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Rev. July 20, 2009

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SUPPLIER DEVELOPMENT AT SYSINTEG (A)

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Sid Parker, a summer intern at XS Inc. (XS), had gotten up early to drive to the SysInteg
plant to participate in a two-day Value Stream Mapping (VSM) event that was getting under way
that morning. This was his first chance to put his knowledge of lean principles and tools into
practice working with a key supplier. Parker had spent the last month organizing and analyzing
supplier VSM events—a new initiative for his Corporate Supplier Development department.

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Today’s event was a hands-on opportunity to contribute directly, and he was very excited. His
internship manager had obtained special permission from SysInteg, to allow Parker to participate
in the otherwise closed-door VSM event.

Parker had been interested in pursuing a post-MBA career in operations strategy, and his
internship search had led him to an exciting lean-implementation opportunity at XS, a Fortune
100 manufacturing company, where he would have a bird’s-eye view of every division’s supply-
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chain-management improvement activities. Jim Lesley, Parker’s manager at Corporate Supplier
Development, was a recent graduate of the same MBA program and took a keen interest in
Parker’s development, assigning him to projects that required both analytical skills and sound
judgment.

The Manufacturing Extension Partnership (MEP), a nonprofit organization funded by the

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federal government, had contacted Parker’s department to explore a lead-time-reduction program

specifically targeted toward improving supplier performance. MEP approached large Original
Equipment Manufacturers (OEMs) to select key suppliers and then helped to arrange VSM
events at supplier facilities where the organization’s lean consultants would help supplier
personnel identify waste and reduce lead-time in manufacturing and distribution processes. The
OEMs were interested as the projects could help in creating a cost-effective supply chain in the
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longer term. And suppliers saw the MEP program as an economical opportunity to access expert
advice that could not only improve operations but also strengthen their current status with the
OEMs; the MEP model promised a win-win situation for all involved.
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This case was prepared by Chitanya Karri (MBA ’08) and Robert D. Landel, the Henry E. McWane Professor of
Business Administration. It was written as a basis for class discussion rather than to illustrate effective or ineffective
handling of an administrative situation. All names and data in this case have been disguised. Copyright  2008 by
the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies,
send an e-mail to sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a
retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical,
photocopying, recording, or otherwise—without the permission of the Darden School Foundation. Rev. 7/09.

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Parker’s responsibilities included creating a structured program, organizing and
managing kick-off events, developing a stage-gate review process, identifying internal
stakeholders, organizing and overseeing the progress of the VSM events, conducting feedback
surveys, and coordinating with various stakeholders from XS divisions, MEP, and the suppliers.
His assignment also required that he create and document a business process to help with the

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execution of future MEP-supplier events.

As this was XS’s first time sponsoring an improvement initiative led by a third party, it
was under tight scrutiny by the XS corporate-level senior management. On the one hand, XS saw
this as an opportunity to deploy external lean experts from MEP (in lieu of the internal XS
resources, who were often operating with a large backlog of internal projects), while on the other
hand, some members of senior management were skeptical about the lack of oversight on

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milestones, performance management, or (supplier) resource allocation. Parker and Lesley
considered anything less than 50% reduction in cycle time as a project failure; Parker was
concerned that a poor performance at SysInteg would affect his chances for future employment
at XS. After today’s event at SysInteg, Lesley expected Parker to establish a communication plan
and identify stakeholders for each future VSM event.
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XS Incorporated

XS was the industry leader in practically all the product segments in which it competed.
The company held a strong position in its relations with its suppliers but also with its customers.
It had typically emphasized delivery consistency from its suppliers and leveraged its ability to
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purchase for different divisions as an advantage in all negotiations. Aware of its reputation as a
fair and tough negotiator, XS tried to compliment this image through a variety of programs
designed to help its key suppliers improve their operations.  The programs included supplier
diversity, health and safety, green projects, and such supplier-development initiatives as the lead-
time-reduction efforts now underway with MEP. Corporate Supplier Development was
responsible, among other things, for tracking supplier performance on various metrics, such as
cost, quality, and delivery performance.
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System Integrators (SysInteg)

As reliable supplier, SysInteg was known for its superior quality, delivery reliability, and
customer satisfaction. To maintain its competitive advantage, it focused on providing low-cost,
procurement and logistical services to its customers. Its history of productivity improvement
made it an ideal choice for a MEP event. SysInteg’s core competencies were its logistics-system
Do

capabilities that had evolved over the last six decades.

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Procurement

 Third-party procurement
 Online order-status check

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Logistics

 Inspection services
 Parts kitting
 On-site Supplier Managed Inventory (SMI)

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Besides XS, SysInteg provided custom-procurement and logistics services for close to
900 OEM clients. The XS annual-procurement contracts specified that SysInteg purchase XS-
designed components from third-party certified suppliers, conduct incoming inspection, maintain
a secure inventory, and package and ship orders to an XS-division factory according to a pull-
based production schedule. SysInteg’s contracts with XS typically required an average 90-day
inventory for each contracted SKU. This allowed XS to run its production facilities with low on-
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site inventories and avoid costly production delays because of stock-out conditions. For the past
four years, changing production forecasts combined with limited on-site inventory space often
had forced XS divisions to contract SysInteg for numerous different specialty parts.

Procurement specialists at SysInteg studied XS order patterns and projected future orders
to avoid overstocking and, in turn, reduced carrying costs. Accordingly, it placed orders with
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parts manufacturers to meet its forecast, carry a lean inventory (less than the expected 90 days),
and still provide on-time delivery to XS facilities. This arrangement benefitted XS, as the cost
for the procurement and logistical services at SysInteg was, on average, 10% less than the annual
disruption costs associated with stock-outs that XS faced when volatile production schedules
combined with the daily fire fighting related to late shipments from suppliers occurred.
No

Manufacturing Extension Partnership

For almost two decades, MEP had focused on increasing the competitiveness of the U.S.
industrial base by bridging the productivity gap for manufacturers, identifying opportunities for
growth, and encouraging technology deployment.

MEP provided its manufacturing customers with a wide array of fundamental services in
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business and process improvements, helping them to stay strong and ready to compete in the
global market. Grown from a pilot project that consisted of three centers to national coverage
through its 59 affiliated organizations, MEP’s range of services provided by these organizations
and its partners was also growing in the following areas:

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 Programs in lean manufacturing were expanding to consider the entire enterprise;
 Energy and environmental services had grown to include sustainability;
 Information technology now addressed continuity-of-service issues; and
 Future programs would address manufacturers’ concerns related to innovation,

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technology deployment, and business growth.

These and other disciplines added the vital skills and capacity to client companies that enabled
them to achieve measurable results.

By 2007, MEP and its partners provided manufacturers the services it had developed over

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the years, while adding new offerings in growth services and technology adoption. The nation’s
manufacturers, with MEP assistance, had streamlined their plant operations and improved their
bottom lines, and as a result, MEP, with its partners, was poised to capitalize on these results by
creating opportunities for growth via new sales, new markets, and new products.

Lead-Time-Reduction Program
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The Corporate Supplier Development department at XS had 10 internal lean experts who
traveled between different internal supplier sites to conduct training sessions and facilitate
Kaizen/Value Stream Mapping events. These events usually ran from two to five days, and
divisional participants gave them high ratings. Because of the increasing popularity of the events
and the fixed number of experts, the average waiting time for a new VSM project was usually
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three months.

MEP’s goal was to identify suppliers across the United States and help them improve
their operations. In particular, MEP aimed to reduce Manufacturing Critical-Path Time (MCT)1
for an identified product line. In doing so, MEP introduced the supplier to lean thinking and
demonstrated the value and simplicity of the tools and processes to start a supplier on its own
No

lean lead-time-reduction journey. Ideally, the result was that a supplier became more capable in
competing with low-cost, non-U.S. suppliers. And because the government subsidized the MEP
programs, suppliers were not required to pay for a two-day VSM event. A supplier could choose
between contracting MEP to implement the recommendations of the VSM event or to go it alone.
Depending on the complexity of the recommendations and the supplier’s experience with MEP
during the VSM event, the supplier decided whether it wanted to contract MEP for the
implementation. The MEP charged a nominal fee for this phase, and there were state-provided
subsidies that paid part of this fee.
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1
MCT was defined as the time taken within the supplier facility once it received the raw material to the point
when the finished product left the facility. This did not include customer lead times but only the production time in
the supplier facility.

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Thus, MEP brought in experts at a subsidized cost, providing XS with an opportunity to
immediately run new supplier development programs that would otherwise have had to wait
many months. In addition, MEP was a neutral third party and could allow suppliers to talk freely
about performance issues they were hesitant to share with XS. Each supplier committed to a
three-phase process: Phase I, Phase II, and Phase III. XS also organized a kickoff event where it,

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suppliers, and the MEP reviewed the project goals and signed the Contract and the Charter
(Exhibits 1 and 2).

Corporate Supplier Development allowed the divisions to identify key suppliers based on
any criteria the divisions deemed appropriate. This lack of constraints helped the divisions in
their identifications, and they collectively identified 20 key suppliers.

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Each supplier representative then received information about the benefits of MEP and
XS’s involvement. An interested supplier was provided with a personalized contract and a
charter listing the scope of the project as outlined by MEP and XS. The supplier then was
required to identify a waste-laden process in an area of its facility that supplied an XS division.
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First Day

VSM training

As Parker walked into the SysInteg conference room, he noticed that the participants had
just finished breakfast and were waiting for the MEP expert to start the meeting (Exhibit 3).
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Parker looked at the participant list and was relieved to see that the participants were people with
the authority to make process changes. He had read in the VSM training manual that it was
necessary that the participant group consist of higher-ups; otherwise, recommendations created at
the meeting could be forgotten.

Parker noticed two chalkboards occupied the adjacent walls of the room and that there
was an overhead projector. He later noted that one of the boards was used to list concepts that the
No

instructor considered important. The instructor used the other board to draw the Current State
using post-it stickers. The projector displayed the electronic version of the maps drawn at the
session.

Ron Larson, the lean expert from MEP, started the session by reemphasizing the
objectives of the session, and he handed out a copy of the Value Stream Mapping Workshop—
Participant Guide to each participant. This handbook provided a systematic approach to
understanding such lean terms as muda, kanban, takt time, etc., which Parker considered a good
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review of his former operations elective course in lean thinking. Larson led the group through the
basics of Value Stream Mapping broken up into two sections: Current State and Future State
mapping. Larson explained that Current State was best drawn using the following guidelines:

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1. Walk the gemba (workplace).
2. Use pencil and paper to record observations and process steps when walking around.
3. Start with the customer in mind.

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Parker soon realized that the focus of the event was on a single XS part number and that
the operations observed were typical of the logistics services provided for XS divisions and other
OEM customers. This defined the operational scope of the VSM event.

The Situation

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Regina Puzzo, vice president of Operations at SysInteg, and Richard Blair, director of
Operations at SysInteg, were actively involved in the training session and appeared interested in
achieving reduction in internal operations lead-time. Puzzo and Blair had identified the spacer-
disk pack as the focus at this event, as the item represented the hundreds of SKU’s covered in
XS/SysInteg contracts. The spacer-disk pack consisted of 10 individual but identical disks that
were considered finished products, requiring neither kitting nor assembly at SysInteg and used in
both subassembly and final assembly operations at various XS facilities for many different
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power-transmission applications in several product families (Exhibit 4). XS required that each
spacer-disk to be inspected for the latest parts-drawing specifications and then wrapped and
stored individually. Prior to the arrangements with SysInteg, XS had sourced this line of spacer-
disks directly from the manufacturer, DP Specialty Suppliers (DP). But erratic production
schedules at XS operations and reduced inventory storage area, combined with frequent missed
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shipments and high inventory carrying costs prompted XS to contract for SysInteg’s logistic
services. XS had attempted to improve its ordering practices and reduce its stock-out costs; yet it
had made little progress.

XS required all of its suppliers to perform a Quality Check (QC) on all parts delivered to
its facilities. Consequently, SysInteg was required to inspect all of the parts sourced from DP
Suppliers using design specifications provided by XS. Puzzo concluded that almost 60% of XS-
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contracted parts failed at least one of the verification or inspection steps and required a follow-up
inspection from either DP or XS. Then Puzzo commented that her team had suggestions on how
to grow the yield to a respectable number.

Walking the Plant

Ron Larson led the questioning about details regarding the workflow process. Puzzo
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fielded the questions and provided only the necessary details, taking care not to complicate the
situation. Then, each participant drew a Current State map using the VSM symbols reviewed

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earlier that day to document observations regarding the spacer-disk part.2 Parker took notes to
describe each step and carefully documented anything that seemed important in determining if a
step was useful or not for the future state (Exhibit 5). He knew that these notes would come
handy in the VSM exercise. The group started with the receiving dock and worked its way
through the shelves and inspection process activities, finally stopping at the point where the part

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left the facility.

Current State Mapping

The Value Stream Mapping Workshop—Participant Guide listed the following Team
Tips that proved very useful for participants in mapping the Current State:

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 Review the basic processing steps and calculate the takt time in your team’s breakout
room.
 Draw while on the shop floor.
 Draw both the material and information flows.
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 Introduce yourself to operators and show you are drawing the total factory flow as part of
a training session; show them your drawings.
 Select a scribe and combine drawings into one Current State map (in team area).
 Calculate total lead-time versus processing time.
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 Make an overhead transparency of the map and select presenters.

 All team members go up front with presenters. State the product family and takt.
 Present from your overhead transparency (five minutes per participant).
 Start with customer and information flow into the facility.
 State the lead-time versus the processing time.
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 Remember what problems you saw and where you found push and overproduction.
 Share any future-state thoughts you have so far.

Back in the conference room, the team reviewed the individual Current State drawings
and then helped Larson draw a Current State map on the board using post-it notes shaped as the
VSM symbols. Everyone agreed on a particular step/process before proceeding to the next one.
This ensured that the final map was something that the participants thought of as a good
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representation of the process in question (Exhibit 6). Then, the steps were divided into three
categories: Value Added (VA), Non-Value Added (NVA), and necessary Non-Value Added
                                                           
2
See Value Stream Mapping Workshop—Participant Guide at http://www.strategosinc.com/value-stream-
mapping-3.htm (accessed December 18, 2008).

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(nNVA). Larson indicated that this was the first step in improving the process and visualizing a
Future State.

Calculating Value-Added and Non-Value-Added Time

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 Value Added (VA): Time spent on processes that the customer specified and paid for,
such as a quality check. Any action changing a product in context with providing value to
the customer was Value-Added.
 Non-Value Added (NVA): Time spent in such activities as waiting for materials, travel to
supplier, etc., which did not add value to the product or service for which the customer

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had paid extra. Any action that consumed labor or material resources that did not provide
value to the customer, such as unnecessary inspections, setting up a workstation, looking
for tools, and fixing a broken gauge was Non-Value Added.
 necessary Non-Value Added (nNVA): Time spent on unavoidable activities like delivery
lead-time. Any action that needed doing in order to process the order, such as generating
workflow instructions, calibrating measurement tools, or preventative maintenance was
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necessary Non-Value Added.

Larson explained that the sum of VA, NVA, and nNVA was the Manufacturing Critical-
Path Time (MCT)—the primary metric for this exercise. The Current State Map shown in
Exhibit 6 included the calculations after identifying VA, NVA and nNVA. The program goal
was to achieve a minimum of 50% improvement in this metric from Current State to Future
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State. Larson classified the processes and calculated the Total Lead Time. The team then
brainstormed to identify problem areas and improvements, using post-it notes to create a Current
State map on the board.

Parker noted that takt time was not relevant for this exercise as there was some disparity
about the number of orders at the supplier’s end. Although Richard Blair said that the customer
orders were around 2,800 a year, he did not want to focus on leveling the flow to the takt time
No

but on taking the existing waste out first.

Ron Larson emphasized that the VSM thinking rather than focusing on achieving exact
results should focus on identifying the approximate amount of waste in a, reasonable manner.
Therefore, he told Blair and Puzzo that it was acceptable if the Current State map was an
approximation as the incremental time spent in finding missing data was not worth waiting for.

Note: The spacer-disks were not modified at SysInteg, as no subassembly operations

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were performed, which made it challenging to distinguish between Value Added time and Non-
Value-Added time for this particular VSM.

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Second Day

Future State mapping

After walking the gemba, Parker recognized obvious waste in the Current State map and

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thought he saw areas of improvement. He liked the idea of not working on the Future State map
on the same day as the Current State map to allow participants enough time to reflect on the
previous day’s activities. In addition, Larson had directed the participants to spend 30 minutes
completely reviewing the Current State map to identify things missed the previous day. As
Parker reflected on the events of the previous day, he realized that the Future State needed to be
a realistic representation of possible improvements to the process. He wondered if SysInteg and
XS had the same idea of what was realistic and whether MEP actually had motivated the

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participants to create a Future State map they agreed upon that was easily implementable. Parker
prepared himself for another good learning experience.
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No
Do

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Exhibit 1
SUPPLIER DEVELOPMENT AT SYSINTEG (A)
XS Supplier Development Contract with MEP

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Project Goals:
 Provide Manufacturing Critical Path Time (MCT) reductions.
 Accelerate the adoption of lean-manufacturing practices by XS suppliers.
 Foster a strong working partnership between MEP, XS Operations, and the supply base.

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Project Deliverables:

 The VSM event was to be held at the supplier’s facility and facilitated by MEP or a
locally trained and qualified MEP organization using the Accelerate Model.
1. XS responsibilities:
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a) Identify a Project Champion for this effort, who will commit up to 20% of his/her
time in project management.
b) Fund MEP Project Management fee @ $2000* per supplier.
2. MEP responsibilities:
a) The Phase I includes a gap analysis of the product or part family agreed to by XS
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and each supplier in the Charter signed at the kickoff meeting. MEP will have a
pre-project meeting with the supplier to verify the value stream, discuss potential
project impact and barriers. A two-day/two-person on-site facilitation of the
Value Stream map with MCT gap analysis, for the supplier’s team to be provided.
Following the two-day VSM event, a post-project meeting to review results by the
MEP.
No

* Amounts and numbers modified for case purposes.

Do

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Exhibit 2
SUPPLIER DEVELOPMENT AT SYSINTEG (A)
Charter

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1. Business Case:
SYSINTEG is a key supplier to XS. In order to remain competitive, both XS and
SYSINTEG must focus on ongoing continuous improvement. The implementation of
lean manufacturing Principles to reduce and eliminate waste for all areas of SYSINTEG
business can play a critical role in achieving this objective.

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2. Goal:
The goal of this project will be to increase SYSINTEG order-fulfillment performance
through an improvement in Manufacturing Critical-Path Time. MCT reduction results in
improved operational effectiveness and increased order fulfillment flexibility.
Consequently, the overall project goals will be to implement action items identified to
reduce MCT by 50%.
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3. Project Scope:
The project will focus on the following: (Part #/name)
4. Schedule & Deliverables:
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Activity End Date

Finalize/Sign Project Charter MMDDYY
Phase I MMDDYY
 Collect data
 Define
o Current State: VSM and MCT
o Future State: VSM and MCT
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o Identify gap between Current and Future State

o Develop Gap Closure Plan
o SYSINTEG presents results to XS
Phase II MMDDYY
 Implement Gap Closure Plan
 Confirm results with VSM and MCT
 SYSINTEG presents results to XS
Phase III (Ongoing)
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 SYSINTEG to conduct ongoing continuous improvement through

repetition of Phase I/Phase II on other part numbers, part family(s), and
value stream (s).
 SYSINTEG to sustain a culture of lean and continuous improvement.

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Exhibit 2 (continued)

5. Assignments and Roles:

a. XS division sponsor

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b. SYSINTEG executive
c. MEP lean expert
6. Savings:
a. Existing cost-reduction plans and commitments will continue to apply.

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7. Resource Support:
a. SYSINTEG will assign a Project Manager who will have overall project
responsibility.
b. It is not anticipated that SYSINTEG will require significant capital investment in
order to achieve the objectives of this project.
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8. Communication Plan:
a. Project Status Reports will be generated by SYSINTEG’s Project Manager and
distributed on a regular basis to a commonly agreed-upon distribution list.
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No
Do

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Exhibit 3
SUPPLIER DEVELOPMENT AT SYSINTEG (A)
VSM Event Participants

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Name Company Title Details
Mark Maple XS-division Senior Sees the event primarily as a cost-cutting exercise.
Operations
Manager
Brett Turnip XS-division Operations Reports to Mark Maple. Open to new ideas and

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Analyst learning new tools.
Johnny XS-corporate Manager Environment Safety Expert. His participation is
Gordon limited to observation only.
Sid Parker XS-corporate Summer New to VSM methodologies. Trained in various
Intern lean techniques at graduate school and in workshops
at XS.
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Richard Puzzo SysInteg Director Knowledgeable and committed to the project
Operations success. Not entirely convinced by the VSM
approach and seemed skeptical of any too-good-to-
be-true suggestions.
Regina Blair SysInteg VP Operations Very personable and involved. She relied on
Puzzo’s inputs in her absence from the sessions. She
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was keenly interested in the progress and not the

details.
Ron Larson MEP-corporate Lean Expert Lead facilitators. Larson and King led the entire
group during the VSM training session, the walk
through the warehouse and helped the group prepare
the Current and Future State maps. They were also
responsible for providing a debrief report to
No

Bob King MEP-local Lean Expert SysInteg and/or XS).

chapter
Artie Marshall MEP-corporate VSM Skilled at MPT mapping software (based on eVSM
Software platform). Spoke only when he could not understand
Specialist the group’s hand-drawn diagram.
* XS, SysInteg and all participant names, roles, and personality descriptions are fictitious.
Do

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Exhibit 4
SUPPLIER DEVELOPMENT AT SYSINTEG (A)
Spacer-Disk Pack

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Note:
1. Each spacer-disk pack contains 10 individual spacer-disks sealed in a plastic bag. The disks may vary in
size depending on the kind of assembly that requires them.
2. Every pack is opened and visually and dimensionally inspected based on XS-supplied part drawings.
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3. Inner and outer diameter, thickness, material-surface finish, and flatness attributes are some of the
inspection measurements checked against the XS drawing-specification limits.

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Exhibit 5
SUPPLIER DEVELOPMENT AT SYSINTEG (A)
Process Observations by VSM Participants
Step Process Name Process Description

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1. Receive, open DP Specialty Suppliers typically shipped a dozen or so different manufactured
and sort products weekly in large cartons to SysInteg, so it was necessary to open the
shipping cartons at the receiving dock to sort the contents by part number/SKU.
Spacer-disk pack receipts had to be checked by “matching” the part number and the
item quantities against information on a SysInteg purchase order. Each plastic
bagged “spacer disk pack” contained 10 idential spacer disks. Finally, the operator
looked up the assigned inventory storage location in the receiving area for the

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spacer disk packs and the items were moved to the location. DP’s cartons usually
remained at the SysInteg receiving dock for a day before this step was begun.
2. Schedule and The spacer-disk pack items remained in the assigned storage rack location until an
pick for internal release order triggered pick and inspection activity. This step indicated that
inspection a quantity of the spacer disk packs was to be picked and transported to an assigned
inspection station. Blair indicated that on average the disk packs remained in the
receiving area storage for 45 days before they were be scheduled for inspection. He
admitted that it was longer than they wanted to take on average but urgent* items
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would get higher priority. *Urgent usually meant expediting activities because of
customer phone calls expressing requirements for special services.
3. First article Blair noted that per the AS9100 policy guidance (noted below) and contractual
inspection agreement with XS, a thorough check is made on a sample of all newly designed
reporting parts or redesigned parts to compare the first production lot of delivered items
against the XS drawing specifications for the part . This was standard checklist of
questions to find out whether the DP Specialty Suppliers fully understood the
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documented specifications and whether the supplier had provided appropriate

evidence of the process capability statistics. This inspection step had a very high
pass rate. Parker noted that this step took 90 minutes but he was unable to
understand the significance of this step, as the spacer-disk parts had not been
modified in several years. He made a note to question this at the mapping session.
4.10.6 of AS9100/EN9100 states, “First Article Inspection: The supplier's system
shall provide a process, as appropriate, for the inspection, verification, and
documentation of the first production article.”
No

4. Dimensional This step was required to check if each of the dimensions of the spacer disk part
inspection was within acceptable dimensional specifications range as set forth by the
engineering drawing. Some VSM members commented that while this quality
check makes sense if the disk was used in an operation within SysInteg, but only
provided logistics services, this step seemed redundant; DP Specialty Suppliers had
previously been a certified supplier to XS delivering spacer disks packs directly to
an assembly line operations without incoming inspection—a JIT supplier.
5. Travel to According to Blair, SysInteg personnel travel became necessary only when
supplier and inspection issues could not be resolved with DP over phone. He said, “Sometimes a
inspection large number of disks would not match the design specifications and despite
Do

several attempts, they would be unsuccessful in contacting the DP or come to a

resolution agreement over phone.” Blair added that such problems also arose when
an incorrect product or incorrect quantity was shipped. In such an event, SysInteg
would send a representative to the DP facility to sort out the issue, but this activity
was something that SysInteg wanted to avoid in the future.

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 t
  -16- UV1080

os
Exhibit 5 (continued)

6. Review process SysInteg reviewed process certifications information from DP. In this step,
certification SysInteg was required to check if the manufacturing processes at DP conformed
with the Process Certification Standards set forth by XS for all purchased

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components (process control charts, materials certifications, capability index
documentation, drawing revision information). Puzzo mentioned one particular
troublesome issue: design specifications revisions made by XS and sent to
SysInteg were often out of version as compared to the specifications that DP
Specialty Suppliers had used for its manufacturing. This would also occur when
there was an engineering deviation that was communicated to DP without including
SysInteg. SysInteg usually ended up rejecting the product and holding it for
disposition, as the process certification documentation provided by DP would not

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match the one provided by XS.
7. Accepted by An “approved by quality” stamp put on the accepted spacer disk product and kept
quality at the inventory storage area (approved inventory ready for shipping-supermarket).
8. Pick Spacer disks picked up from the supermarket inventory based on XS’s order
schedule. This step was important as it ensured that the order was picked on time.
9. Source This step requires a Certified Quality Assurance Representative (CQAR) from XS
inspection to inspect the spacer disk product at the SysInteg facility SysInteg usually had a
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wait time before the CQAR traveled to their facility and performed the source
inspection.
10. XSQS Stood for XS Supplier Quality System—A system to track PPM defects, and
request information regarding nonconforming product for each of the XS
suppliers. Deviations were required to be submitted to XS once the Source
Inspection was over.
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11. Contact vendor SysInteg used XS’s Web-based helpline system or called up XS’ tech-support line
for correction to resolve open issues that usually dealt with process certification verification and
approvals. If DP Speciality Supplier’s process certification paperwork did not
match with XS’s requirements then SysInteg had two options: first to reject the
product or second to approach XS to inquire if the product itself was acceptable
based on dimensional specifications? This inquiry was justifiable as there were past
incidents when XS had directly communicated to DP accepting engineering
deviations but failed to include SysInteg in the information chain.
No

12. Response of Usually an email or a phone call from XS or DP Speciality Suppliers, followed
correction with appropriate paperwork.
13. Tech help online XS’s tech support line for suppliers who required clarifications on product
dimensional or materials specifications, and manufacturing process certifications.
This was SysInteg’s last resort to get clarification about out-of-spec process
certifications. Puzzo suggested that the turnaround time could be better.
Parker’s manager told him that SysInteg was top on the list of XS suppliers who
used XS’s tech help line.
14. Supplier DP Speciality Suppliers—the manufacturer for the spacer-disk packs.
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15. ERP SysInteg used the internet to track XS’s orders on a real time basis. The Website
linked to XS’s ERP system.
16. XS XS facility
17. Pack and ship This was the last step at the SysInteg facility. Product shipped to the XS facility.

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Permissions@hbsp.harvard.edu or 617.783.7860
 -17- UV1080

Exhibit 6
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SUPPLIER DEVELOPMENT AT SYSINTEG (A)
Current State Map and Time Calculations Prepared by VSM Participants
No
Current State Value Stream Map for Spacer Disk Pack
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DP  Forecast &  Pack & 
Supplier Execution
XS Div. Ship
2X/day Cycle Time 15 Mins.
ERP 2800/Year

1X/day

40% Pass Through
Receive &  Schedule &  1st Article  Dimensional  Travel to  Review  Accepted 
I I I I Q I Source 
Open Wait Pick for Insp Wait Inspection Inspection Quality Supplier & Insp Process Certs by Quality Pick I Q I XSQS
Rec’d Parts Wait Wait Inspection Wait
op
Batch Time 45 Days Cycle Time 5 Mins. 1 Days Days Supermarket 
1 Days 10 Mins. Cycle Time 90 Mins. Cycle Time 150 Mins. 12 Quality 2 Days 3 Days Cycle Time 20 Mins. Cycle Time 5 Mins. 1 Days .5 Days Problem Free Lead 
Material Cycle Time 10 Mins. Cycle Time 30 Mins. Cycle Time 15 Mins.
Yield (%) 95 % Cycle Time 1 Hrs Yield (%) 40 % Time
NVA 65.5 Days 65.5 Days
1 Days 45 Days 1 Days 0 Mins 12 Days 3 Days 0 Mins 0 Days 1 Days 0.5 Days
10 Mins 5 Mins 90 Mins 150 Mins 1 Hrs 20 Mins 5 Mins 10 Mins 30 Mins 15 Mins VA 80 Mins 80 Mins
nNVA 345 Mins 345 Mins

60% Require 

Permissions@hbsp.harvard.edu or 617.783.7860
Attention
Response of  A20
Contact Vendor 
I Q Correction Total Lead Time
for Correction Wait
NVA 78.1 Days 78.1 Days
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21 Days
Cycle Time 15 Mins. Cycle Time 10 Mins. VA 80 Mins 80 Mins
Either/Or Paths nNVA 370 Mins 370 Mins
Response of  VA/NVA Ratio 0.07 %
Tech‐Help 
I Q Correction
On‐Line Wait
Old Process Lead  Time
Cycle Time 15 Mins. 21 Days
Cycle Time 10 Mins. NVA 12.6** Days 12.6** Days
VA 0 Mins 0 Mins
21 Days
15 Mins 10 Mins nNVA 25 Mins
25 Mins
** = 60% Actual Lead
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This document is authorized for educator review use only by ASHER RAMISH, Lahore University of Management Sciences until Feb 2021. Copying or posting is an infringement of copyright.