1. Introduction Operations Analysis and Improvement 2010 Fall Dr. Tai-Yue Wang Industrial and Information Management Department National Cheng Kung University

2. Dr. Tai-Yue Wang IIM Dept. NCKU 2 Presentation Asian culture has had a significant impact on the rest of the world. Many words used in our daily languages. Martial arts, religion or food. Within the business environment. Improvement tools (kaizen( 改善 ) tools) Production philosophies such as Just-in-time. Just-in-time philosophy is also known as Lean Manufacturing.

3. Dr. Tai-Yue Wang IIM Dept. NCKU 3 Presentation Another important philosophy is the concept developed by a Japanese consultant named Kobayashi( 小林 ). Based on a methodology of 20 keys leading business on a course of continuous improvement (kaizen).

4. Dr. Tai-Yue Wang IIM Dept. NCKU 4 Presentation The core elements of Kobayashi’s concepts are presented in order to focus on production improvements. In addition, a measurement standard for improvement results is also explained.

5. Dr. Tai-Yue Wang IIM Dept. NCKU 5 Introduction Continuous improvement is a management philosophy based on employees’ suggestions. It was developed in the United States at the end of the 19th century. Many important improvements took place when this idea or philosophy arrived in Japan. Japan was already utilizing tools such as quality circles. When they combined these two ideas, kaizen was born.

6. Dr. Tai-Yue Wang IIM Dept. NCKU 6 Introduction In 1926 Henry Ford wrote “To standardize a method is to choose out of the many methods the best one, and use it. Standardization means nothing unless it means standardizing upward. Today’s standardization, instead of being a barricade against improvement, is the necessary foundation on which tomorrow’s improvement will be based.

7. Dr. Tai-Yue Wang IIM Dept. NCKU 7 Introduction In 1926 Henry Ford wrote If you think of “standardization” as the best that you know today, but which is to be improved tomorrow - you get somewhere. But if you think of standards as confining, then progress stops.”

8. Dr. Tai-Yue Wang IIM Dept. NCKU 8 Kaizen vs Reengineering Creating an useable and meaningful standard is key to the success of any enterprise. Businesses usually utilize two different kinds of improvements. Those that suppose a revolution in the way of working. Those that suppose smaller benefits with less investment.

9. Dr. Tai-Yue Wang IIM Dept. NCKU 9 Kaizen vs Reengineering Kaizen Final situation Initial situation time Reengineering productivity

10. Dr. Tai-Yue Wang IIM Dept. NCKU 10 Kaizen vs Reengineering The evolution consists of continuous improvements being made in both the product and process. A rapid and radical change (kaikaku, 改革 ) process is sometimes used as a precursor to kaizen activities. Carried out by the utilization of process reengineering or a major product redesign.

11. Dr. Tai-Yue Wang IIM Dept. NCKU 11 Kaizen vs Reengineering Require large investments and are based on process automation. In the U.S., these radical activities are frequently called “kaizen blitzes”.

12. Dr. Tai-Yue Wang IIM Dept. NCKU 12 Kaizen vs Reengineering If the process is constantly being improved (continuous line), the innovation effort required to make a major change can be reduced (discontinuous line in the left). Otherwise, the process of reengineering can become very expensive (discontinuous line in the right).

13. Dr. Tai-Yue Wang IIM Dept. NCKU 13 Improvement Philosophies and Methodologies In order to find the source of a problem, it is important to define and understand the source and core of the problem. Problem -> Any deviation with respect to the standard value of a variable (quality and production rate). It is necessary to know what the variable objective is (desired standard) and what is the starting situation in order to propose a realistic objective.

14. Dr. Tai-Yue Wang IIM Dept. NCKU 14 Improvement philosophies and methodologies Three main factors that production managers fear. Poor quality. Increase of production cost. Increase in the lead time.

15. Dr. Tai-Yue Wang IIM Dept. NCKU 15 Improvement philosophies and methodologies Production improvements should be based on the improvements of processes as well as operations. Problems can appear in any of the basic elements that constitute the production area.

16. Dr. Tai-Yue Wang IIM Dept. NCKU 16 Improvement philosophies and methodologies Some example of problems. Defects, obsolete work methods, energy waste, poorly coached workers, low rates of performance in machines and materials. By analyzing the production management history, several improvement approaches can be identified. Just-in-time Methodologies (Lean Manufacturing). 20 Keys to Workplace Improvement (Kobayashi).

17. Dr. Tai-Yue Wang IIM Dept. NCKU 17 Improvement philosophies and methodologies The keys to the Japanese success are. Simple improvement methodologies. Workers respect. Teamwork.

18. Dr. Tai-Yue Wang IIM Dept. NCKU 18 Just-in-Time--Introduction In accordance with this philosophy principle, nothing is manufactured until it is demanded, fulfilling the customer requirements “I need it today, not yesterday, not tomorrow.” The plant flexibility required to respond to this kind of demand is total, and is never fully obtained. It is critical that inventory is minimized. Product obsolescence can make in-process and finished goods inventory worthless.

19. Dr. Tai-Yue Wang IIM Dept. NCKU 19 Just-in-Time--Introduction In 1949 Toyota was on the brink of bankruptcy. While in the United States Ford’s car production was at least 8 times more efficient than Toyota’s. The president of Toyota, Kiichiro Toyoda, presented a challenge to the members of his executive team. “To achieve the same rate of production as the United States in three years.”

20. Dr. Tai-Yue Wang IIM Dept. NCKU 20 Just-in-Time--Introduction Taiichi Ohno( 大野耐一 ), vice president of Toyota, accepted his challenge. Inspired by the way that an American supermarket works, “invented” the Just-in-time method. With the aid of Shigeo Shingo( 新鄉重夫 ) and Hiroyuki Hirano( 平野博之 ).

21. Dr. Tai-Yue Wang IIM Dept. NCKU 21 Just-in-Time--Introduction Daiichi Ohno ( 大野耐一 ) and Shigeo Shingo ( 新鄉 重夫 ) wrote their goal. Deliver the right material, in the exact quantity, with perfect quality, in the right place just before it is needed”. They developed different methodologies. Thinking revolution The 5S Standard operations One-Piece flow Poka-Yoke Jidoka TPM JUST IN TIME Workforce optimization Visual Control Leveling Production Kanban Multi- functional workers SMED

22. Dr. Tai-Yue Wang IIM Dept. NCKU 22 Just-in-Time--Introduction The systematic application of all the methodologies create a new management philosophy. The real value is the knowledge acquired during its implementation. The philosophy developed in Toyota was not accepted until the end of the sixties. Japan in 1973 benefited from the petroleum crisis and started to export fuel efficient cars to the United States. Since the 1970s, Japan has been the pioneer of work improvement methodologies.

23. Dr. Tai-Yue Wang IIM Dept. NCKU 23 Just-in-Time--Thinking Revolution The Western world employed the following formula to obtain the price of a product. Price = Cost + Profit. In Japan, mainly Toyota, employed the following expression. Profit = Price – Cost. Today, this formula is used worldwide. In order to make sure that Toyota would work like the supermarket it was necessary to identify and eliminate all business and production wastes.

24. Dr. Tai-Yue Wang IIM Dept. NCKU 24 Just-in-Time--Thinking Revolution The real cost is “as big as a seed of a plum tree.” In some cases, manufacturers, let the seed (cost) grow as big as a tree. Managers try to decrease the cost by cutting some leaves out. In reality, it is more efficient to eliminate tasks that do not add value to the product. Reducing the tree to a smaller size is equivalent to planting a smaller seed. The goal of Toyota’s executives was to find this plum tree seed and work hard to reduce the cost.

25. Dr. Tai-Yue Wang IIM Dept. NCKU 25 Just-in-Time--Seven types of Waste Hiroyuki Hirano ( 平野博之 ) defined waste as “everything that is not absolutely essential.” Few operations are safe from elimination. He also defined work as “any task that adds value to the product”. In Toyota’s factories outside of Japan, they required between 5 to 10 times more operations to produce the same car. Shigeo Shingo identified 7 main wastes common to factories.

26. Dr. Tai-Yue Wang IIM Dept. NCKU 26 Just-in-Time--Seven types of Waste Overproduction Producing unnecessary products, when they are not needed and in a greater quantities than required. Inventory. Material stored as raw material, work-in-process and final products. Transportation. Material handling between internal sections.

27. Dr. Tai-Yue Wang IIM Dept. NCKU 27 Just-in-Time--Seven types of Waste Defects. Irregular products that interfere with productivity stopping the flow of high quality products.

28. Dr. Tai-Yue Wang IIM Dept. NCKU 28 Just-in-Time--Seven types of Waste Processes. Tasks accepted as necessary. Operations. Not all operations add value to the product. Inactivities. Correspond to machines idle time or operator’s idle time. Inventory is considered the type of waste with greater impact

29. Dr. Tai-Yue Wang IIM Dept. NCKU 29 Just-in-Time--Inventory Inventory is a sign of an ill factory because it hides the problems instead of resolving them. For example, in order to cope with the problem of poor process quality, the size of production lots is typically increased. Products that will probably never be used, get stored.

30. Dr. Tai-Yue Wang IIM Dept. NCKU 30 Just-in-Time--Inventory If the problem that produces the low quality is solved inventory could be reduced without affecting service. Sometimes it is necessary to force a decrease in inventory in order to identify the production variability that necessitated it. Then, the work method can be changed.

31. Dr. Tai-Yue Wang IIM Dept. NCKU 31 Lean Manufacturing Lean Manufacturing is the systematic elimination of waste. Lean is focused at cutting “fat” from production activities. Lean has also been successfully applied to administrative and engineering activities as well.

32. Dr. Tai-Yue Wang IIM Dept. NCKU 32 Lean Manufacturing Many of the tools used in lean can be traced back to Taylor, Ford and the Gilbreths. The Japanese systematized the development and evolution of improvement tools. Lean Manufacturing is one way to define Toyota’s production system. MUDA is the term chosen when referring to lean. In Japanese, MUDA means waste.

33. Dr. Tai-Yue Wang IIM Dept. NCKU 33 Lean Manufacturing Lean Manufacturing is supported by three philosophies. Just-in-time Kaizen (continuous improvements)

34. Dr. Tai-Yue Wang IIM Dept. NCKU 34 Lean Manufacturing Jidoka ( 自働化 ). Translates as autonomation. Machinery automatically inspects each item after producing it, ceasing production and notifying humans if a defect is detected. Toyota expands the meaning of Jidoka to include the responsibility of all workers to function similarly. 這個自『働』化與一般的自動化 (Automation) 不同，它的動加了人字旁， 加了人工的智慧。不但會自動生產所需要 的零件，也會在發現品質問題時自動停止 。引申到一般的生產線自主管理，生產線 不但會生產所需的產品，也會在發現問題 的時候自動停止！

35. Dr. Tai-Yue Wang IIM Dept. NCKU 35 Lean Manufacturing Traditional approximations improves the lead time by reducing waste in the activities that add value (AV). Lean Manufacturing reduces the lead time by eliminating operations that do not add value to the product (MUDA). Lead Time 95% MUDA5% VA 98% MUDA2% VA Lead Time 95% MUDA Lead Time 90% MUDA Lead Time 5% VA 10% VA

36. Dr. Tai-Yue Wang IIM Dept. NCKU 36 20 Keys to workplace improvement Iwao Kobayashi, in 1988, published a book explaining 20 keys to Workplace improvement. They all must be considered in order to achieve continuous improvement. 20 16 12 11 9 7 14 5 4 8 15 13 10 19 18 17 6 1 2 3

37. Dr. Tai-Yue Wang IIM Dept. NCKU 37 20 Keys to workplace improvement These 20 keys are arranged in a circle. Shows the relations between the keys and their influence on the three main factors. Quality, cost and lead time. 20 16 12 11 9 7 14 5 4 8 15 13 10 19 18 17 6 1 2 3

38. Dr. Tai-Yue Wang IIM Dept. NCKU 38 20 Leading Technology 16 Production Scheduling 12 Developing your Suppliers 11 Quality Assurance System 9 Maintaining Equipment 7 Zero Monitor Manufacturing 14 Empowering Workers to Make improve- ments 5 Quick Changeover Technology 4 Reducing Inventory 8 Coupled Manufacturing 15 Cross Training 13 Eliminating Waste 10 Time Control And Commitment 19 Conserving Energy and Materials 18 Using Information systems 17 Efficiency Control 6 Method Improvement 1 Cleaning and Organizing 2 Rationalizing the system 3 Improvement Team Activities Quality CostLead time

39. Dr. Tai-Yue Wang IIM Dept. NCKU 39 Quality

40. Dr. Tai-Yue Wang IIM Dept. NCKU 40 Cost

41. Dr. Tai-Yue Wang IIM Dept. NCKU 41 Lead Time

42. Dr. Tai-Yue Wang IIM Dept. NCKU 42 20 Keys to workplace improvement There are four keys outside the circle. Keys 1, 2 and 3 must be implemented before the rest. Key number 20 is the result of implementing the other 19 keys. 20 Leading Technology 16 Production Scheduling 12 Developing your Suppliers 11 Quaility Assurance System 9 Maintaining Equipment 7 Zero Monitor Manufacturing 14 Empowering Workers to Make improve- ments 5 Quick Changeover Technology 4 Reducing Inventory 8 Coupled Manufacturing 15 Cross Training 13 Eliminating Waste 10 Time Control And Commitment 19 Conserving Energy and Materials 18 Using Information systems 17 Efficiency Control 6 Method Improvement 1 Cleaning and Organizing 2 Rationalizing the system 3 Improvement Team Activities Quality CostLead time

43. Dr. Tai-Yue Wang IIM Dept. NCKU 43 20 Keys to workplace improvement Kobayashi divided each key into five levels and set some criteria to rise from one level to the next. Kobayashi offers the steps to reach the final level gradually rather than attempting to directly reach the top.

44. Dr. Tai-Yue Wang IIM Dept. NCKU 44 20 Keys to workplace improvement Kobayashi presents a radar graphic to show the evolution of the factory The scoring of each key is represented. Kobayashi recommends to improve all the keys equally. In the radar graphic, the factory’s scoring will grow concentrically.

45. Dr. Tai-Yue Wang IIM Dept. NCKU 45 Overall Equipment Efficiency (OEE) To improve the productivity of production equipment Nakajima ( 中島 ) summarized the main time losses for equipment based on the value of three activities. Available work time -> Calendar time. Fixed time for planned stops -> Preventive maintenance, operators break. The rest of the time is considered load time. Load time Calendar time Planned stops

46. Dr. Tai-Yue Wang IIM Dept. NCKU 46 Overall Equipment Efficiency Six main causes that reduce valid operation time. Breakdowns. The time that the machine is stopped by repairs. Setup and changeovers. Corresponds to the change time between models, or between products of the same model. Idling and minor stoppage. Loss time caused by the processes´ randomness or by the worker-machine cycle complexity.

47. Dr. Tai-Yue Wang IIM Dept. NCKU 47 Overall Equipment Efficiency Six main causes that reduce valid operation time. Reduced speed. Caused by the wear of components. Defects and reworks. Low quality products. Starting losses. Machine produces defects until it reaches the operation steady state.

48. Dr. Tai-Yue Wang IIM Dept. NCKU 48 Overall Equipment Efficiency These six main losses are grouped. Load time Useful time Operating time Breakdowns Setup and changeover Idling and minor stoppages Reduced speed Defects and rework Starting losses

49. Dr. Tai-Yue Wang IIM Dept. NCKU 49 Overall Equipment Efficiency Load time Useful time Operating time The previous grouped losses define three basic indicator. Availability, performance and quality. Overall Equipment Efficiency (OEE) = A · P · Q

50. Dr. Tai-Yue Wang IIM Dept. NCKU 50 Overall Equipment Efficiency Objectives predicted for each indicator by Nakajima. More than 90% in the availability. More than 95% in the rate of performance. More than 99% in the rate of quality. The main advantage of the implementation of these rates is that they can show how the improvements carried out affect directly the equipment efficiency.

51. Dr. Tai-Yue Wang IIM Dept. NCKU 51 Overall Equipment Efficiency

52. Dr. Tai-Yue Wang IIM Dept. NCKU 52 More on OEE(1/2) The OEE definition in SEMI E79 is composed of four components. OEE = Available Efficiency * Operation Efficiency * Rate Efficiency * Rate of Quality

53. Dr. Tai-Yue Wang IIM Dept. NCKU 53 More on OEE(2/2) Available Efficiency = (Equipment Uptime) / (Total Time) Operation Efficiency = (Productive Time) / (Equipment Uptime) Rate Efficiency = (Actual unit output) / (Theoretical unit throughput) /(Productive Time) Rate of Quality = (Actual unit output – Rework - Scrap) / (Actual unit output)