Rapid Plant Assessment

“Lean manufacturing assessment to read a

plant fast, to assess if a factory is truly lean”

1
 History of the Lean RPA

Developed by Dr. R. Eugene Woodson in 1998

 Served as Group VP in Johnson Controls for Automotive Systems
 Experience includes significant leadership positions in university,
government, and industrial environments
 Based on lessons learned in the US automotive industry in the early
80’s
 Traces back to the Toyota Production System and their evaluation of
automotive suppliers
 Article published in Harvard Business Review, May 2002

Used over 400 times for 150 companies by 2002

 Implemented at the Univ of Michigan Business School
 Dr. Woodson, now a Professor of Operations Management

Lean Rapid Plant Assessment 2

 What is the Lean RPA?

Have you ever felt that the plant tour was a waste of time
at the start of your audit?

•Lean Rapid Plant Assessment (Lean RPA) adds significant

value to your plant tours and your audit reports.

•RPA can tell if a factory is lean with a brief plant tour. Some
Lean Practitioners might prefer the term “Gemba Walk”

•RPA maximizes the return on a typical plant tour for audits

focused on Efficiency and Effectiveness

To a trained eye, a quick plant tour can reveal a lot about a company!

Lean Rapid Plant Assessment 3

 Why use the Lean RPA?
Simple and powerful tool to take visual cues
about strengths and weaknesses and
assess leanness of the operations.

Identify areas of efficiency/effectiveness that

should be treated as best practices.

Identify problems with suppliers early.

What Lean RPA isn’t…

• It is only ONE factor to consider and is not the whole answer!
• It is NOT a substitute for Due Diligence.

Lean Rapid Plant Assessment 4

 Methodology

1  Team of 3~5 trained people observing all aspects of a plant’s

environment, like an audit team with entire day spend on-site

 Talking with the workforce and managers

2  Looking for evidences of best practices
 Picking up visual cues, not distracted by taking notes
 Each member is lead for few categories
 It's important that we not take notes during the tour
• Note taking detracts from picking up visual cues and impedes communication with
employees during the plant tour
 Meet immediately after the tour to fill work sheets
3  Team consensus on final recommendation & next steps

Lean Rapid Plant Assessment 5

 Lean RPA Tools

Rating Sheet
 Eleven (11) Categories rated numerically to assess leanness
 Based on 6 possible discrete levels of performance
 From Poor to Best In Class
Questionnaire
 Twenty (20) Yes/No questions to determine if best practices are followed in the
categories from the Lean RPA Rating Sheet.

Lean Rapid Plant Assessment 6

 RPA Rating Sheet
11 Dimensions of Lean

Source: R. Eugene Goodson, “Reading A Plant—Fast” Harvard Business Review, May 2002, pp. 108–9.
FIGURE 15–13
[Link], 2003

RPA tools 1. Rating Sheet 2. Questionnaire

Lean Rapid Plant Assessment 7
 Lean RPA Rating

• Assessment on a scale from ‘poor’ (1) to ‘excellent’ (9) to ‘best in

class’ (11).
• Total scores between 11 (all poor) and 121 (all BIC); Average 55
• Rating sheet also links to relevant questions in questionnaire
• Plants rated every year and drives YOY improvements
• Determine a course of focused improvement
• Categories with low rat­ings are instantly visible opportunities for
improvement & should be the first steps on a journey to Lean.

Easy to learn, Quick to put into practice – but proved very powerful in application!

Lean Rapid Plant Assessment 8

Lean RPA Questionnaire - example

More Yeses,
Leaner the plant is

No = Waste;
Inefficiency

RPA tools 1. Rating Sheet 2. Questionnaire

Lean Rapid Plant Assessment 9

RPA Radar Chart

Ford Lean Assessment Radar Chart (for comparison)

Lean Rapid Plant Assessment 10

Insights of 11 Lean Dimensions

Lean Rapid Plant Assessment 11

 Customer Satisfaction

 Both Internal & External customers to be known and

1.1. Customer Customer satisfaction should be their primary goal
CustomerSatisfaction
Satisfaction
2.2. Safety, Given overview of its layout, work force, customers
Safety, Environment,Cleanliness,
Environment, Cleanliness,Order

Order
3.3. Visual
VisualManagement
ManagementSystem
System and products
4.4. Scheduling
SchedulingSystem
System  Feeling invited to the plant
5.5. Use
Use of Space,Movement
of Space, MovementofofMaterials
Materials  Quality and Customer satisfaction ratings
and Product Line Flow
and Product Line Flow prominently posted
6.6. Levels
LevelsofofInventory
Inventoryand
andWork
WorkininProcess
Process
7.7. Teamwork and Motivation  Exceptional plant visit experience & visitors leave
Teamwork and Motivation with positive feelings
8.8. Condition
ConditionandandMaintenance
MaintenanceofofEquipment
Equipment
and Tools
and Tools
9.9. Management
ManagementofofComplexity
ComplexityandandVariability
Variability
10. Supply Chain Integration
10. Supply Chain Integration
11. Questions: Where does your product go next?
[Link]
CommitmenttotoQuality
Quality Related Questions 1, 2 and 20

Workers in the best plants clearly know who their INTERNAL & EXTERNAL customers are

Lean Rapid Plant Assessment 12

 Safety, Environment, Cleanliness, Order

 Clean and orderly plant; Easy to estimate

1.1. Customer inventory; products move safely and
CustomerSatisfaction
Satisfaction
2.2. Safety,
Safety, Environment,Cleanliness,
Environment, Cleanliness,Order
Order efficiently
3.3. Visual
VisualManagement
ManagementSystem
System
4.4. Scheduling
 Well lit plant; Good air quality; Low noise
SchedulingSystem
System
5.5. Use
Use of Space,Movement
of Space, MovementofofMaterials
Materials
levels
and Product Line Flow
and Product Line Flow  Visual labeling to mark inventory, tools,
6.6. Levels
LevelsofofInventory
Inventoryand
andWork
WorkininProcess
Process
7.7. Teamwork and Motivation processes and flow
Teamwork and Motivation
8.8. Condition
ConditionandandMaintenance
MaintenanceofofEquipment
Equipment  All component parts treated with equal
and Tools
and Tools
9.9. Management
care
ManagementofofComplexity
ComplexityandandVariability
Variability
10. Supply Chain Integration
10. Supply Chain Integration
11. Related Questions 3, 4, 5 and 20
[Link]
CommitmenttotoQuality
Quality

Clean and Orderly Plant. Quick to estimate inventory. Products move safely & efficiently

Lean Rapid Plant Assessment 13

 Visual Management System
 Tools providing visual cues are apparent in well
functioning plants
1.1. Customer
CustomerSatisfaction
Satisfaction  Clearly guides employees to appropriate locations
2.2. Safety,
Safety, Environment,Cleanliness,
Environment, Cleanliness,Order
Order and tasks; higher productivity
3.3. Visual
VisualManagement
ManagementSystem
System
4.4. Scheduling  Organizational tools like Kanban scheduling; color
SchedulingSystem
System coded production lines; plainly posted work
5.5. Use
Use of Space,Movement
of Space, MovementofofMaterials
Materials
and Product Line Flow instructions, quality and productivity charts and
and Product Line Flow maintenance records
6.6. Levels
LevelsofofInventory
Inventoryand
andWork
WorkininProcess
Process
7.7. Teamwork and Motivation
Teamwork and Motivation
 Kiosks displaying names of team members,
8.8. Condition
ConditionandandMaintenance
MaintenanceofofEquipment
Equipment productivity measures, vacation schedules, central
and Tools
and Tools location such as a status board for current state of
9.9. Management
ManagementofofComplexity
ComplexityandandVariability
Variability overall operation
10. Supply Chain Integration
10. Supply Chain Integration
11.
[Link]
CommitmenttotoQuality
Quality
Related Questions 2, 4, 6-10 and 20

Tools that provide visual cues and directions are readily apparent in well functioning plants

Lean Rapid Plant Assessment 14

 Scheduling System
 Single Pacing process, end of line controls
production of upstream activities
1.1. Customer  PULL - Demand for product at each work center
CustomerSatisfaction
Satisfaction
2.2. Safety, is triggered by demand at the next.
Safety, Environment,Cleanliness,
Environment, Cleanliness,Order
Order
3.3. Visual
VisualManagement
ManagementSystem
System  Production lines are not waiting for parts,
4.4. Scheduling
SchedulingSystem
System thereby restricts inventory build up, improves
5.5. Use
Use of Space,Movement
of Space, MovementofofMaterials
Materials quality, and reduces downtime
and Product Line Flow
and Product Line Flow
6.6. Levels  Central scheduling system tend to over or under
LevelsofofInventory
Inventoryand
andWork
WorkininProcess
Process
7.7. Teamwork and Motivation
Teamwork and Motivation produce because instructions come to each line
8.8. Condition
ConditionandandMaintenance
MaintenanceofofEquipment
Equipment from a central computer.
and Tools
and Tools  Visual & verbal communication between
9.9. Management
ManagementofofComplexity
ComplexityandandVariability
Variability operators should be possible and see another’s
10. Supply Chain Integration
10. Supply Chain Integration
11. inventory and override central scheduling
[Link]
CommitmenttotoQuality
Quality
Related Questions 11 and 20

Line balancing & Pull system – EOL, controls speed & production for upstream activities

Lean Rapid Plant Assessment 15

 Use of Space, Movement of Materials and Product line flow
 Efficient use of space and production material
are moved only once
1.1. Customer  Production materials should be stored at line
CustomerSatisfaction
Satisfaction
2.2. Safety,
Safety, Environment,Cleanliness,
Environment, Cleanliness,Order
Order side, not in separate inventory storage areas
3.3. Visual
VisualManagement
ManagementSystem
System  Tools and setup equipment should be kept near
4.4. Scheduling
SchedulingSystem
System the machines
5.5. Use
Use of Space,Movement
of Space, MovementofofMaterials
Materials
and Product Line Flow  Counting Forklifts is an easy way to get a sense
and Product Line Flow
6.6. Levels of a plant’s use of space. Forklifts require wide
LevelsofofInventory
Inventoryand
andWork
WorkininProcess
Process
7.7. Teamwork and Motivation
Teamwork and Motivation aisles, are expensive to operate, increase
8.8. Condition
ConditionandandMaintenance
MaintenanceofofEquipment
Equipment pollution and encourage unnecessary movement
and Tools
and Tools of materials.
9.9. Management
ManagementofofComplexity
ComplexityandandVariability
Variability
10. Supply Chain Integration
 Plants regularly free-up space and make it as a
10. Supply Chain Integration productivity objective
11.
[Link]
CommitmenttotoQuality
Quality
Related Questions 7, 12, 13 and 20

Space is valuable commodity and productivity objective

Lean Rapid Plant Assessment 16

 Levels of Inventory and Work in process

 Quick read on inventory by watching a production

1.1. Customer
CustomerSatisfaction
Satisfaction line and counting the inventory at each work
2.2. Safety,
Safety, Environment,Cleanliness,
Environment, Cleanliness,Order
Order center.
3.3. Visual
VisualManagement
ManagementSystem
System
4.4. Scheduling
 Internal operations seldom require high
SchedulingSystem
System inventories; Observable no. of any component
5.5. Use
Use of Space,Movement
of Space, MovementofofMaterials
Materials
and Product Line Flow part is a good measure of a plant’s leanness.
and Product Line Flow
6.6. Levels
LevelsofofInventory
Inventoryand
andWork
WorkininProcess
Process  Each part should go directly to the next process
7.7. Teamwork and Motivation
Teamwork and Motivation to be used fairly quickly.
8.8. Condition
ConditionandandMaintenance
MaintenanceofofEquipment
Equipment
and Tools
and Tools
9.9. Management
ManagementofofComplexity
ComplexityandandVariability
Variability
10. Supply Chain Integration
10. Supply Chain Integration Related Questions 7, 11 and 20
11.
[Link]
CommitmenttotoQuality
Quality

Inventory and WIP levels are good measure of plant’s leanness

Lean Rapid Plant Assessment 17

 Teamwork and Motivation

 Motivated employees are easily discerned

1.1. Customer
CustomerSatisfaction
Satisfaction during a brief tour; even a short talk with an
2.2. Safety,
Safety, Environment,Cleanliness,
Environment, Cleanliness,Order
Order operator tells you a lot
3.3. Visual
VisualManagement
ManagementSystem
System
4.4. Scheduling
 Posters or charts on problem solving;
SchedulingSystem
System employee empowerment procedures – Visible
5.5. Use
Use of Space,Movement
of Space, MovementofofMaterials
Materials
and Product Line Flow indicators of team work
and Product Line Flow
6.6. Levels
LevelsofofInventory
Inventoryand
andWork
WorkininProcess
Process  Posters boasting of Quality & productivity
7.7. Teamwork and Motivation
Teamwork and Motivation improvements are good indicators of
8.8. Condition
ConditionandandMaintenance
MaintenanceofofEquipment
Equipment teamwork & motivation.
and Tools
and Tools
9.9. Management
ManagementofofComplexity
ComplexityandandVariability
Variability
10. Supply Chain Integration
10. Supply Chain Integration
11.
[Link]
CommitmenttotoQuality
Quality Related Questions 6, 9, 14, 15 & 20

People focusing on productivity & quality goals; know their jobs well & share their knowledge

Lean Rapid Plant Assessment 18

 Condition and Maintenance of Equipment and Tools

 Equipment are clean & well maintained. Maintenance

1.1. Customer
CustomerSatisfaction
Satisfaction records are posted
2.2. Safety,
Safety, Environment,Cleanliness,
Environment, Cleanliness,Order
Order  Posting cost and maintenance records, company
3.3. Visual
VisualManagement
ManagementSystem
System signals to employees that management cares about
4.4. Scheduling
SchedulingSystem
System the product and they care about the work people do.
5.5. Use
Use of Space,Movement
of Space, MovementofofMaterials
Materials  Ask shop floor workers, how things are working –
and Product Line Flow
and Product Line Flow Operators provide insight on equipment performance
6.6. Levels
LevelsofofInventory
Inventoryand
andWork
WorkininProcess
Process
7.7. Teamwork and Motivation  Whether Operators and PD are involved in
Teamwork and Motivation purchasing tools and equipment as they are in best
8.8. Condition
ConditionandandMaintenance
MaintenanceofofEquipment
Equipment
and Tools position to understand strengths & weakness of new
and Tools
9.9. Management equipment and need of the line.
ManagementofofComplexity
ComplexityandandVariability
Variability
10. Supply Chain Integration
10. Supply Chain Integration
11.
[Link]
CommitmenttotoQuality
Quality
Related Questions 16 and 20

In best plants, equipment is clean and well maintained

Lean Rapid Plant Assessment 19

 Complexity and variability management

 Check to understand operation manages, controls

1.1. Customer
CustomerSatisfaction
Satisfaction and reduces the complexity and variability.
2.2. Safety,
Safety, Environment,Cleanliness,
Environment, Cleanliness,Order
Order  Difficult to judge, but you can watch for certain
3.3. Visual
VisualManagement
ManagementSystem
System indicators. Ex: Collecting much more data than they
4.4. Scheduling
SchedulingSystem
System need; manually recording data and a large number of
5.5. Use
Use of Space,Movement
of Space, MovementofofMaterials
Materials keyboards for data entry: poor complexity handling
and Product Line Flow
and Product Line Flow  Build error proofing into their production processes,
6.6. Levels
LevelsofofInventory
Inventoryand
andWork
WorkininProcess
Process
7.7. Teamwork and Motivation designing systems to aid operators in picking the
Teamwork and Motivation right parts out of a broad selection. If a worker
8.8. Condition
ConditionandandMaintenance
MaintenanceofofEquipment
Equipment
and Tools reaches for the wrong valve, triggers red lights and
and Tools possibly trigger audible signal. Ask workers if such
9.9. Complexity
Complexityand andVariability
Variabilitymanagement
management
10. Supply Chain Integration systems prevail
10. Supply Chain Integration
11.
[Link]
CommitmenttotoQuality
Quality
Related Questions 8, 17 & 20

Best plants use the same types of parts in the manufacture of different products

Lean Rapid Plant Assessment 20

 Supply chain integration

 Best operations keeps costs low and quality high by

1.1. Customer working closely with a relatively small no. of suppliers
CustomerSatisfaction
Satisfaction
2.2. Safety,
Safety, Environment,Cleanliness,
Environment, Cleanliness,Order
Order
 Multiple suppliers for same part or family of parts
3.3. Visual
VisualManagement
ManagementSystem
System indicates lack of supplier involvement in development
4.4. Scheduling
SchedulingSystem
System  Best practice for plants to pay suppliers based on
5.5. Use
Use of Space,Movement
of Space, MovementofofMaterials
Materials completed, shippable product; Paid automatically when
and Product Line Flow
and Product Line Flow the product comes off the line, cutting down paperwork
6.6. Levels
LevelsofofInventory
Inventoryand
andWork
WorkininProcess
Process and no. of people involved in settling accounts.
7.7. Teamwork and Motivation
Teamwork and Motivation  Ask plant personnel, how suppliers are paid. Presence
8.8. Condition
ConditionandandMaintenance
MaintenanceofofEquipment
Equipment of lots of paperwork on the receiving dock – Indication
and Tools
and Tools of high costs in the supply chain.
9.9. Complexity
Complexityand andVariability
Variabilitymanagement
management
10. Supply Chain Integration
10. Supply Chain Integration
11.
[Link]
CommitmenttotoQuality
Quality
Related Questions 18 & 20

Keep costs low and quality high; Work with small number of dedicated, supportive suppliers

Lean Rapid Plant Assessment 21

 Commitment to Quality

 Attention to quality is usually easy to spot. If

1.1. Customer
CustomerSatisfaction
Satisfaction employees are proud of their quality program,
2.2. Safety,
Safety, Environment,Cleanliness,
Environment, Cleanliness,Order
Order they usually give it a name, displaying the
3.3. Visual
VisualManagement
ManagementSystem
System plant’s vision or mission statement, business
4.4. Scheduling
SchedulingSystem
System objectives and metrics showing achievements
5.5. Use
Use of Space,Movement
of Space, MovementofofMaterials
Materials
and Product Line Flow to date.
and Product Line Flow
6.6. Levels
LevelsofofInventory
Inventoryand
andWork
WorkininProcess
Process
 What plant does with scrap? Better plants call
7.7. Teamwork and Motivation
Teamwork and Motivation attention to scrap rather than hide it.
8.8. Condition
ConditionandandMaintenance
MaintenanceofofEquipment
Equipment  Ask people what they do when a faulty part
and Tools
and Tools comes off the line
9.9. Complexity
Complexityand andVariability
Variabilitymanagement
management
10. Supply Chain Integration  Discarding or discreetly putting it out of the way
10. Supply Chain Integration
11.
[Link]
CommitmenttotoQuality
Quality is a sign of inefficiency.

Related Questions 15, 17, 19 and 20

Always striving to improve quality and productivity

Lean Rapid Plant Assessment 22

 Example of Lean RPA in action

• When Dr. Goodson was the CEO of Oshkosh Truck, they were engaged in a highly
competitive auction for Pierce Manufacturing, a leading U.S. fire truck maker.
• Pierce's executives didn't favor Oshkosh as the acquirer, therefore, Pierce only permitted
them one 30-minute tour of each of their three plants.
• Oshkosh learned so much in those short tours (using Lean RPA) that they knew they could
cut costs by $$M per year
 Identified major areas of waste for elimination
• As a result, Oshkosh offered a higher price than the company's financials would have
indicated and WON the auction.

Lean Rapid Plant Assessment 23

 Conclusion

Adding aspects of the Lean Rapid Plant Assessment to

audits can add value to those tours and the audit
reports.

The Lean Rapid Plant Assessment can maximize the

return on an audit plant tour
 Particularly where assessing Lean, Efficiency, or
Effectiveness is an important goal.

Thank you!
Lean Rapid Plant Assessment 24
 Back-up

Lean Rapid Plant Assessment

 Can Lean RPA apply to audits?

YES! - It began life as a supplier audit tool with Toyota

Move to back-up
Lean RPA applies very well during plant tours for;
 1st party audits (Internal)
 2nd party audits (Supplier)

Lean Rapid Plant Assessment

What is Rapid Assessment Process

Lean Rapid Plant Assessment

Lean is about more than just Muda…

Lean Rapid Plant Assessment

 Lean RPA for Effectiveness
In the full implementation of the Lean RPA, a group is trained in advance to go
in as a team and perform the assessment in individual areas, very much
like an audit team.

A full RPA may easily involve 3-5 people with an entire day spent on-site.
Higher cost and greater commitment.
Gives the most bang for the buck.

Lean Rapid Plant Assessment

 RPA Rating Sheet Template
Rated by:_______________ Rapid Plant Assessment Apr-02

Tour Date:______________ Table 1--Rating Sheet Plant:________________

Below Above Best in
Ratings Poor Average Excellent
Average Average Class
No Measure Score 1 3 5 7 9 11 Scores

1 Customer Satisfaction

Safety, environment,
2
cleanliness, & order
Visual Management
3
Deployment
4 Scheduling system

Product flow, space use &

5
material movement means
6 Inventory & WIP Levels

People teamwork, skill

7
level, & motivation
Equipment & tooling state
8
& maintenance
Ability to Manage
9
Complexity & Variability
10 Supply Chain Integration

11 Quality System Deployment

Totals

RPA tools 1. Rating Sheet 2. Questionnaire

Lean Rapid Plant Assessment

RPA Rating Sheet – 11 dimensions of lean
1. Customer Satisfaction
2. Safety, Environment, Cleanliness, and Order
3. Visual Management System
4. Scheduling System
5. Use of Space, Movement of Materials and Product
Line Flow
6. Levels of Inventory and Work in Process
7. Teamwork and Motivation
8. Condition and Maintenance of Equipment and Tools
9. Management of Complexity and Variability
10. Supply Chain Integration
11. Commitment to Quality

RPA tools 1. Rating Sheet 2. Questionnaire

Lean Rapid Plant Assessment

 RPA Rating Sheet Vs Questionnaire - Relationship Matrix

Lean Dimensions Vs. Questions Matrix RPA Questions

Dimensions of Lean Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 Q19 Q20

1 Customer satisfaction   
2 Safety, enviro nment, cleanliness and o rder    
3 Visual management system        
4 Scheduling system  
5 Use of space, material & product flow
   
6 Levels of inventory and WIP
  
7 Teamwork and motivation
    
8 Condition and maintenance of eqpt/ tools
 
9 Complexity and variability management
  
10 Supply chain integration
 
11 Commitment to quality
   

Lean Rapid Plant Assessment

 Rating sheet evaluative factors
Apr-02 Rapid Plant Assessment Rating--Table 1 Rating Considerations Chart 1
No Measure Factors
Customer Customer ratings, quality certifications & ratings, warranty & product liability costs, employee knowledge of external and internal customer
1 requirements, visitor materials & welcome, market share, rate of new product introduction & acceptance
Satisfaction
Safety & environment record, place for everything & everything in its place, cleanliness of operations--exterior & interior, floors, equipment, spills,
Safety, environment,
2 leaks, noise, lighting, paint, dust, air quality, employee dress, restroom conditions, desks & workbench order & cleanliness, degree of "spiffing" for
cleanliness, & order visitors (negative), inventory order, material flow order & cleanliness, color & other coding for safety & order

Operations mission & performance objectives visible; visibility of labeling & coding of product lines, inventory, equipment, & tooling; color coding &
Visual Management differentiation ; visibility of customer identification & ratings; visibility of charts tracking operation's & teams' safety, quality, & productivity, control room
3 showing status of total operation, customer order & order fulfillment visibility, Kanban deployment, inventory count can be made visually, machines &
Deployment
tool labeling--costs, preventive maintenance visibility, product displays, audit results visible

Degree of scheduling to customer order, order process efficiency, product line scheduling at single point, scheduling buckets (each order, hourly,
4 Scheduling system daily, weekly, or monthly), supplier scheduling & delivery, replenishment versus order fulfillment, computer scheduling versus kanban, pull versus
push systems, flow time efficiencies, backroom costs of scheduling, MRP costs, data entry costs
Product line versus shop layout, rolling carts pulled by tractors or by hand or conveyers versus forklifts, travel distances between processes, material
Product & material
5 movement responsibility--process owned or separate material staff, container size (forklift requirement?), containers designed for parts families,
flows; space use single versus multiple docks to minimize material travel, space utilization, goals for space use reduction
WIP levels at each process, WIP in transit in plant, separate stores versus line side storage, number of inventory storage areas, finished product
Inventory & WIP
6 levels, total inventory to sales ratio, process cycle time to flow time ratios, countability of inventory, WIP movemend triggered by computer, material
Levels department or next process, theoretical versus actual flow times

Lean Rapid Plant Assessment

 Rating sheet evaluative factors
Apr-02 Rapid Plant Assessment Rating--Table 1 Rating Considerations Chart 1
No Measure Factors
Team problem solving capability & history, employee willingness to talk about customers, products, & company; uniformity of dress;
People teamwork,
communications & recognition environment; sales per employee; team meeting areas & performance charts; training investments, educational
7 skill level, & support, benefit package & costs, unionization activity, workforce-management relationship, community support, company-supported activities
motivation (picnics, open houses, sports teams, local involvement, employee knowledge of & support of customers & business, work instructions standards

Preventive maintenance system, setup change times, integrated go-no go quality checks, machine performance data availability, knowledge &
Equipment & tooling
8 utilization of bottleneck processes, process control capability, total asset utilization, operator routine maintenance, maintenance staff & teams, MRO
state & maintenance replenishment efficiency, tool & fixture orderliness, cleanliness, & storage location, equipment improvement policy, equipment technology strategy

Use of common parts, processes, & procedures prototype process, paper transactions required on floor, keyboard entries versus bar coding,
Ability to Manage backroom paperwork & computer transactions costs, matching of data collected with data needed, simplicity & clarity of operations layout, indirect to
9 Complexity & direct labor ratio, support staff to total workforce ratio, overhead cost ratios, commonality of tooling & fixturing, commonality of equipment & tools,
commonality of support software & applications programs across the operation & among sister plants, equipment efficiencies, ability to handle
Variability
variable demand, ability to eliminate controllable variations, ability to smooth demand, ability to handle supply chain, number of suppliers
Number of suppliers, supplier release system--from inventory levels or customer order, supplier certification, sourcing policies--short-term or long-
Supply Chain
10 term, supplier quality ratings, delivery, & productivity objectives & history, new product development responsibility, responsibility for kitting parts, C-
Integration stock replenishment efficiency, supplier material scrap & rework, supplier cost-saving ideas implemented, supplier knowledge of lean
Quality certification, quality process & measurement at each process & for each product, scrap & rework, problem solving process, product &
Quality System
11 customer quality data, quality ratings, new product startup process, continuous improvement environment, degree of focus on customer satisfaction ,
Deployment implementation of best practices, degree operational strategies are linked to corporate strategy, total quality system well-developed & deployed

Lean Rapid Plant Assessment

 Lean RPA Questionnaire

Total number of Yesses (20 possible) is an indicator of the

plant’s leanness:
 the more Yesses, the leaner the plant is.

Each question only answered Yes if the plant obviously

adheres to the Lean principle implied by the question.
 Elimination of waste, Visual Factory, 5S, etc…

Lean Rapid Plant Assessment

 Cost of Sales Assessment - Example
RPA Cost of Sales Example (note comments in cells) 18-Apr-02
Plant Data Value Plant Data Value
Yearly Sales $100,000,000 Material % of COS 56%
Gross Margin 15.0% Freight in % of Material 4.0%
Total production workers 350 Scrap & rework in Material 3.0%
Indirect workers (in above) 110 Plant Size Sq Ft 150,000
Salaried staff 55 Plant fixed cost $/Sq ft $ 5.00
Standard Hours/yr 1,800 Plant variable cost $/Sq ft $ 4.50
Average Direct Labor rate $ 15 Equipment fixed cost $ 4,000,000
Average Indirect Labor rate $ 17 Equipment variable cost $ 750,000
Average hourly overtime 10.0% PP&E $ 6,175,000
Fringe % 42.0% Manufacturing O/H rate 300%
Average salary $ 50,000 Salaried O/H rate 60%
Salaried Fringes 30.0% Corporate allocation %/sales 2.00%
Salaried overtime 10.0% Tour evaluation 55 (Table 1) rating; 5 yes's for Table 2

COS RPA "Cut" RPA COS % COS Traditional COS Computation Value % COS
Yearly Sales $ 100,000,000 Sales $ 100,000,000
Direct Materials + freight in $ 48,156,077 56.7% Material % of COS $ 49,645,440 58.4%
Production people costs $ 15,379,452 18.1% Direct Labor $ 7,128,000 8.4%
Salaried people costs $ 3,932,500 4.6% Manufacturing Overhead 21,384,000 25.2%
Total peopla costs $ 19,311,952 22.7% Salaried Overhead $ 4,840,000 5.7%
PP&E $ 6,175,000 7.3% Corporate allocation $ 2,000,000 2.4%
Other $ 9,356,971 11.0% Cost of Sales $ 85,000,000 100.0%
Corporate Allocation $ 2,000,000 2.4% Numbers in green are computed from the plant data or Table 3
COS $ 85,000,000

100.0% Numbers in red are estimates using Table 3
Gross Profit $ 15,000,000 Numbers in blue are gleaned from the tour
Gross Margin 15% Note: direct labor is 8.4% of COS, while total people costs are 19.2%
Sales per Employee $ 246,914 Relationships are in the cells if this MS Excel sheet is opened.

Lean Rapid Plant Assessment

 Lean RPA application to Audits

Do I need to use both tools?

 Ideally, yes, but

 Use one or the other, or both at your
discretion

Lean RPA Questionnaire alone?

 Review the Lean RPA questions before a tour,

 Fill out the answers immediately after the tour
 Highlight major areas of positive and negative
 minimal time investment
 without disrupting the tour or audit flow

Lean Rapid Plant Assessment

 Lean RPA Data - benchmarking

Source: Read a plant – Fast, R. Eugene Goodson, Harvard Business Review, May 2002, pg 107.

Lean Rapid Plant Assessment

Problem and Solution

• Have you ever felt that the plant tour was

a waste of time at the start of your audit?

• Adding aspects of the Lean Rapid Plant

Assessment (Lean RPA) to your audits
can add significant value to those tours
and your audit reports

• RPA maximizes the return on a typical

plant tour for audits focused on Efficiency
and Effectiveness

Lean Rapid Plant Assessment

 What Lean RPA isn’t…

• It is NOT a substitute for Due Diligence.

• It is only ONE factor to consider and is not the whole

answer!

• It NOT an independent lean assessment.

Lean Rapid Plant Assessment

 Can Lean RPA apply to audits?

But wait just one moment…

x
It's important that we not take notes during the tour

Note taking:

 detracts from picking up visual cues

 impedes communication with employees on the plant floor.

Lean Rapid Plant Assessment

 Lean RPA Questionnaire

More Yeses,
Leaner the plant is

No = Waste;
Inefficiency

RPA tools 1. Rating Sheet 2. Questionnaire

Lean Rapid Plant Assessment

RPA Radar Chart

Lean Rapid Plant Assessment

 Example of Lean RPA in action

Oshkosh learned so much in those short tours (using Lean RPA) that
they knew they could cut costs by $$M per year
 Identified major areas of waste for elimination

As a result, Oshkosh offered a higher price than the

company's financials would have indicated and
WON the auction.

Lean Rapid Plant Assessment