CHAPTER 15 LEAN SYSTEM

THE CONCEPTS Operation systems that are designed to create efficient processes by taking a total system perspective Known as zero inventory, synchronous manufacturing, stockless production, continuous flow manufacturing The generic element : Just-in-time System JIT : the system that eliminates waste by cutting unnecessary inventory and removing non-value added activities in operations

JUST-IN-TIME OPERATIONS Pull Method of Material Flow  Push method : the production of the item begins in advance of customer need  Pull method : customer demand activates production of the item  Considerations : time limit, set up and process time, degree of repetition  Close control of inventory

Consistently high quality  Eliminate scraps and reworks to achieve uniform/balanced flow  Implementation of TQM  Work Method

Small Lot Sizes  “As small as possible” lot size of inventory  Reducing cost and space  Declining lead time  Achieving uniform operating system workload

Uniform Workstation Loads  Assembling the same type and number of units each day  Capacity planning (capacity constraints at critical workstations) and line balancing are used to develop master production schedule  Big lot production or mixed-model assembly

Standardized Components and Work Methods  increasing repeatability  learning to do tasks more efficiently  increasing productivity

Close Supplier Ties  frequent shipment, short lead time, on schedule and high quality  reducing the number of suppliers, using local suppliers and improving supplier relations  supplier involvement in early phases of product design

Flexible Workforce  skill level  training and cost  reduced efficiency comparing to rotation relieves and refresh workers

Line Flow, Automated Production, Prevent Maintenance  reducing the frequency of setups  large volume products - product layout  one worker multiple machines  large volume, low cost operation, reduction in inventory, greater market share (because of low cost, price can be cut)  reducing the frequency and duration of unplanned machine downtime

CONTINUOUS IMPROVEMENT By maintaining low level of inventory, problems are exposed, recorded and assigned for improvement  Eliminating too much scrap requires improving work methods, employee quality training and suppliers quality  Eliminating capacity imbalance should focus on the master production schedule and workforce flexibility  Reducing unreliable suppliers calls for cooperating better with suppliers and replacing suppliers

KANBAN SYSTEM Using cards/visible record to control the flow of production through a factory General Operating Rules :  each container must have a card  the assembly line always withdraws materials from the fabrication cell  containers of parts must never been removed from a storage area before a kanban first being posted  the container should always contain the same number of good parts

 only non defective parts should be passed along to the assembly line  total production should not exceed the total amount authorized on the kanban

Determining the number of container :  determining the amount of authorized inventory  determining the number of units to be held by each container and the number of containers flowing back and forth between the supplier and user stations  the lot size in one container reflects EOQ  the lead time = processing time per container + waiting time during the production process + time required for material handling

the number of containers needed = average demand during lead time + safety stock divided by the number of units in one container

JIT II Vendor-managed inventory includes :  issuing PO to his/her own firms on behalf of the customer  working on design ideas to help save cost and improve manufacturing processes  managing production schedule for suppliers, material contractors and other subcontractors this system is maintaining close interaction with suppliers for mutual benefits

LEAN SYSTEM IN SERVICES repetitive operations, high volume and dealing with tangible items lesser degree of JIT utilization for higher degree of customization consistently high quality - providing defect-free service uniform facility loads : reservation system and differential pricing standardized work method

close supplier ties flexible workforce automation preventive maintenance pull method of material flow line flows

STRATEGIC IMPLICATIONS Competitive priorities : low cost and consistent quality Flows : high volume & productivity, low cost Reducing space, inventory investment, lead time, paperwork Increasing equipment utilization Requiring simple planning system Setting valid priorities for scheduling Encouraging workers participation