1.  Operations as a managerial integration function  Evaluation and Improvement  Course is structured to answer: 1. What is an improvement?  Strategic role of ops 2. Where target improvements?  Identify metrics by linking process flows with financial flows 3. How improve?  Improve each metric Course: Goals and Overview 1 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

2. House Building Game The transition to Lean Ops The Paradigm of Lean Operations: The ideal Basic philosophy of Lean Ops Lean tools for synchronization & waste reduction Towards a system of continuous improvement Approaching the ideal with Product Variety: TPS Managing variety & flexibiltiy Toyota Production System (TPS) Managing Business Process Flows: Ch 10 Lean Operations 2 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

3. Paradigm of Lean Operations: In Search for the Holy Grail  The ideal Process = – Synchronization of all flows 1 x 1 production on demand defect free – At lowest possible cost  Waste = Gap between ideal and actual è How do we sync at lowest cost?> Lean Tools è How do we set up a system to continually reduce waste ? 3 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

4. Improvement as a process The Ideal Operation perfectly synchronized with demand at lowest cost The Actual Operation  = deviation from ideal = waste, variability, inflexibility = opportunity for improvement Reduce  Root cause analysis & problem solving mindset Waste reduction (Lean tools) Variability reduction (Six Sigma, TQM) Increase visibility of  Andon pulls, workplace organization Exploratory stress Process measurement, visual management Continuous Improvement Process 4 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

5. The architect behind Lean Operations: Toyota’s Taiichi Ohno and waste elimination  Taiichi Ohno: “Toyota Production System: Beyond Large-Scale Production”  Sources of waste at Toyota: 1. Overproduction 2. Waiting 3. Inessential handling 4. Non-value adding processing 5. Inventory in excess of immediate needs 6. Inessential motion 7. Correction necessitated by defects  Lean operations has been defined as “a business system for organizing and managing product development, operations, suppliers, and customer relations that requires less human effort, less space, less capital, and less time to make products with fewer defects to precise customer desires, compared with the previous system of mass production.” 5 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

6. Is lean dead?  The just-in-time approach to manufacturing, which has swept the world's factories over the past two decades, has made a virtue out of keeping inventories lean. But some manufacturers think it has gone too far, and that having a little extra padding might be a healthier option. – Wall Street Journal (Apr 29, 2011). http://operationsroom.wordpress.com/ 6 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

7. Lean Tool #1: cut batch sizes An illustrative example  Consider the following 4-step process:  What is: – The bottleneck: – The process capacity or maximal R: – The theoretical flow time T th – The minimal amount of inventory needed to run at capacity:  I th – Call this scenario 1, the best. Let’s now consider what happens if we have (transfer) batches A 1 min/job Resource 1 B 1 min/job Resource 2 C 1 min/job Resource 3 D 1 min/job Resource 4 7 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

8. Lean Tool #1: cut batch size ABCD example continued Batch Shop (Batchsize = 4) A B C D 0 Elapsed Time 2 1 4 3 2 1 4 3 2 1 4 3 2 1 4 3 T T =I =R = 8 7 0 9 Flow Shop (Batchsize = 1) A B C D 0 Elapsed Time 1 T 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 T =I =R = = scenario ? 6 5 8 7 6 5 8 7 6 5 8 7 0 9 2 1 4 3 6 5 0 9 2 1 8 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

9. Lean Tool #2: process on demand = pull Just-In-Time operations JIT = have exactly what is needed, in the quantity it is needed, when it is needed, where it is needed.  “hand-to-mouth” material flow  needed by whom? 9 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

10. Lean Tool #2: Synchronization with demand: customer demand pulls product Supplier inputsoutputs ProcessCustomer PUSH: Inputs availability triggers execution Supplier inputsoutputs ProcessCustomer PULL: Outputs need triggers execution 10 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

11. Lean Tool #2: how make pull system in house game? Production control Roof cut Base cut FA Base assembly 11 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

12. Lean Tool #2: Pull Implementation: Kanban Production Control Systems Kanban Processing center i Processing center i + 1 WIP Job http://www.toyota.co.jp/en/vision/production_system/video.html 12 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

13. Lean Tool #3: Quality at the Source Defects Found at: Own Station Next Station End of Line Final Inspection End User’s Hand $ $ $ $ $ Impact to the Company  Very Minor  Delay  Rework  Resched. of work  Significant Rework  Delay in Delivery  Additional Inspection  Warranty costs  Administra tive costs  Reputation  Loss of Market Share 13 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

14. Reducing Waste: Quality at the Source  Fool-proof/Fail-safe design (Poka-Yoke)  Inspection – Self – Automated ( Jidoka )  Line-stopping empowerment (Andon) Trouble! Approach for operators Preventative If trouble, STOP! If defective don't pass Line-stopping empowerment Approach for machines A mistake-proofing system prevents errors and defects Stop line when defects are detected or machine breaks down Poka Yoke and Jidoka 14 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

15. Lean Tool #4: Flexible Resources & Standardized Work  Cross training of workforce allows resource pooling  Use of IT in services 15 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

16. 16 WORKPLACE ORGANIZATION – 5S Maintenance of improved condition Waste identification and elimination Check what is needed and get rid of what is not used Place each item in its optimal position in the workplace and employ visual management Keep the area and equipment always clean. Set a cleaning program Improve and maint-ain the first 3 "S" by improving the en- vironment: –visual controls –standard machine improvements –standard procedures for all similar areas Employ systems to monitor 5S and ensure that it is constantly maintained Organize the workplace with the aim to Identify and eliminate waste Maintain and continuously improve the workplace/equipment Improve morale and increase worker involvement Objectives Sort Set in order ShineSustainStandardize 5S is a structured approach to systematically clean and organize the workplace to support a lean working environment Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

17. 17 Workplace Organization – 5S Hospital Example From a messy patient waiting area... 1... to an improved area for patients and staff 2 Re-floored and repainted with bright lighting 3 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

18. Lean Tool #5: Heijunka Mixed Level/Balanced Production Batch Production Schedule Mixed Production Schedule (AAAABBBB..)(ABAB...) Product April 1.................15...........................30 April 1....................15.......................30 A B time FGI time FGI http://www.toyota.co.jp/en/vision/production_system/video.html 18 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

19. SILS: shipping in line sequence Business Mall adjacent to Russelsheim’s LeanField 19 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

20. Smartville, Hambach, France: Integrating suppliers directly Suppliers Inflow Outflow Suppliers 20 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

21. Lean Tool #6: From Functional LayouttoProduct Cell organization Production Control Roof Cut Base Cut FA Base Assy Production Control Production Control Production Control Roof Cut Roof Cut Roof Cut Base Cut Base Cut Base Cut Base Assy Base Assy Base Assy FA Department 1 Department 2 Cell 1 Production Control Roof Cut Base Cut FA Base Assy Cell 3 Production Control Roof Cut Base Cut FA Base Assy Cell 2 21 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

22.  What is the theoretical throughput (long-run average) of each kid? R =  What is the theoretical throughput (long-run average) of the process?  What is the actual throughput of the process? – Key drivers of actual throughput: The impact of inventory and variability: The match game in The Goal Output Buffer Input Buffer Play Game Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

23. Towards a system of continuous improvement: Decrease variability and Cap inventory 6-face die (  =1.9) 2-face die (  =0.7) 23 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

24. Scrap & Rework Missed Due Dates Too Much Space Late Deliveries Poor Quality Machine Downtime Engineering Change Orders Long queues Too much paperwork 100% inspection Inventory Towards a system of continuous improvement: Increase Problem Visibility– River Analogy 24 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

25. 25 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

26.  Sears (SHC) does actually have a whole social media team who handles their Twitter and Facebook accounts. They are VERY pro-active on those accounts. SHC contracts out to Viewpoints, which is the company I work for. We run the MySears, MyKmart and Craftsman Community platforms for them, and handle customer service in a pro-active way on those accounts  Along with the senior customer service reps, and folks at corporate, MySears is very fortunate to have a handful of associates or call center employees who pop on to assist, as well. They are not paid, but are influencers who receive an "Advisor" recognition badge for their help. We wish we had more folks like these, as their contributions are most helpful.  Here are a few threads that we would consider "wins" for SHC, as the site helped solve an issue or complaint for a particular customer: – This member was all over the board complaining about the Sears "Lifetime Warranty" on Tools. He ended up connecting with the VP of Tools through the site, something that would be impossible without utilizing social media: http://www.mysears.com/Tools--7018/topics/WARRANTY- ISSUES/postshttp://www.mysears.com/Tools--7018/topics/WARRANTY- ISSUES/posts – Someone who visited having issues with their washer: http://www.mysears.com/Appliances/topics/Kenmore-3-1-CU-FT-IEC-High-Efficiency- Front-Load-Washer-model-42052/posts?page=1http://www.mysears.com/Appliances/topics/Kenmore-3-1-CU-FT-IEC-High-Efficiency- Front-Load-Washer-model-42052/posts?page=1 – One of the above mentioned "Advisor" that help. This member who offered his suggestion is actually a retired service techinician who hangs out a bunch on the site: http://www.mysears.com/Dishwashers--3933/topics/Washer-model-number-665- 17033402/posts?page=1#post_199551http://www.mysears.com/Dishwashers--3933/topics/Washer-model-number-665- 17033402/posts?page=1#post_199551 26 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

27. Visibility: Time plays the role of Inventory in Lean Service Operations TIME 27 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

28. Towards a system of continuous improvement: Kaizen Tools  Reduce variability – Standard operating procedures  Increase visibility of waste and quality at source – Line-stopping empowerment (Andon) – Quality inspection: Self & Automated ( Jidoka ) – Fool-proof/Fail-safe design (Poka-Yoke)  Targeted improvements: root cause analysis (6 Why’s) – Active worker involvement – Time for experimentation – Supplier involvement  Exploratory stress  Human infrastructure & process measurement and review (visual management) 28 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

29. Learning Objectives Lean Operations  Paradigm of Lean Operations:  Strive for the ideal by eliminating waste  This is a total business management system  Synchronization Tools 1. Reduced batch sizes 2. Pull production control systems (vs. push)—JIT & Kanban control 3. Quality at the source 4. Resource pooling 5. Level loading (Heijunka) 6. Layout: Cellular operations  Set up a System for Continuous Improvement 1. Reduce variability (standard operating procedures) 2. Increase visibility (river analogy) 3. Improve human infrastructure 29 Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall

30. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall