1 Chapter 12 Lean Production 2006 The

1 Chapter 12 Lean Production © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

2 OBJECTIVES • Lean Production Defined • The Toyota Production System • Lean Implementation Requirements • Lean Services © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

3 Lean Production • Lean production can be defined as an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods) • Lean production also involves the elimination of waste in production effort • Lean production also involves the timing of production resources (i. e. , parts arrive at the next workstation “just in time”) © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

4 Here the customer starts the process, pulling an inventory item from Final Assembly… JIT Demand-Pull Logic Then sub-assembly work is pulled forward by that demand… Fab Vendor Sub Customers Final Assembly Sub The process continues throughout the entire production process and supply chain Fab Vendor © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

5 Features of Lean Production WHAT IT IS • Management philosophy • “Pull” system through the plant WHAT IT REQUIRES • Employee participation • • Industrial engineering/basics Continuing improvement Total quality control Small lot sizes WHAT IT DOES • Attacks waste • Exposes problems and bottlenecks • Achieves streamlined production WHAT IT ASSUMES • Stable environment © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

6 The Toyota Production System • Based on two philosophies: 1. Elimination of waste 2. Respect for people © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

7 Waste in Operations 1. Waste from overproduction 2. Waste of waiting time 3. Transportation waste 4. Inventory waste 5. Processing waste 6. Waste of motion 7. Waste from product defects © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

8 Elimination of Waste 1. Focused factory networks 2. Group technology 3. Quality at the source 4. JIT production 5. Uniform plant loading 6. Kanban production control system 7. Minimized setup times © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

9 Minimizing Waste: Focused Factory Networks Coordination System Integration These are small specialized plants that limit the range of products produced (sometimes only one type of product for an entire facility) Some plants in Japan have as few as 30 and as many as 1000 employees © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

10 Minimizing Waste: Focused Factory Networks • Small specialized plants • Thinner is better — Better control — Bolsters specialization and excellence — More economical to manage • Large vertically integrated operations are: — Bureaucratic — Difficult to manage © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

11 Minimizing Waste: Group Technology • Identification of: — Machine cells — Part families • Based on similarities in: — Design — Manufacture • Saves time and effort © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

12 Minimizing Waste: Group Technology (Part 1) Note how the flow lines are going back and forth • Using Departmental Specialization for plant layout can cause a lot of unnecessary material movement Saw Saw Grinder Heat Treat Lathe Press © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

Minimizing Waste: Group Technology (Part 2) • 13 Revising by using Group Technology Cells can reduce movement and improve product flow Grinder Saw 1 2 Lathe Press Heat Treat Grinder Saw Lathe A B © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

14 Minimizing Waste Use of Other Technologies • • • Robotics Supply chain management Value stream mapping Flexible manufacturing systems Computer integrated manufacturing systems • Expert systems • Neural networks © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

15 Minimizing Waste: Quality at the Source · Self-inspection — Limited use of QC departments · Automated inspection · Line-stopping empowerment — Quality before quantity © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

16 Minimizing Waste: Uniform Plant Loading This does not mean building a single product. But maintaining a stable mix of products, and firm monthly schedules. © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

17 Minimizing Waste: Uniform Plant Loading (heijunka) Suppose we operate a production plant that produces a single product. The schedule of production for this product could be accomplished using either of the two plant loading schedules below. Not uniform Jan. Units Feb. Units Mar. Units Total 1, 200 3, 500 4, 300 9, 000 or Uniform Jan. Units 3, 000 Feb. Units 3, 000 Mar. Units 3, 000 Total 9, 000 How does the uniform loading help save labor costs? © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

Minimizing Waste: Inventory Hides Problems Machine downtime Scrap Work in process queues (banks) Paperwork backlog Vendor delinquencies Change orders Engineering design redundancies Inspection backlogs 18 Example: By identifying defective items from a vendor early in the production process the downstream work is saved Design backlogs Decision backlogs Example: By identifying defective work by employees upstream, the downstream work is saved © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

19 Minimizing Waste: Kanban Production Control System • Uses signaling system to regulate JIT flows • Kanban—sign or instruction card • Kanban system is a pull system — Authority to produce comes from downstream — It is a form of information system — Production kanban--can be single card if move distance is short — Move (withdrawal, conveyance) kanban © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

20 Kanban Production System • Objectives — Lead time reduction — Lot size reduction — Waste elimination • One of several tools of Lean Mfg. — Ineffective without others — Prerequisites must be met © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

21 Rules of Kanban Production System • Withdraw only the quantity needed • Produce only the quantity given by kanban • Kanban is withdrawal/production authority • Move only good parts • Smooth and level production • Decrease number of cards to reduce inventory © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

22 Minimizing Waste: Kanban Production Control Systems Once the Production kanban is received, the Machine Center produces a unit to replace the one taken by the Assembly Line people in the first place Machine Center Withdrawal kanban Storage Part A Production kanban The process begins by the Assembly Line people pulling Part A from Storage Part A This puts the system back were it was before the item was pulled Assembly Line Material Flow Card (signal) Flow © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

23 Determining the Number of Kanbans Needed • Setting up a kanban system requires determining the number of kanbans cards (or containers) needed • Each container represents the minimum production lot size • An accurate estimate of the lead time required to produce a container is key to determining how many kanbans are required © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

24 The Number of Kanban Card Sets k = Number of kanban card sets (a set is a card) D = Average number of units demanded over some time period L = lead time to replenish an order (same units of time as demand) S = Safety stock expressed as a percentage of demand during lead time C = Container size © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

25 Example of Kanban Card Determination: Problem Data • A switch assembly is assembled in batches of 4 units from an “upstream” assembly area and delivered in a special container to a “downstream” control-panel assembly operation • The control-panel assembly area requires 5 switch assemblies per hour • The switch assembly area can produce a container of switch assemblies in 2 hours • Safety stock has been set at 10% of needed inventory © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

26 Example of Kanban Card Determination: Calculations Always round up! © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

27 Minimizing Waste: Minimized Setup Times · What are the consequences of long setup times? — Long manufacturing lead times — Increased cost — Reduced capacity · A requirement for small-lot-size, mixedmodel production? — Practice more setups to reduce time/setup — Fixed production quantity--improves setup — SMED © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

28 Respect for People • Strive to maintain level payrolls • Workers as assets • Cooperative employee unions • Subcontractor networks • Bottom-round management style • Quality circles (Small Group Involvement Activities or SGIA’s) © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

29 Toyota Production System’s Four Rules 1. All work shall be highly specified as to content, sequence, timing, and outcome 2. Every customer-supplier connection must be direct, and there must be an unambiguous yes-or-no way to send requests and receive responses 3. The pathway for every product and service must be simple and direct 4. Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

30 Lean Implementation Requirements: Design Flow Process • Link operations • Balance workstation capacities • Redesign layout for flow • Emphasize preventive maintenance • Reduce lot sizes • Reduce setup/changeover time © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

31 Lean Implementation Requirements: Total Quality Control • Design for quality and quality at the source • Worker responsibility/quality culture • Measure SQC and use achievable goals • Enforce compliance • Fail-safe methods • Automatic inspection © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

32 Lean Implementation Requirements: Stabilize Schedule • Level schedule – Pull materials into final assembly in uniform pattern • Underutilize capacity – Realized by removing excess inventory – Inventory less likely with quality and equipment maintenance • Establish freeze windows – Fixed schedule with no further changes possible © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

33 Lean Implementation Requirements: Kanban-Pull • Demand pull • Backflush – Used to explode end item’s BOM to determine how many of each product went into it • Reduce lot sizes © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

34 Lean Implementation Requirements: Work with Vendors • Limited number of suppliers for better control • Reduce lead times • Frequent deliveries • Project usage requirements • Quality expectations © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

35 Lean Implementation Requirements: Planning and Control • Plan for quality • Uniform production rate — Smooth flow of materials — Emphasize rate not capacity — Refocused productivity ü Less expensive machines ü Push towards lot size of one — Less expensive machines © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

36 Lean Implementation Requirements: Reduce Inventory More • Look for other areas • Stores • Transit • Carousels • Conveyors © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

37 Lean Implementation Requirements: Improve Product Design • Standard product configuration • Standardize and reduce number of parts • Process design with product design • Quality expectations © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

38 Lean Implementation Requirements: Concurrently Solve Problems • Root cause • Solve permanently • Team approach • Line and specialist responsibility • Continual education © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

39 Lean Implementation Requirements: Measure Performance • Emphasize improvement • Track trends © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

40 Lean in Services (Examples) • Organize Problem-Solving Groups • Upgrade Housekeeping • Upgrade Quality • Clarify Process Flows • Revise Equipment and Process Technologies © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

41 Lean in Services (Examples) • Level the Facility Load • Eliminate Unnecessary Activities • Reorganize Physical Configuration • Introduce Demand-Pull Scheduling • Develop Supplier Networks © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

42 Performance Measurement • Quality levels • Customer satisfaction • Equipment effectiveness • Supplier performance • Throughput time • Inventory levels • Setup/lead time reduction • Layout efficiency © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

43 Other Tools: Visual Control (5 s) • Sort—Seiri (organization; find what’s not needed) • Set in order—Seiton (place for everything) • Shine—Seiso (cleanliness) • Standardize—Seiketsu (develop/maintain standards. ) • Sustain—Shitsuke (self-discipline) © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved

44 The Clean Workplace Post all pertinent Information Schedule Returns Procedures Posted Store Tools Close to the Point of use Problems Part A Part B Holding areas Identified Outgoing © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved