimum 10%
energy reduction guideline as attainable
through the application of proper
maintenance and technology solutions.

G.A.S. Index: Global Asset

Sustainability Index
G.A.S. Index = Availability * Performance *
Quality *
Energy Efficiency
Availability = All downtime / Scheduled time
Performance = Actual output for scheduled
time / Design output for scheduled time
Quality = Total production minus defects or
rework / Total production
Energy Efficiency = Design energy
consumption/Actual energy consumption
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Example: Motor Efficiency

90,000 Watts

100 HP

76,000 Watts

1HP = .746 kWatts

15,400 Watts (17.4%)

Motor Efficiency Savings

Energy Savings = 90kW x 8,000 hrs./year x
(1-(.828/.94)) = 87,336 kWh/yr.
At an average cost of 11 cents per kWh, the
estimated savings would be $9,607 per year.
Motor operating cost:
(100 HP x .746 kW/HP x 8,000 hrs. x $.11/KWh )
/ .94 efficiency = $69,838 per yr.
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Repair v. Buy
Break even analyses must be based on
the increased cost of purchasing a new,
more energy efficient equipment versus
the energy consumption reduction.
The cost energy today ranges from 10-13
cents per kilowatt-hour.

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Lean Definition
A philosophy of production that
emphasizes the minimization of the
amount of all the resources
(including time) used in the various
activities of the enterprise.
- APICS Dictionary, 10th ed.

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Lean Enterprise
An enterprise with a focus on waste
elimination and the customers needs
in all parts of its operations,
manufacturing and administration.
Emphasis is given to lean structures
and processes, flexibility of response
and methods and techniques to
continually seize new opportunities as
they arise.
- APICS Lean SIG

12

Early Lean Processes

Mass Production

Early 1900s
Ford Motor Company was a pioneer
Assembly line production
High volume production
Limited number of products
Significant cost reductions

13

Today
More than 96% of all U.S. companies have less than 250
employees
Global competition / low cost labor
Demands by customers:

Higher quality
Innovation
Mass customization
Flexibility
Lower Costs

Limited resources
Source: U.S. Bureau of Census, 2004

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What is Lean?
It is NOT:
Collection of techniques or a methodology
Reduced staffing or low inventories

It IS:

A philosophy of manufacturing
Totally different way of thinking
A different value system
Seeks to eliminate waste (non-value added activities to the
customer)
Emphasis on flow manufacturing

15

What is Lean?
Lean Production
Total Quality Management (TQM)
Six Sigma
Cellular Manufacturing
Business Process Improvement (BPI)
Just in Time
Theory of Constraints
Zero Defects
SPC
TQC
Kanban

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Lean Characteristics
Focus is on the improvement of resource
utilization:
Equipment setup time reduced
Scheduled machine maintenance
Orderly, clean workplace
Pull production being used
JIT inventory control
Factory layout in work cell arrangement by
products
Active error elimination
Improved quality, etc.

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The Importance of Waste

Elimination
Lean deals with the elimination or
reduction of many types of nonvalue-added activities, often
referred to as waste
The driving force for waste
elimination is improved
value in the
products and services customers buy

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Seven Popular Wastes

Overproduction
Waiting
Excessive transportation
Inappropriate processing (the hidden
factory)
Unnecessary inventories
Unnecessary motion
Defects
- Taiichi Ohno
Toyota Production System

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The Nature of Wastes

1. Overproduction
Target and achievement unclear
Processes not statistically capable

2. Waiting
Operators waiting
Operators slower than production line

3. Excessive Transportation
Widely spaced equipment waiting
Forklifts not available when needed

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The Nature of Wastes

(continued)
4. Inappropriate Processing
Variability in operators performance
Processes not statistically capable

5. Inventory
Large safety stocks
Variable procurement lead times

21

The Nature of Wastes

(continued)
6. Motion
Double handling
Non-standard layouts
Equipment widely spaced from each other

7. Defects
Low material yields
Excessive process variability

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Correcting Wastes
1. Overproduction
Eliminate by reducing setup times.
Synchronizing quantities and timing
between processes.
Make only what is needed now.

2. Waiting
Eliminate through synchronizing work flow.
Balancing uneven loads with flexible
workers and equipment.

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Correcting Wastes (continued)

3. Excessive Transportation
Establish layouts and locations to make
transport and handling unnecessary, if
possible.

4. Inappropriate Processing
Why should this item be made?
Why is each process necessary?
Are any processes being performed that
are not part of the work flow?
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Correcting Wastes (continued)

5. Inventory

Reduce by shortening setup times.

Improving work skills.
Smoothing fluctuations in demand for the product.
Reducing all the other wastes reduces the waste in
stocks.

6. Motion
Study motion for economy and consistency.
Economy improves productivity, and consistency
improves quality.
Improve the motions, then mechanize or automate.
Otherwise, there is a danger of automating waste.

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Correcting Wastes (continued)

7. Defects
Develop the production process to prevent
defects.
Eliminate the need for inspection. At each
process, produce no defects.
Design processes to be failsafe (Poka
yoke).
Quality processes yields quality products
automatically.

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Can you think of other actions to

eliminate waste in your
company?

27

Leadership Function
Initiate needed change by
identifying a vision
Aligning employees to that vision
Motivating to achieve that vision

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Leadership
Lean Change Infrastructure
Champion
CEO
Plant Management/President
Vice President

Vision &
Lean
Strategy
Value
No Waste
Flow
Pull
Standard Work
JIT

Project &
Training Plans
____________________
____________________
____________________
____________________
____________________
____________________
____________________
____________________
___________

Sponsors:
Manufacturing
Engineering
Quality

Lean Office

Facilitator

Team

Team

Facilitator

Team

Team

Facilitator

Team

Team

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Transparent
Workplace
30

Transparent Workplace

Define Processes
Value-Added Activities
A Value-Added Step
Value versus Non-Value-Added
Value-Stream Mapping
Typical Process Flow Analysis
Visual Order The Five Ss
Visual Control
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Transparent Workplace
Processes Definition

A particular method of doing something

which involves a number of steps,
activities, or operations
Processes are found in manufacturing &
service industries
Example:
Manufacturing
Office

Grind

Turn

Mill

Drill

Type
Contract

Obtain
Signature

Type
Envelope

Mail

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Process
Map
2

Total Time: 10 Days

Value-Added Time: 6 minutes
Production
Control

Weekly
Orders

Supplier

Weekly
Orders

Customer

Weekly Schedule
Daily

Daily

Stamping

Weld
I

1 Day

1 Day
50 sec

Assembly
I

2 Days
40 sec

Paint
I

2 Days
90 sec

Shipping
I

3 Days
120 sec

Staging
1 Day

60 sec

Process Time Line

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Transparent Workplace
Value-Stream
Mapping
Process
Map customer requirements (orders)
Map order information flows
Map physical product/material flows
Map plant/office information flows
Add a process time line
Summarize current state
Ask questions at each step to
determine waste or non-value-added
areas
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Transparent Workplace
Summarize
Current
State
The % of value-creating time

The number of units of inventory

required to support a production unit
Total travel distance versus valuecreating distance

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What Are Value-Added

Activities?
Transparent Workplace
Add value to products & services that
customers are willing to pay for
Improvements that change a products or
services form, fit or function

Other activities use resources but add no

value

Some non-value-added activities may be necessary

Based on current knowledge or technology
Long term goal - Eliminate
Remaining non-value-added activities should be
eliminated now!

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Transparent Workplace
A Value-Added Step
A process that physically changes the
work passing through it that makes it
more valuable to the customer
A step requested by the customer - they
are willing to pay for it

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Transparent Workplace
Value versus Non-Value-Added
Value-Added Activities

Non-Value-Added Activities

Entering order
Ordering materials, supplies
Preparing drawings
Assembling
Shipping to customers
Processing customer deposits
Examining patients
Filing insurance claims
Dispensing event tickets
Fueling airplane

Waiting/sorting
Moving
Kitting/staging
Counting
Inspecting
Checking
Recording
Obtaining approvals
Testing
Reviewing
Copying
Filing
Revising/reworking
Tracking work

- Charlene B. Adair & Bruce A. Murray,

Breakthrough Process Redesign

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Value Stream Costing

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Traditional Accounting and Lean

Controls
System/Issue

Traditional
Accounting

Lean

Production Inventory
Control

Work Order
Production tracking
Inventory Cycle Count

Kanban
Visual signals
Five S

Procurement

Purchase order approval

Three way match in AP

Key Suppliers
Master POs
Supplier Certification

Quality of Products

Detailed inspection
Rework or scrap

Standardized work
Single-piece flow

Production Cost Control

Standard cost
Variance Reports
Analysis of Variance

Cell/VS CSFs and

measures
Analysis of Root Cause

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Costs Outside the Value Stream

Identify tasks not related to the Value Stream
Exp. - ISO 9000
These costs are not allocated to the Value Stream
They are treated as sustaining costs of the business
Budgeted
Controlled
No need for full absorption costing
Value Stream costing proves relevant, accurate cost info
about the Value Stream

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Transparent Workplace
Value-Stream
Mapping
(VSM)
Observe & record the flows of orders,
materials, goods and information for a
product family
Product family: A group of product variants
passing through similar processing steps that
use common equipment

Mapping identifies waste situations for

improvements
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What are some value-added

& non-value-added activities
at your company?

43

Transparent Workplace
Visual Order The Five Ss
To eliminate waste, you must first find it
Visual order makes waste evident and is a
good starting point for managing
resources
Toyota Production - Five Ss as the
method for exposing waste & poor
utilization of resources
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Transparent Workplace
Visual Order The Five Ss
Sort
Set in order
Shine
Standardize
Sustain
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Transparent Workplace
Lockheed & Boeings Six Ss
SORT

SUSTAIN

6S

STRAIGHTEN

SHINE

SAFETY

STANDARDIZE

46

Transparent Workplace
The Six Ss
Sort: Classify tools, parts, instructions into
necessary & unnecessary
Set in Order: Make it visible & easy to use; 3
Es = easy to see, easy to get & easy to return
Shine: Conduct cleanup to identify
abnormalities
Standardize: Put a system in place to readily
identify abnormal conditions
Safety: Identify & eliminate dangerous &
hazardous conditions
Sustain: Make a habit of properly maintaining
& following standard practices
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Transparent Workplace
Visual Control
Awareness of whats happening
Manpower: Skill levels, performance, continuous
training
Machines: Develop Maintenance schedules and use
them
Materials: Demand Signals indicating shortages;
shadow boards for location of tools
Methods: Standard Worksheets and Operating
Procedures
Measurements: Performance trends
Display schedule
Quality targets
Reductions in setup & lead times

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Pull versus Push Production

Strategy

Lean Principles
Value

Value
Stream

Flow

Pull

Perfection

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Pull
No one upstream should produce any
good or service until the customer
downstream asks for it
Kanban

Lean Principles
Value

Value
Stream

Flow

Pull

Perfection

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Push

Build product to forecast

Excess inventory
Poor utilization & distribution of product
Filled distribution channels
50% of all books manufactured are
shredded
Lean Principles
Value

Value
Stream

Flow

Pull

Perfection

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Pull

Design
Schedule based on actual demand signals
Produce exactly what the customer wants
Flow takes place throughout the supply
chain, not just inside your production facility

Lean Principles
Value

Value
Stream

Flow

Pull

Perfection

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Pull
Benefits
High throughput
Excellent protection against stock-outs
Higher flexibility
Less congestion
Shorter lead times
Higher customer service
Lean Principles
Value

Value
Stream

Flow

Pull

Perfection

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Perfection
Begins with visualizing the perfect
process
Continuous process to remove waste by
eliminating effort, time, space and defects

Lean Principles
Value

Value
Stream

Flow

Pull

Perfection

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Final Thoughts Lean and

Green

There is a social responsibility component to saving

energy and reducing the amount of CO2 emissions.
Green as a marketing tool.
Select an small area with high visibility and a
manageable number of variables for the first G.A.S.
Assessment and Lean project.
The journey is never-ending and definitely not easy
(especially at first) but the results are well worth the
effort.
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