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

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

3. 3 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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”)

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

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

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

7. 7 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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

8. 8 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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

9. 9 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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

10. 10 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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

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

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

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

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

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

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

17. 17 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved Minimizing Waste: Uniform Plant Loading (heijunka) Not uniformJan. UnitsFeb. UnitsMar. UnitsTotal 1,2003,5004,3009,000 UniformJan. UnitsFeb. UnitsMar. UnitsTotal 3,0003,0003,0009,000 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. How does the uniform loading help save labor costs? or

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

19. 19 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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

20. 20 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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

21. 21 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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

22. 22 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved Minimizing Waste: Kanban Production Control Systems Storage Part A Machine Center Assembly Line Material Flow Card (signal) Flow Withdrawal kanban 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 This puts the system back were it was before the item was pulled The process begins by the Assembly Line people pulling Part A from Storage Production kanban

23. 23 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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

24. 24 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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

25. 25 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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

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

27. 27 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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, mixed- model production? —Practice more setups to reduce time/setup —Fixed production quantity--improves setup —SMED

28. 28 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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)

29. 29 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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

30. 30 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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

31. 31 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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

32. 32 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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

33. 33 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved 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

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

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

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

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

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

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

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

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

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

43. 43 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved Other Tools: Visual Control (5s) 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)

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