11 lean systems

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What are Lean Systems?

Lean Systems are processeswhere value added ismaximizedat each operation by minimizing resources,and eliminating waste and inefficiencies.

Categories of Waste: Overproduction: Manufacturing an item before it is needed.

Inappropriate Processing: Using a diamond cutter to cut paper.

Idleness: Delays, waiting, line imbalances, inefficiency

Excessive orunnecessary material movement and handling. Motion: Unnecessary effort/movement by workers.

Inventory: Excessive, unnecessary inventory increases costs.

Defects: Rework and scrap add costs (lost capacity, increasedinspections, rescheduling efforts, loss of customer good will.

Improper Utilization or Underutilization of Employees


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Toyotas Lean Systems

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Toyotas Production System

Toyotas Production System is one of the most admired lean

manufacturing systems in existence.

They have a culture of TQM and continuous improvement.

Employees are encouraged to experiment to find better ways to do theirjobs.

Work is completely specified as to content, sequence, timing, and

outcome.

Services and goods do not flow to the next available person or machine,but to a specific person or machine. (Volkswagen also does this.)

Employees who are actually doing the work are actively involved

in making improvements.


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Characteristics of

Lean Systems

Minimizes costs and waste

Minimizes Inventory

Uses the Pull Methodof production rather than the

traditional push method. Small lot sizesand Short set-up times

TQMprinciples of high quality and continuous improvement.

Line Balancing

Standardizationof work methods and parts Flexible work force

Automation

Small capacity cushions

Close ties and goodsupplier relationships


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Are There Different Types?

Yes, but basically they all strive to achieve

the same principles.

Different Companies use different names.

Stockless Production (HP)

Material as Needed (Harley Davidson)

Continuous Flow Manufacturing (IBM)

Zero Inventory

Just-In-Time production (Generic Lean System)


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PUSH SYSTEMSThe Traditional, but Inefficient production method

Raw materials and parts are planned, scheduled

and acquired prior to production.

Example: A buffet where food is prepared in advance.

Materials and parts are pushed into the

production operation before it starts.

All materials needed for a production run are gathered.

This creates excessive and unnecessary

inventory (raw materials and work-in-process)

Thus it increases inventory costs.



Lean systems are pull systems. Partsand materials are requested anddelivered as they are needed.

Example: A restaurant where food is onlyprepared when orders are placed.

Materials & parts are pulledinto theproduction operation as needed. They arrive Just In Timeto be used in the

production process, as illustrated in the Fordplant video.

PULL SYSTEMSThe Preferred Way To Produce


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JUST-IN-TIME SYSTEMS

This is the generic term forLean Systems.

Utilizes the Pull systems of production

Attempts to minimize inventory

Highly dependent on supply chain

efficiency. Suppliers must deliver what you need,

when you need it.

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JUST-IN-TIME SYSTEMS

Theory: Just enough of the materials needed for

an operation arrive when and where they are

needed,just in timeto be used. (Pull System) Result: Reduced inventory; especially work-in-

process inventory

EG: Video on the Volkswagen Factory in Dresden.

Goal: To smooth/lean the production process to

the point where only minimal inventory is

required.



A SUPPLY CHAIN EXAMPLE

In the past, businesses dealt with stocking grocerystore shelves or restaurants by maintaining a largeinventory of all goods to guarantee a supplyshortage would not occur. They stored these products in either warehouses, stores,

freezers, or on storeroom shelves.

However, this strategy has become too costly due tostronger competition that demands shorter productlife cycles.

Thus today, service-driven systems, which arepulled by customer demand, are making inventory-driven (push) systems obsolete.



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JIT EXAMPLES

Building A House?

Just-in-Time inventory would not work. It is not a

line flow.

Ford Plant in Brazil

Major suppliers produce and assemble the

components in the Ford plant as they are needed.

There is not an inventory of exhaust systems or

suspension systems waiting to be used.

Production lines (or service flows) strive to

minimize the inventory of parts and materials.



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Reducing Inventory

Inventory is expensive (Carrying costs)

So reducing it saves money

Inventory hides problems that createinefficiency and increase costs.

Capacity problems, late vendor deliveries,

imbalanced lines, equipment problems Reducing inventory makes problems

visible so they can be corrected.



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SMALL LOT SIZES

Lots or Lot Size refers to how many items arebeing made in any given production run.

Lines are set up for the production of a given lot size.

Theoretically, only one item at a time can be worked

on at any given work station.

A lot size greater than what can be immediately

worked on creates inventory. Lot sizes greater than what can be worked on results in

excess inventory sitting around waiting to be worked on.



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SMALL LOT SIZES

The theoretical-ideal lot size is one.

But, no firm can have a lot size of one and zero

inventory. You will always have some inventory being

worked on. (Work-In-Process Inventory)

The ideal lot size is generally more than one.

The Cost of inefficiency in making just oneitem overtakes the cost savings fromhaving low inventory.



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SET-UPS

Set-Up Costs are the costs of changing a

production line from making one type of product to

making a different product. Changing machine programming, dies, and

generally getting the production line reconfigured.

Set-Up Timerefers to the time it takes to changethe line for the next production run.

Reducing the set-up time saves money by reducing

the time the line is idle.



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Reducing Set-Up Time and Cost

J.I.T. requires low set-up costs and times.

Short Set-up Times

Small lot sizes require more frequent set-ups If you have to do 20 set-ups a day, you must be able to

do them quickly and cheaply to reduce the idleness.

The Japanese goal for set-up time is called Single-

Digit Set-up. (Set-up times of less than 10minutes.)

The longer the set-up time, the fewer setups you

want, and the more inventory you need for each.


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RELIABLE VENDORS &RELIABLE EQUIPMENT

Vendorsmust be located close to theplant in order to have a lean system.

Enables frequent deliveries of small quantities.

Inventories of a few hours are not unusual.

Reliable production equipmentis

needed. Equipment failure halts production.

Lean systems dont provide extra inventory, so

there is no buffer for operating work stations.


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Steady Demandand Worker Empowerment

Steady & Predictable Demand is necessary. J.I.T. and small lot sizes require stable production schedules.

If demand is uncertain or variable, it usually requires higher capacity

cushions (inventory) and defeats the purpose of J.I.T.

Expanded worker and supervisor involvement Responsibility for the coordination and scheduling of material flows

shifts downward to workers and supervisors.

Small inventory buffers dont allow time for staff and uppermanagement to get involved.

Material or parts shortages on the line have a highly detrimental

impact on production.

Worker empowerment is needed for fast, on the spot, decision

making.


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TQM promotes consistently high quality and

continuous improvement efforts.

Product defects can stop a production line orprocess that uses a Lean Systems approach.

Workers are the quality control inspectors.

Thus quality is controlled at the source (TQM) by the

people on the line.

This minimizes scrap and rework, thus reducing work-

in-process inventory and increasing output rate.

TQM is Necessary


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Small lot sizes require frequent, reliable deliveriesby localsuppliers.

Honda has as many as 50 deliveries a day.

If suppliers are not reliable, you cannot have JIT.

Close suppliers and frequent deliveries reduce theneed for safety stock and thus lower inventory costs.

Firms converting to leans systems generally make adrastic reduction in the number of suppliers.

A Cooperative Approach with suppliers is essential toensure reliable, on-time deliveries and consistent quality.

Close, Reliable Suppliers andGood Supplier Relationships


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Line Balancingand Capacity Planningatworkstationsare critical.

Imbalanced lines create excess work-in-process

inventory, longer cycle times (production times),

and balance delays (idleness).

Lines must be balanced (equal capacities ateach work station).

Bottlenecksmust be eliminated.

Line Balancing andCapacity planning


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Automation of line flows is a key component oflean systems for both services and products.

Flexible Flows rarely can have lean systems. They have lower utilization and jumbled work flows.

Automation is important in order to lower the cost-per-unit for production.

enable line balancing.

facilitate higher levels of output.

Preventative maintenance is essential. Equipment breakdowns stop the line because, in a

pull system, work stations are no longer buffered by

work-in-process inventory.

Automation & Reliability


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Continuous Improvement

One of the philosophies behind Lean Systems is to

uncover problems, learn from them, & solve them.

It is a continual process

No production operation has lot sizes of one and/or

zero set-up times.

These are goals to continually strive for, but are

impossible to economically achieve.

The result, however, is a focus on continual

improvement.


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Lean Systems at New Balance(NB) Athletic Shoe Company

The Lawrence, Kansas plant makes footwear styles exclusive to theNorth American market. Most new designs are first made at Lawrenceand then transferred out to other NB American plants, all of whichfollow the same production methods.

NB moved away from the shoe industrys traditional batch and queuemethod (push system) towards a pull systemwith small-lot sizes

Empowerment: Operators never pass on a defective unit, and theyalways check the prior operators work as well as their own. (TQM)

When deciding how many shoes of each style to schedule, NB thinks

of sales ordersrather than production orders. Instead of pushingshoes to the market, NB uses more of a pull

strategy. Productionschedules are driven by market demand.

NBs work flow is uniform, and it fosters teamwork and a culture ofcontinuous improvement.


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Kanbanis the Japanese word used in connection withjust-in-time' manufacturing. A kanban is a signboard orplacard used as a signal for more material.

A J.I.T. system used by Toyota A Two-Card, Visually-Coordinated J.I.T. system.

Withdrawal cards (Kanbans) are used by thefinal assembly workers

Specifies how much material & parts are needed toproduce the current lot.

Production-Order cards are used to supplyparts & material to the assembly workers.

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KANBAN


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BicycleFabrication Area

Supply/Storage

Area

Bicycle

Assembly Area Receiver

Post

Production

order Post

P.O.

P.O.

P.O.

W.C.

KANBAN EXAMPLE


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Receiver

Post

Production

order Post

W.C.

1. An assembly worker gets a Withdrawal Kanban from

the receiver post that tells how many of each item to

withdraw from Supply/Storage.


Supply/Storage

Area

Bicycle

Assembly Area


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Receiver

Post

Production

order Post

P.O.W.C.

2. The assembly worker goes to the supply point and

gets a cart with all the items specified on the

withdrawal card.


Supply/Storage

Area

Bicycle

Assembly Area


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Receiver

Post

Production

order Post

P.O.

3. There is a Production Order card on the cart that the

assembly worker removes and places on the receiver

post where someone from fabrication will get it.

W.C.


Supply/Storage

Area

Bicycle

Assembly Area


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Receiver

Post

Production

order Post

P.O.

4. The assembly worker places the withdrawal kanban

on the full cart and takes it back to the assembly

area to assemble.

W.C.


Supply/Storage

Area

Bicycle

Assembly Area


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Receiver

Post

Production

order Post

P.O.

5. Someone periodically removes the production order

kanbans from the receiver post, reviews and sorts them for

priority, and places them on the production-order post.

P.O.


Supply/Storage

Area

Bicycle

Assembly Area


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Receiver

Post

Production

order Post

6. A fabrication worker comes to the Production-Order

Post and gets a production-order kanban and an

empty cart.

P.O.


Supply/Storage

Area

Bicycle

Assembly Area


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Receiver

Post

Production

order Post

P.O.

7. Fabrication produces the items specified on the

Production-Order Kanban delivers them to the

supply/storage area.


Supply/Storage

Area

Bicycle

Assembly Area


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Receiver

Post

Production

order Post

P.O.

P.O.

P.O.

W.C.

KANBAN SEQUENCE

W.C.

W.C.

P.O.


Supply/Storage

Area

Bicycle

Assembly Area


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KANBAN USE

The Kanban system works well in

repetitive production environments(Line

flows/product focused) If you are able to achieve small lot sizes

and short set-up times, and

If your suppliers are close by and canmake frequent deliveries using a just-in-

time system.


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J I T II

Improves on the JIT concept of having close

suppliers.

Supplier reps become full-time, on-siterepresentatives in your production facility

Your supplier is in-house at their expense.

Suppliers rep issues purchase orders for you as needed.

Streamlines the purchasing process

Ford took this one step further by having some

of their supplier production lines in the Ford plant.


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Organizational Considerations

The human costs:

Lean-system implementation requires a high degree ofregimentation, and sometimes it can stress the workforce.

Increased Employee Cooperation, Trust andResponsibility (Worker empowerment)

Workers and first-line supervisors must take on responsibilities

formerly assigned to middle managers and support staff, and

thus need training.

Reward systems and labor classifications must oftenbe revamped when a lean system is implemented.

Process layouts may need to be changed.


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Inventory & Scheduling

Production Schedule Stability: Productionschedules must be stable for high-volume, make-to-stock environments.

Thus stable supply and demand is important.

Set-ups: If the inventory advantages of a leansystem are to be realized, small lot sizes must beused, and short set-up times are essential.

Purchasing and Logistics: Iffrequent, smallshipments of purchased items cannot be providedby suppliers, then inventory costs go up as moreinventory is needed and is sitting idle.


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SUMMARY

In order to have a lean system you need:

A cooperative relationshipwith close supplierswho

make frequent small deliveries

A pull system of productionthat emphasizes

automation, standardization, TQM, balanced lines,

small lot sizes and short set-up times.

Steady and predictable demand. Job enrichmentand empowerment for line workers.

A culture of learningandcontinual improvement

11 lean systems

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