A Seminar on

LEAN PRODUCTION and INFORMATION TECHNOLOGY

SUBMITTED BY: A.

Sowmya 13HM06NITK

MBA 2013-15

ABSTRACT• Lean production or rather lean management, is an intellectual

approach consisting of a system of measures and methods

which when taken all together have the potential to bring about

a lean and therefore particularly competitive state in a company.

• The aim of lean production is to reduce the quantity of resources used.

• Lean production should mean less use of labor, materials, space and time.

• The main fields

product development,

the chain of supply,

shop floor management

after-sales service

Cont.…

• Four important topics studied are: the use of IT in

Lean reduction

Production logistics

Computer-aided production management systems

Advanced plant maintenance

• Companies using advanced ITs such as ERP are more successful with

lean practices

• E.g.. : standardization, levelled production, quick changeovers, and

customer relationship management.

INTRODUCTION• Corporate world has been facing a challenge because of globalisation, product

innovations and due to competition. Customers are increasingly expecting for

more variety and increased quality, delivery in shorter lead times and products at

a lower price.

• To survive in such situations companies have developed two popular strategies

Lean practices implementation Integration of information technology (IT).

• To meet the competition and to reduce cost companies have chosen Lean

manufacturing techniques which helped them to cut cycle time and increase

their competitive edge.

Cont.…

• Three factors driving the need for broader use of technology in Lean

manufacturing.

• Lean initiatives to increase and spit in cycles.

• The Toyota Production System assembly line manufacturing methodology,

developed in the 1950s, says the importance of "getting the right things to the

right place at the right time, the first time, while minimizing waste and being

open to change".

• To gain the market where competitors produce the same product only lean

practices are not enough to reduce the costs.

• In such a situation Information Technology in Lean production comes into

picture.

HISTORY• The industrialised countries faced a steady increase in demand. Many

production facilities had to be rebuilt and even lost the market.

• This modernisation and industrial rebuild had increased the demand but with the

scarce resources the competition was critical.

• Bullwhip, or Forrester effect :

The variability in demand increases through the supply chain.

• The main causes for this erratic behaviour is due to:

a time delay in the information feedback system

the use of incorrect inventory policies such as increasing safety stock as

demand increased

the use of statistical forecasting techniques which assumed that the historical

demand patterns would prevail in the near future.

• The development of computerised information systems reduced both the

required time and the costs of integrated control.

• Industry had a tendency to use the systems mainly for

administrative purposes such as ordering,

maintaining the bills of materials,

as well as recording price

lead time information.

tracking and tracing inventory.

Internal and External IT integration

• IT integration is categorised into two categories:

internal integration and

external integration

• Most discrete manufacturer’s implement their internal IT systems, such as

material requirements planning (MRP), first and then expand the scope of their

IT integration into the supply chain.

• If a firm does not have good between-firm IT(external) infrastructure in place it

cannot receive updated demand information, supplier information, and customer

information needed to support an effective within-firm IT (internal) system.

Internal IT integration

• Internal integration connects the different functions in a firm such as

manufacturing, purchasing, and materials management aimed at improving the

performance of cross-functional processes that make up the order- to- cash

process.

Eg. ERP

• Intra firm information systems enable manufacturers to offer a broader range of

products by shortening setup time, thus enabling small batch runs, both of which

result in reduced lead times.

External IT Integration

• External integration refers to information systems that connect a

firm with its suppliers and customers.

• IT integration with suppliers and customers lead to improved firm

performance.

• E.g.: Inter organizational information systems

• Insufficient data integration leads to delays, decreases in

communication, and greater distortion of meaning.

• Between-firm integration aids supply chain partners in reaching

joint decisions by facilitating information exchange, recollection,

and standardization.

IT Integration and Lean/JIT

• Increasing importance of supply chain considerations, contemporary lean/JIT

systems require not only local information from internal IT systems such MRP

and ERP but also need information from supply chain partners that is provided

through external IT integration.

• Internal IT systems such as advanced planning and scheduling can help

bottleneck/constraint removal and facilitate cycle-time reduction.

• External IT systems such as direct connections between suppliers and buyers

can help reduce production lot size, enhance pull-system effectiveness, and

facilitate agile manufacturing approaches.

• IT integration facilitate three lean practices:

The use of pull systems

With internal and external IT integration, pull systems can transmit the

order information through the entire supply chain and helps in reducing

customer lead time.

E.g. Dell pull production systems

Lot-size reduction practices, which in turn reduce lead time.

E.g.: Cisco

Between-firm IT systems such as online customer service and/or help desk

can get information from customers and provide customer information to

lean/JIT production systems which facilitates lean/JIT practices and reduces

customer lead time.

E.g.: Dell online customer service system

PULL & PUSH SYSTEMS

• A ‘pull’ system is known as one that explicitly limits the amount of work in

progress that can be in the system.

• A ‘push’ system, does not explicitly limit the amount of work that can be

released to the shop floor.

E.g.: The MRP system and cyclical planning systems.

• Make-to-stock or assemble-to-order companies face different problems to make-

to-order or engineer-to-order companies has had a large impact on the

development of new production control mechanisms for Lean production

systems.

• ‘Pull’ systems became particularly popular due to the increased application of

Lean Production, which aims to minimise waste.

• Pull systems attempt to reduce throughput time by limiting the amount of work-

in-progress on the shop floor.

• Work-in-progress has an important function in smoothing production output.

• If the WIP in the production system is located ineffectively output might be

reduced.

What is information waste?

• One of the foundations of lean thinking is being able to identify and eliminate

waste.

• In any kind of business venue -- wasteful behaviour gets in the way of

companies ability to deliver value to the customer.

• Unfortunately, in the last few years there has been so much emphasis on cutting

costs that many companies have been cutting not just fat, but also cutting

essential resources, weakening the capability of IT to serve the customer .

• Organizations can solve these problems by taking a systematic approach,

implementing a data governance program that includes a master data

management system to ensure data integrity.

Computer-aided production management systems

• CAPM systems are information systems that include: transaction processing,

maintaining, updating and making available specifications, instructions and production

records; management information used for decision making, particularly relating to the

allocation of resources and priorities; and automated decision making.

• CAPM modules include support for planning :

Master production scheduling

MRP

Capacity requirements planning (CRP)

• CAPM modules which support control

Inventory control

Shop floor control

Vendor measurement

MRP systems

• Material requirements planning (MRP)assume infinite capacity, fixed leads

lead-times and a predetermined product structure.

• MRP works best in stable environments in which the demand for products is

very predictable.

• When there is uncertainty MRP needs to frequently reschedule.

• To cope with these changes in demand additional subsystems such as purchasing

and feedback loops were incorporated.

• The combination of master production scheduling, material requirements

planning and capacity planning together with the potential to provide feedback

from the shop floor and vendor management systems was termed ‘closed loop’

MRP

• The enterprise resources planning is defined as ‘‘a framework for organising,

defining and standardising the business processes necessary to effectively plan

and control and organisation so that the organisation can use its internal

knowledge to seek competitive advantage’’.

• Companies are increasingly using off-the-shelf ERP solutions.

• ERP systems can dramatically reduce the amount of time required to obtain

information relating to products and processes. They can help increase the speed

and quality of management decisions, while reducing costs.

• Many lean companies now use ERP based approaches for communicating

demand through the supply chain to facilitate just-in-time delivery.

• E.g. : Nissan Motors

• Computer-aided production management and Lean are now

complementary technologies.

MAINTAINANCE

• There is an increasing demand to improve product quality at the same time as

simultaneously reducing costs.

• Lean Production is particularly sensitive to quality problems and strives to

minimise waste.

• Current maintenance practice is usually heavily supported by information

technology (IT).

• There are four approaches to organising the maintenance function:

TPM

a combination of techniques and improvement campaigns aim to

improve the Overall Equipment Effectiveness

• CBM

to detect initial failures long before their occurrence.

CBM is appropriate when:

(i) time directed preventive maintenance is not feasible (because failures

happen randomly and/or an in-service failure not acceptable)

(ii) a measurable parameter which correlates with the onset of failure can be

identified

(iii) it is possible to determine a threshold value for the parameter when action

is to be taken.

• RCM

a framework within which a maintenance system can be designed.

• Risk-based maintenance

A preventive maintenance activities may be considered to be ‘waste’ as they add

cost but do not necessarily add value.

• Additional use of IT in support of the maintenance function :

MMIS

to process maintenance work-orders efficiently.

• Decision support systems

• Performance monitoring and evaluation

SUMMARY

• The use of IT in production planning and control systems; computer-aided production

management systems and enterprise resource planning; and advanced plant

maintenance along with which how IT integration has helped in the lean reduction

techniques are discussed.

• Though the origin of the different areas is similar but their developments followed

different directions.

• the developments in ‘pull’ system design focuses upon adapting well-known ‘pull’

mechanisms to different situations. The differences between the three systems relate to

the characteristics of different production environments.

• The developments also place new demands on the type of IT support needed to

implement these systems.

• The combination of Lean Production with computerised methods provides an

effective way to manage the supply chain.