Lean Manufacturing (Lean Production)

Lean Manufacturing (Lean Production)
Module #2

Outline Background and history The Principles
Continuous Improvement Eliminate Waste (JIT) Customer focus (TQM) JIT techniques for smooth flow Quality Quality of Design Statistical Process Control (SPC) Eliminating defects Production Planning and Control Level scheduling Synchronizing and balancing processes Planning and control in pull production Managing the supply chain KEY MESSAGE This module reviews the basic concepts of lean manufacturing. TALKING POINTS Lean manufacturing is a system based on some simple principles. It is a complete system with many interconnected elements. If implemented correctly, lean manufacturing results in large improvements compared to traditional mass production thinking.

Background and History

The Machine that Changed the World
In 1985, the International Motor Vehicle Program (IMVP) was established at M.I.T. IMVP undertook an extensive 5 year study of the worldwide auto industry This was one of the most comprehensive industry studies ever undertaken The findings were published in over 116 research papers, and summarized in the book “The Machine that Changed the World” KEY MESSAGE The book “The Machine that Changed the World” resulted from a landmark study of the global auto industry. TALKING POINTS This was the first study to systematically examine the different approaches taken by North American, European and Japanese car manufacturers.

The Scope of the Study The IMVP study looked at all aspects of the auto industry, including: market assessment product design detailed engineering coordination of supply chain operation of individual factories sales and service of finished product KEY MESSAGE The study looked at all aspects of business and manufacturing methods and practices in different parts of the world. TALKING POINTS While the focus was on the auto industry, the study is applicable to other industries as well.

The Findings... A new manufacturing paradigm dubbed “lean production” has emerged since World War II Lean production is replacing the existing mass production approach pioneered in North America by Henry Ford. Lean production requires a fundamental restructuring of traditional industries KEY MESSAGE The study “discovered” lean production, which has been practiced in Japan for 50 years! TALKING POINTS The study documented the distinctly different approaches used by Japanese car companies, and showed conclusively why Japanese companies like Toyota have been so successful. The authors coined the term “lean production” to describe this new system. Lean production has been shown to be superior to the mass production paradigm.

The Spread of Lean Production
The dominance of Japanese industry today is founded on the principles of lean production Most North American and European manufacturers are still rooted in mass production thinking KEY MESSAGE Lean production is only starting to migrate from Japan to the rest of the world. TALKING POINTS Until recently, Western manufacturers did not understand the nature of lean production. Their thinking has been, and continues to be, firmly rooted in the mass production paradigm.

The Principles of Lean Production
Elimination of waste Continuous improvement Customer focus KEY MESSAGE The underlying principles of lean production are simple. TALKING POINTS Lean production is a complete, integrated system based on certain fundamental principles. All of the techniques and methods build on and follow from these principles.

Eras in Manufacturing Craft production Mass production Lean production
has existed for centuries Mass production developed after World War I by Henry Ford and General Motors’ Alfred Sloan Based on principles of Scientific Management Lean production developed in Japan after World War II pioneered by Eiji Toyoda and Taiichi Ohno of Toyota KEY MESSAGE There have been three eras or paradigms in manufacturing. TALKING POINTS These three paradigms continue to coexist today. However, they are not equivalent. Some car makers like Aston Martin continue to use craft production. Most car makers in North America and Europe use mass production. Mass production is much more efficient than craft production. Lean production dominates in Japan. Lean production is superior to mass production.

Craft Production Despite the extensive hand craftsmanship, early cars were unreliable and trouble-prone. The problem stemmed from lack of part standardization. No standard gauging No tools for cutting hardened steel As a result, parts were not interchangeable. KEY MESSAGE Historically, craft production resulted in low productivity, high cost and poor quality. TALKING POINTS Until the beginning of the 20th century, most products were produced by skilled craftsmen. Throughout history, only the wealthy could afford their goods. For example, in medieval times only nobility could afford swords and armor, which were very expensive. Early firearms were all hand made, and each one was slightly different. Parts were made by hand, and extensive fitting was required to assemble them.

Mass Production The mass production techniques developed by Henry Ford before World War I put almost all the craft producers out of business The key to mass production: interchangeable parts. This was necessary to make the assembly line possible. Production of interchangeable parts required two major advances: standardized gauging capability to machine hardened steel KEY MESSAGE Interchangeable parts made mass production possible. TALKING POINTS Ford introduced the Model T in 1908, and the moving assembly line in 1913 The key to mass production: interchangeable parts. This was necessary to make the assembly line possible. European manufacturers had a strong craft tradition, and mass production was not widespread in Europe until the 1950s

Mass Production Productivity was increased by a fine division of labour unskilled workers perform simple, repetitive jobs Assembly workers must be supported by narrowly skilled indirect workers maintenance workers quality inspectors rework specialists KEY MESSAGE Division of labor allowed production to be done by unskilled workers. TALKING POINTS Division of labor was first proposed by the economist Adam Smith in “Wealth of Nations”. These ideas were further developed and promoted by Frederick Taylor, and became known as “Scientific Management” By dividing work into simple, repetitive elements, production could be done by unskilled workers. Other specialized support functions emerged as well.

Mass Production Division of labour within engineering has lead to narrow specialization Design engineers design of products to meet functional requirements Manufacturing engineers design of production equipment and machine tools to manufacture these products Industrial engineers design and allocation of assembly procedures design and analysis of manufacturing systems work study and ergonomics KEY MESSAGE Specialization also extended to engineering and professional work. TALKING POINTS Specialization of work was a result of widespread application of scientific management. As companies grew, complex hierarchical bureaucracies were developed to manage them.

Lean Production After the Second World War, Japanese industry underwent complete rebuilding Manufacturers did not have the volume to justify Detroit-type mass production assembly lines, and needed a better way Lean production principles were developed by Japanese engineers based on practical considerations, and are largely a matter of common sense KEY MESSAGE Lean production resulted from rethinking manufacturing from scratch. TALKING POINTS After WWII, Japanese industry did not have the scale to adopt mass production methods from the West. In the early years, Toyota produced fewer cars in total than the output of a single American assembly plant. In order to compete, they needed an alternative approach. Lean production ideas seem obvious if one discards traditional assumptions.

Lean Production A critical contribution was made by W. Edwards Deming, an American statistician, who convinced the Japanese of the importance of quality, and gave them tools to achieve it Ironically, Dr. Deming was not discovered by North American manufacturers until the early 1980s, when he was in his eighties His teachings are widely credited as being responsible for major improvements in North American competitiveness KEY MESSAGE Japanese companies focused on improving quality decades before western manufacturers. TALKING POINTS Many of today’s quality management techniques were developed before WWII by American statisticians like W. Edwards Deming and Walter Shewhart. Deming became almost a god in Japan, yet was virtually unknown in the West until the 1980’s. After WWII, with no global competition to worry about, North American companies forgot about quality. They could sell everything they made, and customers had no other choice. For many years, “Made in Japan” was synonymous with “junk”. By the time North American companies began to take Japanese competitors seriously, it was too late. Today, Japanese companies dominate consumer electronics, and continue to increase market share in automobiles.

Lean Production There are many popular manufacturing buzz words these days, including Just in time Continuous improvement Concurrent engineering Flexible manufacturing Total quality management Statistical process control These are all integral parts of lean production KEY MESSAGE Lean production is a single, integrated system. Each part is required. TALKING POINTS Over the years, many terms and buzzwords have been coined to describe different aspects of lean production. To add to the confusion, companies like to invent their own internal terminology. Consultants invent other terms to try to sell services. This proliferation of terminology has lead to the belief that there are many alternative systems out there to choose from. In fact, they are all elements of the same thing: lean production. Even the term “lean production” is not universal. Recently, the term “lean manufacturing” has become popular. It is the same thing. Another currently popular system is six sigma. It started as a repackaging of existing lean production techniques by Motorola, and is now widely adopted.

Comparison Craft Mass Lean highly skilled workers or artisans
unskilled or semiskilled workers teams of multiskilled workers simple, flexible tools expensive, single purpose machines highly flexible machines unique, individualized, custom made products standardized products large product variety low productivity, and high cost high productivity and low cost KEY MESSAGE This table summarizes the differences between craft, mass and lean production. TALKING POINTS While this chart is very simplified, it summarizes some of the fundamental differences between the three systems. It is important to understand that each of these systems is self-consistent. One cannot mix and match between them without making things much worse!

Lean Production Vs. Mass Production:
half the human effort in the factory half the manufacturing space half the investment in tools half the engineering hours half the time to develop new products a fraction of the inventory few defects KEY MESSAGE Lean production works, and results in large improvements TALKING POINTS While the actual improvements vary for each case, the results shown here are typical for almost every case. These numbers were supported by hard data from virtually every car assembly plant in the world as a result of the IMVP study. Many other case studies in other industries show the same results. Lean production works in all industries, and for companies of every size. In the next section, we’ll look at some specific examples and case studies.

Principles and Examples
KEY MESSAGE Different authors and sources have proposed slightly different principles. TALKING POINTS They are usually different views of the same thing, and are consistent with each other. One does not find principles that contradict each other.

Origins of Lean Production
Pioneered by Toyota Adopted by other Japanese manufacturers Discovered much later by Western manufacturers Known by many names: Toyota Production System Just In Time/Total Quality Management Lean production Lean manufacturing Flow production

The Principles (Nicholas)
Continuous Improvement Eliminate Waste Customer focus (TQM) KEY MESSAGE Lean production is built on these three principles

The Principles (Womack and Jones)
Specify value defined by the customer Identify value stream eliminate all activities that don’t add value Flow products should flow along value stream Pull let the customer pull products they want, rather than pushing products they may not want Perfection strive for perfection through continuous improvement KEY MESSAGE This is a slightly different version of the same principles TALKING POINTS These five principles follow directly from continuous improvement, elimination of waste and customer focus. These principles are a bit more specific about the details.

The Principles (Deming)
Optimize the system to satisfy the customer Reduce complexity In other words, simplify Continuous improvement KEY MESSAGE These are Deming’s principles TALKING POINTS One can see the direct correspondence to customer focus and continuous improvement. Reducing complexity is an important strategy for reducing waste and variation.

The Transition Lean Performance Mass Craft KEY MESSAGE
Craft, Mass and Lean production are incompatible systems, and the transition is difficult. TALKING POINTS During the transition from one system to another, performance might get worse before it gets better. One cannot take small steps, and one cannot implement one part at a time since they are all interdependent. Many companies have tried to adopt the “easy” parts of lean production, and have seen no improvement. Many have made the mistake that lean production won’t work for them, and that the status quo is the best route.

How Long does it Take? Womack and Jones document many cases where major improvements are achieved in a matter of days The principles are straightforward Toyota invented lean production 50 years ago, and is still perfecting it! The principles are hard to implement Improvement never ends KEY MESSAGE Many elements can be implemented quickly, but mastering it takes years TALKING POINTS The initial steps toward lean production are often straightforward, and improvements can be achieved quickly. There are no “secrets” in lean production. Toyota has been very open, and has given many competitors tours of their plants. Detailed books have been written about the Toyota Production System (another name for lean production). Toyota knows that it takes serious commitment and years of experience to implement it well. Furthermore, Toyota is hard to catch because they are not standing still!

How Much does it Cost? The cost is usually low
In many cases, companies replace expensive equipment with much simpler and cheaper equipment Lean production does not emphasize technology or automation KEY MESSAGE Lean production is not expensive to implement TALKING POINTS In the 1980’s, General Motors spent tens of billions of dollars on technology and automation in order to compete with the Japanese. They did not understand lean production, and their performance did not improve. Many companies that invested in complex technology in the 1980’s are replacing it with simpler and more effective equipment.

Lean Production Benefits
Double labour productivity 90% reduction in throughput times 90% reduction in inventory Improved quality Reduced time to market KEY MESSAGE Large improvements are typical when lean production is adopted. TALKING POINTS The improvements typically range from a factor of 2 up to several orders of magnitude. For example, many case studies show improvements in the range shown on this slide. The next few slides show some actual case studies.

Hewlett Packard’s Cupertino California plant
lead time work in process no. of back orders 1982 (before JIT) 1986 (after JIT) 15 days 11.3 hours $670,000 $20,000 KEY MESSAGE This chart shows the improvements achieved by Hewlett Packard TALKING POINTS One can assume that Hewlett Packard did a good job of running their manufacturing plant before 1982, and that the performance was about as good as they could achieve using mass production methods. The improvements achieved by adopting lean production demonstrate the great superiority of the lean production system. 200 2

The Lean Transformation at Lantech
KEY MESSAGE This shows the results for a medium sized American machine tool maker TALKING POINTS Womack and Jones use the term “batch and queue” for mass production, and “flow” for lean production. They studied lean production implementations in many industries in different countries, and always saw improvements of similar magnitude From: Womack and Jones, Lean Thinking, p.121

Relative Performance in Auto Industry
KEY MESSAGE This chart summarizes the significant differences in performance between lean and mass producers of cars TALKING POINTS In the mid-1990’s, the gap between Toyota and the rest of the industry was very large in all important measures of competitiveness. This difference is due to lean production versus mass production. The biggest gap is found between the smaller suppliers, who have been the slowest to adopt lean production practices. , from Womack and Jones, Lean Thinking

Relative Performance in Auto Industry
, from Womack and Jones, Lean Thinking

Porsche’s Lean Transition
KEY MESSAGE Porsche’s lean transition after they learned how to make cars from the Japanese TALKING POINTS Many German manufacturers like Porsche have a strong craft tradition The result: cars are expensive to make, and quality is not good After adopting lean production practices under the guidance of Japanese consultants, they slashed inventory, reduced lead times, and made cars with less effort and fewer defects Source: Womack and Jones, Lean Thinking

Porsche’s Lean Transition
Source: Womack and Jones, Lean Thinking

Case Study – Pratt & Whitney
Product: Turbine blades Problem: grinding the blade roots P & W replaced their existing system with a new system Which of the following two alternatives was the new system? KEY MESSAGE Lean production also works in high-tech aerospace companies like Pratt & Whitney TALKING POINTS Case study from “Lean Thinking” by Womack and Jones.

Alternative One Grind Grind Grind EDM EDM Weld Grind Grind Grind Grind
Wash Eight identical cells Eight 3-axis grinding machines Two EDM machines Quick-change fixtures Manual part movement Total machining time: 75 min. KEY MESSAGE Here is a simple, low tech manufacturing system TALKING POINTS This system uses basic, inexpensive equipment

Twelve custom-made Hauni-Blohm blade grinding centres
Alternative Two Twelve custom-made Hauni-Blohm blade grinding centres Encapsulate Gauge Grind Gauge Decapsulate AGVs X-ray Automated storage and retrieval system KEY MESSAGE Here is a sophisticated, high-tech system TALKING POINTS The grinder requires blades to be encapsulated in a metal alloy for support. Afterward, the alloy must be removed, the blades x-rayed and then cleaned with acid and inspected. All grinding operations can be done by a single machine, in 3 minutes. This system uses all the hot automation technologies: AS/RS, Automated Guided Vehicles (AGVs), multi-axis CNC machining centres, and complex computer control The system is completely automated Total machining time is 3 minutes, compared to 75 minutes for the low-tech system Which system is better? Inspect Acid clean Total machining time: 3 min.

Activities that Add Value…
This adds value – the rest is waste! Encapsulate Gauge Grind Gauge Decapsulate AGVs X-ray Automated storage and retrieval system KEY MESSAGE The high-tech system is not lean! TALKING POINTS The only activity that adds value is the grinding operation. Everything else is waste! This was their existing system. It was replaced by the low-tech, lean system and performance improved greatly This is counter-intuitive to many engineers and managers, who believe that high-tech, automated systems are always better Inspect Acid clean

Monuments The existing system, Alternative Two, is a “monument”
A monument is a machine that is too big to move, and must be operated in batch mode Monuments are bad! KEY MESSAGE Machines that must be operated in batch mode are bad TALKING POINTS Large, automated systems are less flexible than smaller, simpler systems. Let’s compare the two.

Source: Womack and Jones, Lean Thinking
Lean versus Monumental Machining Automated Blohm Grinder Lean Cells Actual machining time 3 minutes 75 minutes Space/product cell (sq.ft.) 6,430 2,480 Part travel (ft.) 2,500 80 Inventory (average per cell) 1,640 15 Batch size (number of blades) 250 1 Throughput time (sum of cycle time) 10 days Environmental Acid cleaning and X-ray No acid, no X-ray Changeover time 480 minutes 100 seconds Grinding cost per blade .49 New blade tooling cost .3 Capital cost $80 million $13.6 million KEY MESSAGE Lean cells were superior to the high-tech automated system in virtually every aspect! TALKING POINTS The automated system was superior only in actual machining time. However, this advantage is meaningless compared to the many disadvantages. In every other metric, the lean cells improved performance by a factor of two up to several orders of magnitude! Source: Womack and Jones, Lean Thinking

Important Points Lean production principles are generally agreed
Lean production methods can lead to large improvements at little cost A completely new way of thinking and doing things is required Without knowledge of lean production principles, improvement efforts involving automation, robotics, CIM, etc. can make things worse! KEY MESSAGE Lean production is a fundamentally different and better way to manufacture products TALKING POINTS A large number of industry case studies, in different industries all over the world, have shown large performance improvements after adopting lean production Lean production is fundamentally different and better than mass production Companies that want to stay in business MUST understand and implement lean production practices!

The Principles

The Principles Continuous Improvement Eliminate Waste (JIT)
Customer focus (TQM) KEY MESSAGE In this section, we discuss and illustrate the basic principles TALKING POINTS All of the elements of the lean production system are based on these three principles

Continuous Improvement Strategy
Continuous incremental improvement: Kaizen Periodic big leaps: Innovation improvement KEY MESSAGE There are two kinds of improvement: continuous improvement and big leaps TALKING POINTS Continuous incremental improvement has been part of lean production from the beginning. In the early 1990’s, Hammer and Champy introduced the idea of business process reengineering. Reengineering involves scrapping existing processes, and starting from scratch. The two approaches are actually complementary, as we will see.

Incremental Improvement: Kaizen
Improvement follows S-curve, and eventually slows Performance KEY MESSAGE Incremental improvement follows an S-curve, and eventually slows TALKING POINTS Incremental improvement can lead to large improvements over time, but eventually the rate of improvement slows Improvement follows the classical “S-curve” Most technologies and processes follow an S-curve Effort

Innovation Improvement
Further improvement requires major innovation Process reengineering is often used Then, kaizen starts again Performance New process Old process Discontinuity KEY MESSAGE Once improvement slows, major innovation is required TALKING POINTS Periodically, big leaps are taken as new processes and technologies replace old ones. This requires major innovation, and can’t be achieved by Kaizen This is where process reengineering comes in There is usually disruption and discontinuity during the transition between the old and new process/technology Initially the new process/technology is untried and works poorly, and Kaizen resumes to continuously improve it Effort

Making the Leap Steam locomotive Diesel electric Propeller plane
Jet plane KEY MESSAGE Major innovations in processes and technologies are relatively infrequent TALKING POINTS Improvements can usually be attributed to a few major innovations, many minor innovations, and continuous improvement. It is hard to predict which innovations will pan out, though hindsight is 20/20 Companies that are slow to adopt new technologies often disappear. Consider the current transition from film to digital photography. How are Fuji, Kodak, Nikon, Minolta, etc. responding to this? Will they still be around in 10 years? Vacuum tubes Transistors

Finding and Implementing Improvements
PDCA cycle Five-why process Value analysis/value engineering KEY MESSAGE Several methods exist for finding and implementing improvements TALKING POINTS For Kaizen to work, we need tools for finding and implementing improvements. In the next few slides, we will discuss several methods.

The PDCA Cycle (or Deming Wheel)
1. Plan Identify problem Develop plan for improvement 4. Act Institutionalize improvement Continue cycle 2. Do Implement plan on test basis KEY MESSAGE PDCA is a powerful, generic problem solving method TALKING POINTS This is basically the scientific method, also a standard problem-solving method. Also known as the Shewhart Cycle, after Walter Shewhart who first described it. It is often called the Deming Wheel, after W. Edwards Deming who popularized it. Deming himself called it the Shewhart Cycle. This is basically the same as the DMAIC method of Six Sigma. In lean production, the same ideas often appear with different names. 3. Study / Check Is the plan working

Five-why process Superficial analysis of problems results in treating the symptoms (fire fighting) Asking “why” five times reveals the root cause Once the root cause is addressed, the problem goes away KEY MESSAGE The five-why process finds root causes of problems. TALKING POINTS Consider the following problem: a bearing is failing on a machine, and needs frequent replacement Why is it failing? Because it is wearing prematurely. Why is it wearing prematurely? Because the lubricant is breaking down. Why is the lubricant breaking down? Because the bearing temperature is too high. Why is the bearing temperature too high? Because the machine is hot. Why is the machine hot? Because it is right next to a furnace. Possible solutions: move the machine, or find a way to keep it cool. Once this is done, the problem goes away.

Value Analysis/Value Engineering
How much value does “something” add compared to its cost? Components Features Processing steps Etc. Eliminate things that add cost but not value KEY MESSAGE Eliminate things that add cost but not value. TALKING POINTS Customers what the maximum value for the price. Value is subjective, and is defined by the customer. Value engineering seeks to optimize value while minimizing cost. For many products, improvements come from achieving the same function at lower cost. For example, there have been few technical improvements to CD players or VCRs over the years. Cost continues to fall as manufacturers find less expensive manufacturing methods, simpler designs, etc. that work just as well from the customer’s perspective.

Process Reengineering
“the fundamental rethinking and redesign of business processes to achieve dramatic improvement in contemporary measures of performance such as cost, quality, service and speed” Hammer and Champy, from Reengineering the Corporation KEY MESSAGE Process reengineering is an approach to achieve innovation improvement TALKING POINTS When reengineering was first proposed by Hammer and Champy, it seemed to contradict the Kaizen approach. Now it is seen as a complementary tool.

Reengineering Fundamentals
Simplify process and eliminate non-value-added steps Information technology is an essential enabler Start from scratch, don’t just automate an existing process KEY MESSAGE New technologies allow processes to be redesigned from scratch TALKING POINTS The main emphasis of reengineering has been business processes, to improve productivity of white-collar office work. The same principles can apply to any process. Information technology has been the main enabler allowing business processes to be redesigned. Many of these processes were first developed in pre-computer days, using a hierarchical, bureaucratic model. Consider a typical business process like submitting travel expenses. Usually this requires filling out of paper forms, which are routed to several people for checking, approval, filing, issuing of cheques, etc. In terms of value added, most of these steps are waste. An alternative would be to allow claims through a web-based form, with automatic updating of financial databases and direct electronic deposit of funds.

Employee Involvement Traditionally only experts were involved
Improvement must be everyone’s job Required elements: Opportunity Authority Skills Recognition Respect Training and tools KEY MESSAGE Continuous improvement involves everyone in the company. TALKING POINTS Traditionally, process improvement was relegated to the hands of narrow specialists. It was believed that shop floor workers lacked the skills and ability to make improvements. Lean manufacturers make improvement everyone’s job. This requires a change in attitude. Workers must have ownership, with authority and accountability.

Problem Solving Tools Check sheet Histogram Pareto analysis
Scatter diagram Process flowchart Cause and effect analysis Run diagram KEY MESSAGE There are seven standard problem solving tools used in lean production. TALKING POINTS This slide lists the seven standard problem solving tools used in lean production. They have been developed over many years. There is nothing magic about the number “seven” – more tools can be added to the list. These tools are simple to learn and use, which makes them effective for shop-floor workers. None of them requires a computer. Sometimes these tools are discussed in the context of Total Quality Management. Motorola’s Six Sigma system uses these tools.

The Principles Eliminate Waste (JIT) Continuous Improvement
Customer focus (TQM) KEY MESSAGE The next principle we will discuss is Waste Elimination. TALKING POINTS Elimination of waste is most closely associated with the techniques of Just-in-Time (JIT)

JIT: Value Added and Waste Elimination
Lean production focuses on eliminating waste Anything that doesn’t add value is waste KEY MESSAGE Anything that doesn’t add value is waste, and should be eliminated. TALKING POINTS Identifying and eliminating common forms of waste is a key basis for lean production methods.

Value-added Focus Distinguish necessary and unnecessary activities
Improve the necessary ones, eliminate the unnecessary ones Unnecessary activities are waste KEY MESSAGE Identify unnecessary activities, and eliminate them TALKING POINTS Every process is composed of activities. Some activities are necessary and add value. Some are necessary but don’t add value. And some are unnecessary. The unnecessary activities should be identified and eliminated. Consider the previous example of submitting travel expense claims. Are all the signatures and approvals really necessary? Does it cost more to process the claim than the amount of the claim? (this is often true) Sometimes it is more effective to redesign the process from scratch using reengineering.

Toyota’s Seven Wastes Producing defects Transportation Inventory
Overproduction Waiting time Processing Motion KEY MESSAGE Toyota identifies seven kinds of waste to be eliminated. TALKING POINTS Many of the elements of lean production follow directly from elimination of waste. Toyota developed their Toyota Production System to eliminate the following kinds of waste. Producing defects is waste. Eliminate this by improving processes to make them defect-free. Transportation of material is waste. Eliminate it by moving equipment closer together and implementing flow production. Inventory is waste. Lean production slashes inventory compared to mass production. Overproduction is waste. Don’t keep machines and workers busy making parts that are not needed. Waiting time is waste. Eliminate it by implementing flow production. Waiting time and inventory are usually related. Processing is waste. Processing adds value and is necessary, but can it be done more efficiently? Redesign products so that less processing is required. Motion is waste. Find ways to perform tasks with a minimum of unnecessary motion. Standard operations and workcells address this.

Canon’s Nine Wastes Work-in-process Defects Equipment Expense
Indirect Labour Planning Human resources Operations Startup KEY MESSAGE Canon identifies waste in a broader way. TALKING POINTS Toyota’s seven wastes focus on plant operations. Canon includes other forms of waste in the organization as well.

JIT Principles Simplification Cleanliness and organization Visibility
Cycle timing Agility Variation reduction Measurement KEY MESSAGE Next we will look at the JIT principles to reduce waste.

JIT Principles Simplification Cleanliness and organization Visibility
Cycle timing Agility Variation reduction Measurement KEY MESSAGE The first principle is simplification. TALKING POINTS Any effort to reduce waste in a product, process or procedure usually results in simplification. Conversely, efforts to simplify usually reduce waste.

Product Simplification
KEY MESSAGE This is an example of product simplification. TALKING POINTS Product simplification must be a goal of product design. Many principles of Design for Manufacturability, Design for Assembly, etc. address this issue. Value engineering/analysis are valuable tools as well. In the figure, design B is clearly much simpler than design A. It will be cheaper to make, and the quality will be higher since there is less that can go wrong. Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Process Simplification
KEY MESSAGE Process simplification is a cornerstone of lean production. TALKING POINTS Lean production techniques lead to process simplification. In the figure, case A illustrates a typical batch-and-queue process. By moving the machines close together, the process is simplified by eliminating material handling and inventory storage between them. Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Procedure Simplification
KEY MESSAGE Many procedures can also be simplified. TALKING POINTS An important procedure in manufacturing is machine setup. Lean production greatly reduces setup time by simplifying the procedures. In the example above, the use of spacer blocks for dies eliminates the need for press height adjustment. Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Cleanliness and organization – the Five S’s
Seiri (整理) – proper arrangement and organization Seiton(整頓) – orderliness Seiso (淸掃)– cleanup Seiketsu (淸潔) – cleanliness Shitsuke – discipline KEY MESSAGE The Five S’s eliminate waste due to disorganization of the workplace. TALKING POINTS By keeping the workplace clean and organized, problems are identified, wasted motion is reduced and visibility is improved.

Seiri – proper arrangement and organization Do things in the proper order Eliminate unnecessary things Seiton – orderliness Seiso – cleanup Seiketsu – cleanliness Shitsuke - discipline

Seiri – proper arrangement and organization Seiton – orderliness Specify a location for everything Designate location by number, colour, etc. Put things where they belong Seiso – cleanup Seiketsu – cleanliness Shitsuke - discipline

Seiri – proper arrangement and organization Seiton – orderliness Seiso – cleanup Specify recommended procedures for cleanup Follow the procedures Check over all the work Seiketsu – cleanliness Shitsuke - discipline

Seiri – proper arrangement and organization Seiton – orderliness Seiso – cleanup Seiketsu – cleanliness Dust, wash and maintain equipment Keep equipment and the workplace in the best possible condition Shitsuke – discipline

Seiri – proper arrangement and organization Seiton – orderliness Seiso – cleanup Seiketsu – cleanliness Shitsuke – discipline Scrutinize practices; expose the wrong ones Learn correct practices and use them

5S Check Sheet KEY MESSAGE
5S practices can be encouraged by using a check sheet. TALKING POINTS A check sheet like the one shown here encourages good practices and identifies problem areas. Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Cleanliness and organization
KEY MESSAGE This slide illustrates a well organized workplace. Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Visibility Tool board Visual kanbans Work station Library shelf
How to sensor KEY MESSAGE Information should be visible. TALKING POINTS Workers should know what has been done, and what needs to be done, by seeing it. In traditional manufacturing, information is often restricted, and workers don’t have the information they need to do a good job. Visibility emphasizes ways to make information visually clear so that it can be understood at a glance. Machine controls 30-50 Good Better Best Source: adapted from Russell, R.S., and B.W. Taylor III, Operations Management, 3rd edition, Prentice Hall, 2000

Cycle timing Processes should be repetitive and predictable
Cycle time should be based on demand KEY MESSAGE Cycle timing is a key concept in achieving smooth flow. TALKING POINTS Waste is minimized when material flows smoothly through production, with minimal queues and inventory. Smooth flow requires repetitive processes with minimal variation. This is achieved by using a cycle time based on demand to pace production. For example, if our demand is for 400 widgets per day, we should produce a widget every minute. The cycle time for widgets is one minute. If we make two kinds of widgets with the same demand, and each one takes 30 seconds, we should alternate so that one of each widget is produced every minute. Note that this is NOT the same as making 400 of widget A then 400 of widget B.

Agility Lean manufacturers are also agile
Agility means responding to unpredictable change Changing demand Changing product mix New products Agile elements of Lean Short setups and small batches Flexible equipment Flexible workers KEY MESSAGE Lean manufacturers are also agile. TALKING POINTS Agile manufacturing has been proposed as a replacement or alternative to lean manufacturing. Some argue that lean manufacturing is not agile. In fact, lean manufacturing principles complement agile manufacturing. Lean manufacturing is inherently flexible, and can adapt to change more easily than mass production.

Variation Reduction Variability always makes performance worse
The goal is to reduce or eliminate variability of all kinds Example: Batch and queue has high variability Every day is different Small lot, repetitive, flow production has low variability Every day is the same KEY MESSAGE A key to eliminating waste is to reduce all forms of variability. TALKING POINTS When people speak of variability in manufacturing, they are usually referring to process variability as defined in SPC. In fact, variability of any kind is bad. For example, traditional batch production introduces a large amount of variability in lead times, WIP, job mix, machine utilization, etc. Small-lot, repetitive manufacturing aims to eliminate variability by making the process repetitive.

Measurement Measurement is critical to improvement
Without measurement, how do we know things are better (or worse)? KEY MESSAGE Measurement is a key to improvement. TALKING POINTS We need to define what metrics are important indicators of competitiveness, and measure them. If we use the wrong metrics, overall system performance will not be optimized. Measuring the right things will tell us if the system is improving.

The Principles Customer focus (TQM) Continuous Improvement
Eliminate Waste (JIT) Customer focus (TQM) KEY MESSAGE The third major principle is customer focus. TALKING POINTS Customer focus is associated with Total Quality Management (TQM). The focus is on maximizing quality from the customer’s perspective, at the minimum cost. The more “quality” the customer gets for the same price, the higher the value.

Total Quality Management
Traditional: Establish acceptable quality levels Detect and rework or scrap defects TQM Focus entire company on all aspects of quality, with emphasis on the customer’s perspective The customer is interested in Value, which combines quality and cost KEY MESSAGE TQM focuses on all aspects of quality. TALKING POINTS The traditional definition of quality focuses only on defects and conformance to specifications. Unfortunately, a defect-free product has little value to a customer if it does not meet and surpass their needs, wants and expectations. It is critical to understand what attributes the customer considers most important, and focus on them to maximize value.

Achieving Total Quality
techniques philosophy KEY MESSAGE TQM is a philosophy, a system, and a set of techniques. system

What is Quality? The concept of quality is subjective and difficult to define Certain aspects of quality can be identified Ultimately, the judgement of quality rests with the customer KEY MESSAGE Many attributes of quality are subjective, and are determined by the customer. TALKING POINTS There is no single definition of quality, since each customer values different attributes. It is critical to understand the customers perspective in order to deliver the maximum value.

Quality: Customer’s Perspective
Quality of design Fitness for use Performance Features Reliability Conformance Durability Serviceability Aesthetics Perceived value KEY MESSAGE This slide lists some different attributes of quality from the customers perspective. TALKING POINTS Each customer values different attributes of quality in a product or service. The auto market is segmented into many niches based on different customer profiles. Some customers value reliability, economy and low price. They want subcompact cars that maximize these attributes. Other customers value style, image and aesthetics. They are willing to pay more for a car with the right image. Other customers value performance, and are attracted to sports cars.

Quality: Producer’s Perspective
Quality of conformance Satisfaction of requirements or specifications Emphasis on defect detection and defect prevention KEY MESSAGE The producer’s perspective focuses on conformance and defect-prevention. TALKING POINTS Most of the quality attributes discussed previously must be addressed during product design. The responsibility of production is to make products that conform to specifications and are free of defects. Lean manufacturers improve value by both increasing quality from the customers perspective, and reducing cost.

Producer’s Perspective Consumer’s Perspective
The Meaning of Quality Producer’s Perspective Consumer’s Perspective Quality of Conformance Quality of Design Production Marketing Conformance to specifications Cost Quality characteristics Price Fitness for Consumer Use

Cost of Quality Prevention costs Appraisal costs
build it right the first time Appraisal costs inspection and testing Internal failure costs scrap and rework External failure costs warranty claims, recalls, lost business KEY MESSAGE There are several costs associated with quality. TALKING POINTS the cost of making things right the first time is usually the only time companies think about quality. Usually this is considered too expensive or impossible, so quality is achieved through inspection and rework. Quality problems that slip through are dealt with through warranty claims and recalls. The cost of quality increases by orders of magnitude at each successive stage.

“Quality is Free” For the average company, the cost of quality is about 25% of total sales The cost of prevention is a fraction of the cost of fixing mistakes after they are made Investments in prevention can drastically reduce the total cost of quality KEY MESSAGE Making things right the first time actually saves money – quality is free. TALKING POINTS The traditional view is that quality and cost are directly related. In other words, increasing quality costs more money. Traditional companies achieved high quality through extensive inspection and rework rather than making things right the first time. Until the emergence of lean production, it was generally true that high quality products cost more. Japanese companies like Toyota have shown that high quality can be achieved at low cost. On the other hand, until recently some luxury car makers like Porsche and Jaguar demonstrated that you could also have low quality at high cost…

Three Areas to Improve Quality
Quality of design meet the customer’s needs design for manufacturability build quality in Quality of conformance minimize and control process variation to satisfy the design specifications every time Quality of service The customer must come first KEY MESSAGE There are several areas where quality can be improved. TALKING POINTS Traditionally, companies have neglected product design as an area where quality can be improved. Quality of design can be improved by better meeting the customers needs, simplifying the design so it is easier to make, and designing it to be robust. Conformance can be improved through the techniques of Kaizen, TQM and SPC. Quality of service also needs to be addressed.

TQM Throughout the Company
Marketing and sales Feedback on customer wants and needs Finance and accounting Design and manufacturing Product must satisfy customer Design for manufacture Simplify to improve quality Production management, supervisors, line workers KEY MESSAGE TQM involves all parts of the company. TALKING POINTS The traditional view is that quality is the responsibility of a “quality department”, that often has competing objectives with other departments. TQM requires involvement from all parts of the company. Quality is everyone’s responsibility. Marketing focuses on understanding customer needs. Accounting understands the cost of quality. Design focuses on developing products that delight the customer, and are easy to make. Shop floor workers participate in SPC, TQM and improvement efforts.

TQM Throughout the Company
Purchasing and suppliers Long-term supplier relations based on quality not price Suppliers as part of design team Customer service Satisfy customer Feedback information for improvement KEY MESSAGE TQM involves all parts of the company. TALKING POINTS Purchasing selects suppliers based on quality, not price. Suppliers are partners, not adversaries. Customer service is important too.

Employee Involvement Give ownership of quality to workers
Organize for quality Cross-functional teams Quality circles Process and project-oriented teams Greater customer awareness Train and educate workers Quality skills and tools Importance of TQM KEY MESSAGE Again, employee involvement is key. TALKING POINTS As with other elements of lean production, employees must be involved in quality through cross-functional teams, quality circles, etc. Training is required.

Benchmarking Find the companies with the “best practices” Copy them
Improve them KEY MESSAGE Benchmarking is an important tool for improvement. TALKING POINTS Benchmarking is a well-known technique of comparing aspects of your company to the “best-in-class”, then working to close the gap and even leapfrog competitors.

Benchmarking Process Determining what to benchmark
Determining what to measure Determining whom to benchmark Collecting data Analyzing data Setting goals and action plans Monitoring the action KEY MESSAGE Benchmarking is an important tool for improvement. TALKING POINTS A generic benchmarking process is used. Companies in many industries volunteer to share benchmarking information for mutual benefit. It is important to look outside your specific industry for best in class. If you want to improve your distribution and logistics, take a look at Walmart. If you are an assemble-to-order company, benchmark Dell.

Strategic Planning Mission & Vision Business Strategy Marketing
Operations Financial Voice of the Business Customer KEY MESSAGE Strategic planning is essential. TALKING POINTS A company’s strategic plan is directed by the mission and vision of the company, and incorporates the interests of the stakeholders, including the company and its customers. The overall business strategy is then used to develop marketing strategy, operations strategy, product strategy, financial strategy, and so on.

Policy Deployment Focusing and directing all activities and processes so they support the companies vision, mission and long-term strategy KEY MESSAGE Policy deployment ensures that all activities support the strategy. TALKING POINTS A corporate vision, mission statement and business strategy are useless unless they govern all activities of the company. To often they are nice words, but it’s really business as usual. In many cases, the performance objectives of departments and employees are in conflict with the corporate strategy. If purchasing seeks to minimize price as an objective, then quality and long-term supplier relations will not be pursued. Policy deployment is a systematic method to make sure that all company activities are aligned with the business strategy.

Policy Deployment Steps
Develop a long term vision Determine annual policies to support the long-term vision Deploy the policy company-wide through participation in planning Implement the policy Audit the process and plans monthly Audit the process annually by top management KEY MESSAGE Policies at every level in the company are developed and monitored to be consistent with the high-level vision and strategy. TALKING POINTS If the business strategy is to have the best quality in the industry, then policies at every level should be consistent with improving quality. As a matter of policy, purchasing will seek long-term supplier relations based on quality, and price will be considered secondary. Ongoing monitoring provides feedback to management about progress towards the corporate goals.

In Other Words… Make sure everyone understands and supports the company goals Make sure individual and department goals are consistent with company goals Plan ways to achieve the goals Measure the success KEY MESSAGE This slide says the same thing in plain language. TALKING POINTS The way to achieve company goals is to make sure everyone is pulling in the same direction. Consider two retail chains claiming “customer satisfaction” as a goal. One chain requires proof of purchase, and cumbersome paperwork to return products. They accept returns only for damaged products, and they provide a store credit, not a refund. The second chain requires no proof of purchase and no reason. A cash refund is given on the spot. The accountants think the second chain’s practices are imprudent, wasteful and open to abuse, but guess which one has more “satisfied customers”?

TQM and JIT TQM and JIT are consistent, interrelated and interdependent Often they are combined as JIT/TQM KEY MESSAGE TQM and JIT are parts of lean production. TALKING POINTS TQM and JIT are often considered to be separate systems, as if they are alternatives to each other. In fact, they are complementary, and are embedded in lean production. By choosing just one or the other, the full benefits of lean production cannot be achieved. Before the term “lean production” was coined, people often referred to it as “JIT/TQM”.

JIT Techniques for Smooth Flow
KEY MESSAGE In this section, we examine how JIT achieves smooth flow.

Flow versus Batch and Queue
Traditional manufacturing produces and orders parts in batches, which often spend time in queues Batch and queue introduces much waste Lean production strives for smooth, continuous flow KEY MESSAGE Smooth flow is better than batch-and-queue. TALKING POINTS In traditional mass production companies, only a small proportion of production is done on continuous flow lines. Most parts and assemblies are made in batches. Traditional batch production is very wasteful, with high WIP inventory, long lead times and lots of variation and unpredictability. Lean production strives to produce the same mix of products using smooth, continuous flow. To achieve this, some fundamental changes are required. The whole JIT system follows from the requirements.

Small-lot Production Smooth flow requires production in small lots, with frequent changeovers JIT includes many interdependent techniques and principles to make this possible KEY MESSAGE Smooth flow requires small-lot production. TALKING POINTS By making parts in frequent, small lots, the flow of material is much smoother and more repetitive. Less WIP is required, and lead times are shorter. To produce in small lots, several fundamental changes are required. These are discussed in the following slides.

JIT Techniques for Smooth Flow
Small-lot production Setup-time reduction Maintaining and improving equipment Pull production systems Focused factories and group technologies Workcells and cellular manufacturing Standard operations KEY MESSAGE Small-lot production is supported by a set of interdependent techniques. TALKING POINTS Small-lot production cannot be achieved without adopting the entire range of JIT techniques. They are all interdependent and necessary.

Lean Production Techniques for Smooth Flow
Small-lot production Setup-time reduction Maintaining and improving equipment Pull production systems Focused factories and group technologies Workcells and cellular manufacturing Standard operations KEY MESSAGE In this section, we show the advantages of small-lot production

Traditional Batch Thinking
It is expensive to process orders for purchased items, and quantity discounts are available as a result, orders for parts are placed infrequently, in large quantities Setups are lengthy and expensive as a result, large batches of each product are made KEY MESSAGE Traditional batch thinking is based on assumptions that are challenged by lean production. TALKING POINTS Mass production thinking encourages the placement of large, infrequent orders. The cost of placing orders is high, and it seems more efficient to order large quantities. The same is true of production. It is expensive and time consuming to setup machines, so it seems more efficient to produce large batches. Elaborate formulas like Economic Order Quantity (EOQ), and Economic Lot Size (ELS) have been taught for generations, and make it appear that these quantities are mathematically “optimal”. However, the formulas are based on assumptions, that are never questioned. 6

Small lot production Lean Manufacturers reduce inventory by reducing ordering or setup costs This permits frequent, small order or production quantities Materials arrive or are produced “Just In Time” Material flows smoothly KEY MESSAGE Small lots are feasible if order and setup costs are reduced. TALKING POINTS Lean producers question the assumptions, and have found ways to reduce ordering costs and setup costs. Once these are reduced, the optimal lot size decreases. Ordering and setup costs must be continuously reduced, with a goal of lot size of one.

Traditional Vs. JIT Inventory
Inventory Level Traditional Average Inventory JIT KEY MESSAGE Small lots drastically reduce inventory. TALKING POINTS When products are produced or ordered in large batches but consumed at a constant rate, inventory levels resemble a saw-tooth profile shown above. It is easy to see that small, frequent lots drastically reduce the average inventory level. Ordering in small lots requires frequent and dependable deliveries from suppliers. Producing in small lots requires frequent machine setups, which we will discuss next. Time

Small-lot production Setup-time reduction Maintaining and improving equipment Pull production systems Focused factories and group technologies Workcells and cellular manufacturing Standard operations KEY MESSAGE Setup-time reduction is necessary to achieve small-lot production. TALKING POINTS As the lot size decreases, the number of setups increases. Setup time is a waste, and as the number increases the proportion of time devoted to setup increases. The traditional approach is to make large batches with few setups. The lean approach is to reduce setup time.

Setup-time Reduction Small-lot production requires frequent setups
Setup-time must be reduced KEY MESSAGE Setup-time reduction is necessary to achieve small-lot production. TALKING POINTS As the lot size decreases, the number of setups increases. Setup time is a waste, and as the number increases the proportion of time devoted to setup increases. The traditional approach is to make large batches with few setups. The lean approach is to reduce setup time.

Setup reduction methodology
Many key ideas developed by Shigeo Shingo Shingo called it SMED Single Minute Exchange of Dies Means single digit, ie. Less than 10 minutes Example: ton press Before: 4 hr After: 3 min Improvement: 98.7%, or a factor of 80 KEY MESSAGE Great improvements are possible with relatively little effort. TALKING POINTS Once setup-time reduction is identified as a target for improvement, it turns out that much improvement is possible. Traditional manufacturers have never given it much thought – it was considered fixed and unchangeable. Shigeo Shingo focused on this problem, and developed many simple and practical techniques to reduce setup time by an order of magnitude or more.

Classification of setup activities
Type 1 Gathering, preparing, and returning tools, fixtures, etc. Type 2 Removing previous setup, mounting next setup on machine Type 3 Measuring, calibrating, adjusting Type 4 Producing test pieces, further adjustment until parts are good KEY MESSAGE Setup activities can be classified into four types. TALKING POINTS Classifying setup activities into one of four types is the first step toward identifying waste and making improvement. The techniques seem obvious once they are considered in a systematic way.

SMED Methodology Identify internal and external steps
Convert internal steps to external Improve all aspects of the setup operation Abolish setup KEY MESSAGE SMED methodology consists of several basic steps. TALKING POINTS We will look at each of these in turn.

Identify Internal and External Steps
External steps can be done while the machine is running Internal steps require the machine to be stopped Type 1 activities are usually internal Type 2, 3, 4 are usually internal KEY MESSAGE First, identify internal and external setup steps.

Convert Internal Steps to External
Often activities that are done while the machine is stopped could be done while it is running Do as much setup externally as possible KEY MESSAGE Convert internal steps to external steps. TALKING POINTS We can reduce the amount of time the machine is stopped by doing as much of the setup externally as possible. For example, much fixture and tool preparation can be done externally.

Use Standard Setup Procedures
Checklists Equipment checks and repairs Setup schedules KEY MESSAGE Standard setup procedures should be documented and used. TALKING POINTS Setup procedures should be carefully planned and documented. Checklists provide step-by-step instructions. Equipment and tools should be checked and repaired before setup begins. Setups should be scheduled so that people and resources are available.

Improve Internal Setups
Parallel setup tasks Quick-attachment devices Eliminate adjustments KEY MESSAGE Internal setup can be improved using several effective techniques.

Parallel Setup Tasks Ideally, two people can do the job in half the time as one person Think about a pit stop at a car race KEY MESSAGE Have more than one person performing setup. TALKING POINTS A coordinated and practiced team can complete setup faster than an individual. Consider how long it would take you to change a flat tire on your car. Now think about how long it takes to change 4 wheels in a Formula One pit stop. Machine setups should be like Formula One pit stops! Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Quick-attachment Devices
KEY MESSAGE Use quick-attachment devices instead of bolts. TALKING POINTS Traditional setups involve many bolts, which need to be loosened, removed, replaced and tightened. This is very time consuming. Since this has to be done quickly and frequently, it is better to use quick-attachment devices. Ideally only a single motion and no tools should be required. Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

KEY MESSAGE Dies can be located with fixed holders and locating pins. TALKING POINTS A good example is the lens mounting system used on SLR cameras. Photographers frequently change lenses. In the old days, one lens had to be unscrewed and another screwed on. By then, the opportunity for the photo was past. Modern cameras use a quick-attachment mount. Usually a pin is released, and a small rotation is enough to remove the lens. Precisely machined engagement features ensure that the position is precisely repeatable. One can easily think of other every-day examples. Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

KEY MESSAGE Tooling can be held with quick-release clamps. Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Eliminate Adjustments
KEY MESSAGE Eliminate the need for adjustments in setups. TALKING POINTS Traditional setups involve many trial-and-error adjustments before they are complete. These adjustments can be eliminated by making the process more repeatable. Holders can be used to precisely and repeatably position fixtures and parts without adjustment. Again, consider the example of a camera lens mount. Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Eliminate Adjustments
KEY MESSAGE Spacers and shims are easy ways to eliminate adjustments. TALKING POINTS In this example, the need for adjusting the press height is eliminated by making all of the dies the same height using shims. Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Improve External Setups
Store fixtures, etc., near machine Prepare setup kits and carts Improve material handling KEY MESSAGE External setup steps also need to be improved. TALKING POINTS External steps should also be improved and optimized. Keep all tools and fixtures near the machine. Prepare setup kits in advance so that everything is ready. Improve material handling to simplify and speed up the removal and placement of heavy fixtures and tooling. A simple roller transfer bed is faster and simpler than grappling with the overhead crane! Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Abolish Setup Reduce or eliminate differences in parts
Combine parts or steps Dedicate machines to one part Many dedicated low-cost machines vs. one large expensive machine KEY MESSAGE The best way to reduce setup-time is to abolish it. TALKING POINTS Setups are required because parts are different. In some cases, parts can be redesigned so that they can use the same setup. Combining several parts or steps in a single setup is another approach. Perhaps you need to stamp an equal number of left hand and right hand parts. Instead of doing a setup, combine both parts in the same die. Progressive dies are often used to combine several steps in one operation. Finally, consider dedicating a low-cost machine to making one part. Now no setups are required. In this respect, many low-cost slow machines are preferable to a few expensive fast ones, since each one can be dedicated to a single part.

Small-lot production Setup-time reduction Maintaining and improving equipment Pull production systems Focused factories and group technologies Workcells and cellular manufacturing Standard operations KEY MESSAGE Next we will look at the importance of reliable equipment.

Maintaining and Improving Equipment
Small lot production with little inventory requires equipment that: Doesn’t break down Doesn’t produce defects Performs well KEY MESSAGE Small-lot production with little inventory requires reliable equipment that doesn’t break down. TALKING POINTS In traditional manufacturing with lots of WIP inventory, equipment breakdowns did not seriously affect production. All the other machines had plenty of WIP to keep them going. In lean production, there is little WIP buffer, and a breakdown will quickly halt production of all other machines. Therefore, equipment must be reliable.

Preventive Maintenance
Identify and eliminate causes of equipment problems Deterioration Wrong equipment for the job Poor maintenance Wrong operating conditions Lack of skills of operators KEY MESSAGE Preventive maintenance improves equipment reliability. TALKING POINTS Traditional manufacturers frequently did no equipment maintenance until there was a breakdown. At that point, maintenance personnel rushed to get it fixed the quickest way possible. After that, nothing was done until it broke down again. This is known as breakdown maintenance, and is obviously not the best approach. Preventive maintenance identifies and eliminates causes of equipment problems. Typical causes include: worn-out equipment; using the wrong machine for the job; poor maintenance; running the machine outside its normal operating range; and intentional or unintentional abuse from operators.

Preventive Maintenance Elements
Maintain normal operating conditions Maintain equipment requirements Keep equipment and facilities clean and organized Monitor equipment daily Schedule preventive maintenance Manage maintenance information Use predictive (condition-based) maintenance KEY MESSAGE Preventive maintenance prevents machine breakdowns. TALKING POINTS The points here are self explanatory. Don’t push machines to their limits Keep them lubricated, adjusted, and clean. Monitor them daily to spot problems like leaks, funny noises and vibration, etc. Schedule routine preventive maintenance to replace parts, etc. Keep track of maintenance information to be aware of problem histories and to schedule maintenance. Use predictive maintenance to monitor condition based on vibration, temperature, etc. Often there are signs of impending failure.

Role of Operators Best people to do routine maintenance and monitoring are the operators Keep machine clean Routine lubrication and adjustments Visual inspection (cracks, oil leaks) Be aware of unusual sounds, heat, vibration, etc. KEY MESSAGE Operators should perform routine maintenance. TALKING POINTS Traditionally, maintenance was done by maintenance personnel. Operators are most familiar with their machine, and should do routine maintenance and monitoring. They will be most likely to notice changes in machine operation resulting in unusual sounds, vibrations, etc.

Total Productive Maintenance (TPM)
Ineffective equipment is a form of waste TPM seeks to find the root causes of equipment problems, and fix them Done using continuous improvement methods KEY MESSAGE Total Productive Maintenance maximizes machine effectiveness. TALKING POINTS TPM goes beyond just maintaining equipment, and seeks to improve it and to eliminate sources of problems.

Elements of TPM Preventive maintenance done by operators
Restore and redesign equipment to make it better than new, and to extend its life Eliminate human error in maintenance and operation Education and training Foolproofing Improved maintenance procedures KEY MESSAGE TPM involves operators in improving equipment and eliminating human error. TALKING POINTS Often equipment can be improved so that it works better than new, and to make it last longer. Many equipment problems are the result of human error. These can be minimized by training operators, by foolproofing equipment to prevent errors, and to improve maintenance procedures.

Small-lot production Setup-time reduction Maintaining and improving equipment Pull production systems Focused factories and group technologies Workcells and cellular manufacturing Standard operations KEY MESSAGE The next important element is pull production.

The Traditional Push System
In traditional manufacturing, an item is released for production at a specified time, with an associated due date The item moves through a sequence of operations Usually a batch of parts moves from station to station, and sits in a queue before processing KEY MESSAGE Traditional production is push based. TALKING POINTS In a push system, jobs are released to production based on a due date and estimated lead time. This is typical of batch-and-queue production.

The Pull System The pull system focuses on the output of the system rather than the input Finished products are “pulled” from the final operation in response to firm customer orders This leads to a chain reaction, with each station pulling material from its preceding station KEY MESSAGE Lean manufacturing uses a pull system. TALKING POINTS In a pull system, production is signaled by actual demand from the output, and parts are pulled through the system. This imposes a smooth flow as opposed to batches and queues. To many people, JIT and pull production are the most visible parts of lean production.

Necessary Conditions for Pull Production Systems
Planning and control at the shop floor Produce to meet demand Inventory reduction Preventive maintenance Quality assurance Short setups and small lots Plant layout facilitating smooth flow Uniform production plans Cooperative work attitudes KEY MESSAGE Pull production requires several conditions. TALKING POINTS Pull production decentralizes planning and control to the shop floor. It doesn’t use centralized scheduling except for the output, which is based on demand. Pull requires the other elements to be in place: small-lot production, short setups, reliable equipment. As we will see later, pull production also requires appropriate plant layouts and uniform production plans. Pull operates with very little inventory compared to push.

Turning Batch Production into Flow Production
Production in large, irregular batches results in very uneven flow and poor performance Large batches, large queues: high WIP, long lead times Flow production efficiency can be achieved through small-lot production and uniform production schedules Small batches, small queues: low WIP, short lead times KEY MESSAGE Pull production results in smooth flow compared to push production.

The Kanban System The Kanban system uses simple cards to strictly control production The basic idea is that no station is permitted to produce more than is immediately required by the succeeding station This simple idea prevents the buildup of inventory by making a group of multipurpose machines act like a flow line No computer is required! KEY MESSAGE The Kanban system is used to implement pull production TALKING POINTS The Kanban system uses a fixed number of containers of standard size, with Kanban cards attached. Basically, only enough parts are made to replenish empty containers. The number of containers limits the WIP. WIP is reduced by reducing the number of containers through continuous improvement.

Batch and Queue High WIP inventory, long lead time
Jobs pushed to next operation Next operation Operation KEY MESSAGE In traditional batch-and-queue production, WIP tends to build up. TALKING POINTS In batch-and-queue or push production, operations tend to produce parts as long as material is available. To keep the shop busy, more work orders are released than can be handled, and WIP tends to build up. Eventually, there are huge piles of WIP in front of every operation. Lead times increase dramatically, and scheduling becomes very difficult. Studies have shown that in most batch production plants, parts spend only a few percent of the total time actually being processed. The majority of the time is spent waiting in queues. Jobs waiting in queue High WIP inventory, long lead time

Pull Low WIP inventory, short lead time Replenishment signal Next
operation Operation KEY MESSAGE Kanbans limit production to just what is needed to replace what has been used. TALKING POINTS Pull production uses Kanban signals to authorize upstream operations to produce just the amount that is consumed by downstream operations. As a result, material flows smoothly and WIP doesn’t build up. Pull systems operate with very little inventory. To avoid disrupting production, parts must be 100% defect free, and equipment must be reliable. Material flow Low WIP inventory, short lead time

Small-lot production Setup-time reduction Maintaining and improving equipment Pull production systems Focused factories and group technologies Workcells and cellular manufacturing Standard operations KEY MESSAGE Focused factories streamline production by separating parts into families.

Manufacturing Process Layout
Milling Department Lathe Department Drilling Department L L M M D D D D M M D D D D L L L L G G G P KEY MESSAGE Traditional batch production plants use a process layout. TALKING POINTS The traditional thinking is that since jobs take many different routes through the plant, it makes sense to arrange the plant by process, and move jobs from operation to operation as required. The result is excessive material handling. Jobs can travel many kilometers before they are complete. G G G P L L Grinding Department Painting Department L L A A A Receiving and Shipping Assembly Source: adapted from Russell, R.S., and B.W. Taylor III, Operations Management, 3rd edition, Prentice Hall, 2000

A Product Layout IN OUT KEY MESSAGE
Product layouts are used for single products. TALKING POINTS If a single product is made in large volume, a dedicated product layout is typically used. Operations are arranged in the order required, with mechanized material handling linking them. This is the typical assembly line. A product layout has no place for WIP to build up between operations, so inventory is low and lead time is short. Lean production attempts to achieve the efficiencies of a product layout even when product variety is large.

Cellular Layouts Identify families of parts with similar flow paths
Group machines into cells based on part families Arrange cells so parts movement is minimized Locate large shared machines at point of use KEY MESSAGE Flow line efficiency can be achieved by creating manufacturing cells for families of similar parts.

Group Technology Group products that are similar into families
Similar processing requirements Similar design functionality A variety of coding schemes are used for this KEY MESSAGE Group technology is used to identify part families. TALKING POINTS In the 1980’s, many group technology coding schemes were developed to identify part families. Each part was assigned a code, then parts were grouped according to their codes. Group technology coding is not widely used in practice to identify part families.

Exploiting Similar Processing
Parts with similar processing steps can be grouped together and processed in a focused factory Sometimes parts can be redesigned so processing steps are identical KEY MESSAGE Parts with similar processing steps can be processed in a focused factory. TALKING POINTS Often the processing steps vary only slightly between similar parts. In some cases, the parts can be redesigned so that processing steps are identical. The cost per part might appear to be higher, but total manufacturing cost is lower. For example, design engineers might select exactly the right fasteners for every application, using the cheapest, lowest grade fastener possible. The cost savings in fasteners is quickly offset by the additional cost of tracking and managing inventory of many fasteners, and the more complex assembly operations due to many fastener types. An alternative method would be to standardize on a few fasteners, even if the cost and grade is higher than necessary for some applications.

Focused Factory Layouts
Focused flow lines When parts in family have nearly the same process sequence and processing times Workcells More flexible, when parts have greater differences Focused workcentres Used when it’s not practical to rearrange machines Individual machines are dedicated to particular families KEY MESSAGE Various layouts are possible to achieve smooth flow of different parts. TALKING POINTS The objective is to achieve the smoothest possible flow even when many different parts are manufactured.

Establishing Product and Machine Groups
Coding and classification Use GT codes Cluster analysis Grouping achieved by visual inspection of process plans Production Flow Analysis (PFA) Similar to cluster analysis Uses matrix methods to find clusters KEY MESSAGE Several methods are available to establish part families and machine groupings TALKING POINTS The problem is to identify families of parts with similar processing requirements, and identify the necessary group of machines or operations required. The machines can then be arranged into cells to produce the part family. Group Technology coding is discussed in all the textbooks, but doesn’t seem to be widely used in practice. In many cases, simple visual inspection is sufficient. For more complex situations, production flow analysis can be used.

Original Process Layout
Assembly 4 6 7 9 5 8 2 10 12 KEY MESSAGE This slide shows the typical flow of jobs when a process layout is used. TALKING POINTS The flow of different parts through the plant is very convoluted, with a lot of material handling required. 1 3 11 A B C Raw materials Source: adapted from Russell, R.S., and B.W. Taylor III, Operations Management, 3rd edition, Prentice Hall, 2000

Part Routing Matrix Parts Machines A X B C D E F G H 1 2 3 4 5 6 7 8 9
10 11 12 A X B C D E F G H KEY MESSAGE Production Flow Analysis matches parts to machines to identify cells. TALKING POINTS In this matrix, no patterns are immediately apparent. However, we can rearrange the rows and columns using some standard methods. Source: adapted from Russell, R.S., and B.W. Taylor III, Operations Management, 3rd edition, Prentice Hall, 2000

Reordered to Highlight Cells
Parts Machines 1 2 4 8 10 3 6 9 5 7 11 12 A X D F C G B H E KEY MESSAGE The reordered matrix shows part families and cells quite clearly. TALKING POINTS After the matrix is rearranged, we can clearly see groupings of parts and machines shown in different colours. The plant layout can be rearranged into cells based on this analysis. Source: adapted from Russell, R.S., and B.W. Taylor III, Operations Management, 3rd edition, Prentice Hall, 2000

Cellular Layout Solution
KEY MESSAGE Cellular layout greatly simplifies material flow. TALKING POINTS Here we see the rearranged layout based on the cells we identified. Parts flow smoothly, with much less material handling. Notice that this looks a lot like dedicated flow lines. Source: adapted from Russell, R.S., and B.W. Taylor III, Operations Management, 3rd edition, Prentice Hall, 2000

Advantages Of Focused Factories
70 – 95% reduction in WIP 65 – 80% reduction in setup times 70 – 90% reduction in lead time 75 – 90% reduction in handling 20 – 56% reduction in factory space 96% reduction of late orders Better use of human resources Easier to control Easier to automate KEY MESSAGE Focused factories result in very substantial improvements.

Small-lot production Setup-time reduction Maintaining and improving equipment Pull production systems Focused factories and group technologies Workcells and cellular manufacturing Standard operations

Cellular Manufacturing
Group dissimilar machines in manufacturing cell to produce family of parts Work flows in one direction through cell U-shaped for easy access and movement One worker tends several machines Cycle time adjusted by changing number of workers KEY MESSAGE Cellular manufacturing is a further refinement of focused factories. TALKING POINTS In many cases, there are some differences between parts in a part family. These differences are easily accommodated by properly designed work cells.

Manufacturing Cell With One Worker
Machines Enter KEY MESSAGE A typical work cell. TALKING POINTS Here we have a work cell with nine operations tended by a single worker. The operations are arranged in a U-shape so that the worker can easily move between them. Material handling is typically manual. The operations could be manual or automated. Exit Key: Product route Worker route

Manufacturing Cell With Three Workers
Machines Enter Worker 2 Worker 3 Worker 1 KEY MESSAGE Cell capacity can be adjusted by adding workers. TALKING POINTS The capacity of a work cell is determined by either the worker or machine capacity. If the worker is the limiting factor, then capacity can be adjusted by adding and removing workers. If we use three workers in the cell shown in the previous slide, we should achieve about three times more output. Exit Key: Product route Worker route

Workcells are Flexible
Flexible labour multifunction, adaptable operators the number of operators can be changed to change capacity Flexible equipment a variety of products are produced on the same equipment this requires multifunctional machines Achievable with basic technology! KEY MESSAGE Workcells achieve flexibility with basic technology. TALKING POINTS The keys to flexibility are flexible workers and flexible equipment. Often, only basic, general-purpose machines are needed. The equipment can accommodate minor variations in processing requirements for different parts of a family.

Cycle Time (CT) Cycle time (CT) is time interval between completed parts coming from the cell Required CT is determined by demand (sometimes called tackt time) Actual CT is determined by cell capacity Actual CT should be close to required CT KEY MESSAGE Cycle time is a key concept in lean manufacturing. TALKING POINTS A key idea in lean manufacturing is to determine the required CT for each part or product based demand. The required CT for every component and upstream operation can be determined from this. The cells are designed and their capacities adjusted so that their actual CTs match the required CT. Output of cells is governed by required CT (i.e., demand) rather than actual CT (i.e., how much they can produce).

Small-lot production Setup-time reduction Maintaining and improving equipment Pull production systems Focused factories and group technologies Workcells and cellular manufacturing Standard operations KEY MESSAGE Standard operations is another key technique in lean manufacturing.

Standard Operations Lean production (JIT) gives workers a much broader role and more complex responsibilities However, it is still important to follow standard procedures that represent the best way to do things The standard procedures are changed only when a better way is found KEY MESSAGE It is important to find, document and follow the best way of doing things. TALKING POINTS Standard operations is based on the ideas of Scientific Management and work study. However, the tasks of workers is more complex than in a traditional mass production environment. Workers participate in finding the best way to do things through planned experimentation. If improvements are found, they are documented and become the new standard. It is important not to take this too far – it is well documented that in many lean manufacturing plants, workers are pushed to their absolute limits and are more highly stressed than in traditional plants!

Standard Operations Detailed specification of all tasks, procedures, and operations Elements include: Cycle time Completion time per unit Production capacity Standard Operations Routine Standard quantity of WIP KEY MESSAGE Standard operations document all aspects of tasks, procedures and operations. TALKING POINTS Standard operations are often documented using a Standard Operations Sheet (SOS). The SOS documents all aspects of an operation on a form displayed at the operation.

Idle Time If actual CT is less than required CT, there will be idle time Opportunity to reduce number of workers or assign additional tasks If actual CT is greater than required CT, demand cannot be met Add workers if cell is not limited by machine CT Otherwise, additional machines may need to be added KEY MESSAGE Lean manufacturers seek to reduce worker idle time. TALKING POINTS Normally, cell capacity is greater than the required demand, resulting in a certain amount of worker idle time during every cycle. Lean manufacturers constantly rebalance cells to match capacity to demand, and minimize idle time. Again, this can be taken too far, causing great pressure and stress on the workers!

Quality KEY MESSAGE In the next section, we discuss the role of quality.

Quality Quality of Design Statistical Process Control (SPC)
Eliminating defects KEY MESSAGE Quality has several aspects, which we will discuss.

Quality Quality of Design Statistical Process Control (SPC)
Eliminating defects KEY MESSAGE The first aspect is the quality of product design.

An Effective Design Process
Matches product characteristics with customer needs Meets customer requirements in simplest, most cost-effective manner Reduces time to market Minimizes revisions KEY MESSAGE Products must be designed to meet customer needs. TALKING POINTS Well designed products satisfy customers while at the same time being reliable and simple to make. Usually product simplification results in reduced cost and improved quality. Designers must strive to simplify products while still satisfying customers.

Measures Of Design Quality
Number of component parts and product options Percentage of standard parts Use of existing manufacturing resources Cost of first production run First six months cost of engineering changes KEY MESSAGE Quality of design can be measured. TALKING POINTS A well-designed product minimizes the number of parts required, uses standard parts wherever possible, uses existing manufacturing capabilities, is easy to make, requires few design changes after production starts, has few warranty claims or recalls, can be produced at a low cost, and is environmentally friendly.

Measures Of Design Quality
First year cost of field service repair Total product cost Total product sales Sustainable development

Distribution Of Design Changes
Company 1 90% of Total changes complete Company 2 Number of Design Changes KEY MESSAGE Concentrating on design quality pays off in the long run. TALKING POINTS It is well known that the later a design flaw is discovered, the more it costs to fix it. World class companies put resources into the early stages of design so that problems are discovered and fixed while it is still easy to do. Traditional companies might skimp on resources allocated to design. As a result, problems are discovered after production starts, when they are much more expensive to fix. 21 12 3 Production begins 3 Months

Design Simplification
(a) The original design (b) Revised design (c) Final design Design for push-and-snap assembly KEY MESSAGE Design simplification results in better products at lower cost. TALKING POINTS This slide shows an original design using many parts, and a greatly simplified design. The simplified design works as well as the original design, but is much simpler and less expensive to make. In addition, its quality is higher as there are fewer things that can go wrong. For example, the original design is likely to suffer from bolts loosening in service. The improved design does not have that problem. One-piece base & elimination of fasteners Assembly using common fasteners Source: adapted from Russell, R.S., and B.W. Taylor III, Operations Management, 3rd edition, Prentice Hall, 2000

Quality Statistical Process Control (SPC) Quality of Design
Eliminating defects KEY MESSAGE Statistical Process Control is another key to quality improvement.

Variation in Processes
Common Causes Variation inherent in a process Can be eliminated only through improvements in the system Special Causes Variation due to identifiable factors Can be modified through operator or management action KEY MESSAGE SPC distinguishes between normal process variation, and variation due to identifiable factors TALKING POINTS Every process has variation even when it is running normally. This variation can only be reduced by improving the process. SPC tracks process variation, and helps the operator identify abnormal variation caused by an identifiable factor. Process adjustments or corrections can then be made to fix the problem.

Control Charts Control charts are used to monitor processes
Random variation due to common causes are normal for a stable process Variations due to special causes are identified and can be corrected KEY MESSAGE Control charts are the key tool of SPC. TALKING POINTS Control charts track the performance of a process, and help distinguish between normal and abnormal variation.

Sampling and Control Limits
Process outputs are sampled Control limits are determined to specify the normal variation of the process If measured samples lie outside the control limits, it indicates a special cause KEY MESSAGE Control charts use sampled data to establish control limits and monitor variation. TALKING POINTS Control limits are upper and lower limits on the chart indicating the normal range of variation. If control points from sampled data lie outside these limits, it is probable that this is not a random event but rather that something is wrong with the process and needs correction.

Statistical Process Control
Take periodic samples from process Plot sample points on control chart Determine if process is within limits Prevent quality problems

Types Of Data Attribute data Variable data
Product characteristic evaluated with a discrete choice Good/bad, yes/no Variable data Product characteristic that can be measured Length, size, weight, height, time, velocity KEY MESSAGE SPC can track either attribute data or variable data. TALKING POINTS Different control charts are used for different kinds of data.

Control Charts Graph establishing process control limits
Charts for variables Mean (X-bar), Range (R) Charts for attributes p and c KEY MESSAGE Different control charts are used for different kinds of data.

Process Control Chart Upper control limit Process average Lower
KEY MESSAGE This is an example of an X-bar chart. TALKING POINTS An X-bar chart plots the average value of each sample. Since the process has inherent random variation, we expect the control points to vary randomly about the process average. If systematic trends appear, or if control points stray beyond the control limits, it is likely that something is wrong with the process and needs correction. 1 2 3 4 5 6 7 8 9 10 Sample number Source: adapted from Russell, R.S., and B.W. Taylor III, Operations Management, 3rd edition, Prentice Hall, 2000

A Process Is In Control If
No sample points outside limits Most points near process average About equal # points above & below centerline Points appear randomly distributed KEY MESSAGE Various guidelines exist for determining if a process is in control. TALKING POINTS A process is in control if the variation is within the normal limits. Since the data is randomly distributed, we can never be sure if observed variation is due to normal variation or a special cause. However, we can calculate probabilities that observed events or patterns are random, and make a decision based on probability.

Development Of Control Chart
Based on in-control data If non-random causes present discard data Correct control chart limits KEY MESSAGE Control charts are developed using data from the process itself. TALKING POINTS We can establish process limits and average by collecting data from a normally operating, stable process.

Control Charts For Variables
Mean chart (X-Bar Chart) Uses average of a sample Range chart (R-Chart) Uses amount of dispersion in a sample KEY MESSAGE X-bar and R charts are used for variable data.

Control Chart Patterns
LCL UCL Sample observations consistently below the center line UCL LCL Sample observations consistently above the center line KEY MESSAGE Here are examples of some non-random patterns suggesting special causes. TALKING POINTS Remember that we can never be sure these patterns aren’t just normal variation. There is always a small possibilility that these patterns are the result of normal random variation. For example, if one tosses a coin ten times and gets heads every time, it seems likely that the coin toss is not random. However, if one conducts many experiments, occasionally one will get ten heads in a row. The probability of this can be calculated. Source: adapted from Russell, R.S., and B.W. Taylor III, Operations Management, 3rd edition, Prentice Hall, 2000

Control Chart Patterns
LCL UCL Sample observations consistently increasing LCL UCL Sample observations consistently decreasing Source: adapted from Russell, R.S., and B.W. Taylor III, Operations Management, 3rd edition, Prentice Hall, 2000

Sample Size Determination
Attribute control charts 50 to 100 parts in a sample Variable control charts 2 to 10 parts in a sample KEY MESSAGE Attribute charts need larger samples than variable charts. TALKING POINTS In order to provide information, an attribute sample needs to be large enough to have a few bad parts. They work well if the defect rate is above 1 percent. As quality improves and defects decrease, attribute charts become less useful. Each measurement of a variable provides more information than just good/bad, so fewer measurements are required and smaller samples can be used. Variable charts remain useful as long as the variation is large enough to measure.

Process Capability Range of natural variability in process
Measured with control charts. Process cannot meet specifications if natural variability exceeds tolerances 3-sigma quality specifications equal the process control limits. 6-sigma quality ( %) specifications twice as large as control limits KEY MESSAGE Process capability is a measure of the ability of a process to produce good parts. TALKING POINTS In order to produce good parts nearly all the time, the natural variation of the process must be less than the allowable tolerances. For a randomly varying process, there is always a possibility that the output will exceed any specified limit. The less variation there is, the smaller the probability of a defect. Traditional process variation of 3-sigma results in defect rates around 1%. This used to be considered good. Today, many companies have set a higher target of Six-sigma quality to achieve defects in the range of parts per million. This is done by improving processes to reduce their variation.

Process Capability Process cannot meet specifications
Natural control limits Design specifications Process can meet specifications PROCESS Natural control limits specifications Design Process capability exceeds specifications PROCESS Natural control limits specifications Design KEY MESSAGE This slide illustrates process capability. TALKING POINTS If the process variation is greater than the design specifications (i.e. tolerances) the process is incapable of meeting the specifications. Source: adapted from Russell, R.S., and B.W. Taylor III, Operations Management, 3rd edition, Prentice Hall, 2000

Process Capability and Variation
If the inherent variation of a process is less than the specification limits, the process is capable The process capability index is KEY MESSAGE Process capability index is a measure of process capability. TALKING POINTS If the upper and lower specification limits are at plus and minus six standard deviations from the process average, then the process will produce 99.74% good parts (within the specs), and 0.26% defects. If we account for some drift of the process average away from the centre, then the defect rate will be somewhat higher. Traditionally this has been considered acceptable quality, so such a process is considered capable. The process capability for this process will be A better process with less variation will have an index greater than 1.

Process Capability Lower specification limit Upper specification limit
Cp = 1 Cp > 1 Out of spec KEY MESSAGE This slide shows the relationship between process variation and process capability index. TALKING POINTS The percentage area under the tails of the curve outside the limits corresponds to defects. Statistically, it is not possible to reach zero defects. However, as variation is reduced, the area under the tails becomes vanishingly small. nominal (average)

SPC in Practice SPC is a powerful tool for monitoring processes and supports continuous improvement SPC requires involvement of workers SPC alone is sometimes insufficient KEY MESSAGE SPC alone is not sufficient to achieve zero defects. For example, it can monitor process variation and indicate problems, but it can’t eliminate defects.

Quality Eliminating defects Quality of Design
Statistical Process Control (SPC) Eliminating defects KEY MESSAGE In this section, we discuss ways to eliminate defects.

SPC Limitations SPC monitors processes, but does not prevent defects from occurring SPC does not guarantee zero defects

100% Inspection (Screening)
100% inspection is required to eliminate defects This can be achieved through: Self checks Successive checks KEY MESSAGE 100% inspection is required to eliminate defects.

Requirements for Self checking and Successive checking
Check targets Workers should know what to check Feedback and action When a defect is spotted, the responsible worker is notified immediately and the problem is corrected KEY MESSAGE 100% inspection can be achieved effectively by self checking and successive checking. TALKING POINTS In traditional manufacturing, workers often assume that if they make a mistake, an inspector down the line is responsible for catching it. Many of these errors could be caught immediately by the worker performing a quick self-check after each task is complete. The self-check procedure should be carefully planned so that it is quick and easy, yet catches problems reliably. In addition to checking their own work, workers should check the work of parts coming from upstream operations as well. If a problem is discovered, the worker responsible should be notified and the problem corrected.

Source Inspection SPC and inspection of outputs do not prevent defects
Defects are prevented by discovering their causes and eliminating them This is known as source inspection KEY MESSAGE Source inspection and pokayoke aim to prevent defects from happening. TALKING POINTS Source inspection discovers the causes of defects, and eliminates them.

Pokayoke Pokayoke means error proofing
Pokayoke is a scheme or device used in source inspection to prevent defects Two types: Regulatory pokayokes control or give warning about a process Setting pokayokes ensure proper settings or counts in a process KEY MESSAGE Pokayoke means error-proofing. TALKING POINTS Pokayoke are schemes or devices to prevent errors by automatically warning the operator of errors, or preventing operators from doing things the wrong way. For example, it might be possible to assemble a component backwards. If it is possible, then it will occasionally happen no matter how careful or diligent the worker is. A pokayoke solution might be to either redesign the part so that it can fit only one way, or design it so it will work either way. Now the error cannot happen.

Jidoka Use of automatic control to prevent a process from continuing if a defect is detected Process can be stopped automatically, or manually by a worker KEY MESSAGE Jidoka stops the process if an error is detected. TALKING POINTS An important example is giving workers authority to stop the line if a problem is discovered. This is based on the belief that it is better to fix the problem than to allow defects, even if production is disrupted. In traditional plants, stopping the line is unheard of.

Andons Andon lights are used to indicate a problem when a process or line is stopped The andon signals the location and severity of the problem Green – running normally Yellow – stopped, problem being fixed Red – stopped, need help KEY MESSAGE Andons are signals to indicate problems. TALKING POINTS Stopping the line through jidoka is a serious matter, since the line will be idled until the problem is fixed. Andon lights at each station along the line indicate the status of each station. If a worker stops the line and needs help, a red light will signal the location of the problem and call for assitance.

Visual Control Andon lights signal quality problems
Visual control makes problems visible KEY MESSAGE Andon lights are an example of visual control.

Visual Control Tool board Visual kanbans Work station Library shelf
How to sensor KEY MESSAGE This slide illustrates some ways that problems can be made visible, so they can be spotted at a glance. Machine controls 30-50 Good Better Best Source: adapted from Russell, R.S., and B.W. Taylor III, Operations Management, 3rd edition, Prentice Hall, 2000

Six Sigma KEY MESSAGE In this section, we look at Six Sigma
TALKING POINTS Six Sigma programs have become very popular in industry. In this section, we will show that Six Sigma is simply a repackaging of known techniques and principles of lean production.

Six Sigma “Six sigma is the structured application of tools and techniques applied on project basis to achieve sustained strategic results” KEY MESSAGE The tools and techniques of Six Sigma are not new.

Six Sigma Six Sigma is a TQM methodology originally developed by Motorola It uses existing TQM techniques and methodologies “six sigma” refers to a quality level of 3.4 defects per million Lean production aims for zero defects – six sigma is a more realistic target KEY MESSAGE Six Sigma was developed by Motorola, and is now widely adopted. TALKING POINTS Six Sigma refers to quality levels where the spec limits are at six standard deviations from the process average. Including an allowance for drift of the process average from the target value, this results in a quality level of 3.4 defects per million. The Six Sigma methodology uses techniques already discussed to achieve this kind of quality level.

DMAIC Six Sigma Approach
Define Measure Analyze Improve Control This is a variation of the PDCA cycle KEY MESSAGE The Six Sigma DMAIC process is basically a variation of the well known PDCA cycle. TALKING POINTS Be aware that companies and consultants like to repackage existing ideas with a new name, then promote it as something new. Once you know the basic principles, it’s easy to spot these efforts. Having said that, the Six Sigma methodology is sound, and provides a good framework for quality improvement. It just isn’t new.

Define (DMAIC) What are the core processes?
What is the project scope, expectations, resources, deliverables? Policy deployment can give direction KEY MESSAGE The Define stage uses policy deployment and other techniques.

Measure (DMAIC) What measures should be used?
What is the current performance? Variation Trends SPC techniques are used This establishes a baseline for improvement KEY MESSAGE Measure uses SPC.

Analyze (DMAIC) Analyze the process using statistical and TQM tools
Root cause analysis Cause and effect diagrams Pareto analysis Etc. KEY MESSAGE Analyse uses well-known problem solving and TQM tools.

Improve (DMAIC) Identify possible solutions, and implement them on an experimental basis Measure results to see if improvement results This is basically the PDCA cycle KEY MESSAGE Improve uses concepts of Kaizen and the PDCA cycle.

Control (DMAIC) Monitor and control performance using SPC
Use Kaizen to ensure performance continues to improve KEY MESSAGE Control uses SPC and Kaizen.

Production Planning and Control
KEY MESSAGE In the next section, we look at the importance of production planning and control. TALKING POINTS As with other aspects, production planning and control is different in lean production than in traditional manufacturing.

Level scheduling Synchronizing and balancing processes Planning and control in pull production KEY MESSAGE The main aspects are level scheduling, synchronizing and balancing processes, and planning and control. TALKING POINTS Level scheduling means that production schedules should be made uniform and repetitive so that every day is the same. This results in sooth flow. All processes need to be synchronized and balanced to meet the requirements of the level schedule. Some modifications are required to traditional methods to establish the appropriate level schedule to meet demand.

Level scheduling Synchronizing and balancing processes Planning and control in pull production KEY MESSAGE First we look at level scheduling.

Production Leveling Production is most efficient when parts and materials flow smoothly This can be achieved by using a uniform daily production schedule This is much different than the traditional batch approach KEY MESSAGE Level schedules promote smooth flow. TALKING POINTS Traditional production makes things in large batches to minimize setups. The result is production schedules that are different every day, and very uneven flow of material. Since accurate scheduling becomes very difficult, companies hold lots of inventory as a hedge against shortages that would disrupt production. By making the same things every day based on demand, scheduling is much simpler. Material flows smoothly, with less inventory.

Using Inventory to Smooth Production
Varying demand and changing production schedules result in uneven flow The traditional solution is to add inventory buffers When demand is high, excess comes from inventory When demand is low, excess goes into inventory Inventory is a waste!

Leveling Production with Uniform Schedules
A better solution is to use a uniform or level production schedule based on demand The daily production schedule is now consistent, so scheduling is easier and parts flow smoothly with minimum inventory

Requirements for Leveling Production Schedules
Continuous, stable demand Often, actual demand is fairly uniform Demand can be managed to minimize variation Segregate customers and products with uniform demand Often the majority of products and sales volume are in this category KEY MESSAGE Level scheduling requires continuous, stable demand. TALKING POINTS It turns out that final customer demand is usually fairly stable at an aggregate level, with fairly slow moving trends. A lot of the variation in demand that companies perceive is artificial. For example, an OEM may place large part orders at infrequent and unpredictable intervals even though the demand for their products is fairly uniform.

Requirements for Leveling Production Schedules
Short setup times Level schedules involve making small amounts of every product, every day This requires small lots and short setups Production = Demand The level schedule should be based on actual demand The schedule should be updated periodically to reflect changing demand KEY MESSAGE All products are made every day based on demand, with short setups between them. TALKING POINTS A level schedule requires making everything in small amounts, every day. The amounts are determined by the actual demand, and short setups are required due to the frequent changeovers.

Leveling Focus Focus first on leveling the production of the highest volume products For example, only a few out of many products could account for over half of sales These are the ones to concentrate on KEY MESSAGE Focus on the largest volume products first. TALKING POINTS It is difficult to apply level scheduling to everything at once. A good strategy is to concentrate on the largest volume products first.

Leveling the Master Schedule
The master production schedule specifies the planned production of each item during each time period In traditional batch manufacturing, the schedule is different for every period Lean producers level the schedule so that every period is the same

Level Scheduling in Pull Production
Pull production requires a schedule only for the last stage of production If this schedule is uniform, then flow will be smooth KEY MESSAGE In lean production, a schedule is needed only for the output. TALKING POINTS If products are “pulled” from the last stage of production based on a uniform, level schedule, then flow of materials from upstream stations will be smooth and repetitive. Upstream stations don’t need their own production schedules – they are controlled by a Kanban system based on the output of the last stage. In contrast, traditional manufacturing uses a schedule for every station and operation, and scheduling is a lot more complex.

Mixed Model Production
For products that require assembly, the production schedule is know as the final-assembly schedule (FAS) Producing several products on the same line is known as mixed-model production (MMP) Different models are interspersed so that flow is uniform KEY MESSAGE Production of multiple assembled products is called Mixed Model Production (MMMP), and is driven by a Final Assembly Schedule (FAS). TALKING POINTS In Mixed Model Production, different products are made on the same line based on a final assembly schedule. Ideally, there is no setup time between models, and they are made in a fully mixed sequence based on the proportional demand for each. This will become clear in the following slides.

Master Production Schedule
Time Period (Months) 1 2 3 4 A 1200 B 400 C 1600 D E 600 F KEY MESSAGE This slide shows a typical master production schedule (MPS). TALKING POINTS The MPS shown here is for 6 different products. The relative demands are different, but the total demand is the same every month.

Traditional Batch Schedule
KEY MESSAGE This shows a traditional batch schedule. TALKING POINTS A batch manufacturer might use a schedule like this. All of product A for the month is made in week 1, then the line is changed over to make a batch of product 2, and so on. Notice that with this schedule, the total output each week is the same, but the mix of products is different. Also, since the products are made in batches, they must be stored in inventory until they are sold or shipped. Every week is different – bad!

Level Weekly Schedule Every week is the same – good! KEY MESSAGE
This is a level schedule for the same products. TALKING POINTS Notice that now we make smaller quantities of every product every week. If we are trying to minimize setups, this schedule requires 4 times as many setups as before. Every week is the same – good!

Level Daily Schedule KEY MESSAGE
Level schedules should be uniform for every time period. TALKING POINTS Here we are making small, uniform amounts of everything every day. Now instead of one setup per week, we need at least six setups every day.

Batch Size and MMP If three products A, B, C are made in equal quantities, the ideal sequence is ABCABCABC This results in smooth flow but requires setups for each one Target: batch size = 1, setup = 0 If the quantities are not the same, the schedule should mix them as much as possible AAAAAAAABBBBCC – poor, uneven flow AABACABABAABAC – better KEY MESSAGE Ideally, setup =0 and batch size=1 TALKING POINTS If we take this to the limit, the ideal schedule mixes the products uniformly so we rarely make two in a row of the same thing. Now, the required cycle time for each product based on demand corresponds approximately to the actual time between successive units of that particular product coming off the line. To achieve optimally mixed schedules, setup time must be essentially zero. In practice, the setup must be no longer than a few seconds.

MMP Schedule Mixed model production of six different products repeats
KEY MESSAGE This slide shows the optimal model mix for the six products. TALKING POINTS We want to mix the models as much as possible to achieve the smoothest possible flow. Mixed model production of six different products repeats on a 48 minute cycle. These should be mixed like this: CBCACDCABEBFBA…

Scheduling under Different Circumstances
Make-to-stock Small variety of end products Schedule end products Assemble-to-order Large number of end products assembled from small number of modules Schedule modules Make-to-order Unique products make from standard materials, parts Schedule materials KEY MESSAGE Scheduling should be done at the level where there is the least variety. TALKING POINTS If a small number of end products are made from a large number of components, then the end products should be scheduled. This would be appropriate for items like appliances, consumer electronics, etc. If products are assembled to order from a small number of modules and components, then the modules should be scheduled. There might be a very large variety of end products each with unpredictable demand, but the number of modules is small. Examples include made-to-order computers, custom bicycles, cars (option packages, colour, trim), etc. If products are made to order from standard materials, then the materials should be scheduled. For example, a job shop makes a limitless variety of products, but typically uses a predictable amount of various steel and aluminum stock sizes.

Modular Bill of Materials
KEY MESSAGE Modular bills of materials are used for products made from standard modules. TALKING POINTS Dell offers a huge number of possible computer configurations, but they are assembled from a relatively small number of standard modules. It is not necessary to generate a unique BOM for each possible configuration. A modular BOM shows the combinations of modules that can be used. The demand for different modules is relatively large and stable, and can be used for planning and scheduling purposes. Schedule the options (modules), not the final systems. The proportions of each option can usually be estimated for planning purposes.

Minimizing Scheduling Problems
Simplify the BOMs Use group technology and standard parts/modules Make only what is needed Produce in lot sizes that are small and easy to count Use simple visual control systems Do not overload the shop Use short lead times KEY MESSAGE This slide summarizes some guidelines for simplifying scheduling. TALKING POINTS Scheduling of traditional batch manufacturing is very complex, and manufacturers have resorted to elaborate computer systems like MRP to manage it. An alternative used by lean producers is to simplify scheduling. One source of complexity is proliferation of BOMs for end items and all the intermediate subassemblies. Instead of more powerful MRP, we can simplify and eliminate the BOMs. For example, if something is stored in inventory then it needs a BOM. If it is used immediately in a subsequent operation without storage, no BOM is required.

Advantages of Level Scheduling
Batch production becomes repetitive Low inventories Flexible and responsive Simple to control - computers are not needed! KEY MESSAGE Level scheduling promotes smooth flow, low inventory, flexibility and simple scheduling.

Level scheduling Synchronizing and balancing processes Planning and control in pull production KEY MESSAGE In this section we look at synchronizing and scheduling process based on required cycle time to meet demand.

Synchronization Pull production is driven by a repetitive, level production schedule to meet demand All upstream operations must by synchronized to produce at the necessary rate Parts must flow smoothly, without buildup of inventory This is achieved by setting the CTs of all operations based on the final assembly CT KEY MESSAGE Required cycle time of all operations is based on the final level schedule. TALKING POINTS Cycle time implies repetitive production, with a unit rolling off the line every so many seconds. By using a mixed, level schedule for the final output stage, the finished products do roll off the line at repetitive intervals based on the demand for them. The required cycle times of all upstream operations must match the required CT of the final operation. If the final stage is smooth and repetitive, then upstream operations will also be smooth and repetitive.

Synchronized Flow Mixed Model, make-to-order computer assembly
KEY MESSAGE This shows how components are used at a repetitive rate in final assembly. TALKING POINTS The CT for each component is synchronized with the final assembly CT. This is fairly uniform and predictable. Disk drive assembly station

Synchronized Flow KEY MESSAGE
Here we see many components flowing to main assembly. TALKING POINTS Ideally, the “rate of flow” of parts and components is uniform and repetitive everywhere. This is analogous to several streams flowing smoothly into a river.

Bottleneck Scheduling
Often one or more upstream operations have insufficient capacity to keep up with the planned final production schedule Actual production is limited by these “bottlenecks” Production must be scheduled based on these bottlenecks KEY MESSAGE Bottlenecks are operations that can’t keep up with demand. TALKING POINTS Plant capacity is limited by the operations with the lowest capacity, known as bottlenecks. The bottlenecks limit production only if the demand is greater than the available capacity. In those cases, production is scheduled based on bottleneck capacity instead of demand.

Principles Set the production CT based on the bottleneck capacity (drum) Make sure there is a buffer of WIP in front of the bottleneck so it never runs out of work (buffer) Pull production to bottleneck (rope) This is known as the drum-buffer-rope system KEY MESSAGE Bottlenecks are scheduled using the Drum-Buffer-Rope system. TALKING POINTS The drum-buffer-rope system was first described by Eli Goldratt in his book “The Goal”. The system is sometimes known as “synchronous manufacturing”. While his ideas seem independent of the larger theme of lean production, they complement it nicely.

Balancing Once CTs for all operations have been set, capacity should be adjusted accordingly so that actual CT is close to required CT This is known as balancing KEY MESSAGE Balancing adjusts capacity to match required CT. TALKING POINTS Line balancing is a well known subject in manufacturing, and most of the principles apply to lean manufacturing as well. Lean production facilities are not as well controlled and predictable as traditional fixed flow lines, though. In traditional line balancing, the line makes just one thing, and the cycle time is known precisely. In lean production, several things are made and the cycle time for each one varies, and is an average only.

Traditional Line Balancing
Used for product layouts or assembly lines Develop precedence diagram of tasks network showing required order of tasks Divide jobs into work elements Assign work elements to workstations Try to balance the amount work of each workstation KEY MESSAGE This slide summarizes the traditional line balancing problem.

Balancing for Mixed Model Production
MMP involves production of different models with different task times on the same line Use weighted average times to calculate workstation task times KEY MESSAGE Balancing for mixed model production is more difficult. TALKING POINTS In MMP, each model requires a slightly different amount of time at each operation. Balancing is done using weighted average task times. There needs to be provision to allow variation in task times as well.

Other Ways to Achieve Balance
Dynamic balance Dynamically allocate tasks to different workstations to equalize work (workers help each other) Parallel lines Split line into two parallel operations to reduce CT KEY MESSAGE Other methods can also be used to achieve balance. TALKING POINTS Lean producers are constantly reallocating tasks to different stations to improve balance. This might be done every time the level schedule is updated. Workers might also help each other to improve balance. A worker who has finished a task helps someone who isn’t finished.

Balancing for Synchronous Flow
Balance using continuous improvement and worker reallocation Eliminate wasteful steps Reallocate tasks Reduce number of workers and repeat KEY MESSAGE Continuous improvement and waste reduction lead to performing the same tasks with fewer workers. TALKING POINTS By eliminating and streamlining wasteful steps, it is often possible to reduce the number of workers needed. Again, overzealous application of this can result in a highly stressed and overworked workforce!

Balancing through Worker Reassignment
Rebalance so that all idle time is shifted to one worker Seek ways to reduce task time so that one worker can be removed (and reassigned elsewhere) KEY MESSAGE Rebalancing seeks to reduce the number of workers required. TALKING POINTS It is important that the workers eliminated from the process are reassigned elsewhere and do not loose their jobs. However, over time lean producers require a smaller workforce than traditional manufacturers.

Balancing Required CT Unbalanced, required CT can’t be achieved
KEY MESSAGE Here is an unbalanced process. TALKING POINTS Worker 2 has too much work, and can’t meet the required CT. Unbalanced, required CT can’t be achieved

Balancing Required CT Balanced with equal idle time KEY MESSAGE
Spreading idle time equally is not desired. TALKING POINTS It seems logical to spread the idle time equally among workers, but that doesn’t lead to improvement even though their jobs will be easier. Balanced with equal idle time

Balancing Required CT KEY MESSAGE To force improvement, all idle time is shifted to one worker. TALKING POINTS Here, three workers are working very hard, and the third has little to do. If the process can be improved further, the remaining work of the fourth worker can be reassigned to the other three. The result is that the process now requires only 3 workers instead of 4. The downside is increased stress on the remaining workers. There have been several studies indicating how serious this problem can be in lean manufacturing plants. Balanced, all idle time allocated to worker 4. Improve the process so that worker 4 is not needed.

Adapting to Schedule Changes
Alter the production workday Overtime Extra shifts Alter the production rate Easy if actual CT is less than required CT Increase capacity by adding workers Use a combination of both KEY MESSAGE Lean manufacturers have several ways to accommodate changing demand.

Level scheduling Synchronizing and balancing processes Planning and control in pull production KEY MESSAGE In this section we look at planning and control.

Centralized Planning Traditional manufacturing uses MRP-based systems and centralized planning JIT uses more decentralized planning Aspects of MRP are still useful in JIT KEY MESSAGE Lean production uses both centralized and decentralized planning. TALKING POINTS In lean production, planning is more decentralized than in traditional manufacturing.

Centralized Planning Monthly planning Daily scheduling
Material procurement forecast KEY MESSAGE Centralized systems are used for monthly and daily planning. TALKING POINTS Production plans are prepared several months in advance, based on firm and forecast customer demand. The current month is broken down further into weekly then daily schedules. Material procurement forecasts are generated from the MPS, and communicated with suppliers.

Centralized Planning Flexible (forecast) Firm January February March
April Current week Week 2 Week 3 Week 4 KEY MESSAGE This slide shows the different planning periods. TALKING POINTS The schedule becomes more firm as we approach the production date. Traditionally, the schedule is fixed at a certain point, and no further changes are permitted. With lean production scheduling, it is still possible to insert or change orders until a few days before production. Today Fixed

Daily Scheduling N-4 N-3 N-2 N-1 N Day of production
KEY MESSAGE Final scheduling is done in the days before the day of production. TALKING POINTS A few days ahead of production, it is still possible to add or change orders. Three days in advance, the final schedule is sent to the plant. It should be roughly the same as other days for level scheduling. Two days in advance, the Final Assembly Schedule is generated to specify the exact MMP sequence to use. Final order alterations received Daily schedule sent to plant MMP sequence set

MRP-based Planning All parts and subassemblies are tracked explicitly as unique inventory items Complete bill of material (product structure file) maintained for everything KEY MESSAGE MRP-based planning needs BOMs for everything. TALKING POINTS MRP systems use information from the MPS, BOMs and inventory records to plan and schedule production. If items are stored, a BOM is required for them.

Adapting MRP-based Systems to Pull Production
Simplify Eliminate in-process storage Simplify Bill of Materials (BOM) Simplify inventory tracking KEY MESSAGE Lean production simplifies MRP TALKING POINTS MRP systems are still used in lean production. MRP is streamlined by simplifying processes, eliminating in-process storage, simplifying BOMs and simplifying inventory tracking.

BOM Structure for 4-step Process
Level 0 4 BOMs are required Items A, B, C are outputs from each step They are used immediately in the next step They don’t need to be tracked unless they are being stored in between! Level 1 Level 2 KEY MESSAGE Additional BOMs are needed for intermediate assemblies. TALKING POINTS The intermediate BOMs aren’t needed unless the assemblies are stored between subsequent assembly operations. Level 3 Level 4

Indented BOMs Each level of an indented BOM represents an intermediate subassembly that needs to be tracked JIT eliminates intermediate storage of material BOMs for intermediate subassemblies are no longer needed, and the BOM can be flattened KEY MESSAGE Eliminating intermediate storage allows BOMs to be flattened.

Flattened BOM L, M, N, O, P are the parts that go into X
Intermediate assemblies are not tracked Only one BOM instead of four Level 0 Level 1 KEY MESSAGE The flattened BOM contains just the parts, not the intermediate subassemblies. TALKING POINTS By flattening the BOM, we have only one level instead of four, and only one BOM

Stock Areas and Point of Use
A stock area is a physical location where material is temporarily stored Ideally, the stock area should be at the point of use KEY MESSAGE Stock areas should be located at the point of use. TALKING POINTS Some temporary storage is required even with lean production. Parts and material should be stored where they are used, or at point-of-use. Traditional companies store stock in central warehouses or stock areas.

Traditional MRP Approach
Inventory (warehouse) Receiving Operation Operation Shipping KEY MESSAGE This slide shows flow of material in a traditional plant. TALKING POINTS The traditional MRP approach involves retrieving the necessary parts and materials from inventory to meet the master production process. WIP is also stored in inventory. Suppliers

JIT Approach Point of use Cell 1 Cell 2 Cell 3 Suppliers KEY MESSAGE
This slide shows stock areas in JIT. TALKING POINTS Lean production arranges small stock areas dispersed throughout the plant, at the point of use. Material movement is controlled by Kanban systems, and there is no need to track WIP in detail. Suppliers

Postdeduct and Deduct Lists
It is necessary to track completed items, and parts that go into them Post deduct or backflushing is a simple method: Every time an item is completed, reduce the number on the production schedule by one Reduce the inventory of all parts by the amount used KEY MESSAGE Postdeduct is a simple way to calculate actual production and part usage. TALKING POINTS Rather than tracking every item and intermediate step, postdeduct looks simply at the final stage. Every time a unit comes off the line, it is added to the list of completed items. In addition, all parts contained in it are deducted from inventory. One drawback of this approach is that there is a time delay between when a part is used and when it is deducted from inventory. However, in pull production the time delay is usually fairly short.

Postdeduct Example Each time a computer comes off the line, deduct it from the production schedule Deduct all items used in the computer from the on-hand inventory One Seagate 30Gb drive One 230W power supply One ATI Radeon graphics card Etc. KEY MESSAGE Here is a simple example. TALKING POINTS Each time a finished computer comes off the line, it is added to the list of finished products and all the modules used are deducted from inventory.

Managing the Supply Chain
KEY MESSAGE The final section will look at managing the supply chain. TALKING POINTS Lean production requires a fundamentally different approach to supply chain management. Increasing partnership and collaboration within the supply chain has increased the need for effective communication and information exchange.

Supply-Chain Management
Tier 1 Tier 2 KEY MESSAGE This slide reviews the tiered organization of the supply chain. Tier 3

Management Philosophy
The entire supply chain is a single, integrated entity The cost, quality and delivery requirements of the manufacturing customer are objectives shared by every company in the chain Inventory is the last resort for resolving supply-and-demand imbalances between the tiers KEY MESSAGE Satisfying the customer must be the goal of every company in the supply chain.

Process Orientation Cellular manufacturing and pull production link processes on the shop floor The same methods can be extended to link suppliers in the supply chain KEY MESSAGE Pull production methods can be extended to suppliers.

Customer Orientation Every supplier must understand the needs of its customers, and strive to meet them What is good for the customer is good for the supplier

Teamwork Process orientation and customer orientation are achieved through teamwork Teams must include people from different functions from supplier and customer companies, including: Purchasing Marketing Engineering Manufacturing KEY MESSAGE Teamwork is required between customers and suppliers.

New Customer-Supplier Relationships
Traditional Partnership Purchase criteria Lowest bid Competency, ability, capacity, willingness to work with customer Design source Customer Customer and supplier Number of suppliers Several for each item One or a few for each item or commodity group KEY MESSAGE This series of slides contrasts traditional versus new customer-supplier relationships.

Traditional Partnership Customer business volume per supplier Limited: multiple suppliers share business High: one or few suppliers get all of the business Type of agreement Purchase order; contracts to meet immediate requirements Contract plus agreement about working relationship

Terms of agreement Traditional Partnership Duration Short-term, or as needed by customer Long-term, multiple years Price/cost Lowest bid, inefficiencies and waste keep prices/costs high Negotiated price/cost savings from supplier improvements shared with customer

Terms of agreement Traditional Partnership Quality Variable; customer relies on incoming inspection High; quality at source; supplier uses SPC, TQM, etc. Shipping: frequency, size, location Infrequent, large, dock or stockroom Frequent, small, point-of-use Order mechanism Mail or phone FAX, phone, EDI, Internet, or kanban

Traditional Partnership Customer-supplier interaction Formal information exchange, limited to customer requirements; no teamwork; supplier service limited to minimal requirements Frequent formal and informal exchange of plans, schedules, problems, ideas; teamwork and mutual commitment based on trust; cooperation to resolve problems and improve supplier’s products and processes

JIT in the Supply Chain Facilities layout
Transportation setup reduction and small-batch shipping Kanban Communication and scheduling KEY MESSAGE JIT techniques can be applied to the supply chain.

Facilities layout Focused factories
Many loading docks all around the factory Small, frequent deliveries Delivery of material directly to point-of-use KEY MESSAGE A different type of facility layout is needed. TALKING POINTS Traditional plants are organized so that all incoming and outgoing material flows through a single large shipping-receiving area. From there, material is stored in warehouses and then moved to the plant floor as needed. Lean plants eliminate shipping/receiving and warehouses. The plant is arranged into focused factories dedicated to different product families. Deliveries are made frequently, in small quantities, directly to the point of use. The plant typically has many loading docks all around the factory.

Transportation Setup Reduction and Small-batch Shipping
JIT requires small, frequent deliveries Reduce fixed cost of delivery Smaller trucks Locate closer to customer Combine multiple deliveries in one run Milk run Loaded and unloaded in sequence Side-loading trucks KEY MESSAGE JIT delivery requires changes. TALKING POINTS Large trucks, trains and ships were ideal for large, infrequent shipments but are ill-suited to frequent JIT deliveries. To reduce the cost of delivery, suppliers are adopting smaller trucks, and are locating closer to their customers. Deliveries to several customers are combined into a single trip. Orders are loaded and unloaded in the drop-off sequence. Side-loading trucks are also used.

Kanban Use kanbans to control delivery
Kanbans cycle between the supplier and the customer The longer the round-trip travel time, the more kanbans required Inventory is minimized by locating close to the customer KEY MESSAGE Kanbans can be used to control supplier deliveries. TALKING POINTS If we think of suppliers as simply an extension of our production system, then it is logical to use a Kanban system to link suppliers and customers as if they were two operations in the same plant. The number of Kanbans and hence inventory depends on the round-trip travel time, so there is advantage in locating close to the customer.

Communication and Scheduling
Customer and supplier must share plans and schedules Level scheduling should be used Customers and suppliers must communicate directly and immediately, even several tiers down, to eliminate distortion KEY MESSAGE Customers and suppliers must communicate schedules and plans. TALKING POINTS Customers must communicate changing plans and schedules with suppliers so they can adjust capacity and schedules to meet future demand. Level schedules extend to suppliers, allowing predictable and stable demand. Lack of communication can lead to the well-known “bull-whip” effect, where small changes in demand for the final product lead to large swings in production and inventory at lower levels of the supply chain.

Summary Lean production results in large improvements compared to mass production It’s based on simple principles: Continuous Improvement Eliminate Waste (JIT) Customer focus (TQM) Techniques like small lot sizes, short setups, pull production promote smooth flow All aspects of quality are important Quality of Design to satisfy customer needs Statistical Process Control (SPC) to control variation Eliminating defects Production Planning and Control promotes smooth flow through: Level scheduling Synchronizing and balancing processes Planning and control in pull production Managing the supply chain is important

Lean Manufacturing (Lean Production)

Similar presentations

Presentation on theme: "Lean Manufacturing (Lean Production)"— Presentation transcript:

Similar presentations

About project

Feedback

Log in

Auth with social network:

Lean Manufacturing (Lean Production)

Similar presentations

Presentation on theme: "Lean Manufacturing (Lean Production)"— Presentation transcript:

Similar presentations

About project

Feedback