Development of Lean Maturity Model for Operational Level Planning Mohammad Ali Maasouman A Thesis in the Department of Mechanical and Industrial Engineering Presented in Partial Fulfillment of the Requirements for the Degree of Master of Applied Science in Industrial Engineering at Concordia University Montreal, Quebec, Canada December 2014 © Mohammad Ali Maasouman, 2014 ABSTRACT Development of Lean Maturity Model for Operational Level Planning Mohammad Ali Maasouman The purpose of this thesis is to develop a visual, data-driven operational lean maturity model (LMM). The model intends to assess the level of lean maturity and the lean effectiveness in different axes of production cells (PCs). Lean is a transformation journey, in which, change management and organizational culture are critical elements of successful implementation. Diverse maturity and assessment models have been developed to evaluate and lead the organizational transformation toward leanness. The main goal of lean is to create more value for the customers by removing wastes. Despite the important role of PCs in creating value, the transformation principles in the operational level have not been considered as deserved. Moreover, the research on lean assessments has used either inputs (tools and processes) or outputs (performance) to evaluate leanness. However, to evaluate the effectiveness of lean practices, both groups of indicators should be measured separately but analyzed together. Considering the mentioned gaps, the findings of a thorough literature review on lean principles, tools, metrics and assessment models were synthesized to develop LMM for PCs through four stages: defining maturity levels; defining lean axes; suggesting main control items and performance measures; and suggesting enablers. A case study is carried out for gathering data of analysis and explanatory study of results. The qualitative and quantitative data on lean capability and performance results of two PCs was collected through direct observation and audit. To quantify the qualitative indicators of leanness, a scoring system is used based on the major and minor non-conformances. Minimum of fuzzy membership value is selected to calculate the overall performance of each lean axis. Then, the results of leanness are compared with the performance of PCs to find the gaps between requirements of leanness and results of their practices, and to fill that gap by focusing on the areas of strength and those needing improvement. Results of the case study show that the developed model can be successfully used to measure both leanness and lean effectiveness through assessment of lean-performance. The model can be applied by practitioners as a framework to design and develop a company-specific LMM. iii ACKNOWLEDGMENT I am extremely grateful for the support I received from my advisor, Dr. Kudret Demirli who has been a constant source of knowledge and support throughout my research. Without his excellent guidance on lean and fuzzy systems, the work in this form would not be possible. I am also very thankful for the support of individuals who take part in my research during data collection, checklist preparation, audit and discussion meetings including RPS team, workshop managers and supervisors of two manufacturing cells of case study and Engineering Director of ABC Company. I would also like to thank my colleagues in industrial engineering lab for their time to read my thesis and provide me with constructive feedbacks. This thesis is dedicated to: My beloved wife for her support throughout my time at graduate school, I appreciate her patience during some of the more stressful times, as well as her time to take care of my dearest Sepanta. My beloved parents for their never fading support and love, and my younger brother, who takes care of my father with his health issues when I was far away from home during graduate study. iv Table of Contents Development of Lean Maturity Model for Operational Level Planning ......................... iii ABSTRACT ..................................................................................................................... iii ACKNOWLEDGMENT.................................................................................................. iv Table of Contents .............................................................................................................. v LIST OF TABLES ......................................................................................................... viii LIST OF FIGURES ......................................................................................................... ix CHAPTER 1: INTRODUCTION ..................................................................................... 1 1.1 Introduction ......................................................................................................... 1 1.2 Statement of Research Problem .......................................................................... 2 1.3 Research Objectives ............................................................................................ 5 1.4 Research Questions ............................................................................................. 6 1.5 Research Overview ............................................................................................. 6 1.6 Definition of Terms ............................................................................................. 8 2 CHAPTER 2: LITERATURE REVIEW .................................................................. 11 2.1 The Theoretical Framework .............................................................................. 11 2.2 Review of Lean History .................................................................................... 11 2.2.1 TPS and Lean .............................................................................................. 12 2.2.2 XPS.............................................................................................................. 13 2.3 Lean in Strategy Level, Lean in Functional Level ............................................ 14 2.4 Lean Principles, Tools and Metrics ................................................................... 17 2.4.1 Lean Principles ............................................................................................ 17 2.4.2 Lean Tools ................................................................................................... 21 2.4.3 Lean - Performance Metrics ........................................................................ 25 v 2.5 Lean Maturity and Assessment Models ............................................................ 31 2.5.1 Qualitative Assessment ............................................................................... 32 2.5.2 Quantitative Assessment ............................................................................. 38 2.6 Critical Analysis of Literature ........................................................................... 39 3 CHAPTER 3: METHODOLOGY ............................................................................ 42 3.1 Overview of Research Procedure ...................................................................... 42 3.2 Design Phase ..................................................................................................... 44 3.3 Measurement Phase ........................................................................................... 46 3.4 Analysis Phase................................................................................................... 49 3.5 Verification Phase ............................................................................................. 52 4 Chapter 4: DEVELOPMENT OF CONCEPTUAL FRAMEWORK ...................... 54 4.1 First Step: Maturity Levels ................................................................................ 54 4.1.1 Understanding (Training, Standardization, Stability) ................................. 56 4.1.2 Implementation (Effectiveness) .................................................................. 57 4.1.3 Improvement (Efficiency) ........................................................................... 58 4.1.4 Sustainability (Autonomy) .......................................................................... 58 4.1.5 Maturity Levels - Conclusion ...................................................................... 59 4.2 Second Step: Maturity Axis .............................................................................. 60 4.2.1 People .......................................................................................................... 64 4.2.2 Facilities Management ................................................................................ 67 4.2.3 Working Condition ...................................................................................... 68 4.2.4 Production Processes ................................................................................... 70 4.2.5 Quality ......................................................................................................... 71 4.2.6 Just In Time (JIT) ........................................................................................ 72 4.2.7 Leadership ................................................................................................... 73 vi 4.3 Third Step: Lean and Performance Objectives ................................................. 74 4.4 Fourth Step: Enablers ........................................................................................ 78 5 Chapter 5: DATA COLLECTION AND ANALYSIS ............................................. 81 5.1 Definition of Leanness Indicators: .................................................................... 82 5.2 Development of Checklists for Measurement of Leanness Indicators: ............. 84 5.3 Definition of Performance Indicators:............................................................... 85 5.4 Collecting the Data of Leanness and Performance ........................................... 86 5.5 Data Analysis Plan and Implementation ........................................................... 90 5.6 Overall Leanness ............................................................................................... 91 5.7 Overall Performance ......................................................................................... 98 6 Chapter 6: RESULTS AND DISCUSSION ........................................................... 108 6.1.1 Leanness Indicators vs. Performance Measures ........................................ 108 6.1.2 Application of Model ................................................................................ 115 7 Chapter 7: CONCLUSION ..................................................................................... 117 7.1 Overall Summary of Findings ......................................................................... 117 7.2 Conclusion ....................................................................................................... 117 7.3 Limitations and Delimitations ......................................................................... 118 7.4 Recommendation and Future Research ........................................................... 121 BIBLIOGRAPHY ......................................................................................................... 122 APPENDICES .............................................................................................................. 129 Appendix A: .............................................................................................................. 130 Appendix B: .............................................................................................................. 132 Appendix C: .............................................................................................................. 135 vii LIST OF TABLES Table 1: Four Approach of lean production ...................................................................... 16 Table 2: Lean principles.................................................................................................... 20 Table 3 : lean tools and techniques ................................................................................... 24 Table 4: lean criteria for each lean objective .................................................................... 28 Table 5 : lean metrics ........................................................................................................ 29 Table 6: Summary of lean Maturity Levels ...................................................................... 38 Table 7: Four levels of lean maturity model in production cells ...................................... 60 Table 8: Suggested performance metrics in each axis of LMM ....................................... 77 Table 9: Lean techniques-maturity level matrix ............................................................... 79 Table 10 : Leanness indicators of axis Facilities .............................................................. 83 Table 11: sample of questions used for measurement of leanness indicators ................... 85 Table 12: Coding of leanness indicators and performance measures ............................... 87 Table 13: Leanness indicators – production cell 1............................................................ 89 Table 14: Leanness indicators – production cell 2............................................................ 90 Table 15: leanness indicators of each axis ........................................................................ 92 Table 16: leanness indicators of each axis ........................................................................ 97 Table 17: Performance measures of production cells 1 and 2 .......................................... 99 Table 18: Data collection results on performance measures .......................................... 101 Table 19: Overall performance based on minimum fuzzy membership function .......... 106 Table 20: Lean-Performance Benchmarking criterion – Production cells 1 and 2 ......... 114 viii LIST OF FIGURES Figure 1 : Most widely methodologies of process improvement ........................................ 2 Figure 2: Porter value chain ................................................................................................ 3 Figure 3 : Toyota Production System “House” ................................................................... 4 Figure 4: Two level of lean Management ......................................................................... 15 Figure 5: Renault Production System model .................................................................... 23 Figure 6: Two generation of lean implementation ............................................................ 31 Figure 7: RPS Roadmap.................................................................................................... 33 Figure 8: lean Enterprise model developed by LAI .......................................................... 34 Figure 9: Shingo principles of operational excellence ...................................................... 37 Figure 10 : Shingo Transformational Process ................................................................... 37 Figure 11: Framework of the research approach .............................................................. 43 Figure 12: Gradual development of new culture .............................................................. 56 Figure 13: IPO Model ....................................................................................................... 62 Figure 14 : Inputs of a typical manufacturing process ...................................................... 63 Figure 15 : lean Maturity model - Axes ............................................................................ 64 Figure 16: Performance indicators in LMM ..................................................................... 76 Figure 17: Progression of lean in each level ..................................................................... 93 Figure 18: leanness results – Production Cell 1 ................................................................ 94 Figure 19: leanness results – Production Cell 2 ................................................................ 94 Figure 20: Fuzzy membership function of P11, P23, P31, P32, P51, and P52 ............ 103 Figure 21: Fuzzy membership function of P21, P22, P41, P42, P53, and P62 ............. 105 Figure 22: Overall performance ...................................................................................... 107 Figure 23: leanness and performance assessment – Production cell 1 ........................... 108 Figure 24: leanness and performance assessment – Production cell 2 ........................... 109 Figure 25: Level of target achievement – Production Cell 1 .......................................... 111 Figure 26: Level of target achievement – Production Cell 2 .......................................... 112 Figure 27: lean – Performance Benchmarking Criterion – Production Cells 1 and 2 .... 114 Figure 28: Improvement through lean practice ............................................................... 118 ix LIST OF ABBRIVIATIONS AHP Analytic hierarchy process EDI Electronic data interchange FMEA Failure Mode and Effects Analysis FIFO First In, First Out JIT Just In Time KPI Key Performance Indicator LMM Lean Maturity Model MTBF Mean time between failures MTTR Mean Time To Repair OEE Overall equipment effectiveness PDCA Plan, Do, Check, Act TPS Toyota Production System TQM Total Quality Management TPM Total Productive Maintenance VA Value added VSM Value stream mapping WIP Work in process x