Chapter 14

Lean Operations & JIT

Learning Objectives

You should be able to:1. Explain what is meant by the term lean operations

system2. List each of the goals of a lean system and explain its

importance3. List and briefly describe the building blocks of lean4. List the benefits and risks of a lean system

Instructor Slides 2

Lean Operations• Lean operations

– A philosophy that encompasses every aspect of the process, from design to after the sale of a product.

– Pursues a system that functions with minimal levels of inventory, waste, space and transactions.

– A flexible system of operation that uses considerably less resources (activities, people, inventory, space) than a traditional system• Tends to achieve

– Greater productivity– Lower costs– Shorter cycle times– Higher quality

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Lean: Ultimate Goal

• The ultimate goal:– Achieve a system that matches supply to

customer demand; supply is synchronized to meet customer demand in a smooth uninterrupted flow

– A balanced system• One that achieves a smooth, rapid flow of materials

and/or work through the system

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History of Lean Operation & Just In Time

Goals and building blocks of lean systems

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Lean:Supporting Goals

• The degree to which lean’s ultimate goal is achieved depends upon how well its supporting goals are achieved:1. Eliminate disruptions

• Poor quality (lean systems do not carry extra inventory), equipment breakdowns, schedule changes, late deliveries.

2. Make the system flexible• Mix of products, levels of output.• Require reducing setup-times & lead-times.

3. Eliminate waste, especially excess inventory• Minimize inventory

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WasteRepresents unproductive resourcesSeven sources of waste in lean systems:

1. Inventory– Idle resource, requires space, cost

2. Overproduction– Overuse of manufacturing resources

3. Waiting time– Require space, WIP

4. Unnecessary transporting– Handling cost, WIP inventory

5. Processing waste– Unnecessary production steps, scrap

6. Inefficient work methods– Reduced productivity, increased scrap, increased WIP

7. Product defects– Rework costs, customer dissatisfaction 14-7

Lean: Building Blocks

1. Product design2. Process design3. Personnel/

organizational elements

4. Manufacturing planning and control

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Building Blocks1. Product Design

• Four elements of product design important for lean systems:1. Standard parts

• Fewer parts, less training, lower costs, routine purchasing, handling and quality inspection. Can use standard processing.

2. Modular design• Fewer parts, simpler assembly, purchasing, handling, training.

3. Highly capable systems with quality built in• small lot sizes and absence of buffer stock.• Quality designed into the product and production process.

Standardized products, methods and equipment, workers familiar with their jobs.

4. Concurrent engineering• Bringing together design and manufacturing personnel

together early in the design phase to prevent engineering changes.

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Building Blocks2. Process Design

• Seven aspects of process design that are important for lean systems:A. Small lot sizesB. Setup time reductionC. Manufacturing cellsD. Quality improvementE. Production flexibilityF. A balanced systemG. Little inventory storageH. Fail-safe methods

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2. Process DesignA. Small Lot Sizes

In the lean philosophy, the ideal lot size is 1.Goal: reduce lot size as much as possible (given

practical considerations)Benefits of small lot size

Reduced in-process inventoryLower total carrying costs

Inspection and rework costs are lower when quality problems do occur

Permits greater flexibility in scheduling = better response to customer demands.

Less inventory to ‘work off’ before implementing product improvements

Increased visibility of problemsIncreased ease of balancing operations 14-11

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2. Process DesignB. Setup Time Reduction

• Small lot sizes and changing product mixes require frequent setups– Unless these are quick and relatively inexpensive, they can

be prohibitive

• Setup time reduction requires deliberate improvement efforts– Workers are trained to do their own setups– Single-minute exchange of die (SMED)

• A system for reducing changeover time (e.g. 1982 Toyota from 100 to 3 minutes).

• Convert activities form “internal” to “external”.

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What is “die?”

Instructor Slides 13

2. Process DesignD. Quality Improvement

• Quality defects during the process can disrupt the orderly flow of work

• Focus on finding and eliminating the causes of problems.

• Autonomation (jidoka)– Automatic detection of defects during production

• Two mechanisms are employed1. One for detecting defects when they occur2. Another for stopping production to correct the cause of the

defects (force immediate attention to the problem)

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2. Process DesignF. Balanced System

• Line balancing helps to achieve a rapid work flow.• Work assigned to each workstation must not exceed

cycle time (Takt time).• Takt time

– The cycle time needed to match customer demand for final product.

– Sometimes referred to as the heartbeat of a lean system• Procedure:

1. Determine the net time available per shift2. If there is more than one shift per day, multiply the net

time by the number of shifts3. Compute the takt time by dividing the net available time

by demand

• Using takt time minimizes WIP inventory. 14-15

2. Process DesignG. Inventory Storage

• Lean systems are designed to minimize inventory (waste)– Inventories are buffers that tend to cover up recurring problems that are

never resolved• partly because they are not obvious• partly because the presence of inventory makes them seem less

serious• The lean approach is to gradually reduce inventories in order to

uncover problems and then resolve them.• Advantages:

– Lower carrying cost– Less space– Less dependence on buffers– Less rework– Less need use current inventory before implementing design

improvements.• Risks:

– No safety stock– Opportunity loss when problems arise

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Building Blocks 3. Personnel/Organizational

• Five personnel/ organizational elements that are important for lean systems:A. Workers as assetsB. Cross-trained workersC. Continuous

improvementD. Cost accountingE. Leadership/project

management

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3. Personnel/Organizational: A. Workers as Assets

• Workers as assets– Well-trained and motivated workers are the

heart of the lean system• They are given greater authority to make decisions…

but more is expected of them

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3. Personnel/OrganizationalB. Cross-Trained Workers

• Cross-trained workers– Workers are trained to perform several parts of a

process and operate a variety of machines• Facilitates flexibility• Helps in line balancing

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3. Personnel/OrganizationalC. Continuous Improvement

• Continuous improvement (Kaizen, 改善 )– Workers in lean systems have greater responsibility

for quality, and they are expected to be involved in problem solving and continuous improvement

– Teams of workers and managers who routinely work on problems.

– Problem solving “culture”: workers are encouraged to report problems and potential problems.

– Andon: System of lights used at each workstation to signal problems or slowdowns (green, amber, red lights)

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Building Blocks4. MPC

• Seven elements of Manufacturing Planning and Control (MPC) are particularly important for lean system:A. Level loadingB. Pull systemsC. Visual systemsD. Limited work-in-process (WIP)E. Close vendor relationshipsF. Reduced transaction

processingG. Preventive maintenance and

housekeeping14-21

4. MPCB. Pull Systems

Push systemWork is pushed to the next station as it is completed (without

regard to the next station’s readiness).Work may pile up at workstations that fall behind schedule.

Pull systemWork moves on in response to demand from the next stage in

the process.A workstation pulls output from the preceding workstation as it

is neededOutput of the final operation is pulled by customer demand or

the master schedule

Pull systems are not appropriate for all operationsRequire fairly steady flow of reparative work. Large variations in volume, product mix, or product design will

undermine the system

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4. MPCB. Pull Systems: Communication

• Communication moves backward through the system from station to station– Each workstation (customer) communicates its

need for more work to the preceding workstation (supplier)• Assures that supply equals demand

– Work moves “just in time” for the next operation• Flow of work is coordinated• Accumulation of excessive inventories is avoided

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4. MPCC. Visual Systems

Kanban ( 看板） Card or other device that communicates demand

for work or materials from the preceding stationKanban is the Japanese word meaning “signal” or “visible

record”

Paperless production control systemAuthority to pull, or produce, comes from a

downstream process.

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4. MPCC. Visual Systems - kanban

Kanban A kanban card is affixed to each containerWhen a workstation needs to replenish its supply

of parts, a worker withdraws on containerEach container holds a predetermined quantityThe worker removes the kanban card from the

container, posts it, and take the container to the workstation.

The posted card is picked up by a stock person who replenishes the stock with another container

and so on down the line.14-25

4. MPCE. Close Vendor Relationships

• Relatively small number of suppliers.• Close relationships with (certified) vendors

– They are expected to provide frequent, small deliveries of high-quality goods

– The burden of ensuring component quality is shifted to the vendor.

• Local supplier are preferred in order to reduce lead time (of small frequent deliveries)

• Ideally the suppliers themselves will be operating under JIT.

• The suppliers become part of an extended integrated JIT system.

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Lean Services• In service the focus is often on the time needed to perform

the service - speed is often the order winner• Provide services when they are needed• Lean benefits can be achieved in the following ways:

– Eliminate disruptions• e.g., avoid having service providers also answer phones.

– Make system flexible• Train workers to handle more variety.

– Reduce setup and lead times• Estimate what parts and tools are frequently needed and have them on

hand– Eliminate waste

• Eliminate errors and duplicate work.– Minimize WIP

• e.g., orders waiting to be processed, calls waiting to be answered, packages waiting for delivery, truck waiting to be loaded/unloaded etc.

– Simplify the process • e.g., self-service systems such as in retail, ATMs, vending machines, service

systems14-27

Lean vs. Traditional Philosophies

Factor Traditional Lean

Inventory Much to offset forecast errors, late deliveries

Minimal necessary to operate

Deliveries Few, large Many, small

Lot sizes Large Small

Setup; runs Few, long runs Many, short runs

Vendors Long-term relationships are unusual

Partners

Workers Necessary to do the work

Assets

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Lean Systems• Key benefits:

– Reduced waste• inventory levels• scrap and rework• space requirements

– High quality– Flexibility– Reduced lead times– Increased productivity

and equipment utilization

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• Key Risks:• Absence of buffers

(personnel, inventory) to fall back on if something goes wrong.

• Possible loss off sale and lost customers.