Kaizen in Action

Topics

• Understanding What Is Requested
• Getting Ready for the Kaizen Event
• Doing the Event
  • Day 1 - Focus the Kaizen Event
    • Build a Description of the Target Work Process
    • Walk Through the Target Work Process
    • Build the Mission Statement
    • Set Goals for the Kaizen Event
    • Define the Do's and Don'ts
    • Close Day 1
  • Day 2 - Evaluate the Target Work Process
    • Gather Information
    • Analyze the Amounts and Sources of Waste
    • Summarize the Results of the Evaluation
    • Close Day 2
  • Day 3 - Solve the Performance Issue
    • Generate Improvement Ideas
    • Trim Improvement Ideas
    • Conduct an Experiment
    • Select Improvement Ideas
    • Close Day 3
  • Days 4 and 5 - Act to Improve the Target Work Process
    • Create Action Plans
    • Execute Improvement Ideas
    • Measure Results
• Following Up the Event
  • Close the Kaizen Event
  • Communicate Results to All Stakeholders
  • Mine Learning From the Completed Event
• Postscript

Measure Results

With the improvement ideas executed, the team turned its efforts to measuring results. This step detects and quantifies the work process and business benefits produced by the Kaizen event. It provides the information needed to verify whether the event achieved its mission and goals. Our Kaizen process measures both operating improvements and monetary benefits. The team measured the operating improvements by repeating its process observations of each work process doing a similar batch of work but now executed in a manner that incorporated the improvements made by the team. Measuring monetary benefits translates the operating and non-operating changes into dollar savings or revenue gains, adjusting for the cost associated with implementing any of the changes. We computed both hard and soft monetary benefits. Hard monetary benefits are savings or revenue gains that begin to flow as soon as the event ends. Soft monetary benefits require an additional management action before they can be realized. In this event, hard monetary benefits were realized for the two work processes the team modified. The soft benefits would flow from the replication of the improvements to the flammable fill side of the Oakland plant and then to the nonflammable and flammable blending fill operations at the three remaining plants producing blended gases. These replication benefits are judged "soft" because the managers at these sites will need to authorize the changes before the improvements can be made.

Operating Improvements

Computation of operating improvements is facilitated by a spreadsheet contained in the Kaizen Tool Kit. Exhibit 22, next page, presents the operating improvement realized for the cylinder preparation work process; Exhibit 23 (page 56) presents the operating improvements achieved for the nonflammable blending work process.

The cylinder preparation work process went from requiring 141 steps to just 92 steps after implementation of the team's improvements. This reduction in the number of required operations is even more striking given that the work accomplished by this process was increased to absorb scraping labels and touch-up painting of cylinders—tasks previously done in the blending work process.

The cycle time of the cylinder preparation work process was reduced by 35%. This shrinking of the work while expanding its outputs was largely due to installing a second vacuum pump which accelerated the preparation process and by eliminating unnecessary paperwork. The addition of the scrapping and painting activities did not add to cycle time because the activities are accomplished concurrent with the vacuuming, purging, and venting operations. In this way, wait time is transformed into productive activity. Indeed, wait time was completely eliminated (reduced 100%).

The other significant improvement was in unnecessary processing, which was reduced 22%. An unwanted byproduct of moving the scrapping and touch-up painting of cylinders into the cylinder preparation work process was an increase in setup activities, as scrapping and painting are entirely setup in nature—that is, these work activities prepare cylinders to be filled but do not accomplish the filling. Nonetheless, the improvement resulted in a 55% increase in labor productivity. The team also felt that a follow-up Kaizen event focusing on setup would reduce its presence in the cylinder preparation work process.

The improvements reduced nonflammable blending process activities from 336 steps to 227. The major benefits were in cycle time (reduced 31%), value-added ratio (increased 98%), wait (reduced 96%), setup (reduced 23%), and travel/transport (reduced 20% in time and 18% in distance). These improvements were largely due to reducing rolling time; eliminating the vacuum, purge, and vent operations; transferring cylinder prep activities to the cylinder preparation work process; installing the battery charger and nets in the blending area; and eliminating unneeded paperwork. The value-added ratio was increased by trimming down these elements of waste. Overall, the improvements elevated labor productivity by 45% and increased throughput capability by 80%. One anomalous finding in the post-observation was a spike in rework (almost four minutes). This was due to three problems that were not observed earlier: a faulty safety valve, a improperly purged cylinder, and a blending sheet with the incorrect mix specified. Clearly, rework should be an area looked into in future events.

Monetary Benefits

Computation of monetary benefits is also facilitated by a spreadsheet contained in the Kaizen Tool Kit. Before using the spreadsheet, the Kaizen co-leader calculates the dollar value of labor time savings and then calculates the dollar value of non-labor savings. Examples of non-labor savings include inventory, materials or supplies, energy or other utilities, equipment or tools, facility space, scrap or waste, and contracted services. Once the computations are made, the benefits are designated as either hard or soft based on whether they flow immediately following the Kaizen event or require additional management action. Exhibit 24 presents the information the team developed to enable it to compute the monetary benefits produced by the event. The information was obtained from the scope document and the team's process observations and was supplemented by input from the site manager.

The team determined that all monetary savings at Oakland associated with the nonflammable blending process and cylinder preparation were hard savings as the changes needed to realize them were done in the event and the labor freed was redeployed to the flammable blending side. These savings amounted to $82,385.13 for the first year of operation. From this amount, the cost of the tools and battery chargers for the three nonflammable blend booths was deducted to achieve a first year savings of $82,175.13. Exhibit 25 summarizes the final monetary benefits from the Kaizen event.

The benefits produced on the flammable side at Oakland required that the team continue its change implementation past the week. With Sandra's support, this was a certainty—but we abided by the rule that if a change is not achieved during the event and requires additional action, it is counted as soft until that action is taken. The soft savings at Oakland amounted to $67,477.50 for the first year, less the costs of improvements. With the replication of the process improvements to the remaining three plants producing nonflammable blended gases, the first year soft savings would rise by $31,777.00 for the cylinder preparation work processes and $33,738.75 for the blending processes.

By Friday noon, we had completed Task D4. Act to Improve the Target Work Process. We were ready to address the tasks that end a Kaizen event.