BIZ2121 Production & Operations Management

Lean Systems

Sung Joo Bae, Associate Professor

Yonsei University School of Business

Lean Systems Lean systems: Operations systems that

maximizes the value added by each of a company’s activities by removing waste and delays from them.

Lean systems affect a firm’s internal linkages between its core and supporting processes and its external linkages with its customers and suppliers.

The key to this approach is the understanding that excess capacity or inventory hides process problems.

One of the most popular systems that incorporate the generic elements of lean systems is the Just-In-Time (JIT) system.

JIT (Just-in-time) philosophy

Eliminate waste by cutting excess

capacity (or inventory) and removing

non-value-added activities

Significant part of the JIT is about the

supplier relationship with respect to the

parts inventory control

Eight Wastes TABLE 8.1 | THE EIGHT TYPES OF WASTE OR MUDA(無駄)

Waste Definition

1. Overproduction Manufacturing an item before it is needed.

2. Inappropriate Processing

Using expensive high precision equipment when simpler machines would suffice.

3. Waiting Wasteful time incurred when product is not being moved or processed.

4. Transportation Excessive movement and material handling of product between processes.

5. Motion Unnecessary effort related to the ergonomics of bending, stretching, reaching, lifting, and walking.

1. Inventory Excess inventory hides problems on the shop floor, consumes space, increases lead times, and inhibits communication.

1. Defects Quality defects result in rework and scrap, and add wasteful costs to the system in the form of lost capacity, rescheduling effort, increased inspection, and loss of customer good will.

1. Underutilization of Employees

Failure of the firm to learn from and capitalize on its employees’ knowledge and creativity impedes long term efforts to eliminate waste.

Continuous Improvement with Lean Systems

Improving work processes

Additional training

Higher quality suppliers

Revising firm’s master production schedule

Improving the flexibility of workforces

Supply Chain Considerations

Close supplier ties

◦ Low levels of capacity slack or inventory

◦ Look for ways to improve efficiency and reduce inventories

throughout the supply chain

◦ JIT II

Originated by Bose Corporation

In-plant representative – purchase orders, design ideas, involvement in the

production scheduling

Benefits to both buyers and suppliers

Supply Chain Considerations

Small lot sizes Lot: a quantity of items that are processed together

Reduces the average level of inventory

Pass through system faster

Uniform workload and prevents overproduction – makes scheduling more efficient

Increases setup (changeover) frequency

Honda’s change of dies: 3-4 hours work in 8 min

Conveyors for die storage, moving dies with cranes, simplifying dies, computers to position work, preparing for changeover while operating with the previous one

http://www.youtube.com/watch?v=AkG6JCfE26c

Process Considerations Pull method of work flow ◦ Push method:

Long lead time

Reasonably accurate demand forecast

Variety of products that require common processes

Customers that needs to be served as fast as possible

◦ Pull method Used when meeting customer’s demand within an

acceptable amount of time is okay

Important to notice that pull method is integral part of the lean systems (Push method for producing parts and pull method for assemble-to-order)

Process Considerations Quality at the source: Defects are caught and corrected where

they are created

Jidoka (自働化):

Automatically stopping the process when something is wrong and then fixing the problems on the line itself as they occur

Often uses Visual Management System for graphically representing status of safety, quality, delivery and cost performance

Problem-solving can be delayed and have significant effects unless they are solved when they arise.

Andon:

System to signal any abnormal condition (tool malfunction, shortage of parts, products out of design specifications)

Audio alarms, blinking lights, LCD display

Huge responsibilities for employees: detecting and correcting problems at the point of happening

Poka-yoke (Fool-proof):

The goal is to minimize human errors.

Making different parts of the modular product in such a way that allows them to be assembled in only one way

Toyota’s vehicle with RFID chips to make sure all the parts are assembled before moving forward on the line

Process Considerations

Uniform workstation loads: The goal is to maximize the utilization of workforces

Takt time

The cycle time needed to match the rate of production to the rate of sales or consumption.

If Toyota’s daily production should be 450 vehicles per shift (8 hours) in order to meet the demand, then the takt time is 1.067 min (64 sec)

Big-lot production: 200 Camrys, 150 Avalons, and 100 Solaras in each shift

Heijunka(平準化: Leveling)

The leveling of production load by both volume and product mix

Leveled mixed-model assembly: C-C-C-C-A-A-A-S-S with 50 cycles of 9.60 min

Lot size of one: C-S-C-C-A-C-A-C-S-A with a steady rate of component requirements

Setup time should be brief.

Process Considerations

Standardized components and work methods

◦ Observation, documenting, redesign of the product/service

Flexible workforce

◦ Trained to do more than one job

◦ Easy to cope with the variability in demand

◦ Relieve boredom and refreshes workers

◦ Temporary efficiency reduction might happen

Automation

◦ Not always the best answer

Five S (5S) practices

Five S Method

TABLE 8.2 | 5S DEFINED

5S Term 5S Defined

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 are 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.

A method for organizing, cleaning, developing and sustaining a productive work

environment

Designing Lean System Layouts

Line flows recommended

◦ Eliminate waste

One worker, multiple machines (OWMM)

- Reduces inventory by reducing the queues waiting for transportation to the next step

- Reduces labor requirement by putting more automation

OWMM Cell

Figure 8.2 – One-Worker, Multiple-Machines (OWMM) Cell

Designing Lean System Layouts

Group technology

Group parts or products with similar characteristics (size, shape, demand, manufacturing or routing requirement) into families

Set aside groups of machines for production

Minimize the setup time

Group Technology

Drilling

D D

D D

Grinding

G G

G G

G G

Milling

M M

M M

M M

Assembly

A A

A A

Lathing

Receiving and

shipping

L

L L

L L

L L

L

(a) Jumbled flows in a job shop without GT cells

Figure 8.3 – Process Flows Before and After the Use of GT Cells

Group Technology

(b) Line flows in a job shop with three GT cells

Cell 3

L M G G

Cell 1 Cell 2

Assembly

area

A A

L M D L

L M Shipping

D

Receiving

G

Figure 8.3 – Process Flows Before and After the Use of GT Cells

Value Stream Mapping (VSM)

Value stream mapping is a

qualitative lean tool for

eliminating waste

Creates a visual “map” of

every process involved in

the flow of materials and

information in a product’s

value chain

Work plan and

implementation

Future state

drawing

Current state

drawing

Product

family

Figure 8.6 – Value Stream Mapping Steps

Value Stream Mapping

Figure 8.7 – Selected Set of Value Stream Mapping Icons

Value Stream Mapping

Figure 8.8 – A Representative Current State Map for a Family of Retainers at a Bearings Manufacturing Company

House of Toyota

A key challenge is to bring underlying philosophy of lean to employees in an easy-to-understand fashion

The house conveys stability

The roof represents the primary goals of high quality, low cost, waste elimination, and short lead-times

The twin pillars, which supports the roof, represents JIT and jidoka

Highest quality, lowest cost, shortest lead time by eliminating wasted

time and activity

Just in Time (JIT)

Takt time

One-piece flow

Pull system

Culture of Continuous

Improvement

Jidoka

Manual or automatic line stop

Separate operator and machine activities

Error-proofing

Visual control

Operational Stability

Heijunka Standard Work TPM Supply Chain

Operational Benefits and

Implementation Issues Organizational considerations

◦ Human costs of lean systems

◦ Cooperation and trust between middle managers and line workers Shared responsibilities in scheduling, expediting, and improving productivity

◦ Reward systems and labor classifications

Process considerations: rearranging processes and the layouts

Inventory and scheduling

Schedule stability

Setups: the shorter, the better

Purchasing and logistics: frequent and reliable suppliers are the keys

The Kanban System A Japanese word for “card” or “visible

record”

Used to control the flow of production:

◦ order quantity and inventory level is automatically controlled in this system

The Kanban System

KANBAN

Part Number: 1234567Z

Location: Aisle 5 Bin 47

Lot Quantity: 6

Supplier: WS 83

Customer: WS 116

The Kanban System of Toyota

Receiving post

Fabrication

cell O1

O2

O3

O2

Storage

area

Empty containers

Full containers

Assembly line 1

Assembly line 2

Figure 8.4 – Single-Card Kanban System

Withdrawl card for

product 1

The Kanban System

Storage

area

Empty containers

Full containers

Receiving post

Fabrication

cell O1

O2

O3

O2

Assembly line 1

Assembly line 2

Figure 8.4 – Single-Card Kanban System

Production order cards

Production order

card for product 1

The Kanban System of Toyota

Receiving post

Fabrication

cell O1

O2

O3

O2

Storage

area

Empty containers

Full containers

Assembly line 1

Assembly line 2

Figure 8.4 – Single-Card Kanban System

Withdrawl card for

product 1

The Kanban System 1. Each container must have a card

2. Assembly always withdraws from fabrication (pull system)

3. Containers cannot be moved without a kanban

4. Containers should contain the same number of parts (Standardized containers)

5. Only good parts are passed along

6. Production should not exceed authorization

Number of Containers

Decides the inventory level – two things considered

Number of units to be held by each container

Determines lot size

Number of containers that should be flowing between the user station and supplier station

Estimate the average lead time needed to produce a container of parts

Little’s law

Average work-in-process inventory equals the average demand rate multiplied by the average time a unit spends in the manufacturing process

Other Kanban Signals

Cards are not the only way to signal need

◦ Container system:

◦ Containerless system: Square

Solved Problem A company using a kanban system has an inefficient machine group. For

example, the daily demand for part L105A is 3,000 units. The average

waiting time for a container of parts is 0.8 day. The processing time for a

container of L105A is 0.2 day, and a container holds 270 units. Currently,

20 containers are used for this item.

a. What is the value of the policy variable, α?

b. What is the total planned inventory (work-in-process and finished goods) for item L105A?

c. Suppose that the policy variable, α, was 0. How many containers would be needed now? What is the effect of the policy variable in this example?

Solved Problem

SOLUTION

a. We use the equation for the number of containers and then solve

for α:

k = d (w + p )(1 + α)

c

so

α = 1.8 – 1 = 0.8

= 3,000(0.8 + 0.2)(1 + α)

270

(1 + α) = = 1.8 20(27)

3,000(0.8 + 0.2)

Solved Problem b. With 20 containers in the system and each container holding 270 units,

the total planned inventory is 20(270) = 5,400 units

c. If α = 0

k =

= 11.11, or 12 containers

3,000(0.8 + 0.2)(1 + 0)

270

The policy variable adjusts the number of containers. In this case, the difference is quite dramatic because w + p is fairly large and the number of units per container is small relative to daily demand.

End of Process Quality Session

Number of Containers

Formula for the number of containers

k = Average demand during lead time + Safety stock

Number of units per container

WIP = (average demand rate)(average time a container

spends in the manufacturing process) + safety stock

Number of Containers WIP = (average demand rate)

(average time a container spends in the manufacturing process)

+ safety stock

WIP = kc

kc = d (w + p )(1 + α)

k = d (w + p )(1 + α)

c

where

k = number of containers

c = number of units in each container

d =expected daily demand for the part (units per day)

w = average waiting time

p = average processing time

α = policy variable

Determining the Appropriate

Number of Containers EXAMPLE 8.1

EXAMPLE 8.1

Determining the Appropriate Number of Containers

Application 8.1 Item B52R has an average daily demand of 1000 units. The average waiting

time per container of parts (which holds 100 units) is 0.5 day. The

processing time per container is 0.1 day. If the policy variable is set at 10

percent, how many containers are required?

k = d (w + p )(1 + α)

c

= 6.6, or 7 containers

= 1,000(0.05 + 0.01)(1 + 0.1)

100