Matching Supply with Demand: An Introduction to Operations Management Gérard Cachon ChristianTerwiesch All slides in this file are copyrighted by Gerard Cachon and Christian Terwiesch. Any instructor that adopts Matching Supply with Demand: An Introduction to Operations Management as a required text for their course is free to use and modify these slides as desired. All others must obtain explicit written permission from the authors to use these slides.

Zero non-value added activities (muda) Zero defects, zero breakdowns, zero inventory, zero set-up Production flow synchronized with demand (JIT) One-unit-at-a-time flow Mixed model production (heijunka) Piece-by-piece transfer (ikko-nagashi) Match production demand based on Takt time Pull instead of push Supermarket / Kanban Make-to-order Quality methods to reduce defects Fool-proofing (poka-yoke) and visual feed-back Detect-stop-alert (Jidoka) Defects at machines (original Jidoka) Defects in assembly (Andon cord) Build-in-quality (tsukurikomi) Flexibility Standardization of work Worker involvement Quality circles (Kaizen) Fishbone diagrams (Ishikawa) Skill development / X-training Reduction of Variability Quartile Analysis Standard operating procedures Adjustment of capacity to meet takt-time Multi-task assignment (takotei-mochi) Reduce inventory to expose defects

Net opera- ting time Idling and minor stop-pages Re-duced Speed (quartile plot) OEEDefectsStart-upAvail- able time Break- down Change- overs Total planned up-time Downtime losses Availability rate 55 % Speed losses Performance rate 82 % XX = OEE 30 % Quality losses Quality rate 67 % Improve- ment potential > 300%

Kanban Direction of production flow upstreamdownstream Kanban Authorize production of next unit Figure 8.13.: Simplified mechanics of a Kanban system

Figure 8.12.: Information turnaround time and its relationship with buffer size ITAT=7*1 minute ITAT=2*1 minute Good unit Defective unit

Inventory in process Buffer argument: “Increase inventory” Toyota argument: “Decrease inventory” Figure 8.14.: More or less inventory? A simple metaphor

Figure 8.15.: Tension between flow rate and inventory levels / ITAT Flow Rate Inventory High Low High Inventory (Long ITAT) Low Inventory (short ITAT) Now Frontier reflecting current process Reduce inventory (blocking or starving become more likely) Increase inventory (smooth flow) New frontier Path advocated by Toyota production system