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LEARNING OBJECTIVES
After completing the chapter you will: Understand the concepts of the Toyota
Production System and lean management Learn how a production pull system works Understand how to eliminate waste in
processes Understand the “rules” of lean management Understand how to accomplish lean
production See examples of lean concepts applied to
manufacturing and service systems
12-2
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”)
12-3
LEAN THINKING Womack and Jones (1996) defined the
principles of lean thinking:Define value precisely from the perspective of
the end customer in terms of a specific product with specific capabilities offered at a specific price and time Differentiate value from muda, or waste Can be difficult due to the many steps across
departments and companies Identify the entire value stream for each
product or product family and eliminate waste Apply to three critical activities: product definition,
information management, and physical transformation
LEAN THINKING
Make the remaining value-creating steps flowNo waiting, downtime, or scrap within or between steps
Suggest application of kaikuku, or radical improvement, as opposed to kaizen, or continuous improvement
Design and provide what the customer wants only when the customer wants itLet the customer pull the product from the value stream
LEAN THINKING
Pursue perfectionThere is no end to the process of
reducing effortThe four initial steps interact with one
another in a virtuous circle More precisely defined value challenges steps in value stream to reduce waste
getting value to flow faster exposes muda
harder customers pull, the more impediments to flow revealed
LEAN THINKING: LANTECH
Developed a device that would stretch-wrap pallets with plastic film
Built its four types of machines in batches, called a batch and queue system Also used this system for processing orders and
developing new products Great complexity with its processes, long
time to complete processes, and much of the process time was queue time
Moved to total quality management after it lost a patent infringement suit Empowered workers but didn’t address
processes
LEAN THINKING: LANTECH
New VP of Operations hired an established a dedicated process flow for each of the four product families Equipment grouped together in four cells No batches – one unit at a time: continuous flow All jobs directly linked – no buffers of inventory Set takt time: available time in a period /
customer orders in that period Changeovers done quickly to accommodate
product options Applied same techniques to office and
product development
FEATURES OF LEAN PRODUCTION
• Management philosophy• “Pull” system though the plant
WHAT IT IS
• Employee participation• Industrial engineering/basics• Continuing improvement• Total quality control• Small lot sizes
WHAT IT REQUIRES
• Attacks waste• Exposes problems and bottlenecks• Achieves streamlined production
WHAT IT DOES
• Stable environment
WHAT IT ASSUMES
PULL SYSTEM
Customers
Sub
Sub
Fab
Fab
Fab
Fab
Vendor
Vendor
Vendor
Vendor
Final Assembly
Here the customer starts the process, pulling an inventory item from Final Assembly…
Here the customer starts the process, pulling an inventory item from Final Assembly…
Then sub-assembly work is pulled forward by that demand…
Then sub-assembly work is pulled forward by that demand…
The process continues throughout the entire production process and supply chain
The process continues throughout the entire production process and supply chain
THE TOYOTA PRODUCTION SYSTEM
Based on two philosophies: 1. Elimination of waste
2. Respect for people
12-11
ELIMINATION OF WASTE
1. Focused factory networks
2. Group technology
3. Quality at the source
4. JIT production
5. Uniform plant loading
6. Kanban production control system
7. Minimized setup times
12-12
MINIMIZING WASTE: FOCUSED FACTORY NETWORKS
CoordinationSystem Integration
These are small specialized plants that limit the range of products produced (sometimes only one type of product for an entire facility)
These are small specialized plants that limit the range of products produced (sometimes only one type of product for an entire facility)
Some plants in Japan have as few as 30 and as many as 1000 employees
Some plants in Japan have as few as 30 and as many as 1000 employees
12-13
MINIMIZING WASTE: GROUP TECHNOLOGY (PART 1)
Using Departmental Specialization for plant layout can cause a lot of unnecessary material movement
Using Departmental Specialization for plant layout can cause a lot of unnecessary material movement
Saw Saw
Lathe PressPress
Grinder
LatheLathe
Saw
Press
Heat Treat
Grinder
Note how the flow lines are going back and forthNote how the flow lines are going back and forth
12-14
MINIMIZING WASTE: GROUP TECHNOLOGY (PART 2)
Revising by using Group Technology Cells can reduce movement and improve product flow
Revising by using Group Technology Cells can reduce movement and improve product flow
Press
Lathe
Grinder
Grinder
A
2
BSaw
Heat Treat
LatheSaw Lathe
PressLathe
1
12-15
MINIMIZING WASTE: UNIFORM PLANT LOADING (HEIJUNKA)
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
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.
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.
How does the uniform loading help save labor costs?How does the uniform loading help save labor costs?
or
12-16
MINIMIZING WASTE: INVENTORY HIDES PROBLEMS
Work in
process
queues
(banks)
Change
orders
Engineering design
redundancies
Vendor
delinquencies
Scrap
Design
backlogs
Machine
downtime
Decision
backlogsInspection
backlogs
Paperwork
backlog
Example: By identifying defective items from a vendor early in the production process the downstream work is saved
Example: By identifying defective work by employees upstream, the downstream work is saved
12-17
MINIMIZING WASTE: KANBAN PRODUCTION CONTROL SYSTEMS
Storage Part A
Storage Part AMachine
Center Assembly Line
Material Flow
Card (signal) Flow
Withdrawal kanban
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
The process begins by the Assembly Line people pulling Part A from Storage
Production kanban
12-18
RESPECT FOR PEOPLE
Level payrolls
Cooperative employee unions
Subcontractor networks
Bottom-round management style
Quality circles (Small Group Involvement Activities or SGIA’s)
12-19
TOYOTA PRODUCTION SYSTEM’S FOUR RULES: SPEAR AND BOVER (1999)
1. All work shall be highly specified as to content, sequence, timing, and outcome
2. Every customer-supplier connection must be direct, and there must be an unambiguous yes-or-no way to send requests and receive responses
3. The pathway for every product and service must be simple and direct
4. 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
12-20
RULE 1: HOW PEOPLE WORK
Focus on the details 1st unstated rule: every activity must be
specified for success May seem obvious, but the majority of managers
outside Toyota do not take this approach)
RULE 1: CAR SEAT EXAMPLE
“ When a car’s seat is installed, the bolts are always tightened in the same order, the time it takes to turn each bolt is specified, and so is the torque to which the bolt should be tightened. Such exactness is applied not only to the repetitive motions of production workers but also to the activities of all people regardless of functional role.”
RULE 1: TOYOTA’S METHOD
Seven-step process with specific steps and lengths of time
There is a well developed sequence of events for each particular job
When employees deviate from these details it is obvious
RULE 1: TOYOTA’S HYPOTHESES
Performing the activity tests two hypotheses:1) The person doing the activity is capable of
performing it correctly2) Performing the activity creates the expected
outcome
Example:“If they can’t insert the seat in the specified way
within the specified amount of time, then they are clearly refuting at least one of the hypotheses, indicating that the activity needs to be redesigned or the worker must be trained again.”
RULE 2: HOW PEOPLE CONNECT
Every connection must be standardized & direct, specifying: people involved form & quantity of goods and services way requests are made by each customer expected time that requests will be met
Rule creates supplier-customer relationship Result: “…no gray zones in deciding who
provides what to whom and when.”
RULE 2: APPLICATION
Toyota uses kanban cards to set up direct links between suppliers and customers
Other companies use supervisors to answer calls for help; no specific person assigned “…when something is everyone’s problem it
becomes no one’s problem.” Toyota’s workers expected to ask for help Testing hypothesis keeps system flexible,
allowing for constructive adjustment
RULE 3: HOW THE PRODUCTION LINE IS CONSTRUCTED
All products and services flow along a simple specified path no forks or loops to convolute the flow; all direct
to specific persons or machines change only when production line is expressly
redesigned Toyota production lines accommodate many
types of products All of the rules allow Toyota to conduct
experiments and remain flexible and responsive
RULE 4: HOW TO IMPROVE
What can be improved: Production activities Connections between workers or machines Manufacturing pathways
Improvements must be made: Using the scientific method Under the guidance of a teacher At the lowest possible organizational level
RULE 4: HOW TO IMPROVE
How do you use the scientific method? Frame problems using first three rules Formulate and test hypotheses Question assumptions Don’t confuse goals with predictions based on
hypothesese.g. Reducing changeover time by two-thirds
RULE 4: HOW TO IMPROVE
Who does the improvement? Frontline workers, with assistance from supervisors Problem scale determines how many organizational
levels are included in the solution Toyota’s commitment to learning
Operations Management Consulting Division (OMCD) Toyota Supplier Support Center (TSSC)
NOTION OF THE IDEAL
People motivated by a common goal Sense of what the ideal production system would
be Make improvements beyond what is “necessary”
Very pervasive Essential to the Toyota Production System
NOTION OF THE IDEAL
Concrete Definition: The output of an ideal person, group of people,
or machine: Is defect free; Can be delivered one request at a time; Can be supplied on demand in the version requested; Can be delivered immediately; Can be produced without waste; Can be produced in a safe work environment.
ORGANIZATIONAL IMPACT OF THE RULES
The rules create an organization with a nested modular structure by: Making people capable and responsible for their
own work Standardizing connections between individual
customers and suppliers Pushing the resolution of connection and flow
problems to the lowest possible level
ORGANIZATIONAL IMPACT OF THE RULES
Benefit: People can implement design changes in one part without unduly affecting other parts Toyota can delegate a lot of responsibility
without creating chaos
COUNTERMEASURES
Kanbans or andon cords Temporary
responses to specific problems
Serve until a better approach is found or conditions change
NOT solutions
Building up inventory of materials Ideal system would
have no need for inventory
Required in certain circumstances: Unpredictable
downtime or yields Time consuming setups Volatility in the mix
and volume of consumer demands
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
12-36
LEAN IMPLEMENTATION REQUIREMENTS: TOTAL QUALITY CONTROL
Worker responsibility
Measure SQC
Enforce compliance
Fail-safe methods
Automatic inspection
12-37
LEAN IMPLEMENTATION REQUIREMENTS: STABILIZE SCHEDULE
Level schedule
Underutilize capacity
Establish freeze windows
12-38
LEAN IMPLEMENTATION REQUIREMENTS: WORK WITH VENDORS
Reduce lead times
Frequent deliveries
Project usage requirements
Quality expectations
12-39
LEAN IMPLEMENTATION REQUIREMENTS: REDUCE INVENTORY MORE
Look for other areas
Stores
Transit
Carousels
Conveyors
12-40
LEAN IMPLEMENTATION REQUIREMENTS: IMPROVE PRODUCT DESIGN
Standard product configuration
Standardize and reduce number of parts
Process design with product design
Quality expectations
12-41
LEAN IMPLEMENTATION REQUIREMENTS: CONCURRENTLY SOLVE PROBLEMS
Root cause Solve permanently
Team approach
Line and specialist responsibility
Continual education
12-42
LEAN IN SERVICES (EXAMPLES)
Organize Problem-Solving Groups
Upgrade Housekeeping
Upgrade Quality
Clarify Process Flows
Revise Equipment and Process Technologies
12-44
LEAN SERVICES: JEFFERSON PILOT FINANCIAL
Jefferson Pilot Financial is an insurance company searching for new ways to grow Had rising customer expectations New products with increased complexity
Had to deal with specialized companies with lower prices
Needed a way to improve service and reduce costs
STEPS TOWARD IMPROVEMENT
Wanted key differentiator to be superior service
Needed to analyze operations of business units
With analysis, JPF realized they could increase revenue through improved operations
Looked to Japanese practices of “lean production”
LEAN PRODUCTION
JPF could benefit because its operations were similar to that of a car company
In 2000, appointed “lean team” Initiative has delivered impressive results
Halved time of receipt to application of policy Reduced labor cost by 26% Reduced rate of errors on policies by 40%
Resulted in 60% increase in new premiums
BUILDING THE MODEL CELL
Company can introduce a lean system without significantly disrupting operations
“Model cell” rollout- company sets up microcosm of its entire process-Allows managers to conduct experiments and smooth out kinks while working towards optimal design
BUILDING THE MODEL CELL
Jefferson Pilot Financial chose section of new business unit devoted to processing policies
Unit had 10 employees and handled policies that did or did not require physician statements
Lean production built around continuous-flow processing Traditional methods have large batches processed
at each step and passed along only after an entire batch has been processed
If not caught quickly, errors can occur on large scale
Applied seven design practices of Lean manufacturing to redesign Cell’s Workflow
REDESIGNING THE CELL’S WORK FLOW
1. Placing Linked Processes near One Another All steps in a process should be located
close to one another JPF- Work groups located by function
ex: Employees who receive applications and employees who sort them on different floors
After teams were placed next to each other process was done faster and employees were more aware of being part of a whole
REDESIGNING THE CELL’S WORK FLOW
Standardizing Procedures JPF employees had freedom in managing
work, which made it difficult for other workers to fill inex: Different systems for storing files
Lean Team insists files be store alphabetically and in same drawer at each workstation; standardized data entry
Made it much easier for others to help when workloads were high or workers were absent
REDESIGNING THE CELL’S WORK FLOW
3. Eliminating Loop-Backs Loop-Back is when work returns to a previous
step for further processing which typically creates delays
Lean Team noticed all sections of each policy form were sent back to employee who received initial application
JPF split receiving team in half-employees to assemble policies-employees to receive applications
Reduced confusion and reduced delays and waste
REDESIGNING THE CELL’S WORK FLOW
4. Setting a Common Tempo Applies the concept of “Takt” (German
for musical meter) A baseline was calculated by timing
new employees and challenging employees to speed the process
Then appropriate number of employees assigned to each task
REDESIGNING THE CELL’S WORK FLOW
5. Balancing Loads Instead of sorting applications by numerical
or alphabetical order, the work is spread loaded among different teams
This keeps an even tempo and leaves no team in the process idling while another team is working
REDESIGNING THE CELL’S WORK FLOW
6. Segregating Complexity While balancing loads of work is important to
keep a smooth flow, it is also important to separate complicated work
Some applications are more complex because they require a physicians statement
Once the tasks requiring a physician’s statement were separated into two different teams, the time to process applications dropped 80%
REDESIGNING THE CELL’S WORK FLOW
7. Posting Performance Results Hourly performance is posted and therefore
subject to review enables the team to review performance and see
where the team is excelling and where it is lagging
Employees at first feared that if they were a laggard they would be criticized as such.
However, the postings encouraged teams to strive to improve, and also served as a way to benchmark positive performance and reward it
SETTING PERFORMANCE GOALS
Always measure performance & productivity from customer’s perspective
JPF changed processing time metric Previously measured time application was
received to when it was bound, and now measure time between when customer sends application to when they receive policy
Shop-floor goals should be connected to CEO’s performance metrics Cell productivity ties to the ratio of total
acquisition expenses to value of new paid premiums
SETTING PERFORMANCE GOALS
Look at suppliers through lean-production lens Established new vendor-selection criteria
Matched metrics with lean-production requirements Measured process and put results on white-
boards for all to see
ROLLING OUT THE NEW SYSTEM
Six-month rollout of lean production to rest of New Business Operations
Divided operations between status of customers and complexity of tasks
Identified other operations that could benefit from new system
Helped increase productivity and make more cost-effective capital investments
CONVINCING SKEPTICS
To ensure effectiveness, needed to communicate “why” and “how” Everyone needed to understand why the process
was necessary Used plane exercise as example
Skeptics of initiative were convinced through exponential performance improvements Staff could perform more cross-functional work
and benefit from having their work visibly represented
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