Quality Council of India Relevance of Lean in MSME sector Quality - - PowerPoint PPT Presentation

Salient Features of New Scheme of Lean Manufacturing for MSME

Quality Council of India

Relevance of Lean in MSME sector

Quality Council of India

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Cabinet decision to establish Quality Council of India, in 1996 Formed in January 1997. Non-profit autonomous society Joint initiative of the Government of India, and the Indian Industry, namely ASSOCHAM, CII and FICCI. PPP – 50% seed money by Govt; 50% by the industry bodies

Purpose : To establish & operate national accreditation structure and to promote Quality through nation wide quality campaign

Mission :

• Quality for the National Well Being

Current Chairman

• Mr. Adil Zainulbhai

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Governance

Council – 38 members Governing Body – 11 members out of the Council Chairman - appointed by the Prime Minister on recommendation of the Government and Industry.

Past Chairmen:

• Mr. Ratan N. Tata

(1997-99)

• Mr. Venu Srinivasan

(1999-01)

• Dr. R. A. Mashelkar

(2001-07)

• Mr. Ajay Shankar

(2007-10)

• Mr. Arun Maira

(2010 -13)

• Mr. Saurabh Chandra

(2014)

• Mr. Amitabh Kant

(2014)

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* Currently an independent autonomous organization under Department of Science & Technology

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Training of ITI Teachers – 1800 Teachers trained on QMS/ QT Tools Awareness Programs on QMS/ QT Tools -198 programs, 7000 individuals trained on QMS/ QT tools Cluster project : Implementation of QMS/ QT Tools in 10 identified clusters Training of Polytechnic Teachers on QMS/ QT tools Evaluation Study report on Lean Manufacturing Competitiveness

National Workshop on Enabling MSME to be Competitive through Quality Tools

Working With MSME

Worldwide, micro, small and medium enterprises (MSMEs) have been accepted as the engine of economic growth and for promoting equitable development. MSMEs constitute over 90% of total enterprises in most of the economies and are credited with generating the highest rates of employment growth and account for a major share of industrial production and exports. In India too, the MSMEs play a pivotal role in the overall industrial economy of the

• country. MSMEs in India account for more than 80% of the total number of

industrial enterprises and produce over 8000 value-added products. It is estimated that in terms of value, the sector accounts for 45% of the manufacturing

• utput and 40% of the total export of the country and employs over 6 crore people.

Further, in recent years the MSME sector has consistently registered higher growth rate compared to the overall industrial sector. The major advantage of the sector is its employment potential at low capital cost (skill development).

ROLE of MSME

Status of MSME’s

The Micro, Small and Medium Enterprises (MSMEs) are a vital part of the Indian economy contributing to over 45% of industrial production and around 40% of the total

• exports. There are more than 13 million MSMEs in India employing about 31

million people, easily the single largest contributor in terms employment generation in the manufacturing sector Manufacturing Sector has been recognized as the main engine for growth of the economy The share of the manufacturing sector in Indian National GDP over the years has stagnated to 14-15% only The National Manufacturing Policy of Government

• f India envisages share of manufacturing to reach

target of 25% of the National GDP by 2022 To achieve a sustained rate of growth, the manufacturing sector needs to build and maintain competitiveness needed to face the challenges posed by globalization Under the LM Scheme, MSMEs will be assisted in reducing their manufacturing costs, through proper personnel management, better space utilization, scientific inventory management, improved process flows, reduced engineering time and so on with application of LM techniques

Problems being faced by MSME

Despite constituting more than 80 % of the total number of industrial enterprises and supporting industrial development, many MSMEs in India have problems such as

• sub-optimal scale of operation
• technological obsolescence
• supply chain inefficiencies
• increasing domestic and global competition
• fund shortage
• change in manufacturing strategies
• turbulent and uncertain market scenario.

Lean Manufacturing

Lean manufacturing is aimed at the elimination of waste in every area

• f

production including

• customer relations,
• product design,
• supplier networks and
• factory management

The goal of Lean Manufacturing is to incorporate

• less human effort,
• less inventory,
• less time to develop products, and
• less space

to become highly responsive to customer demand, while at the same time producing top quality products in the most efficient and economical manner.

Lean Manufacturing goals

• In
• rder

to stay competitive in today’s marketplace, a company must understand its customers' wants and needs and design processes to meet their expectations and requirements.

Improve Quality

• Waste is any activity that consumes time,

resources, or space but does not add any value to the product or service.

Eliminate Waste

• Reducing the time it takes to finish an activity

from start to finish is one of the most effective ways to eliminate waste and lower costs..

Reduce Time

• To minimize cost, a company must produce
• nly

to customer demand. Overproduction increases a company’s inventory costs due to storage needs.

Reduce Total Cost

4 Goals of Lean

Lean

The term “lean” is used because lean manufacturing uses “less”… 1

• Labor in factory

2

• Manufacturing space

3

• Capital Investment

4

• Material

5

• Time between the customer order and the

product shipment

Definition of Lean

A systematic approach to identifying and eliminating waste (non-value-added activities) through continuous improvement by flowing the product at the pull of the customer in pursuit of perfection.”

Non-value added is an activity that takes time, resources or space, but does not add to the value of the product or service itself.

Value-added is an activity that transforms

• r

shapes raw material or information to meet customer requirements.

Waste: Anything that adds Cost to the product without adding Value

OrderProcessing, Transport, Storage, Waiting, Rework, Machine Setup, Inspection, Machine Breakdowns, etc...

The Basics of Lean Manufacturing

It means :

• Eliminating work processes that add no value

to the product

• Simplify those processes that add value

RUN TIME

Total Lead Time

Typically >95% of Total Lead Time is Non-Value Added!!

• Specify value from the standpoint of the end customer by

product family.

Define Value from the Customer Perspective

• Identify all the steps in the value stream for each product

family, eliminating whenever possible those steps that do not create value.

Identify the value stream

• Make the value-creating steps occur in tight sequence so the

product will flow smoothly toward the customer

Make the process flow

• Make only what the customer has ordered

Pull from the customer

• As value is specified, value streams are identified, wasted

steps are removed, and flow and pull are introduced, begin the process again and continue it until a state of perfection is reached in which perfect value is created with no waste.

Head toward Perfection

5 Principles of Lean

8 Wastes of Lean

“OMIT What U DO”

O

• Overproduction

M

• Motion

I

• Inventory

T

• Transportation
• Waiting

What

U

• Underutilized

People

Do

• Defects
• Over-processing

Lean Vs Traditional Lean

• Simple and visual

signals

• Demand driven
• Inventory

as needed

• Reduce

non-value added

• Small lot size
• Minimal lead time
• Quality built
• Value

stream managers

Traditional

• Complex
• Forecast driven
• Excessive inventory
• Speed

up value- added work

• Batch production
• Long lead time
• Inspected-in
• Functional

departments

Real Results 50 100 Lead Time Reduction Productivity Increase WIP Reduction Quality Improvement Space Utilization

Benefits of Lean Manufacturing

Helps in –  Cost reduction  Cycle time reduction  “Waste” minimization  Elimination of non- value-added activities  Resulting in a more “lean,” competitive, agile, and market- responsive company

Lean Tools

5S Just in Time (JIT) Kanban System Cellular Layout Value Stream Mapping Poka Yoke or Mistake Proofing TPM ( Total Productive Maintenance)

The 5 S systems is a workplace organization which helps in getting the "junk" out of the work area and set of procedures to keep it that way. 5S stands for Sort, Set in order, Shine, Standardize & Sustain. Visual controls such as cartoons, charts, light signals, Lane marking on floor, Safety instructions, Warning signs, Poka-Yoke instructions etc. can be displayed all over the work place. All verbal instructions should be converted to SOPs to remove dependency on skilled personnel in achieving required product quality level, consistency, effectiveness and efficiency.

JIT is a Japanese manufacturing philosophy to make the right product in right quantity at the right time. This almost results in zero inventory and shortest possible cycle time. In Kanban System, components are pulled by assembly

• r

subsequent work centers and the containers are replenished with the right quantities by the previous work center, which reduces the inventory of unwanted components. Cellular Layout is improved manufacturing system, family wise component completion is aimed at within the smaller self contained cell, which is a part of a big factory, as compared to operation wise completion in traditional functional layout

Value Stream Mapping covers all activities, both value added and non- value added, and helps in arriving at best layout of all resources required for making the product. Poka Yoke is again a Japanese technique used to prevent errors

• ccurring at their source of origin, and it

finally leads to a 'Zero Defect' situation. Applying ingenious methods, set up time is minimized and brought to less than ten minutes; there by smaller batches as required by the customer can be taken up for manufacturing.

TPM involves

• perators,

maintenance staff and management working together to improve

• verall
• peration
• f

any

• equipment. Operators, who first identify

noisy or vibrating motors, oil or air leaks, can be trained to make simple repairs to prevent major and costly break downs. Kaizen Blitz or Improvement Process is an intense management programme, which results in immediate change and bottom line improvement. Both management staff and workers are involved in this.

Introduction

The Government has announced formulation of National Manufacturing Competitiveness Programme in 2005-06 with an objective to support the Small and Medium Enterprises (SMEs) in their endeavor to become competitive and adjust the competitive pressure caused by liberalization and moderation of tariff rates Office of the Development Commissioner ( Micro, Small and Medium Enterprises), Ministry of MSME has launched the National Manufacturing Competitiveness Programme to improve the competitiveness of Micro, Small and Medium Enterprises (MSME ) Sector. The initiative under NMCP aims at increasing productivity, upgrading technology and conserving energy in manufacturing processes as well as expanding domestic and global market share of Indian MSME products. One of the components of NMCP is Lean Manufacturing Competitiveness Scheme and its upscale version ready to launch after successful completion of first phase. The scheme will be implemented in 500 mini clusters in 12th Five Year Plan.

Need for Lean Manufacturing

Ever changing globalized environment has been posing challenges

• f

competitiveness and survival to all the constituents of the economy. It has been more so for MSMEs in the manufacturing sector. MSME units are so engaged in their day to day management issues that they don’t have time and resources to dedicate a strategic understanding of the need and acquiring means of various techniques which would help them in enhancing their productivity and hence being competitive in the world market Lean Manufacturing is a set of techniques, which have evolved over a long period and are based on various minor to major breakthroughs that help in reducing cost and hence increase productivity and competitiveness,.

Objective of Scheme

• Elimination of Waste is prime goal of lean
• Over Production,

Waiting Time, Transportation within the units, Over Processing , Inventory ( Raw Material, Finished Goods, Finished Goods), Motions, Defects

Reducing Waste

• Increasing productivity is another goal of Lean
• Cycle time of products, Cost of Product ( Labour Cost, Material Cost,

Overhead Cost), Energy Conservation ( Electricity, Fuel ( Coal/ Oil), Productivity Space Utilization, Machine Utilization, No. of Accidents, Green Productivity ( Pollution Control, Pollution Prevention)

Increasing Productivity

• New Process, New Technology, New product(s), New

Management practices etc.)

Introducing Innovative Practices for Improving

• verall Competitiveness
• Company

level governance, business management, functional management, quality management system, environment, occupational health & safety or any other parameter related to good management system

Inculcating Good Management Systems

• culture of continuous improvement is the aim of

implementation of lean tool in the organization. Culture of continuous improvement helps the organization in long term for sustained growth and development of the organization.

Imbibing a Culture of Continuous Improvement

Implementation Arrangement

A three tier arrangement has been proposed in the Scheme. A Mini Cluster (MC) would be formed at the lowest tier. The units of MC would work with assigned Lean Manufacturing Consultant to implement the specific Lean Manufacturing techniques. The next higher level tier, National Monitoring and Implementing Units (NMIUs) will be responsible for facilitating, implementation and monitoring of the scheme. At the highest level, Screening and Steering Committee will provide overall direction to the scheme and will be headed by the Development Commissioner (MSME)

Mini Cluster/ DPG/ Sub Group/ Special Purpose Vehicle (SPV) Implementing Agency (IA) National Monitoring and Implementing Unit (NMIU) Screening and Steering Committee (SSC)

Technical Advisory Committee (TAC)

MSME - DI

Lean Manufacturing Cluster (LMC) Special Purpose Vehicle (SPV)

MSME - 1 MSME - 10 MSME - 2

Minimum 6 Units per cluster

Sub Group (SG) / Distinct Product Group (DPG) Association Or Existing SPV

MSME - 1 MSME - 10 MSME - 2

Minimum 6 Units per cluster

Mini Cluster is a group of preferably 10 MSME’s located within an identifiable and as far as practicable, contiguous area and manufacturing same/ similar products. Mini Cluster A mini cluster may be formed by a new SPV or as Sub Group / Distinct Product Group

• f

an Association or Existing SPV. In case SPV is not available in the cluster, the scheme may be availed through another legal entity i.e. concerned association by grouping the MSMEs in the form of Distinct Product or Sub Groups DPG and SG will be small groups within Association or existing SPVs, formed with the approval of Management of SPV or Associations as the case may be.

A mini cluster will consist of ideally 10 MSMEs (minimum 6 units)

All the units of MC would work with Assigned Lean Manufacturing Consultant to implement specific Lean Techniques. In case the scheme is being availed by SPV ( existing or new), a separate joint Bank Account will be opened in a National Bank for receiving the funds from NMIU. In case DPG/ SG is formed for taking benefit of the scheme, the project specific account will be

• perated jointly by Head of SPV or Association

and the Nodal officer of DPG/ SG.

Lean Manufacturing Consultants (LMCs)

An Individual or a Consultancy Firm ( National or International) duly registered with

• r certified by a reputed certification agency in the field of manufacturing technology,

quality control etc. , would be an eligible entity to participate in the scheme as a

• LMC. NMIU will obtain the approval of the SSC for empanelment of LM Consultants

Roles and Responsibility of LMC Consultants  Assess the existing system at each member unit of the concerned MC  Diagnostic Study Report for each cluster shall be prepared by assigned LM Consultant. The report includes measurable targets with respect to baseline data. The baseline data and monitor able increment may be different for each unit  Stipulated detailed step by step procedures and schedules for implementation of the LM Techniques ( pre- defined milestones)  Identify the end targets in quantified parameters to be achieved by each unit at the end

• f the scheme

 Work in close cooperation with each of the units to assess and then achieve the LM techniques implementation and  Respond to specific queries raised by SPV or NMIU on its performance  To attend orientation / meet / re- orientation programme organized by NMIU/ Office of DC (MSME) so as to clarify scheme implementation related doubts, if any and to share their experiences with peers and also to update LMCs with the developments in the

• field. LMC’s would be required to attend these workshops at their own cost. The cost of

conducting workshops would be borne under the scheme.

Special Purpose Vehicle

• “Trust” as per Indian Trust Act, 1882 or any similar Trust Act
• r
• A Private Limited company incorporated as per Indian

Companies Act , 1956 or

• A “ society” under

The Societies Registration Act, 1860 ( including any of state equivalent) or

• Any similar entity as approved by SSC from time to time

The MSMEs would be required to sign a MoU among themselves. MoU should, inter alia, cover the following points – 1. Collective and joint responsibility of units 2. Details of SPV or any other legal entity for receiving Government of India funds/ grants from the NMIU 3. Undertaking to adhere to Terms and Conditions

• f the Scheme

4. Undertaking to cooperate and work in collaboration with LMC 5. Undertaking to continue to implement LM techniques after the completion of project under the scheme. 6. Undertaking for periodic reporting on progress to NMIU and 7. Appointment of a nodal officer to be authorized signatory and single point of contact

LMCs and IAs will submit progress report to NMIU which in turn will send consolidated report to the office of DC MSME. The end of the project reports may be prepared to show the tangible results obtained during the implementation of the LM Interventions These IAs will discharge day to day activities for smooth and effective implementation of the

• projects. IAs will coordinate with LMC, cluster units, concerned associations, NMIU, MSME –

DI etc. The field level office / project offices of the NMIU will function as Implementing Agency (IA) for implementation of the projects NMIU will monitor every Stage of the program on behalf of the Development Commissioner (MSME) National Monitoring and Implementing Unit (NMIU) will be responsible for facilitating, implementation and monitoring of the scheme National Monitoring and Implementing Unit (NMIU) will be a competent National Level

• rganization, with experience and competence in Quality Management

and / or Lean Manufacturing programmes and will function as MSMEs outsourced project “ Control Room”

National Monitoring and Implementation Unit (NMIU)

National Monitoring and Implementation Unit (NMIU)

• 1. Act as Implementation Unit on behalf of DC – MSME
• 2. Receiving applications for the scheme, examine through

TAC and put up for consideration of SSC.

• 3. Maintaining an panel of LM Consultants. Approval of List of

LM Consultants with SSC.

• 4. Maintenance of separate account of funds of the scheme
• 5. Release of fund to the beneficiaries against the reports on

the bases

• f

progress

• f

implementation and

• n

satisfactory performance of LMCs.

• 6. Undertake awareness generation programmes for the units

and encourage them to participate in the scheme.

• 7. Organize orientation program for LM Consultants
• 8. Industry expert for Apprising Team
• 9. Creating Benchmark Action Plans

10.Monthly Review and Trouble Shooting 11.Development of National Reports, 12.Submission of DSR, completion report etc. required under the scheme 13.Publications, News letter etc. 14.Website

Technical Advisory Committee

NMIU would be required to deal with a number of Mini Clusters and their technical issues, take decisions on the matters of productivity, preparation of reports, recommendations of clusters for approvals, progress etc. To this end a Technical Advisor Committee ( TAC) would be constituted, within NMIU, which would be empowered to take the decision on productivity related issues . Role and Responsibility of TAC –

• Appraisal of the applications received from Mini Clusters and giving

recommendations

• n

the same to Screening and Steering Committee ( SSC)

• Cross Checking of implementation of the Lean Manufacturing

milestones at the unit level, against the LMC’s periodic report and accordingly approving acceptance of Claims of units

• Conducting field visits along with representatives of SPV’s at units

participating in the scheme

• Conducting Orientation/ Meets for LMCs at periodic intervals
• Maintaining

a central data base and reference library for participating units and LMCs;

• Conducting periodic workshops and meets for participating units
• Appraising the decisions of TAC to office of DC MSME through

NMIU

At the highest level, SSC will guide, review, monitor and provide overall direction for implementation

• f

the scheme and will be headed by DC (MSME). SSC will have Overall responsibility for policy formulation, scheme implementation and monitoring. It will be empowered to take all Key decisions related to the Scheme and approve minor modifications / procedural changes in the guidelines for operational expediency SSC would deliberate on the issues put up by NMIU. It would laid down detailed implementation Strategy for NMIU.

Screening and Steering Committee (SSC)

1 AS & DC, MSME Chairman 2. AS & FA / Alternate EA ( IFW) Member 3. Representative of NMCC Member 4. Representative of expert Agencies like NPC and QCI Member 5 In Charge, NMIU Member 6 Representative of Associations Member 7 Director of MSME – DI Concerned / invitee Member 8 Nodal officer handling LMCs in DC, MSME Member- Secretary 9 Special Invitee / experts/consultants/ IAs/ SPVs

Implementation Period

The implementation Period will be maximum 18 months in each Mini Cluster to complete Diagnostic Study Report , implement the action plan, , verify the incremental stages, submission of final reports. Performance of Implementation of LM Techniques will be divided in to 5 Milestones  1st Miles Stone – Completion of Cluster Specific Diagnostic Study Report (DSR). DSR includes –  Existing Status ( 5s, workspace management, Safety, health, energy conservation, Single Minutes of Exchange of Dies, TPM, Reduction in inventory, Organization Structure, Layout , process of Mnaufacture, visual base line survey, identifciation of 7 wastes, inventory practices, top chronic problems etc.)  Time Bound targets for achieving Incremental Improvements. Paramters are rated on a scale of 1- 10  Phase wise Action Plan  Qualitative , Quantitative, monetary benefits likely to be achieved

2nd, 3rd, 4th and 5th Milestones – Incremental Improvements to next stage

• n the scale of 1 -10

MSME

• DI

To

• rganize

program in coordination with NMIU, LMC, Associations, other stakeholders etc. To Participate in 1st, 3rd and 5th audits of lean implementation jointly with NMIU Facilitate the beneficiary MSMEs to submit application for availing the scheme

Participate in the Screening and Steering Committee Meetings and Meetings for Selection

• f

Lean Consultants

Fund Flow Chart

Office of Development Commissioner (MSME) National Manufacturing and Implementation Unit (NMIU)

SPV/ Association For Awareness Program/ Orientation Program / Workshops/ Training Programs etc Office of MSEM – DO (For Awareness Program/ Training Programs , Workshops etc) Lean Consultants

Documents Required

 Memorandum of Understanding  Power of Attorney  Special Purpose Vehicle

Changes in Scheme

Particular Earlier Scheme Requirement New Scheme Requirement Implementation Period 12 months 18 months LM Consultant Fees

• Rs. 23.8 lakhs
• Rs. 36 Lakhs ( Max.)

MSME –DI Not there Now will be involved in Audit, Awareness program, formation of Cluster etc. Payment Terms Fixed Pro Rata. Cluster size limited to 6 units Contribution from Industries 25% from Micro 50% from Small Flat 20% SPV formation SPV only Sub Groups/ Distinct product Groups can also form cluster

Knowledge Management

Orientation Program for LMCs Defined deliverables in measurable / parameters for evaluating/ reporting Development of interactive dynamic website Benchmark action plans Publication of Newsletter, Book of Knowledge, Success stories, case studies

Kindly contact us:

• 1. Mr. Anurag Rastogi, Deputy Director

Email Address: anurag@qcin.org

National Accreditation Board for Education and Training (NABET) Quality Council of India, ITPI Building, 6th Floor, 4-A Ring Road , I P Estate, New Delhi - 110 002

• Ph. +91 11 23323416 / 417 / 418 / 419 /420
• Fax. +91 11 23323415

Thank you

NABET Quality Council of India