1. Lean Operations: Process Synchronization and Improvement
Chapter 10
Lean Operations: Process Synchronization and Improvement

2. Introduction Lean Operations: Perfected by Japanese automaker - Toyota
A more efficient process
Adopted in USA by the aerospace industry in 1990’s
Some turnaround times were lowered by 30-50%
Maintenance productivity improved by 25-50%

3. $ Introduction Why?? Many industries have adopted lean operations
Overall:
Many industries have adopted lean operations
Why??
Improved performance including:
Cost
Quality
Response time $

4. Introduction Operations Frontier Responsiveness Price Quick review: AB C
Price
High
Low

5. 10.1 Processing Networks
Processing Networks: consists of information and material flows of multiple products through a sequence of interconnected processes.
Process 5
Process 1
Process 2
Process 3
Process 4
Process 6
Product A
Product B

6. 10.1 Processing Networks Plants & Supply Chains— Two different levels:
Plants: any singly owned, independently managed and operated facility (i.e., manufacturing site, service unit, storage warehouse)
Supply Chain: a network of interconnected facilities
Diverse ownership
Flows of information and materials between the facilities (i.e., raw materials suppliers, finished goods producers, wholesalers, distributors, retailers)

7. 10.2 The Process Ideal: Synchronization & Efficiency
What is an “Ideal Process”?
A process that achieves synchronization at the lowest possible cost
Process Synchronization
The ability of the process to meet customer demand in terms of their quantity, time, quality and location requirements.
Process Efficiency
Measured in terms of the total processing costs. Less cost, more efficient!!.

8. 10.2 The Process Ideal: Synchronization & Efficiency
Perfectly Synchronized Process that is LEAN will develop, produce and deliver these ONLY on demand:
Exactly what is needed (not wrong or defective products)
Exactly how much is needed (neither more or less)
Exactly when it is needed (not before or after)
Exactly where it is needed (not somewhere else)

9. 10.2 The Process ideal: Synchronization & Efficiency
Just-In-Time (JIT)
When the four “just rights” come together—
Action is taken only when it becomes necessary!!!
In Manufacturing - production of only necessary flow units in necessary quantities at necessary times!!!

10. 10.2 The Process ideal: Synchronization & Efficiency
Synchronized Networks:
Outflow of one process is the inflow to another process!!!!
REQUIRES PRECISE MATCHING OF SUPPLY & DEMAND
All stages are required to be tightly linked with flow of information and product
Ideally – the processing stages are achieved for lowest possible cost!!!!

11. Low Efficiency = High Processing Costs
10.3 Waste and Its Sources
ANYTHING LESS THAN IDEAL PERFORMANCE IS AN OPPORTUNITY FOR IMPROVEMENT!!!
Low Efficiency = High Processing Costs
Lack of Synchronization
Defective products, high inventories, delays, stock outs

12. 10.3 Waste and Its Sources
Waste: producing inefficiently, producing wrong or defective products, producing in quantities that are too small/large, delivering early/late
Sources of Waste:
Producing defective products
Producing too much product
Carrying inventory
Waiting due to unbalanced workloads
Unnecessary processing
Unnecessary worker movement
Transporting materials

13. Waste Elimination: 10.3 Waste and Its Sources
Short term strategies include:
Cycle & Safety inventories
Safety capacity
Non-Value adding activities (transportation, inspection, rework, process control)

14. Waste Elimination (cont’d):
10.3 Waste and Its Sources
Waste Elimination (cont’d):
Long-Term Strategy
Improve the overall processes
Build in flexibility, predictability, stability to eliminate temporary fixes.
i.e.→ Reduce setup costs to make it more economical to produce small batches.

15. 10.3 Waste and Its Sources
The River Analogy: The boat can sail in shallow water (lean operations) if we are able to find ways to remove the imperfections on the river bottom!!! FG FM
WIP
Defects
Defective Materials
Machine Breakdowns
Long Setups
Long Lead Times
Unsuitable Equipment
Uneven Schedules
Unreliable Suppliers
Absenteeism
Rigid Work Rules
Inefficient Layouts

16. 10.4 Improving Flows in a Plant: Basic Principles of Lean Operations
Many buzz-words for managing and achieving efficiency within a plant:
Lean operations
Just-in-time production
Zero inventory program
Synchronous manufacturing
Agile manufacturing
Toyota Production System (TPS)

17. 10.4 Improving Flows in a Plant: Basic Principles of Lean Operations
LEAN OPERATIONS HAS FOUR OBJECTIVES:
To improve process flows
Efficient plant layout and fast/accurate flow of materials and information
To increase process flexibility
Reducing equipment changeover times & cross-functional training
To decrease process variability
Flow rates, processing times, and quality
To minimize processing costs
Eliminate non-value adding activities (transportation, inspection, rework)

18. 10.4 Improving Flows in a Plant: Basic Principles of Lean Operations
WHY?????
First three goals improve Process Synchronization
Last goal improves Cost Efficiency

19. 10.4 Improving Flows in a Plant: Basic Principles of Lean Operations
Classic Example:
Efficiency/Synchronization for mass production:
Henry Ford’s Rouge, Michigan plant
Totally integrated with – steel mill, glass factory, machine tools, electrical systems, assembly line, well-trained (well-paid) workers
Minimal low time & cost
Everything in place except product variety!

20. 10.4 Improving Flows in a Plant: Basic Principles of Lean Operations
Efficiency/Synchronization for Mass Production
Ford Motor Company 1910
Rouge, Michigan Plant
Source: <

21. 10.4.1 Improving Process Architecture: Cellular Layouts
Process Architecture: the network of activities and resources
One method:
FUNCTIONAL LAYOUTS
Different product types follow different routings through the resource pools…enabling each flow unit to be sent to any available station in the pool.

22. 10.4.1 Review of Process Architectures: Job Shop
Functional Layout: Resources that perform the same function are physically pooled together–
JOB SHOPS A C B D
Product 1
Output
Input
Product 2

23. 10.4.1 Improving Process Architecture: Cellular Layouts
Alternate to Process-based Functional Layout:
CELLULAR LAYOUT
All workstations that perform successive operations on a given product are grouped together to form a “CELL”

24. 10.4.1 Improving Process Architecture: Cellular Layouts
Product 1 A B C
Input
Output
Example: Henry Ford’s Assembly Line for the Model T

25. 10.4.1 Improving Process Architecture: Cellular Layouts+ +
ADVANTAGES
Facilitates synchronous flow of information and materials between processing stations
Physical proximity of cells reduce transportation of low units
Moves small batches of flow units quickly
Encourages teamwork & cross functional skill development
Improved communication between stations
Improves synchronization where each station produces parts only if the next station needs them
Easier to recognize and report problems
Quicker ability to correct defects

26. 10.4.1 Improving Process Architecture: Cellular Layouts- -
DISADVANTAGES
Resources are dedicated to specific cells
Resources cannot be used by other cells
Lose advantage of resource pooling
Worker incentives must be “team” oriented, not individual performance based
REMEDIES:
Use flexible resources that are cross functional
Peer pressure to control productivity of team members

27. 10.4.2 Improving Information & Material Flow: Demand Pull
TWO APPROACHES
PUSH: Input availability triggers production where emphasis is on “keeping busy” and maximize resource utilization (as long as there is work)
Planning Tool: MRP (Material Requirements Planning)
MRP: End-Product demand forecasts are “exploded” backwards to determine parts requirements at each station

28. 10.4.2 Improving Information & Material Flow: Demand Pull
PUSH works well under these conditions if:
All information is accurate
Forecasts of finished goods are correct
There is no variability in processing times
If one of these conditions at any stages is not met will
DISTURB PLANNED FLOW AND DESTROY SYNCHRONIZATION THROUGHOUT THE PROCESS!!

29. 10.4.2 Improving Information & Material Flow: Demand Pull
Demand-Pull: Where demand from a customer station triggers production.
Consequences of Demand-Pull Each station produces only on demand from its customer station
The demand is actually “downstream”
Two requirements to make a pull system work:
Must have a well-defined customer with a well-defined supplier process.
Must produce the quantity needed only when signaled to do so by its customer

30. 10.4.2 Improving Information & Material Flow: Demand Pull
SUPPLY PUSH: Input availability triggers production
DEMAND PULL: Output need triggers production
Supplier
Inputs
Process
Outputs
Customer
Information Flow:
Material Flow:

31. 10.4.2 Improving Information & Material Flow: Demand Pull
Demand Signaling: Customer needs a way to signal (inform) the supplier of its need.
Customer’s demand starts a chain reaction –
For withdrawals and replenishments of intermediate parts
EOQ-ROP system is a “Pull” system where ROP triggers production at the supplier and EOQ determines the quantity produced

32. 10.4.2 Improving Information & Material Flow: Demand Pull
Synchronized Pull: When the delivery of parts are in sequence
[Suppliers must have greater ability and capability to achieve a synchronized pull effectively]

33. 10.4.3 Improving Process Flexibility: Batch-Size Reduction
Each station must know HOW MUCH TO PRODUCE AT A TIME
Level Production: where small quantities are produced frequently to mach customer demand
[i.e., if demand is sedans and 5000 SUVs, the production would call for producing 2 sedans and then 1 SUV, and then repeat the sequence]
Changeover Costs and Batch Reduction: Goal of level production is reduction of changeover costs (fixed setup or transportation costs of each batch)
I.E. In auto production expensive parts like seats are produced in batches of one, wipers in larger batches
Study the Changeover process to: use special tools to speed it up, customize some machines, keep some machines already set up.
Consider “small-batch” production

34. 10.4.4 Quality at Source: Defect Prevention & Early Detection
Defective flow units increase average flow time and cost!!!
WHY?
It necessitates inspection and rework!!!
Anticipate and then Compensate for the problem:
Hold extra safety inventory in the buffer
This increases avg. flow time and cost
Plan and control Quality:
Prevent defects for occurring in the first place
Detect and correct them as soon as they appear

35. 10.4.4 Quality at Source: Defect Prevention & Early Detection
Careful design of both product and process
Simplification & standardization
Mistake-proofing (poka yoke)
Parts are designed to halt automatically when defective units are fed into them (parts are designed to minimize chances of incorrect assembly)
Defect Visibility
Early detection/corrections more effective & economical

36. 10.4.4 Quality at Source: Defect Prevention & Early Detection
Defect visibility (cont’d)
Early detection helps tracing to the source
Contribution to better synchronization and lower costs
Early detection requires constant vigilance and monitoring!!
Decentralized Control
Employees must be empowered
with authority and the means to
identify & correct problems at the local level

37. 10.4.4 Quality at Source: Defect Prevention & Early Detection
Decentralized Control (cont’d)
In typical plants, line workers don’t feel the responsibility, motivation or security to point out problems.
BEST STRATEGIES OF LEAN OPERATIONS ARE:
Preventing problems through better planning
Highlighting problems as soon as they occur
Delegating problem solving to the local level

38. 10.4.5 Reducing Processing Variability: Standardization of Work Maintenance, and Safety Capacity
Reduce Variability:
Standardize work at each stage and specify it clearly
Advantages to Standardization:
Reduces variability from changing personnel
Reduces variability from one production cycle to the next
Makes it easier to identify sources of waste that can be eliminated

39. Lean Operations try to:
Reducing Processing Variability: Standardization of Work Maintenance, and Safety Capacity
Lean Operations try to:
Minimize carrying safety inventory due to increased flow time
Maintain some safety capacity as production against variability
These could be extra machines, workers, overtime
These forms of safety capacity should be flexible so that it can be used as needed!!

40. 10.4.6 Visibility of Performance
A company needs to “see” (measure) process performance from the customer’s perspective
I.E. Time per call
Measure Percentage of Customers that had a problem resolved with one call
Actual performance (along with expectations) should be visible at each work cell
Not for punishment, but to provide quick feedback for corrective action

41. 10.4.7 Managing Human Resources: Employee Involvement
SYNCHRONIZATION WITHIN A PLANT REQUIRES:
Cooperation
Contribution
Commitment
Elton Mayo’s “Hawthorne Experiments” at Western Electric showed that:
Research has shown that workers involved in the decision-making process are better motivated and productive

42. 10.4.7 Managing Human Resources: Employee Involvement
In Companies with Lean Operations:
Workers are cross-trained to provide the company with flexible workers.
Workers are in work teams in cells and may perform certain managerial duties such as material ordering, hiring, scheduling
Great importance on recruiting and training of workers

43. 10.4.8 Supplier Management: Partnerships
Outsourcing: Provides a flexible alternative to producing in-house
BUT- - - purchased materials account for a major portion of product cost and are a major source of quality problems!!
Lean approach:
Choose only a few capable suppliers
Cultivate cooperative, long-term relationships

44. 10.4.8 Supplier Management: Partnerships
In Lean Operations:
Suppliers are an extension of the plant
Processing without inventories or quality inspection
Synchronization requires defect-free material
Frequent deliveries, small batches
Supplier’s process be able to produce small quantities on demand

45. 10.4.8 Supplier Management: Partnerships
YOU ARE TREATING THE SUPPLIERS AS PARTNERS

46. Synchronize material and information flows Increase flexibility
– SUMMARY
Lean Operations aim to sustain continuous flow processing in an economical manner:
Synchronize material and information flows
Increase flexibility
Reduce variability
Decrease processing costs

47. Process Synchronization and Improvement
Chapter 10
Lean Operations:
Process Synchronization and Improvement
Questions??