Introduction
Operations Analysis and Improvement
2010 Fall
Dr. Tai-Yue WangIndustrial and Information Management Department
National Cheng Kung University
2Dr. Tai-Yue Wang IIM Dept. NCKU
Presentation Asian culture has had a significant impact
on the rest of the world. Many words used in our daily languages.
Martial arts, religion or food.
Within the business environment. Improvement tools (kaizen( 改善 ) tools) Production philosophies such as Just-in-time.
Just-in-time philosophy is also known as Lean Manufacturing.
3Dr. Tai-Yue Wang IIM Dept. NCKU
Presentation Another important philosophy is the concept
developed by a Japanese consultant named Kobayashi( 小林 ). Based on a methodology of 20 keys leading
business on a course of continuous improvement (kaizen).
4Dr. Tai-Yue Wang IIM Dept. NCKU
Presentation The core elements of Kobayashi’s concepts are
presented in order to focus on production improvements. In addition, a measurement standard for
improvement results is also explained.
5Dr. Tai-Yue Wang IIM Dept. NCKU
Introduction
Continuous improvement is a management philosophy based on employees’ suggestions. It was developed in the United States at the end of
the 19th century. Many important improvements took place
when this idea or philosophy arrived in Japan. Japan was already utilizing tools such as quality
circles. When they combined these two ideas, kaizen was born.
6Dr. Tai-Yue Wang IIM Dept. NCKU
Introduction
In 1926 Henry Ford wrote “To standardize a method is to choose out of the
many methods the best one, and use it. Standardization means nothing unless it means standardizing upward.
Today’s standardization, instead of being a barricade against improvement, is the necessary foundation on which tomorrow’s improvement will be based.
7Dr. Tai-Yue Wang IIM Dept. NCKU
Introduction
In 1926 Henry Ford wrote If you think of “standardization” as the best that
you know today, but which is to be improved tomorrow - you get somewhere. But if you think of standards as confining, then progress stops.”
8Dr. Tai-Yue Wang IIM Dept. NCKU
Kaizen vs Reengineering Creating an useable and meaningful standard is key to the
success of any enterprise. Businesses usually utilize two different kinds of
improvements. Those that suppose a revolution in the way of working. Those that suppose smaller benefits with less investment.
9Dr. Tai-Yue Wang IIM Dept. NCKU
Kaizen vs Reengineering
Kaizen
Final situation
Initial situation
time
Reengineering
productivity
10Dr. Tai-Yue Wang IIM Dept. NCKU
Kaizen vs Reengineering
The evolution consists of continuous improvements being made in both the product and process.
A rapid and radical change (kaikaku, 改革 ) process is sometimes used as a precursor to kaizen activities. Carried out by the utilization of process reengineering
or a major product redesign.
11Dr. Tai-Yue Wang IIM Dept. NCKU
Kaizen vs Reengineering Require large investments and are based on process
automation. In the U.S., these radical activities are frequently called
“kaizen blitzes”.
12Dr. Tai-Yue Wang IIM Dept. NCKU
Kaizen vs Reengineering
If the process is constantly being improved (continuous line), the innovation effort required to make a major change can be reduced (discontinuous line in the left). Otherwise, the process of reengineering can become
very expensive (discontinuous line in the right).
13Dr. Tai-Yue Wang IIM Dept. NCKU
Improvement Philosophies and Methodologies
In order to find the source of a problem, it is important to define and understand the source and core of the problem.
Problem -> Any deviation with respect to the standard value of a variable (quality and production rate). It is necessary to know what the variable objective is
(desired standard) and what is the starting situation in order to propose a realistic objective.
14Dr. Tai-Yue Wang IIM Dept. NCKU
Improvement philosophies and methodologies
Three main factors that production managers fear. Poor quality. Increase of production cost. Increase in the lead time.
15Dr. Tai-Yue Wang IIM Dept. NCKU
Improvement philosophies and methodologies
Production improvements should be based on the improvements of processes as well as operations. Problems can appear in any of the basic
elements that constitute the production area.
16Dr. Tai-Yue Wang IIM Dept. NCKU
Improvement philosophies and methodologies
Some example of problems. Defects, obsolete work methods, energy waste, poorly
coached workers, low rates of performance in machines and materials.
By analyzing the production management history, several improvement approaches can be identified. Just-in-time Methodologies (Lean Manufacturing). 20 Keys to Workplace Improvement (Kobayashi).
17Dr. Tai-Yue Wang IIM Dept. NCKU
Improvement philosophies and methodologies
The keys to the Japanese success are. Simple improvement methodologies. Workers respect. Teamwork.
18Dr. Tai-Yue Wang IIM Dept. NCKU
Just-in-Time--Introduction In accordance with this philosophy principle,
nothing is manufactured until it is demanded, fulfilling the customer requirements “I need it today, not yesterday, not tomorrow.”
The plant flexibility required to respond to this kind of demand is total, and is never fully obtained. It is critical that inventory is minimized.
Product obsolescence can make in-process and finished goods inventory worthless.
19Dr. Tai-Yue Wang IIM Dept. NCKU
Just-in-Time--Introduction
In 1949 Toyota was on the brink of bankruptcy. While in the United States Ford’s car production was at
least 8 times more efficient than Toyota’s. The president of Toyota, Kiichiro Toyoda, presented
a challenge to the members of his executive team. “To achieve the same rate of production as the United
States in three years.”
20Dr. Tai-Yue Wang IIM Dept. NCKU
Just-in-Time--Introduction
Taiichi Ohno( 大野耐一 ), vice president of Toyota, accepted his challenge. Inspired by the way that an American supermarket
works, “invented” the Just-in-time method. With the aid of Shigeo Shingo( 新鄉重夫 ) and Hiroyuki
Hirano( 平野博之 ) .
21Dr. Tai-Yue Wang IIM Dept. NCKU
Just-in-Time--Introduction
Daiichi Ohno ( 大野耐一 ) and Shigeo Shingo ( 新鄉重夫 ) wrote their goal. Deliver the right material,
in the exact quantity, with perfect quality, in the right place just before it is needed”.
They developed different methodologies.
Thinkingrevolution
The 5S
Standardoperations
One-Pieceflow
Poka-Yoke Jidoka
TPM
JUST IN TIME
Work
forc
e o
ptim
izatio
n
Vis
ual C
on
trol
LevelingProductionKanban
Multi-functionalworkers
SMED
22Dr. Tai-Yue Wang IIM Dept. NCKU
Just-in-Time--Introduction The systematic application of all the methodologies
create a new management philosophy. The real value is the knowledge acquired during its
implementation. The philosophy developed in Toyota was not
accepted until the end of the sixties. Japan in 1973 benefited from the petroleum crisis and
started to export fuel efficient cars to the United States. Since the 1970s, Japan has been the pioneer of work
improvement methodologies.
23Dr. Tai-Yue Wang IIM Dept. NCKU
Just-in-Time--Thinking Revolution
The Western world employed the following formula to obtain the price of a product. Price = Cost + Profit. In Japan, mainly Toyota, employed the following expression.
Profit = Price – Cost. Today, this formula is used worldwide.
In order to make sure that Toyota would work like the supermarket it was necessary to identify and eliminate all business and production wastes.
24Dr. Tai-Yue Wang IIM Dept. NCKU
Just-in-Time--Thinking Revolution
The real cost is “as big as a seed of a plum tree.” In some cases, manufacturers, let the seed (cost) grow
as big as a tree. Managers try to decrease the cost by cutting some leaves out.
In reality, it is more efficient to eliminate tasks that do not add value to the product.
Reducing the tree to a smaller size is equivalent to planting a smaller seed.
The goal of Toyota’s executives was to find this plum tree seed and work hard to reduce the cost.
25Dr. Tai-Yue Wang IIM Dept. NCKU
Just-in-Time--Seven types of Waste
Hiroyuki Hirano ( 平野博之 ) defined waste as “everything that is not absolutely essential.” Few operations are safe from elimination.
He also defined work as “any task that adds value to the product”. In Toyota’s factories outside of Japan, they required
between 5 to 10 times more operations to produce the same car.
Shigeo Shingo identified 7 main wastes common to factories.
26Dr. Tai-Yue Wang IIM Dept. NCKU
Just-in-Time--Seven types of Waste
Overproduction Producing unnecessary products, when they are not
needed and in a greater quantities than required. Inventory.
Material stored as raw material, work-in-process and final products.
Transportation. Material handling between internal sections.
27Dr. Tai-Yue Wang IIM Dept. NCKU
Just-in-Time--Seven types of Waste
Defects. Irregular products that interfere with productivity
stopping the flow of high quality products.
28Dr. Tai-Yue Wang IIM Dept. NCKU
Just-in-Time--Seven types of Waste
Processes. Tasks accepted as necessary.
Operations. Not all operations add value to the product.
Inactivities. Correspond to machines idle time or operator’s idle time.
Inventory is considered the type of waste with greater impact
29Dr. Tai-Yue Wang IIM Dept. NCKU
Just-in-Time--Inventory Inventory is a sign of an
ill factory because it hides the problems instead of resolving them. For example, in order to
cope with the problem of poor process quality, the size of production lots is typically increased.
Products that will probably never be used, get stored.
30Dr. Tai-Yue Wang IIM Dept. NCKU
Just-in-Time--Inventory If the problem that produces the
low quality is solved inventory could be reduced without affecting service.
Sometimes it is necessary to force a decrease in inventory in order to identify the production variability that necessitated it. Then, the work method can be
changed.
31Dr. Tai-Yue Wang IIM Dept. NCKU
Lean Manufacturing Lean Manufacturing is the systematic elimination
of waste. Lean is focused at cutting “fat” from production
activities. Lean has also been successfully applied to administrative
and engineering activities as well.
32Dr. Tai-Yue Wang IIM Dept. NCKU
Lean Manufacturing Many of the tools used in lean can be traced back
to Taylor, Ford and the Gilbreths. The Japanese systematized the development and
evolution of improvement tools. Lean Manufacturing is one way to define
Toyota’s production system. MUDA is the term chosen when referring to lean. In
Japanese, MUDA means waste.
33Dr. Tai-Yue Wang IIM Dept. NCKU
Lean Manufacturing
Lean Manufacturing is supported by three philosophies. Just-in-time Kaizen (continuous improvements)
34Dr. Tai-Yue Wang IIM Dept. NCKU
Lean Manufacturing
Jidoka ( 自働化 ). Translates as autonomation. Machinery automatically inspects each item after producing it,
ceasing production and notifying humans if a defect is detected.
Toyota expands the meaning of Jidoka to include the responsibility of all workers to function similarly.
這個自『働』化與一般的自動化(Automation)不同,它的動加了人字旁,加了人工的智慧。不但會自動生產所需要的零件,也會在發現品質問題時自動停止。引申到一般的生產線自主管理,生產線不但會生產所需的產品,也會在發現問題的時候自動停止!
35Dr. Tai-Yue Wang IIM Dept. NCKU
Lean Manufacturing Traditional approximations improves the lead time
by reducing waste in the activities that add value (AV).
Lean Manufacturing reduces the lead time by eliminating operations that do not add value to the product (MUDA).
Lead Time95% MUDA 5% VA
98% MUDA 2% VA
Lead Time
95% MUDA
Lead Time
90% MUDALead Time
5% VA
10% VA
36Dr. Tai-Yue Wang IIM Dept. NCKU
20 Keys to workplace improvement
Iwao Kobayashi, in 1988, published a book explaining 20 keys to Workplace improvement. They all must be considered in order
to achieve continuous improvement.
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37Dr. Tai-Yue Wang IIM Dept. NCKU
20 Keys to workplace improvement
These 20 keys are arranged in a circle. Shows the relations between the
keys and their influence on the three main factors.
Quality, cost and lead time.
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38Dr. Tai-Yue Wang IIM Dept. NCKU
20Leading
Technology
16ProductionScheduling
12Developing
yourSuppliers
11Quality
AssuranceSystem
9MaintainingEquipment
7Zero Monitor
Manufacturing
14EmpoweringWorkers to
Make improve-ments
5Quick
ChangeoverTechnology
4ReducingInventory
8Coupled
Manufacturing
15Cross
Training13
EliminatingWaste
10Time Control
AndCommitment
19ConservingEnergy andMaterials
18Using
Informationsystems
17EfficiencyControl
6Method
Improvement
1Cleaning andOrganizing
2Rationalizingthe system
3Improvement
TeamActivities
Quality
Cost Lead time
39Dr. Tai-Yue Wang IIM Dept. NCKU
Quality
40Dr. Tai-Yue Wang IIM Dept. NCKU
Cost
41Dr. Tai-Yue Wang IIM Dept. NCKU
Lead Time
42Dr. Tai-Yue Wang IIM Dept. NCKU
20 Keys to workplace improvement
There are four keys outside the circle. Keys 1, 2 and 3
must be implemented before the rest.
Key number 20 is the result of implementing the other 19 keys.
20Leading
Technology
16ProductionScheduling
12Developing
yourSuppliers
11Quaility
AssuranceSystem
9MaintainingEquipment
7Zero Monitor
Manufacturing
14EmpoweringWorkers to
Make improve-ments
5Quick
ChangeoverTechnology
4ReducingInventory
8Coupled
Manufacturing
15Cross
Training
13Eliminating
Waste10
Time ControlAnd
Commitment
19ConservingEnergy andMaterials
18Using
Informationsystems
17EfficiencyControl
6Method
Improvement
1Cleaning andOrganizing
2Rationalizingthe system
3Improvement
TeamActivities
Quality
Cost Lead time
43Dr. Tai-Yue Wang IIM Dept. NCKU
20 Keys to workplace improvement
Kobayashi divided each key into five levels and set some criteria to rise from one level to the next. Kobayashi offers the steps to reach the final level
gradually rather than attempting to directly reach the top.
44Dr. Tai-Yue Wang IIM Dept. NCKU
20 Keys to workplace improvement
Kobayashi presents a radar graphic to show the evolution of the factory The scoring of each key is
represented. Kobayashi recommends to
improve all the keys equally. In the radar graphic, the
factory’s scoring will grow concentrically.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
45Dr. Tai-Yue Wang IIM Dept. NCKU
Overall Equipment Efficiency (OEE)
To improve the productivity of production equipment Nakajima ( 中島 ) summarized the main time losses for equipment based on the value of three activities.
Available work time -> Calendar time. Fixed time for planned stops -> Preventive maintenance,
operators break. The rest of the time is considered load time.
Load time
Calendar time
Planned stops
46Dr. Tai-Yue Wang IIM Dept. NCKU
Overall Equipment Efficiency
Six main causes that reduce valid operation time. Breakdowns.
The time that the machine is stopped by repairs. Setup and changeovers.
Corresponds to the change time between models, or between products of the same model.
Idling and minor stoppage. Loss time caused by the processes´ randomness or by the worker-
machine cycle complexity.
47Dr. Tai-Yue Wang IIM Dept. NCKU
Overall Equipment Efficiency
Six main causes that reduce valid operation time. Reduced speed.
Caused by the wear of components. Defects and reworks.
Low quality products. Starting losses.
Machine produces defects until it reaches the operation steady state.
48Dr. Tai-Yue Wang IIM Dept. NCKU
Overall Equipment Efficiency
These six main losses are grouped.
Load time
Useful time
Operating time
BreakdownsSetup and changeover
Idling and minor stoppagesReduced speed
Defects and reworkStarting losses
49Dr. Tai-Yue Wang IIM Dept. NCKU
Overall Equipment Efficiency
Load time
Useful time
Operating time
100time load
time setup and breakdowntime loadty AvailabiliA
100time operating
units processedtime cycle stardardePerformancP
100units processed
units defective units processedualityQQ
QPA(OEE) Effeciency
Equipment Overall
The previous grouped losses define three basic indicator. Availability, performance and quality. Overall Equipment Efficiency (OEE) = A · P · Q
50Dr. Tai-Yue Wang IIM Dept. NCKU
Overall Equipment Efficiency
Objectives predicted for each indicator by Nakajima. More than 90% in the availability. More than 95% in the rate of performance. More than 99% in the rate of quality.
The main advantage of the implementation of these rates is that they can show how the improvements carried out affect directly the equipment efficiency.
51Dr. Tai-Yue Wang IIM Dept. NCKU
Overall Equipment Efficiency
Startitg situation
0,000
0,200
0,400
0,600
0,800
1,000
1,200
1 4 7 10 13 16 19 2 25 2 31 3 37 4 4 4 4 52
A
P
Q
OEE
Transitory improvement
0,000
0,200
0,400
0,600
0,800
1,000
1,200
1 4 7 10 13 16 19 2 25 2 31 3 37 4 4 4 4 52
A
P
Q
OEE
Permanent improvement
0,000
0,200
0,400
0,600
0,800
1,000
1,200
1 4 7 10 13 16 19 2 25 2 31 3 37 4 4 4 4 52
A
P
Q
OEE
Permanent improvement but
worsening in the OEE rate
0,000
0,200
0,400
0,600
0,800
1,000
1,200
1 4 7 10 13 16 19 2 25 2 31 3 37 4 4 4 4 52
A
P
Q
OEE
52Dr. Tai-Yue Wang IIM Dept. NCKU
More on OEE(1/2)
The OEE definition in SEMI E79 is composed of four components.
OEE = Available Efficiency * Operation Efficiency* Rate Efficiency * Rate of Quality
53Dr. Tai-Yue Wang IIM Dept. NCKU
More on OEE(2/2) Available Efficiency
= (Equipment Uptime) / (Total Time) Operation Efficiency
= (Productive Time) / (Equipment Uptime) Rate Efficiency
= (Actual unit output) / (Theoretical unit throughput) /(Productive Time)
Rate of Quality = (Actual unit output – Rework - Scrap)
/ (Actual unit output)
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