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Lean Manufacturing Simulation Game 

Cost

1. Percent increase in inventory turnover
Inventory turnover is looked at as a measure of material throughput. The measurement is completed by compiling the annualized cost of sales and dividing it by current total inventory. Turnover is measured monthly and displayed on a trend line. Raw material and work in process can be measured separately from finished goods inventory.

2. Percent reduction in data transactions
Data transactions are considered one of the key wastes in the business process and should be minimized. The mea­surement should be by product line and measure transac­tions such as labor and inventory movement. The measure­ment should be against a baseline of business activity such as total units produced. This measurement is monthly for the product line and is displayed on a trend line.

3. Percent increase in materials shipped to point of use by supplier
Companies need to shorten the time to process incoming materials. Activities such as incoming inspection, mate­rial movement and taking material out of the shipping container to put in another container suitable to the manufacturing process are cost-added. The measurement tracks by supplier the percent of materials that are able to be shipped directly to work-in-process. A trend line is used on a monthly basis to display the information.

4. Percent increase in dollars of product output per employee
The measurement is a measure of productivity. It deter­mines how effectively people and resources are being used in the production of the product. The calculation would be annualized sales divided by total number of employees. This should be measured monthly and displayed using trend lines.

5. Percent reduction in floor space utilized
The reduction in floor space utilized is measured by product line. This typically is accomplished by mapping the process and measuring the physical distance the product travels from first step to last step in the production process. Measure monthly and display trend by product line.

Flexibility

1. Percent reduction in cycle
The reduction in cycle time is measured by product line. The measurement is the ration calculated by dividing actual cycle time by the theoretical cycle time. Actual cycle time is normally based on average work in process through­put time. Theoretical cycle time is based on value add time for a lot size of one. It contains no inspection, setup or queue time. Both work in process and administrative cycle times should be measured. Measure monthly and display trend.

2. Percent reduction in setup time
Reduction in setup or changeover of the equipment or production line is an important measure of continuous improvement and flexibility. The measure can be daily, weekly or monthly, depending on the current frequency of changeover. Measure by machine and display on a trend line.

3. Percent reduction in lot/batch size
The measurement of lot/batch size reduction measures the trend in reduction of lot sizes. It is measured monthly as average lot size by production process.
4. Percent increase in number of jobs mastered per employee

The purpose of increasing the number of jobs mastered per employee is not only for improvement of flexibility, but to help facilitate the habit of improvement. This is accom­plished by continuously providing a "different set of eyes" engaged in the process. Most companies involve other hourly workers in the development of qualifications for certification and deciding whether someone is to be certi­fied. Display in the work areas, showing the number of jobs each individual has mastered.

5. Percent increase in common materials used per product
This measurement would be taken at the time of design release and is total common materials divided by total materials by product. Measure relative to goals set for standardization at the time design was initiated.

Reliability

1. Percent increase in process capable equipment
The first step must be to establish that the equipment is statistically in control, then measure process capability. The measure is percent of machines or processes at CP = 2.0. CP is the specifications width (tolerance) divided by the process spread (+/-3 sigma). Measure number of machines in the department divided by the number of machines capable of meeting this standard.

2. Percent increase in overall equipment effectiveness
Machine effectiveness is availability (hours running di­vided by scheduled run hours) times performance (actual machine cycle or rate divided by theoretical machine cycle or rate) times rate of quality product (good material divided by total material run).

Measurement is for three purposes: One, does the machine run all of the time scheduled? Two, is the equipment fit for use to be run at the speed it was designed to run? Three, does the equipment produce quality material?
Measure progress on run charts and summarize by depart­ment and machine monthly.

3. Percent reduction in warranty costs
Measure and track monthly by product line in dollars as percent of sales and as percent of operating cost. Utilize trend charts.

4. Percent reduction in engineering changes
Measure by comparing a series of new products released to manufacturing. The measure is for right first time or quality of release. Depending upon the frequency of new product introduction, the measurement can be monthly by product line on a trend line.

5. Percent increase in on-time delivery
Measurement shows whether the product was shipped to the customer in the time frame promised. Actual measure­ment is orders shipped on time divided by total orders shipped.

To be Continued