1. Lean Operations & JIT
Chapter 14

2. Learning Objectives You should be able to:
Explain what is meant by the term lean operations system
List each of the goals of a lean system and explain its importance
List and briefly describe the building blocks of lean
List the benefits and risks of a lean system
Instructor Slides

3. Lean Operations Lean operations
A philosophy that encompasses every aspect of the process, from design to after the sale of a product.
Pursues a system that functions with minimal levels of inventory, waste, space and transactions.
A flexible system of operation that uses considerably less resources (activities, people, inventory, space) than a traditional system
Tends to achieve
Greater productivity
Lower costs
Shorter cycle times
Higher quality
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4. Lean: Ultimate Goal The ultimate goal:
Achieve a system that matches supply to customer demand; supply is synchronized to meet customer demand in a smooth uninterrupted flow
A balanced system
One that achieves a smooth, rapid flow of materials and/or work through the system
History of Lean Operation & Just In Time
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5. Goals and building blocks of lean systems
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6. Lean: Supporting Goals
The degree to which lean’s ultimate goal is achieved depends upon how well its supporting goals are achieved:
Eliminate disruptions
Poor quality (lean systems do not carry extra inventory), equipment breakdowns, schedule changes, late deliveries.
Make the system flexible
Mix of products, levels of output.
Require reducing setup-times & lead-times.
Eliminate waste, especially excess inventory
Minimize inventory
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7. Waste Represents unproductive resources
Seven sources of waste in lean systems:
Inventory
Idle resource, requires space, cost
Overproduction
Overuse of manufacturing resources
Waiting time
Require space, WIP
Unnecessary transporting
Handling cost, WIP inventory
Processing waste
Unnecessary production steps, scrap
Inefficient work methods
Reduced productivity, increased scrap, increased WIP
Product defects
Rework costs, customer dissatisfaction
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8. Lean: Building Blocks Product design Process design
Personnel/ organizational elements
Manufacturing planning and control
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9. Building Blocks 1. Product Design
Four elements of product design important for lean systems:
Standard parts
Fewer parts, less training, lower costs, routine purchasing, handling and quality inspection. Can use standard processing.
Modular design
Fewer parts, simpler assembly, purchasing, handling, training.
Highly capable systems with quality built in
small lot sizes and absence of buffer stock.
Quality designed into the product and production process. Standardized products, methods and equipment, workers familiar with their jobs.
Concurrent engineering
Bringing together design and manufacturing personnel together early in the design phase to prevent engineering changes.
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10. Building Blocks 2. Process Design
Seven aspects of process design that are important for lean systems:
Small lot sizes
Setup time reduction
Manufacturing cells
Quality improvement
Production flexibility
A balanced system
Little inventory storage
Fail-safe methods
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11. 2. Process Design A. Small Lot Sizes
In the lean philosophy, the ideal lot size is 1.
Goal: reduce lot size as much as possible (given practical considerations)
Benefits of small lot size
Reduced in-process inventory
Lower total carrying costs
Inspection and rework costs are lower when quality problems do occur
Permits greater flexibility in scheduling = better response to customer demands.
Less inventory to ‘work off’ before implementing product improvements
Increased visibility of problems
Increased ease of balancing operations
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12. 2. Process Design B. Setup Time Reduction
Small lot sizes and changing product mixes require frequent setups
Unless these are quick and relatively inexpensive, they can be prohibitive
Setup time reduction requires deliberate improvement efforts
Workers are trained to do their own setups
Single-minute exchange of die (SMED)
A system for reducing changeover time (e.g Toyota from 100 to 3 minutes).
Convert activities form “internal” to “external”.
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13. What is “die?”
Instructor Slides

14. 2. Process Design D. Quality Improvement
Quality defects during the process can disrupt the orderly flow of work
Focus on finding and eliminating the causes of problems.
Autonomation (jidoka)
Automatic detection of defects during production
Two mechanisms are employed
One for detecting defects when they occur
Another for stopping production to correct the cause of the defects (force immediate attention to the problem)
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15. 2. Process Design F. Balanced System
Line balancing helps to achieve a rapid work flow.
Work assigned to each workstation must not exceed cycle time (Takt time).
Takt time
The cycle time needed to match customer demand for final product.
Sometimes referred to as the heartbeat of a lean system
Procedure:
Determine the net time available per shift
If there is more than one shift per day, multiply the net time by the number of shifts
Compute the takt time by dividing the net available time by demand
Using takt time minimizes WIP inventory.
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16. 2. Process Design G. Inventory Storage
Lean systems are designed to minimize inventory (waste)
Inventories are buffers that tend to cover up recurring problems that are never resolved
partly because they are not obvious
partly because the presence of inventory makes them seem less serious
The lean approach is to gradually reduce inventories in order to uncover problems and then resolve them.
Advantages:
Lower carrying cost
Less space
Less dependence on buffers
Less rework
Less need use current inventory before implementing design improvements.
Risks:
No safety stock
Opportunity loss when problems arise
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17. Building Blocks 3. Personnel/Organizational
Five personnel/ organizational elements that are important for lean systems:
Workers as assets
Cross-trained workers
Continuous improvement
Cost accounting
Leadership/project management
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18. 3. Personnel/Organizational: A. Workers as Assets
Well-trained and motivated workers are the heart of the lean system
They are given greater authority to make decisions… but more is expected of them
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19. 3. Personnel/Organizational B. Cross-Trained Workers
Workers are trained to perform several parts of a process and operate a variety of machines
Facilitates flexibility
Helps in line balancing
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20. 3. Personnel/Organizational C. Continuous Improvement
Continuous improvement (Kaizen, 改善)
Workers in lean systems have greater responsibility for quality, and they are expected to be involved in problem solving and continuous improvement
Teams of workers and managers who routinely work on problems.
Problem solving “culture”: workers are encouraged to report problems and potential problems.
Andon: System of lights used at each workstation to signal problems or slowdowns (green, amber, red lights)
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21. Building Blocks 4. MPC
Seven elements of Manufacturing Planning and Control (MPC) are particularly important for lean system:
Level loading
Pull systems
Visual systems
Limited work-in-process (WIP)
Close vendor relationships
Reduced transaction processing
Preventive maintenance and housekeeping
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22. 4. MPC B. Pull Systems Push system Pull system
Work is pushed to the next station as it is completed (without regard to the next station’s readiness).
Work may pile up at workstations that fall behind schedule.
Pull system
Work moves on in response to demand from the next stage in the process.
A workstation pulls output from the preceding workstation as it is needed
Output of the final operation is pulled by customer demand or the master schedule
Pull systems are not appropriate for all operations
Require fairly steady flow of reparative work.
Large variations in volume, product mix, or product design will undermine the system
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23. 4. MPC B. Pull Systems: Communication
Communication moves backward through the system from station to station
Each workstation (customer) communicates its need for more work to the preceding workstation (supplier)
Assures that supply equals demand
Work moves “just in time” for the next operation
Flow of work is coordinated
Accumulation of excessive inventories is avoided
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24. 4. MPC C. Visual Systems Kanban (看板）
Card or other device that communicates demand for work or materials from the preceding station
Kanban is the Japanese word meaning “signal” or “visible record”
Paperless production control system
Authority to pull, or produce, comes from a downstream process.
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25. 4. MPC C. Visual Systems - kanban
A kanban card is affixed to each container
When a workstation needs to replenish its supply of parts, a worker withdraws on container
Each container holds a predetermined quantity
The worker removes the kanban card from the container, posts it, and take the container to the workstation.
The posted card is picked up by a stock person who replenishes the stock with another container
and so on down the line.
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26. 4. MPC E. Close Vendor Relationships
Relatively small number of suppliers.
Close relationships with (certified) vendors
They are expected to provide frequent, small deliveries of high-quality goods
The burden of ensuring component quality is shifted to the vendor.
Local supplier are preferred in order to reduce lead time (of small frequent deliveries)
Ideally the suppliers themselves will be operating under JIT.
The suppliers become part of an extended integrated JIT system.
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27. Lean Services
In service the focus is often on the time needed to perform the service - speed is often the order winner
Provide services when they are needed
Lean benefits can be achieved in the following ways:
Eliminate disruptions
e.g., avoid having service providers also answer phones.
Make system flexible
Train workers to handle more variety.
Reduce setup and lead times
Estimate what parts and tools are frequently needed and have them on hand
Eliminate waste
Eliminate errors and duplicate work.
Minimize WIP
e.g., orders waiting to be processed, calls waiting to be answered, packages waiting for delivery, truck waiting to be loaded/unloaded etc.
Simplify the process
e.g., self-service systems such as in retail, ATMs, vending machines, service systems
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28. Lean vs. Traditional Philosophies
Factor
Traditional
Lean
Inventory
Much to offset forecast errors, late deliveries
Minimal necessary to operate
Deliveries
Few, large
Many, small
Lot sizes
Large
Small
Setup; runs
Few, long runs
Many, short runs
Vendors
Long-term relationships are unusual
Partners
Workers
Necessary to do the work
Assets
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29. Lean Systems Key Risks:
Key benefits:
Reduced waste
inventory levels
scrap and rework
space requirements
High quality
Flexibility
Reduced lead times
Increased productivity and equipment utilization
Key Risks:
Absence of buffers (personnel, inventory) to fall back on if something goes wrong.
Possible loss off sale and lost customers.