Understand the differences and similarities between techniques of Lean Manufacturing and Theory of...
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Transcript of Understand the differences and similarities between techniques of Lean Manufacturing and Theory of...
©2012 Vector Consulting Group. All Rights Reserved.
www.vectorconsulting.inwww.vectorconsulting.in
VCG employs the 'Theory of Constraints’ philosophy to bring about quantum jump in performance of organizations in its target industry clusters.
LEVERAGING THE POTENTIAL
RetailConsumerGoods
EquipmentManufacturing
Engineering& Construction
Automobile &Auto Components
©2012 Vector Consulting Group. All Rights Reserved.
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Phone: +91 22 2589 5896 Fax: +91 22 2589 5897
Email: [email protected]: www.vectorconsulting.in
2
TOC Insights - OperationsSep 18, 2012
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Basics 01 - Part 01
Only 20% of the Japanese Companies have implemented Lean/Six Sigma/TQM/TPM
Its not that the remaining 80% didn't try.These firms tried, but failed repeatedly.
Did they fail because of lack of seriousness?Did they fail because lack of efforts?Did they fail because lack of Knowledge? Not really!!
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Basics 01 - Part 02
The firms tried and failed repeatedly because:
Their Production Environment were fundamental different from Toyota.
TPS was developed for Toyota. You cannot “Copy Paste” solution of one environment to the other environment!
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Reality of implementation ofLean / Six Sigma / TQM / TPM
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An Insight
Application is specific, do not force them on your production environments.
01
Concepts are general, learn them and design application for your environment.
02
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Basics 02
The assembly line developed for the Ford Model T began operation on December 1, 1913. It had immense influence on the world.
Assembly Lines (FORD)Features• Flow line concept introduced for Mass Production.• Flow means inventories in the operation are moving.• Inventories are controlled by limiting space
between work-stations.
What happens when space is full?Production stops i.e. in essence local efficiencies are abolished (Against conventional wisdom of 100% efficiency).
LimitationsSingle Product lines where facilities are dedicated for each component.
Output is lost when production stops?Focusing mechanism now available to eliminate shortages.
©2012 Vector Consulting Group. All Rights Reserved. 8
Basics 02 Assem
bly Lines(FO
RD)
Part02
Generic Concepts
Improving flow (or equivalently lead time) is the primary objective of operations.
This primary objective should be translated into a practical mechanism that guides operation when not to produce (i.e. prevent over-production).
Local efficiencies must be abolished.
A focusing process to balance flow must be in place.
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Basics 02
LEAN / TPS (TOYOTA)
Challenges to introduce FORD system to TOYOTA
Demand for small quantities of a variety of cars, hence dedicated lines could not be justified.
Space cannot be used to limit inventories because:
If components are unavailable, then Assembly would stop.
If space is full, feeder lines would stop.
Solution was realized when Taichi Ohno heard about Super-Markets
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Basics 02
Part02
LEAN / TPS
(TOYO
TA)Features• Flow is the most important element of TPS• In place of Space, Kanban System introduced to limit
the inventory• Only when an allocated container is used, production of
that container is triggered (No Card ..... No Production)
Frequent switching for small lots means more set-ups and hence loss of production• Just-in-time Evolved i.e. produce only those items which are
required in the very short-term.• Set-up reduction techniques were developed (called Lean).• Kanban was further used to guide process improvement efforts.• Gradual reduction in Containers (FIVE WHYs introduced to guide
improvement efforts).
©2012 Vector Consulting Group. All Rights Reserved. 11
Basics 02
Part03
LEAN / TPS
(TOYO
TA)Almost everyone has implemented TPS, but still no one has achieved the same Productivity numbers as Toyota ...
Why?
Answer lies in the process of choosing local improvements
Conventional companies use cost savings as the parameter to decide local improvements whereas Toyota uses “Flow Improvement”.
E.g. Setup Reduction was never done to gain cost savings, rather it was done to create better availability at a faster rate.
E.g. Quality was not improved to save trivial costs, rather it was improved to remove disruptions caused by defective part.
No focus on squeezing better prices from supplier or cut payroll cost (manpower reduction), rather full energy is spent on improving the flow.
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Basics 02
Part04
LEAN / TPS
(TOYO
TA)End ResultsFocusing on Flow instead of local cost considerations resulted in a much better lower cost per unit.
Abolishing local efficiencies resulted in much higher efficiency of the workforce.
Important InsightAll cost reductions have a ceiling (can cost be made ZERO?).
Improvement efforts have diminishing returns.
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Basics 02
Part05
LEAN / TPS
(TOYO
TA)Generic Concepts
Improving flow (or equivalently lead time) is a primary objective of operations.
This primary objective should be translated into a practical mechanism that guides the operation when not to produce (prevents overproduction). Ford used space; Ohno used inventory.
Local efficiencies must be abolished. Ford used dedicated lines; Ohno introduced JIT & Lean techniques.
A focusing process to balance flow must be in place. Ford used direct observation.Ohno used gradual reduction of the number of containers and then gradual reduction of parts per container.
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Basics 02
Part06
LEAN / TPS (TO
YOTA
Production System)
Boundaries of TPS
Works in Stable environments i.e. the processes and the products do not change significantly for a considerable length of time.
Demand over time per product should be relatively stable.
E.g. Toyota has only 1 time change yearly per model.
Combine specific techniques of Lean with cost saving programs.
Total load placed by orders on the various types of resources must be relatively stable.
Imagine holding containers for items which have sporadic demand.
When load changes frequently, promising firm due dates is challenging.
Typical way of implementing Lean in most companies
Is this really a true implementa-tion of Lean?
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Theory of Constraint Way of Production
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Basics 03 - TOC way of Production - Part01
Core Principles
Flow is the most important objective of Operations.
Practical Mechanism to avoid Over-Production.
Achieved by ensuring synchronization from everywhere achieved by reducing lead times cross the chain.
Local Efficiencies are abolished.
Restrict release of material ahead of time (suitable for unstable environments as it is less sensitive to disruptions in flow.
Buffer Management (BM) and Load control are put in place.
Focusing process to balance flow must be in place.
Analysis of Blacks & Reds guide the improvement efforts.
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Bottleneck
Basics 03 - TOC way of Production - Part02
Abolishment of Local Efficiencies
If C is to be used 100%• There has to be Continuous bank of work in front of “C”.• Whenever, there are disruptions in “A” or “B”; not only they have to ensure
that “C” is fed but also the Bank is rebuilt. Which means “A” / “B” should have excess capacity than “C”.
• Similarly, incase of disruptions in “D”; not only it has to produce what “C” is producing, “D” also has to clear the backlog created by “C”. Which again means “D” has excess capacity than “C”.
A B C D
By this very definition, “A” / “B” / “D” should have much more capacity than “C” just to keep “C” 100% busy. If so then local efficiencies at places other than “C” have to be abolished otherwise inventory will hit the roofs.
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Basics 03 - TOC way of Production - Part03
Time Based Mechanism to control WIP
Problem of using Space to control WIP between Workstations
• E.g. Conveyers, Trolleys, etc.
• When space is full, production stops which may not mean 100% utilization of Bottleneck (“C”) resource.
• WIP in front of Bottleneck and Space after the Bottleneck is a function of the “Normal Disruptions” at upstream & downstream resources.
o Typically the WIP is designed to be kept to bare minimum which can result in production loss.
A B C D
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Basics 03 - TOC way of Production - Part04
Time Based Mechanism to control WIP
In TOC,
• WIP in the system is not artificially restrained between every 2 work centers; rather it is controlled for the entire system allowing the effects of Murphy to be absorbed throughout the system and yet protect the due dates.
• Unlike Kanban, WIP is not maintained everywhere in the system. Rather it is maintained only where needed i.e. to ensure 100% utilization of bottleneck.
A B C D
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Basics 03 - TOC way of Production - Part05
Concept of Lead Time
• Most of the time, order is waiting in queues in front of the resources.
• Generally the time actually spent working on an order is less than 10% of the total lead time.
• Therefore at times of Urgency, material can moved very fast through the system.
Total Lead Time
Waiting TimeTouch Time
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Basics 03 - TOC way of Production - Part06
Choke The Release
• Small lead times cause too much expediting (termed as “Hand-2-mouth”)
• Large lead times cause Jams, missed priorities
• Stables zone is in the middle and hence “Choke the Release” is done by cutting WIP by half
Man
agem
ent A
tten
tion
Time Buffer Size
Insufficient Reaction time
Jams,Missed priorities
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Basics 03 - TOC way of Production - Part07
Priority System
• Just “Choking the Release” i.e. reducing WIP by half will not result in more than 90% due date performance.
• Therefore a simple yet robust priority system is needed to guide operations.
• Buffer Management gives clear priority to all the work-centers to effectively plan and execute orders.
Reduced Lead Time
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Basics 03 - TOC way of Production - Part08
Focusing Mechanism (POOGI)
• Analysis of RED orders every week.
• Identifying the top reason for REDs and eliminating it.
Material availability Manpower availability Machine availability Utilities availability
40%
30%
20%
10%
Red Reasons
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