LEAN MANUFACTURING IN DYNAMICS 365 FOR OPERATIONS AXUG

LEAN MANUFACTURING IN DYNAMICS 365 FOR OPERATIONS AXUG Hartford Chapter, March 9 2017 Phil Coy, MD Manufacturing Excellence, mca. Connect phil. coy@mcaconnect. com MEMBERSHIP HAS ITS BENEFITS @AXUG @NAV 1

SOUND FAMILIAR? Lead story from Manufacturing. net @AXUG 16 September 2014

SOUND FAMILIAR? @AXUG

SOUND FAMILIAR? @AXUG

SOUND FAMILIAR? @AXUG

SOUND FAMILIAR? @AXUG

SOUND FAMILIAR? @AXUG

MANUFACTURING BUSINESS MODELS Increasing Complexity and Variation High Volume Repetitive Make to Stock High Mix, Low Volume (HMLV) Job Shop Mixed Model Custom Make to Order Design/Build Assemble to Order Engineer to Order Configure to Order One-time Build Final Assembly A continuum, not fixed categories. @AXUG

QUICK POLL § How many are manufacturers? § How many discrete? Process? § How many are: ‒ High volume repetitive? ‒ High mix / low volume? ‒ Job shop? § How many are involved with lean? § How long with lean? ‒ Over 2 years? @AXUG Over 5 years? 10+ years?

QUICK POLL – WHO IS DOING LEAN? “Comparative Study of Lean Manufacturing Tools used in Manufacturing Firms and Service Sector” World Congress on Engineering, 2013 @AXUG

WHAT’S THE BIG DEAL ABOUT LEAN? SHOW ME THE MONEY § Lead times cut from weeks to days. § Inventory turns doubled in two years and quadrupled in four. § Annual productivity gains of 15 -20%. § 50% reduction in defects per year. § 50% reduction in floor space in two years. § 4 -8% percent improvement in gross margins. § Working capital as a percentage of sales cut in half. § Increased growth by taking market share. “The Lean Turnaround”, Art Byrne and Jim Womack, 2012 @AXUG

BUT THAT’S NOT WHAT I’M SEEING § Alix. Partners, a global business advisory firm questioned the claims of lean benefits. The study found: ‒ 70% of manufacturing executives reported that their improvement efforts led to reduction in manufacturing costs of less than 5%. ‒ 36% indicated that savings were 3 -4% and 18% said that savings were under 2%. ‒ 14% said they didn’t even know how much they were saving. ‒ 60% of respondents believe that half of the savings will be unsustainable. ‒ Only 13% said they could sustain more than 75% of the identified savings. Alix. Partners, September, 2011 @AXUG

WHY DID THE GAINS EVAPORATE? § Alix. Partners, a global business advisory firm questioned the claims of lean benefits. § Conclusions: “Most continuous improvement initiatives focus too much on implementing a particular “checklist” of program tools and processes rather than on basic execution. ” Lean initiatives fail in 50 - 90% of organizations “Many traditional Lean and Six Sigma programs also fail to institutionalize the improvements that they do generate. As a result, the cost benefits often aren’t sustainable. ” Alix. Partners, September, 2011 @AXUG

CURRENT STATE OF LEAN § High mix / low volume complex manufacturers are failing to successfully implement lean ‒ Make-to-order and configured products with high variation cannot be managed with manual methods alone ‒ Lean either cannot scale or backslides after initial wins ‒ Lean is often not integrated into enterprise systems Lean is proven best practice in high volume repetitive. Much of which has been moved offshore. @AXUG

ELEMENTS OF LEAN STRATEGY § Customers define value § Separate value from waste § Visualize the flow of value creation No reference to tools § Implement flow to surface problems § Involve people to solve problems § Solve problems with Plan-Do-Check-Adjust § Continuously improve § Develop a learning organization @AXUG

4 P’S OF LEAN STRATEGY “The Toyota Way” Jeffrey Liker, 2004 @AXUG

TECHNOLOGY ASSIST FOR LEAN TRANSFORMATION Design Learning Improvement Opportunities Exception Analysis Big Data / Predictive Analytics What-ifs and Comparisons Lean Repository Execution Order Mgmt Visual Factory Kanban Signals Heijunka Leveling Data Collection Inventory Mgmt @AXUG Future State VSM MTS / MTO / Hybrid Pull and Flow Buffer Strategy Takt Time / EPEI Operator Balance Supermarket Sizing

TECHNOLOGY ASSIST FOR LEAN TRANSFORMATION Design Learning Improvement Opportunities Exception Analysis Big Data / Predictive Analytics What-ifs and Comparisons Lean Repository Power. BI Cortana Areteium LTS Execution Order Mgmt Visual Factory Kanban Signals Heijunka Leveling Data Collection Inventory Mgmt @AXUG Future State VSM MTS / MTO / Hybrid Pull and Flow Buffer Strategy Takt Time / EPEI Operator Balance Supermarket Sizing Dynamics 365 for Operations

LEAN PRINCIPLES OF TECHNOLOGY USE § Technology serves people § Support human problem-solving and decision-making but free people from the non-value adding portions of analysis § Provide the right tool for the right person for the problem “If the only tool you have is a hammer, every problem looks like a nail” Maslow @AXUG For lean, technology shouldn’t be used to replace human decision-making but to support problemsolving.

LEAN PRINCIPLES OF TECHNOLOGY USE § Use the most visual method possible § Use the simplest method possible § Support the worker in their process (gemba) @AXUG

LEAN MANUFACTURING IN D 365 Execution Order Mgmt Visual Factory Kanban Signals Heijunka Leveling Data Collection Inventory Mgmt @AXUG Production flows = value streams Kanban = signal to build an item with a qty, due date and production flow Kanban rules define MTO, MTS and traditional kanban use Integrate kanbans with Master Planning but not required Kanban schedule board = heijunka for leveling Kanban process board provides easy operator interface

BUILD RESPONSIVENESS WITH CONFIGURABLE SOFTWARE § Designed to operate fully independently of MRP § Broad range of deployments of kanban Kanban defined in D 365 is broadly a signal to build. Much broader than the classic concept of a fixed quantity kanban. @AXUG

BUILD RESPONSIVENESS WITH CONFIGURABLE SOFTWARE Kanban rule for blades Create kanban if below min Kanban rule for mowers Create kanban on sales order Kanban rule for housings Release kanban when container is empty Kanban rule for engines Create kanban from MRP @AXUG

TOP FOUR KPI’S § On-time Delivery § Lead Time § Inventory Turns § Profitability @AXUG 24

THESE ARE ALL RESULTS OF YOUR PROCESSES § On-time Delivery – do you have process stability? § Lead Time – do you run with big batches? § Inventory Turns – do you have too much inventory? § Profitability – do you make money? @AXUG 25

PROCESS CHANGE: THE SECRET SAUCE FOR LEAN § Identify the Metric to Change § Understand the Behavior that moves the Metric § Change the Process to change the Behavior § The Metric will Change @AXUG 26

STRIVE FOR PERFECTION “Gentlemen, we are going to relentlessly chase perfection, knowing full we will not catch it, because nothing is perfect. But we are going to relentlessly chase it, because in the process we will catch excellence. ” Vince Lombardi on his first day as head coach of the Green Bay Packers. @AXUG

Innovative Solutions. Exceptionally Delivered. Company founded Selected Microsoft Dynamics AX as lead product 2002 Achieved Microsoft Inner Circle for the first time Achieved Microsoft President’s Club for first time 2007 2008 Won the US Microsoft Dynamics Partner of the Year for the first time (Won again in 2012 & 2014) 2010 Won Microsoft ERP Worldwide Partner of the Year Won US Dynamics Reseller of the Year Won US Industry Partner of the Year (Manufacturing) 2013 Acquired CRM Partner Sales. Metrix 2014 Won Microsoft CRM Partner of the Year Finalist Joined AXpact group of international implementation consultants 2015