Lean Systems

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Lean Systems
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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
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Toyota Production System (TPS)

• Developed at Toyota Co. by Taiichi Ohno(???? )
• 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.

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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.

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Lean Systems

• Lean systems are operations systems that maximize
  the value added by each of a companys 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.

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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.

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Characteristics of Lean Systems

• 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

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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.

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Characteristics of Lean Systems

• 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

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Quality at the Source

• Quality at the source is an organization-wide
  effort to improve the quality of a firms
  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.

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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.

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Characteristics of Lean Systems

• 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

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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.

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Lot Size and Cycle Inventory
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Lot Size and Cycle Inventory
100 75 50 25 0
Average cycle inventory
Lot size 100
On-hand inventory
5 10 15 20 25 30 Time (hours)
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Lot Size and Cycle Inventory
100 75 50 25 0
Average cycle inventory
Lot size 100
On-hand inventory
5 10 15 20 25 30 Time (hours)
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Lot Size and Cycle Inventory
100 75 50 25 0
Average cycle inventory
Lot size 100
On-hand inventory
Lot size 50
5 10 15 20 25 30 Time (hours)
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Lot Size and Cycle Inventory
100 75 50 25 0
Average cycle inventory
Lot size 100
On-hand inventory
Lot size 50
5 10 15 20 25 30 Time (hours)
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Lot Size and Cycle Inventory
100 75 50 25 0
Average cycle inventory
Lot size 100
On-hand inventory
Lot size 50
5 10 15 20 25 30 Time (hours)
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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

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Characteristics of Lean Systems

• 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

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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.

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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

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Manufacturing Cell
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Manufacturing Cell
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Manufacturing Cell
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Manufacturing Cell
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Manufacturing Cell
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Manufacturing Cell
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Characteristics of Lean Systems

• 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

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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.

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Characteristics of Lean Systems

• 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

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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.

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5S ?????

• 1. ??(Seili)???????????,??????????
• ???????????????,??????????????????
• 2. ??(Seitou)?????????????????
• ?????????????????????(????)?
• 3. ??(Seisoo)???????,???????
• ?????????????????,???????
• 4. ??(Seiketsu)?????????????????
• ????????????????,??????????????
• 5. ??(Shitsuke)??????????,?????????????

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Continuous Improvement with Lean Systems
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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
• Each container must have a card.
• The assembly line always withdraws materials from
  fabrication (pull system).
• Containers of parts must never be removed from a
  storage area without a kanban being posted on the
  receiving post.
• 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.
• Only nondefective parts should be passed along.
• Total production should not exceed the total
  amount authorized on the kanbans in the system.

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The Single-Card Kanban System
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The Single-Card Kanban System
Storage area
Kanban card for product 1
Kanban card for product 2
Empty containers
Full containers
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The Single-Card Kanban System
Storage area
Kanban card for product 1
Kanban card for product 2
Empty containers
Full containers
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The Single-Card Kanban System
Storage area
Kanban card for product 1
Kanban card for product 2
Empty containers
Full containers
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The Single-Card Kanban System
Storage area
Kanban card for product 1
Kanban card for product 2
Empty containers
Full containers
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The Single-Card Kanban System
Storage area
Kanban card for product 1
Kanban card for product 2
Empty containers
Full containers
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The Single-Card Kanban System
Storage area
Kanban card for product 1
Kanban card for product 2
Empty containers
O2
Fabrication cell
O3
O1
Full containers
O2
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Dual Card Kanban System
Part Number 1234567Z Location Aisle 5 Bin
47 Lot Quantity 6 Supplier WS
83 Customer WS 116
KANBAN
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Determining the Number of Containers
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.
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Calculations for Example 9.1
Westerville Auto Parts
a. If each container contains 22 parts, how
many containers should be authorized?
k 10 containers
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Calculations for Example 9.1
Westerville Auto Parts
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?
Proposed change from 0.08
k 8 containers
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Application 9.1
Determining the Number of Containers for Item B52R
k 6.6 or 7 containers
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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.

Current state drawing
Future state drawing

• Value stream mapping (VSM) spans the entire
  value chain, from the firms receipt of raw
  materials to the delivery of finished goods to
  the customer.

Work plan implementation
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Selected Set of Value Stream Mapping Icons
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A Representative Current State Map for a Family
of Retainers at a Bearings Manufacturing Company
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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.

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Process ConsiderationsInventory 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.

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Comparison of JIT and Traditional
Factor Traditional JIT
Inventory Much to offset forecast errors, late deliveries Minimal necessary to operate
Deliveries Few, large Many, small
Lot sizes Large Small
Setup runs Few, long runs Many, short runs
Vendors Long-term relationships are unusual Partners
Workers Necessary to do the work Assets
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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

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Obstacles to Conversion

• Management may not be committed
• Workers/management may not be cooperative
• Suppliers may resist
• Why?

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JIT II(1/3)

• Implemented by Bose, IBM, Intel, ATT,
• 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.

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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.

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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

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JIT II(3/3)

• Benefits to the suppliers
• The supplier can communicate with and sell
  directly to engineering
• Invoicing and payment administration are
  efficient

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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

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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

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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