Slide 1Starting with a bit of history…Starting with a bit of history…Starting with a bit of history…The cost of variety..Next Step: The Lean EnterpriseWhat is Lean Production?What is Lean Production?Elements of Lean ProductionElements of Lean ProductionProcess Performance MetricsLittle’s LawOne-Piece FlowElements of Lean ProductionElements of Lean ProductionA Kanban ExampleA Kanban ExampleAnother Kanban ExampleElements of Lean ProductionElements of Lean ProductionElements of Lean ProductionOther Elements of Lean ProductionOther Elements of Lean ProductionExample of a Value-Stream Map1BA 341 – Lean OperationsDr. Bogdan BichescuCore Principles of Lean OperationsStarting with a bit of history…In 1955 Japan produced less than 70,000 vehicles, U.S. made 9.2 million that yearIn 1980 Japan’s production exceeded 11 millions, while U.S. achieved just over 8 millionToyota is today the largest car manufacturer, selling ~9 million vehicles, worth ~$245 billionStarting with a bit of history…The Toyota Production System (TPS) was inspired by Henry Ford’s assembly lineHenry Ford’s system created flow from ore to final product:One companyOne locationOne productLong life cyclesUnlimited demandStarting 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 CadillacDifferent colors, body styles and options Yearly model changesHow did GM accommodate this level of variety?The cost of variety..Think of how General Motor’s differed from Ford in terms of:SchedulingFactory LayoutOrganizationAccountingBatch 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 times24% of raw material is scrapped somewhere along the wayrequires 319 days to do 3 hours of workNext Step: The Lean Enterprise Taiichi Ohno, the father of TPS and lean production principles, combined Ford’s assembly line idea and supermarket operationsThe 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, “just in time” - JIT)What is Lean Production?7What is Lean Production?A set of integrated activities designed toAchieve high-volume production, whileMinimizing waste in the production process, e.g.,Reduce inventories of raw materials, WIP and finished products (overproduction)Reduce defects and rework due to poor qualityReduce waiting due to resource or part unavailabilityReduce unnecessary transportation and motionReduce overprocessing – work that doesn’t add valueElements of Lean ProductionHow much WIP should we have?Inventory (WIP) hides problemsLower Levels of (WIP) Expose ProblemsElements of Lean ProductionEmphasize JIT productionEmploy a Pull production systemHow 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 throughputRequires constant effort to reduce setup timesProcess Performance MetricsThroughput Time (THt) or Turn Around Time (TAT)Total time required to complete one unit of a product or service“The longer an article is in the process of manufacture and the more it is moved about, the greater its ultimate cost.” Henry Ford, 1926Shorter THt Less Cost More ProfitFinishStartThroughput TimeLittle’s LawWIP = THt x THr, whereWIP – represents amount of work in processTHt – 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 capacityEquals the inverse of the process time of a stationOne-Piece FlowCase 1 – assume that parts are transferred 60 units at a time. What is the average THt?Case 2 – assume that parts are transferred 1 unit at a time. What is the average THt?WIP = 60 unitsStep 1100 units/hrWIP = 60 unitsStep 2100 units/hrWIP = 60 unitsStep 3100 units/hrWIP = 1 unitStep 1100 units/hrWIP = 1 unitStep 2100 units/hrWIP = 1 unitStep 3100 units/hrElements of Lean ProductionUse Kanban Production Control SystemsStorage Part AStorage Part AMachine CenterAssembly LineOnce a kanban (i.e., container) is received, the Machine Center produces a unit to replace the one pulled by the Assembly Line peopleMaterial FlowCard (signal) FlowThe process begins by the Assembly Line people pulling Part A from StorageElements of Lean ProductionDetermining the Number of Kanban cards (containers) neededeach container represents the minimum production lot size and the number of such containers determines directly the amount of WIP in systemK = (Expected demand during lead time + Safety Stock) / Size of the container = (DL+S)/CD = average demand per periodL = lead time to replenish an orderS = safety stock expressed in days (hours, etc.) of demandC = Container sizeA Kanban ExampleHobbs 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 cakesProduction lead time = 2 daysSafety stock = 4 hoursWorkday length = 8 hoursContainer size = 250 cakesHow many Kanban cards do they need? 16A Kanban ExampleDemand during Lead Time is:500 cakes/day * 2 days = 1,000 cakes Make sure that the time units match!Safety Stock is4 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 17Another Kanban ExampleArvin 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 demandHow many Kanban cards are needed to manage this process?Level Scheduling (Heijunka)Goal: achieve a smooth, stable
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