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Chapter 10. Lean Operations: Process Synchronization and Improvement. Introduction. Lean Operations : Perfected by Japanese automaker - Toyota A more efficient process Adopted in USA by the aerospace industry in 1990’s Some turnaround times were lowered by 30-50%

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introduction
Introduction
  • Lean Operations:
    • Perfected by Japanese automaker - Toyota
    • A more efficient process
    • Adopted in USA by the aerospace industry in 1990’s
    • Some turnaround times were lowered by 30-50%
    • Maintenance productivity improved by 25-50%
introduction3

$

Introduction
  • Overall:
    • Many industries have adopted lean operations

Why??

      • Improved performance including:
        • Cost
        • Quality
        • Response time
introduction4

Responsiveness

A

B

Operations

Frontier

C

High

Low

Price

Introduction

Quick review:

10 1 processing networks

Process 2

Process 4

Product A

Process 6

Process 1

Process 3

Product B

Process 5

10.1 Processing Networks
  • Processing Networks:consists of information and material flows of multiple products through a sequence of interconnected processes.
10 1 processing networks6
10.1 Processing Networks
  • Plants & Supply Chains—
    • Two different levels:
      • Plants: any singly owned, independently managed and operated facility (i.e., manufacturing site, service unit, storage warehouse)
      • Supply Chain: a network of interconnected facilities
        • Diverse ownership
        • Flows of information and materials between the facilities (i.e., raw materials suppliers, finished goods producers, wholesalers, distributors, retailers)
10 2 the process ideal synchronization efficiency
10.2 The Process Ideal: Synchronization & Efficiency

What is an“Ideal Process”?

A process that achieves synchronization at the lowest possible cost

Process Synchronization

The ability of the process to meet customer demand in terms of their quantity, time, quality and location requirements.

Process Efficiency

Measured in terms of the total processing costs. Less cost, more efficient!!.

10 2 the process ideal synchronization efficiency8
10.2 The Process Ideal: Synchronization & Efficiency
  • Perfectly Synchronized Process that is LEAN will develop, produce and deliver theseONLY on demand:
    • Exactly what is needed (not wrong or defective products)
    • Exactly how much is needed (neither more or less)
    • Exactly when it is needed (not before or after)
    • Exactly where it is needed (not somewhere else)
10 2 the process ideal synchronization efficiency9
10.2 The Process ideal: Synchronization & Efficiency
  • Just-In-Time (JIT)
    • When the four “just rights” come together—
    • Action is taken only when it becomes necessary!!!
    • In Manufacturing - production of only necessary flow units in necessary quantities at necessary times!!!
10 2 the process ideal synchronization efficiency10
10.2 The Process ideal: Synchronization & Efficiency
  • Synchronized Networks:
    • Outflow of one process is the inflow to another process!!!!
    • REQUIRES PRECISE MATCHING OF SUPPLY & DEMAND
    • All stages are required to be tightly linked with flow of information and product
    • Ideally – the processing stages are achieved for lowest possible cost!!!!
10 3 waste and its sources
10.3 Waste and Its Sources
  • ANYTHING LESSTHAN IDEAL PERFORMANCE IS AN OPPORTUNITY FOR IMPROVEMENT!!!

Low Efficiency = High Processing Costs

Defective products, high inventories, delays, stock outs

Lack of Synchronization

10 3 waste and its sources12
10.3 Waste and Its Sources

Waste: producing inefficiently, producing wrong or defective products, producing in quantities that are too small/large, delivering early/late

Sources of Waste:

  • Producing defective products
  • Producing too much product
  • Carrying inventory
  • Waiting due to unbalanced workloads
  • Unnecessary processing
  • Unnecessary worker movement
  • Transporting materials
10 3 waste and its sources13
10.3 Waste and Its Sources
  • Waste Elimination:
    • Short term strategies include:
      • Cycle & Safety inventories
      • Safety capacity
      • Non-Value adding activities (transportation, inspection, rework, process control)
10 3 waste and its sources14
10.3 Waste and Its Sources
  • Waste Elimination (cont’d):
    • Long-Term Strategy
    • Improve the overall processes
    • Build in flexibility, predictability, stability to eliminate temporary fixes.
      • i.e.→ Reduce setup costs to make it more economical to produce small batches.
10 3 waste and its sources15
10.3 Waste and Its Sources

The River Analogy: The boat can sail in shallow water (lean operations) if we are able to find ways to remove the imperfections on the river bottom!!!

FG

FM

WIP

Defects

Defective Materials

Long Setups

Machine Breakdowns

Long Lead Times

Unsuitable Equipment

Uneven Schedules

Unreliable Suppliers

Absenteeism

Rigid Work Rules

Inefficient Layouts

10 4 improving flows in a plant basic principles of lean operations
10.4 Improving Flows in a Plant: Basic Principles of Lean Operations
  • Many buzz-words for managing and achieving efficiency within a plant:
    • Lean operations
    • Just-in-time production
    • Zero inventory program
    • Synchronous manufacturing
    • Agile manufacturing
    • Toyota Production System (TPS)
10 4 improving flows in a plant basic principles of lean operations17
10.4 Improving Flows in a Plant: Basic Principles of Lean Operations
  • LEAN OPERATIONS HAS FOUR OBJECTIVES:
    • To improve process flows
      • Efficient plant layout and fast/accurate flow of materials and information
    • To increase process flexibility
      • Reducing equipment changeover times & cross-functional training
    • To decrease process variability
      • Flow rates, processing times, and quality
    • To minimize processing costs
      • Eliminate non-value adding activities (transportation, inspection, rework)
10 4 improving flows in a plant basic principles of lean operations18
10.4 Improving Flows in a Plant: Basic Principles of Lean Operations

WHY?????

  • First three goals improve Process Synchronization
  • Last goal improves Cost Efficiency
10 4 improving flows in a plant basic principles of lean operations19
10.4 Improving Flows in a Plant: Basic Principles of Lean Operations
  • Classic Example:
    • Efficiency/Synchronization for mass production:

Henry Ford’s Rouge, Michigan plant

    • Totally integrated with – steel mill, glass factory, machine tools, electrical systems, assembly line, well-trained (well-paid) workers
    • Minimal low time & cost
    • Everything in place except product variety!
10 4 improving flows in a plant basic principles of lean operations20
10.4 Improving Flows in a Plant: Basic Principles of Lean Operations
  • Efficiency/Synchronization for Mass Production
    • Ford Motor Company 1910
    • Rouge, Michigan Plant

Source: <http://www.shadetreemechanic.com/ford_centennial_in_atlanta.htm>

10 4 1 improving process architecture cellular layouts
10.4.1 Improving Process Architecture: Cellular Layouts
  • Process Architecture: the network of activities and resources
  • One method:

FUNCTIONAL LAYOUTS

  • Different product types follow different routings through the resource pools…enabling each flow unit to be sent to any available station in the pool.
10 4 1 review of process architectures job shop

Output

A

B

Product 1

Input

C

D

Product 2

10.4.1 Review of Process Architectures: Job Shop

Functional Layout: Resources that perform the same function are physically pooled together–

JOB SHOPS

10 4 1 improving process architecture cellular layouts23
10.4.1 Improving Process Architecture: Cellular Layouts
  • Alternate to Process-based Functional Layout:

CELLULAR LAYOUT

All workstations that perform successive operations on a given product are grouped together to form a “CELL”

10 4 1 improving process architecture cellular layouts24
10.4.1 Improving Process Architecture: Cellular Layouts

Product 1

A

B

C

Input

Output

Example: Henry Ford’s Assembly Line for the Model T

10 4 1 improving process architecture cellular layouts25
Facilitates synchronous flow of information and materials between processing stations

Physical proximity of cells reduce transportation of low units

Moves small batches of flow units quickly

Encourages teamwork & cross functional skill development

Improved communication between stations

Improves synchronization where each station produces parts only if the next station needs them

Easier to recognize and report problems

Quicker ability to correct defects

10.4.1 Improving Process Architecture: Cellular Layouts

+

+

ADVANTAGES

10 4 1 improving process architecture cellular layouts26
Resources are dedicated to specific cells

Resources cannot be used by other cells

Lose advantage of resource pooling

Worker incentives must be “team” oriented, not individual performance based

REMEDIES:

Use flexible resources that are cross functional

Peer pressure to control productivity of team members

10.4.1 Improving Process Architecture: Cellular Layouts

-

-

DISADVANTAGES

10 4 2 improving information material flow demand pull
10.4.2 Improving Information & Material Flow: Demand Pull

TWO APPROACHES

  • PUSH: Input availability triggers production where emphasis is on “keeping busy” and maximize resource utilization (as long as there is work)
  • Planning Tool: MRP (Material Requirements Planning)
  • MRP: End-Product demand forecasts are “exploded” backwards to determine parts requirements at each station
10 4 2 improving information material flow demand pull28
10.4.2 Improving Information & Material Flow: Demand Pull
  • PUSH works well under these conditions if:
    • All information is accurate
    • Forecasts of finished goods are correct
    • There is no variability in processing times
  • If one of these conditions at any stages is not met will

DISTURB PLANNED FLOW AND DESTROY SYNCHRONIZATION THROUGHOUT THE PROCESS!!

10 4 2 improving information material flow demand pull29
10.4.2 Improving Information & Material Flow: Demand Pull
  • Demand-Pull: Where demand from a customer station triggers production.
  • Consequences of Demand-Pull -- -- -- Each station produces only on demand from its customer station
  • The demand is actually “downstream”

Two requirements to make a pull system work:

    • Must have a well-defined customer with a well-defined supplier process.
    • Must produce the quantity needed only when signaled to do so by its customer
10 4 2 improving information material flow demand pull30

SUPPLY PUSH: Input availability triggers production

Supplier

Process

Customer

Inputs

Outputs

DEMAND PULL: Output need triggers production

Supplier

Process

Customer

Inputs

Outputs

Information Flow:

Material Flow:

10.4.2 Improving Information & Material Flow: Demand Pull
10 4 2 improving information material flow demand pull31
10.4.2 Improving Information & Material Flow: Demand Pull
  • Demand Signaling: Customer needs a way to signal (inform) the supplier of its need.
  • Customer’s demand starts a chain reaction –
      • For withdrawals and replenishments of intermediate parts
      • EOQ-ROP system is a “Pull” system where ROP triggers production at the supplier and EOQ determines the quantity produced
10 4 2 improving information material flow demand pull32
10.4.2 Improving Information & Material Flow: Demand Pull
  • Synchronized Pull: When the delivery of parts are in sequence

[Suppliers must have greater ability and capability to achieve a synchronized pull effectively]

10 4 3 improving process flexibility batch size reduction
10.4.3 Improving Process Flexibility: Batch-Size Reduction

Each station must know HOW MUCH TO PRODUCE AT A TIME

  • Level Production: where small quantities are produced frequently to mach customer demand

[i.e., if demand is 10000 sedans and 5000 SUVs, the production would call for producing 2 sedans and then 1 SUV, and then repeat the sequence]

  • Changeover Costs and Batch Reduction:Goal of level production is reduction of changeover costs (fixed setup or transportation costs of each batch)
  • I.E. In auto production expensive parts like seats are produced in batches of one, wipers in larger batches
    • Study the Changeover process to: use special tools to speed it up, customize some machines, keep some machines already set up.
    • Consider “small-batch” production
10 4 4 quality at source defect prevention early detection
10.4.4 Quality at Source: Defect Prevention & Early Detection

Defective flow units increase average flow time and cost!!!

WHY?

  • It necessitates inspection and rework!!!
  • Anticipate and then Compensate for the problem:
    • Hold extra safety inventory in the buffer
    • This increases avg. flow time and cost
  • Plan and control Quality:
    • Prevent defects for occurring in the first place
    • Detect and correct them as soon as they appear
10 4 4 quality at source defect prevention early detection35
10.4.4 Quality at Source: Defect Prevention & Early Detection
  • Defect Prevention
    • Careful design of both product and process
    • Simplification & standardization
    • Mistake-proofing (poka yoke)
      • Parts are designed to halt automatically when defective units are fed into them (parts are designed to minimize chances of incorrect assembly)
  • Defect Visibility
    • Early detection/corrections more effective & economical
10 4 4 quality at source defect prevention early detection36
10.4.4 Quality at Source: Defect Prevention & Early Detection
  • Defect visibility (cont’d)
    • Early detection helps tracing to the source
    • Contribution to better synchronization and lower costs
    • Early detection requires constant vigilance and monitoring!!
  • Decentralized Control
    • Employees must be empowered

with authority and the means to

identify & correct problems at the local level

10 4 4 quality at source defect prevention early detection37
10.4.4 Quality at Source: Defect Prevention & Early Detection
  • Decentralized Control (cont’d)
    • In typical plants, line workers don’t feel the responsibility, motivation or security to point out problems.
  • BEST STRATEGIES OF LEAN OPERATIONS ARE:
    • Preventing problems through better planning
    • Highlighting problems as soon as they occur
    • Delegating problem solving to the local level
10 4 5 reducing processing variability standardization of work maintenance and safety capacity
10.4.5 Reducing Processing Variability: Standardization of Work Maintenance, and Safety Capacity
  • Reduce Variability:
    • Standardize work at each stage and specify it clearly
  • Advantages to Standardization:
    • Reduces variability from changing personnel
    • Reduces variability from one production cycle to the next
    • Makes it easier to identify sources of waste that can be eliminated
10 4 5 reducing processing variability standardization of work maintenance and safety capacity39
10.4.5 Reducing Processing Variability: Standardization of Work Maintenance, and Safety Capacity
  • Lean Operations try to:
    • Minimize carrying safety inventory due to increased flow time
    • Maintain somesafety capacity as production against variability
      • These could be extra machines, workers, overtime
        • These forms of safety capacity should be flexible so that it can be used as needed!!
10 4 6 visibility of performance
10.4.6 Visibility of Performance
  • A company needs to “see” (measure) process performance from the customer’s perspective
    • I.E. Time per call
  • Measure Percentage of Customers that had a problem resolved with one call
  • Actual performance (along with expectations) should be visible at each work cell
  • Not for punishment, but to provide quick feedback for corrective action
10 4 7 managing human resources employee involvement
10.4.7 Managing Human Resources: Employee Involvement
  • SYNCHRONIZATION WITHIN A PLANT REQUIRES:
          • Cooperation
          • Contribution
          • Commitment

Elton Mayo’s “Hawthorne Experiments” at Western Electric showed that:

Research has shown that workers involved in the decision-making process are better motivated and productive

10 4 7 managing human resources employee involvement42
10.4.7 Managing Human Resources: Employee Involvement

In Companies with Lean Operations:

  • Workers are cross-trained to provide the company with flexible workers.
  • Workers are in work teams in cells and may perform certain managerial duties such as material ordering, hiring, scheduling
  • Great importance on recruiting and training of workers
10 4 8 supplier management partnerships
10.4.8 Supplier Management: Partnerships
  • Outsourcing: Provides a flexible alternative to producing in-house
  • BUT- - - purchased materials account for a major portion of product cost and are a major source of quality problems!!
  • Lean approach:
    • Choose only a few capable suppliers
    • Cultivate cooperative, long-term relationships
10 4 8 supplier management partnerships44
10.4.8 Supplier Management: Partnerships
  • In Lean Operations:
    • Suppliers are an extension of the plant
    • Processing without inventories or quality inspection
    • Synchronization requires defect-free material
    • Frequent deliveries, small batches
    • Supplier’s process be able to produce small quantities on demand
10 4 8 supplier management partnerships45
10.4.8 Supplier Management: Partnerships

YOU ARE TREATING THE SUPPLIERS AS PARTNERS

10 4 1 10 4 8 summary
10.4.1 – 10.4.8 SUMMARY
  • Lean Operations aim to sustain continuous flow processing in an economical manner:
      • Synchronize material and information flows
      • Increase flexibility
      • Reduce variability
      • Decrease processing costs
chapter 10
Chapter 10

Lean Operations:

Process Synchronization and Improvement

Questions??