Chapter 16 Lean Operations

1
Chapter 16 Lean Operations

• Production Environments Lean Operations (JIT)
  History, Goals and Building Blocks Maintenance

2
Part 2 Summary to Date - 1

• Forecasting demand is basis for all planning
• Approaches
• Judgment
• Associative (for cycles)
• Historical
• Multi-period pattern (for trend and seasonal)
• Single period patternless (other)
• Measures of forecast error

3
Part 2 Summary to Date - 2

• Aggregate planning
• Sales plan
• Production plan (most likely in )
• Long range resource plan (LRRP)
• Disaggregate to intermediate range
• Demand forecast (include other demand)
• Master production schedule (MPS)
• units of product (or end items)
• Rough cut capacity plan (RCCP)
• Only resources critical to meeting the MPS

4
Part 2 Summary to Date - 3

• MPS drives the next level
• Material Requirements Plan (MRP)
• All assemblies, subassemblies, fabricated parts,
  components, raw material
• Predicts shortages
• Suggests action through messages
• Capacity Requirements Plan (CRP)
• All labor, equipment, other important resources

5
Part 2 Summary to Date - 4

• MRP terms
• Gross requirements
• Derived from planned order releases at higher
  level
• Scheduled receipts
• Date and quantity for delivery of existing orders
• Projected availability
• Starts with current on hand
• If negative net requirements, MRP must plan
  action
• Planned order releases
• Created by MRP, dont exist outside the computer

6
Part 2 Summary to Date - 5

• MRP processing
• Driven by MPS
• Proceeds level by level
• Projects available inventory until shortage
• Then suggests push, pull, cancel
• If not adequate, creates planned order
• Order quantity determined by lot sizing rule
• Order release date determined by lead time

7
Part 2 Summary to Date - 6

• Evolution of MRP Systems
• MRP (Joseph Orlicky)
• Closed Loop MRP (Oliver Wight)
• MRP II (Oliver Wight)
• ERP (Gartner Group)
• Latest hot buttons
• Supply chain management
• E-commerce

8
Production Environments

• Product Characteristics (continuum)
• Customized lt--------------gt Commodity
• Operation Types (continuum)
• Project
• Job Shop
• Batch
• Repetitive/Assembly
• Continuous flow __

9
History of Lean Operations (JIT)

• Japanese Post-WW II conditions
• Emphasis on quality and eliminating waste
• Also called lean manufacturing or the Toyota
  production system
• U.S. attention as a result of oil embargo
• Change in philosophy needed in U.S.
• Also called Zero Inventory in U.S.

10
Obstacles to JIT in the US

• Emphasis on MRP systems
• Fit job shops most closely
• APICS, Oliver Wight and others
• Cost Accounting
• Traditional job accounting
• Management
• Reluctance to empower employees
• Focus on high utilization
• Limited allowance for training

11
Key Contributors to JIT - 1

• Japan (developer)
• Taichi Ohno (Toyota Motor Company)
• Toyota Production System
• Aka Lean Production or Lean Manufacturing

12
Key Contributors to JIT - 2

• US (popularizers)
• Richard Schonberger (U of Nebraska, U of
  Washington)
• Emphasized concepts, management aspect
• Japanese Manufacturing Techniques
• World Class Manufacturing
• Robert Hall (U of Indiana)
• Emphasized specific tools and techniques
• Zero Inventories

13
Lean Operations Goals

• Eliminate waste
• Smooth the flow
• Minimize disruptions
• Minimize inventory
• Reduce queue, setup, wait, transit times
• Reduce lead time
• Introduce flexibility
• Reduce cost

14
Lean Operations Requirements

• Management commitment
• Quality
• Training
• Worker involvement / ownership
• Flexibility - people and equipment
• Process changes
• Supplier partnerships

15
Building Blocks - 1

• Product design
• Standard parts
• Modular design
• Capable production systems

16
Building Blocks - 2

• Process design
• Quality improvement
• Small lot sizes
• Setup time reduction
• Manufacturing cells
• Limited WIP
• Production flexibility
• Minimal inventory storage

17
Building Blocks - 3

• People
• View employees as assets
• Cross-training
• Commitment to continuous improvement
• Cost accounting (big obstacle in U.S. due to job
  costing bias)
• Leadership

18
Building Blocks - 4

• Manufacturing planning and control
• Level loading
• Pull systems
• Visual signals (Kanban)
• Container, card(s), cart, taped space on floor or
  counter, colored lights (??), golf balls (??)
• Supplier partnerships
• Reduced transaction processing
• Preventive maintenance and housekeeping

19
Making the change

• Insure true management commitment
• Provide employees training
• Focus on internal operations before moving on to
  suppliers
• Start small (one line) and at end of process
• Deal with cost accounting issues early
• Now extend to your suppliers