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Coordinate implementation of customer service strategies Lecture 6 Payman Shafiee.

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1 Coordinate implementation of customer service strategies Lecture 6 Payman Shafiee

2 JIT Six Sigma and TPS(Toyota Production System) Discription and Assessment Taiichi Ohno made no secret of the fact that he learned most of his methods from Ford, and the books that Ford wrote between 1922 and 1930 describe lean manufacturing very explicitly. Slides by Payman Shafiee

3 JIT Six Sigma and TPS(Toyota Production System) Ohno Taiichi, (February 29, May 28, 1990) The father of the Toyota Production System The Lean Manufacturing in the U.S.. He wrote several books about the system, the most popular of which is Toyota Production System: Beyond Large-Scale Production. Born in Dalian, China, and a graduate of the Nagoya Technical High School, he was an employee first of the Toyoda family's Toyoda Spinning, then moved to the motor company in 1943, and gradually rose through the ranks to become an executive. In what is considered to be a slight, possibly because he spoke publicly about the production system, he was denied the normal executive track and was sent instead to consult with suppliers in his later career.[citation needed] ^^ Slides by Payman Shafiee

4 JIT Six Sigma and TPS(Toyota Production System) "My Life and Work" (1922) by Henry Ford has a detailed description of the benefits of just-in-time manufacturing as well as the need to eliminate variation in delivery time to make it work smoothly. It also summarizes effective labor relations in one sentence: "It ought to be the employer's ambition, as leader, to pay better wages than any similar line of business, and it ought to be the workman's ambition to make this possible." Slides by Payman Shafiee

5 Just In Time Henry Ford described it in his, My Life and Work (1922): "We have found in buying materials that it is not worthwhile to buy for other than immediate needs. We buy only enough to fit into the plan of production, taking into consideration the state of transportation at the time. If transportation were perfect and an even flow of materials could be assured, it would not be necessary to carry any stock whatsoever. The carloads of raw materials would arrive on schedule and in the planned order and amounts, and go from the railway cars into production. That would save a great deal of money, for it would give a very rapid turnover and thus decrease the amount of money tied up in materials. With bad transportation one has to carry larger stocks.“ Source: Slides by Payman Shafiee

6 Just In Time This statement also describes the concept of "dock to factory floor," in which incoming materials are not even stored or warehoused before going into production. The concept requires an effective freight management system (FMS), which Ford describes in Today and Tomorrow. Source: Slides by Payman Shafiee

7 How Just In Time benefited Ford Somebody who bought a dollar's worth of Ford stock in 1903 walked away with $2,500 in This corresponds to an annual compounded gain of 63%, and it does not even account for dividends. Ford also quadrupled his workers' wages in 20 years (a compounded annual growth rate of 7.2%). The postwar depression of 1918 had little perceptible effect on the company's fortunes, thus demonstrating that Ford's methods worked even under very unfavorable economic conditions Source: Slides by Payman Shafiee

8 How Just In Time benefited Toyota It is hard for Japanese corporations to warehouse finished products and parts, due to limited land availability. Before the 1950s, this forced the production lot size below the economic lot size. (An economic lot size is the number of identical products that must be produced to justify the cost of changing the production process over to another product.) This caused poor return on investment for factories. Source: Slides by Payman Shafiee

9 Sig Sigma Six Sigma is a business management strategy originally developed by Motorola Six Sigma originated as a set of practices designed to improve manufacturing processes and eliminate defects, but its application was subsequently extended to other types of business processes as well.[3] In Six Sigma, a defect is defined as any process output that does not meet customer specifications, or that could lead to creating an output that does not meet customer specifications Slides by Payman Shafiee

10 Sig Sigma The term "Six Sigma" comes from a field of statistics known as process capability studies. Originally, it referred to the ability of manufacturing processes to produce a very high proportion of output within specification. Processes that operate with "six sigma quality" over the short term are assumed to produce long- term defect levels below 3.4 defects per million opportunities (DPMO).[7][8] Six Sigma's implicit goal is to improve all processes to that level of quality or better. Slides by Payman Shafiee

11 Six Sigma The term "six sigma process" comes from the notion that if one has six standard deviations between the process mean and the nearest specification limit, as shown in the graph, practically no items will fail to meet specifications.[8] This is based on the calculation method employed in process capability studies. Slides by Payman Shafiee

12 Six Sigma In simple terms, it shows how much variation there is from the "average" (mean). It may be thought of as the average difference of the scores from the mean of distribution, how far they are away from the mean. A low standard deviation indicates that the data points tend to be very close to the mean, whereas high standard deviation indicates that the data are spread out over a large range of values. Slides by Payman Shafiee

13 Six Sigma For example, the average height for adult men in the United States is about 70 inches (178 cm), with a standard deviation of around 3 in (8 cm). This means that most men (about 68 percent, assuming a normal distribution) have a height within 3 in (8 cm) of the mean (67–73 in (170–185 cm)) – one standard deviation, whereas almost all men (about 95%) have a height within 6 in (15 cm) of the mean (64–76 in (163–193 cm)) – 2 standard deviations. If the standard deviation were zero, then all men would be exactly 70 in (178 cm) high. If the standard deviation were 20 in (51 cm), then men would have much more variable heights, with a typical range of about 50 to 90 in (127 to 229 cm). Three standard deviations account for 99% of the sample population being studied, assuming the distribution is normal (bell-shaped) Slides by Payman Shafiee

14 Six Sigma Features clear focus on achieving measurable and quantifiable financial returns from any Six Sigma project.[2] An increased emphasis on strong and passionate management leadership and support.[2] A special infrastructure of "Champions," "Master Black Belts," "Black Belts," etc. to lead and implement the Six Sigma approach.[2] A clear commitment to making decisions on the basis of verifiable data, rather than assumptions and guesswork Slides by Payman Shafiee

15 Six Sigma and Ford’s System standardization and best practice deployment as central elements of Six Sigma, but they were centerpieces of Henry Ford's system more than eight decades earlier. There is also no doubt that Six Sigma can deliver results in situations for which its measurement-intensive methods (e.g. gap analysis) are designed. Slides by Payman Shafiee

16 Six Sigma and Ford’s System Ford's system, in contrast, relied heavily on common sense and on the frontline manufacturing worker's ability to identify improvement opportunities even where no measurable "gap" existed  i.e. If a workstation produced 100% quality but the worker had to take even two steps to move raw materials or finished goods, either the worker in question or a more experienced co-worker would realize that this was a problem; a person can be paid to make parts, but not to walk or to move parts. Metal turnings or shavings from machining operations attracted instant attention because, even in the absence of a quality "gap," the process converted some of the stock into waste instead of parts. Slides by Payman Shafiee

17 TPS (Toyota Production System) The Toyota Production System (TPS) is an integrated socio-technical system, developed by Toyota, that comprises its management philosophy and practices. The TPS organizes manufacturing and logistics for the automobile manufacturer, including interaction with suppliers and customers. The system is a major precursor of the more generic "Lean manufacturing." Taiichi Ohno, Shigeo Shingo and Eiji Toyoda developed the system between 1948 and 1975.[1] Slides by Payman Shafiee

18 TPS and JIT, inherently One The philosophy of JIT is simple: inventory is waste In short, the just-in-time inventory system focus is having “the right material, at the right time, at the right place, and in the exact amount”, without the safety net of inventory. The JIT system has broad implications for implementers Slides by Payman Shafiee


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