Lean Operations Module

1. Lean Operations Module • House Building Game • The transition to Lean Ops • The Paradigm of Lean Operations: The ideal • Basic philosophy of Lean Ops • Methods for synchronization & waste reduction • Managing variety & flexibiltiy • Approaching the ideal : TPS • Continuous improvement • Toyota Production System (TPS) Lin/Operations/Lean Ops

2. Paradigm of Lean Operations: In Search for the Holy Grail = The ideal Process • Synchronization of all flows • 1 x 1 • production on demand • defect free • At lowest possible cost • Waste = Gap between ideal and actual • How do we set up a system to continually reduce waste ? • Improving synchronization • Visibility for continuous improvement Lin/Operations/Lean Ops

3. Toyota’s waste elimination in Operations 1. Overproduction 2. Waiting 3. Inessential handling 4. Non-value adding processing 5. Inventory in excess of immediate needs 6. Inessential motion 7. Correction necessitated by defects Lin/Operations/Lean Ops

4. House Game Improvements: What did your team do? Lin/Operations/Lean Ops

5. A B C D 1 min/job 1 min/job 1 min/job 1 min/job Lean Tool #1: Cut Batch Sizes A Simple Example • What is the theoretical flow time of the process? • What is the capacity of the process? • What does that imply for the amount of inventory needed in the process? Lin/Operations/Lean Ops

6. Batch Mfg (Batch size = 4) Flow Mfg (Batch size = 1) Example: A B 1 min/job 1 min/job C D 1 min/job 1 min/job 0 4 1 2 3 4 Elapsed Time 1 2 3 4 1 3 4 2 2 1 3 8 2 1 12 Synchronize: Cut Batch Sizes B C D B C D A A 0 1-4 5 4 Elapsed Time 1-4 6 5 5-8 8 5-8 1-4 9-12 12 9-12 1-4 5-8 13-16 16 5-8 13-16 1-4 17-20 9-12 20 Lin/Operations/Lean Ops

7. PUSH: Inputs availability triggers execution Supplier Process Customer inputs outputs PULL: Outputs need triggers execution Supplier Process Customer inputs outputs Lean Tool #2: customer demand pulls product -- Synchronization with demand Lin/Operations/Lean Ops

8. Kanban Job Processing center i WIP Processing center i + 1 Implementation: Kanban Production Control Systems Lin/Operations/Lean Ops

9. Synchronize: Just-In-Time operations JIT= have exactly what is needed, in the quantity it is needed, when it is needed, where it is needed. • Reduce transfer batches • Pull rather than push work • Set up cells Lin/Operations/Lean Ops

10. Production Control P r o d u c t i o n P r o d u c t i o n P r o d u c t i o n C o n t r o l C o n t r o l C o n t r o l Roof Cut Base Cut R o o f R o o f R o o f B a s e B a s e B a s e C u t C u t C u t C u t C u t C u t Base Assy FA B a s e B a s e B a s e F A F A F A Production Control A s s y A s s y A s s y Production Control Roof Cut Base Cut Roof Cut Base Cut Q C Q C Q C Base Assy Base Assy FA FA Lean Tool #3: From Functional Layout to Cells Lin/Operations/Lean Ops

11. Managing Flows: the Process View & product cells • Recall: “By rethinking the IBM Austin assembly plant and introducing cells, distance traveled by a card was cut from 1.5 miles to 200 yards. Floor space was reduced to half and production tripled with about the same number of workers.” • Pro’s of cells: • Con’s of cells: Lin/Operations/Lean Ops

12. Teams in Cells and Lean Ops: Human Resources issues • Advantages • Consistent with the moral ideal of “autonomy.” • Empowers the workforce through participation and autonomy in managing daily activities • Gives unprecedented responsibility to workers: • Immediate and impartial feedback of problems • Investigation of process improvements • Monitoring quality • They also gain better understanding of the process • Challenges: • Less WIP means more tight coupling and less autonomy • Rigid procedures and interdependence of cells • Team dynamics: incentives, team pressure, … • From monthly 30-day goals before to 3-minute goals now • Does not leave much room for variability Lin/Operations/Lean Ops

13. Lean Tool #4:Quality at the Source Lin/Operations/Lean Ops

14. Quality at the Source • Fool-proof/Fail-safe design (Poka-Yoke) • Inspection • Self • Automated (Jidoka) • Line-stopping empowerment (Andon) • Human infrastructure Lin/Operations/Lean Ops

15. How to run Lean Operations: Managing Variety • Monthly Production Requirement: • How should production be scheduled for the month? Lin/Operations/Lean Ops

16. FGI FGI time time Synchronize: HeijunkaMixed Level/Balanced Production Batch Production Schedule Mixed Production Schedule (AAAABBBB..) (ABAB...) Product Apr/12.................15...........................30 Apr/12....................15.......................30 A B Lin/Operations/Lean Ops

17. Reducing Waste: Reduced Setup Times • What happens if we have long setup/changeover times? • How do synchronized production with variety (product mix)? Lin/Operations/Lean Ops

18. Synchronize: HeijunkaUniform Plant Loading • This does not mean building a single product. • Rather: • maintain a stable mix of products, • and firm frozen schedules based on actual orders • Benefits: • Costs: Must reduce scale economies Lin/Operations/Lean Ops

19. Reducing Waste:Mixed-Load Pickup and Delivery Part A Plant Individual Pickup Assembly Line Part B Plant Part C Plant Part A Plant Mixed-Load Pickup Assembly Line Part B Plant Part C Plant Lin/Operations/Lean Ops

20. THE DICE GAME INPUT Buffer OUTPUT Buffer Unfair Dice which rolls into either 3 or 4 6 Face Fair Dice Average Capacity of Each Step = Average Capacity of Each Stage = Average Process Capacity = Average Capacity of The Process = Play The Game Lin/Operations/Lean Ops

21. 195 185 175 Series1 Series2 Series3 Output after 50 Runs 165 Series4 Series5 Average 155 145 135 0 5 10 15 20 25 Starting Inventory in each Buffer The impact of inventory and variability: Output of Match Game 2-face die (s=0.7) 6-face die (s=1.9) Lin/Operations/Lean Ops

22. Too Much Space Missed Due Dates Late Deliveries Too much paperwork Inventory Engineering Change Orders Scrap & Rework 100% inspection Long queues Poor Quality Machine Downtime Reducing waste: Increase Problem Visibility Lower the Water to Expose the Rocks Lin/Operations/Lean Ops

23. Time plays the role of Inventory in Lean Service Operations TIME Lin/Operations/Lean Ops

24. Toyota Motor Manufacturing, USA Lin/Operations/Lean Ops

25. Toyota financial performance Fig 1: The Economist, 2005. Fig 2: Barron’s 2004. Lin/Operations/Lean Ops

26. Impact of Toyota Name on Resale Value Lin/Operations/Lean Ops

27. The Changing Cost of Warranty Management Warranty Problems per Vehicle vs. Warranty Costs (*) (**) (*)JD Power 1QS, May 2001 (**) Business Week Article, June 25, 2001. Lin/Operations/Lean Ops

28. Continuous Improvement: Kaizen • Increase visibility of waste • Targeted improvements • Active worker involvement • Time for experimentation • Supplier involvement • Exploratory stress • Human infrastructure Lin/Operations/Lean Ops

29. Lean Operations: Best Implementation is TPS • TPS is a production management system that aims for the “ideal” through continuous improvement • Includes, but goes way beyond JIT. Pillars: • Synchronization • Quality at Source • Continuous Improvement (Kaizen): through visibility & empowerment .... Lin/Operations/Lean Ops

30. Learning ObjectivesLean Operations • Paradigm of Lean Operations: • Strive for the ideal by eliminating waste • Flow Synchronization • Reduced batch sizes • Level Mixed Production: Heijunka • Pull production control systems (vs. push) • Implementation: Kanban • Layout: Cellular operations • Quality at the source • Continuous Improvement • Increase problem visibility (river analogy) • Kaizen Lin/Operations/Lean Ops