Lean Production

1
Lean Production

• Henry C. Co
• Technology and Operations Management,
• California Polytechnic and State University

2
What is Lean?

• According to Womack, Jones Roos (1991), lean
  production vs. mass production requires,
• ½ the human effort in the factory (context!)
• ½ the manufacturing space
• ½ the investment tools
• ½ the engineering hours
• ½ the time to develop new products

Reference Womack, J.P., Jones, D.T. Roos, D.
(1991), The machine that changed the world The
story of lean production. New York, NY First
Harper Perennial.
3
A Brief History of Lean
4

• Lean is elimination of waste and the efficient
  creation of value throughout the enterprise!
• Lean always complements a Quality System (usually
  6 Sigma). Lean says Dont do a process that
  does not add Value! Six Sigma says Once we can
  identify value added processes lets absolutely
  minimize the variability and get them in
  control.
• Lean is, above all, a People System. A lot of
  companies adopt systems, but get stopped
  because we dont educate the people adding the
  value how to improve the system (base line
  industrial engineering skillsets).

5
What is the Toyota Production System?
6
Major MPC Approaches

• Up to the late 1960s, the EOQ/ROP approach was
  the method of choice in production-inventory
  management (PIM).
• During the 1970s, the American Production and
  Inventory Control Society (APICS) campaigned to
  promote MRP.
• For the 1980s, APICS promotes JIT production as
  the proper method of PIM.
• Another contemporary technique for managing
  production and inventory is the Optimized
  Production Technology (OPT) system.

7
EOQ/ROP

• Developed at Westinghouse by F. W. Harris in
  1915.
• Event-triggered, uses Calculus to find the
  optimal order quantity
• Q
• Major deficiencies.
• Ignores product structure relationships.
• Does not permit effective rescheduling in
  response to dynamic changes in demand or
  production activities.
• Reactive backward looking rather than proactive
  forward looking.

8
MRP Resolves EOQ/ROP Deficiencies

• Matched sets.
• structured bill of material provides "matched
  sets" of components parts from which to build the
  end items called for by the master schedule.
• Proactive.
• Inventory and production management is guided by
  firm orders and forecasts of future demand.
• orders for parts are matched with the demand
  these parts are expected to satisfy.

9
Nervousness of MRP

• Steady stream of changes confronted by
  manufacturing companies.
• Forecasts are wrong!
• bill of materials are revised!
• parts are scraped!
• vendors are late! etc.
• A significant change in the final assembly
  creates changed requirements in feeder operations
  that are usually amplified because of lot size
  rules, set-ups, queues, and waiting time.
• A 10 change at assembly could easily result in a
  100 change at the front end.

10
The Toyota Production System

• A manufacturing strategy having a dominant theme
  of constantly reduced inventory and a system of
  equipment, procedures and attitudes which
  eliminate waste and promote respect for people.
• Just-in-time manufacturing is a production
  philosophy which calls for the production of
  precisely the necessary units, in the necessary
  quantities, at the necessary times.
• The kanban system is an MPC system that supports
  JIT manufacturing.

11
Kanban System

• Developed in the 1970s by Toyota.
• Information system that supports JIT production.
• Kanban is a card, usually put in a rectangular
  vinyl envelope, that authorizes the production or
  withdrawal of materials.
• Consequently, we can think of the kanban system
  as a manufacturing planning and control system.
• Three categories
• pickup information,
• transfer information,
• production information.
• The kanban controls the production of more than
  4.8 billion a year!

12
(No Transcript)
13
Key Elements of Toyota Production

• Just-in-time production.
• People involvement Teamwork, Discipline (job
  design, methods), Supplier involvement.
• Total quality control.
• Kanban-controlled flow.
• Rapid setup to achieve JIT production.
• Group technology mixed-model assembly.
• Streamlined plant layout.
• Capacity reserve to support peak production.

14

• Total quality.
• Quality is everyone's job, each has an immediate
  customer.
• Many quality-related efforts are moved to the
  workers.
• TQC must become a company culture to be fully
  effective.
• Work simplification.
• Preventive maintenance.
• JIT production control kanban-controlled.
• Focused factories.
• Supplier network.
• JIT accounting.
• Team approach.

15
Toyota Focuses on Eliminating Waste

• Queues waste.
• Reduce queues a way to discover problems and
  reduce cost.
• Waste of overproduction and unnecessary
  inventory.
• Waste of time waiting.
• Waste in transportation.
• Waste of processing (making defective products).
• Waste of movement.

16
JIT Production

• Uniform production rate.
• Purchasing and producing small lots.
• Quick, inexpensive setups.
• Multiskilled workers and flexible facilities.
• High quality level.
• Effective preventive maintenance.
• Continuous improvement.
• Fix it, even if it ain't broke.
• Wake up the sleeping dog!
• A pull method of coordinating work centers (e.g.,
  kanban).

17
Production Smoothing at Toyota

• The JIT system works in Toyota because of the
  unique way Toyota structure its master production
  schedule.
• Master production schedule in MRP seeks economies
  and efficiencies through economical lot sizes.
• at Toyota, the master production schedule is
  prepared with the goal of scheduling every
  product every day.
• Mixed-model assembly processing a variety of
  models of the same family on the same assembly
  line.
• Aggregate production schedule.
• One-year horizon.
• Updated monthly marketing and finance input.
• MPS has a three-month horizon.
• First month shows daily schedule for the final
  assembly of each model.
• Next two months lso in daily time-buckets, but in
  terms of model family.
• Daily schedules are determined by dividing the
  number of units required for the month by the
  number of working days in the month.
• Same production for each item each day.

18
Illustration

• Forecasts for next two weeks
• 50 of the sales will be Product A,
• 25 will be Product B, and
• 25 will be Product C
• Typical U.S. plant
• Make Product A for 5 straight days,
• Change over to Product B for two and a half days
  Produce Product C for the balance of the week
• Under the JIT system
• make Product A, followed by Product B, followed
  by Product A, followed by Product C, and the
  cycle repeats.
• The goal is to schedule every product every day,
  and in a sequence which intermixes all products.

19
JIT MPS Future Resembles Past
20
A Two Card Kanban System

• Consider a multi-stage system.
• The output of workstation A is the input to
  workstation B.
• Each filled container at the outgoing stocking
  point of A has a production (P) kanban
• At the incoming stocking point in B, each has a
  withdrawal (W) kanban.
• At workstations B (the customer)
• As each container is opened, B detaches the
  W-kanban and deposits it in a withdrawal post
  (either a box or a board).
• At fixed intervals (e.g., 2 hours), a material
  handler (called "mizusumashi" at Toyota) picks up
  the W-kanban at the withdrawal post takes the
  W-kanban and the corresponding number of empty
  containers to the outgoing stock point at
  workstation A.

21

• Order-Picking at the outgoing stocking point of
  Workstation A
• The material handler
• Picks up the corresponding number of filled
  containers.
• Detaches the P-kanban from each filled containers
  at the outgoing stock point.
• Deposits the detached P-kanban in a receiving
  post.
• Attaches a W-kanban to each of these filled
  containers.
• Transports the filled containers to Workstation
  B.
• Production at Workstation A
• Each kanban card deposited in the P-kanban post
  authorizes workstation A to produce one
  container.
• Attaches the production kanban to each filled
  containers, store at the outgoing stock point.

22
Two Card Kanban
23
Pull Push Systems

• Push system (conventional production system).
• To maintain a high level of utilization (i.e., to
  keep the workstations working), materials are
  pushed from each stage to the succeeding
  stage(s).
• When something goes wrong in some intermediate
  stage, inventory builds up in the up-stream
  stages.
• Pull system (kanban-controlled)
• Production at each stage is triggered by its
  successor stage(s), and this process is carried
  all the way to the raw material acquisition
  stage.
• Production is controlled (i.e., pulled) by
  demand, as information of demand flows backwards
  from the final stage (the final assembly) to the
  initial stage (the raw material acquisition).
• at each work center, all requests for production
  are made through the kanban cards.

24
Number of kanban Needed

• Number of kanban cards
• AD average daily demand for the month.
• WT waiting time.
• PT processing time for one container.
• CQ container quantity -- limited to maximum of
  10 of day's demand.
• PV policy variable (determined by management)
  up to 10 of day's demand.
• WT PT time interval between order picking.

25
Kanban and EOQ/ROP

• Observations by Walter Goddard of Oliver Wight
  Educational Associates, Inc.
• Both are reactive systems designed to replenish
  inventory -- the quantity used is the quantity
  ordered -- not in anticipation of future orders
  (MRP).
• Kanban system linked replenishment.

26
Linked Replenishment

• The conventional EOQ/ROP system ignored the
  product structure/bill-of-materials relationships
  among the component parts. the demand of each
  component item is assumed to be independent of
  each other. Hence, items are replenished
  independently.
• With the kanban system, production of an item is
  "pulled" by the demand for the item at the
  succeeding stage.
• Last stage the final assembly, which is planned
  in the master production schedule.
• If something is not used in the final assembly,
  no replenishment action will take place.
• Replenishment is therefore linked with the master
  production schedule, just like in MRP.

27
Quick Setups at Toyota

• To make
• 10,000 coronas a month, consisting of 5,000
  sedans, 2500 hardtops, and 2500 wagons.
• 20 days/month means producing 250 sedans/day, 125
  hardtops/day, and 125 wagons/day.
• Die-change time
• In 1940's die-change time was 2-3 hours.
• In the late 1960's, it was cut to 3 minutes.
• A 50 fold decrease!

28
Lean Manufacturing

• Delivering highest Quality product at the lowest
  cost on time

29
U.S. vs. Japanese Automakers

• Chrysler, Ford, GM
• Toyota, Nissan, Honda

30
Performance Indicators
31
Lean Production

• Keeping Inventory Levels Low
• Maintaining Level Production
• Incorporating Quality
• Developing Close Relationships with
  Transportation Carriers
• Setting Stringent Delivery Requirements
• Compensating for Geographical Distance
• Adopting Effective loading Methods