Class 24: Process Integration: Lean Operations Chapter 10.1-10.4 OPSM301 Spring 2012 Class 24: Process Integration: Lean Operations Chapter 10.1-10.4

Announcements Class on Thursday May 10 in SOS 180

Paradigm of Lean Operations: In Search for the Holy Grail The ideal Process = Synchronization of all flows production on demand defect free At lowest possible cost Waste = Gap between ideal and actual How do we sync at lowest cost?  Lean Tools How do we set up a system to continually reduce waste ? J.A. Van Mieghem/Operations/Lean Ops

The architect behind Lean Operations: The architect behind Lean Operations: Toyota’s Taiichi Ohno and waste elimination Taiichi Ohno: “Toyota Production System: Beyond Large-Scale Production” Sources of waste at Toyota: 1. Overproduction 2. Waiting 3. Inessential handling (transportation) 4. Non-value adding processing 5. Inventory in excess of immediate needs 6. Inessential motion 7. Correction necessitated by defects Lean operations has been defined as “a business system for organizing and managing product development, operations, suppliers, and customer relations that requires less human effort, less space, less capital, and less time to make products with fewer defects to precise customer desires, compared with the previous system of mass production.” J.A. Van Mieghem/Operations/Lean Ops

Is lean dead? The just-in-time approach to manufacturing, which has swept the world's factories over the past two decades, has made a virtue out of keeping inventories lean. But some manufacturers think it has gone too far, and that having a little extra padding might be a healthier option. Wall Street Journal (Apr 29, 2011).

Some Japanese Kaizen-continuous improvement Muda-eliminate waste Jidoka-quality at the source, root cause Heijunka-level production, mix model Kanban-JIT (just intime)-a mechanism to “pull” production

Lean Tool #1: cut batch sizes An illustrative example Consider the following 4-step process: What is: The bottleneck: The process capacity or maximal R: The theoretical flow time Tth The minimal amount of inventory needed to run at capacity: Ith Call this scenario 1, the best. Let’s now consider what happens if we have (transfer) batches A 1 min/job Resource 1 B Resource 2 C Resource 3 D Resource 4 J.A. Van Mieghem/Operations/Lean Ops

Lean Tool #1: cut batch size ABCD example continued Batch Shop (Batchsize = 4) Flow Shop (Batchsize = 1) A B C D Elapsed Time 1 T 2 3 4 5 T = I = R = = scenario ? A B C D 1 2 3 4 6 5 8 7 1 2 Elapsed Time 3 4 9 6 5 8 7 1 2 1 3 2 4 4 3 6 5 9 6 5 8 7 1 2 1 3 2 4 T 8 7 9 T = I = R = J.A. Van Mieghem/Operations/Lean Ops

High-Inventory Manufacturing Order : 1000 units 4 months (24 hrs a day, 7 days a week) A : 1/2 hr/unit inventory B : 1/10 hr/unit avg. inventory C : 1 hr/unit B : 1/10 hr/unit D : 3/4 hr/unit 1000 2000 Time (hours)

Low-Inventory Manufacturing Order : 1000 units 2 months Move batches of 200 Release materials according to the bottleneck A : 1/2 hr/unit B : 1/10 hr/unit C : 1 hr/unit inventory B : 1/10 hr/unit avg. inventory D : 3/4 hr/unit 1000 2000 Time (hours)

When do you detect quality problems? Quality control A B C B D Damage done

How do you incorporate engineering changes? B C B D Engineering change one month after start of order

Shorter Lead time - High margins Quoted lead time of the order is 3 months A B C B D overtime No overtime

Lean Tool #2: process on demand = pull Just-In-Time operations JIT = have exactly what is needed, in the quantity it is needed, when it is needed, where it is needed. J.A. Van Mieghem/Operations/Lean Ops

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

Lean Tool #2: Pull Implementation: Kanban Production Control Systems Processing center i Processing center i + 1 WIP Job http://www.toyota.co.jp/en/vision/production_system/video.html J.A. Van Mieghem/Operations/Lean Ops

Lean Tool #3: Quality at the Source Stage: At Source Next Process End of Line Final Inspection End User Cost: Impact: • Little • Minor • Rework • Much rework • Warranty delay • Reschedule • Delivery delay • Complaints • Inspect more • Reputation • Market share

Reducing Waste: Quality at the Source Fool-proof/Fail-safe design (Poka-Yoke) Inspection Self Automated (Jidoka) Line-stopping empowerment (Andon) http://www.youtube.com/watch?v=B_nSvN_L4hc Line-stopping empowerment Poka Yoke and Jidoka Trouble! Approach for operators • Preventative • If trouble, STOP! • If defective don't pass Approach for machines A mistake-proofing system prevents errors and defects Stop line when defects are detected or machine breaks down J.A. Van Mieghem/Operations/Lean Ops

Lean Tool #4: Flexible Resources & Standardized Work Cross training of workforce allows resource pooling Use of IT in services Standardisation helps a system be highly flexible to respond to variability – ball boys and girls have very standardised processes but the ball can go anywhere … Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall J.A. Van Mieghem/

Lean Tool #5: Heijunka Mixed Level/Balanced Production Batch Production Schedule Mixed Production Schedule (AAAABBBB..) (ABAB...) Product April 1.................15...........................30 April 1....................15.......................30 A B FGI FGI Stress: this is only for multi-product settings Role of setup/changeover time reduction Role of frozen schedules Role of mixed pickups/logistics time time http://www.toyota.co.jp/en/vision/production_system/video.html J.A. Van Mieghem/Operations/Lean Ops

Lean Tool #6: From Functional Layout to Product Cell organization Production Control Roof Cut Base FA Assy Department 1 Production Control Production Control Production Control Cell 1 Department 2 Department 2 Roof Cut Roof Cut Roof Cut Base Cut Base Cut Base Cut Production Control Roof Cut Base FA Assy Production Control Roof Cut Base FA Assy Department 2 Department 2 FA FA FA Base Assy Base Assy Base Assy Cell 2 Cell 3 J.A. Van Mieghem/Operations/Lean Ops

Towards a system of continuous improvement: Increase Problem Visibility– River Analogy Scrap & Rework Missed Due Dates Too Much Space Late Deliveries Poor Quality Machine Downtime Engineering Change Orders Long queues Too much paperwork 100% inspection Inventory Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall J.A. Van Mieghem/Operations/Lean Ops

Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

Visibility: Time plays the role of Inventory in Lean Service Operations Instead of I, look at promising 2 weeks to customers But Track internally whenever T > 13 days, + Investigate + Reduce sigma. J.A. Van Mieghem/Operations/Lean Ops

Towards a system of continuous improvement: Kaizen Tools Reduce variability Standard operating procedures Increase visibility of waste and quality at source Line-stopping empowerment (Andon) Quality inspection: Self & Automated (Jidoka) Fool-proof/Fail-safe design (Poka-Yoke) Targeted improvements: root cause analysis (5 Why’s) Active worker involvement Time for experimentation Supplier involvement Exploratory stress Human infrastructure & process measurement and review (visual management) J.A. Van Mieghem/Operations/Lean Ops

Learning Objectives Lean Operations Paradigm of Lean Operations: Strive for the ideal by eliminating waste This is a total business management system Synchronization Tools Reduced batch sizes Pull production control systems (vs. push)—JIT & Kanban control Quality at the source Resource pooling Level loading (Heijunka) Layout: Cellular operations Set up a System for Continuous Improvement Reduce variability (standard operating procedures) Increase visibility (river analogy) Improve human infrastructure J.A. Van Mieghem/Operations/Lean Ops

How about the workers? Modern Times by Charlie Chaplin

Worker s’ Response to TQM Implementations in Turkey A study in Brisa Factory,1998: Positive Results of TQM: 44% reduction in accidents, 50% reduction in absenteeism and turnover rate Worker education levels increased Job security increased- this is regarded as the most important issue by the workers There were also complaints: More intense work, need to work more

Quotes from Workers: Reference: Engin Yıldırım: “Modern Management Techniques in the Developing World: The Case of TQM and its Impact on Workers in Turkey” Work, Employment, Society, 1999, vol. 13, no. 4, pp. 693-709.

Not only controlling actions bu also ideology A critisism of Lean Management System: From despotic management to hegemonic management* Not only controlling actions bu also ideology control by creating a commonality of interests where conflict is replaced by mutual interest and co-operation. Toyotasa attempts to establish hegemony in the factory, which would not leave the worker’s brain in a state of freedom, allowing for the possibility of non-conformist thoughts Reference: Gamze Yücesan-Özdemir: “Hidden Forms of Resistance among Turkish Workers: Hegemonic Incorporation or Building Blocks for Working Class Struggle?” Capital and Class, no. 81, Autumn 2003, pp. 31-59.

Some quotes from workers on how they feel about working environment: Reference: Gamze Yücesan-Özdemir: “Hidden Forms of Resistance among Turkish Workers: Hegemonic Incorporation or Building Blocks for Working Class Struggle?” Capital and Class, no. 81, Autumn 2003, pp. 31-59.

Improvement as a process OPNS454 Week 9: Improvement and Innovation 4/18/2018 The Ideal Operation perfectly synchronized with demand at lowest cost D = deviation from ideal = waste, variability, inflexibility = opportunity for improvement The Actual Operation Continuous Improvement Process Increase visibility of D Andon pulls, workplace organization Exploratory stress Process measurement, visual management Remind them of lean ops philosophy discussed in the core class + role of visibility (later, automation may reduce this) and employee involvement in kaizen (standardization will reduce this) Reduce D Root cause analysis & problem solving mindset Waste reduction (Lean tools) Variability reduction (Six Sigma, TQM) OPNS454 © Van Mieghem

Ongoing objectives Improve process flows Increase process flexibility Efficient plant layout Fast and accurate flow of material and information Increase process flexibility Reduce changeover times Cross-training Decrease process variability Flow rates Processing times Quality Minimize processing costs Eliminate transportation, inspection, rework

How? Improve process flows Increase process flexibility Cellular layouts Demand pull mechanisms Increase process flexibility Fast changeovers Smaller lotsizes, level production Decrease process variability Standardize Improve supplier reliability and capacity Safety capacity, preventive maintenance Fast feedback and correction Minimize processing costs Improve quality, eliminate non-value-adding activities