Core Principles of Lean Operations BA 341 Lean Operations Dr Bogdan Bichescu 1 Starting with a bit of history In 1955 Japan produced less than 70 000 vehicles U S made 9 2 million that year In 1980 Japan s production exceeded 11 millions while U S achieved just over 8 million Toyota is today the largest car manufacturer selling 9 million Starting with a bit of history The Toyota Production System TPS was inspired by Henry Ford s assembly line Henry Ford s system created flow from ore to final product One company One location One product Long life cycles Unlimited demand Starting with a bit of history In the 1920 s General Motors replace Ford as the worlds largest automobile manufacturer by giving the customer a choice Different product lines Chevrolet Pontiac Oldsmobile Buick and Cadillac Different colors body styles and options Yearly model changes How did GM accommodate this level of The cost of variety Think of how General Motor s differed from Ford in terms of Scheduling Factory Layout Organization Accounting Batch production sacrifices flow For example an aluminum cola can from ore to customer passes through eight firms fourteen storage points is picked up and put down 30 times 24 of raw material is scrapped somewhere along the way Next Step The Lean Enterprise Taiichi Ohno the father of TPS and lean production principles combined Ford s assembly line idea and supermarket operations The goal is to eliminate waste muda and to produce only what s needed on any given day rather than in anticipation of demand Produce the right part in the right place at the right time in other words What is Lean Production 7 What is Lean Production A set of integrated activities designed to Achieve high volume production while Minimizing waste in the production process e g Reduce inventories of raw materials WIP and finished products overproduction Reduce defects and rework due to poor quality Reduce waiting due to resource or part unavailability Reduce unnecessary transportation and motion Reduce overprocessing work that doesn t add value Elements of Lean Production How much WIP should we have Inventory WIP hides problems Lower Levels of WIP Expose Problems Elements of Lean Production Emphasize JIT production Employ a Pull production system How are WIP and Throughput Time in a Pull system compared to a Push System Use one piece flow Move products one unit at a time if possible between workstations to improve throughput Requires constant effort to reduce setup times Process Performance Metrics Throughput Time THt or Turn Around Time TAT Total time required to complete one unit of a product or service Throughput Time Start Finish The longer an article is in the process of manufacture and the more it is moved about the greater its ultimate cost Henry Ford 1926 Shorter THt Less Cost More Profit Little s Law WIP THt x THr where WIP represents amount of work in process THt is the throughput time i e time in system THr is the throughput rate Defines the output rate that a process is expected to produce over a period of time units time Represents a measure of process capacity Equals the inverse of the process time of a station One Piece Flow Case 1 assume that parts are transferred 60 units at a time What is the average THt WIP 60 units Step 1 100 units hr WIP 60 units Step 2 100 units hr WIP 60 units Step 3 100 units hr Case 2 assume that parts are transferred 1 unit at a time What is the WIP 1 WIP 1 WIP 1 Step 1 Step 2 Step 3 average THt unit unit unit 100 units hr 100 units hr 100 units hr Elements of Lean Production Use Kanban Production Control Systems Once a kanban i e container is received the Machine Center produces a unit to replace the one pulled by the Assembly Line people Machine Center Storage Part A Storage Part A Assembly Line Material Flow The process begins by the Assembly Line people pulling Part A from Storage Card signal Flow Elements of Lean Production Determining the Number of Kanban cards containers needed each container represents the minimum production lot size and the number of such containers determines directly the amount of WIP in system K Expected demand during lead time Safety Stock Size of the container DL S C D average demand per period L lead time to replenish an order S safety stock expressed in days hours etc of demand C Container size A Kanban Example Hobbs Bakery makes cakes that are shipped to grocery stores The bakery wants to change to a kanban system Their data is as follows Daily demand 500 cakes Production lead time 2 days Safety stock 4 hours Workday length 8 hours Container size 250 cakes How many Kanban cards do they need 16 A Kanban Example Demand during Lead Time is Safety Stock is 500 cakes day 2 days 1 000 cakes Make sure that the time units match 4 hours of demand i e 500 cakes day 4hrs 8hrs day 500 cakes day 0 5 days 250 cakes again note that units must match Then the number of Kanban containers is 1 000 250 250 1 250 250 5 17 Another Kanban Example Arvin Automotive makes muffler assemblies composed of a muffler and a catalytic converter The former are made in batches of 10 and the production cell can manufacture a batch in about 4 hours The muffler assembly process averages about eight assemblies per hour Management carries a safety stock equivalent to 75 minutes of demand How many Kanban cards are needed to manage this process Elements of Lean Production Level Scheduling Heijunka Goal achieve a smooth stable production flow Why would this be desirable Idea process frequent small batches rather than a few large batches a k a mixed model jelly bean schedule Elements of Lean Production What does the current layout resemble Saw Saw Saw Grinder Grinder Heat Treat Lathe Lathe Lathe Press Press Press Elements of Lean Production JIT Layout Group technology Group similar products into families Group processes in work cells Grinder Saw Lathe 1 2 Lathe Press Lathe Press Heat Treat Grinder Saw Lathe A B Other Elements of Lean Production Quality at the source andon cord Upgrade housekeeping 5S Seiri Sorting Seiton Simplify Seiso Shine sweep Seiketsu Standardize Shitsuke Sustain self discipline Other Elements of Lean Production Respect for people Preventive maintenance Use clear standardized consistent task specs Value chain mapping Periodic inspection and repair Standard Work Cross functional teams Map processes and identify value added and non value added activities Continuous improvement Kaizen Example of a Value Stream Map 24