Operations Management Session 6 Lean Production Operations Management Session 6

Objectives By the end of this session, student will be able to: Discuss relative merits of different types of relationships with suppliers Discuss criteria for selection of suppliers Identify different purchasing strategies Evaluate different approaches to e-procurement

Topics Make/Buy decision Vertical integration Purchasing strategies Kieretsu Supply chain partnerships Virtual companies Supplier selection Purchasing techniques E-procurement

Lean Operations & JIT Lean Philosophy of Operations Eliminate Waste Involve Everyone Continuous Improvement JIT as a set of techniques for managing operations Basic working practices Design for manufacture Operations focus Small simple machines Flow layout TPM Set-up reduction Total people involvement Visibility JIT supply JIT as a method of planning and control:- Pull scheduling Kanban control Levelled scheduling Mixed modelling Synchronisation

Eliminate Waste Muda – anything that does not add value for the customer Products in storage Products being inspected Products waiting in queues Defective products Unnecessary movement of materials or workers

Involve Everyone “High dependency” – JIT and TQM heighten the dependency of an organisation on its agencies – especially employees and suppliers “Respect for humans” Team-based problem solving Job enrichment Job rotation Multi-skilling

Continuous Improvement - kaizen Generate sustained involvement in CI Ability to link CI activities to the strategic goals of the company Move CI activity across organisational boundaries Manage strategically the development of CI Articulate and demonstrate CI’s values Ability to learn through CI activity

Basic Working Practices Discipline - standards of quality and safety Flexibility – removal of grading structures and restrictive practices Equality – fair and egalitarian personnel policies Autonomy – delegate responsibility Development of personnel - training Quality of working life – security of employment, involvement in decision making Creativity – improving the job Total people involvement – selecting new recruits, dealing directly with suppliers and customers, planning and reviewing

Design for Manufacture If a product is easy to make it will be economical to produce Consider the manufacturability early in the design phase Integrate product design with process planning and design Fewer components Use of sub-assemblies Better use of materials Improvement of processing techniques

Operations Focus “Simplicity, repetition and experience breed competence” Focus each process on a limited set of products, technologies and markets Structure operations objectives so that they are focused and coherent

Small Simple Machines Several small machines can perform different processes simultaneously If one large machine breaks down the process stops completely Small machines can be moved easily Lower risk investment decision

Layout for Smooth Flow Process Layout Work Cell 1 2 2 5 4 3 1 6 LATHE SAW 2 SAW PRESS LATHE 2 SAW 5 4 LATHE HEAT TREAT LATHE GRINDER 3 1 PRESS GRINDER HEAT TREAT 6 PRESS GRINDER

Total Productive Maintenance (TPM) Five Goals: - Improve equipment effectiveness – examine faults to see if equipment can be used more effectively Achieve autonomous maintenance – operators take part in maintenance leaving engineers to improve systems Plan maintenance – fully worked out approach Train all staff in relevant maintenance skills – appropriate and continuous training Achieve early equipment management – ‘maintenance prevention’ at design and installation stage

Set-up Reduction The time taken to change over the process from one activity to the next. eg. pre-set tools so that a complete unit is fixed to the machine instead of having to be built up while the machine is stopped

Steps to Reduce Setup Time Initial Setup Time Separate setup into preparation, and actual setup, doing as much as possible while the machine/process is running (save 30 minutes) Move material closer and improve material handling (save 20 minutes) Standardize and improve tooling (save 15 minutes) 90 min 60 min 45 min 25 min 15 min Use one-touch system to eliminate adjustments (save 10 minutes) Training operators and standardizing work procedures (save 2 minutes) Step 1 Step 2 Step 3 Step 4 Step 5 13 min

Visibility Performance measures are clearly displayed Coloured lights indicate stoppages – Andon SPC control charts regularly updated and clearly displayed Visual control systems – kanbans Workplace layouts clear and open plan

JIT Suppliers Incoming material and finished goods involve waste Buyer and supplier form JIT partnerships JIT partnerships eliminate Unnecessary activities In-plant inventory In-transit inventory Poor suppliers 22

Kanban Control Japanese word for card Pronounced ‘kahn-bahn’ (not ‘can-ban’) Authorizes production from downstream operations ‘Pulls’ material through plant May be a card, flag, verbal signal etc. Used often with fixed-size containers Add or remove containers to change production rate

Case Study Toyota Production System From Operations Management 4th ed., Slack et al

Levelled Scheduling Heijunka Production needed in 20 day period: Product A = 3000 Product B = 1000 Product C = 1000 Current batch sizes: Product A = 600 Product B = 200 Product C = 200 By reducing set up times can produce batch sizes small enough for 1 day: Product A = 150 Product B = 50 Product C = 50 Considerably reduces inventory and makes the process more responsive

Labor Specialization Involves Breaking jobs into small component parts Assigning specialists to do each part First noted by Adam Smith (1876) Observed how workers in pin factory divided tasks into smaller components Found in manufacturing & service industries 15

Labour Specialisation Often Reduces Cost Greater dexterity & faster learning Less lost time changing jobs or tools Use more specialized tools Pay only for needed skills 16

Job Expansion Process of adding more variety to jobs Intended to reduce boredom associated with labor specialization Methods Job enlargement Job enrichment Job rotation Employee empowerment 17

Job Expansion/Enrichment Control Planning Enriched Job Enlarged Job Task #2 Present Job Task #3 18

Job Expansion Constraints Higher capital cost Workers’ preferences Example: Some people prefer simple jobs Higher wages required Smaller labour pool Increased accident rates Lack of technology 19

Employee Empowerment Employee Empowerment Decision-Making Control Planning 21

Job Design Continuum Self-directed Teams Increasing reliance on employees contribution and increasing acceptance of responsibility by employee Empowerment Enrichment Enlargement Specialization 22

Limitations to Job Enlargement/Job Enrichment Higher capital cost Many individuals prefer simple jobs Higher wages are required since the worker must utilize a higher level of skill A smaller labor pool exists of persons able and willing to perform enriched or enlarged jobs Increased accident rates may occur Current technology in some industries does not lend itself to job enlargement and enrichment 23

Case Study Create a schedule for a motor race pit stop