Chapter 16 Lean Systems Russell and Taylor Operations and Supply Chain Management, 8th Edition

Lecture Outline Basic Elements of Lean Production – Slide 4Basic Elements of Lean Production Implementing Lean Systems – Slide 47Implementing Lean Systems Lean Six Sigma – Slide 49Lean Six Sigma Value Stream Mapping – Slide 50Value Stream Mapping Lean and the Environment – Slide 54Lean and the Environment Lean Services – Slide 56Lean Services © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-2

Learning Objectives Explain how the basic elements of lean eliminate waste, create flow and continuously improve operations Assess the benefits of lean, as well as the difficulties in implementing lean systems Explain how the complementary concepts of lean and six sigma work together for process improvement Construct and interpret a value stream map Create strategies for implementing lean in service industries Use lean concepts and techniques to enhance environmental initiatives © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-3

Basic Elements of Lean Production Doing more with less inventory, fewer workers, less space Just-in-time (JIT) smoothing the flow of material to arrive just as it is needed “JIT” and “Lean Production” are used interchangeably Muda waste, anything other than that which adds value to product or service © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-4

Waste in Operations © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-5

Waste in Operations © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-6

Waste in Operations © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-7

Elements of Lean Production 1.Flexible resources 2.Cellular layouts 3.Pull system 4.Kanbans 5.Small lots 6.Quick setups 7.Uniform production levels 8.Quality at the source 9.Total productive maintenance 10.Supplier networks 16-8 © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

Flexible Resources Multifunctional workers perform more than one job General-purpose machines perform several basic functions Cycle time time required for the worker to complete one pass through the operations assigned Takt time paces production to customer demand © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-9

Standard Operating Routine for a Worker © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-10

Cellular Layouts Manufacturing cells comprised of dissimilar machines brought together to manufacture a family of parts Cycle time is adjusted to match takt time by changing worker paths © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-11

Cells With Worker Routes © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-12

Worker Routes Lengthen as Volume Decreases © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-13

Pull System Material is pulled through the system when needed Reversal of traditional push system where material is pushed according to a schedule Forces cooperation Prevent over and underproduction While push systems rely on a predetermined schedule, pull systems rely on customer requests © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-14

Kanbans Card which indicates standard quantity of production Derived from two-bin inventory system Maintain discipline of pull production Authorize production and movement of goods © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-15

Sample Kanban © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-16

Origin of Kanban © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-17

Types of Kanban Production kanban –authorizes production of goods Withdrawal kanban –authorizes movement of goods Kanban square –a marked area designated to hold items Signal kanban –triangular kanban to signal production at the previous workstation Material kanban –to order material in advance of a process Supplier kanban –rotates between the factory and suppliers © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-18

Dual Kanban System © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-19

Other Kanbans © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-20

Other Kanbans © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-21

Determining Number of Kanbans © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e where N = number of kanbans or containers d = average demand over some time period L = lead time to replenish an order S = safety stock C = container size No. of Kanbans = average demand during lead time + safety stock container size N = dL + S C 16-22

Determining Number of Kanbans © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e d = 150 bottles per hour L = 30 minutes = 0.5 hours S = 0.10 (150 x 0.5) = 7.5 C = 25 bottles N= = dL + S C 16-23

Determining Number of Kanbans © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e d = 150 bottles per hour L = 30 minutes = 0.5 hours S = 0.10 (150 x 0.5) = 7.5 C = 25 bottles Round up to 4 (to allow some slack) or down to 3 (to force improvement) N= = = = 3.3 kanbans or containers dL + S C (150 x 0.5)

Small Lots Require less space and capital investment Move processes closer together Make quality problems easier to detect Make processes more dependent on each other © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-25

Inventory Hides Problems © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-26

Less Inventory Exposes Problems © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-27

Components of Lead Time Processing time Reduce number of items or improve efficiency Move time Reduce distances, simplify movements, standardize routings Waiting time Better scheduling, sufficient capacity, time blocked Setup time Generally the biggest bottleneck © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-28

Quick Setups Internal setup –Can be performed only when a process is stopped External setup –Can be performed in advance SMED Principles –Separate internal setup from external setup –Convert internal setup to external setup –Streamline all aspects of setup –Perform setup activities in parallel or eliminate them entirely © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-29

Techniques for Reducing Setup Time © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-30

Uniform Production Levels Result from smoothing production requirements on final assembly line Kanban systems can handle +/- 10% demand changes Reduce variability with more accurate forecasts Smooth demand across planning horizon Mixed-model assembly steadies component production © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-31

Mixed-Model Sequencing © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-32

Homework 16-1 © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e   As local developers prepare for an increase in housing starts, they must anticipate their demand for various materials. One such material is tile. Used in bathrooms, kitchens, and for decoration, tiles come in many shapes, colors, and sizes. In order to accommodate the varying needs, the tile manufacturer must schedule its production efficiently. Each month developers order 30,000 boxes of quarry tile, 15,000 boxes of Italian mosaic tile, and 45,000 boxes of 4-inch bathroom tile. Determine a mixed-model sequence that will efficiently meet these needs. Assume 30 days per month.  

Homework 3-1 Solution © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-34

Quality at the Source Visual control –makes problems visible Poka-yokes –prevent defects from occurring Kaizen –a system of continuous improvement; “change for the good of all” Jidoka –authority to stop the production line Andons –call lights that signal quality problems Under-capacity scheduling –leaves time for planning, problem solving, and maintenance © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-35

Poka-Yokes in Automobiles Have to put foot on brake before you can get car out of park When car is placed in gear, doors lock Anti-lock brakes Warnings when seatbelts are not fastened Warnings when low on fuel Warnings when tire is low Rear-view video camera Blind-spot detection Turn-signal lights on side mirrors Maintenance light Check engine light Most cars today will automatically shut lights off when car is off and there are no passengers inside Cannot shut off ignition if car is not in park Some cars will use LADAR or RADAR to stop the car if driver is not paying attention Safety locks for the children (child-lock) Some cars are able to detect when driver is weaving, sleepy, drowsy or drunk © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-36

Examples of Visual Control © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-37

Examples of Visual Control © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-38

Examples of Visual Control © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-39

5 Whys A key part in an effective Kaizen is finding the root cause of a problem and eliminating it A practice of asking “why?” repeatedly until the underlying cause is identified (usually requiring five questions) Simple, yet powerful technique for finding the root cause of a problem © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-40

Total Productive Maintenance (TPM) Breakdown maintenance Repairs to make failed machine operational Preventive maintenance System of periodic inspection and maintenance to keep machines operating TPM combines preventive maintenance and total quality concepts © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-41

TPM Requirements Design products that can be easily produced on existing machines Design machines for easier operation, changeover, maintenance Train and retrain workers to operate machines Purchase machines that maximize productive potential Design preventive maintenance plan spanning life of machine © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-42

5S Workplace Scan © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e Seiri (sort) Seiton (set in order) Seisou (shine) 5S Scan   Keep only what you need   A place for everything and everything in its place   Cleaning, and looking for ways to keep clean and organized Goal   Unneeded equipment, tools, furniture; unneeded items on walls, bulletins; items blocking aisles or stacked in corners; unneeded inventory, supplies, parts; safety hazards   Items not in their correct places; correct places not obvious; aisles, workstations, & equipment locations not indicated; items not put away immediately after use   Floors, walls, stairs, equipment, & surfaces not clean; cleaning materials not easily accessible; lines, labels, signs broken or unclean; other cleaning problems Eliminate or Correct 16-43

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e Seiketsu (standardize) Shisuke (sustain) 5S Scan   Maintaining and monitoring the first three categories   Sticking to the rules Goal   Necessary information not visible; standards not known; checklists missing; quantities and limits not easily recognizable; items can’t be located within 30 seconds   Number of workers without 5S training; number of daily 5S inspections not performed; number of personal items not stored; number of times job aids not available or up-to-date Eliminate or Correct 5S Workplace Scan 16-44

Supplier Networks Long-term supplier contracts 3-to-5 years, awarded to most reliable, dependable Synchronized production Synchronized to customer demand Supplier certification Many companies bill their suppliers for the impact of a defective part Mixed loads and frequent deliveries Small lots, mixed loads, delivered several times a day Precise delivery schedules Delivery windows can be as short as 15 minutes Heavy fines if missed--$32,000/hr for each hour late Standardized, sequenced delivery Nissan receives deliveries for vehicle seats four times an hour— lets supplier know 2 hrs in advance what size and color in which seats are to be unloaded Locating in close proximity to the customer © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-45

Benefits of Lean Production Reduced inventory Improved quality Lower costs Reduced space requirements Shorter lead time Increased productivity © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-46

Benefits of Lean Production Greater flexibility Better relations with suppliers Simplified scheduling and control activities Increased capacity Better use of human resources More product variety © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-47

Implementing Lean Systems Use lean production to finely tune an operating system Somewhat different in USA than Japan Lean production is still evolving Lean production is not for everyone © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-48

Drawbacks of Lean Production Highly variable demand Large variety of low-volume products Custom engineered products Mass production parts Unexpected changes in demand or supply © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-49

Lean Six Sigma Lean and Six Sigma are natural partners for process improvement Lean Eliminates waste and creates flow More continuous improvement Six Sigma Reduces variability and enhances process capabilities Requires breakthrough improvements © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-50

Value Stream Mapping (VSM) A tool for analyzing process flows and eliminating waste Specialized icons related to lean production material and information flows “aha” Kaizen bursts © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-51

VSM Shapes © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-52

VSM for Milling & Welding © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-53

VSM for Emergency Room © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-54

Lean and the Environment Identify environmental waste along with other forms These can indicate poor process design Reduce costs of material energy regulatory compliance Reduce worker health and safety risks © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-55

US EPA Recommendations Commit to eliminate environmental waste Involve staff with environmental expertise in planning for & implementing lean events Find & drive out environmental waste in specific processes by using lean tools Empower & enable workers to eliminate environmental waste in their work areas Use environmental, health & safety icons in VSM © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-56

Lean Services Basic elements of lean production apply equally to services Most prevalent applications lean retailing lean banking lean health care supply chain © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-57

Leaning the Supply Chain “pulling” a smooth flow of material through a series of suppliers to support frequent replenishment orders and changes in customer demand Firms need to share information and coordinate demand forecasts, production planning, and inventory replenishment with suppliers and supplier’s suppliers throughout supply chain © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-58

Leaning the Supply Chain Pull a smooth flow of material through the system Build a highly collaborative business environment Adopt the technology to support your system Consider “near shoring” © 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 16-59

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e Copyright 2014 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information herein