Six Sigma and Lean Integration

© 2004 Johnson & Johnson

Six Sigma and Lean Six Sigma and Lean IntegrationIntegration

Johnson & JohnsonJohnson & JohnsonConsumer and Personal Care Consumer and Personal Care

December 2, 2004December 2, 2004

Page: 1


Six Sigma and Lean Integration

• What is Six Sigma at Johnson and Johnson?What is Six Sigma at Johnson and Johnson?• What is Lean at Johnson and Johnson?What is Lean at Johnson and Johnson?• How do Six Sigma and Lean work together?How do Six Sigma and Lean work together?

– SynergiesSynergies• Challenges in deploymentChallenges in deployment• Rewards: Driving business resultsRewards: Driving business results






Process Excellence

Assessment Improvement Recognition

Process Excellence

SixSigmaSixSix

SigmaSigma

MetricsMetricsMetricsLean

ThinkingLean Lean

ThinkingThinking

DesignExcellence

DesignDesignExcellenceExcellence


Role ofLeadership

Role ofLeadership

CustomerFocus

CustomerFocus

Process Mgt.& High Perf.Environment

Process Mgt.& High Perf.Environment

Fact-BasedMgt. &

Evaluation

Fact-BasedMgt. &

Evaluation

Improvement&

Innovation

Improvement&

Innovation

ContinuousAssessment& Renewal

ContinuousAssessment& Renewal

DashboardsDashboardsDashboardsDashboardsImprovement Improvement MethodologiesMethodologiesImprovement Improvement

MethodologiesMethodologiesBusinessBusiness

AssessmentAssessmentBusinessBusiness

AssessmentAssessment

What is Process Excellence?

Best PracticesBest PracticesBest PracticesBest Practices

Tools – Support the Principles

The PE Strategy is to enable every J&J business leader to adopt, use and engrain

these Business Management Principles in their organizations


Assessments


Process Excellence

SixSigmaSixSix

SigmaSigma


ThinkingLean Lean

ThinkingThinking

DesignExcellence


• Competitiveness Assessment

• 6 Processes:1. Leadership

2. Business Information and Analysis

3. Business Planning

4. Human Resources Management and Development

5. Processes (Design, Supply Chain, Regulatory and Compliance)

6. Customer and Markets

• Business Results

• Process Excellence Deployment Assessment

• Lean Maturity Assessment

• Lean Maturity

• Waste Identification, business value


Metrics / Dashboards


Process Excellence

SixSigmaSixSix

SigmaSigma


ThinkingLean Lean

ThinkingThinking

DesignExcellence


• Key Metrics

• Causal

• Drill down into lower level driver• Well dressed measures

• Definition of measures

• Lagging and leading indicators

• Benchmark

• Visual

• Reviewed periodically


Design Excellence


Process Excellence

SixSigmaSixSix

SigmaSigma


ThinkingLean Lean

ThinkingThinking

DesignExcellence


Methodology used to develop products and/or processes that consistently meet

customer requirements.

• Based on Six Sigma Approach

• 5 Steps1. Define

2. Measure

3. Analyze

4. Design

5. Validate

Execute with Excellence

Do it right first


Six Sigma


Process Excellence

SixSigmaSixSix

SigmaSigma


ThinkingLean Lean

ThinkingThinking

DesignExcellence


Methodology used to attack process variability in order to eliminate defects

• 5 Steps1. Define

2. Measure

3. Analyze

4. Innovative Improvement

5. Control

• Use data to solve problems

• Statistical approach

• Rigorous training


Six Sigma Improvement Cycle

NEXT PROBLEMNEXT PROBLEM

DATA DRIVENSOLUTION

PRACTICALSOLUTION

PRACTICALPROBLEM

DATA BASEDPROBLEM


Six Sigma DMAI2C Improvement Methodology

1DEFINE

2MEASURE

3ANALYZE

4INNOVATEIMPROVE

5CONTROL

Pro

ject

SIPO

C

VOC

Data

Sampling

Gage R&RPatternsCapability

Process

Analysis

Mu

lti-Vari

Org

anize

Cau

ses

Hyp

oth

esisT

esting

Reg

ression

DoE

Solutions

FMEA

Pilot

Implement-

ation

Closure

Evaluate

Monitor

Docum

entS

tand

ardize

Co

ntro

l

Define

Measure

Analyze

Innovate

Improve

Control


Six Sigma – DMAI2C - Chartered Projects

Project Charter

Project Name Montreal plant Lean thinking implementation

Products Impacted ob digital, Stayfree and Carefree

Sponsor W. Morrell Company & Plant Location J&J Montreal Master Belt Telephone Number Black Belt Denis Gallagher Telephone Number Core Team Members

Gaétan Côté, Christian Gendron, Lori Ann Potash, Gaétan Chevalier, Daniel Dorion, Simon Kurzum, Richard Gougeon, Louis Canuel,

Start Date June 2001 Target Completion Date June 2003

Description

1. Project Description

(Purpose-of-Process statement needs to be included)

Implement Lean Thinking tools such as Inventory Replenishment Levels (IRL) and Consumption Trigger Report (CTR) to do our planning based on real demand instead of forecast. Implement a continuous improvement process to reduce inventories, cost and cycle time.

2. Process Scope & Project Scope

We will start the implementation with the o.b. digital business and the Quark Advantage business. We will then proceed with the Stayfree Maxi business, the Carefree business and finally the UltraThin business. We will be looking at each business from the supplier to the customer as described by the Value Stream Mapping that will be performed in each business.The goal is to reach the objective set by the team on the Future Value Stream Map within 18 months of the start date.

3. Project Goal (tie metrics back to purpose statement)

Basel. Current Goal Savings

Reduce the inventory cost and therefore improve cash flow. ( Equivalent carrying cost reduction )

Inv. cost $7.0MM ($630,000)

Reduce annual Exel warehousing cost by reducing the number of finished good pallets in their DCs.

Outside warehousing

cost ($)

$150,000

Reduce re-deploys cost Re-deploys cost

$300,000

Reduce double handling at the Montreal plant. Double handling

cost

$ 320,000

4. Business Results This project will improve PPC’s cash flow by $7.0 MM. We will also improve the PPC P&L by $450,000 and the Montreal plant operating cost by $320,000. We will also reduce the cycle time of each targeted business by more than 60 Days.

5. Team members Gaétan Côté and from each business where we`ll implement Lean, we will have the Business Unit Manager and representatives of the following functions : QA, Distribution, Transportation, Planning, Purchasing and production. The list of the team members will be detailed in the project charter of each business.

6. Support Required

IM support

7. Customer Benefits

Increase responsiveness by decreasing the cycle time and reduce the cost.

8. Schedule ( See attached schedule )

Phase Planned

Complete

Status

D- Define: Project charter written, communicated and sponsored. 2 QT ’01 Completed

M- Measure: Do Current VSM; Do Future VSM; Identify project opportunities to work on; Do manual IRL.

2 QT ’01 to 1 QT ‘02 Completed

A- Analyze: Validate manual IRL ( simulation ); Do LMS test version reality check; Analyze project opportunities.


I2- Innovative Improvement: Live LMS version turn on; Start project opportunities implementation.


C- Control: Monitor LMS; Start monthly renewal meeting; Continue project opportunities identification, implementation and tracking.


Content

• Sponsor

• Team Members

• Description

• Benefits

• Base line

• Entitled state

• Goals

• Timeline

Process

• Aligned to organization objectives

• Signed by sponsor, manager and Belt mentor

• Results verified by finance controller


1000009500090000850008000075000

95% Confidence Interval for Mu

97000920008700082000

95% Confidence Interval for Median

Variable: Total Sold

83077,1

5153,7

84235,8

Maximum3rd QuartileMedian1st QuartileMinimum

NKurtosisSkewnessVarianceStDevMean

P-Value:A-Squared:

97285,7

15864,4

97268,9

99215,096881,093126,584529,076303,0

80,128040-9,5E-01

60757493 7794,7

90752,4

0,4450,320


95% Confidence Interval for Sigma


Anderson-Darling Normality Test

Descriptive StatisticsWeeks 2, 3

End o

f

month

4321

125000

100000

75000

50000

Statu

Tota

l S

old

Sales of past 18 weeks(means are indicated by solid circles)

100000800006000040000


105000950008500075000


Variable: Total Sold

76477

16007

77289

Maximum3rd QuartileMedian1st QuartileMinimum

NKurtosisSkewnessVarianceStDevMean

P-Value:A-Squared:

104914

32711

99390

113605105354 94075 73405 43812

170,285310-9,6E-01

4,62E+0821493,088339,8

0,1210,565


95% Confidence Interval for Sigma


Anderson-Darling Normality Test

Descriptive StatisticsWeeks 1, 2, 3, 4, 5

Demand variability weeks # 1, 2, 3, 4, 5Calculation : Z (2.054 at 98 %CI) * σ

Dem. Var. = 2.054 * 21 493 = 44 147

Demand variability weeks # 2, 3

Dem. Var. = 2.054 * 7 795 = 16 011

P-Value- 0.000

DD MM AA II22 CCSix Sigma – DMAI2C - Statistical Analysis


Six Sigma – DMAI2C – Control Results

600000

500000

400000

300000

$ D

olla

rs

05

/02

/20

04

22

/01

/20

04

08

/01

/20

04

19

/12

/20

03

05

/12

/20

03

21

/11

/20

03

07

/11

/20

03

24

/10

/20

03

10

/10

/20

03

26

/09

/20

03

12

/09

/20

03

29

/08

/20

03

14

/08

/20

03

31

/07

/20

03

17

/07

/20

03

03

/07

/20

03

19

/06

/20

03

05

/06

/20

03

22

/05

/20

03

06

/05

/20

03

17

/04

/20

03

03

/04

/20

03

20

/03

/20

03

06

/03

/20

03

20

/02

/20

03

06

/02

/20

03

Date

Inventory on hand

Mean=390095

UCL=431668

LCL=348523

Bef ore

Mean=469812

Control

• Control chart with control limits

• Before and after project

• Mean and Variability


Six Sigma / Design Excellence Improvement Strategies

Is the gapsmall?

Customer Requirements

Process Capability

FundamentalRedesign

IterativeImprovement

YESNO

• Design a new product / process• Broad approach• Blank sheet of paper approach• High Risk• Longer time span• Addressing many CTQs • Goal: Quantum Leap

• Fix an existing process• Narrow Focus• Use current process model• Low Risk• Shorter Time Span• Addressing few CTQs• Goal: Improvement

DesignExcellence

Six Sigma






Lean Thinking


Process Excellence

SixSigmaSixSix

SigmaSigma


ThinkingLean Lean

ThinkingThinking

DesignExcellence


Methodology used to transform large scale complex processes to deliver customer value

faster, improve work flow and eliminate waste

• Road map (4 steps)1. Prepare2. Analyze / Plan3. Execute

4. Continuous Improvement

• Tools for key processes• Supply Chain• New Products Development• Demand Generation


Lean Thinking relies on 7 Key Fundamental Principles

Goal AlignmentAll elements of the process have linked/common goals to achieve

customer and shareholder defined outcomes. (All functions have goals that are aligned to the

operational results- marketing, sales, quality, manufacturing, suppliers, human resources, information technology, etc.)

ValueValue is always defined from the

customer’s perspective.

Value CreationAll activities (work) from the

time a customer need is identified until it is satisfied must add value from the customer’s perspective in

meeting that need. (They are willing to pay for it.)

Pull Work is initiated only at the signal of demand. Work is synchronized and

designed based on demand patterns and known events. Work and

inventory are kept at the lowest level of investment possible and unique

attributes are delayed until last point possible.

FlowBoth material and

information flow are simplified and

optimized to ensure the shortest possible cycle time. The end

objective is one piece flow.

Roles, Responsibilities and Culture

Roles follow process design and responsibilities are based on

process performance requirements (fit to process) and are designed to

enable line of sight to the whole process.

Continuous Improvement

There is a systematic change and renewal process to bring about innovation and refinement of

efficiency, rhythm time and quality in order to continuously drive down

costs and cycle time.


Lean Thinking “Sources of Waste”

Waste: “any human activity which absorbs resources but creates no value”- Lean Thinking; Womack & Jones, 1996

•Taiichi Ohno, defined seven types of waste found in manufacturing processes...

•Overproduction Waste•Overproduction Waste

•Inventory Waste•Inventory Waste

•Conveyance Waste•Conveyance Waste

•Defect-Production Waste•Defect-Production Waste

•Processing-related Waste•Processing-related Waste

•Operation-related Waste•Operation-related Waste

•Idle Time Waste•Idle Time Waste

But these ideas apply to But these ideas apply to mostmost business processes… business processes…

waste is any waste is any ““non-value-addednon-value-added”” activity, where activity, where “value” is defined by the customer“value” is defined by the customer


Lean Thinking - Make to Order Hierarchy

Make to Order - Pull

Make to Order - Push/Pull

Inventory as a Control Point - Pull

Inventory as a Control Point - Push/Pull

Make to Forecast - Pull

Make to Forecast - Push

Ideal

“Postponement”

Downward Drivers:1) Cycle time >Order lead Time2) Many SKU’s (large # of changeovers)3) Demand variability > Mfg. Capacity

4) Many raws to many SKU’s High inventory carrying costs

5) High variability in demand (Entity is replenishing according to prior sales)

Many J&J Companies(after Lean implementation)

1) Locked in to orders2) Unresponsive to changes and customer needs3) High potential for error4) Production in anticipation of orders

Worst Case


““Lean Thinking Wheel” – Supply ChainLean Thinking Wheel” – Supply ChainM

easu

rabl

e Leverageable

Implementable

MLI

1. What is customer/market

demand variability?2. What is current

supply constraints and

variability?

3. Can we make to order?

4. Can we use postponement?

5. Can we use inventory as a control point?

6. What’s my Entitlement

process? VSM-Line Live-Renewal

7. What is benefit of

Entitlement?(Business Case)

8. What is my implementation plan to

get there?

9. What’s my Competitive process?

VSM-End State MLI

10. Start over!


Supply Chain - Elements of Lean Thinking

1. Value stream mapping• Current and Future states

• Taking waste out of the processes

2. Inventory as a control point (Pull Finished Goods)• Demand driven replenishment

3. Rhythm (How often do we make products)• Impacts service and inventory levels

4. Work-In-Process kanbans (Pull WIP)• Demand driven production of components

5. Raw material kanbans (Pull Raw Materials)• Supplier managed replenishment


• Current State and Future State– Flow of material or process– Flow of information– Value analysis– Projects to achieve Future state

• Applications– Supply Chain (Internal and 3rd party manufacturing)– New Products Development– Demand generation– Transactional processes– Human Resources

Value Stream Mapping



Lift Truck

Lift TruckLift Truck

Lift Truck Lift Truck Warehouse

Lift Truck Lift Truck Warehouse

TruckLift Truck Warehouse Lift Truck

TruckLift Truck


TruckLift Truck Lift Truck Lift Truck

Truck

Lift Truck Lift Truck Lift Truck

TruckLift Truck Lift Truck

TruckLift Truck Lift Truck Lift Truck

Lift Truck

F

F

TPT

TPT

F

TPT

TPT

TPT

TPT Lift TruckLift Truck to Powder Lines

Lift TruckLift Truck to Powder Lines

JBP Primary

Manufacturing Process

JBPCS Primary


Shower to ShowerPrimary


STS Primary

JBP Primary

JBPCS Primary

JBP Primary

JBPCS Primary

STS Primary

JBPCS Primary

STS Primary

Line B Filling

Line A Filling

Line C Filling

Line B Filling

Line A Filling

Supply All Lines

Lift Truck

ILift Truck

Supply All Lines

I2 Forecast

MFG-Pro DC

Interface DC SplitsWeekly Splits

2yrs.MFG Pro Forecast

DRP Runs

Excel DCDo Receipts

Weekly BucketsBy SkuBy Site

WeeklyConsolidatedProduction

Requirements

ProductionSchedulingBy Planner

WeeklyScheduling

Current

Excel OXOX LoadLeveling

Schedule By ShiftExcel

Access Database

MRP Scheduling

WeeklyConsolidatedProduction

RequirementsMolding

ProductionSchedule

By Planner

Excel WeeklySchedule Current

Access DB

TPT - Shippingrequirements

available on line

Fax (F)8-12 Weeks Req't

Truck

Truck

Truck

Electronic SilosKanban Signal

Lift Truck

F Pump Silo toPrimaryIPump Talc into

Silos

Manufacturing ProcessOutside Source

LuzenacVermont

(Talc)

RT = 21 days | RF = Weekly

I

I

I IInventory

Production Line

IInventory

Production Line

IInventory

Production Line

I

I

I

I

I

I

TPT Corn ProductsChicago

Outside SourceRT = 14 days | RF = Weekly

Pump CSinto Primary



TPT/FPump From Drum

To PrimaryI

PerfumeSuppliers



Lift Truck

F

TruckOutside Source

Bi Carb SuperSackOhio


I

Truck

Milk Run



I

2 railcars - $65,2007.5 supply days

1.2 DOS

I

I

QA Accept & Count

IQA - 5 day micro test

I

I

I

I

I

I

I

I

1 Railcar$0

(pay after use)

I

I

I


Pump from Sackto Primary



Pump to Primary


Closure Molding


I

I

Pump Resins toSilo


Pump Resin toInjection Blow

Molding Machine


Bottle Molding


Dump into bin

JBPCS Primary

MRP Runs RawReqs

To Filling Lines

To Molding

PO Receipt QA Release

Zinc OxideZinc Corp. of

Amer.Pittsburg,PA

Outside SourceRT = 7 days | RF = Monthly

TCP


-

$65,200

Misc. To Be MDAd

LabelsMA


Resins(Bottles)

TX


Colorant(Bottles)

NC

Outside SourceRT = 14 | RF = Weekly

Resins(Caps & Sifters)

GA


Colorants(Caps & Sifters)

NC



Shippers


P/S Labels


STS Primary

STS Primary

Schedule fromAccess DB

C/T=5.3hr/plt

Closures

C/O = NA

C/T=1.4 hr/plt

Bottles

C/O = NA

Schedule fromAccess DB

Line B Filling

C/T = 44 plts/shift

Loading = 100%

C/T = 32.5 plts/shift

C/O = 0.6 hr/shift

Loading = 70%

Capacity Actual

Line A Filling


Loading = 100%


C/O = 0.5 hr/shift

Loading = 60%

Capacity Actual

Line C Filling


C/T = 53 plts/shift

Loading = 100%

C/T = 40 plts/shift

C/O = 0.9 hr/shift

Loading = 40%

Capacity Actual

0.25 Days

0.9

$65,800

I

1 Pallet

Stretch Wrap

ManufacturingProcess


Loading = 100%

C/T = 82.2 plts/shiftAvg = 26.2 plts/shift

C/O = 0.7 hr/shift

Loading = 55%

Capacity Actual

Filling LineSummary

1.2 DOS

-

1.2 DOS

-

21 Days

-

-

-

-

0.01 Days

-

-

-

-

0.01 Days

-

-

-

-

0.01 Days

-

-

-

-

0.01 Days

-

-

-

-

0.01 Days

-

-

-

-

0.01 Days

-

-

-

-

0.01 Days

-

-

-

-

0.22 Days

-

-

-

5.3 hours

1 Pallet

1 Pallet

1 Pallet

Whse - $178,20011.5 supply days

3.3 DOS


1.3 DOS

Whse - $40005.5 supply days

0.07 DOS

11.8 Days

11.8

$263,700

4.8 DOS

-

Total

Cycle Time

Inv Supply Days

Inv Dollars

Inventory DOS

Processing Time

77.84 Days

52.9

$3,087,600

57.6 DOS

0.01 Days

-

-

-

0.3 Hours

Silos -$111,60012.5 supply days

2.1 DOS

13.6 Days

13.9 Days

$731,700

13.7 DOS

-

Rail Road Shipment

Rail Road Shipment

Inbound Supervisor

CSRsubmits

order

Trailer waits in rail yard Trailer waits in rail yard

Trailer waits tobe picked up by carrier

Trailer waits in DC yard

6.0 Days

7.1

$527,400

9.8 DOS

-

24.9 Days

19.2

$1,433,800

26.9 DOS

2 Hours

Shipping

Plant creates &Inputs DO into

PRS; calls carrierto pick up trailer.

A

Shipping

Trailer loaded andsealed for truck

Inbounding

Exel DC clerk viewsDO in PRS.

Prioritizes & callscarrier for

appointment.

IMechanisburg

Memphis

Truck

CPC Skillmanmarks HOTtrailers inPRS daily

Inbounding

Exel DC clerkgenerates inbound

priority list

Inbounding

Trailer positionedat door

Inbounding

Exel unload.Operator unloads,

counts, and recordsnumber of cases on

tally sheet

Inboundsupervisor givesblind tally sheet

to unloadoperator

Inbounding

Inboundsupervisor verifiestally against DO

Inbounding

Exel inventory controlclerk assigns baylocations to tally

sheet

Inbound Supervisor

Inboundsupervisor

redistributesunload tally w/

pre-located baylocations

Inbounding

Exel unload.Operator puts pallets

away

Inbounding

Exel Inbound Clerkmanually updatesTopex & MFG Pro.Removes DO from

PRS

FIFOPicking & Staging

Exel 2nd & 3rd shifts

Shipping

Exel 1st shift

Waits until appt. granted byDC;

---contingent on QA release--- Appt. cannot be granted until

D.O. is visibile. D.O. does not appear in PRS

until QA release complete

Ontario, CA

Truck

I I

Electronic Information FlowRelease

I

I

I

I

I

MechanisburgMemphis

Truck

Ontario, CA

Truck

Trailer waits in carrier yard

Rail Road Shipment

ITrailer waits to

be picked up by carrier

I

I

QA Release Process3.5 Days

Shipping

Trailer loaded andsealed for rail

Lift Truck

SLCCDM Forecast

By Customer DCBy SKU

By Excel DCMonthly Splits

WarehouseManagement

Exel Topex

Inbound Supervisor

Order Management

SLC Pathfinder Maint/Inquiryassigns ship dateE&E- - 60% Sales

Order Management

SLC OMEDCust. Service Rep.resolves EDI errors

Order Generation

SLC ManugisticsVMR generates order

based on 852 data

Customer

InternalJob

4x day

Pick SheetsWarehouse

E&E standingappt. FT

TruckDaily LTL, SS,

FT, AIR

Truck

Upon Receipt of 940Exel calls receiving dept. for appt. on non E&E customers

Canadian DC

Exel West

Exel East

Exel Central

Promo Site

*Mfg Time* *Mfg Time*

Cycle Time

Inv Supply Days

Inv dollars

Legend

Inventory DOS

Processing Time

Revision #11April 16, 2003Debby Harbin

Packing


Bottle Packing


Decorating


Primary Constraints

1.5 JBP 4 JBP 4 JBPCS

1.5 JBPCS

9 JBP 9 JBPCS 15 JBP 15 JBPCS * 15 MED ** ** 15 LAV ** ** 15 VAN ** ** 22 JBP 22 JBPCS * 22 LAV ** ** 22 VAN ** **

No Primary Constraints

Significant PrimaryConstraints

Some Primary Constraints

Railcar - $43,6004.0 supply days

0.8 DOS

Whse Count

Whse - $12,40025 supply days

0.2 DOS

QA - 5 day micro test

Rail Road Shipment

Whse Count

Whse CountQA - 5 day micro test


0.07 DOS

QA Accept & Count

QA Accept & Count Whse - $27,20011.0 supply days

0.5 DOS

QA Accept & Count Whse - $00 supply days

0 DOS


0.2 DOS


0.3 DOS


0.8 DOS

Silo Inventory$0

(pay after use)


1.8 DOS

Whse - $119,2002.2 DOS


0.7 DOS


4.2 DOS

Dock Staging36 pallets - $27,700

0.4 supply days0.5 DOS

I

Dock Staging - Intl Orders64 pallets - $38,100

0.5 supply days0.7 DOS

Shipping

Trailer loaded andsealed for truckLift Truck Intl carrier

Truck Affiliate Customer

-

Lift Truck Lift Truck

Lift Truck Warehouse

Lift Truck Warehouse

Truck Lift Truck Lift Truck


Truck Lift Truck Lift Truck

Truck





I

I

I

I

I

I

I

I

I

I

Lift Truck Lift Truck to Powder Lines

Lift Truck Lift Truck to Powder Lines

JBP Primary


JBPCS Primary


Shower to ShowerPrimary


STS Primary

JBP Primary

JBPCS Primary

JBP Primary

JBPCS Primary

STS Primary

JBPCS Primary

STS Primary

Line B Filling

Line A Filling

Line C Filling

Line C Filling

Line A Filling

Supply All Lines

IInventoryStaging

Lift Truck

Supply All Lines

I2 Forecast

MFG-Pro DC

Interface DC SplitsWeekly Splits

2yrs.MFG Pro Forecast

DRP Runs

Excel DCDo Receipts

Raw MaterialRequired13 WeeksInternet (I)

Fax (F)8-12 Weeks Req't

E-mail (E) 8-10Weeks Req't

Truck

Truck

Truck

Electronic SilosKanban Signal

E Pump Silo toPrimary

Inventory

IPump Talc intoSilos

Manufacturing ProcessOutside Source

LuzenacVermont

(Talc)


IInventoryWHSE

IInventoryWHSE

IInventoryWHSE

IInventory

Production Line

IInventory

Production Line

IInventory

Production Line

IInventoryWHSE

IInventoryWHSE

IInventory

Molding WHSE

IInventory

Silo

IInventory

Molding WHSE

IInventory

Molding WHSE

I Corn ProductsChicago


Pump CSinto Primary


Lift Truck

IPump From Drum

To PrimaryI

Inventory

PerfumeSuppliers



I

TruckOutside Source

Bi Carb SuperSackOhio


IInventoryWHSE

Inventory

Truck

Milk Run



Inventory Rail Cars inRoyston

I

1 Railcar$32, 000

2 Railcars$5,000

I

IInventory

Rail Car with Resin

0.1 Railcar$8,100

IInventory

Molding WHSE

IInventory

Molding WHSE





Pump to Primary


Closure Molding


IInventory

3 Days | $10,000

IInventoryWHSE

3 Days | $40,000

Pump Resins toSilo


Pump Resin toInjection Blow

Molding Machine


Bottle Molding


Dump into bin

JBPCS Primary

MRP Runs RawReqs

PO Receipt QA Release

Zinc OxideZinc Corp. of

Amer.Pittsburg,PA

Outside SourceRT = 7 days | RF = Monthly

TCP


0.17 Days

2

$53,145

Shippers(Line B)

GA


LabelsMA


Resins(Bottles)

TX


Colorant(Bottles)

NC

Outside SourceRT = 14 | RF = Weekly

Resins(Caps & Sifters)

GA


Colorants(Caps & Sifters)

NC


Inner PackersSimkins


ShippersStone

Marietta, GA(Line A & C)


Six Pack StretchFilm


STS Primary

STS Primary

C/T = 2hrs/pallet

Closures

C/O = NA

C/T = 1hr/pallet

Bottles

C/O = NA

Line B Filling

C/T = 40 pallets/shift

C/O = 0.6 hr/shift

Loading = 100%


C/O = 0.6 hr/shift

Loading = 70%

Capacity Actual

Line A Filling


C/O = 0.5 hr/shift

Loading = 100%


C/O = 0.5 hr/shift

Loading = 60%

Capacity Actual

Line C Filling



C/O = 0.9 hr/shift

Loading = 100%


C/O = 0.9 hr/shift

Loading = 40%

Capacity Actual

-

-

$ 575

3.5 Days

-

$ 157,900

1 Pallet

Stretch Wrap

ManufacturingProcess


C/O = 0.7 hr/shift

Loading = 100%


C/O = 0.7 hr/shift

Loading = 55%

Capacity Actual

Summary

$8,800

$14,625

$194,400

1 DOS

-

-

-

3.5 DOS

-

21 Days

-

-

-

-

0.01 Days

-

-

-

-

0.01 Days

-

-

-

-

0.01 Days

-

-

-

-

0.01 Days

-

-

-

-

0.01 Days

-

-

-

-

0.01 Days

-

-

-

-

0.01 Days

-

-

-

-

0.08 Days

-

-

-

2 Hours

$14,880

$21,600

$2,400

$7,200

$8,880

1 Pallet

1 Pallet

1 Pallet

$3,840

$48,000

$7,200

$26,400

$4,800

14 Days

8

$ 166,149

4DOS

-

Total

Cycle Time

Inv Supply Days

Inv Dollars

Inventory DOS

Processing Time

104.3 Days

28

$2,762,000

63 DOS

82.3 Hours

46 Pallets

0.03 Days

-

-

-

0.8 Hours

$10,000

18 Days

18

$373,025

9 DOS

-

0.5 Days

0.5

$ 830

-

-

Rail Road Shipment

Rail Road Shipment

Rail Road Shipment

Inbound Supervisor

CSRsubmitsorder

Trailer waits in rail yard Trailer waits in rail yard


Trailer waits in DC yard

38 Days

-

$1,680,200

38 DOS

2 Hours

1 Day

-

-

-

24 Hours

1 Day

-

-

-

24 Hours

Monthly Forecast From Affiliate

ShippingPlant creates &Inputs DO into

PRS; calls carrierto pick up trailer.

A

Shipping

Trailer loaded andsealed for truck

InboundingExel DC clerk views

DO in PRS.Prioritizes & calls

carrier forappointment.

IMechanisburg

Memphis

Truck

CPC Skillmanmarks HOTtrailers inPRS daily

Inbounding

Exel DC clerkgenerates inbound

priority list

Inbounding

Trailer positionedat door

InboundingExel unload.

Operator unloads,counts, and recordsnumber of cases on

tally sheet

Inboundsupervisor givesblind tally sheet

to unloadoperator

Inbounding

Inboundsupervisor verifiestally against DO

Inbounding

Exel inventory controlclerk assigns baylocations to tally

sheet

Inbound Supervisor

Inboundsupervisor

redistributesunload tally w/pre-located bay

locations

Inbounding

Exel unload.Operator puts pallets

away

InboundingExel Inbound Clerkmanually updatesTopex & MFG Pro.Removes DO from

PRS

FIFOPicking & Staging

Exel 2nd & 3rd shifts

Shipping

Exel 1st shift

Waits until appt. granted byDC;

---contingent on QA release--- Appt. cannot be granted until

D.O. is visibile. D.O. does not appear in PRS

until QA release complete

Ontario, CA

TruckI I

Electronic Information FlowRelease

I

I

I

I

I

MechanisburgMemphis

Truck

Ontario, CA

Truck

Trailer waits in carrier yard

Rail Road ShipmentI


I

I

QA Release Process3.5 Days

Shipping

Trailer loaded andsealed for rail

Lift Truck

SLCCDM Forecast

By Customer DCBy SKU

By Excel DCMonthly Splits

WarehouseManagement

Exel Topex

Inbound Supervisor

Order Management

SLC Pathfinder Maint/Inquiryassigns ship dateE&E- - 60% Sales

Order Management

SLC OMEDCust. Service Rep.resolves EDI errors

Order Generation

SLC ManugisticsVMR generates order

based on 852 data

Customer

InternalJob

4x day

Pick SheetsWarehouse

E&E standingappt. FT

TruckDaily LTL, SS,

FT, AIR

Truck

Upon Receipt of 940Exel calls receiving dept. for appt. on non E&E customers

Canadian DC

Exel West

Exel East

Exel Central

Promo Site


Cycle Time

Inv Supply Days

Inv dollars

Legend

Inventory DOS

Processing Time

Revision (#2)6/5/01

Lean SystemDatabase

DowntimeDatabase

ConsumptionTrigger Report

0.04 Days

0.5

$45,100

-

-

$ 575

3 Days

-

$ 135,400

1 DOS

-

-

-

3 DOS

-

21 Days

-

-

-

-

0.01 Days

-

-

-

-

0.0 Days

-

-

-

-

0.01 Days

-

-

-

-

0.01 Days

-

-

-

-

0.01 Days

-

-

-

-

0.0 Days

-

-

-

-

0.0 Days

-

-

-

-

0.08 Days

-

-

-

2 Hours

3 Days

3

$ 50,000

1DOS

-

Total

Cycle Time

Inv Supply Days

Inv Dollars

Inventory DOS

Processing Time

72 Days

16

$1,731,000

41 DOS

58.3 Hours

0.03 Days

-

-

-

0.8 Hours

12 Days

12

$248,700

6 DOS

-

0.5 Days

0.5

$ 830

-

-

28 Days

-

$1,162,000

28 DOS

2 Hours

1 Day

-

-

-

24 Hours

1 Day

-

-

-

24 Hours


Cycle Time

Inv Supply Days

Inv dollars

Legend

Inventory DOS

Processing Time

Vendor AppliedRM Bar Code

Vendor ManagedInventories

Use ofTelemetry

WarehouseKanbans

InternetBased

Communications

Raw MaterialConsignment

ReduceQA Testing

Kanban betweenMFG Staging

& WHSE

MoldingKanban

MoldingChangeoverReduction

Labelingat Filling

Stretch WrapConveyor

FillingChangeoverReduction

Conveyorto Dock

GenericShippers

BabyTwin PackShippers

TotalPreventativeMaintenance

Closure Moldingat Filling

Pallet HeightOptimization

ConsumptionTrigger Report

Database

Finished GoodsRelease Time

Reduction

TransitTime

Reduction

DC AppointmentTime Reduction

DC UnloadTime Reduction

Reconciliationand Put-away

Time Reduction

Direct Shipfrom MFGto Trade

Supplier TriggerReport & Raw

Material Kanbans

X

Reduce Run Size to .75 Shift

(Lines A & B)

X

X Reduce DemandVariability

DC26Canada Shipment Codes

Impound

4 days

-

$176,800

4 DOS

5 Hours

2 Days

-

$88,400

2 DOS

0.5 Hours

1 day

-

$44,200

1 DOS

5 Hours

1 Day

-

$44,200

1 DOS

0.5 Hours

Current State

Future State


Inventory Replenishment Level (IRL)Inventory Replenishment Level (IRL)

Safety StocksIntranet Pull System – Finished Goods

Inventory as a Control Point


Work-in-process Kanbans

Work-in-process Kanbans (signals)

• Visual

• Simple

• In the work environment

• Linked to ERP system for transaction


Raw Material Kanbans

Internet Based Raw Material Pull (Kanban) System


Lean Manufacturing Toolbox

– Rapid Changeover– Standard Work– Center-lining– Maintenance Excellence– Cellular Manufacturing– Five S– Line Balancing– Layout Analysis / Improvement


Lean Thinking in 3 phases

• Lean Manufacturing 2001-05– J&J Plants

• Lean Contract Manufacturing 2003-06– Contract sites

• Lean Enterprise 2004-07– Sales and Logistics– New Products Development– Transactional and Office processes






Six Sigma / Lean Integration

Create a current Value Stream Map

LeanCreate a

future Value Stream Map

Lean

Prioritize initiatives

Six Sigma

Charter Projects

Six Sigma

Use DMAI2C for project

Six Sigma

Use Lean Tools for project

Lean

Six Sigma

Lean


Process Excellence

Design ExcellenceLeanSix Sigma

Data Based Problem Solving and Variation Reduction

Create Customer Value by Eliminating Waste

Design Based on Customer Needs

Data Based Decisions + Reduced Waste + Customer Focus = World Class Manufacturing

Business Metrics and Dashboards

Six-Sigma

Six-Sigma / Lean Synergies



• What is Six-Sigma at Johnson and Johnson?What is Six-Sigma at Johnson and Johnson?• What is Lean at Johnson and Johnson?What is Lean at Johnson and Johnson?• How do Six-Sigma and Lean work together?How do Six-Sigma and Lean work together?

– SynergiesSynergies– DivergenceDivergence

• Challenges in deploymentChallenges in deployment• Rewards: Driving business resultsRewards: Driving business results


Six Sigma / Lean Challenges

• After initial training, it does not stick:– Belts do not continue to execute projects

“This is hard work, when will I find the time”

• Other initiatives come on board:– Six Sigma and Lean starts to be seen as fads

“If I stand by, it will pass and I won’t have to do anything”

• Management becomes impatient with return:– Six Sigma and Lean are long term investment

“We need quick wins”


Six Sigma / Lean Success Elements

• Change management

• Visibility

• Assessment

• Control

• Passion


Effective Change ManagementChange Management

DespairGiving up

High expectationsRealisation of effort

and complexity/Informed pessimism (doubt)

Informed Optimism (confidence)Light at the end

of the tunnel

Op

tim

ism

+

-

Time

Pes

sim

ism

with effective change management


Strong Business Case


Haphazard change,false starts

Anxiety, frustration,learned helplessness

Diminishing momentum,diffuse effort

Low priority, bottomof the in-basket

SUCCESSFULSUCCESSFULCHANGECHANGE

=

=

=

=

=







A Clear and Shared Vision








Capacity for Change

Capacity for Change

Capacity for Change

Capacity for Change

Capacity for Change

Capacity for Change

Capacity for Change

Capacity for Change

Actionable First Steps








Elements of Successful Change ManagementChange Management


Beliefs/Values

Jobs /Organization

Process

Management /Measurement Systems

Six Sigma / Lean - Change ManagementChange Management

More than the process


What’s wrong with this picture?Six Sigma&

DMAI2C

SmokeSmoke TreeTree

FenceFence

ChimneyChimney AntennaAntennaDoorDoor

WindowWindow

StairsStairs

ShrubsShrubs

GrassGrass

PorchPorch

Flowers

RoofRoof

WIRESWIRES

MeterMeter

SkySky

FireFire


A picture is worth a thousand wordsA picture is worth a thousand words

Six Sigma&

DMAI2CSix Sigma / Lean Make it VisualMake it Visual


Lean Thinking AssessmentAssessment

0123456789

10Supply Chain Integration

Leadership

Continuous Improvement

Goal Alignment


Roles, Responsibilities, Culture

Flow

Pull

2002 2004

Scoring ExampleJohnson & Johnson Sample Country

Lean Company

Average Company

Traditional Company


Lean Thinking AssessmentAssessment

Johnson & Johnson Plant

Category of Waste Cost Cost Revenue Inventory ReceivableReduction Avoidance Enhancement Reduction Reduction

Transportation Waste 200 450

Motion Waste 400

Defect waste

Overproduction waste 144

Waiting time waste

Overprocessing waste 223 200

Inventory waste 3821

Total (US $) 344 623 450 3821 200

Financial Benefits (M US$)

Eliminating waste must turn in tangible financial benefits.


Lean Thinking - Monitor and ControlMonitor and Control

2004World Wide

Number of Process Centers 2004 2004 2004 2004

Elements (proc ess c enters) Ac

tua

l

Ap

pli

ca

ble

Pe

rce

nt

Ta

rge

t

Ac

tua

l

Ap

pli

ca

ble

Pe

rce

nt

Ta

rge

t

Ac

tua

l

Ap

pli

ca

ble

Pe

rce

nt

Ta

rge

t

Ac

tua

l

Ap

pli

ca

ble

Pe

rce

nt

Ta

rge

t

Current Value Stream Map 22 56 39% 43% 25 26 96% 92% 8 14 57% 86% 14 17 82% 60%Future Value Stream Map 20 56 36% 43% 25 26 96% 92% 4.5 14 32% 57% 5 17 29% 60%Rhythm 10 10 100% 100% 24 26 92% 92% 0 14 0% 36% 1 15 7% 38%Demand pull (IRL / CTR) 14 56 25% 26% 24 26 92% 92% 2 14 14% 36% 4 17 24% 37%WIP kanbans 10 13 77% 78% 13 16 81% 58% 1 14 7% 14% 1 17 6% 0%Raw material kanbans 11 13 85% 78% 17 26 65% 71% 2.1 14 15% 14% 1 17 6% 10%Total 60% 61% 82% 83% 21% 40% 26% 34%

56

Region A Region B

26

Region D

17

Region C

14




– SynergiesSynergies– DivergenceDivergence

• Challenges in deploymentChallenges in deployment• Rewards: Driving business resultsRewards: Driving business results


Six Sigma / Lean Thinking / Design Excellence

CapitalCapitalEfficientEfficient

ProfitableProfitableGrowthGrowth

Cost ofCost ofCapitalCapital

ROICROIC

GrowthGrowth

OperatingOperatingMarginMargin

Net AssetNet AssetTurnoverTurnover

CostCostManagementManagement

Fixed AssetFixed AssetManagementManagement

WorkingWorkingCapitalCapital

ManagementManagement

RevenueRevenueManagementManagement

• Product PerformanceProduct Performance• Technical SupportTechnical Support• Product MixProduct Mix• Delivery PerformanceDelivery Performance• Customer ServiceCustomer Service

• Product PerformanceProduct Performance• Technical SupportTechnical Support• Product MixProduct Mix• Delivery PerformanceDelivery Performance• Customer ServiceCustomer Service

• YieldYield• Material CostsMaterial Costs• Facility UtilizationFacility Utilization• DL and IDL EfficiencyDL and IDL Efficiency

• YieldYield• Material CostsMaterial Costs• Facility UtilizationFacility Utilization• DL and IDL EfficiencyDL and IDL Efficiency

• Facilities ModernizationFacilities Modernization• Capacity UtilizationCapacity Utilization• Process TechnologyProcess Technology

• Facilities ModernizationFacilities Modernization• Capacity UtilizationCapacity Utilization• Process TechnologyProcess Technology

• Inventory turnoverInventory turnover• DSODSO• Accounts Payable DaysAccounts Payable Days• Cycle TimeCycle Time

• Inventory turnoverInventory turnover• DSODSO• Accounts Payable DaysAccounts Payable Days• Cycle TimeCycle Time

• Market PenetrationMarket Penetration• Market DevelopmentMarket Development• Product DevelopmentProduct Development

• Market PenetrationMarket Penetration• Market DevelopmentMarket Development• Product DevelopmentProduct Development

ProcessProcessExcellence Excellence

ProjectsProjects

Delivering

Shareholder

Value


Six Sigma / Lean - Driving the Business

• Lower inventories

• Increased customer service

• Value creation in lower costs

Consumer and Personal Care Group 2001-2004


Thank you!Thank you!

Page: 47

Six Sigma and Lean Integration

Documents

sigma approach

sigma methodology

sigma dmai

sigma improvement cycle

lean work

sigma d mai

process variability

business value