APO E Learning Integrating Lean MFG System With Ind 4.0 Concept (Module 3)

APO E LEARNING PROGRAM “INTEGRATING LEAN
MANUFACTURING SYSTEM AND INDUSTRY 4.0

CONCEPT”
Module 3: Initiating the Lean processes
 Eliminates 7 waste / MUDA
 Value stream mapping approach
 Material flow cost accounting approach
 Big data and analytics
 Quiz
Slide 1
Initiating the Lean processes
Eliminate 7 waste / Muda In the journey of Lean, the goals always be deliver
products or services with the best quality, lower
price and shorted delivery time, however in reality
that’s various type of obstacle in the route of
pursued the Lean goals.
Off cut Waiting Various types of obstacle in the name of waste or
Rework Muda in Japanese may occur in between.
Scrap The following slide will explore and type of waste
and the possible causes of the waste
Reject
Delay
Products/Services
Best Quality
Lowest price
Shortest delivery time
Slide 2
Eliminate 7 waste / Muda
How many Muda may be found from your
processes ? A few ? A dozens ? A hundred
or far more ?
If you able to observe waste such as high
inventory, customer complaints, idle
machinery or workers from the process, it
actually indicate that’s far more Muda
within the organization.
That’s a theory of iceberg which what we
see every day could just be the tips of
iceberg. Which mean much more waste
or Muda actually hidden and shall be
identify and eliminate accordingly.
Slide 3
3 Enemies of LEAN
MUDA: Any activity that consumes resources without creating value

for the customer. Which the customer does not want, does not need,
can not use or will not use.
MURA: Unevenness in an operation
MURI: Overburdening equipment or operators by requiring utilized

them for more than 100% to finish their task. This means
breakdowns when it comes to machines and absenteeism when it
comes to employees
Slide 4
Suppose that a firm needs to transport 900kg of
Eliminate 7 waste / Muda material to its customer and is considering its
options. One is to pile all 900kg on one truck and
make a single trip. But this would be Muri
900kg Muri: Overburdened because it would overburden the truck (rated for
only 500kg) leading to breakdowns, which also
would lead to Muda and Mura.
A second option is to make two trips, one with
150kg and the other with 750kg. But this would
150kg 750kg be Mura because the unevenness of materials
arriving at the customer would create jam-ups
on the receiving dock followed by too little work.
Mura: Imbalance
This option also would create Muri, because on
one trip the truck still is overburdened, and
Muda as well, because the uneven pace of work
300kg 300kg 300kg would cause the waste of waiting by the
customer’s receiving employees.
Muda: Waste A third option is to load 300kg on the truck and
make three trips. But this would be Muda, even
if not Mura and Muri, because the truck would
be only partially loaded on each trip.
450kg The only way to eliminate Muda, Mura, and Muri
450kg
is to load the truck with 450kg (its rated
capacity) and make two trips
No Muri, Mura and Muda
Slide 5
MUDA is a Japanese word mean “Waste”
• MUDA is anything a person does not want, does not need, can not
use or will not use.
• Something a person will certainly not be willing to pay for it
Source: Shuichi Yoshida’s Kaizen Blitz Workshop Notes
Slide 6
Value adding 5%
3. MUDA of transportation
4. MUDA of Processing
MUDA
95%
5. MUDA of Inventory
2. MUDA of Waiting 7. MUDA of

Repair/Reject
1. MUDA of Over production

6. MUDA of Motion
According to Pascal Dennis, the author of “Lean Production Simplified” That’s 5/95 ratio of value to Muda common in most
operations. Most of the daily routine activities is Muda.
However if we think from positive point of view, such large portion of Muda also represent tremendous opportunities,
If the waste as the money in the bank, we only need to find the right approach to withdraws it.
Slide 7
Causes
Definition
• Volume incentives
• Producing more Definition Cause
(sales, pay, purchasing)
than what is needed
• High capacity
equipment
• Producing faster
• Line imbalance; poor
than what is needed Over scheduling/shifting
Production • Poor production
planning
• Cost accounting
practices that
MUDA encourage build up of
inventory
Slide 8
Causes
Definition
• Poor route planning
• Unnecessary Definition Cause
• Distant suppliers
material movement
• Complex material flows
• Poor layout
• Unnecessary tools
• Disorganized workplace
or equipment Transport • Line imbalance
movement
MUDA
Slide 9
Causes
Definition
• Unsynchronized
• Man idle or waiting Definition Cause
processes; line
time
imbalance
• Inflexible work force
• Machine idle or
• Over-staffing
waiting time Waiting Time • Unscheduled
machine downtime
• Long set-up
• Material / man
power shortage or
MUDA delay
Slide 10
Causes
Definition
• Over-production
• Excessive process Definition Cause
• Imbalanced line
(WIP) inventories
• Big batch sizes
• Long lead times
• Excessive raw
• Large minimum
material inventories Inventory order quantities
and supplies
• High rework rate
MUDA
Slide 11
Causes
Definition
• Poor lay-out and
• Unnecessary Definition Cause
housekeeping
movement and
• Disorganized work
motions of worker
place and storage
locations
Motion • Unclear, non-
standardized work
instructions
• Unclear process and
materials flow
MUDA
Slide 12
Causes
Definition
• Unclear customer
• Non-value added Definition Cause
specifications
man processing
• Frequent engineering
changes
• Non-value added
• Excessive quality
machine processing Processing (refinements)
• Inadequate value
analysis
MUDA
Slide 13
Causes
Definition
• Unclear customer
• Processing due to Definition Cause
specifications
the production of
• Incapable processes
defects
• Lack of process
control
• Processing due to Repair • Unskilled personnel
rework or repair of Reject • Departmental rather
defects
than total quality
• Incapable suppliers
• Materials used due
to defect and rework MUDA
Slide 14
1. How to find MUDA – Go to GEMBA After reviewing the 7 Muda and also
possible causes, the next move shall
• Breakdown the entire job into steps be Muda identification.
While Muda only can identify thru
• Classify work step into 2 kinds, value adding and MUDA onsite (Gemba) observation. For those
who participate in identifying Muda,
2. How to eliminate MUDA of motion often ask to go Gemba, to observe and
ask
• Abolish – Can we eliminate this motion?
1. Is this method the best one ?
• Reduce – Can we reduce the frequency if this motion? 2. Is there any better way
3. Why the machine/workers
• Standardize – Can we change this complicated motion into idle/waiting ?
the simplest one? 4. Why the product/material need to
move ?
• Mechanized – Can we replace this manual operation with 5. Is this process contributed to value
automatic operation? for customer ?
6. Why needed the inventory of work
• Simply – Can we simplify this motion? in progress / finished goods?
7. Why that’s rework or repair
• Pre-schedule – Can we pre-schedule these independent activities
motions?
• Synchronize – Can we synchronize all these motion?
Slide 15
Machine stop = 30 minutes

BEFORE
‘A’ part Preparation ‘B’ part
Set up time
production Before Set up production
AFTER
‘A’ part Set up
production time ‘B’ part production
Preparation
Machine stop = 8.5 minutes
For machinery stop for setup which occur Muda of waiting, should consider to to breakdown
the change over procedure into steps consist of preparation needed online and off line.
Whereby for preparation could prepare offline shall prepare prior the machine stop and shall
be ready once the machine stop for change over.
The typical example should refer to the Formula 1 pit stop changing tire activities, which the
pit lane crew prepare all the necessary tools and tire prior the car stop for pit, once the car
stop, only value added activities in place which lead to significant free from any possible
Muda of waiting.
Slide 16
Example for line balancing which reduce the bottle neck of processes and re allocate the
resources and work in improve balance (refer to operator).
The result will be increase of cycle time and reduce of human resources.
Before After
Reduced Man power from 12 person to 7 person

Line balance reduced from 30sec to 16 sec
Slide 17
Before After
0.8 cm x 280 cm x 420 cm 0.8 cm x 272 cm x 400 cm
Source: MFCA Wrap up presentation, MPC 2012.
Example of reduce unnecessary off cut which not contributed to value for customer, whereby the customer only require
metal stamping part within the red colour line regardless the size outside of the red line.
Therefore reduce of the overall metal piece size contribute to direct cost saving on raw material
Slide 18
MUDA Identification and For Muda that identify and

eliminate should be record
Elimination
with photo and data as part
BEFORE AFTER
of the knowledge sharing
Photo Photo
and also recognition
program.
The name of the person who
identify the Muda and the
name of the one who solved
Fact Fact Muda shall be report
accordingly
MUDA Identify by: MUDA Solved by:
Slide 19
Value Stream Mapping (VSM)
Is a lean tool that employs a flow diagram documenting in high detail
every step of a process. Many lean practitioners see value stream
mapping as the fundamental tool to identify waste, reduce process
cycle times, and implement process improvement
(source: www.asq.org)
A value stream is the sequence of activities an organization

undertakes to deliver on a customer request
(source: Value stream Mapping, Karen Martin & Mike Osterling)
Slide 20
Value Stream Mapping Processes
Activity Department
Function
# People
Turnaround time
LT
PT Time convert input
into output
%C&A
% Complete and
accurate
Value Stream Mapping (VSM) is a kind of Lean language comprising the symbols shown in following diagram which the
details of the selected activities illustrate in details with necessary information such as
Process, Department, Number of workers require, Turn around time, Time convert input into output and % complete and
accurate
With laying out the entire process with tangible information could visible the value stream with any Muda or opportunities
for improvement
Slide 21
Material Flow Cost Accounting (MFCA)
• MFCA is a method of environmental management accounting (MFCA Case book, METI
Japan)
• Tool for quantifying the flows and stocks of materials in processes or production lines in
both physical and monetary units (ISO 14051)
• Tools aimed to simultaneously reduce both environmental impact and cost (MFCA Case
book, METI Japan)
• Tool for systematically identifying and visualized the cost loss throughout the value added
processes (Alex YAP, EcoLean)
MFCA shall be used as MUDA visualization tool in identify MUDA from monetary point of
view, And should be implement prior improvement initiative in order to determine the
priority of improvement initiative
Slide 22
Supplier Finished
Material Drilling Cutting QC Delivery
A product
If 100Kg Man ?? Kg
Material Electricity Chemical Reject
power FG
Quantity center
The MFCA approach trace the flow of resources thru out the selected boundary which all the resources such as raw
material, labour, electricity, packaging material, etc. which converted into the product (also know as positive product in
MFCA) and any non valued added outputs such as off cut, rejects, (also know as negative product in MFCA)
Each step within the process define as quantity center which the type of resource flow in and out will be trace in volume
(such as kg, liter) whereby the total input shall be equal to total output
Slide 23
Material Drilling Cutting QC Delivery
MFCA: Visualizing waste from each steps of selected

process
Once the total inputs
Product equivalent to the total
Processes Waste
SupplierSupplier
A A output the quantity
center achieve mass
balance.
Subsequently the
information will convert
into monetary and
represent by chart that
provide
Slide 24
Conventional Cost Accounting
INPUT
Material: 95Kg
Production Process USED 100KG
Material cost:
$ 950
Processing cost: $ 930 Product (70kg)
Material cost $ ???
Processing cost $ 930
Initial material Final material Total $ ???
stock (15kg) stock (10kg)
$150 $100
Waste (30kg)
The diagram above illustrated the

Production Processes conventional accounting, as the material
used = 100 Kg, let try out the total costing.
Slide 25
Conventional Cost Accounting
INPUT
Material: 95Kg
Production Process USED 100KG
Material cost:
$ 950
Processing cost: $ 930 Product (70kg)
Material cost $ 1000
Processing cost $ 930
Initial material Final material Total $ 1930
$150 $100
Waste (30kg)
So the total cost shall be $1930, I hope you got it right, if you have any doubt
Production Processes please feel email to alex@EcoLeanConsultancy.com for question.
As you can see, in the conventional cost accounting, there is no allocation of cost
on the 30kg waste generated
Slide 26
MFCA
Product (70kg)
Material costs $ 700
Quantity Centre
INPUT Energy costs $ ??
Material: System costs $ ???
95Kg Energy costs $ 50
Total $ 1295
Material cost: System costs $ 800
$ 950 Waste Mgmt. $ 80
Material lost (30kg)
Initial material Final material Energy costs $ ??
$150 $ 100 Systems costs $ ???
Waste Mgmt. costs $ ??
Total $ 635
Now, based on MFCA calculation, please try compute the costs accordingly, you
Production Processes should complete within 5 minutes and we will discuss the answer in the next
slide
Slide 27
MFCA
Product (70kg)
Quantity Centre Material costs $ 700
Energy costs $ 35
INPUT Energy costs $ 50 System costs $ 560
Material: System costs $ 800 Total $ 1295
95Kg Waste Mgmt. $ 80
Material cost: Material lost (30kg)
$ 950
Initial material Final material
stock (15kg) stock (10kg) Energy costs $ 15
$150 $ 100 Systems costs $ 240
Waste Mgmt. costs $ 80
Total $ 635
Now, as you can see, the MFCA approach will split the costing according to product and waste
accordingly. Therefore the total of $1930 actually split into $ 1295 for value added product but $635
Production Processes for non value added waste. Therefore the MFCA will be to provide tangible information on waste
generate for every single step of the resources flow thru in monetary information which will be
useful for determine area for improvement
Slide 28
The MFCA will be use for pre improvement initiative in order to determine the most costly Muda for
improvement.
As above picture, it could be very common in the working environment of factory, however MFCA will
provide alternate information on these physical waste in monetary information.
Slide 29
Source: ISO Insider January-February, 2009.
The MFCA will be use for pre improvement initiative in order to determine the most costly Muda for
improvement.
As following picture, it could be very common in the working environment of factory, however MFCA will
provide alternate information on these physical waste in monetary information.
Slide 30
$ 9815/M
MFCA $ 450/M
$ 2338/M $ 7678/M
The MFCA work like a X-Ray for cost.

Slide 31
Example
Brake lining manufacturing
40 Workers
Annual sales: $ 23 Million
MFCA Team: 3 Person
Project Period: 2 Months
Slide 32
The original production Conventional Production Management
data demonstrated the
production process with Mixing, Processing, QC, FG
Raw 99.7
yield of 99.7% whereby
the performance count
material Oven Grinding Store %
by pieces of product
and the production
manager very
comfortable with the Reject: 0.3%
performance.
However when the
same set of data based Cost of Final
on the MFCA calculation MFCA Production Management Product
based on weight and
converted into
monetary, it seem the Raw Mixing, Processing, QC, FG
material 82 %
waste bring along 18% Oven Grinding Store
of total costing. Which
was surprised the
management of the
company and they Set up waste, Process waste, reject, Waste
decided to find out waste disposal cost, 18%
what happen ?
Slide 33
This picture show you the typical production process of the company, could you identify any waste or
Muda so far ?
The brake lining product make by asbestos which is harmful for both the worker and the
environment. In this grinding process, the workers needed to grind the piece of product to the shape
that needed by the customer, which needed resources such as electricity and labour than produced
the product in the right shape together with grinded waste.
Slide 34
GP Implementation Case Studies
Air Electricity
suction
Grind off
Grinder Waste
disc
Waste
disposal
Labor Land / air

pollution
Occupational
Health and
PPE Safety
Machine
Raw material maintenance
Slide 35
GP Implementation Case Studies
MFCA
Value added Motivation for

(Positive Product) improvement Productivity &
How much ? $ Environment
Waste Support decision performance
(Negative Product) making (ROI)
Slide 36
Reduce material loss by reduce grinded

%
 Modify mold ($ 8,300)
 MFCA justify mold investment cost
 Reduce grind thickness from 1.5mm

to 0.8 mm
 0.7 mm or 47% material loss reduce
The MFCA team identify the waste of 18% cost justify the investment in modify and increase the precision of
the mold produced a “near shape” piece which require lesser grinding. The thinner near shape product
produced with lesser material contributed to lesser resources in grinding process.
Slide 37
Waste disposal (Impact to
Environment)
47 % Material Loss Processing time
Reduce/product Use of raw material
(Sustaining
Resources) Electricity (CO2
Emission)
Man power
CO2 Emission Reduce : Result
from Energy Usage Reduce
$ 130,500
COST
/Year
Total of 47% material lost reported with various improvement such as reduce waste disposal, reduce
processing time, lesser raw material, man power and electricity that contributed S130,500 saving annual for
the selected product. Where the company could easily benchmark the counter measure of modify mold
with other product. The achievement also contributed to in direct reduce in CO2 emission thru reduce in
electricity consumption.
Slide 38
Big Data & analyst
Equipment
OEE Machine
Competitor
Supplier
Employee
Material
Economy Reject
Products
Market
Processes
Customer Takt Time
In these days, most organization will find themselves dealing with flood of amount of data from various
sources, which typically created kind of new Muda of Data. Therefore there is a need to collect, filter, collate,
organize into meaningful for subsequent analyst and provided information to support management decision or
problem solving. The use of big data and analyst in Lean system could enhance the efficiency and effectiveness
in optimizing productivity, reduce waste/Muda and improve delivery performance. Improvement initiative in
product quality could significant increase as data obtain from the whole population of product instead of
sampling which increase the precision in root cause analysis and problem solving process.
Slide 39
Big Data & analyst In view of potential benefits with integrate
of big data & analyst into Lean
01 Connection Manufacturing System, according to
Alasdair Gilchrist, author of “The Industrial
Internet of Things” the following factors
should be consider in setting up the
initiative.
02 Cloud computing 1. Connection: Availability of relevant
sensor such as optic scope, measuring
equipment data link device, location
sensor and local network could be
03 Cyber (Model & Memory) among the consideration
2. Cloud computing: The availability of
cloud computing which eliminate the
restriction of location
04 Content / Context 3. Cyber: Which involves model and
memory
4. Context: Internal and external context
that could bring impact or relevant to
Community the situation
05 5. Community: Sharing and collaboration
among stakeholder in problems solving
and improvement activities such as
QCC or Kaizen Blitz
06 Customization 6. Customization: The flexibility of
customization according to situation
could be enhance robustness of Lean
Slide 40
Initiating Lean Processes
Quiz
Slide 41

APO E Learning Integrating Lean MFG System With Ind 4.0 Concept (Module 3)

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APO E LEARNING PROGRAM “INTEGRATING LEAN

MANUFACTURING SYSTEM AND INDUSTRY 4.0

MUDA: Any activity that consumes resources without creating value

MURA: Unevenness in an operation

MURI: Overburdening equipment or operators by requiring utilized

Source: Shuichi Yoshida’s Kaizen Blitz Workshop Notes

2. MUDA of Waiting 7. MUDA of

1. MUDA of Over production

Machine stop = 30 minutes

Reduced Man power from 12 person to 7 person

Source: MFCA Wrap up presentation, MPC 2012.

MUDA Identification and For Muda that identify and

MUDA Identify by: MUDA Solved by:

A value stream is the sequence of activities an organization

Material Drilling Cutting QC Delivery

MFCA: Visualizing waste from each steps of selected

The diagram above illustrated the

Source: ISO Insider January-February, 2009.

The MFCA work like a X-Ray for cost.

Brake lining manufacturing

Annual sales: $ 23 Million

MFCA Team: 3 Person

Project Period: 2 Months

Labor Land / air

Value added Motivation for

Reduce material loss by reduce grinded

 Modify mold ($ 8,300)

 MFCA justify mold investment cost

 Reduce grind thickness from 1.5mm

 0.7 mm or 47% material loss reduce

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