1. 1/63 Lean Systems

2. 2/63 How Lean Systems fits the Operations Management Philosophy Operations As a Competitive Weapon Operations Strategy Project Management Process Strategy Process Analysis Process Performance and Quality Constraint Management Process Layout Lean Systems Supply Chain Strategy Location Inventory Management Forecasting Sales and Operations Planning Resource Planning Scheduling

3. 3/63 Toyota Production System (TPS)  Developed at Toyota Co. by Taiichi Ohno( 大野 耐一  Developed at Toyota Co. by Taiichi Ohno( 大野 耐一 )  Toyota Production System (TPS) is one of the most admired lean manufacturing systems in existence.  They have a process of continuous improvement.  Work is completely specified as to content, sequence, timing, and outcome.

4. 4/63 Toyota Production System (TPS)  Services and goods do not flow to the next available person or machine, but to a specific person or machine.  Employees are stimulated to experiment to find better ways to do their jobs.  Improvements to the system must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible organizational level.

5. 5/63 Lean Systems  Lean systems are operations systems that maximize the value added by each of a company’s activities by paring unnecessary resources and delays from them.  Just-in-time (JIT) philosophy The belief that waste can be eliminated by cutting unnecessary capacity or inventory and removing non-value-added activities in operations.

6. 6/63 Lean Systems  JIT system: A system that organizes the resources, information flows, and decision rules that enable a firm to realize the benefits of JIT principles.

7. 7/63  Pull method of work flow  Quality at the source  Small lot sizes  Uniform workstation loads  Standardized components & work methods  Close supplier ties  Flexible workforce  Line flows  Automation  Five S  Preventive maintenance Characteristics of Lean Systems

8. 8/63 Push and Pull Systems of Work Flow  Push method: A method in which production of the item begins in advance of customer needs.  Example: A buffet where food is prepared in advance.  Pull Method: A method in which customer demand activates production of the service or item.  Example: A restaurant where food is only prepared when orders are placed.  Lean systems use the pull method of work flow.

9. 9/63  Pull method of materials flow  Quality at the source  Small lot sizes  Uniform workstation loads  Standardized components & work methods  Close supplier ties  Flexible workforce  Line flows  Automation  Five S  Preventive maintenance Characteristics of Lean Systems

10. 10/63 Quality at the Source  Quality at the source is an organization-wide effort to improve the quality of a firm’s products by having employees act as their own quality inspectors, and never pass defective units to next stage.  One approach for implementing quality at the source is to use poka-yoke, mistake-proofing methods aimed at designing fail safe systems that minimize human error.

11. 11/63 Quality at the Source  Another approach for implementing quality at the source is a practice the Japanese call jidoka, and andon, which gives machines and machine operators the ability to detect when an abnormal condition has occurred.

12. 12/63  Pull method of materials flow  Quality at the source  Small lot sizes  Uniform workstation loads  Standardized components & work methods  Close supplier ties  Flexible workforce  Line flows  Automation  Five S  Preventive maintenance Characteristics of Lean Systems

13. 13/63 Small Lot Sizes  Lot: A quantity of items that are processed together.  Setup: The group of activities needed to change or readjust a process between successive lots of items.  Single-digit setup: The goal of having a setup time of less than 10 minutes.

14. 14/63 Lot Size and Cycle Inventory

15. 15/63 Lot Size and Cycle Inventory Lot size = 100 On-hand inventory 51015202530 Time (hours) 100 – 75 – 50 – 25 – 0 – Average cycle inventory

16. 16/63 Lot Size and Cycle Inventory Average cycle inventory Lot size = 100 On-hand inventory 51015202530 Time (hours) 100 – 75 – 50 – 25 – 0 –

17. 17/63 Lot Size and Cycle Inventory Average cycle inventory Lot size = 100 Lot size = 50 On-hand inventory 51015202530 Time (hours) 100 – 75 – 50 – 25 – 0 –

18. 18/63 Lot Size and Cycle Inventory Average cycle inventory Lot size = 100 Lot size = 50 On-hand inventory 51015202530 Time (hours) 100 – 75 – 50 – 25 – 0 –

19. 19/63 Lot Size and Cycle Inventory Average cycle inventory Lot size = 100 Lot size = 50 On-hand inventory 51015202530 Time (hours) 100 – 75 – 50 – 25 – 0 –

20. 20/63 Setup Time Reduction 1.Determine the existing method 2.Separate the internal elements from the external element 3.Convert the internal elements to the external elements 4.Reduce or eliminate the internal elements 5.Apply method analysis and practice doing setups 6.Eliminate adjustments 7.Abolish the setup itself

21. 21/63  Pull method of materials flow  Quality at the source  Small lot sizes  Uniform workstation loads  Standardized components & work methods  Close supplier ties  Flexible workforce  Line flows  Automation  Five S  Preventive maintenance Characteristics of Lean Systems

22. 22/63 Uniform Workstation Loads  A lean system works best if the daily load on individual workstations is relatively uniform.  Service processes can achieve uniform workstation loads by using reservation systems (e.g., scheduled surgeries) and differential pricing to manage the demand.  For manufacturing processes, uniform loads can be achieved by assembling the same type and number of units each day, thus creating a uniform daily demand at all workstations.  Mixed-model assembly produces a mix of models in smaller lots.

23. 23/63 Manufacturing Cell 1.Machines are arranged in the process sequence 2.The cell is designed in U-shape 3.One piece at a time is made within the cell 4.The workers are trained to handle more than one process 5.The cycle time for the system dictates the production rate for the cell

24. 24/63 Manufacturing Cell

25. 25/63 Manufacturing Cell

26. 26/63 Manufacturing Cell

27. 27/63 Manufacturing Cell

28. 28/63 Manufacturing Cell

29. 29/63 Manufacturing Cell

30. 30/63  Pull method of materials flow  Quality at the source  Small lot sizes  Uniform workstation loads  Standardized components & work methods  Close supplier ties  Flexible workforce  Line flows  Automation  Five S  Preventive maintenance Characteristics of Lean Systems

31. 31/63 Line Flows and Automation  Line Flows: Managers of hybrid-office and back-office service processes can organize their employees and equipment to provide uniform work flows through the process and, thereby, eliminate wasted employee time.  Another tactic used to reduce or eliminate setups is the one-worker, multiple-machines (OWMM) approach, which essentially is a one-person line.  Automation plays a big role in lean systems and is a key to low-cost operations.

32. 32/63  Pull method of materials flow  Quality at the source  Small lot sizes  Uniform workstation loads  Standardized components & work methods  Close supplier ties  Flexible workforce  Line flows  Automation  Five S  Preventive maintenance Characteristics of Lean Systems

33. 33/63 Five S (5S)  Five S (5S) A methodology consisting of five workplace practices conducive to visual controls and lean production. 1.Sort: Separate needed from unneeded items (including tools, parts, materials, and paperwork), and discard the unneeded. 2.Straighten: Neatly arrange what is left, with a place for everything and everything in its place. Organize the work area so that it is easy to find what is needed. 3.Shine: Clean and wash the work area and make it shine. 4.Standardize: Establish schedules and methods of performing the cleaning and sorting. Formalize the cleanliness that results from regularly doing the first three S practices so that perpetual cleanliness and a state of readiness is maintained. 5.Sustain: Create discipline to perform the first four S practices, whereby everyone understands, obeys, and practices the rules when in the plant. Implement mechanisms to sustain the gains by involving people and recognizing them via a performance measurement system.

34. 34/63 5S 活動的意義 整理 (Seili) 1. 整理 (Seili) ：區分要用與不要用的物品，將不要用的物品丟棄。 ＊紅牌作戰：對不用物品貼上紅色標籤，標示品名、數量、停止使用時間及理 由。 整頓 (Seitou) 2. 整頓 (Seitou) ：把要用的物品維持在良好的管理狀態。 ＊看板作戰：以看板標示庫存的場所、品名、及數量 ( 目視管理 ) 。 清掃 (Seisoo) 3. 清掃 (Seisoo) ：掃除垃圾、灰塵，使成乾淨狀態。 ＊垃圾、灰塵、污髒會造成機器設備故障，亦縮短其壽命。 清潔 (Seiketsu) 4. 清潔 (Seiketsu) ：維持無垃圾、無灰塵、無污髒的狀態。 ＊乾淨的場所才能製造品質安定的產品，並有利於發現工作上之問題點。 教養 (Shitsuke) 5. 教養 (Shitsuke) ：教導員工保持敬業樂群，奉公守法的良好習慣與態度。

35. 35/63 Continuous Improvement with Lean Systems

36. 36/63 © 2007 Pearson Education The Single-Card Kanban System  Kanban means “card” or “visible record” in Japanese & refers to cards used to control the flow of production through a factory.  General Operating Rules: 1.Each container must have a card. 2.The assembly line always withdraws materials from fabrication (pull system). 3.Containers of parts must never be removed from a storage area without a kanban being posted on the receiving post. 4.The containers should always contain the same number of good parts. The use of nonstandard containers or irregularly filled containers disrupts the production flow of the assembly line. 5.Only nondefective parts should be passed along. 6.Total production should not exceed the total amount authorized on the kanbans in the system.

37. 37/63 Kanban card for product 1 Kanban card for product 2 Fabrication cell O1O1O1O1 O2O2O2O2 O3O3O3O3 O2O2O2O2 Storage area Empty containers Full containers Assembly line 1 Assembly line 2 The Single-Card Kanban System Receiving post

38. 38/63 Storage area Empty containers Full containers Kanban card for product 1 Kanban card for product 2 Fabrication cell O1O1O1O1 O2O2O2O2 O3O3O3O3 O2O2O2O2 Assembly line 1 Assembly line 2 Receiving post The Single-Card Kanban System

39. 39/63 Storage area Empty containers Full containers Kanban card for product 1 Kanban card for product 2 Fabrication cell O1O1O1O1 O2O2O2O2 O3O3O3O3 O2O2O2O2 Assembly line 1 Assembly line 2 Receiving post The Single-Card Kanban System

40. 40/63 Storage area Empty containers Full containers Kanban card for product 1 Kanban card for product 2 Fabrication cell O1O1O1O1 O2O2O2O2 O3O3O3O3 O2O2O2O2 Assembly line 1 Assembly line 2 Receiving post The Single-Card Kanban System

41. 41/63 Storage area Empty containers Full containers Kanban card for product 1 Kanban card for product 2 Fabrication cell O1O1O1O1 O2O2O2O2 O3O3O3O3 O2O2O2O2 Assembly line 1 Assembly line 2 Receiving post The Single-Card Kanban System

42. 42/63 Storage area Empty containers Full containers Kanban card for product 1 Kanban card for product 2 Fabrication cell O1O1O1O1 O2O2O2O2 O3O3O3O3 O2O2O2O2 Assembly line 1 Assembly line 2 Receiving post The Single-Card Kanban System

43. 43/63 Storage area Empty containers Full containers Kanban card for product 1 Kanban card for product 2 Fabrication cell O1O1O1O1 O2O2O2O2 O3O3O3O3 O2O2O2O2 Assembly line 1 Assembly line 2 Receiving post The Single-Card Kanban System

44. 44/63 Dual Card Kanban System KANBAN Part Number:1234567Z Location:Aisle 5 Bin 47 Lot Quantity:6 Supplier:WS 83 Customer:WS 116

45. 45/63 Example 9.1 Westerville Auto Parts Company produces rocker-arm assemblies for use in the steering and suspension systems of four-wheel-drive trucks. A typical container of parts spends 0.02 day in processing and 0.08 day in materials handling and waiting during its manufacturing cycle. Daily demand for the part is 2,000 units. Management believes that demand for the rocker- arm assembly is uncertain enough to warrant a safety stock equivalent of 10 percent of inventory. Determining the Number of Containers

46. 46/63 Calculations for Example 9.1 k = d( w + p )( 1 +  ) c d = 2000 units/day p = 0.02 day  = 0.10 w = 0.08 day c = 22 units Westerville Auto Parts k = 2000( 0.08 + 0.02 )( 1 + 0.10 ) 22 k = 10 containers a. If each container contains 22 parts, how many containers should be authorized?

47. 47/63 Calculations for Example 9.1 k = d( w + p )( 1 +  ) c d = 2000 units/day p = 0.02 day  = 0.10 w = 0.06 day c = 22 units Westerville Auto Parts k = 2000( 0.06 + 0.02 )( 1 + 0.10 ) 22 k = 8 containers Proposed change from 0.08 b. A proposal to revise the plant layout would cut materials handling and waiting time per container to 0.06 day. How many containers would be needed?

48. 48/63 Application 9.1 k = d( w + p )( 1 +  ) c Determining the Number of Containersfor Item B52R Determining the Number of Containers for Item B52R k = 1000( 0.5 + 0.1 )( 1 + 0.10 ) 100 k = 6.6 or 7 containers d = 1000 units/day p = 0.10 day  = 0.10 w = 0.5 day c = 100 units

49. 49/63 Value Stream Mapping  Value stream mapping (VSM) is a qualitative lean tool for eliminating waste (or muda) that involves a current state drawing, a future state drawing, and an implementation plan. Product family Current state drawing Future state drawing Work plan & implementation  Value stream mapping (VSM) spans the entire value chain, from the firm’s receipt of raw materials to the delivery of finished goods to the customer.

50. 50/63 Selected Set of Value Stream Mapping Icons

51. 51/63 A Representative Current State Map for a Family of Retainers at a Bearings Manufacturing Company

52. 52/63 Organizational Considerations  The human costs: Lean system implementation requires a high degree of regimentation, and sometimes it can stress the workforce.  Cooperation & Trust: Workers and first-line supervisors must take on responsibilities formerly assigned to middle managers and support staff.  Reward systems and labor classifications must often be revamped when a lean system is implemented.  Existing layouts may need to be changed.

53. 53/63 Process Considerations Inventory & Scheduling  Schedule Stability: Daily production schedules in high- volume, make-to-stock environments must be stable for extended periods.  Setups: If the inventory advantages of a lean system are to be realized, small lot sizes must be used.  Purchasing and Logistics: If frequent, small shipments of purchased items cannot be arranged with suppliers, large inventory savings for these items cannot be realized.

54. 54/63 Comparison of JIT and Traditional FactorTraditionalJIT Inventory Much to offset forecast errors, late deliveries Minimal necessary to operate Deliveries Few, largeMany, small Lot sizes LargeSmall Setup; runs Few, long runsMany, short runs Vendors Long-term relationships are unusual Partners Workers Necessary to do the workAssets

55. 55/63 Transitioning to a JIT System  Get top management commitment  Decide which parts need most effort  Obtain support of workers  Start by trying to reduce setup times  Gradually convert operations  Convert suppliers to JIT  Prepare for obstacles

56. 56/63 Obstacles to Conversion  Management may not be committed  Workers/management may not be cooperative  Suppliers may resist  Why?

57. 57/63 JIT II(1/3) Implemented by Bose, IBM, Intel, AT&T, … In-Plant Representative is on site full time at the suppliers expense Representatives duties: - issuing purchase orders to his/her own firms - working on design ideas to help save costs and improve manufacturing processes - managing production schedules for suppliers, materials contractors, and other subcontractors.

58. 58/63 JIT II(2/3) Benefits to the customers: - liberated from administrative tasks, the purchasing staff is able to work on improving efficiencies in other areas of procurement - communication and purchase order placement are improve dramatically - The cost of materials is reduced immediately, and the savings are ongoing - Preferred suppliers are brought into product design process earlier -A natural foundation is provided for electronic data interchange(EDI), effective paperwork, and administrative savings.

59. 59/63 JIT II(3/3) Benefits to the suppliers: - eliminate sales effort - Communication and purchase order placement are improved dramatically - The volume of business rises at the start of the program and continues to grow as new products are introduced -An evergreen contract is provided, with no end date and no rebidding

60. 60/63 JIT II(3/3) Benefits to the suppliers: -The supplier can communicate with and sell directly to engineering -Invoicing and payment administration are efficient

61. 61/63 Lean Systems in Services  Consistently high quality  Uniform facility loads  Standardized work methods  Close supplier ties  Flexible workforce  Automation  Preventive maintenance  Pull method of materials flow  Line flows

62. 62/63 Operational Benefits  Reduce space requirements  Reduce inventory investment  Reduce lead times  Increase labor productivity  Increase equipment utilization  Reduce paperwork and simple planning systems  Valid priorities for scheduling  Workforce participation  Increase product quality

63. 63/63 Implementation Issues  Organizational Consideration: - Human costs of JIT systems - Cooperation and trust - Reward systems and labor classifications  Process Considerations  Inventory and Scheduling - MPS stability - Setups - Purchasing and Logistics