TPM Baseline

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A V4. 3
4/15/98
Table of Contents
1. Management Overview
2. Up Front Data
3. Facilitator Guide
4. Organization
5. Operations
6. Materials
7. Finance
8. Outbrief
Baseline Analysis
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©1998 The Lean Alliance - All Rights Reserved
Management Overview
Baseline Analysis
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Management Overview
Site Baseline Analysis

Creating a Road Map for Site Transition
to Lean Enterprise
Baseline Analysis
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Management Overview
Baseline Analysis Goals
u Kick off the Implementation of Lean Enterprise

u Get baseline data on Site’s Readiness
u Provide Leadership with a Yardstick of Leanness
u Select a target Model Line
u Solidify a Plant Block Layout “To Be”
u Create a Project Plan for Implementation
u Estimate Resources for Implementation
u Synchronize Initiative Deployment Plan
u Set Training Expectations
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Management Overview
Total Quality
d r
l i
Business Assessment
a g
Leadership
B e
Process HR Strategic Info

Management Development Planning Systems
Site Baseline Assessment
Organization
Engineering
Operations
Customers
Suppliers
Materials
Finance
Lean Enterprise & Site Baseline Analysis Span the Entire Value Chain
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Management Overview
Analysis Methodology
Analysts Analysis
Local Baseline Team Previsit Data
5 -> 8 Members Surveys
Guidebook of Techniques
Outside Eyes
Sector Lean Mfg. Using
and
OE Champions
OSD Their Expertise
Suppliers
in a
1 Week Intensive Session
to
Produce
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Management Overview
Deliverables
Baseline Data
Lean Production Status
Current State Operations Data
Current State Operations Support Status
Model Line Selection

Target Product Line with Performance goals and Rationale
Vendor links identified
Site Block Layout

Rough layout for a Lean Facility
Site Transition Plan

Product Cell Transition Plan
Resource Estimates
Resource Deployment
A Contract for Change

Goals Defined
Roles Defined
Buy-in Secured
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Management Overview
Baseline Analysis Process

Prework Analysis
Briefing
Previsit Req’s (triage) Resource
Organization
Planning
Selection & Planning
Selection & Analysis

Materials
Ops Data
Finance
Selection & Planning
Selection & Analysis

Facilitated ABC
Block Layout
Model Line
&
CI Project
Block Layout
Model Line
CI Project
T - 4 Weeks
Activity
Brief Intro Sequencing
Previsit
Data
Factory
Collection Tour &
T - 4 to T - 0 Weeks Data Gathering Summary-Self
Implementation Assessment
Data
Customer Survey “Business Planning
Analysis Performance
T - 4 to T - 1 Weeks Review”
Current Targets
Metrics, Plans,
Alignment Survey State
Barriers
Mgmt
Brief
T - 1 Weeks Data
ABC Transactions Collection Mgmt Mgmt Mgmt Contract
T - 4 to T - 1Weeks Brief Brief Brief for Change
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Management Overview
Analysis Team
Expertise Represented Role Attributes
u Materials Management u Baseline Analysis u Leadership

u OCI / Blackbelts u Master Plan Generation u Strong People Skills
u Quality Engineering u Be Trained as Trainers u Keen Business
u Cell / Shop Floor Management u Content Experts Understanding
Outside
Baseline Team
u Process Engineering u Drivers of the Change u Long Term
Process Commitment
u Financial Analysis
u Disciples u Change Agents
u ABC / Product Line Costing
Site u Master Scheduling / BRP
u Design for Manufacturability
u TQMP Certified Facilitators
u Organization Design
u Reward & Recognition
u Job Design / Job Pay Rating
Baseline u Industrial Engineering / Layout
u Information Systems Design
Team u Database Querey / Data
Warehousing / ERP
u Program Management
Support
u Site Leadership Team u Content Provision

Support
u Functional Experts u Baseline Team Review

Resources
Team
u Contract for Change

u Steering Committee
u Cultural Change
u Activity Based
Management
Resources
u SBU Lean Leaders u Outside Perspective

u Supplier Development / OSD u Benchmark Data
Outside
u OE Champions u Training Material

u Supplier Personnel Provision
u Other SBU Lean u Resource Linkage
Constituencies u Lean Best Practices
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Management Overview
Team Member List

Core Team Outside Resource
Name Title Phone Functional Experience Name Title Phone
To be Completed by Site Leadership, Lean Champion & Expert Candidate
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Management Overview
Lean Enterprise - Principles
1) Specify value in the eyes of the

customer
2) Identify value stream and eliminate
waste
3) Make value flow at pull of the
customer
4) Involve & Empower Employees
5) Continuously improve in pursuit of
perfection
Management Overview
Lean Enterprise - Elements

Customer
Just People Built

in in
Time Quality
Stability
Lean Enterprise - Tools Management Overview
Customer
• QFD
• Takt
• VOC
People
u Policy Deployment
• Materials Systems
• Production
Just » Metrics Built • Autonomation
u HPWO • Mistake-proofing
Smoothing in in
» Values
• Flow / Pull Time » High Perf Org Design Quality
– Line Design F Steering Comm
– Kanban F Design Teams
– SMED » Kaizen
– POU » Multi-process
Operators
u Ergonomics
Stability
• Six Sigma
• Visual Control
• Standard Work
• DFM
• TPM
Management Overview
The Transition
Phase 0 Phase II Phase II
»Baseline Analysis u High Performance u Lean Enterprise
FPrevisit
Data Production » Synchronize & Align
FModel Line Selection
» Site Optimization F Info Systems
FBlock Layout / Vision
F Organization Design F Reward &
FResource Allocation Recognition
F Product Costing
F Business Metrics F Lean Support
Phase I F Barrier Removal

– Mistake Proof
u Lean Operations – Six Sigma
» Make/Buy – Preproduction
Kaizen
» Model Line Construction
– Zero Set-up
» Physical Move Interruptions
» Lean Training – Chaku-chaku
» OSD - Supplier Link – TPM
» Organization Alignment » Lean Supply Chain
» Replication F Supplier Impvt
. . . . stable, lean process F Distribution &
Logistics
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Management Overview
Lean Implementation
Baseline Analysis
Contract For Change
Transition Roadmap
I Lean Operations
II High Performance Production

Training
III Lean Enterprise
Guidance / Mentoring Resource Support
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Management Overview
Contract
Timing
Phase Model
for Change End Phase I End Phase II - Model Review
Gates 1 2 3 4 Enterprise
Education & Training

World
Advanced Training
Class
Systems Alignment -
Phase II
Phase I
ERP / Data Warehouse
EDI / Supplier Tie

& Integration
Sourcing
Steps
Lean Suppliers
Make/Buy
Cell Product Line Costing Cell P & L

Metrics Activity Based
Reward &
Recognition
Ops Enterprise
Alignment Alignment
Physical Kaizen
Move
Pilot Line
Baseline
Phase 0 Phase I Phase II Phase III

Lean Operation High Performance
Production Lean Enterprise
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Up Front Data
Up Front Data
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Up Front Data
Plant Data
B Plant Organization Chart
A Plant Master Layout
A Major Product Lines List
A # of Drawings / Product Line

A Sales $ by product line By product is best
A Sales units by product line
B Staffing Levels by Function & Job Description
A Plant P & L - by product line is very useful (earnings statement)
A Plant Balance Sheet
A Plant Expenses by Category
A Fill rate by product line (On-time shipments)
A Returns by product line / Internal rework
A STRAP / AOP - need to know future / growth rate
C CI Goals & Objectives
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Up Front Data
Operations Data
B Org Chart
C Job Descriptions & # people per
A Cell Structure & # People Per
A Block Layout by Cell
A Cell Metric Data

Fill Rate - On time shipments
Quality
Cost
Safety
5 S Rating
TPM Overall Equipment Effectiveness
A Capacity by Work Center
A Shift Staffing by Work Center
A Machine Uptime Data
C Standard Work (examples)
A Takt Time by Product (Calculate from demand data & availability assumptions
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Up Front Data
Materials Data
A MRP System Description
B Quoted Lead times by product line
A Actual Lead times by product line
C # Weekly action messages from MRP
A % to MPS by Product line - Schedule Compliance
% Capacity Utilization by Work Center

- Calculate
A FG inventory Policy/ RM / WIP policies (if any)
A W I P - by $ and Location
EOQ Calculation
Batch Size
Yield Factors
Down Time Factors
B Inventory Accuracy
B BOM Accuracy
A Demand Linearity - By product / product family
B MPS Linearity
B Shop Dispatching System FlowChart
B Order Release Policy
C Order Acceptance Policy
A Kanban System Description
B Supplier Broadcast System Flowchart
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Up Front Data
Purchasing Data
A # of Vendors
A # of Partnered Suppliers
B Weekly # of Purchase Orders
B Weekly # of PO changes
A Major Vendors
Dollar Sales by month
Fill Rate
Cycle
Defect Rates
C Org Chart
C % work on LTA's
B BRP Communication process to Vendors
C Supplier Certification Program Description
C Supplier Development & Kaizen Activities
A Vendor Rating & Selection Criteria
C Vendor Ratings for top 50 vendors ($ based)
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Up Front Data
Finance Data
A Cost System Description
A Overhead Rate
A Inventory
Raw by Product Line
WIP by Productline
Finished Goods by Product line
B Backflush Point (relieving inventory costs based on BOM)
A Backlog by Product Line
A Scrap Rate by Product Line
A Rework Costs
A Department Expenses
A ABM Data
A COPQ
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Up Front Data
Engineering Data
B Configuration Control System Flow Chart
C # of ECN's Introduced by product, by month for a year
B Major Product Development Milestones
C Org Chart
C Design for Manufacturing & Assembly Policy
C FEMA's in Design (example)
C Mistake Proofing in Design (example)
C Parts Simplification Program Description
C Design Templates
C Design Team Structure (chart)
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A
Up Front Data
Customer Survey Instructions
1) Identify your top 5 customers now and in the future (5 now, 5 future)
2) Figure out who in the customer organization has the best knowledge of your Site.
3) Call that person and explain the purpose of the survey.
4) Fax the survey to that person.
5) Receive the filled out survey and summarize the data.
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Up Front Data
Customer Survey
Customer Name: Allied Site:
Survey Respondant: Reply by:
Dear Customer,
We are in the middle of a process to assess each of our sites for the purposes of improving our performance.
As one of our key customers, your input to the process is highly valued.
Please fill out this survey and fax it to the number listed below
Poor Average Excellent
1 2 3 4 5
How would you rate us on delivery vs. Promises?
How would you rate the quality of our work?
How would you rate our cost competitiveness?
How would you rate the communication between us

and yourselves and our ability to quickly resolve issues?
What is your overall impression of us as a supplier?
How would rate the overall value delivered by this AlliedSignal site?
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Up Front Data
Customer Survey
Site Strengths Site Weaknesses
1)
2)
3)
4)
5)
What are the top issues / characteristics that you use to value our products and services as a supplier
1)
2)
3)
4)
5)
What is your daily consumption rate of AlliedSignal supplied products
Additional Comments:
Reply Fax #:
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Up Front Data
Customer Input Summary
Cost
World Class
Strengths Weaknesses
Average
Quality
Valued Competencies
Poor
Delivery
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A
Up Front Data
Problem Alignment Instructions

1) Pick a 5 people from each of the following groups to answer the survey.
2) Record the names of the respondents below:
SBU Leadership team

1. 2.
3. 4.
5.
Site Management Team

1. 2.
3. 4.
5.
First line Leaders ( Supervisors, Prod. Control, Tech Support)

1. 2.
3. 4.
5.
First Line Employees

1. 2.
3. 4.
5.
3) Have each respondent answer the question from all 5 perspectives

4) Plot responses on the “Organizational Alignment” slide
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Up Front Data
Problem Alignment Survey

A) How do you believe the following groups would answer the question:
“The top three problems in this plant are?”
The Company
1. 2. 3.
Your Plant management team

1. 2. 3.
Your Most Important Customers

1. 2. 3.
The Plant Employees

1. 2. 3.
You and Your Peer Group

1. 2. 3.
B) Given your top 3 problems list, what are the programs being used to address each problem:
1)
2)
3)
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Up Front Data
Shop Floor Personnel Management Team Owners /Corporate
Organizational Alignment
What are The Top Problems
What You Think Customers Think What You Think Owners Think
What You Think Employees Think What You Think Management Thinks
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Up Front Data
Metrics Alignment
1) Pass out surveys to the following groups of people
Site Leader
Site Leadership staff 1 survey per function
Cell Leaders 2 selected at random
Supervisors 2 from the same units as the cell leaders
Shop Floor Employees 2“ “ “ “ “
Support Staff 2 - randomly selected
2) Explain the process and its purpose (all survey’s to remain anonymous)
3) Explain the use of the form
4) Plot the analyzed results on the “Metrics Alignment” form.
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Up Front Data
Metrics Alignment Survey

You Follow Your Boss Follows You could get
Metrics Tracked / Posted Daily Weekly Monthly Daily Weekly Monthly Ad Hoc Freq. fired for
Instructions: List all of the metrics which you track, report, post or follow in the first column. In the subsequent columns
place a check mark in the column which describes the frequency of attention that the metrics receive from you
and your boss. If the attention is not listed in a column, please write the correct frequency in the "ad hoc" column.
Finally, place a check mark in the rows for the metrics which are "really" important (you could get fired for messing them up)
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Up Front Data
Metrics Alignment
What’s Measured Considered Important
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Facilitator Guide
Facilitator Guide
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Facilitator Guide
Facilitator Instructions
u Up Front Activities » (Analysis Prep) u Day 4 - Detailed Planning
F Logical Flow Chart
» Management Brief » Family Process Maps
F Spaghetti Chart
» Name Team Members F Timed Value Chart » Rough Cell Sizing
» Gather Data (Use Up Front Data F MRP FlowChart » Plant Block Layout
Checklist) F Product Data » CI Activity Plan
– Sales $
» Get Facilitation Materials Together » Organization Design Concepts\
– Unit Sales
» Get a Room – Expense Breakdown » Outbrief
» Set-up Kick off » Outbrief u Day 5 - Wrap-up
F Plant Tour F Current Reality
F STRAP Review » Future Reality Tree
F Group Baldrige Assessment
» Activity Sequencing
u Day 1 - Kick-off » Reality Tree Construction
» Resource Planning
» Plant Tour u Day 3 - Preliminary Planning » Impact Analysis
» Strap Review » Finish Data Analysis » Strategic Fit Check
» Nominal Group Technique - List » Finish Current Reality Tree
Initial Impressions »
F Policy Constraints
» Brainstorm - List “Undesirable » Final Outbrief
» Determine Product Families
Effects” F Future Reality - Direction
» Break into Sub - Teams
» Break into sub-teams F Future Reality - Metrics
F Model Line Selection
F Organization Analysis Team F Implementation Plan
F Block Layout
F Operations Analysis Team F Resource Identification
F CI
F Materials Analysis Team F Kick-off Phase I
» Outbrief
F Financial Analysis Team
F Product Families
u Day 2 - Data Collection F Monuments Analysis
» Have Teams Gather Data F Affinity Analysis
F Model Selection
» Prepare the Following Analysis
F Leveraged CI Ideas
F Metrics Alignment
F Organization Alignment
F Problem Alignment
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Facilitator Guide
Analysis Facility Needs
A dedicated conference room of at least 500 sq ft
A conference table at least 3 x 10
10 chairs
A desk with power outlets
A flip chart easel
An overhead projector
Use of a photo copier
An additional small break out room 150 sq ft
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Facilitator Guide
Materials Requirements
Flip Chart Paper - 4 pads
Masking Tape - 2 rolls 1 “ wide
3 x 5 “ post it notes - 40 pads, multi-colored
8 Pads of lined 8 1/2 x 11 paper
8 multi-colored felt tipped markers (white board compatible)- narrow
8 multi-colored felt tipped markers (white board compatible- wide
50 sheets of “ink jet” overhead transparency paper
1 package of 8 1/2 x 11 copier paper
30 sheets of 8 1/2 x 17 legal size copier paper
8 to 10 ball point pens
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Facilitator Guide
Facilitator Check List

Up Front Data
Previsit Data
Cell Metric Data
Customer Survey Inventory Fill Rate
Raw by Product Line Quality
Problem Alignment Survey WIP by Product Line Cost
Finished Goods by Product line
Metrics Alignment Survey Capacity by Work Center
Backlog by Product Line
Snapshot Data Shift Staffing by Work Center
Engineering Scrap Rate by Product Line
Marketing Machine up time
Finance Department Expenses by Category
Maintenance Configuration Control System FlowChart
Purchasing MRP System Description
Quality ECN's by product / month
Quoted Lead Times by Product
Org Chart Engineering Support Chart
Actual Lead Times by Product
Plant Layout Legacy Support Plan Description
# of Weekly MRP Action Messages
Sales Data $ # Vendors
% to MPS by Product
Sales Data Units # Partnered Suppliers
% Capacity Utilization by Work Center
Staffing Levels by Function Weekly PO Volume
FG Inventory Policy
Plant P & L Weekly PO Change Volume
WIP
Plant Expenses by Category EOQ Calculation Major Vendor Data
Batch Size Purchases by month
Fill Rate by Product Line Yield Factors Fill Rate
Down Time Factors Cycle
Returns by Product Line Defect Rates
Demand Linearity
Cost System Description Purchasing Org Chart
MPS Linearity
Overhead Rate & History % Work on LTS's over time
Shop Dispatching System Flowchart
BRP Communication Process to Vendors
Order Release Policy
Order Acceptance Policy
Cell Structure & Population
Block Layout by Cell
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Facilitator Guide
Facilitator Checklist
Analysis Process
Team Activities Facilitator Organization Operations Materials Finance
Operations Brief Team Training Metrics Alignment 5S Assessment Material Plng Flowchart Product Data
Sales
Plant Tour Day 2 Plan Mtg Organization Alignment Logical Process Map MRP Policy Survey Units
Dollars
Initial Impressions Day 3 Plan Mtg Job Description Spaghetti Lead Time v. Cycle
Activity Allocation
UDE Descriptions Day 4 Plan Mtg Problem Alignment Inventory Locations Cycle Time v. Activity Activity Cost
Day 2 Outbrief Delphi Process Plant Layout Classification Timed Value Chart Demand, MPS, Delivery Expense Categories
Current Reality Tree Outbrief Compilation Offic Location Diagram Queue Times Batch Size Analysis
Day 3 Outbrief Capacity Constraints Vendor Graphs
Policy Constraints Pipeline Charts
Day 4 Outbrief Defect Data Summary
Future Reality Tree Problem Attack Methodology
Target "Model Line" Non-conforming Mat'l FlowChart
Plant Block Diagram Return Followup
Focus Areas Customer Link
Impact Assessment
Financial Impact
Outbrief
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Facilitator Guide
Reality Tree Instructions

Purpose
The purpose of this section of the assessment synthesize subjective data into a coherent, network of causes and effects. It is an
attempt to identify the major independent variables and policy decisions which are determining the performance of the plant.
Goals
Document the links of causes and effects
Identify Major Policy Decisions
Tie commonly perceived problems back to their root causes
Determine the key leverage points for improvement.
Analysis Procedure:
1) After the group has been on its plant tour and heard the management briefing on to state of the business, hold a brainstorming
using nominal group technique. Each assessor is to document (one per post it note) the major problems which they have observed.
These problems will henceforth be referred to as UDE’s. Be sure that all UDE’s are all one color of post-it note and are written in the
same color pen.
2) Clear off a wall and plaster it with flip chart paper. Paste the Original UDE’s on the wall.
3) After Day 2’s analysis and outbrief, get the group together again to add UDE’s to the Wall.
4) Facilitate the group to make connections. The connection procedure is quite simple:
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Facilitator Guide
a) Find 2 UDE’s which are related somehow.

b) Determine the causal connection .... A causes B
c) Determine (logically) if there is sufficiency..... if there is not, add another UDE
to the equation or create an injection on a different colored post-it.
d) Continue to try to link up UDE’s until all are connected.
e) If 2 or more notes are causes of another, determine the type of
relationship: “and” or “or”.
For and relationships, link the arrows with a small circle to document the “and”.
5) After linkage is complete, color code the post-its with dots

Red - Facts about the World
Green - Human Nature
Blue - Policy Decisions
Yellow - Metrics; Objective Data
Pink - Physical Constraints
6) Examine the tree --- determine the major causes by looking at the blocks with the most connections.
7) Create a root cause theory for review by the larger group.
Example:
The Following UDE’s were observed:
High Overhead Rate
Uncompetitive Price
Low Sales
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Facilitator Guide
Reality Tree - Example

1 Orignial UDE’s 2 Establish a Causal Relationship 3 Make another Connection
Low
High Sales
Overhead
Rate High Low
Overhead Sales
Rate
Uncompetitive Uncompetitive
Price Price
Uncompetitive
Price
Low
Sales
Reads: Because of uncompetitive price, we have low sales Reads: Because of Low Sales, we have ha high Overhead Reate
6 Determine Root Cause & Actions:

4 Check for insufficiency, add an 5 Make further connections, add
Many
injection High injections High
Fixed Cost Machines Root: Low Capacity Utilization
Fixed Cost
High Low
High Low Options:
Overhead Sales Low
Overhead Sales Utilization Lower Price to increase sales
Rate Rate
Sell off capacity
Uncompetitive Uncompetitive High

Price Price Depreciation
Reads: Because of Low Sales, and high fixed costs, we have Reads: Because have many machines, with low utilizaiton
a highoverhead rate. and high depreciation, we have high fixed costs.
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Facilitator Guide
Plant Block Layout - Instructions

Purpose
To Sketch out a plant layout concept which will serve as the basis for a master plan for cell geography and cell transition.
Goals
Lean Factories have the following characteristics:
1) 80 % of the work is done in product cells
2) Value chains (and thus product cells) are broken infrequently
3) Material handling along standard paths
4) Cell clustering around monuments is based on frequency of use.
5) Layout tracts are standardized so that long term changes are easy
6) Facility hook-ups are flexible and quick connect/disconnect.
Analysis Procedure:
1) Determine the major cell families per “Cell Family “ flowchart.
2) Determine the plant “monuments”. For each monument, determine the appropriate course of action:
a) eliminate the activity
b) miniaturize / duplicate and do the activity within the cell
c) feed through Kanban type system
3) Determine plant concept ..... what is the mix of batch and flow and where are the break points.
4) Do an affinity diagram for product cells vs. Monuments
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Facilitator Guide
6) Determine the material storage requirements based on batch size analysis
7) Assign rectangles to product cells based on affinity diagram.
8) Determine material flow paths and directions.
9) Formulate implementation sequence based on “model line” and machine

movement considerations.
Traffic
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Facilitator Guide
Block Layout - FlowChart

Start
Non Fit
Determine Part Farmout List
Families Non Fit
Farmout List
Organization
Design
Detailed Line Layout
Machine Draft
List
Organization Staffing Move Plan
Move &
Realign
Hold Machine
Draft
Redistribute
Machines
Farmout Family
Acquire
Train, Implement
Determine Machine Plan for Shortage

Shortages
Kaizen:
Set-up Reduction
Flow
Standardization
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Facilitator Guide
Product Family Determination

Start
Check other Parts

for
"Fit"
No Fit
Production Load
By Part # Interview to Determine
Rough Families Put into
Validate "Capacity" Part Parking Lot
& Production Data
Build Capacity
Model
Assess Reasons for Parking:

Cost Data: Labor
Capacity
Mat'l, Outside Proc, Pick "Model" Parts for Each
Know How
Overhead Rate "Cell" based on:
No Fit Flow
Normality
Insignificant Volume
Thruput $
Segregate
Determine "Model" Part

No Fit
Top Level Flow Fit Other Cells
Anywhere
Like Parts
Bannana Republic
Orphans
Grouped parts as Candidates for Farm Out
Up for "Adoption"
Candidates for new
from other cells
Cell
Replan Significant Volume

"Cells" to Warrent Cell?
Too Check for Cell Size

Split where
Large & Variety
Required
Cell Product
Farmout
Family
List
List
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Facilitator Guide
Machine Draft Process

Start
Cell Product Part Machine Times

Family Create "Model" Production Volumes
List Flow Set-up Times Calculate Major
Machine Down Times Machine Loading
MOT's Create Cell Current Area

Part vs. Model Flow Machine List Segregate Machine
Spreadsheet List
Create
"Needed Machines &
Process" List
Machines we Need Machines we Have & MachinesNeed but Machines we have

& Have & are Need but are not don't have and don't need
Loaded Loaded
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Facilitator Guide
Layout Process
Start
Determine
Monuments
Determine Cell
Space Need
Non Fit
Map Cell to Cell & Farmout
CellList
List
Cell to Monument Affinity
Machine List
Parts List
Block Layout
Machine Specs
Determine Machine Sizes Cell List
Machine List
Parts List
Cell Design Criteria

Determine Cell Cell List Cell Detailed Layout
Special Facility Needs Machine List
Placement in Cell List
Parts List
Building Machine List
Parts List
Stop
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Facilitator Guide
Purpose
Model Line Selection
To pick an area to start the Cellularization process for the plant
Goals -
Ideal Model Line Candidates have the following Characteristics:
1) They contain a visible product line
2) The product line has a future
3) Their financial impact on the business is large enough to make a difference
4) The product line managers are willing to change their thinking.
5) Most of the value added for the product is performed within the plant and not captured in monuments.
6) The labor content will keep 10 to 20 people busy
7) There are not too many varieties (less than 20)
Analysis Procedure:
1) With the plant management team, rate each product line per the “Model Line Matrix”
2) Multiply the scores by the weighting factor and determine the best candidates.
3) Examine the pros and Con’s of your selection
4) Do a forcefield analysis for the chosen product line ..... brainstorm mitigation options for each of the detractors.
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Facilitator Guide
Model Line Selection Matrix

Factor Weight Product A Product B Product C Product D Product E
Important Line 4
Future Requirements 4
Financial Significance 3
Leadership WIllingness 5
VA Contained in Plant 4
VA not Contained in Monuments 4
Labor Content (Heads 10 -> 20) 3
Limited Product Varieties 3
Product Score 0 0 0 0 0
For eachproduct
Instructions:
line, rate the desirability on a scale of 1 to 5
5 = very
1 = not at all
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Facilitator Guide
Resource Estimate
Activity / Resource Number Units Rate Extended Cost
Machine Moves
Large
Medium
Small
Work Stations
Tool Mods
Extensive
Average
Easy
Temporary Support
Design Engineers
Manufacturing Engineers
Tool Engineers
Draftsmen
NC Programmers
Data Entry Clerks
Materials Planners
Buyers
Maintenance
Electricians
MillWrights
Plumbers
Electronic Techs
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Contract for Change
Instructions:
Once you have completed the baseline analysis and have an action plan for implementing APS, it is
necessary to detail the plan with a” contract for change.” The contract is a summary of the plan, schedule,
resources and expected results. The contract will be signed by the management team and the baseline team as a
“contract” agreement relative to the project. Listed below are some of the areas which you might want to cover
in your contract.
u Detailed Contract for Change

» Nomenclature
» Schedule
» Resource Requirement Plan
» Communication Plan
» Training Plan
» Metric Detail - Expected Results
» Organization Concept
» HR Impact
F Job Security
F Parity
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Policy Deployment
Instructions:
A good vehicle for communicating the plan is a policy deployment matrix. This format summarizes
relationships between objectives, goals, projects and improvement teams.
Improvement Teams
Selected Projects
Improvement
Objectives
Targets
Target
dollar results
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Organizational
Assessment
Organizational Assessment
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Organizational
Assessment
Organizational Instructions
Purpose
The purpose of this section of the assessement is to determine the degree to which a “lean”
organization has been created.
Goals - The standards for a “lean” organization are defined below:
Product / Customer Focus - Manufacturing units based on products and aligned with
specific cusotmers.
Self Contained Small Businesses - 80 -> 90 % of the skills needed to compelete the
manufacturing tasks are contained within the lowest organizational unit. Business units
with less than 30 people.
Organizationally Aligned - There is congruence of alignment from the lowest unit through
the site leadership.
Geographically Aligned - the entire cell organization is located in a geographically compact

area.
Pointed in the Right Direction - goals are clear, understood by team memberes and
endorsed by the entire site leadership team.
Appropriate Feedback Mechanisms - real business metrics (not too many) are kept within
the cell and teir up to the important site metrics in a clear, strait forward fashion.
Analysis Procedure:
1) Following plant tour, use a sub group of the core team to describe the business per the
business overview slide. Describe the enterprise, each market segment and the key
competancies for succeeding in that segment.
2) Classify the plant layout per the “Plant Organization “ Slide . Classify each segment of
the value chain.
3) Using the Organization Charts & interviews with cells, fill out the Organization
Structure slide counting boundries and layers; Do an alignment chart, color coding
alignment between cells and support organizations
4) After interviewing cell leaders, fill out the “Organization Assessment “ worksheet
showing the cell leader’s organization and supporting relationships. Plot the % cell
alignment per the “Cell Resource Distribution” slide.
5) Plot the locations for desks, offices and cells on the plant layout to describe the
geographical concentration of cell team members.
6) Using the pre-visit data on metrics, fill out the Metrics Alignment Chart
7) Fill out the “Organizational Alignment” slide showing top problems; check for
concistency and common themes. Evaluate the organization’s perceptions with the
customer’s pereceptions of major problems.
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Organizational
Assessment
Business Overview
Summary:
Segment A Segment B Segment C
u Medium Volume, High Mix, u Low Volume High Mix u Custom Engineered
Products
Lines
Vertically integrated Integration business with Products Business,

Business. some parts manufacturing aextremely low volume; no
parts manufacture
Competancies
Required
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Plant Organization Organizational
Assessment
u Clustered / Jumbled
» Clusters of Generic Work Stations
» No attempt to organize by product flow
» No easily identified flow path or organization contrary to flow path
u Clustered, Flow line
» Clusters of generic workstations
» Organized by Product flow
u Cellular
» Unlike workstations clustered into cells to produce a product family
» Only one workstation type per cell except for capacity reasons
» Cell to cell organization by product type
u Unitary machine or assembly station
» Complete module, product or part made at a single machine, station
or transfer line
u Dedicated flow line
» Unlike workstations grouped into a dedicated flow line
» Organized by product flow for a product of group of products
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Organizational
Assessment
Plant Process Organization

Clustered/Jumbled Clustered Flow Line Cellular Unitary Machine/Assy Dedicated Flow Line
Receiving / Stores x
Machining x
Post Machine Processing x
Kitting x
Sub-Assembly x
Asesembly See below
Test x
Final Out x
Ship x
Starters
737 x
All Other x
Actuators x
Valves
Red Traditional x
Red Starter x
Red Load x
Green Focused x
Green Traditional x
Blue FLow Control x
Blue Traditional x
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Organizational
Assessment
Organization Structure
ASA Toronto
Site Mgr
Mfg. Ops Mgr Product Quality Systems Materials Programs

Dev. & Technology
Prod PMGS Proc Planning Process & Test Software Mechanical Purchasing Master Sched Logistics
Ctrl Mgr Mgr & ME Reliability Engi. Design Design Leader Leader
Designer Designer QCE

Cell Cell Cell Process Process Test Commodity PMCS Gen’l Stores New -8/400
Leader Leader Leader Planner Eng Eng Buyer Mast. Sched Picker
MD90 G4 All Else
Test Designer Designer Stores
Process Process Commodity New 737
Planner Eng Eng Buyer Picker APU
Prod Cell Cell Cell
Controller Direct & Direct & Direct & Process Test Commodity New MD90 Old MD90
Inspect Inspect Inspect Planner Eng Buyer
Mech. Commodity New 737X Old w 737X

Eng Buyer APU APU
Prod Mech. New G4 Old G4

Controller Eng
11 Organizational Boundaries to Cross; 3 to 4 Layers of management

Opportunity for Communication & Priority Problems - High
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Organizational
Assessment
Alignment Chart
ASA Toronto
Site Mgr

Dev. & Technology
Cell Cell Cell Test Designer Designer QCE Gen’l Stores

Process Process Commodity PMCS New -8/400
MD90 G4 All Else
Designer Designer
Process Process Test Commodity Stores New 737
Prod Cell Cell Cell

Eng Buyer APU APU

Controller Eng
Alignment between Organizations is Poor - Support Not Consistent with “Cell” Structure
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Organizational
Assessment
Cell Stats
Cell Name Product Group Direct Labor % of Direct # Top Level Dwgs. % of Sales
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Organizational
Assessment
Cell Resource Alignment
Outside Support
On the team
Number % to this Cell
Operators
Tooling / Maintenance
Mechanical Engineer
Design Engineer
Buyer
Planner
Quality Engineer
Inspectors
Other Support Used:

Frequency
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Organizational
Assessment
Cell Resource Distribution

100 % 100 %
Shared Dedicated
Operators x
Tooling Maintenance x
ME’s x
Design x
Buyer x
Planner x
Quality x
Inspect x
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Organizational
Assessment
Cell Geography
Burn In
Basement
Stores
Stores
Ops Prog Mgr
Ops Prog Mgr
Test
Burn In
Sub & Test

Stores Prod
Ctrl
Main Coat Board
Assy Prod Ctrl
ME Production Prod
Control Cell Prod Prod
Ctrl
Cell Leader Ctrl Ctrl
Production
Control
Leader Assy Cell
Cell Leader
ME
Master Leader
Scheduler
Boards
ME
Mgr
Buyer Buyer
QCE
Board Board
QCE Buyer Buyer Mgr ME’s
Mgr
PMGS
Shared Areas Engineering
Prog. Mgmt
ECS
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Organizational
Assessment
Metrics Alignment
s
ric
ric
s
s
et
et
ric
ric
rM
rM
s
s
et
et
ric
ric
M
M
oo
oo
et
et
n
n
Fl
Fl
tM
tM
io
io
op
op
is
is
an
an
iv
iv
Sh
Sh
Pl
Pl
D
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Organizational
Assessment
Baseline Analysis
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Organizational
Cellularization Checklist Assessment
Business Segment
u Alignment
» Customer
» Product
F Well Defined
F Not Too Many
u Design
» Geographically Compact
» Self Contained
F Contain > 80 % of work content
u Organization
» Reasonable # of Team Members
» Attitude
» Support Aligned
u Direction
» The Right Metrics
» Metric Alignment for Cell
» Team Metric Understanding
u “Flow”
» Connection with Value Chain
» Pull
» Standard Processes for all Products
» Division of Labor Employed
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Operations
Assessment
Operations Assessment
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Operations
Assessment
Operations Instructions
Purpose
The purpose of this section of the assessment is to determine the degree to real product cells have been implemented on the
floor. This involves an analysis of product flow, plant layout, and general operating procedures
Goal s - The standards for a “cellular ” operation are:
All products in the cell must have similar flows (sequence of operations)
Machines are physically linked in a “U” shaped production line.
WIP is planned and controlled (“standard) based on machine constraints
Work instructions are visible and similar for all products passing through each operation
Lot size / Batch size approaches “1” unless specifically planned for
Analysis Procedure:
1) Form a team of two people; one very familiar with the operation and one who is an outsider to the process.
2) Pick a product which represents a significant slice of the plant’s dollar volume and has medium complexity (“a significant
representative product). Obtain Demand data for the site, the product line and the product; plot demand for the next year.
3) Walk the process and obtain information on the “Product Process Map” form. Check off the operation type, whether the step
is value added or not and if the activity is inside of the “cell” group. Record the distance from the last operation to the current
operation and record the “time” for the operation. Count the # of pieces of inventory in front of the current operation and record
the operation set-up time (average).
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Operations
Assessment
4) Upon completing the process mapping data capture; fill out the 5S rating form.
5) Create a logical process flow chart for the product and color-code the in cell vs. out of cell operations.
6) Create a “Spaghetti” chart for the product, numbering the steps at the operation location on the plant layout sheet.
7) Record the inventory quantity and locations on another plant layout .
8) Create a timed value chart based on the “Product Process Map” form. The length of the arrow is the total cycle time for the
part; The line segments above the arrow are value added activities whose widths are proportionate to the operation times; the
line segments below are non-value added (non-transformational); the white spaces between the line segments represent dead
time (no activity). Draw in the feedback loops with arrows which show the place defects are detected, the place that they are
created and the % rejects. Summarize the times and activities on a bar graph below the TVC.
9) Determine if the wait times prior to transformational operations are based on lot size, set-up times or some other factor.
10) Estimate the capacity constraints based on inventory locations, shift staffing, set-up times and machine rates. Draw
appropriate pipeline charts.
11) Perform work sampling activities on 5 operators in different areas of the plant per the “Work Sampling” form.
12) Estimate the “Productive Utilization” of the workforce based on the work sampling.
13) Obtain machine uptime data and plot total machine effectiveness by position in the value chain.
14) Do a Floor space sampling exercise to determine the floor space utilization.
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Operations
Assessment
Quality Assessment Instructions

Purpose
The purpose of this section of the assessement is to check the status of the site’s quality
system.
Goals - The standards for a “lean” quality system are:
Source quality control at all operations
Defect prevention at the transformational operation

Gage Repeatability and Reproducability to be within 10 % of required tolerances
Poke Yoka on fixtures, processes, etc.
Autonomation where possible - machines detect errors and then stop
No Separate inspection department

Workers able to stop the line when defects occur
Cell tracked defects
Root cause and corrective action from within the cell.

Analysis Procedure:
1) Review product and process defect data and determine problem areas.
2) Examine the problem areas in detail:
Has a Gage R & R been done?

Is Process Capability Data available?
What is the process control plan and how is it based on process capability?
Has DOE been employed?
Is there a defect attack team at work on the problem?
3) Interview the black belts and find out what they’re working on and why.
4) Flow chart the non-conforming material procedure and find out if its being followed.
5) Check the customer return data; dig into a few examples to trace them back to root
cause.
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Operations
Assessment
Product Process Map

Process:
Product:
# Pieces of Inventory
Cell Controlled?
Value Added?
Op S/U Time
Transform
Transport
Distance
Storage
Inspect
Yield
Time
Wait
# Activity
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Operations
Assessment
5S Radar Chart
5 S Rating Sort
20
15
5S 10
Sustain 2S
Store
5
0
4S 3S
Standardize Shine
Sort Storage Shining Standardize Sustain
All material needed in area Everything Identified Clean Work Place All areas function the same Happens Everywhere
No unneeded material in area Places for storage identified Eliminate dirt & Dust way automatically
Everything in its place Equipment Clean & PM’d
Strait Isles
Perpendicular, parallel & horizontal
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Operations
Assessment
Logical Flow Chart Common

Service
In
Receiving Recv Stores Picking Kit & Board Add BD/Sub Ruggidize Coating Mech/ Cell
Dock Insp Prep Cell On Test Bond Final Assy
Cure/
Prep
Assy
Omni
S/A
Cell S/A Coating
Assy & PMGS Only
Stores Kitting
Test
GW End Unit Final ATP Burn in Final Test Fin

PMGS Only
S’Mart Kitting Assy Cal/Prelid Stores
ECS Only
Ship Insp
Dis'Assy
& Coat
Cust
Source
Reassy
& Test
Shipping
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Operations
Assessment
Spaghetti Chart
Incpt -
Hot Sheet
Board S/A
Cafeteria SMD TCAS
Slide 15 16
17
Auto Insert Test
9
3 10
8 Wave 12
13
2 7 18
5 11 14 20 19Clean
4Preform 26 25 24 Coat
Carousel 21
27 6 23 22
Stockroom
Nav Sys GPS

DME
Servo CTL
Sing Test Heads
Indicators
ARINC
1
Wires
XPonder Maintenance
Antenna
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Operations
Assessment
Inventory Location Diagram

Incpt -
Hot Sheet 30
Cafeteria Board S/A
SMD TCAS 25
Weeks on Hand
20
15
10
Slide
Test 5
Auto Insert
0
Wave
Boards
Finished
Board
Boards
Line
Raw
Clean
Preform Coat
Carousel
Stockroom
GPS Quantities
Nav Sys
DME
> 10000
Servo CTL
Sing Test Heads 5000
Indicators
1000
ARINC 100
Wires
50
XPonder Maintenance
Antenna
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Operations
Assessment
Timed Value Chart

30 % 10 % 10 %
Machin Assy
e
Set-Up
Elapsed Time = 1680 Hours Total Activity = 118 Hours

40 %
Non-Value Added
55 Hours
Value Added
63 Hours
Value Added
63 Hours
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Operations
Assessment
Pipeline Chart
Defects
S/U Time
Effective
Capacity
Maintenance
Yield
False Demand
Supply Purchasing Board SubAssy S/A Test Conf End Test

Coat Assy & BI
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Operations
Assessment
Work Sampling Form
Time
Function Activity Total Frequency
Operation
Load/Unload
Set-up
Inspect
Manual Transport
Machine Transport
Paperwork
Machine Adjustment
Obeservation
Discussion
Cleaning
Walk
Idle
Other
Absent
Total
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Operations
Assessment
Productive Utilization
100
90
80
70
60 Other
50 Aux
40 Basic
30
20
10
0
Assemble
Machine
Process
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Equipment Effectiveness
Instructions:
Obtain machine downtime records from the maintenance department. For each major step of the value chain, calculate the Overall
Equipment effectiveness (OEE = Uptime * Yield *Efficiency) . Plot the results per below.
Machine Effectiveness
100 100
90 90
80 80
70 70
60 60
Up Time
50 50
Effectiveness
40 40
30 30
20 20
10 10
0 0
Comp Test
Sub Assy
Special Proc
Final Test
Machining
Assy
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Floor Space Utilization
Instructions:
Obtain a layout of the factory form the facilities group. Pick 3 areas which are representative of the major processes in the value chain.
For each area; target 25 % of the space and mark it off on the layout. Go to the selected areas and estimate the fraction of the total space
used for each of the categories listed below: Graph the results by area. (Note, idle work benches are “pure waste”.)
Floor Space Utilization

Square Feet % of Total
100%
Total Area
90%
Value
Machines 80%
Work Benches in Use
70%
Planned Waste
Tool Storage 60% Pure Waste
Gage Storage
50% Planned Waste
Isles 40% Value Added
30%
Incoming Inventory Storage
Pure
Outgoing Inventory Storage 20%

Work Benches not in Use 10%
0%
Support Machining Assembly
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Materials
Assessment
Engineering Assessment
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Engineering Instructions
Purpose
The purpose of this section of the assessement is to determine the degree to which a “lean”
principles have been deployed in the product development process and in support of legacy
production.
Goals - The standards for a “lean” engineering process are:
Products are designed based on hard process capability and are customized to fit the
distinctive competancies of the manufacturing process.
Support of legacy products is such that major process problems are jointly solved by
engineering and manufacturing. Design change implementation is swift and effective.
Product development takes place using cross functional teams.
The product development process has been compressed to speed time to market through
waste elimination, parallel activities and selective use of automation. An ongoing effort is
in place to shrink the design lead times continually.
There is a program of parts standardization / simplification using the concepts of DFMA.
Design engineers rotate through the manufacturing organization in a program of ongoing

development.
Analysis Procedure:
1) Create a logical flow chart for the design change process.
2) Create a timed value chart for design changes.
3) Estimate the total cycle time for design changes by type and customer.
4) Chart the ECN activity by product group for the past year.
5) Create logical and timed value charts for the engineering development process.
6) Chart the MRB levels by month by product group.
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Materials
Assessment
Materials Assessment
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Materials
Assessment
Materials Instructions
Purpose
The purpose of this section of the assessment is determine the state of the material control systems for the site. This will entail a review of the MRP
system, vendor selection, vendor linkage and shop floor control.
Goals
A lean material system has the following characteristics:
1) A relatively small number of suppliers
2) Suppliers whose quality is such that they are on “vendor release”.
3) Direct line delivery of at least 80 % of the total purchased material dollar value.
3) Long term supplier contracts with broad demand requirements specified.
4) Relatively frequent delivery of small batches; demand not forecast to suppliers but “pulled” from the production line. For low dollar value items,
point of use storage with “supermarkets” for small parts.
5) Raw material stock levels set by supplier replenishment times.
6) Smoothed top level schedule “MPS” based on macro demand.
7) Fixed repeating production schedule with small batches.
8) Specific requirements “pulled “ by the customers
9) Strategic inventory levels of Raw, WIP and FG inventories calculated based on replenishment rates; with a program to continuously drive down
replenishment times and thus inventory levels.
10) Stable, predictable cycle times much shorter than customer demanded lead times
Analysis Procedure:
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Materials
Assessment
1) Flow chart the material planning system.
2) Interview key stakeholders and determine the MRP policy decisions that have been made for the site; use the “MRP Policy Survey”
form to guide the discussion.
3) Lead time vs. Cycle Time: For 4 or 5 representative products, plot the quoted lead times vs the MRP lead times vs the actual time
take to complete the order.
4) Segment the cycle time into categories (order, vendor, stores, machine, wait, assemble, test, pack, ship, etc) and plot per “Cycle
Time” chart ... for 2 major product lines.
5) For 6 months data, plot actual demand vs. MPS vs. delivery.
6) Perform batch size analysis per the spreadsheet to determine the batch size driver.
7) Trace the MPS requirements to purchase orders for a couple of major vendors .... check for correspondence, batch size and
degree of smoothing. Trace the revision history of the PO’s. Does the history indicate an erratic or smooth scheduling system.
8) Obtain vendor data: # of vendors, orders per vendor, % LTA’s, % of vendors on vendor release
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Materials
Assessment
MRP Policy Survey

# of Levels of the BOM
# Parts Tracked in MRP
Top Level Build Items
Frequency of Regen
Frequency of MPS Changes
Lot Size
Batch Size
Lead Times / Product
Target Cycle time
Frequency of Cycle time revisions
Minimum action duration
Target inventory levels

Raw
A Days of Supply
B
C
WIP
A
B
C
FG
A
B
C
Scrap Factor
Down Time Factor
Schedule Cushion or Pull in
BRP % to Order
% to Forecast
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Materials
Assessment
Cycle Time Analysis
Quoted MRP Actual Order # PO Date Order Entry Date Release Date Build Date Cmpt Test Date Ship Date Customer Dock Date
Product A Order 1
Order 2
Order 3
Product B Order A
Order B
Order C
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Materials
Assessment
Lead Time vs. Cycle TIme
45
40
35
Weeks
30
25 Quoted
MRP
Actual
20
15
10
0
Order 1 Order 2 Order 3 Order A Order B Order C
Job #
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Materials
Assessment
“Cycle” Time
Quoted Lead Time
Assemble
Purchase
Days In
Machine
Vendor Test & Ship
Process
Pick
0 100 200 300 400
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Materials
Assessment
Batch Size Analysis

Cell: Weekly Demand:
Product Line: # of Product Varities:
Operation Op Cycle Time # Shifts # min/shift Days / week S/U time # change Min
(min) (min) per week Batch Size
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Financial
Assessment
Financial Assessment
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Financial
Assessment
Financial Instructions
Purpose
The purpose of this section of the assessment is to: gather financial data to: evaluate the effectiveness of the enterprise;. point
out areas of financial opportunity and determine the degree to which the financial system supports lean improvements.
Goals
A lean financial system has the following characteristics:
1) Product line data available for:

cost
sales
inventory
raw
WIP
Finished Goods
2) Financial data updated frequently at the cell level
3) Cells have Balance Sheet and P & L Data for their business
4) Financial data tier up in a simple, uniform way.
5) People within the organization understand financial measures and realize how their actions relate to financial performance.
Analysis Procedure:
1)Obtain site financial data and plug into P & L and sheet forms
2)Obtain expense info and plot; if possible, attempt an allocation of Expenses by product line.
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Financial
Assessment
3) Plot the sales data by product line; plot anticipated sales growth
4) Summarize the metrics on the “Product Line Performance” chart
5) Do a “Financial Snapshot’ for the site -- include: P & L , Balance Sheet, Operations, and Cash.
6) Do a “Financial Snapshot’ for the major product lines -- include: P & L , Balance Sheet, Operations, and Cash. Graph
“Sales” and “Contribution Margin” for the major lines; highlight differences and seek explanations.
7) Plot “Cost & Inventory” data
8) Collect and graph inventory data.
9) After project plans have been finalized, perform a financial impacts analysis.
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Financial
Assessment
Financial Snapshot
P&L ($ 000,s) % Sales Balance Sheet
ACTUAL ACTUAL TARGET
Net Sales 2,151 100.00% Inventory $ ($ 000,s)

- Stores 10,904
Contribution Margin 652 30.32% - WIP 3,906
- Fin Goods 1,474
Period Costs 57 2.66%
Inventory Turns (Net) 4.75 8.00
Other Operating Costs 166 7.71%
A / R $ (NET) 16,395
E.B.I.T. 429 19.95%
DSO 38.11 30.00
Operations ACTUAL CASH ACTUAL TARGET

Returns / $ 0
- by Reason Type EBIT (Beg Bal):
Delivery Reliability % 90 Less Purchases

- End Unit vs Requested Less Payroll
Quoted Lead Time Wks Plus Collections

Actual Lead Time Wks 24
Ending Bal:
Booked Orders $ 2,331
Backlog $ 175,000
Overtime Hr / $ by Process
Census # 1007
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Financial
Assessment
Segment Data
Sensors ECS PMGS
P&L ($ 000,s) % Sales Balance Sheet P&L ($ 000,s) % Sales Balance Sheet P&L ($ 000's) % Sales B/S
ACTUAL ACTUAL TARGET ACTUAL ACTUAL TARGET ACTUAL ACTUAL TARGET
Net Sales 208 100.00% Inventory $ ($ 000,s) Net Sales 1,115 100.00% Inventory $ ($ 000,s) Net Sales 399 100.00% Inventory $ ($ 000's)
- Stores 1,200 - Stores 6,314 - Stores 2,184
Contribution Margin 57 27.40% - WIP 430 Contribution Margin 177 44.41% - WIP 782
- Fin Goods 170 - Fin Goods 294
- Fin Goods 848 Period Costs 5 1.27%
Period Costs 25 11.87% Period Costs 28 2.47%
Inventory Turns (Net)
4.79 Inventory Turns (Net) 3.91
2.64 Other Operating Costs 49 12.35%
Other Operating Costs 21 10.21% Other Operating Costs 79 7.11% A/R $ 2,951
A/R $ 1,640 A/R $ 8,525 E.B.I.T. 123 30.80%
E.B.I.T. 11 5.33% E.B.I.T. 575 51.61% DSO 36.95
DSO 39.41 DSO 38.24

Operations ACTUAL CASH ACTUAL TARGET Operations ACTUAL CASH ACTUAL TARGET Returns / $
Returns / $ Returns / $ - by Reason Type EBIT (Beg Bal):
- by Reason Type EBIT (Beg Bal): - by Reason Type EBIT (Beg Bal):
Delivery Reliability % 96 Less Purchases Delivery Reliability % 73 Less Purchases - End Unit vs Requested Less Payroll
- End Unit vs Requested Less Payroll - End Unit vs Requested Less Payroll
Quoted Lead Time Wks 38 Plus Collections
Quoted Lead Time Wks Plus Collections Quoted Lead Time Wks 28 Plus Collections Actual Lead Time Wks 30
Actual Lead Time Wks 22 Actual Lead Time Wks 22 Ending Bal:
Ending Bal: Ending Bal: Booked Orders $ 267
Booked Orders $ 210 Booked Orders $ 1,303 Backlog $
Backlog $ Backlog $
Overtime Hr / $ by Process Overtime Hr / $ by Process
Census #
Census # 1007 Census #
R&0
11% 0%
Sensor
11% 70
60
50
40
30
PMGS
57% 20
ECS
10
21%
0
PMGS ECS Sensor R&0
Sales Contribution Margin
Baseline Analysis
Version 4.3
6/12/98 98
Financial
Assessment
Current State Analysis

Sales
Sales ($M)
70
62.4
60 52
50
40 25
30
15
20 9
10
0
DEEC Allison/ GE R&O Hydraulics
AE
Baseline Analysis
Version 4.3
6/12/98 99
Financial

Assessment
Cost & Inventory
Inventory ($M) DL
13 $7M / 7%
FOH
14 12.2
$22M / 21%
10
12
8.5
10
MOH
8 8.7 8.8 $13M / 12% Factory
5
6
7.8
7.,2
Cost Input
Purch
Material
4 Parts $106M
Content $64M / 60%
2
0
DEEC Hydraulics Allison/ GE Other
AE
70% + Material Content
Baseline Analysis
Version 4.3
6/12/98 100
Financial
Assessment
Product Line Performance

Sales (1996) Units ('96) (1995) (1995) (1995)
Product Line OE AM OE Cost/Sell COPQ OTD
DEEC $39.3M $23.1M 3190 0.66 (PW) $1.5M (3%) 54%

0.39 (Itochu) 0.1 (1%)
GE 18.5 6.5 680 0.93 0.4 (2%) 80%
Allison / AE 19.0 32.5 2002 0.57 (Allison) 0.4 (2%) 60%

0.82 (AE) 0.6 (2%) 34%
Hydraulics 4.9 3.5 2849 1.01 1.2 (9%) 68%

Subtotal 81.7 65.6 8721 0.74 $4.2M
EMID's (included in lines) 7920 ---- $0.9M Inv & Obsolete
R&O ---- 15.9 ???? 0.51 ----
Totals $81.7M $65.6M 16641+ $5.1M
Baseline Analysis
Version 4.3
6/12/98 101
Financial
Assessment
Inventory Distribution
Overall
12000
10000
8000
6000
$
4000
2000
0
Stores WIP Fin Goods
12000 12000 12000

10000 10000 10000
8000 8000 8000
6000 6000 6000
$
$
4000 4000 4000
2000 2000 2000
0 0 0
Stores WIP Fin Goods Stores WIP Fin Goods Stores WIP Fin Goods
Sensors PMGS ECS
Baseline Analysis
Version 4.3
6/12/98 102
Diffusion =Degree of Containment of the problem to a relatively few causes
Key
Independence = The affect of the problem on other problems
Lack of Know How =Do We have the skills, knowledge, understanding & tools to fix
Leverage Assessment
Potential Financial Impact Leverage & Focus
Concentration
Low
10
15
8
Improve 6
Millions of Dollars
10 4
Supply 2 High
5 0
Chain
Management 0
Cash Thruput Op Expense Know How Interdependence
Concentration
Low
10
15 8
6
Internal
Millions of Dollars
4
10
2 High
Capacity 5
0
Constraint
0
Removal Cash Thruput Op Expense
Know How Interdependence
Concentration
Low
10
15 8
6
Critical
Millions of Dollars
10 4
Material 5
2
0
High
Quality
0
Improvement Cash Thruput Op Expense
Baseline Analysis
Version 4.3
6/12/98 103
OUTBRIEF
TEMPLATE
Outbrief Template
Baseline Analysis
Baseline Analysis
Version 4.3
6/12/98 104
OUTBRIEF
TEMPLATE
First Glimpse
u Workforce u Process Balance
» Friendly » Common Areas appear to be Bottlenecks
» Working » Doing PM on 1st shift -- the only
» Aware of need to Reduce Cycle “Scheduled” Shift
» No Second Shift
u Scheduling
» Hot Lists Everywhere » Burn In --- one shift but long cycle takes 2
shifts
» Sorted by Date
» Board ship missing “Demand
» People don’t know what the date means
» Actions to deal with perceived bottleneck
» “Artificial” flat production schedule are not aggressive
u Process Flow u Inventory
» Constraint not Obvious » Many types of system
» No Flow » POU
» Micro-Optimized Areas » Supermarket
» Common Areas a Great % of Work » Stores
» Not Cells - Product Teams » Kits
» Spaghetti Flows » Un aware of $ value by location
» Division of Labor Not Used » Much WIP on floor
» Inspection Redundancies
u Quality
» Push
» Terrible Yields PMGS Assy / Test
» “Parts Short “, but not holding up
» 10 % Snag Rate @ Final Inspect
production
» Manage shipments to “Margin” at month » Rework Loops
end u Design
» 60’s wiring technology
Baseline Analysis
Version 4.3
6/12/98 105
OUTBRIEF
TEMPLATE
Impressions
u Workforce u Mfg Ops
» Attitude + » Layout -
» “Productivity” + » Flow -
» Technology +
» Understanding +
» Technology Support o
u Organization
» Capacity Utilization -
» Customer Alignment
» Thruput
» Product Focus +
u Systems
» Linkage -
» Inventory Control -
u Improvement Processes
» Scheduling
» Planning Process
F Planning -
» Strategic Fit
F Release -
» Focus -
F Feedback -
» Results Linkage -
» Financial Control -
» IS -
Baseline Analysis
Version 4.3
6/12/98 106
OUTBRIEF
TEMPLATE
Customer Input
Cost
World Class
Strengths Weaknesses
Average
Quality
Valued Competencies
Poor
Delivery
Baseline Analysis
Version 4.3
6/12/98 107
Plant Organization OUTBRIEF
TEMPLATE
u Clustered / Jumbled
» Clusters of Generic Work Stations
» No attempt to organize by product flow
» No easily identified flow path or organization contrary to flow path
u Clustered, Flow line
» Clusters of generic workstations
» Organized by Product flow
u Cellular
» Unlike workstations clustered into cells to produce a product family
» Cell to cell organization by product type
u Unitary machine or assembly station
» Complete module, product or part made at a single machine, station
or transfer line
u Dedicated flow line
» Unlike workstations grouped into a dedicated flow line
» Organized by product flow for a product of group of products
Baseline Analysis
Version 4.3
6/12/98 108
OUTBRIEF
TEMPLATE
5S Radar Chart
5 S Rating CLEARING UP
20
15
5S 10
TRAINING & 2S
DISCIPLINE ORGANIZING
5
0
4S 3S
STANDARDIZING CLEANING
Sort Storage Shining Standardize Sustain
All material needed in area Everything Identified Clean Work Place All areas function the same Happens Everywhere
No unneeded material in area Places for storage identified Eliminate dirt & Dust way automatically
Everything in its place Equipment Clean & PM’d
Strait Isles
Perpendicular, parallel & horizontal
Baseline Analysis
Version 4.3
6/12/98 109
OUTBRIEF
TEMPLATE
Baseline Analysis
Version 4.3
6/12/98 110
OUTBRIEF
TEMPLATE
Metrics Alignment
s
ric
ric
s
s
et
et
ric
ric
rM
rM
s
s
et
et
ric
ric
M
M
oo
oo
et
et
n
n
Fl
Fl
tM
tM
io
io
op
op
is
is
an
an
iv
iv
Sh
Sh
Pl
Pl
D
D
Baseline Analysis
Version 4.3
6/12/98 111
OUTBRIEF
TEMPLATE
Financial Snapshot
P&L ($ 000,s) % Sales Balance Sheet
ACTUAL ACTUAL TARGET
Net Sales 2,151 100.00% Inventory $ ($ 000,s)

- Stores 10,904
- Fin Goods 1,474
Period Costs 57 2.66%
Inventory Turns (Net) 4.75 8.00
Other Operating Costs 166 7.71%
A / R $ (NET) 16,395
E.B.I.T. 429 19.95%
DSO 38.11 30.00

Returns / $ 0
- by Reason Type EBIT (Beg Bal):

- End Unit vs Requested Less Payroll
Quoted Lead Time Wks Plus Collections

Actual Lead Time Wks 24
Ending Bal:
Booked Orders $ 2,331
Backlog $ 175,000
Census # 1007
Linkage of Financial Reporting to Cell Structure is Weak
Baseline Analysis
Version 4.3
6/12/98 112
OUTBRIEF
TEMPLATE
Segment Data
Sensors ECS PMGS
P&L ($ 000,s) % Sales Balance Sheet P&L ($ 000,s) % Sales Balance Sheet P&L ($ 000's) % Sales B/S
ACTUAL ACTUAL TARGET ACTUAL ACTUAL TARGET ACTUAL ACTUAL TARGET
Net Sales 208 100.00% Inventory $ ($ 000,s) Net Sales 1,115 100.00% Inventory $ ($ 000,s) Net Sales 399 100.00% Inventory $ ($ 000's)
- Stores 1,200 - Stores 6,314 - Stores 2,184
Contribution Margin 57 27.40% - WIP 430 Contribution Margin 177 44.41% - WIP 782
- Fin Goods 170 - Fin Goods 294
- Fin Goods 848 Period Costs 5 1.27%
Period Costs 25 11.87% Period Costs 28 2.47%
4.79 Inventory Turns (Net) 3.91
2.64 Other Operating Costs 49 12.35%
Other Operating Costs 21 10.21% Other Operating Costs 79 7.11% A/R $ 2,951
A/R $ 1,640 A/R $ 8,525 E.B.I.T. 123 30.80%
E.B.I.T. 11 5.33% E.B.I.T. 575 51.61% DSO 36.95
DSO 39.41 DSO 38.24

Operations ACTUAL CASH ACTUAL TARGET Operations ACTUAL CASH ACTUAL TARGET Returns / $
Returns / $ Returns / $ - by Reason Type EBIT (Beg Bal):
- by Reason Type EBIT (Beg Bal): - by Reason Type EBIT (Beg Bal):
Delivery Reliability % 96 Less Purchases Delivery Reliability % 73 Less Purchases - End Unit vs Requested Less Payroll
- End Unit vs Requested Less Payroll - End Unit vs Requested Less Payroll
Quoted Lead Time Wks 38 Plus Collections
Quoted Lead Time Wks Plus Collections Quoted Lead Time Wks 28 Plus Collections Actual Lead Time Wks 30
Actual Lead Time Wks 22 Actual Lead Time Wks 22 Ending Bal:
Ending Bal: Ending Bal: Booked Orders $ 267
Booked Orders $ 210 Booked Orders $ 1,303 Backlog $
Backlog $ Backlog $
Overtime Hr / $ by Process Overtime Hr / $ by Process
Census #
Census # 1007 Census #
R&0
11% 0%
Sensor
11% 70
60
50
40
30
PMGS
57% 20
ECS
10
21%
0
PMGS ECS Sensor R&0
Sales Contribution Margin
Thruput Increases in OEM products will be Richly Rewarded through Contribution Margin
Baseline Analysis
Version 4.3
6/12/98 113
OUTBRIEF
TEMPLATE

Sales
Sales ($M)
70
62.4
60 52
50
40 25
30
15
20 9
10
0
DEEC Allison/ GE R&O Hydraulics
AE
Major Portion of Business (HMU) has a Limited Life Expectancy
Baseline Analysis
Version 4.3
6/12/98 114
OUTBRIEF

TEMPLATE
Cost & Inventory
Inventory ($M) DL
13 $7M / 7%
14 12.2 FOH
$22M / 21%
10
12
8.5
10
MOH
8 8.7 8.8 $13M / 12% Factory
5
6
7.8
7.,2
Cost Input
Purch
Material
4 Parts $106M
Content $64M / 60%
2
0
DEEC Hydraulics Allison/ GE Other
AE
70% + Material Content
Largest Part of Expense and Inventory Related to Vendor Control

Based on Internal Cycle, Should Have more Than Enough Inventory
Baseline Analysis
Version 4.3
6/12/98 115
OUTBRIEF
TEMPLATE
Product Line Performance

Sales (1996) Units ('96) (1995) (1995) (1995)
Product Line OE AM OE Cost/Sell COPQ OTD
DEEC $39.3M $23.1M 3190 0.66 (PW) $1.5M (3%) 54%

0.39 (Itochu) 0.1 (1%)
GE 18.5 6.5 680 0.93 0.4 (2%) 80%
Allison / AE 19.0 32.5 2002 0.57 (Allison) 0.4 (2%) 60%

0.82 (AE) 0.6 (2%) 34%
Hydraulics 4.9 3.5 2849 1.01 1.2 (9%) 68%

Subtotal 81.7 65.6 8721 0.74 $4.2M
EMID's (included in lines) 7920 ---- $0.9M Inv & Obsolete
R&O ---- 15.9 ???? 0.51 ----
Totals $81.7M $65.6M 16641+ $5.1M
Customer Delivery is an Extremely Visible Problem
Baseline Analysis
Version 4.3
6/12/98 116
OUTBRIEF
TEMPLATE
Workforce Distribution
Census by Skill
Totals by
Product Cell Machinists A/T Tech ME/OE QE Design Mat'ls PCL Cell
DEEC (GG) 21 14 5 1 1 3 1 46
DEEC (Sat) 23 5 4 1 1 2 1 37
GE 3 13 1 1 2 2 1 23
Allison / AE 0 23 4 1 2 3 1 34
Hydraulics 24 18 5 1 1 3 1 53
EMID's 11 16 4 1 1 1 1 35
Hub 40 0 5 0 0 0 1 46
R&O 4 21 0 0 0 0 1 26
Prototype 4 0 0 0 0 0 1 5
Totals by Skill 130 110 28 6 8 14 9 305
Purch SQA QA Finance IS HR Facilities Gov't Prop MM OCI Total Sppt

Support Ops
Census 47 30 52 5 5 5 14 5 48 10 221
High “Apparent” Overhead Consistent with High Materials Content
Baseline Analysis
Version 4.3
6/12/98 117
OUTBRIEF
TEMPLATE
Cell Stats
Direct Labor % of Direct # Top Level Drawings Sales

Sensor
Coil 16 7% 38 10%
Selector 20 9% 22
PMGS 25%
MD90 6 3% 3
All Else 21 10% 37
G4 32 15% 6
ECS
Boeing 19 9% 15 50%
COmmercial 17 8% 24
Douglas 13 6% 7
General Aviation 16 7% 21
WHCM 13 6% 8
Board 15 7% 435
Common Access 28 13%
“Cell” size ok -- but doesn’t include support

Board cell deals with very high variety
Baseline Analysis
Version 4.3
6/12/98 118
OUTBRIEF
Cellularization Checklist TEMPLATE
u Alignment
» Customer
» Product
F Well Defined
F Not Too Many
u Design
» Geographically Compact
» Self Contained
F Contain > 80 % of work content
u Organization
» Reasonable # of Team Members
» Attitude
» Support Aligned
u Direction
» The Right Metrics
» Metric Alignment for Cell
» Team Metric Understanding
u “Flow”
» Connection with Value Chain
» Pull
» Standard Processes for all Products
» Division of Labor Employed
Baseline Analysis
Version 4.3
6/12/98 119
OUTBRIEF
TEMPLATE
Cell Geography
Burn In
Basement
Stores
Stores
Ops Prog Mgr
Ops Prog Mgr
Test
Burn In
Sub & Test

Stores Prod
Ctrl
Main Coat Board
Assy Prod Ctrl
ME Production Prod
Control Cell Prod Prod
Ctrl
Cell Leader Ctrl Ctrl
Production
Control Leader Assy Cell
Cell Leader
Master ME
Leader
Scheduler
Boards
ME
Mgr
Buyer Buyer
QCE
Board Board
QCE Buyer Buyer Mgr ME’s
Mgr
PMGS
Shared Areas Engineering
Prog. Mgmt
ECS
Geographical Concentration within a Management Unit - Good

Concentration for Product Line Support - Poor
Baseline Analysis
Version 4.3
6/12/98 120
OUTBRIEF
TEMPLATE
Organization Structure
ASA Toronto
Site Mgr

Dev. & Technology
Designer Designer QCE

Cell Cell Cell Process Process Test Commodity PMCS Gen’l Stores New -8/400
MD90 G4 All Else
Test Designer Designer Stores
Process Process Commodity New 737
Prod Cell Cell Cell

Eng Buyer APU APU

Controller Eng
11 Organizational Boundaries to Cross; 3 to 4 Layers of management

Opportunity for Communication & Priority Problems - High
Baseline Analysis
Version 4.3
6/12/98 121
OUTBRIEF
TEMPLATE
Organization Chart - Alignment
ASA Toronto
Site Mgr

Dev. & Technology
Cell Cell Cell Test Designer Designer QCE Gen’l Stores

Process Process Commodity PMCS New -8/400
MD90 G4 All Else
Designer Designer
Process Process Test Commodity Stores New 737
Prod Cell Cell Cell

Eng Buyer APU APU

Controller Eng
Alignment between Organizations is Poor - Support Not Consistent with “Cell” Structure
Baseline Analysis
Version 4.3
6/12/98 122
OUTBRIEF
TEMPLATE
Process Flow Chart Common

Service
In
Receiving Recv Stores Picking Kit & Board Add BD/Sub Ruggidize Coating Mech/ Cell
Dock Insp Prep Cell On Test Bond Final Assy
Cure/
Prep
Assy
Omni
S/A
Cell S/A Coating
Assy & PMGS Only
Stores Kitting
Test
GW End Unit Final ATP Burn in Final Test Fin

PMGS Only
S’Mart Kitting Assy Cal/Prelid Stores
ECS Only
Ship Insp
Dis'Assy
& Coat
Cust
Source
Reassy
50 % of Steps outside of “Cells” & Test
Shipping
Cross cell borders 6 times during flow
Baseline Analysis
Version 4.3
6/12/98 123
OUTBRIEF
Capacity Constraints TEMPLATE
Defects
S/U Time
Effective
Capacity
Maintenance
Yield
False Demand
Supply Purchasing Board SubAssy S/A Test Conf End Test

Coat Assy & BI
Board Line is Pacing the Plant
Baseline Analysis
Version 4.3
6/12/98 124
OUTBRIEF
TEMPLATE
Capacity Constraint Boards

S/U Time
Capacity
Effective
Maintenance
ECN’s
Pick Kit Dip AutoAxial Mech Assy CS400

AddOn
120/shift 120/ shift 96 / Shift 96 / Shift 144 / Shift 80/day
Wave
CS400 is The Major Constraint; Opportunities: 700/Day
Shift Staffing
S/U Reduction
Maintenance on off Shift
Baseline Analysis
Version 4.3
6/12/98 125
OUTBRIEF
TEMPLATE
Material Planning Flow Chart

Start
Negotiate Machine
Dates Capacity
Customer Contracts MPS Approves Shop Load

Requested Aftermarket Price &
Contract Date Delivery
Request
Forecast
Real Orders Orders Staffing
Sales Orders Vendor Lead

No
MPS Approves Internal Cycle Time

Sales Order
Planned Offered
Date
NoNo Date ok?
Vacations/
Shutdowns
Add to MPS
Smooth MPS by Capacity Constraints

Push or Pull
Inventory
Run MRP Status
Weekly Accuracy = 95 %
Lead Times
Accuracy = ?
Bills of Materials
Accuracy = ?
Release Orders
& Past Due Status
ABC DOS Policy

Manufacturing Purchasing Plan 30, 60, 120
Plan Zero Stock Reorder
Push Out Expedite Order

Weekly
Dispatch by
Work Station
Get Promise Date
Prioritize
Workload
& Chunk
Supplier
Delivers
10 % to Schedule Daily Hot List
Update
Inventory
Update Status
Finish
Operation
Feedback Loop weaknesses - vendor promise date changes & Lag on Reschedules
Baseline Analysis
Version 4.3
6/12/98 126
OUTBRIEF
TEMPLATE
Inventory Distribution
Overall
12000
10000
8000
6000
$
4000
2000
0
Stores WIP Fin Goods
12000 12000 12000

10000 10000 10000
8000 8000 8000
6000 6000 6000
$
$
4000 4000 4000
2000 2000 2000
0 0 0
Stores WIP Fin Goods Stores WIP Fin Goods Stores WIP Fin Goods
Sensors PMGS ECS
Distribution suggests Plugged Flow and Planning Mismatch
Baseline Analysis
Version 4.3
6/12/98 127
OUTBRIEF
TEMPLATE
Inventory Locations - Boards

Incpt -
Hot Sheet 30
Cafeteria Board S/A
SMD TCAS 25
Weeks on Hand
20
15
10
Slide
Test 5
Auto Insert
0
Wave
Boards
Finished
Board
Boards
Line
Raw
Clean
Preform Coat
Carousel
Stockroom
GPS Quantities
Nav Sys
DME
> 10000
Servo CTL
Sing Test Heads 5000
Indicators
1000
ARINC 100
Wires
50
XPonder Maintenance
Antenna
Baseline Analysis
Version 4.3
6/12/98 128
OUTBRIEF
TEMPLATE
Material Flow - Boards

(1 Level)
Incpt -
Hot Sheet
Board S/A
Cafeteria SMD TCAS
Slide 15 16
17
Auto Insert Test
9
3 10
8 Wave 12
13
2 7 18
5 11 14 20 19Clean
4Preform 26 25 24 Coat
Carousel 21
27 6 23 22
Stockroom
Nav Sys GPS

DME
Servo CTL
Sing Test Heads
Indicators
ARINC
1
Wires
XPonder Maintenance
Antenna
Baseline Analysis
Version 4.3
6/12/98 129
OUTBRIEF
TEMPLATE
“Cycle” Time
Quoted Lead Time
Assemble
Purchase
Days In
Machine
Vendor Test & Ship
Process
Pick
0 100 200 300 400
Customer Delivery Expectation is in Major Conflict with System Cycle Time
Baseline Analysis
Version 4.3
6/12/98 130
OUTBRIEF
TEMPLATE
Timed Value Chart

30 % 10 % 10 %
Machine Assy
Set-Up
Elapsed Time = 1680 Hours Total Activity = 118 Hours

40 %
Non-Value Added
55 Hours
Value Added
Value Added 63 Hours
63 Hours
Significant Opportunity for Internal Lead Time Reduction Exists
Part Reject Rates are High --- Feedback Loops Very Long (time)
Baseline Analysis
Version 4.3
6/12/98 131
OUTBRIEF
TEMPLATE
Required Competencies
Parts Manufacturer Assembly & Test Overhaul
u Mechanical u Mechanics u Flexibility

Engineering u Troubleshooting » Assy & Test
» Fixture Design u Test » Machining Process
» Machining Process Design (Quick &
» Equipment Maint.
Design Dirty)
» Programming
u Materials u Improvisation
u Vendor Control
u Purchasing u Creativity
» Picking
u Internal Quality u Material Forecasting
» Quality
u Maintenance » Coordination
u “Systems
RockyMount Has 3 Distinct Businesses requiring 3 Distinct Skill Sets
Baseline Analysis
Version 4.3
6/12/98 132
OUTBRIEF
TEMPLATE
Effect Dependency
Inventory Profit Cost
Cash Operating
Thruput
Flow Expense
Parts Internal
Shortages Capacity
Supplier Factory
Material
Performance Performance
System
Thruput Is the Primary Driver of The Factory ... with excess capacity, Parts Shortages Drive Thruput
Baseline Analysis
Version 4.3
6/12/98 133
OUTBRIEF
TEMPLATE
Problems / Causes
Major Problems Root Causes
Baseline Analysis
Version 4.3
6/12/98 134
OUTBRIEF
Management Decisions TEMPLATE
Impacting Major Effects

Major Effect: Parts Shortages
Root Cause: Material Management System
u 2 Week Build Ahead u Infinite Capacity

Buffer Scheduling in a Limited
u Build to Forecast (20%) Capacity World
u Accepting Orders Inside u Allowing Emergency
of Lead Time Picks
u No Buffer Stock u No R & O Stock
u Releasing Work Past u Kits Released
Due Incomplete
Baseline Analysis
Version 4.3
6/12/98 135
OUTBRIEF
TEMPLATE
Product Line Assessment

Where to start cellularization
% Sales
Willingness
Leverage
Concentration
Low
10
15 8
6
Product A
Millions of Dollars
4
10
2 High
0
5
0
Cash Thruput Op Expense Self Know
Contained
How
Easy to Move
Interdependence
Now + 2 yrs
% Sales
Willingness
Concentration
10
Low
15 8
6
Product B 4
Millions of Dollars
10
2 High
0
5
0
Cash Thruput Op Expense SelfKnow How
Contained Easy to Move
Interdependence
Now + 2 yrs
Model Line Target
Baseline Analysis
Version 4.3
6/12/98 136
OUTBRIEF
TEMPLATE
Recommendations
Improve
Supply u Reschedule MPS
1 Chain » You and Your Suppliers are Managing $ 20 Million worth of
Management Orders per week to Ship $ 3.5 Million
u Get Rid of False Demand
» Eliminate 2 week schedule pad on non-critical items
» Stop Ordering to Forecast
F Place safety stock in plant for long lead items
u Smooth System Demand
» Issue Blanket Orders for Long Lead Items
» Pace Shop and Vendors to “Critical Path” Hardware
F Place safety stock in plant for long lead items
» Issue Kits Weekly, Not Monthly
u Get Control of Your Inventory
» Do a 1 Time Wall to Wall Inventory
» Institute Strict Crib Controls
» Rip Out The Kenway
» Pick 1 MRP System and Discard Other Systems
» Do not Issue Incomplete Kits
Supply Chain Management: Hugh Potential Impact . . .Failure will OVERWHELM other Improvement Projects
Baseline Analysis
Version 4.3
6/12/98 137
OUTBRIEF
TEMPLATE
Recommendations
Internal u Get Rid of Kenway

Capacity
2 Constraint
» Pick Rate is the 2nd Plant Capacity
Constraint
Removal u Improve Machining Capacity
» Concentrate on Long Lead Items
F Set-up Reduction (Kaizen)
F Quality Improvement (Blackbelts)
u Focus Efforts On Long Lead Items (those

Critical
which require safety stock) both Internally
Material
3 Quality
and Externally
» Scrap Reduction
Improvement
» Rework Reduction
» Lead Time Reduction
Do not Do These Until # 1 is Completely Under Control
Baseline Analysis
Version 4.3
6/12/98 138
Diffusion =Degree of Containment of the problem to a relatively few causes
Key
Independence = The affect of the problem on other problems
OUTBRIEF
Lack of Know How =Do We have the skills, knowledge, understanding & tools to fix
TEMPLATE
Leverage Assessment
Potential Financial Impact Leverage & Focus
Concentration
Low
10
15
8
Improve 6
Millions of Dollars
10 4
Supply 2 High
5 0
Chain
Management 0
Cash Thruput Op Expense Know How Interdependence
Concentration
Low
10
15 8
6
Internal
Millions of Dollars
4
10
2 High
Capacity 5
0
Constraint
0
Know How
Removal Cash Thruput Op Expense
Interdependence
Concentration
Low
10
15 8
6
Critical
Millions of Dollars
10 4
Material 2 High
5 0
Quality
0
Improvement Cash Thruput Op Expense
Baseline Analysis
Version 4.3
6/12/98 139
OUTBRIEF
TEMPLATE
Strategic Match
Project
Supply System Internal Long Lead
Improvement Capacity Defect Reduction
Low Cost,
Vertically
Integrated
Manufacturer
Critical Very Important Important
Strategy
High Margin
Systems
Integrator
Super Critical Not Important Important
No Matter What Strategy You Choose .... Supply Chain Improvement is Critical
Baseline Analysis
Version 4.3
6/12/98 140

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Site Baseline Analysis

Baseline Analysis Goals

u Kick off the Implementation of Lean Enterprise

Process HR Strategic Info

Site Baseline Assessment

1 Week Intensive Session

Model Line Selection

Site Block Layout

Site Transition Plan

A Contract for Change

Baseline Analysis Process

Previsit Req’s (triage) Resource

Selection & Planning

Selection & Analysis

Selection & Planning

Selection & Analysis

u Materials Management u Baseline Analysis u Leadership

u Site Leadership Team u Content Provision

u Functional Experts u Baseline Team Review

u Contract for Change

u SBU Lean Leaders u Outside Perspective

u OE Champions u Training Material

Team Member List

To be Completed by Site Leadership, Lean Champion & Expert Candidate

Lean Enterprise - Principles

1) Specify value in the eyes of the

Lean Enterprise - Elements

Just People Built

Phase I F Barrier Removal

Contract For Change

II High Performance Production

Guidance / Mentoring Resource Support

Education & Training

ERP / Data Warehouse

EDI / Supplier Tie

Cell Product Line Costing Cell P & L

Phase 0 Phase I Phase II Phase III

A Plant Master Layout

A Major Product Lines List

A # of Drawings / Product Line

B Staffing Levels by Function & Job Description

A Plant P & L - by product line is very useful (earnings statement)

A Plant Balance Sheet

A Plant Expenses by Category

A Fill rate by product line (On-time shipments)

A Returns by product line / Internal rework

A STRAP / AOP - need to know future / growth rate

C CI Goals & Objectives

C Job Descriptions & # people per

A Cell Structure & # People Per

A Block Layout by Cell

A Cell Metric Data

A Capacity by Work Center

A Shift Staffing by Work Center

A Machine Uptime Data

C Standard Work (examples)

B Quoted Lead times by product line

A Actual Lead times by product line

C # Weekly action messages from MRP

A % to MPS by Product line - Schedule Compliance

% Capacity Utilization by Work Center

A FG inventory Policy/ RM / WIP policies (if any)

A Demand Linearity - By product / product family