Operations Analysis and Improvement

1
Introduction
Operations Analysis and Improvement 2009
Spring Dr. Tai-Yue Wang Industrial and
Information Management Department National Cheng
Kung University
2
Presentation

• Asian culture has had a significant impact on the
  rest of the world.
• Many words used in our daily languages.
• Martial arts, religion or food.
• Within the business environment.
• Improvement tools (kaizen(??) tools)
• Production philosophies such as Just-in-time.
• Just-in-time philosophy is also known as Lean
  Manufacturing.

3
Presentation

• Another important philosophy is the concept
  developed by a Japanese consultant named
  Kobayashi(??).
• Based on a methodology of 20 keys leading
  business on a course of continuous improvement
  (kaizen).

4
Presentation

• The core elements of Kobayashis concepts are
  presented in order to focus on production
  improvements.
• In addition, a measurement standard for
  improvement results is also explained.

5
Introduction

• Continuous improvement is a management philosophy
  based on employees suggestions.
• It was developed in the United States at the end
  of the 19th century.
• Many important improvements took place when this
  idea or philosophy arrived in Japan.
• Japan was already utilizing tools such as quality
  circles.
• When they combined these two ideas, kaizen was
  born.

6
Introduction

• In 1926 Henry Ford wrote
• To standardize a method is to choose out of the
  many methods the best one, and use it.
  Standardization means nothing unless it means
  standardizing upward.
• Todays standardization, instead of being a
  barricade against improvement, is the necessary
  foundation on which tomorrows improvement will
  be based.

7
Introduction

• In 1926 Henry Ford wrote
• If you think of standardization as the best
  that you know today, but which is to be improved
  tomorrow - you get somewhere. But if you think of
  standards as confining, then progress stops.

8
Kaizen vs Reengineering

• Creating an useable and meaningful standard is
  key to the success of any enterprise.
• Businesses usually utilize two different kinds of
  improvements.
• Those that suppose a revolution in the way of
  working.
• Those that suppose smaller benefits with less
  investment.

9
Kaizen vs Reengineering

• The evolution consists of continuous improvements
  being made in both the product and process.
• A rapid and radical change (kaikaku) process is
  sometimes used as a precursor to kaizen
  activities.
• Carried out by the utilization of process
  reengineering or a major product redesign.

10
Kaizen vs Reengineering

• Require large investments and are based on
  process automation.
• In the U.S., these radical activities are
  frequently called kaizen blitzes.

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Kaizen vs Reengineering

• If the process is constantly being improved
  (continuous line), the innovation effort required
  to make a major change can be reduced
  (discontinuous line in the left).
• Otherwise, the process of reengineering can
  become very expensive (discontinuous line in the
  right).

12
Improvement philosophies and methodologies

• In order to find the source of a problem, it is
  important to define and understand the source and
  core of the problem.
• Problem -gt Any deviation with respect to the
  standard value of a variable (quality and
  production rate).
• It is necessary to know what the variable
  objective is (desired standard) and what is the
  starting situation in order to propose a
  realistic objective.

13
Improvement philosophies and methodologies

• Three main factors that production managers fear.
• Poor quality.
• Increase of production cost.
• Increase in the lead time.

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Improvement philosophies and methodologies

• Production improvements should be based on the
  improvements of processes as well as operations.
• Problems can appear in any of the basic elements
  that constitute the production area.

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Improvement philosophies and methodologies

• Some example of problems.
• Defects, obsolete work methods, energy waste,
  poorly coached workers, low rates of performance
  in machines and materials.
• By analyzing the production management history,
  several improvement approaches can be identified.
• Just-in-time Methodologies (Lean Manufacturing).
• 20 Keys to Workplace Improvement (Kobayashi).

16
Improvement philosophies and methodologies

• The keys to the Japanese success are.
• Simple improvement methodologies.
• Workers respect.
• Teamwork.

17
Just-in-Time. Introduction

• In accordance with this philosophy principle,
  nothing is manufactured until it is demanded,
  fulfilling the customer requirements
• I need it today, not yesterday, not tomorrow.
• The plant flexibility required to respond to this
  kind of demand is total, and is never fully
  obtained.
• It is critical that inventory is minimized.
• Product obsolescence can make in-process and
  finished goods inventory worthless.

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Just-in-Time. Introduction

• In 1949 Toyota was on the brink of bankruptcy.
• While in the United States Fords car production
  was at least 8 times more efficient than
  Toyotas.
• The president of Toyota, Kiichiro Toyoda,
  presented a challenge to the members of his
  executive team.
• To achieve the same rate of production as the
  United States in three years.

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Just-in-Time. Introduction

• Taiichi Ohno, vice president of Toyota, accepted
  his challenge.
• Inspired by the way that an American supermarket
  works, invented the Just-in-time method.
• With the aid of Shigeo Shingo and Hiroyuki
  Hirano.

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Just-in-Time. Introduction
Thinking revolution

• Daiichi Ohno (???? ) and Shigeo Shingo (???? )
  wrote their goal.
• Deliver the right material, in the exact
  quantity, with perfect quality, in the right
  place just before it is needed.
• They developed different methodologies.

The 5S
Workforce optimization
Visual Control
Standard operations
Poka-Yoke
Jidoka
One-Piece flow
TPM
Multi- functional workers
Leveling Production
Kanban
SMED
JUST IN TIME
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Just-in-Time. Introduction

• The systematic application of all the
  methodologies create a new management philosophy.
• The real value is the knowledge acquired during
  its implementation.
• The philosophy developed in Toyota was not
  accepted until the end of the sixties.
• Japan in 1973 benefited from the petroleum crisis
  and started to export fuel efficient cars to the
  United States.
• Since the 1970s, Japan has been the pioneer of
  work improvement methodologies.

22
Just-in-Time. Thinking Revolution

• The Western world employed the following formula
  to obtain the price of a product.
• Price Cost Profit.
• In Japan, mainly Toyota, employed the following
  expression.
• Profit Price Cost.
• Today, this formula is used worldwide.
• In order to make sure that Toyota would work like
  the supermarket it was necessary to identify and
  eliminate all business and production wastes.

23
Just-in-Time. Thinking Revolution

• The real cost is as big as a seed of a plum
  tree.
• In some cases, manufacturers, let the seed (cost)
  grow as big as a tree.
• Managers try to decrease the cost by cutting some
  leaves out.
• In reality, it is more efficient to eliminate
  tasks that do not add value to the product.
• Reducing the tree to a smaller size is equivalent
  to planting a smaller seed.
• The goal of Toyotas executives was to find this
  plum tree seed and work hard to reduce the cost.

24
Just-in-Time. Seven types of Waste

• Hiroyuki Hirano (????) defined waste as
  everything that is not absolutely essential.
• Few operations are safe from elimination.
• He also defined work as any task that adds value
  to the product.
• In Toyotas factories outside of Japan, they
  required between 5 to 10 times more operations to
  produce the same car.
• Shigeo Shingo identified 7 main wastes common to
  factories.

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Just-in-Time. Seven types of Waste

• Overproduction
• Producing unnecessary products, when they are not
  needed and in a greater quantities than required.
• Inventory.
• Material stored as raw material, work-in-process
  and final products.
• Transportation.
• Material handling between internal sections.

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Just-in-Time. Seven types of Waste

• Defects.
• Irregular products that interfere with
  productivity stopping the flow of high quality
  products.

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Just-in-Time. Seven types of Waste

• Processes.
• Tasks accepted as necessary.
• Operations.
• Not all operations add value to the product.
• Inactivities.
• Correspond to machines idle time or operators
  idle time.
• Inventory is considered the type of waste with
  greater impact

28
Just-in-Time. Inventory

• Inventory is a sign of an ill factory because it
  hides the problems instead of resolving them.
• For example, in order to cope with the problem of
  poor process quality, the size of production lots
  is typically increased.
• Products that will probably never be used, get
  stored.

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Just-in-Time. Inventory

• If the problem that produces the low quality is
  solved inventory could be reduced without
  affecting service.
• Sometimes it is necessary to force a decrease in
  inventory in order to identify the production
  variability that necessitated it.
• Then, the work method can be changed.

30
Lean Manufacturing

• Lean Manufacturing is the systematic elimination
  of waste.
• Lean is focused at cutting fat from production
  activities.
• Lean has also been successfully applied to
  administrative and engineering activities as
  well.

31
Lean Manufacturing

• Many of the tools used in lean can be traced back
  to Taylor, Ford and the Gilbreths.
• The Japanesse systematized the development and
  evolution of improvement tools.
• Lean Manufacturing is one way to define Toyotas
  production system.
• MUDA is the term chosen when referring to lean.
  In Japanese, MUDA means waste.

32
Lean Manufacturing

• Lean Manufacturing is supported by three
  philosophies.
• Just-in-time
• Kaizen (continuous improvements)

33
Lean Manufacturing
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• Jidoka (???).
• Translates as autonomation.
• Machinery automatically inspects each item after
  producing it, ceasing production and notifying
  humans if a defect is detected.
• Toyota expands the meaning of Jidoka to include
  the responsibility of all workers to function
  similarly.

34
Lean Manufacturing

• Traditional approximations improves the lead time
  by reducing waste in the activities that add
  value (AV).
• Lean Manufacturing reduces the lead time by
  eliminating operations that do not add value to
  the product (MUDA).

Lead Time
35
20 Keys to workplace improvement

• Iwao Kobayashi, in 1988, published a book
  explaining 20 keys to Workplace improvement.
• They all must be considered in order to achieve
  continuous improvement.

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20 Keys to workplace improvement

• These 20 keys are arranged in a circle.
• Shows the relations between the keys and their
  influence on the three main factors.
• Quality, cost and lead time.

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Quality
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Cost
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Lead Time
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20 Keys to workplace improvement

• There are four keys outside the circle.
• Keys 1, 2 and 3 must be implemented before the
  rest.
• Key number 20 is the result of implementing the
  other 19 keys.

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20 Keys to workplace improvement

• Kobayashi divided each key into five levels and
  set some criteria to rise from one level to the
  next.
• Kobayashi offers the steps to reach the final
  level gradually rather than attempting to
  directly reach the top.

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20 Keys to workplace improvement

• Kobayashi presents a radar graphic to show the
  evolution of the factory
• The scoring of each key is represented.
• Kobayashi recommends to improve all the keys
  equally.
• In the radar graphic, the factorys scoring will
  grow concentrically.

44
Overall Equipment Efficiency

• To improve the productivity of production
  equipment Nakajima summarized the main time
  losses for equipment based on the value of three
  activities.
• Available work time -gt Calendar time.
• Fixed time for planned stops -gt Preventive
  maintenance, operators break.
• The rest of the time is considered load time.

45
Overall Equipment Efficiency

• Six main causes that reduce valid operation time.
• Breakdowns.
• The time that the machine is stopped by repairs.
• Setup and changeovers.
• Corresponds to the change time between models, or
  between products of the same model.
• Idling and minor stoppage.
• Loss time caused by the processes randomness or
  by the worker-machine cycle complexity.

46
Overall Equipment Efficiency

• Six main causes that reduce valid operation time.
• Reduced speed.
• Caused by the wear of components.
• Defects and reworks.
• Low quality products.
• Starting losses.
• Machine produces defects until it reaches the
  operation steady state.

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Overall Equipment Efficiency

• These six main losses are grouped.

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Overall Equipment Efficiency

• The previous grouped losses define three basic
  indicator.
• Availability, performance and quality.
• Overall Equipment Efficiency (OEE) A P Q

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Overall Equipment Efficiency

• Objectives predicted for each indicator by
  Nakajima.
• More than 90 in the availability.
• More than 95 in the rate of performance.
• More than 99 in the rate of quality.
• The main advantage of the implementation of these
  rates is that they can show how the improvements
  carried out affect directly the equipment
  efficiency.

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Overall Equipment Efficiency