1. Operations Management
Lean Production
Operations Management
Ron Lembke

2. Waste
Waste is ‘anything other than the minimum amount of equipment, materials, parts, space, and workers’ time which are absolutely essential to add value to the product.
--Shoichiro Toyoda, Chairman, Toyota Motor Co.,
If you put your mind to it, you can squeeze water from a dry towel.
-- Eiji Toyoda, President

3. Toyota Motor Corp.
Kiichiro Toyoda, founder Toyoda Auto Only 1936 known Toyoda AA

4. Lexus -- the early years
First two Toyotas imported to U.S. 1957
Toyopet Crowns

5. Eiji Toyoda’s Ambitious Plans
Post-WWII Japanese industry in ruins
Early 1950s – toured Rouge plant
2,500 cars in 13 years. Ford: 8,000 per day
“Catch up to Americans in 4 years!”
Toyoda made delivery trucks and motorcycles, and not many of either

6. Elimination of Waste
Knew they wouldn’t beat U.S. with product innovation, concentrated on licensing patents, and producing more efficiently
Costs prevented mass-production, volume strategy of American firms.
Find ways to reduce waste, cost
Shigeo Shingo (at right)
& Taiichi Ohno, pioneers

7. Couldn’t Emulate GM GM huge batches in huge factories
Japan’s area is 10% less than California and 70% agricultural.
Put entire population of CA into 30% of state, then add 6 times as many people. (and you thought LA was crowded).
Land extremely expensive
Sprawling factories not an option

8. Just-in-Time
Downstream processes take parts from upstream as they need.
Like an American Supermarket:
Get what you want
when you want it
in the quantity you want.
Taaichi Ohno, 1956 US visit

9. 7 Types of Waste (Ohno 1988) Overproduction
Time on Hand (waiting time)
Transportation
Stock on Hand - Inventory
Waste of Processing itself
Movement
Making Defective Products

10. Seven Elements to Eliminate Waste
Focused Factories
Group Technology
Quality at the Source
JIT production
Uniform Plant Loading
Kanban production control system
Minimized setup times

11. 1. Focused Factories Small, specialized plants
No huge, vertically integrated plants
Small plants easier, cheaper to build
Tom Peters, “The Pursuit of Wow.”
Group size of 150
Know everyone else in the group

12. 2. Group Technology – Work Cell
Products grouped into families
Work cell can produce whole family
Cellular layout, not functional, U-shaped, flows through the work cell
Benefits
Much less inventory sitting around
Less material movement, fewer workers
Quality – facilitated by lower inv levels, cross-training
Cross-training
Keep skills sharp
Managers, too – respect them, not just “because they’re your boss,” but they do know what they’re talking about
Reduce boredom & fatigue
Understand overall picture, more new ideas

13. 3. Quality at the Source Do it right the first time
Stop process, correct errors immediately
Not a lot of parts to sift through to find a good one
Can’t afford high defect rates
Since low WIP, get quick feedback on errors

14. Lowering Inventory Reduces Waste
WIP hides problems

15. Lowering Inventory Reduces Waste
WIP hides problems

16. Lowering Inventory Reduces Waste
Reducing WIP makes
problem very visible
STOP

17. Lowering Inventory Reduces Waste
Remove problem, run
With less WIP

18. Lowering Inventory Reduces Waste
Reduce WIP again to find
new problems

19. Performance and WIP Level
Less WIP means products go through system faster
reducing the WIP makes you more sensitive to problems, helps you find problems faster
Stream and Rocks analogy:
Inventory (WIP) is like water in a stream
It hides the rocks
Rocks force you to keep a lot of water (WIP) in the stream

20. 4. Just In Time-- What is It?
Just-in-Time: produce the right parts, at the right time, in the right quantity
Requires repetitive, not big volume
Batch size of one
Short transit times, keep 0.1 days of supply

21. 5. Uniform Plant Loading (heijunka)
Any changes to final assembly are magnified throughout production process
Sequencing:
If mix is 50% A, 25% B, 25% C, produce
A-B-A-C-A-B-A-C…

22. Takt Time Takt time: Beat or cycle
Master production schedule: 10,000 /mo.
500 day, 250 a shift
480 minutes means 1 every 1.92 minutes

23. 6. Kanban Japanese for ‘signboard’ Method for implementing JIT
In order to produce, you need both:
material to work on, and
an available kanban.
Each work station has a fixed # kanbans.

24. 6. Kanban Worker 2 finishes a part, outbound moves over
Flow of work 1 2 3
Worker 2 finishes a part, outbound moves over
2 has a brown triangle tag available, so 2 gets another part to work on:
2 takes off 1’s blue circle tag giving it back to 1, and
puts on her brown triangle tag and moves it into position.

25. 6. Kanban When 3 finishes a part, Finished parts move over one spot
Flow of work 1 2 3
When 3 finishes a part,
Finished parts move over one spot
He has to have a yellow square tag to put on,
He gets a part from 2’s outbound pile,
And gives the brown triangle back to 2

26. 6. Kanban – “Pull” Production
Flow of work 1 2 3
When 3 finishes a part,
Finished parts move over one spot
He has to have a yellow square tag available to put on,
He gets a part from 2’s outbound pile,
And gives the brown triangle back to 2
3’s production will be taken by 4, offstage right.
Tag goes back into 3’s bin
End customers pull products through the factory

27. 6. Kanban – “Blocking” 2 3 Worker #3 finishes his part next. 2 3
But customers haven’t freed up any of the yellow square kanbans, so there is nothing for 3 to work on now.
3 could maintain his machine, or see anyone needs help 2 3

28. How is this Different? Processes can become idled (blocked) or starved
Starved: authorization (kanban card) but no material to work on
Blocked: material to work on, but no authorization
Painfully aware of problems in your system.
Orange County Toyota– cleanest DC I’ve ever seen
Material moves through the system so quickly no in- process recordkeeping is needed.
3M consultant: if we thought computers would be better than paper, we would have used them. But we didn’t.

29. Importance of Flow Ohno was very clear about this:
“Kanban is a tool for realizing just-in-time. For this tool to work fairly well, the process must be managed to flow as much as possible. This is really the basic condition. Other important conditions are leveling the product as much as possible, and always working in accordance with standard work methods.
-- Ohno, 1988, p. 3

30. 7. Setup Reduction Can’t afford to do huge runs
Have to produce in small batches
Toyota Die Change: 3 hours down to 3
SMED: Single Minute Exchange of Dies
under ten minutes
Make Internal setups into External
Internal – process has to be stopped, External
External – process can still be running
Eliminate Adjustments, Eliminate the Setup?
Some setups bigger than others – printing dye colors
Continuous Process Improvement, anyone?

31. A contrasting opinion
“Inventory is not the root of all evil, inventory is the flower of all evil. - Robert Inman, General Motors

32. Ask ‘Why’ 5 Times
5W = 1H
1. Why did the machine stop? Overload and fuse blew
2. Why the overload? Not lubricated
3. Why not lubricated? Oil pump not pumping?
4. Why not pumping? Pump shaft worn out.
5. Why worn out? No screen, scrap got in

33. 5 Whys

34. All the Animals
Guster
Bagel
Wade
Holly

35. Preventative Maintenance
Unexpected loss of production is fatal to system and must be prevented
Additional maintenance can prevent downtime, or minimize length of interruptions, when they do occur

36. Capacity Buffers
System is inflexible, no inventory buffers, so to respond, need excess capacity
Schedule less than 24 hours per day
‘Two-Shifting’
Cross Training

37. Characteristics of JIT Partnershps
Few, nearby suppliers
Supplier just like in-house upstream process
Long-term contract agreements
Steady supply rate
Frequent deliveries in small lots
Buyer helps suppliers meet quality
Suppliers use process control charts
Buyer schedules inbound freight

38. Supplier Relationships
American model:
keep your nose out of my plant.
Gain info to force price cuts
Lack of trust between suppliers
Firm encourages suppliers to share knowledge, because they don’t worry about competing
Firm helps supplier increase quality, reduce costs

39. Summary
The environment can be a control - don’t take setups for granted
Operational details are very important (Ford, Carnegie)
Controlling WIP is important
Flexibility is an asset
Quality can come first
Continual improvement is necessary for survival