Lean Production

1
Lean Production
Operations Management

• Ron Lembke

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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, Chairman, Toyota Motor Co.,
  1992-99
• If you put your mind to it, you can squeeze water
  from a dry towel.
• -- Eiji Toyoda, President 1967-1982

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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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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

1. Focused Factories
2. Group Technology
3. Quality at the Source
4. JIT production
5. Uniform Plant Loading
6. Kanban production control system
7. Minimized setup times

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1. Focused Factories

• Small, specialized plants
• No huge, vertically integrated plants
• Small plants easier, cheaper to build
• Tom Peters, The Pursuit of Wow.
• Group size of 150
• Know everyone else in the group

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2. Group Technology

• Products grouped into families
• 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

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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
• Cant afford high defect rates
• Since low WIP, get quick feedback on errors

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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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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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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

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5. Uniform Plant Loading (heijunka)

• Any changes to final assembly are magnified
  throughout production process
• Sequencing
• If mix is 50 A, 25 B, 25 C, produce
• A-B-A-C-A-B-A-C

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Takt Time

• Takt time
• Beat or cycle
• Master production schedule 10,000 /mo.
• 500 day, 250 a shift
• 480 minutes means 1 every 1.92 minutes

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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.

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6. Kanban
Flow of work
3
2
1

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

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6. Kanban
Flow of work
2
1
3

• When 3 finishes a part,
• Finished parts move over one spot
• He has to have a yellow square tag to put on,
• He gets a part from 2s outbound pile,
• And gives the brown triangle back to 2

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6. Kanban Pull Production
Flow of work
2
1
3

• When 3 finishes a part,
• Finished parts move over one spot
• He has to have a yellow square tag available to
  put on,
• He gets a part from 2s outbound pile,
• And gives the brown triangle back to 2
• 3s production will be taken by 4, offstage
  right.
• Tag goes back into 3s bin
• End customers pull products through the factory

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6. Kanban Blocking
2
3

• Worker 3 finishes his part next.
• But customers havent freed up any of the yellow
  square kanbans, so there is nothing for 3 to work
  on now.
• 3 could maintain his machine, or see anyone needs
  help

2
3
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How is this Different?

• Processes can become idled (blocked) or starved
• Starved authorization (kanban card) but no
  material to work on
• Blocked material to work on, but no
  authorization
• 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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7. Setup Reduction

• Cant afford to do huge runs
• Have to produce in small batches
• Toyota Die Change 3 hours down to 3
• SMED Single Minute Exchange of Dies
• under ten minutes
• Techniques
• Make internal setups into External
• Eliminate Adjustments
• Eliminate the Setup
• Continuous Process Improvement, anyone?

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Lexus -- the early years

• First two Toyotas imported to U.S. 1957
• Toyopet Crowns

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Eiji Toyodas Ambitious Plans

• Post-WWII Japanese industry in ruins
• Early 1950s toured Rouge plant
• 2,500 cars in 13 years. Ford 8,000 per day
• Catch up to Americans in 4 years!
• Toyoda made delivery trucks and motorcycles, and
  not many of either

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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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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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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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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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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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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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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 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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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