1. Operations Management
Lean Production
Ron Tibben-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 President, Toyota Motor Co.
If you put your mind to it, you can squeeze water from a dry towel.
-- Eiji Toyoda, President

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
Focused Factories
Group Technology
Quality at the Source
JIT production
Uniform Plant Loading
Kanban production control system
Minimized setup times

6. 1. Focused Factories Small, specialized plants
No huge, vertically integrated plants
Small plants easier, cheaper to build
Tom Peters

7. 2. Group Technology Products grouped into families Benefits
Work cell can produce whole family
Cellular layout, not functional
Benefits
Much less inventory sitting around
Less material movement
Fewer workers
Cross-training
Keep skills sharp (managers too)
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. 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

10. Lowering Inventory Reduces Waste
WIP hides problems

11. Lowering Inventory Reduces Waste
WIP hides problems

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

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

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

15. 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

16. 5. Uniform Plant Loading (heijunka)
Any changes to final assembly are magnified throughout production process
Smoothing
Master production schedule: 10,000 /mo.
500 day, 250 a shift
480 minutes means 1 every 1.92 minutes
Sequencing:
If mix is 50% A, 25% B, 25% C, produce
A-B-A-C-A-B-A-C…

17. 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.

18. 6. Kanban Worker 2 finishes a part, outbound moves over
Flow of work 2 3
Worker 2 finishes a part, outbound moves over
2 has a blue tag avaliable, so 2 gets another part to work on:
2 takes off 1’s green tag giving it back to 1, and
puts on her blue tag and moves it into position.

19. 6. Kanban When 3 finishes a part, Finished parts move over one spot
Flow of work 2 3
When 3 finishes a part,
Finished parts move over one spot
He has to have a red tag available to put on,
He gets a part from 2’s outbound pile,
And gives the blue back to 2

20. 6. Kanban When 3 finishes a part,
Flow of work 2 3
When 3 finishes a part,
Finished parts move over one spot
He has to have a red tag available to put on,
He gets a part from 2’s outbound pile,
And gives the blue back to 2
3’s production will be taken by 4, offstage right.
Tag goes back into 3’s bin

21. 6. Kanban 2 3 Red finishes his part next. 2 3
But 4 hasn’t freed up any of the red kanbans, so there is nothing for 3 to work on now.
3 could maintain his machine, or see if 4 needs help 2 3

22. How is this Different? Processes can become idled (blocked) or starved
This makes you painfully aware of problems in your system.
Material moves through the system so quickly no in-process recordkeeping is needed.

23. 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

24. 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: under ten minutes
Techniques
Make internal setups into External
Eliminate Adjustments
Eliminate the Setup
Continuous Process Improvement, anyone?

25. 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

26. -- the early years
First two Toyotas imported to U.S. 1957

27. JIT Origins in Japan Post-WWII Japanese industry in ruins
“Catch up to Americans in 4 years!”
Toyoda made delivery trucks and motorcycles, and not many of either

28. 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

29. Small Batches
GM’s large batches require large amounts of storage space.
GM produces in large batches because of significant setup costs.
If Toyota had the same large setup costs, it could never afford small batches.
Reduce setup cost to reduce batch size.
GM didn’t think of doing this.

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’
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. Lessons Learned from JIT
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