Production/Operations Management

1. Lean Manufacturing and Quality Processes Production/Operations Management Dr. Eliot Elfner St. Norbert College Spring 2009

2. TOPICS • Discussion of topics • Lean Manufacturing • Quality Processes

3. Lean Production • Lean Production can be defined as an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods) • Lean Production also involves the elimination of waste in production effort • Lean Production also involves the timing of production resources (i.e., parts arrive at the next workstation “just in time”)

4. The Toyota Production System • Based on two philosophies: • 1. Elimination of waste • 2. Respect for people

5. Elimination of Waste • Focused factory networks • Group technology • Quality at the source • JIT production • Uniform plant loading • Kanban production control system • Minimized setup times

6. These are small specialized plants that limit the range of products produced (sometimes only one type of product for an entire facility) Minimizing Waste: Focused Factory Networks Some plants in Japan have as few as 30 and as many as 1000 employees Coordination System Integration

7. Minimizing Waste:Group Technology (Part 1) Saw Saw Saw Grinder Grinder Heat Treat Lathe Lathe Lathe Press Press Press Note how the flow lines are going back and forth • Using Departmental Specialization for plant layout can cause a lot of unnecessary material movement

8. Minimizing Waste: Group Technology (Part 2) Grinder 1 2 Lathe Press Saw Lathe Heat Treat Grinder Press Lathe A B Saw Lathe • Revising by using Group Technology Cells can reduce movement and improve product flow

9. Minimizing Waste: Uniform Plant Loading (heijunka) Suppose we operate a production plant that produces a single product. The schedule of production for this product could be accomplished using either of the two plant loading schedules below. Not uniform Jan. Units Feb. Units Mar. Units Total 1,200 3,500 4,300 9,000 Uniform Jan. Units Feb. Units Mar. Units Total 3,000 3,000 3,000 9,000 How does the uniform loading help save labor costs?

10. Minimizing Waste: Inventory Hides Problems Example: By identifying defective items from a vendor early in the production process the downstream work is saved Machine downtime Scrap Vendor Change delinquencies Work in orders process queues Engineering design Design (banks) redundancies backlogs Example: By identifying defective work by employees upstream, the downstream work is saved Decision Paperwork Inspection backlogs backlog backlogs

11. Minimizing Waste: Kanban Production Control Systems Once the Production kanban is received, the Machine Center produces a unit to replace the one taken by the Assembly Line people in the first place This puts the system back were it was before the item was pulled Withdrawal kanban Storage Part A Storage Part A Machine Center Assembly Line Production kanban Material Flow Card (signal) Flow The process begins by the Assembly Line people pulling Part A from Storage

12. Determining the Number of Kanbans Needed • Setting up a kanban system requires determining the number of kanbans cards (or containers) needed • Each container represents the minimum production lot size • An accurate estimate of the lead time required to produce a container is key to determining how many kanbans are required

13. The Number of Kanban Card Sets Expected Demand During Lead Time + Safety Stock k = Size of the Container • k = Number of kanban card sets (a set is a card) • D = Average number of units demanded over some time period • L = lead time to replenish an order (same units of time as demand) • S = Safety stock expressed as a percentage of demand during leadtime • C = Container size DL(1+S) k = C

14. Example of Kanban Card Determination: Problem Data • A switch assembly is assembled in batches of 4 units from an “upstream” assembly area and delivered in a special container to a “downstream” control-panel assembly operation • The control-panel assembly area requires 5 switch assemblies per hour • The switch assembly area can produce a container of switch assemblies in 2 hours • Safety stock has been set at 10% of needed inventory

15. Example of Kanban Card Determination: Calculations Expected Demand During Lead Time + Safety Stock k = Size of the Container (5)*(1)*(1.1) DL(1+S) k = = C 4 = 2.75, or 3 Always round up!

16. Respect for People • Level payrolls • Cooperative employee unions • Subcontractor networks • Bottom-round management style • Quality circles (Small Group Involvement Activities or SGIA’s)

17. Toyota Production System’sFour Rules • All work shall be highly specified as to content, sequence, timing, and outcome • Every customer-supplier connection must be direct, and there must be an unambiguous yes-or-no way to send requests and receive responses • The pathway for every product and service must be simple and direct • Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization

18. Lean Implementation Requirements: Design Flow Process • Link operations • Balance workstation capacities • Redesign layout for flow • Emphasize preventive maintenance • Reduce lot sizes • Reduce setup/changeover time

19. Lean Implementation Requirements: Total Quality Control • Worker responsibility • Measure SQC • Enforce compliance • Fail-safe methods • Automatic inspection

20. Lean Implementation Requirements: Stabilize Schedule • Level schedule • Underutilize capacity • Establish freeze windows

21. Lean Implementation Requirements: Kanban-Pull • Demand pull • Backflush • Reduce lot sizes

22. Lean Implementation Requirements: Work with Vendors • Reduce lead times • Frequent deliveries • Project usage requirements • Quality expectations

23. Lean Implementation Requirements: Reduce Inventory More • Look for other areas • Stores • Transit • Carousels • Conveyors

24. Lean Implementation Requirements: Improve Product Design • Standard product configuration • Standardize and reduce number of parts • Process design with product design • Quality expectations

25. Lean Implementation Requirements: Concurrently Solve Problems • Root cause • Solve permanently • Team approach • Line and specialist responsibility • Continual education

26. Lean Implementation Requirements: Measure Performance • Emphasize improvement • Track trends

27. Lean in Services (Examples) • Organize Problem-Solving Groups • Upgrade Housekeeping • Upgrade Quality • Clarify Process Flows • Revise Equipment and Process Technologies

28. Lean in Services (Examples) • Level the Facility Load • Eliminate Unnecessary Activities • Reorganize Physical Configuration • Introduce Demand-Pull Scheduling • Develop Supplier Networks

29. Quality ProcessesA little history • Post WWII Japan – almost a clean slate • Limited resources, low volumes  new approach • Influences • TWI – employees involved in process improvement • Deming & Juran • Poor quality is responsibility of management • Tools for process improvement Formative years of TQM & JIT

30. Total Quality Management TQM is an organization-wide effort directed towards the continuous improvement of quality • One simple definition of high quality is: “exceeds customers’ expectations” • Key point—quality is tied to view of customer (e.g., not specifications) In brief…

31. Putting TQM principlesinto practice Customer focus Employee empowerment Data-based decision making – “management by fact” Continuous improvement in quality – how?

32. Definitions of Quality • Quality as “Excellence” • Quality as “Conformance to Specifications” • Quality as “Fitness for Use” • Quality as “Value for the Price”

33. Total Quality Management • Philosophy of management • Part of mission/vision/purpose • Implemented through long range strategic planning

34. Quality Related Product Characteristics • Reliability • Durability • Serviceability

35. Quality-Related Service Characteristics • Reliability • Tangibles • Responsiveness • Assurance • Empathy

36. Quality Specifications • Design quality: Inherent value of the product in the marketplace • Dimensions include: • Performance • Features • Reliability/Durability • Serviceability • Aesthetics • Perceived Quality. • Conformance quality: Degree to which the product or service design specifications are met

37. Costs of Quality Appraisal Costs External Failure Costs Prevention Costs Internal FailureCosts Costs of Quality

38. ISO 9000 • Series of standards agreed upon by the International Organization for Standardization (ISO) • Adopted in 1987 • More than 100 countries • A prerequisite for global competition? • ISO 9000 directs you to "document what you do and then do as you documented"

39. Six Sigma Quality A philosophy and set of methods companies use to eliminate defects in their products and processes Seeks to reduce variation in the processes that lead to product defects The name, “six sigma” refers to the variation that exists within plus or minus three standard deviations of the process outputs

40. Six Sigma Quality (con’t) Number of defects = x 1,000,000 DPMO Number of opportunities for error per unit é ù x No. of units ê ú ê ú ê ú ë û • Six Sigma allows managers to readily describe process performance using a common metric: Defects Per Million Opportunities (DPMO)

41. Six Sigma Quality (con’t) Example of Defects Per Million Opportunities (DPMO) calculation. Suppose we observe 200 letters delivered incorrectly to the wrong addresses in a small city during a single day when a total of 200,000 letters were delivered. What is the DPMO in this situation? So, for every one million letters delivered this city’s postal managers can expect to have 1,000 letters incorrectly sent to the wrong address. Cost of Quality: What might that DPMO mean in terms of over-time employment to correct the errors?

42. Six Sigma Quality:DMAIC Cycle • Define, Measure, Analyze, Improve, and Control (DMAIC) • Developed by General Electric as a means of focusing effort on quality using a methodological approach • Overall focus of the methodology is to understand and achieve what the customer wants • A 6-sigma program seeks to reduce the variation in the processes that lead to these defects • DMAIC consists of five steps….

43. Six Sigma Quality:DMAIC Cycle (con’t) 1. Define (D) Customers and their priorities 2. Measure (M) Process and its performance 3. Analyze (A) Causes of defects 4. Improve (I) Remove causes of defects 5. Control (C) Maintain quality

44. Total Quality Requirements • Strategic Quality Planning • Clear Focus on Customer Satisfaction • Continuous Improvement of Key Processes • Effective Collection & Analysis of Information • Effective Use of Teamwork and Training • Effective Design of Products and Services • Effective Leadership

45. Components of anOPI Culture OPI as Central Focus of Mission Statement Stakeholder Linkages CULTURE OF ONGOING PROCESS IMPROVEMENT Bias Toward Evidence Based Decision Making Passionate Commitment to Continuous Improvement Commitment to Education/Training Team Development

46. Characteristics ofOPI Systems • Vision/mission/purpose for quality • Focus on supplier/customer linkages • PASSIONATE commitment to continuous improvement • Commitment to teaming/training • Bias for data based decision making

47. Strategic Quality Management Using the quality of products and services to increase a company’s share of the market

48. Implementing TQM Identify Critical Business Issues Secure top management commitment Provide initial training Identify customer requirements Identify key processes Provide specific skills training Collect and analyze data Change the process no Req’mts met? yes Continue to improve processes

49. Lean Manufacturing and Quality Processes Production/Operations Management The End Dr. Eliot Elfner St. Norbert College Spring 2009