Lean Production

1. Lean Production Ron Tibben-Lembke Operations Management

2. Just In Time-- What is It? • Integrated set of activities designed to achieve high-volume production using minimal inventories of raw materials, WIP, and FGI. • Big JIT A.k.a. “lean production” -- Eliminate waste in all aspects of production activities • Little JIT – scheduling goods inventories and production, as needed • Also known as Stockless Production, Toyota Production System

3. Toyoda Automatic Loom Sakichi Toyoda (1867-1930) – Invented a loom which stops automatically if the thread breaks. His son Kiirchiro, started the automotive department of Toyoda Loom Works.

4. JIT Origins in Japan • Post-WWII Japanese industry in ruins • “Catch up to Americans in 4 years!” • Kiichirō Toyoda, 1946 • Toyoda made delivery trucks and motorcycles, and not many of either

5. -- the early years • First two Toyopet Crowns arrive U.S. 1957

6. Ohno – Reduce Waste • If Americans are 9x as productive, we must be wasting something. (p.3) • “The basis of the Toyota production system is the absolute elimination of waste.” (Ohno, p. 4)

7. Waste Waste is ‘anything other than the minimum amount of equipment, materials, parts, space, and workers’ time which are absolutely essential to add value to the product. --Shoichiro Toyoda President, Toyota Motor Co. If you put your mind to it, you can squeeze water from a dry towel. -- Eiji Toyoda, President 1967-1982

8. Elimination of Waste • Knew they wouldn’t beat U.S. with product innovation, concentrated on licensing patents, and producing more efficiently • Costs prevented mass-production, volume strategy of American firms. • Find ways to reduce waste, cost • Shigeo Shingo (at right) • & Taiichi Ohno, pioneers

9. Two Pillars of Toyota System • Just-in-Time: a flow of right parts, at the right time, in the right quantity • Autonomation: ‘Automation with a human touch’ • (make machine mistake-proof) • Workers don’t have to baby-sit machines • Stop automatically if downstream machine stops

10. Couldn’t Emulate GM • GM huge batches in huge factories • Japan’s area is 10% less than California and 70% agricultural. • Put entire population of CA into 30% of state, then add 6 times as many people. (and you thought LA was crowded). • Land extremely expensive • Sprawling factories not an option

11. Small Batches • GM’s large batches require large amounts of storage space. • GM produces in large batches because of significant setup costs. • If Toyota had the same large setup costs, it could never afford small batches. • Reduce setup cost to reduce batch size. • GM didn’t think of doing this.

12. 7 Types of Waste (Ohno 1988) • Overproduction • Time on Hand (waiting time) • Transportation • Stock on Hand - Inventory • Waste of Processing itself • Movement • Making Defective Products

13. Seven Elements to Eliminate Waste • Focused Factories • Group Technology • Quality at the Source • JIT production • Uniform Plant Loading • Kanban production control system • Minimized setup times

14. Focused Factories • Small, specialized plants • No huge, vertically integrated plants • 30 -1,000 workers • Tom Peters

15. Group Technology-Layout • Not enough WIP to have 1 person run 4 milling machines • Don’t departmentalize, organize machines by product type • Cellular layout • Much less inventory sitting around • Batch size of one

16. Cross Training • To maintain the flow, workers have to be able to help out as needed • Rotate workers through jobs: • Keep skills sharp (managers too - prove they know what they’re doing) • Reduce boredom & fatigue • Expand understanding of overall picture • Increase potential for new ideas

17. Employee Input • Employee has a brain, why not use it? • Quality circles look for ways to improve • Emphasis on Continuous Process Improvement

18. Total Quality Management • Not a lot of parts to sift through to find a good one • Can’t afford high defect rates • Since low WIP, get quick feedback on errors

19. Ask ‘Why’ 5 Times • 5W = 1H 1. Why did the machine stop? Overload and fuse blew 2. Why the overload? Not lubricated 3. Why not lubricated? Oil pump not pumping? 4. Why not pumping? Pump shaft worn out. 5. Why worn out? No screen, scrap got in

20. Just-in-Time • Downstream processes take parts from upstream as they need. • Like an American Supermarket: • Get what you want • when you want it • in the quantity you want.

21. Kanban • Japanese for ‘signboard’ • Method Toyota used for implementing JIT • Each work station has a fixed # kanbans. • In order to produce, you need both material to work on, and an available kanban.

22. Kanban Flow of work 2 3 • Worker 2 finishes a part, outbound moves over • 2 gets another part to work on: • 2 takes off 1’s green tag giving it back to 1, and • puts on her blue tag and moves it into position.

23. Kanban Flow of work 2 3 • When 3 finishes a part, • Finished parts move over one spot • He has to have a red tag available to put on, • He gets a part from 2’s outbound pile, • And gives the blue back to 2

24. Kanban Flow of work 2 3 • When 3 finishes a part, • Finished parts move over one spot • He has to have a red tag available to put on, • He gets a part from 2’s outbound pile, • And gives the blue back to 2 • 3’s production will be taken by 4, offstage right. • Tag goes back into 3’s bin

25. Kanbans 2 3 • Red finishes his part next. • But 4 hasn’t freed up any of the red kanbans, so there is nothing for 3 to work on now. • 3 could maintain his machine, or see if 4 needs help 2 3

26. How is this Different? • Processes can become idled (blocked) or starved • This makes you painfully aware of problems in your system. • Material moves through the system so quickly no in-process recordkeeping is needed.

27. Importance of Flow • Ohno was very clear about this: “Kanban is a tool for realizing just-in-time. For this tool to work fairly well, the process must be managed to flow as much as possible. This is really the basic condition. Other important conditions are leveling the product as much as possible, and always working in accordance with standard work methods. -- Ohno, 1988, p. 3

28. Performance and WIP Level • Less WIP means products go through system faster • reducing the WIP makes you more sensitive to problems, helps you find problems faster • Stream and Rocks analogy: • Inventory (WIP) is like water in a stream • It hides the rocks • Rocks force you to keep a lot of water (WIP) in the stream

29. Lowering Inventory Reduces Waste WIP hides problems

30. Lowering Inventory Reduces Waste WIP hides problems

31. STOP Lowering Inventory Reduces Waste Reducing WIP makes problem very visible

32. Lowering Inventory Reduces Waste Remove problem, run With less WIP

33. Lowering Inventory Reduces Waste Reduce WIP again to find new problems

34. A contrasting opinion “Inventory is not the root of all evil, inventory is the flower of all evil. - Robert Inman, General Motors

35. Setup Reduction • Can’t afford to do huge runs • Have to produce in small batches • Toyota Die Change: 3 hours down to 3 SMED: under ten minutes • Techniques • Make internal setups into External • Eliminate Adjustments • Eliminate the Setup

36. Capacity Buffers • System is inflexible, no inventory buffers, so to respond, need excess capacity • Schedule less than 24 hours per day • ‘Two-Shifting’ 4-8-4-8 • Cross Training

37. What about making several products? • Each station has to keep on hand parts to satisfy anything downstream station might ask for • Want to avoid many parts for each of several products • This means more WIP, more inventory, more expense, unless we produce in smaller batches

38. Production Smoothing & Sequencing • Smoothing • Master production schedule: 10,000 /mo. • 500 day, 250 a shift • 480 minutes means 1 every 1.92 minutes • Sequencing: • If mix is 50% A, 25% B, 25% C, produce A-B-A-C-A-B-A-C…

39. Suppliers • Buyer & Supplier form JIT partnerships • JIT partnerships eliminate: • Unnecessary activities • In-plant inventory • In-transit inventory • Poor suppliers

40. Characteristics of JIT Partnershps • Few, nearby suppliers • Supplier just like in-house upstream process • Long-term contract agreements • Steady supply rate • Frequent deliveries in small lots • Buyer helps suppliers meet quality • Suppliers use process control charts • Buyer schedules inbound freight

41. Supplier Worries • Lack of flexibility • Long-term contract with 1 customer • Poor customer scheduling • Frequent engineering changes • Strict quality assurance • Small lot sizes • Close physical proximity

42. Supplier Relationships • American model: • keep your nose out of my plant. • Gain info to force price cuts • Lack of trust between suppliers • Firm encourages suppliers to share knowledge, because they don’t worry about competing • Firm helps supplier increase quality, reduce costs

43. Preventative Maintenance • Unexpected loss of production is fatal to system and must be prevented • Additional maintenance can prevent downtime, or minimize length of interruptions, when they do occur

44. Inventory • Traditionally, inventory exists in case problems arise. • JIT objective: Eliminate inventory • JIT requires • Small lot sizes • Low setup time • Containers for fixed number of parts • JIT inventory: Minimum inventory to keep system running.

45. Lessons Learned from JIT • The environment can be a control - don’t take setups for granted • Operational details are very important (Ford, Carnegie) • Controlling WIP is important • Flexibility is an asset • Quality can come first • Continual improvement is necessary for survival

46. What is not JIT • Having shipments come in just when you need them does not mean JIT goals accomplished • If supplier still produces in large lots, but delivers in small, you have just forced supplier to incur the holding costs

47. System Requirements • Runs with very little inventory • Requires high quality • Management philosophy of continuous and forced problem solving • Elimination of waste

48. Lean Tools • Value Stream mapping • Takt time (German for pace or beat) available work time per shift = ------------------------------------------- Customer demand per shift • Cycle time = how often a piece comes off of production line

49. Where to get more information • Taiichi Ohno - Toyota Production System • Schonberger - Japanese Manufacturing Techniques • Factory Physics - Hopp & Spearman • Shigeo Shingo - Toyota Production System

50. JIT Books in English • 1981 –Shigeo Shingo – “Study of the Toyota Production System” • 1982 – Richard Schonberger – “Japanese Manufacturing Techniques” • 1983 – Richard Hall “Zero Inventories” • 1988 – Taiichi Ohno – “Toyota Production System” • 1989 – Shigeo Shingo – “Study of the Toyota Production System”