Improving Operational Efficiencies

Improving Operational Efficiencies Through
Lean Manufacturing
May 2010
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2
ADVICE IMPLEMENTATION
Operational
Assessment
Optimized
Facility
Design
Improvement
Implementatio
Detailed
Design
Support
Manufacturing Advisory Services

Definition of Lean
A management philosophy/ strategy that focuses on eliminating
wastes in manufacturing. Waste inflate costs, lead times and
inventory requirements. By eliminating waste, quality is improved,
and production time and cost are reduced
Lean principles come from the Japanese manufacturing industry.
For many, Lean is the set of "tools" that assist in the identification and
steady elimination of waste.
The original seven wastes are:
Transportation
Inventory (raw material ,WIP, and finished product)
Motion (people or equipment moving or walking more than is required)
Waiting (Down time)
Overproduction (production ahead of demand)
Over Processing (resulting from poor tool or product design creating activity)
Defects (the effort involved in inspecting for and fixing defects)
3

Wastes in Injection Molding
Waste in:
1. Raw material
2. Overall Equipment/ Plant Efficiency
Machine Availability (Scheduled/ Unscheduled down time)
Machine Performance (Cycle and cavitation)
Rejects
3. Labor
4. Over production
Conformance ratio
5. Inventory
WIP, FG, and spare parts
6. Product flow/ Transportation
7. Production lead time
Value stream mapping
Push vs. Pull system
8. Energy
9. House keeping
4

Waste in:
1. Raw material
Rejects
3. Labor
4. Over production
Conformance ratio
5. Inventory
8. Energy
9. House keeping
5

6
Material is the largest contributor to operational cost regardless of
market type

Any reduction/ elimination of wastage in material directly impacts
bottom line
9%
2%
3%
7%
3% 2% 2%
1%
2%
24%
Automotive
Large Tonnage
60%
PET
Preform
85%
Material
Primary Equipment
Energy
Labor
16%
6%
7%
1%
1%

Closure
molders
18%
5%
2%

Custom
molders
Building & Infrastructure
Maitenance
5%
69%

Waste In Raw Material
6% 64%

7
Material waste typically happens in the following areas:
Part weight
2004 2007 2009
Lightweighing Weight Annual Resin
Opportunity

Sub-total Savings

Assumptions
Savings (g)

2.8
Savings

$3,148,235
Preforms (3 machine plant)

PET Resin Cost

HDPE Resin Cost
850 Million/yr

$1.40 $/kg

$1.10 $/kg
14.5g 12.3g 11.7g

8
Part weight
Unrecoverable scrap

%variationfromnominal

9
Part weight
Unrecoverable scrap
Over packing

0.90%

0.70%

0.50%

0.30%
Weight variation due to process control
0.10%
current range
0 10 20 30 40 50 60 70
-0.10%

-0.30%

-0.50%
-0.70%

-0.90%

-1.10%

-1.30%

-1.50%
Resin consumption reduction: 312,000 kg/yr ($450,000/yr)
Based on plant with 69 SKU (preforms) and 13 IMM

improved range

quality spec

10
Part weight
Unrecoverable scrap
Over packing
Spillage, Purge, Start up


11
Part weight
Unrecoverable scrap
Over packing
Spillage, Purge, Start up
Excessive use of colorant


Waste in:
1. Raw material
Rejects
3. Labor
4. Over production
Conformance ratio
5. Inventory
8. Energy
9. House keeping
12

Common Goal Between Departments
Best-in-class molders enable collaboration among
maintenance, production, and financial groups
Maintenance, operation, and engineering have traditionally
been compensated on different goals
Best-in-Class molders address this challenge by establishing
goals that are aligned (i.e. OEE)
OEE = Availability x Performance x Quality
Connecting these metrics will ensure that functional groups
work collaboratively to achieve common goal
13
Overall Equipment/ Factory Efficiency
OEE/ OFE = Availability x Performance x Quality
OFE

OEE
=

=
Scheduled time = (Total available hours - Hours not scheduled due to lack of sales)
14
15
Asset Intensive Companies: Source: Aberdeen Group, Nov. 2009
Best-in-Class
(Top 20%)
Industry Average
(Middle 50%)
Laggards
(Bottom 30%)
OEE
Unscheduled Down Time
88%
2%
81%
11%
75%
18%
Injection Molding Companies:
PET (1) Closure (2)
Thinwall /
Medical (2)
Custom Automotive
OEE

Unscheduled downtime
>96%

< 3%
>90%

< 5%
>90%

< 5%
> 80%

< 8%
> 85%

< 8%
(1) Preforms only

Best-in-Class Metrics

16
Increasing Availability through predictive maintenance
Unscheduled and Scheduled Down time
Shift from Reactive to Predictive Maintenance

17
MachineAvailability

18


Predictive
100,0%

98,0%

96,0%

94,0%
Machine Availability
Preventive
Program
Program
92,0%

90,0%

88,0%

86,0%

84,0%

82,0%

80,0%
0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 5,5 6,0 6,5 7,0 7,5 8,0 8,5 9,0 9,5 10,0
Years of Production

Data curve generated from more than 200 Husky machine audits
20.00
-
19
300,000.00

250,000.00

200,000.00

Spending 150,000.00

100,000.00

50,000.00

-
Breakdown of Maintenance Spend
35.00

30.00

25.00

20.00

15.00

10.00

5.00

-
Lost Production caps in Milions per year
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Lost Prod'n/Year
Emergency Maintenance Parts
Revenues lost K$

New policy started 2007 to minimize
maintenance spend
Postponed PM visits
Affect on reducing maintenance resulted in
increased total spend and production loss
120.00

100.00

80.00

60.00

40.00
By Q3 of 2008 PM practices were renewed
2005 2006 2007 2008 2009
Revenue Loss

Predictive Maintenance - Case Study
20
Increasing Availability through Quick Mold Change (QMC)
Reduce Scheduled Down Time by QMC
2.
4.

21



Steps to reduce mold change time:
1. Separation of internal from external
times

Conversion of internal to external
3. Parallel operations
Automation (hardware)
Quick connects and disconnects
Hydraulic, Pneumatic, Magnetic clamping
Ejector Couplers
5. Elimination of adjustments

2.
3.

Other
22



times


Parallel operations
Organization
Up to 60% immediate
reduction through
the first three steps
4. Automation (hardware)
Ejector Couplers
Tool positioning
10%
Press settings
6%
Water line
7%
Clamping
9%
Ejector
6%
4%

Organization
58%

2.
4.

23



times

3. Parallel operations
Automation (hardware)
Ejector Couplers


24
Increasing Performance and Quality through Asset
Performance Optimization Program
Improving Equipment Life Cycle Costs

25
CostperPart

Life
26

Existing System
with Technology
Upgrades /Encore
New System

Today
Economical End of
Life
New End of Life
Upgraded system

Key Strategies to Increase Return On
Assets (RoA) in Molding
1. Adopt a Risk based strategy to enable efficient decision making
Plant and operational assessment to Identify, Quantify, and Prioritize
risks that are inherent to the organization (i.e. unscheduled down time)
2. The key strategy that differentiates Best-in-Class is to implement APM
(Asset Performance Management) as the company moves from
reactive to predictive asset management
One of the main goals of the best-in-class molders is to maximize
OEE and minimize down time.
The only way to achieve this goal is by being predictive in managing
assets and proactive in controlling the process
This key strategy enables Best-in-Class molders to perform at a
maximum efficiency and minimum unscheduled down time.
Best-in-Class molders avoid asset failure before they actually happen
resulting in lower unscheduled down time
27
PercentageofParticipants

Key Strategies to Increase RoA in Molding
3. The successful execution of previous strategy requires molders to have
real time visibility into asset performance (also a differentiating factor)

Making effective asset decisions requires molders to equip their employees
with the right data at the right time in the right form
Best-in-Class differentiate themselves from industry average and laggards
by more effectively leveraging data and turning data into action
70%
Best-in-Class
60%
59%
50%
59%
52%
Industry average
Laggards
50%
45%
40%

30%
21%
20%

10%

0%
Failure data is used to perform root
cause analysis
Historical as well as real time data is
used as actionable intelligence
Source: Aberdeen Group, Nov. 2009

28

Waste in:
1. Raw material
Rejects
3. Labor
4. Over production
Conformance ratio
5. Inventory
8. Energy
9. House keeping
29

Labor Reduction without Automation
Case study: Workcells pared for labor sharing
Warehouse
3 1 1 1
1 1 1 1 1
30

Labor Reduction with Automation
Utilize the existing automation (i.e. robots)
Consider other financial metrics in addition to simple
payback when evaluating automation
Life cycle costing
31

Waste in:
1. Raw material
Rejects
3. Labor
4. Over production
Conformance ratio
5. Inventory
8. Energy
9. House keeping
32
%ofscheduledproduction

4 6 1
Over Production
Is Conformance Ratio one of your main KPIs?
Over production leads to excess inventory
High unscheduled down time leads to under production
which in turn leads to low service level

180%
160%

140%

120%

100%

80%

60%

40%

20%

0%
Over production due to
High scheduled down time
Under production due to high
Unscheduled down time
12 37 99 41 17 36 97 13 40 24 14 11 42 25 22 22 48 11 98 18 91
Machine number

33

Waste in:
1. Raw material
Rejects
3. Labor
4. Over production
Conformance ratio
5. Inventory
8. Energy
9. House keeping
34
Cost($)
35
Combined cost

Set Up Costs

Carrying Costs
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Annual Inventory Turns
Optimum Inventory turns
Cost($)
36
Combined cost

Set Up Costs

Carrying Costs
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Cost($)
37
Combined cost
Savings

1 2 3 4
Combined cost

Set Up Costs

Carrying Costs

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A
B
C
Mold Change Time and Inventory
UTILIZATION

Total production: 24
2 changes, I hour each

Lot size reduced in half.

Lot size reduced in half.
5 Changes, I hour each

5 Changes, 24 min. each

Production
Mold change
38
Servicelevel
Inventorylevel(x1000)
0
39
Category A
Category B
Service level and inventory @ 85% OEE
Category C
Top 10
Inventory Top 10
102.0%
100.0%
98.0%
96.0%
94.0%
92.0%
90.0%
88.0%
86.0%
700

600

500

400

300

200

100
84.0%

Category A
Category B
Category C
Top 10
Inventory Top 10
Base

93.5%
95.1%
96.0%
92.4%
512
50% lot size

97.0%
95.0%
95.9%
99.4%
466
25% lot size

97.5%
95.2%
96.1%
99.6%
352
200% lot size

92.0%
92.3%
91.8%
89.6%
591
Simulated the effects of different lot sizing policies on inventory and
service level
Lot size reduction improved service level and reduced inventories

Case study- lot size reduction simulation
Valueofinventory
40
Sensitivity to spare parts inventory
$2,100,000

$2,000,000

$1,900,000

$1,800,000

$1,700,000

$1,600,000

$1,500,000

$1,400,000

$1,300,000

$1,200,000

$1,100,000
Preventive Maintenance
Mean Time Between Failures (MTBF)
10% - reduction of parts not used
$1,000,000

$900,000

$800,000

$700,000
50% reduction in not used parts
Today
Reduction to 3 months for
parts used in 2009
$600,000
$500,756
$500,000

$400,000
$300,000

$200,000

$100,000

$0
Goal
2 1.9 1.8 1.7 1.6 1.5 1.4 1.3 1.2 1.1 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0
Years of inventory (parts used in 2009)

Case Study Spare Parts

Waste in:
1. Raw material
Rejects
3. Labor
4. Over production
Conformance ratio
5. Inventory
8. Energy
9. House keeping
41
42
ASSEMBLY, PACKAGING,
MACHNE HALL
and PALLETIZING

Assembly

Assembly/
Packaging/
Conveyor
Palletizing

WAREHOUSE

Product Flow Before
43
ASSEMBLY, PACKAGING,
PALLETIZING

Assembly/
WIP
MACHNE HALL
Packaging

Palletizing

STAGING

Product Flow After
44
Suppliers
Forecast
PRODUCTION CONTROL
SYACC
Forecast
Customer
Demand: 127K
Daily/ Weekly orders

Injection:
part #: 8720, 90ml vial
Cavitation: 24 cavity
Cycle: 9.6 sec.
Parts/ hr.: 9,000
Daily demand: 127,000/ day
12 sec.
7 days
Scheduling
Units/day
Injection:
part #: 9962, 48 mm cap
Cycle: 10 sec.
Parts/hr.: 6,000
10 sec.
7 days

14 days
Assembly:
Part #: B 90210
Cycle: 0.58 sec. / unit
Parts/hr.: 6,200
Sterilizing:
Outside supplier

8 days
Receiving/ Shipping:

Production Lead Time:
22 days
Processing Time:
22 sec. 0.58 sec.
22.6 sec.
Value Stream Map - Existing System
Lleno
Vaco
7 days
15 days
45
Forecast
PRODUCTION CONTROL
Forecast
Suppliers
SYACC
Full
Customer
Demand: 127K
Units/day
Scheduling

Empty

Injection:
part #: 8720, 90ml vial
Cycle: 9.6 sec.
Parts/ hr.: 9,000
12 sec.
Production
Kan Ban
Withdrawal
Kan Ban
Injection:
part #: 9962, 48 mm cap
Cycle: 10 sec.
Parts/hr.: 6,000
10 sec.
3 days
Assembly:
Part #: B 90210
Cycle: 0.58 sec. / unit
Parts/hr.: 6,200
Sterilizing:
Outside supplier

8 days
Receiving/ shipping:

Production Lead Time:
11 days
Processing Time:
22 sec. 0.58 sec.
22.6 sec.
Value Stream Map - Future System
CarryingCost
AverageInventory

46
1,600,000
Push
$2,000,000

$1,800,000
1,400,000

$1,600,000
1,200,000
$1,400,000

1,000,000
$1,200,000
800,000

600,000
Pull
$1,000,000

$800,000
$600,000
400,000
$400,000

200,000
$200,000
0
Push: 46 machines Pull: Summer + reduced mold change Pull: Level summer + reduced mold
$0
time (26 machines)

Average Inventory
change time (21 machines)

Inventory Carry Cost
Pull System reduced :
Batch size by an average of 56% on high volume products and 74% on low
volume products
Safety Stock from an average of 15 days to 3 days
Inventory by 68%

Push Vs. Pull Simulation Analysis
47
Shift from Push to Pull system requires standardization, process
stability and repeatability
Stabilize operation prior to lean conversion

Material Control
Methods
Level
Production
Reduce response times or changes in demand
Reduce upstream schedule variability
Pull
System
Material replenishment linked to customer withdrawals
Constraint management applied to
manage bottlenecks
Synchronized
Production
Synchronize operations with customer
requirements
Create disciplined process repeatability
Continuous
Flow
Standardize work
Increase process flexibility
Reduce WIP inventory, time loss and defects
Create repeatability between workstations
Stability
Bring processes under control
Provide an environment to eliminate waste
Show a quick business impact
Start here
Time

Shift from Push to Pull

Waste in:
1. Raw material
Rejects
3. Labor
4. Over production
Conformance ratio
5. Inventory
8. Energy
9. House keeping
48
Social Responsibilities with Profits
Reducing energy consumption of assets is an untapped
resource in both the quest for profits and social responsibilities
ENERGY
Lighting
HVAC
8%
Air compressors
6%
Others
1%
3%
Labour
Infrastructure
d cooling
12%
Machines
Energy
3%
2%
2%
Maintenance
2%
50%
Dryers
20%
Equipment
5%
Resin
86%
49

Two Approaches to Reduce Energy Cost
1. Reduce the cost per unit of energy ($/KWh) through
negotiation and risk mitigation
Numerous consulting firms provide Negotiation and risk
mitigation services
Alternative Energy generation
2. Reduce the amount of energy used (KW/lb):
Certain utility companies offer programs that provide molders
rebates towards the purchase and installation of qualified
equipment that improves their facilitys energy efficiency
These two approaches alone without an Energy Management
Program can not be sustainable
50
1-
5-
Total Energy Management Program
Estimate and verify site energy profile
2-

3-

4-
Understand your Base and Process loads

Understand when and how much energy is used

Identify, Quantify, and Prioritize opportunities
Phase 1:
Energy audit
& reduction
strategy
Eliminate waste and reduce consumption through

- Implementation of selected energy reduction projects

6 - Monitoring and Targeting
- Understand Where energy is used

7 - Data analysis and reporting energy KPIs

- (Energy dashboard) by department
Phase 2:
Sustainability
Through
M&T
8 - Conduct internal and external benchmarking

9 - Repeat the steps Continuous improvement

51
0
0
52
Estimated
Capital Cost
Estimated
Annual Savings
Payback Electricity
Reduction
Carbon
Reduction
Identified Opportunities ($) ($) (year) (KW) (ton)
Process Water System
Free cooling
Option 1
Option 2 (4)
$ 60,000
$ 128,000
$ 29,000
$ 26,000
2.1 years
4.9 years
322,222
288,889
72
64
Compressed Air
Air Leaks
Reduced PSI for IMMs
Install ES control solution
$ 2,500 (1)
$0
$ 8,500
$ 37,500
$ 8,376 (2)
$ 12,000
24 days
immediate
0.7 years
416,667

150,000
93

33
Cost avoidance of new Air comp.
$50,000

Lighting
Retrofit to T5s as per layout $ 98,560 $ 46,689 2.1 years 449,206 100
Power Conditioning
Power cure to condition power $ 55,300 $ 23,000 (3) 2.4 years 204,254 45
and improve power factor

Cycle times
Estimated 6% reduction plant wide

TOTAL ESTIMATED COSTS & SAVINGS
$ 24,000

$ 248,860
$ 25,000

$ 178,564
0.96 years

1.39 years
318,000

1,827,016 KW
71

407 ton
Percent reduction compared to current usage

Case Study
17.77%

Waste in:
1. Raw material
Rejects
3. Labor
4. Over production
Conformance ratio
5. Inventory
8. Energy
9. House keeping
53
54
Visual Kan Ban to eliminate excessive material handling
Implement 5S
Action Plan
Start with assessing your current operation
Plant and operational assessment to Identify,
Quantify, and Prioritize Waste reduction
opportunities that are inherent to the organization
Huskys Manufacturing Advisory Services team
can assist you in developing and implementing a
Lean Manufacturing program tailored to your
operation
55
Contacts
Santiago Archila,
sarchila@husky.ca
905-951-5000, Ext. 3810
Sean Golzarian,
sgolzarian@husky.ca
905-951-5000, Ext. 3550
Husky website: www.husky.ca
56

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