1. Operations and Supply Chain Management, 8th Edition
Chapter 16
Lean Systems
Russell and Taylor
Operations and Supply Chain Management, 8th Edition

2. Lecture Outline Basic Elements of Lean Production – Slide 4
Implementing Lean Systems – Slide 47
Lean Six Sigma – Slide 49
Value Stream Mapping – Slide 50
Lean and the Environment – Slide 54
Lean Services – Slide 56
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

3. Learning Objectives
Explain how the basic elements of lean eliminate waste, create flow and continuously improve operations
Assess the benefits of lean, as well as the difficulties in implementing lean systems
Explain how the complementary concepts of lean and six sigma work together for process improvement
Construct and interpret a value stream map
Create strategies for implementing lean in service industries
Use lean concepts and techniques to enhance environmental initiatives
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

4. Basic Elements of Lean Production
Doing more with less inventory, fewer workers, less space
Just-in-time (JIT)
smoothing the flow of material to arrive just as it is needed
“JIT” and “Lean Production” are used interchangeably
Muda
waste, anything other than that which adds value to product or service
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

5. Waste in Operations
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

6. Waste in Operations
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

7. Waste in Operations
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

8. Elements of Lean Production
Flexible resources
Cellular layouts
Pull system
Kanbans
Small lots
Quick setups
Uniform production levels
Quality at the source
Total productive maintenance
Supplier networks
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

9. Flexible Resources Multifunctional workers
perform more than one job
General-purpose machines perform several basic functions
Cycle time
time required for the worker to complete one pass through the operations assigned
Takt time
paces production to customer demand
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

10. Standard Operating Routine for a Worker
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11. Cellular Layouts Manufacturing cells
comprised of dissimilar machines brought together to manufacture a family of parts
Cycle time is adjusted to match takt time by changing worker paths
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

12. Cells With Worker Routes
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13. Worker Routes Lengthen as Volume Decreases
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

14. Pull System Material is pulled through the system when needed
Reversal of traditional push system where material is pushed according to a schedule
Forces cooperation
Prevent over and underproduction
While push systems rely on a predetermined schedule, pull systems rely on customer requests
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

15. Kanbans Card which indicates standard quantity of production
Derived from two-bin inventory system
Maintain discipline of pull production
Authorize production and movement of goods
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

16. Sample Kanban
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

17. Origin of Kanban
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

18. Types of Kanban Production kanban Withdrawal kanban Kanban square
authorizes production of goods
Withdrawal kanban
authorizes movement of goods
Kanban square
a marked area designated to hold items
Signal kanban
triangular kanban to signal production at the previous workstation
Material kanban
to order material in advance of a process
Supplier kanban
rotates between the factory and suppliers
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

19. Dual Kanban System
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20. Other Kanbans
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

21. Other Kanbans
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

22. Determining Number of Kanbans
where
N = number of kanbans or containers
d = average demand over some time period
L = lead time to replenish an order
S = safety stock
C = container size
No. of Kanbans =
average demand during lead time + safety stock
container size
N =
dL + S C
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

23. Determining Number of Kanbans
d = 150 bottles per hour
L = 30 minutes = 0.5 hours
S = 0.10 (150 x 0.5) = 7.5
C = 25 bottles
N = =
dL + S C
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

24. Determining Number of Kanbans
d = 150 bottles per hour
L = 30 minutes = 0.5 hours
S = 0.10 (150 x 0.5) = 7.5
C = 25 bottles
Round up to 4 (to allow some slack) or down to 3 (to force improvement)
N = =
= = 3.3 kanbans or containers
dL + S C
(150 x 0.5) + 7.5 25
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

25. Small Lots Require less space and capital investment
Move processes closer together
Make quality problems easier to detect
Make processes more dependent on each other
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

26. Inventory Hides Problems
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27. Less Inventory Exposes Problems
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28. Components of Lead Time
Processing time
Reduce number of items or improve efficiency
Move time
Reduce distances, simplify movements, standardize routings
Waiting time
Better scheduling, sufficient capacity
Setup time
Generally the biggest bottleneck
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

29. Quick Setups Internal setup External setup SMED Principles
Can be performed only when a process is stopped
External setup
Can be performed in advance
SMED Principles
Separate internal setup from external setup
Convert internal setup to external setup
Streamline all aspects of setup
Perform setup activities in parallel or eliminate them entirely
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

30. Techniques for Reducing Setup Time
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31. Uniform Production Levels
Result from smoothing production requirements on final assembly line
Kanban systems can handle +/- 10% demand changes
Reduce variability with more accurate forecasts
Smooth demand across planning horizon
Mixed-model assembly steadies component production
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

32. Mixed-Model Sequencing
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33. Quality at the Source Visual control Poka-yokes Kaizen Jidoka Andons
makes problems visible
Poka-yokes
prevent defects from occurring
Kaizen
a system of continuous improvement; “change for the good of all”
Jidoka
authority to stop the production line
Andons
call lights that signal quality problems
Under-capacity scheduling
leaves time for planning, problem solving, and maintenance
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

34. Examples of Visual Control
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35. Examples of Visual Control
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36. Examples of Visual Control
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37. 5 Whys
A key part in an effective Kaizen is finding the root cause of a problem and eliminating it
A practice of asking “why?” repeatedly until the underlying cause is identified (usually requiring five questions)
Simple, yet powerful technique for finding the root cause of a problem
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

38. Total Productive Maintenance (TPM)
Breakdown maintenance
Repairs to make failed machine operational
Preventive maintenance
System of periodic inspection and maintenance to keep machines operating
TPM combines preventive maintenance and total quality concepts
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

39. TPM Requirements
Design products that can be easily produced on existing machines
Design machines for easier operation, changeover, maintenance
Train and retrain workers to operate machines
Purchase machines that maximize productive potential
Design preventive maintenance plan spanning life of machine
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

40. 5S Workplace Scan 5S Scan Goal Eliminate or Correct Seiri (sort)
Seiton
(set in order)
Seisou
(shine)
5S Scan
Keep only what you need
A place for everything and everything in its place
Cleaning, and looking for ways to keep clean and organized
Goal
Unneeded equipment, tools, furniture; unneeded items on walls, bulletins; items blocking aisles or stacked in corners; unneeded inventory, supplies, parts; safety hazards
Items not in their correct places; correct places not obvious; aisles, workstations, & equipment locations not indicated; items not put away immediately after use
Floors, walls, stairs, equipment, & surfaces not clean; cleaning materials not easily accessible; lines, labels, signs broken or unclean; other cleaning problems
Eliminate or Correct
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

41. 5S Workplace Scan 5S Scan Goal Eliminate or Correct Seiketsu
(standardize)
Shisuke
(sustain)
5S Scan
Maintaining and monitoring the first three categories
Sticking to the rules
Goal
Necessary information not visible; standards not known; checklists missing; quantities and limits not easily recognizable; items can’t be located within 30 seconds
Number of workers without 5S training; number of daily 5S inspections not performed; number of personal items not stored; number of times job aids not available or up-to-date
Eliminate or Correct
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

42. Supplier Networks Long-term supplier contracts Synchronized production
Supplier certification
Mixed loads and frequent deliveries
Precise delivery schedules
Standardized, sequenced delivery
Locating in close proximity to the customer
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

43. Benefits of Lean Production
Reduced inventory
Improved quality
Lower costs
Reduced space requirements
Shorter lead time
Increased productivity
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

44. Benefits of Lean Production
Greater flexibility
Better relations with suppliers
Simplified scheduling and control activities
Increased capacity
Better use of human resources
More product variety
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

45. Implementing Lean Systems
Use lean production to finely tune an operating system
Somewhat different in USA than Japan
Lean production is still evolving
Lean production is not for everyone
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

46. Drawbacks of Lean Production
Highly variable demand
Large variety of low-volume products
Custom engineered products
Mass production parts
Unexpected changes in demand or supply
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

47. Lean Six Sigma
Lean and Six Sigma are natural partners for process improvement
Lean
Eliminates waste and creates flow
More continuous improvement
Six Sigma
Reduces variability and enhances process capabilities
Requires breakthrough improvements
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

48. Value Stream Mapping (VSM)
A tool for analyzing process flows and eliminating waste
Specialized icons related to
lean production
material and information flows
“aha” Kaizen bursts
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

49. VSM Shapes
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50. VSM for Milling & Welding
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51. VSM for Emergency Room
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

52. Lean and the Environment
Identify environmental waste along with other forms
These can indicate poor process design
Reduce costs of
material
energy
regulatory compliance
Reduce worker health and safety risks
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

53. US EPA Recommendations
Commit to eliminate environmental waste
Involve staff with environmental expertise in planning for & implementing lean events
Find & drive out environmental waste in specific processes by using lean tools
Empower & enable workers to eliminate environmental waste in their work areas
Use environmental, health & safety icons in VSM
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

54. Lean Services
Basic elements of lean production apply equally to services
Most prevalent applications
lean retailing
lean banking
lean health care
supply chain
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

55. Leaning the Supply Chain
“pulling” a smooth flow of material through a series of suppliers to support frequent replenishment orders and changes in customer demand
Firms need to share information and coordinate demand forecasts, production planning, and inventory replenishment with suppliers and supplier’s suppliers throughout supply chain
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

56. Leaning the Supply Chain
Pull a smooth flow of material through the system
Build a highly collaborative business environment
Adopt the technology to support your system
Consider “near shoring”
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

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© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e