Basics of ‘Lean Manufacturing’

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What is Lean?

Operating philosophy:Eliminate waste through continuous improvement:

Define value from the client’s perspective Identify the value stream Only make what the client pulls Keep the flow moving continuously Always improve the process

Goal:

Increase value-added time within the value stream .

The core idea is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources

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Lean Cost Model

Traditional view of adding profit on top of cost to set price is flawed– What client is willing to pay does not depend on your

costs – Clients’ perception of the value of your product/service

determines max. priceLean switches focus to reducing costs and increasing

value to the client– Higher value to client will result into higher sales– Higher sales will result into higher shareholder value

PRICE - COST = PROFIT

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Lean Method Model

In order to increase output:

Traditional Model: Lean Model:Increases the workforce • Eliminates waste Increases working hours • Focuses on efficient use

of equipment and people.

Minimizes issues by standardizing work.

Lean focuses on simplifying complexity and providing the right product in the right amount at the right time

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The term “lean” is used because lean manufacturing uses “less”…• Labor in the factory• Manufacturing space• Capital investment• Materials• Time between the customer order and theproduct shipment

Definition of “Lean”

•Half the hours of human effort in thefactory•Half the defects in the finished product•One-third the hours of engineering effort•Half the factory space for the same output•A tenth or less of in-process inventories

Source: The Machine that Changed the WorldWomack, Jones, Roos 1990

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Lean Manufacturing

The purpose of Lean Manufacturing is tomake your company strong and fast.• Strong = High performance, repeatablePerformance

• Fast = Easily adapts to fluctuations in marketConditions

Reduced operating costs and improvedcustomer satisfaction are natural by-productsof being Lean

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•All organizations have processes that produce and deliver products or services to satisfy customer needs, desires andexpectations.• The success of every organization dependson its ability to attract and retain customers.Manufacturing Challenge Deep Dive into Lean Thinking

Who Wants What

Customer wants:•Low Cost•High Quality•Availability

Your company•Profit•Repeat Business•Growth

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CRAFT MANUFACTURING - Late 1800’s•Car built by workers who walked around the car•Built by craftsmen with pride•Components hand-crafted, hand-fitted•Excellent quality•Very expensive•Few produced

Manufacturing ChallengeAssembly line - Henry Ford 1920s

•Low skilled labor, simplistic jobs, no pride inwork•Interchangeable parts•Lower quality•Affordably priced for the average family•Millions produces - identical

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Customer Expectation

• Much better quality• More customized variants• Just-in-time delivery• Shorter lead times• And freedom to order in small quantities

…..At Lower & Lower PricesQuality

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QUALITY TRENDS

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Toyota Production System

• During the 1970s, Japanese were redefiningthe manufacturing paradigms.• They began to incorporate quality into theircost focused strategy.• Use of TIME as a new competitivedimension emerged.• Toyota Production System was born.

Manufacturing Challenge:

Lean Manufacturing - Toyota 1950s•Cells or flexible assembly lines• Broader jobs, highly skilled workers, proud of product•Low lead time•Excellent quality mandatory•Global markets & competition

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Lean Manufacturing

• During 1980s Americans realized that thethings are not the same anymore.• Japanese were not only making better cars,they were also doing it cheaply.• Toyota was making cars in America at 25% less cost.• Severely denting American market share.

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Jim Womack’s comments

“We also know that lean thinking isspreading across the world. This summer,when Dan Jones, Jose Ferro, and I visitedIndia for the first Lean Summits, we were

amazed to find some of the leanestoperating practices we have ever

encountered outside of Toyota City.”

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In order to survive…We have to make our Organizations Leanby understanding the Lean philosophy andpromoting Lean Thinking throughout theorganization .BUT….The Truth about Lean is… It’s not obvious, It’s not common sense And it’s not intuitive Don Runkle,Delphi

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The Science of Lean Manufacturing

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Introduction

• All organizations have processes that produce &deliver products & services to satisfy customer needs.• These processes transform inputs into outputs by means capital & labor resources.• The transformation involves flow of work through a network of activities performed by available resources.•These resulting outputs are products in the form of physical goods, services or both.•Products differ in attributes that customer values such as product cost, quality, variety & delivery response time• The ability to provide desired product attribute depends on the corresponding process attributes such as processing costs, quality, flexibility and flow time.

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A Process

A process is any activity or set of activitiesthat uses resources to transform inputs intooutputs.

ProcessTransformation of inputs into outputsincorporates five elements:1. Inputs and Outputs2. Flow Units3. A network of activities & buffers4.Resources5. Information structure (controls & feedback)

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Lean Manufacturing

A manufacturing philosophy that demandsshorter lead times to deliver high quality, lowcost products through improved flow, byeliminating waste and reducing variation inthe value stream.

Design (concept to customer)Supply (order to delivery)Build (raw material to finished Product)

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LEAN MANUFACTURING

We know that there is a direct Link between flow and cost

Eliminationof Waste = Improved

Flow

ImprovedFlow = Decreased

Cost

Decreased Cost

= New BusinessSustainable Profits

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Understanding

MUDA, MURA and MURI

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Muda means WASTE.

Waste refers to any activity that does notadd value.

Waste only adds to time and cost.

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Things to Remember about Waste:• Waste is really a symptom rather than a root causeof the problem• Waste points to problems within the system(At both process & value stream levels)

Elements of production that add time, effort, cost,but no value

All activities fall into one of these threecategories:• Value Added• Type I Muda -- adds no value but necessary(Toyota calls this “Non-value added work”)• Type II Muda -- adds no value and avoidable.Most of our activities fall into which category?

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MUDA• Waste of Overproduction• Waste of Inventory• Waste of Repair / Rejects• Waste of Motion• Waste of Processing• Waste of Waiting• Waste of Transport

Waste Of OverproductionProducing More or Sooner orFaster than needed

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Waste Of Inventory

Any Supply in excess of onepiece flow

Waste Of Repair/Reject

Inspection or repair of a product or service to fulfill customer requirements

Waste Of Motion

Any movement that doesnot add value

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Waste Of Processing

Effort which adds no additional customer value to a part

Waste Of Waiting

Being idle between operations

Waste Of Transportation

Any movement of material that is not required for“Just-In-Time” production

Waste Of Transportation

Any movement of materialthat is not required for“Just-In-Time” production

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Mura means IRREGULARITYIt can occur in:• Production• Parts flow• Equipment usage• Work done by team members• Information flow• Material deliveries, causing shortage or overstock Benefits of eliminating Mura:• Shorter Lead times• Lower WIP• Faster response time• Lower cost• Greater production flexibility• Higher quality• Better customer service• Higher revenue• Higher throughput• Increased Profit

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Muri

Muri means strenuous conditions for bothworkers and machines as well as for the workprocess.1. When machines are overburdened• We run the risk of causing safety hazards, equipment

breakdowns and manufacturing defects.

2. When Team Members are overburdened• The safety of the team members can be endangered• Workers are more likely to become exhausted or fatigued • It becomes difficult for team members to do each job with

attention to detail. This increases the frequency of defects, which in turn adversely affects the quality.

Mura Means STRENUOUS Work

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5 Componentsof Lean Thinking?

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PERFECTION

PULL FLOW

VALUE STREAM

VALUE

Lean Guiding Principles

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• Define Customer : clearly understand who the customer is.• Define Value : Quality, schedule, target cost etc.

Specify value from the end customer’s Perspective;

Value

Ask how your current products and processes dissatisfy your customers value expectations,

• Price?• Quality?• Reliable Delivery?• Rapid response to changes?• ??

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Lean Manufacturing is an end-to-end collection of processes that create value for the customer

The value stream includes• People• Tools and technologies• Physical facilities• Communication channels• Policies and procedures

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Value Stream

Identify all of the steps currentlyrequired to move products from orderto delivery :

• Challenge every step: why is thisnecessary?. What does the customer think?• Critically assess value addition at each step.• Eliminate / minimize non-value-addedactivities.

Tip : Use Value Stream Mapping Tool

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Flow

Line-up all the steps that truly create value so they occur in rapid sequence;

1. Produce each product, everyday, in directproportion to demand.

2. Require that each step in the process be,• Capable , right every time (SIX SIGMA)• Available, always able to run (TPM)• Adequate, with capacity to avoid bottleneck. (right size tooling).

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“Flow” refers to the movement of materialthrough the plant.• The material should not be stagnant at any point in time from the receiving of raw material to the shipping of finished products

FLOW

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Pull

Customer should Pull value through the Value Stream;

Through lead time reduction & correct valuespecification, let customers get exactly whatthey want & exactly when they want.

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A method of controlling the flow of resources by replacing what has been consumed.

Pull System

Push vs Pull System

PUSH SYSTEM PULL SYSTEM

• Large Lots• Hidden Problems• Waste• Poor Communication• Approximation/Forecast

•Small Lots•Visual Shop FloorManagement•Minimal Waste•Good Communication•Actual / Real time Information

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Perfection Continuously Pursue Perfection;

• Create a clear vision.• Production ideal state.• Customer Value• Make waste visible & evident.• Problem Solving

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LEAN JOURNEY

It is truly a never ending journey. And the further we go with the lean principles, the further they take you.It’s like climbing a series of stairways through layersof clouds… at each new level you reach, you becomeaware of a whole new level above you – one that younever knew existed.

Joseph Day, CFO, Fedunburg.

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Lean Thinking In Summary

• Value is defined by the customer Value Stream identified• All waste is eliminated Value stream has been refined so that only value added steps remain• Product flows through the manufacturing system Single piece flow is the ultimate state• Production matches the customer “pull” rate Material is pulled through the entire system• Continuous “Pursuit of Perfection”

“Lean” is not an absolute … … there are no rules only guidelines

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Best Quality - Lowest Cost - Shortest Lead Time- Best Safety- High Morale

Through shortening the Production Flow by Eliminating Waste

Just in Time“The right part

at the right timein the right amount”

• Takt time planning•Continuous flow•Pull system•Quick Changeover•Integrated logistics

Jidoka“Built in Quality”

•Automatic stops•Person-machine separation•Error proofing•In station quality control•Solve root cause of problems (5 Why’s)

Leveled Production (heijunka)Stable & standardized processes

Visual management

Make Problems visible

People & Team workSelection

Common goalsFast decision making

Cross trained

Waste Reduction

Genchi Genbutsu

5 Why’s

Eyes for waste

Problem solving

Continuous Improvement

Toyota Production System

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JIT JidoukaTPSGOOD QUALITY PRODUCTS, BY EASIEST WAY & LOWEST COST.

Toyota Way

TPSTPS is a tool to achieve TOYOTA WAY

TOYOTA WAY1. CONTRIBUTE TO INDUSTRY & ECONOMY.2. CONTRIBUTE WELL-BEING AND STABILITY OF TEAM MEMBERS. 3. CONTRIBUTE TO THE OVERALL GROWTH OF OUR BUSINESS ASSOCIATES AND THE AUTOMOBILE INDUSTRY.

Toyota Way

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Some Tools of Lean

•Quick Change Over (SMED)

•Poka Yoke (Jidoka)

•Identification of Waste

•OEE

•JIT

•Levelled Production (Heijunka)

•Work Element Analysis

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Lean Benefits

A comprehensive & patient implementation of lean leads to :

•Substantial reduction in

Inventories

Capital employed

Cost of quality

•Significant improvement in

Quality

Productivity

On-time delivery

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