1. LEAN PRODUCTION Ron Lembke Operations Management

2. Waste Waste is ‘anything other than the minimum amount of equipment, materials, parts, space, and workers’ time which are absolutely essential to add value to the product. --Shoichiro Toyoda, Chairman, Toyota Motor Co., 1992-99 If you put your mind to it, you can squeeze water from a dry towel. -- Eiji Toyoda, President 1967-1982

3. Just-in-Time  Downstream processes take parts from upstream as they need.  Like an American Supermarket:  Get what you want  when you want it  in the quantity you want.

4. 7 Types of Waste (Ohno 1988)  Overproduction  Time on Hand (waiting time)  Transportation  Stock on Hand - Inventory  Waste of Processing itself  Movement  Making Defective Products

5. Seven Elements to Eliminate Waste 1. Focused Factories 2. Group Technology 3. Quality at the Source 4. JIT production 5. Uniform Plant Loading 6. Kanban production control system 7. Minimized setup times

6. 1. Focused Factories  Small, specialized plants  No huge, vertically integrated plants  Small plants easier, cheaper to build  Tom Peters, “The Pursuit of Wow.”  Group size of 150  Know everyone else in the group

7. 2. Group Technology – Work Cell  Products grouped into families  Work cell can produce whole family  Cellular layout, not functional, U-shaped, flows through the work cell  Benefits  Much less inventory sitting around  Less material movement, fewer workers  Quality – facilitated by lower inv levels, cross-training  Cross-training  Keep skills sharp Managers, too – respect them, not just “because they’re your boss,” but they do know what they’re talking about  Reduce boredom & fatigue  Understand overall picture, more new ideas

8. 3. Quality at the Source  Do it right the first time  Stop process, correct errors immediately  Not a lot of parts to sift through to find a good one  Can’t afford high defect rates  Since low WIP, get quick feedback on errors

9. Lowering Inventory Reduces Waste WIP hides problems

10. Lowering Inventory Reduces Waste WIP hides problems

11. Lowering Inventory Reduces Waste Reducing WIP makes problem very visible STOP

12. Lowering Inventory Reduces Waste Remove problem, run With less WIP

13. Lowering Inventory Reduces Waste Reduce WIP again to find new problems

14. Performance and WIP Level  Less WIP means products go through system faster  reducing the WIP makes you more sensitive to problems, helps you find problems faster  Stream and Rocks analogy:  Inventory (WIP) is like water in a stream  It hides the rocks  Rocks force you to keep a lot of water (WIP) in the stream

15. 4. Just In Time-- What is It?  Just-in-Time: produce the right parts, at the right time, in the right quantity  Requires repetitive, not big volume  Batch size of one  Short transit times, keep 0.1 days of supply

16. 5. Uniform Plant Loading (heijunka)  Any changes to final assembly are magnified throughout production process  Sequencing:  If mix is 50% A, 25% B, 25% C, produce A-B-A-C-A-B-A-C…

17. Takt Time  Takt time:  Beat or cycle  Master production schedule: 10,000 /mo.  500 day, 250 a shift  480 minutes means 1 every 1.92 minutes

18. 6. Kanban  Japanese for ‘signboard’  Method for implementing JIT  In order to produce, you need both:  material to work on, and  an available kanban.  Each work station has a fixed # kanbans.

19. 6. Kanban  Worker 2 finishes a part, outbound moves over  2 has a brown triangle tag available, so 2 gets another part to work on:  2 takes off 1’s blue circle tag giving it back to 1, and  puts on her brown triangle tag and moves it into position. Flow of work 321

20. 6. Kanban  When 3 finishes a part,  Finished parts move over one spot  He has to have a yellow square tag to put on,  He gets a part from 2’s outbound pile,  And gives the brown triangle back to 2 Flow of work 3 21

21. 6. Kanban – “Pull” Production  When 3 finishes a part,  Finished parts move over one spot  He has to have a yellow square tag available to put on,  He gets a part from 2’s outbound pile,  And gives the brown triangle back to 2  3’s production will be taken by 4, offstage right.  Tag goes back into 3’s bin  End customers pull products through the factory Flow of work 3 21

22. 6. Kanban – “Blocking”  Worker #3 finishes his part next.  But customers haven’t freed up any of the yellow square kanbans, so there is nothing for 3 to work on now.  3 could maintain his machine, or see anyone needs help 3 2 3 2

23. How is this Different?  Processes can become idled (blocked) or starved  Starved: authorization (kanban card) but no material to work on  Blocked: material to work on, but no authorization  Painfully aware of problems in your system.  Orange County Toyota– cleanest DC I’ve ever seen  Material moves through the system so quickly no in- process recordkeeping is needed.  3M consultant: if we thought computers would be better than paper, we would have used them. But we didn’t.

24. Importance of Flow  Ohno was very clear about this: “Kanban is a tool for realizing just-in-time. For this tool to work fairly well, the process must be managed to flow as much as possible. This is really the basic condition. Other important conditions are leveling the product as much as possible, and always working in accordance with standard work methods. -- Ohno, 1988, p. 3

25. 7. Setup Reduction  Can’t afford to do huge runs  Have to produce in small batches  Toyota Die Change: 3 hours down to 3  SMED: Single Minute Exchange of Dies  under ten minutes  Make Internal setups into External  Internal – process has to be stopped, External  External – process can still be running  Eliminate Adjustments, Eliminate the Setup?  Some setups bigger than others – printing dye colors  Continuous Process Improvement, anyone?

26. Lexus -- the early years  First two Toyotas imported to U.S. 1957  Toyopet Crowns

27. Eiji Toyoda’s Ambitious Plans  Post-WWII Japanese industry in ruins  Early 1950s – toured Rouge plant  2,500 cars in 13 years. Ford: 8,000 per day  “Catch up to Americans in 4 years!”  Toyoda made delivery trucks and motorcycles, and not many of either

28. Elimination of Waste  Knew they wouldn’t beat U.S. with product innovation, concentrated on licensing patents, and producing more efficiently  Costs prevented mass-production, volume strategy of American firms.  Find ways to reduce waste, cost  Shigeo Shingo (at right)  & Taiichi Ohno, pioneers

29. Couldn’t Emulate GM  GM huge batches in huge factories  Japan’s area is 10% less than California and 70% agricultural.  Put entire population of CA into 30% of state, then add 6 times as many people. (and you thought LA was crowded).  Land extremely expensive  Sprawling factories not an option

30. A contrasting opinion “Inventory is not the root of all evil, inventory is the flower of all evil. - Robert Inman, General Motors

31. Ask ‘Why’ 5 Times  5W = 1H 1. Why did the machine stop? Overload and fuse blew 2. Why the overload? Not lubricated 3. Why not lubricated? Oil pump not pumping? 4. Why not pumping? Pump shaft worn out. 5. Why worn out? No screen, scrap got in

32. Preventative Maintenance  Unexpected loss of production is fatal to system and must be prevented  Additional maintenance can prevent downtime, or minimize length of interruptions, when they do occur

33. Capacity Buffers  System is inflexible, no inventory buffers, so to respond, need excess capacity  Schedule less than 24 hours per day  ‘Two-Shifting’ 4-8-4-8  Cross Training

34. Characteristics of JIT Partnershps  Few, nearby suppliers  Supplier just like in-house upstream process  Long-term contract agreements  Steady supply rate  Frequent deliveries in small lots  Buyer helps suppliers meet quality  Suppliers use process control charts  Buyer schedules inbound freight

35. Supplier Relationships  American model:  keep your nose out of my plant.  Gain info to force price cuts  Lack of trust between suppliers  Firm encourages suppliers to share knowledge, because they don’t worry about competing  Firm helps supplier increase quality, reduce costs

36. Summary  The environment can be a control - don’t take setups for granted  Operational details are very important (Ford, Carnegie)  Controlling WIP is important  Flexibility is an asset  Quality can come first  Continual improvement is necessary for survival