Lean Production

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Lean Production

• Ron Tibben-Lembke

Operations Management
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Just In Time-- What is It?

• Integrated set of activities designed to achieve
  high-volume production using minimal inventories
  of raw materials, WIP, and FGI.
• Big JIT A.k.a. lean production -- Eliminate
  waste in all aspects of production activities
• Little JIT scheduling goods inventories and
  production, as needed
• Also known as Stockless Production, Toyota
  Production System

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Toyoda Automatic Loom
Sakichi Toyoda (1867-1930) Invented a loom
which stops automatically if the thread
breaks. His son Kiirchiro, started the automotive
department of Toyoda Loom Works.
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JIT Origins in Japan

• Post-WWII Japanese industry in ruins
• Catch up to Americans in 4 years!
• Kiichiro Toyoda, 1946
• Toyoda made delivery trucks and motorcycles, and
  not many of either

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-- the early years

• First two Toyopet Crowns arrive U.S. 1957

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Ohno Reduce Waste

• If Americans are 9x as productive, we must be
  wasting something. (p.3)
• The basis of the Toyota production system is the
  absolute elimination of waste. (Ohno, p. 4)

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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 1967-1982

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Elimination of Waste

• Knew they wouldnt 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

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Two Pillars of Toyota System

• Just-in-Time a flow of right parts, at the
  right time, in the right quantity
• Autonomation Automation with a human touch
• (make machine mistake-proof)
• Workers dont have to baby-sit machines
• Stop automatically if downstream machine stops

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Couldnt Emulate GM

• GM huge batches in huge factories
• Japans 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

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Small Batches

• GMs 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 didnt think of doing this.

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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

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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

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Focused Factories

• Small, specialized plants
• No huge, vertically integrated plants
• 30 -1,000 workers
• Tom Peters

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Group Technology-Layout

• Not enough WIP to have 1 person run 4 milling
  machines
• Dont departmentalize, organize machines by
  product type
• Cellular layout
• Much less inventory sitting around
• Batch size of one

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Cross Training

• To maintain the flow, workers have to be able to
  help out as needed
• Rotate workers through jobs
• Keep skills sharp (managers too - prove they know
  what theyre doing)
• Reduce boredom fatigue
• Expand understanding of overall picture
• Increase potential for new ideas

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Employee Input

• Employee has a brain, why not use it?
• Quality circles look for ways to improve
• Emphasis on Continuous Process Improvement

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Total Quality Management

• Not a lot of parts to sift through to find a good
  one
• Cant afford high defect rates
• Since low WIP, get quick feedback on errors

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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

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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.

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Kanban

• Japanese for signboard
• Method Toyota used for implementing JIT
• Each work station has a fixed kanbans.
• In order to produce, you need both material to
  work on, and an available kanban.

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Kanban
Flow of work
2
3

• Worker 2 finishes a part, outbound moves over
• 2 gets another part to work on
• 2 takes off 1s green tag giving it back to 1,
  and
• puts on her blue tag and moves it into position.

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Kanban
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 2s outbound pile,
• And gives the blue back to 2

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Kanban
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 2s outbound pile,
• And gives the blue back to 2
• 3s production will be taken by 4, offstage
  right.
• Tag goes back into 3s bin

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Kanbans
2
3

• Red finishes his part next.
• But 4 hasnt 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
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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.

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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

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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

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Lowering Inventory Reduces Waste
WIP hides problems
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Lowering Inventory Reduces Waste
WIP hides problems
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Lowering Inventory Reduces Waste
Reducing WIP makes problem very visible
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Lowering Inventory Reduces Waste
Remove problem, run With less WIP
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Lowering Inventory Reduces Waste
Reduce WIP again to find new problems
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A contrasting opinion

• Inventory is not the root of all evil, inventory
  is the flower of all evil.
• - Robert Inman,
• General Motors

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Setup Reduction

• Cant 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

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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

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What about making several products?

• Each station has to keep on hand parts to satisfy
  anything downstream station might ask for
• Want to avoid many parts for each of several
  products
• This means more WIP, more inventory, more
  expense, unless we produce in smaller batches

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Production Smoothing Sequencing

• 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

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Suppliers

• Buyer Supplier form JIT partnerships
• JIT partnerships eliminate
• Unnecessary activities
• In-plant inventory
• In-transit inventory
• Poor suppliers

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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

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Supplier Worries

• Lack of flexibility
• Long-term contract with 1 customer
• Poor customer scheduling
• Frequent engineering changes
• Strict quality assurance
• Small lot sizes
• Close physical proximity

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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 dont worry about competing
• Firm helps supplier increase quality, reduce costs

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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

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Inventory

• Traditionally, inventory exists in case problems
  arise.
• JIT objective Eliminate inventory
• JIT requires
• Small lot sizes
• Low setup time
• Containers for fixed number of parts
• JIT inventory Minimum inventory to keep system
  running.

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Lessons Learned from JIT

• The environment can be a control - dont 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

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What is not JIT

• Having shipments come in just when you need them
  does not mean JIT goals accomplished
• If supplier still produces in large lots, but
  delivers in small, you have just forced supplier
  to incur the holding costs

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System Requirements

• Runs with very little inventory
• Requires high quality
• Management philosophy of continuous and forced
  problem solving
• Elimination of waste

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Lean Tools

• Value Stream mapping
• Takt time (German for pace or beat)
• available work time per shift
• -------------------------------------------
• Customer demand per shift
• Cycle time how often a piece comes off of
  production line

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Where to get more information

• Taiichi Ohno - Toyota Production System
• Schonberger - Japanese Manufacturing Techniques
• Factory Physics - Hopp Spearman
• Shigeo Shingo - Toyota Production System

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JIT Books in English

• 1981 Shigeo Shingo Study of the Toyota
  Production System
• 1982 Richard Schonberger Japanese
  Manufacturing Techniques
• 1983 Richard Hall Zero Inventories
• 1988 Taiichi Ohno Toyota Production System
• 1989 Shigeo Shingo Study of the Toyota
  Production System