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Lean Production

Operations ManagementSession 6

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Objectives

By the end of this session, student will be able to:

• Discuss relative merits of different types of relationships with suppliers

• Discuss criteria for selection of suppliers

• Identify different purchasing strategies

• Evaluate different approaches to e-procurement

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Topics

• Make/Buy decision• Vertical integration• Purchasing strategies• Kieretsu• Supply chain partnerships• Virtual companies• Supplier selection• Purchasing techniques• E-procurement

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Lean Operations & JITLean Philosophy of Operations• Eliminate Waste• Involve Everyone• Continuous Improvement

JIT as a set of techniques for managing operations• Basic working practices• Design for manufacture• Operations focus• Small simple machines• Flow layout• TPM• Set-up reduction• Total people involvement• Visibility• JIT supply

JIT as a method of planning and control:-

• Pull scheduling• Kanban control• Levelled scheduling• Mixed modelling• Synchronisation

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Eliminate Waste

• Muda – anything that does not add value for the customer– Products in storage– Products being inspected– Products waiting in queues– Defective products– Unnecessary movement of materials or

workers

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Involve Everyone

• “High dependency” – JIT and TQM heighten the dependency of an organisation on its agencies – especially employees and suppliers

• “Respect for humans”– Team-based problem solving– Job enrichment– Job rotation– Multi-skilling

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Continuous Improvement - kaizen

• Generate sustained involvement in CI• Ability to link CI activities to the strategic

goals of the company• Move CI activity across organisational

boundaries• Manage strategically the development of

CI• Articulate and demonstrate CI’s values• Ability to learn through CI activity

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Basic Working Practices• Discipline - standards of quality and safety• Flexibility – removal of grading structures and

restrictive practices• Equality – fair and egalitarian personnel policies• Autonomy – delegate responsibility• Development of personnel - training• Quality of working life – security of employment,

involvement in decision making• Creativity – improving the job• Total people involvement – selecting new recruits,

dealing directly with suppliers and customers, planning and reviewing

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Design for Manufacture• If a product is easy to make it will be economical

to produce• Consider the manufacturability early in the

design phase• Integrate product design with process planning

and design• Fewer components• Use of sub-assemblies• Better use of materials• Improvement of processing techniques

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Operations Focus

• “Simplicity, repetition and experience breed competence”

• Focus each process on a limited set of products, technologies and markets

• Structure operations objectives so that they are focused and coherent

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Small Simple Machines

• Several small machines can perform different processes simultaneously

• If one large machine breaks down the process stops completely

• Small machines can be moved easily

• Lower risk investment decision

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Layout for Smooth FlowProcess Layout Work Cell

1

1

2

3

45

2

6

LATHE

LATHE

LATHE LATHE

SAW

SAW

SAW

PRESS

PRESS

PRESS

GRINDER

GRINDER

GRINDER

HEATTREAT

HEATTREAT

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Total Productive Maintenance (TPM)

Five Goals: -1. Improve equipment effectiveness – examine

faults to see if equipment can be used more effectively

2. Achieve autonomous maintenance – operators take part in maintenance leaving engineers to improve systems

3. Plan maintenance – fully worked out approach

4. Train all staff in relevant maintenance skills – appropriate and continuous training

5. Achieve early equipment management – ‘maintenance prevention’ at design and installation stage

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Set-up Reduction

• The time taken to change over the process from one activity to the next.

• eg. pre-set tools so that a complete unit is fixed to the machine instead of having to be built up while the machine is stopped

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Steps to Reduce Setup Time

Initial Setup Time

Separate setup into preparation, and actual setup, doing as much as possible while the machine/process is running

(save 30 minutes)

Move material closer and improve material handling (save 20 minutes)

Standardize and improve tooling (save 15

minutes)

90 min

60 min

45 min

25 min

15 min

Use one-touch system to eliminate adjustments (save 10

minutes)Training operators and

standardizing work procedures (save 2 minutes)

Step 1

Step 2

Step 3

Step 4Step 5 13 min

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Visibility

• Performance measures are clearly displayed

• Coloured lights indicate stoppages – Andon

• SPC control charts regularly updated and clearly displayed

• Visual control systems – kanbans

• Workplace layouts clear and open plan

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• Incoming material and finished goods involve waste

• Buyer and supplier form JIT partnerships

• JIT partnerships eliminate– Unnecessary activities– In-plant inventory– In-transit inventory– Poor suppliers

JIT Suppliers

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Kanban Control

• Japanese word for card– Pronounced ‘kahn-bahn’ (not ‘can-ban’)

• Authorizes production from downstream operations– ‘Pulls’ material through plant

• May be a card, flag, verbal signal etc.• Used often with fixed-size containers

– Add or remove containers to change production rate

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Case Study

• Toyota Production System

• From Operations Management 4th ed., Slack et al

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Levelled Scheduling

Heijunka

Production needed in 20 day period:

• Product A = 3000• Product B = 1000• Product C = 1000

Current batch sizes:• Product A = 600• Product B = 200• Product C = 200

By reducing set up times can produce batch sizes small enough for 1 day:

• Product A = 150• Product B = 50• Product C = 50

Considerably reduces inventory and makes the process more responsive

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Labor Specialization

• Involves• Breaking jobs into small component parts • Assigning specialists to do each part

• First noted by Adam Smith (1876)• Observed how workers in pin factory

divided tasks into smaller components• Found in manufacturing &

service industries

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• Greater dexterity & faster learning

• Less lost time changing jobs or tools

• Use more specialized tools

• Pay only for needed skills

Labour Specialisation Often Reduces Cost

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Job Expansion

• Process of adding more variety to jobs

• Intended to reduce boredom associated with labor specialization

• Methods– Job enlargement– Job enrichment– Job rotation– Employee empowerment

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Job Expansion/Enrichment

Present Job

Control

Planning

Enriched Job

Task #3Task #2

Enlarged Job

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• Higher capital cost

• Workers’ preferences– Example: Some people prefer simple jobs

• Higher wages required

• Smaller labour pool

• Increased accident rates

• Lack of technology

Job Expansion Constraints

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Employee Empowerment

Employee Empowerment

ControlControl

Decision-MakingDecision-Making

PlanningPlanning

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Job Design Continuum

Specialization

Enlargement

Enrichment

Empowerment

Self-directed Teams

Increasing reliance on employees contribution and increasing acceptance of responsibility by employee

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• Higher capital cost• Many individuals prefer simple jobs• Higher wages are required since the worker

must utilize a higher level of skill• A smaller labor pool exists of persons able and

willing to perform enriched or enlarged jobs• Increased accident rates may occur• Current technology in some industries does not

lend itself to job enlargement and enrichment

Limitations toJob Enlargement/Job Enrichment

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Case Study

• Create a schedule for a motor race pit stop