Introduction to Lean Systems GEOP 4316

Outline Definitions The basis of Lean The 7 wastes Organization’s Strategy Product Life Cycle The components of Lean

Definitions What is Lean Production? A production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes a product or service, "value" is defined as any action or process that a customer would be willing to pay for. http://en.wikipedia.org/wiki/Lean_manufacturing

Definitions What is Lean Production? Essentially, lean is centered on preserving value with less work. Lean manufacturing is a management philosophy derived mostly from the Toyota Production System (TPS)

Definitions What is Lean production? Less Waste Less human effort Less manufacturing space Less investment in tools Less Engineering time Maximizing the value Less than what? Taiichi Ohno https://en.wikipedia.org/wiki/Taiichi_Ohno

+1 The 7+1 Wastes Unused human talent http://en.wikipedia.org/wiki/Muda_%28Japanese_term%29

The 7 Wastes Overproduction and inventory wastes Overproduction: Product with no customers Inventory: Product waiting for further actions Found in batch systems Excess inventory : Increases lead times Dedicates raw materials and resources unnecessarily Consumes productive floor space Delays the identification of problems

The 7 Wastes Waiting Waste Waiting for process to finish, resources to become available and/or materials to arrive Whenever goods are not moving or being processed, the waste of waiting occurs. Typically more than 99% of a product's life in traditional batch-and-queue manufacture will be spent waiting to be processed.

The 7 Wastes Rejects and Defect Waste Products not suitable for sale and/or reprocessing to bring them up to standard. Associated costs Scrap and loss of material quarantining inventory re-inspecting rescheduling capacity loss loss of customers and sales

The 7 Wastes Transportation and movement waste Transporting product between processes is a cost incursion which adds no value to the product. Transportation can be difficult to reduce due to the perceived costs of moving equipment and processes closer together. Movement waste is related to ergonomics and is seen in all instances of bending, stretching, walking, lifting, and reaching. Unnecessary movement of people, double handling of materials, long distance between workstations, stretching

The 7 Wastes (Number + 1) Unused Human Talent Improper or deficient training Lack of decision making ability Lack of a promotion system Not listening to employee’s suggestions

Levels of Lean System’s is defined at multiple levels Multiple Organizations (SC view) Supply side inbound to the production system Distribution outbound to the customers Suppliers ↔ Manufacturing ↔ Customers System’s is defined at multiple levels Single organization/ entity Corporation Business Unit/ Division Plant Cell/Line Workbench Operator

Business Strategy Strategy, a concept of military origin, refers to a plan of action designed to achieve a particular goal. In military usage strategy is distinct from tactics, which are concerned with the conduct of an engagement, while strategy is concerned with how different engagements are linked http://en.wikipedia.org/wiki/Strategy

Business Strategy “… is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations". Johnson and Scholes (Exploring Corporate Strategy)

Customers & Operations Strategy Customers have a set of requirements (needs) Customers = Market segments Customer needs have to be identified and prioritized Basic functions vs. optional functions/ features Cost Warranty Quality (reliability and robustness) Speed of delivery Customization

Customers & Operations Strategy Concept of tradeoffs Less expensive materials, reduce cost but lower quality Instead of dedicated trucks we send material by train Fewer customer service representatives, lower cost, lower customer satisfaction Can’t have it all!

Customers & Operations Strategy Order Winner What do you offer that is unique? Different from the others you compete with? what does the organization do better? The benefit/ characteristic/ feature that will make people finally chose what you are offering? http://www.garybembridge.com/2010/05/order-winner-order-loser-order.html

Customers & Operations Strategy Operations strategy is about planning for the products and systems that match the organization’s customer requirements There must be alignment between the organizations capabilities and the products Lean manufacturing / philosophy is a set of systems and approaches (capabilities) that must be linked to the business strategy

Customers & Operations Strategy While Lean in general applies to any organization/products, it may not have the same strategic value/ significance Tools and focus linked to the OW/ key customer criteria Lean is in general more applicable to low/medium cost standardized high quality products / services Less applicable to products with high customer service levels (high levels of availability, speed of delivery)

Ops Str. and Product Life Cycle Product’s life cycle – describes the relationship between time and a product’s sales/ process maturity/ profitability, …. Important understanding of the “status” of a product (and future status) to define operations and marketing strategies. Introduction/Birth > product awareness, development of process and technology, distribution systems, supplier base, introductory pricing… http://www.quickmba.com/ marketing/product/lifecycle/

Ops Str. and Product Life Cycle Continuation… Growth > capacity expansion, automation/ production control, expanded distribution systems, expanded promotion / sale channels Maturity > Focus on efficiencies (process/ SC improvements), quality improvements, outsourcing, promotions to fend off competitors, secondary distribution channels Decline > sell product, resource reallocation

Components of Lean Lean is made up of many building blocks (concepts, tools, frameworks) continuous improvement (KAIZEN) roof is the philosophy Pull/Kanban Cellular / Flow Total Productive Maintenance steps to the house Quality at the Source Point of Use Storage Quick Changeover Standardized Work Batch Reduction Teams value stream mapping Visual Controls 5S Streamlined Layout

Total Productive Maintenance Components of Lean Many of the components are at the Plant, Cell/Line, Workbench, Operator level continuous improvement (KAIZEN) Pull/Kanban Cellular / Flow Total Productive Maintenance Quality at the Source Point of Use Storage Quick Changeover Standardized Work Batch Reduction Teams value stream mapping Visual Controls 5S Streamlined Layout

Components of Lean Other are more directly linked to the SC continuous improvement (KAIZEN) Pull/Kanban Cellular / Flow Total Productive Maintenance Quality at the Source Point of Use Storage Quick Changeover Standardized Work Batch Reduction Teams value stream mapping Visual Controls 5S Streamlined Layout

continuous improvement Next steps The course will discuss all of these elements First three in black continuous improvement (KAIZEN) Pull/Kanban Cellular / Flow Total Productive Maintenance Quality at the Source Point of Use Storage Quick Changeover Standardized Work Batch Reduction Teams value stream mapping Visual Controls 5S Streamlined Layout