Operations Management Japenese (Lean) Production system

Compiled by Ramesh Adavi

8. MoM - Lean Production & ToC 1

8. Lean Production Systems

- Lean Concepts

- The Toyota System (JIT, …) - Synchronous Mfg. & Theory of Constraints



8a. Lean Production


8. MoM - Lean Production & ToC

• Lean Production Defined

• The Toyota Production System

• Lean Implementation Requirements

• Lean Services

OBJECTIVES



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”)



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



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



The Toyota Production System

• Based on two philosophies:– 1. Elimination of waste

– 2. Respect for people



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



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



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



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



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



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



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



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



The Number of Kanban Card Sets

C

SDL

k

)(1

container theof Size

stockSafety timelead during demand Expected

C

SDL

k

)(1



k = Number of kanban card sets (a set is a card)D = Average number of units demanded over some time periodL = lead time to replenish an order (same units of time as demand)S = Safety stock expressed as a percentage of demand during leadtimeC = Container size



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



Example of Kanban Card Determination: Calculations

3or ,75.24

5(2)(1.1))(1



C

SDL

k

3or ,75.24

5(2)(1.1))(1



C

SDL

k

Always round up!



Respect for People

• Level payrolls

• Cooperative employee unions

• Subcontractor networks

• Bottom-round management style

• Quality circles (Small Group Involvement Activities or SGIA’s)



Toyota Production System’s Four Rules

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



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



Lean Implementation Requirements: Total Quality Control

• Worker responsibility

• Measure SQC

• Enforce compliance

• Fail-safe methods

• Automatic inspection



Lean Implementation Requirements: Stabilize Schedule

• Level schedule

• Underutilize capacity

• Establish freeze windows



Lean Implementation Requirements: Kanban-Pull

• Demand pull

• Backflush

• Reduce lot sizes



Lean Implementation Requirements: Work with Vendors

• Reduce lead times

• Frequent deliveries

• Project usage requirements

• Quality expectations



Lean Implementation Requirements: Reduce Inventory More

• Look for other areas

• Stores

• Transit

• Carousels

• Conveyors



Lean Implementation Requirements: Improve Product Design

• Standard product configuration

• Standardize and reduce number of parts

• Process design with product design

• Quality expectations



Lean Implementation Requirements: Concurrently Solve Problems

• Root cause • Solve permanently

• Team approach

• Line and specialist responsibility

• Continual education



Lean Implementation Requirements: Measure Performance

• Emphasize improvement

• Track trends



Lean in Services (Examples)

• Organize Problem-Solving Groups

• Upgrade Housekeeping

• Upgrade Quality

• Clarify Process Flows

• Revise Equipment and Process Technologies



Lean in Services (Examples)

• Level the Facility Load

• Eliminate Unnecessary Activities

• Reorganize Physical Configuration

• Introduce Demand-Pull Scheduling

• Develop Supplier Networks



Question Bowl

Lean Production seeks to achieve high volume

production using which of the following?

a. Minimal inventory of raw materials

b. Minimal inventory of work-in-process

c. Minimal inventory of finished goods

d. All of the above

e. None of the aboveAnswer: d. All of the above



Question Bowl

In the Toyota Production System, the

“elimination of waste” involves which of the following?

a. Overproduction

b. Waiting time

c. Transportation

d. All of the above

e. None of the above

Answer: d. All of the above



Question Bowl

In the Pull System the partner that begins the

process of “pulling” is which of the following?

a. Customers

b. Vendors

c. Fabrication personnel

d. CEO

e. All of the aboveAnswer: a. Customer



Question Bowl

A Lean Production program requires which of

the following?

a. Employee participation

b. Total quality control

c. Small lot sizes

d. Continuing improvement

e. All of the above

Answer: e. All of the above (Also included in Industrial engineering/basics)



Question Bowl

Inventory has been known to hide which of the

following production problems?

a. Scrap

b. Vendor delinquencies

c. Decision backlogs

d. All of the above


Answer: d. All of the above



Question Bowl

You want to determine how many kanban card sets you need for an

operation. You find that average number of units demanded is

1,000 per hour, the lead time to replenish the order for this item is

10 hours, the container size is 10 units, and the safety stock is

estimated to be 5% of the expected demand. Which of the

following is the desired number of kanban card sets?

a. 1050

b. 1000

c. 605

d. 500


Answer: a. 1050 ([1000x10](1+0.05)/10=1050)



Question Bowl

When trying to implement Lean system a

“stabilized schedule” includes which of the

following?

a. Demand pull

b. Backflush

c. Fail-safe methods

d. All of the above


Answer: e. None of the above (These include: level schedule, underutilization capacity, and establish freeze windows.)



8b. Synchronous Manufacturing and

Theory of Constraints



• Goldratt’s Rules

• Goldratt’s Goal of the Firm

• Performance Measurement

• Capacity and Flow issues

• Synchronous Manufacturing

OBJECTIVES



Goldratt’s Rules of Production Scheduling

• Do not balance capacity balance the flow• The level utilization of a nonbottleneck

resource is not determined by its own potential but by some other constraint in the system

• Utilization and activation of a resource are not the same

• An hour lost at a bottleneck is an hour lost for the entire system

• An hour saved at a nonbottleneck is a mirage



Goldratt’s Rules of Production Scheduling (Continued)

• Bottlenecks govern both throughput and inventory in the system

• Transfer batch may not and many times should not be equal to the process batch

• A process batch should be variable both along its route and in time

• Priorities can be set only by examining the system’s constraints and lead time is a derivative of the schedule



Goldratt’s Theory of Constraints (TOC)

• Identify the system constraints• Decide how to exploit the system

constraints• Subordinate everything else to that

decision• Elevate the system constraints• If, in the previous steps, the constraints

have been broken, go back to Step 1, but do not let inertia become the system constraint



Goldratt’s Goal of the Firm

The goal of a firm is to make money



Performance Measurement:Financial

• Net profit– an absolute measurement in dollars

• Return on investment– a relative measure based on investment

• Cash flow– a survival measurement



Performance Measurement:Operational

• 1. Throughput– the rate at which money is generated by the

system through sales

• 2. Inventory– all the money that the system has invested in

purchasing things it intends to sell

• 3. Operating expenses– all the money that the system spends to turn

inventory into throughput



Productivity

• Does not guarantee profitability– Has throughput increased?– Has inventory decreased?– Have operational expenses

decreased?



Unbalanced Capacity

• In earlier chapters, we discussed balancing assembly lines– The goal was a constant cycle time

across all stations

• Synchronous manufacturing views constant workstation capacity as a bad decision



The Statistics of Dependent Events

• Rather than balancing capacities, the flow of product through the system should be balanced

Process Time (B)Process Time (A)

106 8 10 12 14

Process Time (B) Process Time (A)

10 6 8 10 12 14

(Constant)

(Constant)(Variable)

(Variable)

When one process takes longer than the average, the time can not be made up



Capacity Related Terminology

• Capacity is the available time for production

• Bottleneck is what happens if capacity is less than demand placed on resource

• Nonbottleneck is what happens when capacity is greater than demand placed on resource

• Capacity-constrained resource (CCR) is a resource where the capacity is close to demand placed on the resource



Capacity Example Situation 1

X Y Market

Case A

X YBottleneck Nonbottleneck

Demand/month 200 units 200 unitsProcess time/unit 1 hour 45 minsAvail. time/month 200 hours 200 hours

There is some idle production in this set up. How much?There is some idle production in this set up. How much?

25% in Y25% in Y




Y X Market

Case B



Is there is going to be a build up of unnecessary production in Y?

Is there is going to be a build up of unnecessary production in Y?

Yes, 25% in YYes, 25% in Y




X Y

Assembly

Market

Case C



Is there going to be a build up in unnecessary production in Y?

Is there going to be a build up in unnecessary production in Y?





X Y

Market Market

Case D



If we run both X and Y for the same time, will we produce any unneeded production?

If we run both X and Y for the same time, will we produce any unneeded production?




Time Components of Production Cycle

• Setup time is the time that a part spends waiting for a resource to be set up to work on this same part

• Process time is the time that the part is being processed

• Queue time is the time that a part waits for a resource while the resource is busy with something else



Time Components of Production Cycle (Continued)

• Wait time is the time that a part waits not for a resource but for another part so that they can be assembled together

• Idle time is the unused time that represents the cycle time less the sum of the setup time, processing time, queue time, and wait time



Saving Time

Bottleneck Nonbottleneck

What are the consequences of saving time at each process?

What are the consequences of saving time at each process?

Rule: Bottlenecks govern both throughput and inventory in the system. Rule: An hour lost at a bottleneck is an hour lost for the entire system. Rule: An hour saved at a nonbottleneck is a mirage.

Rule: Bottlenecks govern both throughput and inventory in the system. Rule: An hour lost at a bottleneck is an hour lost for the entire system. Rule: An hour saved at a nonbottleneck is a mirage.



Drum, Buffer, Rope

A B C D E F

Bottleneck (Drum)

Inventorybuffer

(time buffer)Communication

(rope)

Market

Exhibit 18.9Exhibit 18.9



Quality Implications

• More tolerant than JIT systems– Excess capacity throughout system

• Except for the bottleneck– Quality control needed before

bottleneck



Batch Sizes

• What is the batch size?

• One?

• Infinity?



Bottlenecks and CCRs:Flow-Control Situations

• A bottleneck – (1) with no setup required when changing from

one product to another– (2) with setup times required to change from

one product to another

• A capacity constrained resource (CCR)– (3) with no setup required to change from one

product to another– (4) with setup time required when changing

from one product to another



Inventory Cost Measurement:Dollar Days

• Dollar Days is a measurement of the value of inventory and the time it stays within an area

department a withindays of Number

inventory of Value Days Dollar



Benefits from Dollar Day Measurement

• Marketing– Discourages holding large amounts of

finished goods inventory

• Purchasing– Discourages placing large purchase orders

that on the surface appear to take advantage of quantity discounts

• Manufacturing– Discourage large work in process and

producing earlier than needed



Comparing Synchronous Manufacturing to MRP

• MRP uses backward scheduling

• Synchronous manufacturing uses forward scheduling



Comparing Synchronous Manufacturing to JIT

• JIT is limited to repetitive manufacturing

• JIT requires a stable production level

• JIT does not allow very much flexibility in the products produced



Comparing Synchronous Manufacturing to JIT (Continued)

• JIT still requires work in process when used with kanban so that there is “something to pull”

• Vendors need to be located nearby because the system depends on smaller, more frequent deliveries



Relationship with Other Functional Areas

• Accounting’s influence

• Marketing and production



Question Bowl

Which of the following are examples of Goldratt’s Rules of Production Scheduling?

a. Balance flow, not capacityb. Utilization and activation are the samec. Nonbottlenecks govern throughputd. All of the abovee. None of the aboveAnswer: a. Balance flow, not capacity

(There are eight other rules.)



Question Bowl

Which of the following are examples of Goldratt’s Theory of Constraints?

a. Identify the system constraintsb. Decide how to exploit the system

constraintsc. Elevate the system constraintsd. All of the abovee. None of the aboveAnswer: d. All of the above



Question Bowl

Which of the following is Goldratt’s “Goal of the Firm”?

a. Reduce costsb. Increase jobsc. Increase market shared. All of the abovee. None of the aboveAnswer: e. None of the above (The Goal

of the Firm is to “make money”.)



Question Bowl

Which of the following are Goldratt’s Financial Measurements used to measure a firm’s ability to make money?

a. Net profitb. Return on investmentc. Cash flowd. All of the abovee. None of the aboveAnswer: d. All of the above



Question Bowl

Which of the following are Goldratt’s Operational Measurements used to measure a firm’s ability to make money?

a. Throughputb. Inventoryc. Operating expensesd. All of the abovee. None of the aboveAnswer: d. All of the above



Question Bowl

According to Goldratt, any resource whose capacity is less than the demand placed on it, is considered which of the following?

a. Nonbottleneck resourceb. Bottleneck resourcec. Capacity-constrained resourced. A buffer resourcee. None of the aboveAnswer: b. Bottleneck resource



Question Bowl

Which of the following kinds of time make up a “cycle time”?

a. Setup b. Processingc. Queued. Waite. All of the aboveAnswer: e. All of the above (The correct

answer can also include Idle Time.)



Question Bowl

When comparing JIT to synchronous manufacturing, synchronous manufacturing has which of the following drawbacks?

a. Limited to repetitive manufacturingb. Requires stable production levelc. Does not allow much flexibility in the

products producedd. All of the abovee. None of the aboveAnswer: e. None of the above (These are

drawbacks of JIT, not synchronous manufacturing.)

Operations Management Japenese (Lean) Production system

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