1. Lean Manufacturing

2. New Balance Athletic Shoe Company
Lean Systems at
New Balance Athletic Shoe Company
The Lawrence plant makes footwear styles exclusive to the North American market. Most new designs are first made at Lawrence and then transferred out to other NB American plants, all of which follow the same production methods.
NB migrated away from the shoe industry’s traditional batch and queue method towards small-lot, cellular flow production.
Operators never pass on a defective unit, and they always check the prior operator’s work as well as their own.
When deciding how many shoes of each style to schedule, NB thinks of “sales orders” and not “production orders.”
Instead of pushing shoes to the market, NB uses more of a pull strategy. Its production schedules are driven by market demand.
NB’s work flow is uniform and it fosters teamwork and a culture of continuous improvement.

3. Toyota Production System (TPS)
Toyota Production System (TPS) is one of the most admired lean manufacturing systems in existence.
They have a process of continuous improvement.
Work is completely specified as to content, sequence, timing, and outcome.
Employees are stimulated to experiment to find better ways to do their jobs.
Improvements to the system must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible organizational level.

4. APICS* Definition of Lean Manufacturing
“A philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. It involves:
… identifying and eliminating non-value-adding activities,
… employing teams of multi-skilled workers,
… using highly flexible, automated machines”
APICS: American Production and Inventory Control Society

5. Just-in-Time (JIT) JIT is the The most popular lean system
“The primary elements of Just-in-Time are:
to have only the required inventory when needed;
to improve quality to zero defects;
to reduce lead times by reducing setup times, queue lengths, and lot sizes;
to incrementally revise the operations themselves;
and to accomplish these things at minimum cost”.

6. Lean Synonyms IBM - Continuous Flow Manufacturing
HP - Stockless Production
GE - Management by Sight
Motorola - Short Cycle Manufacturing
Toyota JIT
Boeing - Lean Manufacturing

7. Benefits of Lean Production
Reduced inventory
Improved quality
Lower costs
Reduced space requirements
Shorter lead time
Increased productivity

8. Benefits of Lean Production (cont.)
Greater flexibility
Better relations with suppliers
Simplified scheduling and control activities
Increased capacity
Better use of human resources
More product variety

9. Traditional View of Manufacturing
Key objective was to fully utilize capacity so that more products were produced by fewer workers and machines
How? With large queues of in-process inventory waiting at work centers
Workers and machines never had to wait for product to work on, so capacity utilization was high and production costs were low
Result: Products spent most of their time in manufacturing just waiting, an arrangement that is unacceptable in today’s time-based competition

10. Time-Based Competition
It is not enough for firms to be high-quality and low-cost producers
Today, they must also be first in getting products and services to the customer fast
To compete in this new environment, the order-to-delivery cycle must be drastically reduced
JIT is the weapon of choice today to reduce the elapsed time of this cycle

11. JIT Logic
Customers
Final Assy
Sub
Fab
Vendor 4

12. JIT Manufacturing Philosophy
The main objective of JIT manufacturing is to reduce manufacturing lead times
This is primarily achieved by drastic reductions in work-in-process (WIP)
The result is a smooth, uninterrupted flow of small lots of products throughout production

13. Successful JIT Applications
Most successful JIT applications have been in repetitive manufacturing, where batches of standard products are produced at high speeds and in high volumes.
Successful use of JIT is rare in large, highly complex job shops where production planning and control is extremely complicated.
Smaller, less complex job shops have used JIT, but operations have been changed so that they behave somewhat like repetitive manufacturing.

14. Waste--Operations
(1) Waste from overproduction (2) Waste of waiting time (3) Transportation waste (4) Inventory waste (5) Processing waste (6) Waste of motion (7) Waste from product defects 6

15. Waste in Operations

16. Waste in Operations (cont.)

17. Waste in Operations (cont.)

18. The Waste of Over Processing
Trying to add more value to a service than your Customers require or will pay for
Ties up Resources
Uses additional materials
Fills the process with un-required work
Hides the problems
Increases Lead Time
Question - How well does what you do fit with your customer’s requirements?

19. The Waste of Waiting
Any delay between one Process / Step / Activity ending and the next beginning
Waiting increases lead time and reduces throughput
Breakdowns
Shortage of materials, information or other resources
Set ups and preparation
Rejects & Errors
Over production and doing things not required
Question – Have you accurately mapped your processes to identify the above?

20. The Waste of Transportation
Unnecessary movement of materials or information
Every move:
Takes time
Creates a queue
Creates return loops
Usually seen as people walking excessively
Question – Have you mapped transport into your process map?

21. The Waste of Overproduction
Production of service outputs beyond what is needed
Paper work
Consequential processes
Poorly designed process
Testing
Inspection / Checking
Question – Have you identified all the activities that should be ‘right’ first time?

22. The Waste of Motion Needless movement of people
Workplace layout
Office ergonomics
Question – When was the last time the layout / ergonomics were examined?

23. The Waste of Inventory
Any work in progress (WIP) that is in excess of what is required to produce for the customer
Ties up working capital
Increases lead time (cycle time)
Hides problems and breeds complacency
Question – What processes are in place to identify excessive inventory?

24. The Waste of Rejects
Any aspect of the service that does not conform to the customers needs
Materials
Labour
Resource Capacity
Question – Have you completed a value stream map that includes reject corrections?

25. Characteristics of Lean Systems
Pull method of work flow
Quality at the source
Small lot sizes
Uniform workstation loads
Standardized components & work methods
Close supplier ties
Flexible workforce
Line flows
Automation
Five S
Preventive maintenance

26. Push and Pull Systems of Work Flow
Push method: A method in which production of the item begins in advance of customer needs.
Example: A buffet where food is prepared in advance.
Pull Method: A method in which customer demand activates production of the service or item.
Example: A restaurant where food is only prepared when orders are placed.
Lean systems use the pull method of work flow.

27. Characteristics of Lean Systems
Pull method of materials flow
Quality at the source
Small lot sizes
Uniform workstation loads
Standardized components & work methods
Close supplier ties
Flexible workforce
Line flows
Automation
Five S
Preventive maintenance

28. Quality at the Source
Quality at the source is an organization-wide effort to improve the quality of a firm’s products by having employees act as their own quality inspectors, and never pass defective units to next stage.

29. 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

30. Examples of Visual Control

31. Examples of Visual Control (cont.)

32. Examples of Visual Control (cont.)

33. Characteristics of Lean Systems
Pull method of materials flow
Quality at the source
Small lot sizes
Uniform workstation loads
Standardized components & work methods
Close supplier ties
Flexible workforce
Line flows
Automation
Five S
Preventive maintenance

34. Small Lot Sizes Lot: A quantity of items that are processed together.
Setup: The group of activities needed to change or readjust a process between successive lots of items.
Single-digit setup: The goal of having a setup time of less than 10 minutes.

35. Small Lot Sizes Require less space and capital investment
Move processes closer together
Make quality problems easier to detect
Make processes more dependent on each other

36. Inventory Hides Problems

37. Less Inventory Exposes Problems

38. Reducing Inventories through Setup Time Reduction
Smaller lot sizes result in more machine setups
More machine setups, if they are lengthy, result in:
Increased production costs
Lost capacity (idle machines during setup)
The answer is: REDUCE MACHINE SETUP TIMES

39. Common Techniques for Reducing Setup Time

40. Common Techniques for Reducing Setup Time (cont.)

41. Common Techniques for Reducing Setup Time (cont.)

42. Example: Setup Time Required
A firm wants to determine what the length of the setup time of an operation should be in order to make an production lot size (EOQ) of 50 economical. An analyst has made the following estimates: D = 16,800 units (annual demand) d = 84 units (daily demand 200 days/yr) p = 140 units (daily production rate) C = $20 (carrying cost per unit per year) Labor rate = $25.00/hour

43. Example: Setup Time Required
Setup Cost Required for EOQ = 50

44. Example: Setup Time Required
Setup Time Required for EOQ = 5
.833 hours = minutes

45. Characteristics of Lean Systems
Pull method of materials flow
Quality at the source
Small lot sizes
Uniform workstation loads
Standardized components & work methods
Close supplier ties
Flexible workforce
Line flows
Automation
Five S
Preventive maintenance

46. Uniform Workstation Loads
A lean system works best if the daily load on individual workstations is relatively uniform, because kanban only handle +/-10 deman changes
Service processes can achieve uniform workstation loads by using reservation systems (e.g., scheduled surgeries) and differential pricing to manage the demand.
For manufacturing processes, uniform loads can be achieved by assembling the same type and number of units each day, thus creating a uniform daily demand at all workstations.
Mixed-model assembly produces a mix of models in smaller lots this creates steady requirements for parts.

47. Mixed-Model Sequencing

48. Characteristics of Lean Systems
Pull method of materials flow
Quality at the source
Small lot sizes
Uniform workstation loads
Standardized components & work methods
Close supplier ties
Flexible workforce
Line flows
Automation
Five S
Preventive maintenance

49. Working Toward Repetitive Manufacturing
Standardize parts designs
Standardize work methods
Less inventory
More specialization and productivity

50. Characteristics of Lean Systems
Pull method of materials flow
Quality at the source
Small lot sizes
Uniform workstation loads
Standardized components & work methods
Close supplier ties
Flexible workforce
Line flows
Automation
Five S
Preventive maintenance

51. Essential Elements of JIT Purchasing
Cooperative and long-term relationship between customer and supplier.
Supplier selection based not only on price, but also delivery schedules, product quality, and mutual trust.
Suppliers are usually located near the buyer’s factory.
Shipments are delivered directly to the customer’s production line.
Parts are delivered in small, standard-size containers with a minimum of paperwork and in exact quantities.
Delivered material is of near-perfect quality.

52. E-Commerce and JIT Purchasing
Internet-based information systems allow firms to quickly place orders for materials with their suppliers
This is an efficient and effective purchasing process
Saves the time of paperwork
Avoids errors associated with paperwork
Reduces procurement lead time
Reduces labor costs
… and Kanbans can be sent to suppliers

53. Characteristics of Lean Systems
Pull method of materials flow
Quality at the source
Small lot sizes
Uniform workstation loads
Standardized components & work methods
Close supplier ties
Flexible workforce
Line flows
Automation
Five S
Preventive maintenance

54. Flexible Workforce Multifunctional workers perform more than one job
If needed they can be transferred to other departments
It reduces boredom

55. Characteristics of Lean Systems
Pull method of materials flow
Quality at the source
Small lot sizes
Uniform workstation loads
Standardized components & work methods
Close supplier ties
Flexible workforce
Line flows
Automation
Five S
Preventive maintenance

56. Line Flows and Automation
Line Flows: Managers of hybrid-office and back-office service processes can organize their employees and equipment to provide uniform work flows through the process and, thereby, eliminate wasted employee time.
Another tactic used to reduce or eliminate setups is the one-worker, multiple-machines (OWMM) approach, which essentially is a one-person line.
Automation plays a big role in lean systems and is a key to low-cost operations.

57. Characteristics of Lean Systems
Pull method of materials flow
Quality at the source
Small lot sizes
Uniform workstation loads
Standardized components & work methods
Close supplier ties
Flexible workforce
Line flows
Automation
Five S
Preventive maintenance

58. Five S (5S)
Five S (5S) A methodology consisting of five workplace practices conducive to visual controls and lean production.

59. 5S Scan Goal Eliminate or Correct Seiri (sort) Seiton (set in order)
Seisou
(shine)
Seiketsu
(standardize)
Shisuke
(sustain)
Keep only what you need
A place for everything and everything in its place
Cleaning, and looking for ways to keep clean and organized
Maintaining and monitoring the first three categories
Sticking to the rules
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 lines, clean; cleaning materials not easily accessible; labels, signs broken or unclean; other cleaning problems
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

60. Characteristics of Lean Systems
Pull method of materials flow
Quality at the source
Small lot sizes
Uniform workstation loads
Standardized components & work methods
Close supplier ties
Flexible workforce
Line flows
Automation
Five S
Preventive maintenance

61. Preventive maintenance
Since we keep inventory levels minimum, a machine failure during production can be very costly
Preventative maintanance is the system of periodic inspection and maintenance to keep machines operating

62. Continuous Improvement with Lean Systems
Visible Production
Problems are Only 5% of the Total!
In-Process
Inventory

63. Problem Solving and Continuous Improvement
JIT is a system of enforced problem solving.
One approach is to lower inventory gradually to expose problems and force their solution.
With no buffer inventories to rely on in times of production interruptions, problems are highly visible and cannot be ignored.
The job of eliminating production problems is never finished.
Continuous improvement - a practice the Japanese call kaizen - is central to the philosophy of JIT.

64. Kanbans
Kanban means “card” or “visible record” in Japanese & refers to cards used to control the flow of production through a factory.
Kanban is the means of signaling to the upstream workstation that the downstream workstation is ready for the upstream workstation to produce another batch of parts

65. Sample Kanban

66. Types of Kanban Signal kanban Production kanban Withdrawal kanban
a triangular kanban used to signal production at the previous workstation
Material kanban
used to order material in advance of a process
Supplier kanban
rotates between the factory and suppliers
Production kanban
authorizes production of goods
Withdrawal kanban
authorizes movement of goods
Kanban square
a marked area designated to hold items

69. The Single-Card Kanban System
General Operating Rules:
Each container must have a card.
The assembly line always withdraws materials from fabrication (pull system).
Containers of parts must never be removed from a storage area without a kanban being posted on the receiving post.
The containers should always contain the same number of good parts. The use of nonstandard containers or irregularly filled containers disrupts the production flow of the assembly line.
Only nondefective parts should be passed along.
Total production should not exceed the total amount authorized on the kanbans in the system.

70. The Single-Card Kanban System
Kanban card for product 1
Kanban card for product 2
Storage area
Empty containers
Full containers
Receiving post
Assembly line 1
Assembly line 2
Fabrication cell O1 O2 O3

71. The Single-Card Kanban System
Receiving post
Kanban card for product 1
Storage area
Kanban card for product 2
Assembly line 1
Assembly line 2
Empty containers
Fabrication cell O1 O2 O3
The process starts with a card for the first product.
Full containers

72. The Single-Card Kanban System
Receiving post
Kanban card for product 1
Storage area
Kanban card for product 2
Assembly line 1
Assembly line 2
Empty containers
Fabrication cell O1 O2 O3
The fabricated product moves to full container storage.
Full containers

73. The Single-Card Kanban System
Receiving post
Kanban card for product 1
Storage area
Kanban card for product 2
Assembly line 1
Assembly line 2
Empty containers
Fabrication cell O1 O2 O3
Full containers are moved to final assembly.
Full containers

74. The Single-Card Kanban System
Receiving post
Kanban card for product 1
Storage area
Kanban card for product 2
Assembly line 1
Assembly line 2
Empty containers
Fabrication cell O1 O2 O3
The same process is followed for product 2.
Full containers

75. The Single-Card Kanban System
Receiving post
Kanban card for product 1
Storage area
Kanban card for product 2
Assembly line 1
Assembly line 2
Empty containers
Fabrication cell O1 O2 O3
Full containers

76. The Single-Card Kanban System
Receiving post
Kanban card for product 1
Storage area
Kanban card for product 2
Assembly line 1
Assembly line 2
Empty containers O2
Fabrication cell O1 O3
Full containers O2

77. Containers in a Kanban System
Kanban is based on the simple idea of replacement of containers of parts, one at a time.
Containers are reserved for specific parts, are purposely kept small, and always contain the same standard number of parts for each part number.
At Toyota the containers must not hold more than about 10% of a day’s requirements.
There is a minimum of two containers for each part number, one at the upstream “producing” work center and one at the downstream “using” work center.

78. average demand during lead time + safety stock
Determining Number of Kanbans (containers)
No. of Kanbans =
average demand during lead time + safety stock
container size
k =
d( w + p )( 1 + a ) c
where
k = number of kanbans or containers
d = average demand over some time period
w=waitng time
p=processing time
a=safety stock level
c = container capacity

79. Determining the Number of Containers
Example: Westerville Auto Parts Company produces rocker-arm assemblies for use in the steering and suspension systems of four-wheel-drive trucks.
A typical container of parts spends 0.02 day in processing and 0.08 day in materials handling and waiting during its manufacturing cycle.
Daily demand for the part is 2,000 units. Management believes that demand for the rocker-arm assembly is uncertain enough to warrant a safety stock equivalent of 10 percent of inventory.

80. Calculations Westerville Auto Parts
a. If each container contains 22 parts, how many containers should be authorized?
d = 2000 units/day p = 0.02 day a = 0.10
w = 0.08 day c = 22 units
k =
d( w + p )( 1 + a ) c
k =
2000( )( ) 22
k = 10 containers

81. Calculations Westerville Auto Parts
b. A proposal to revise the plant layout would cut materials handling and waiting time per container to 0.06 day. How many containers would be needed?
d = 2000 units/day p = 0.02 day a = 0.10
w = 0.06 day c = 22 units
k =
d( w + p )( 1 + a ) c
Proposed change from 0.08
k =
2000( )( ) 22
k = 8 containers

82. Implementation of JIT
The human costs: Lean system implementation requires a high degree of regimentation, and sometimes it can stress the workforce.
Cooperation & Trust: Workers and first-line supervisors must take on responsibilities formerly assigned to middle managers and support staff.
Reward systems and labor classifications must often be revamped when a lean system is implemented.
Existing layouts may need to be changed.

83. People Make JIT Work
JIT has a strong element of training and involvement of workers.
A culture of mutual trust and teamwork must be developed.
An attitude of loyalty to the team and self-discipline must be developed.
Another crucial element of JIT is empowerment of workers, giving them the authority to solve production problems.

84. Lean Services
Basic elements of lean production apply equally to services
Most prevalent applications
lean retailing
lean banking
lean health care

85. JIT in Services (Examples)
Organize Problem-Solving Groups
Upgrade Housekeeping
Upgrade Quality
Clarify Process Flows
Revise Equipment and Process Technologies 30

86. JIT in Services (Examples)
Level the Facility Load
Eliminate Unnecessary Activities
Reorganize Physical Configuration
Introduce Demand-Pull Scheduling
Develop Supplier Networks 31