House Building Game

1
Lean Operations Module

• House Building Game
• The transition to Lean Ops
• The Paradigm of Lean Operations The ideal
• Basic philosophy of Lean Ops
• Methods for synchronization waste reduction
• Managing variety flexibiltiy
• Approaching the ideal TPS
• Continuous improvement
• Toyota Production System (TPS)

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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
• How do we set up a system to continually reduce
  waste ?
• Improving synchronization
• Visibility for continuous improvement

3
Toyotas waste elimination in Operations

• 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

4
House Game Improvements What did your team do?
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Lean Tool 1 Cut Batch Sizes A Simple Example

• What is the theoretical flow time of the process?
• What is the capacity of the process?
• What does that imply for the amount of inventory
  needed in the process?

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Synchronize Cut Batch Sizes

• Batch Mfg (Batch size 4)

• Flow Mfg (Batch size 1)

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Elapsed Time
1-4
6
5
5-8
1-4
5-8
1-4
9-12
5-8
13-16
17-20
1-4
9-12
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Lean Tool 2 customer demand pulls product --
Synchronization with demand
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Implementation Kanban Production Control Systems
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Synchronize Just-In-Time operations

• JIT have exactly what is needed, in the
  quantity it is needed, when it is needed, where
  it is needed.
• Reduce transfer batches
• Pull rather than push work
• Set up cells

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Lean Tool 3 From Functional Layout to Cells
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Managing Flows the Process View product cells

• Recall By rethinking the IBM Austin assembly
  plant and introducing cells, distance traveled by
  a card was cut from 1.5 miles to 200 yards. Floor
  space was reduced to half and production tripled
  with about the same number of workers.
• Pros of cells
• Cons of cells

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Teams in Cells and Lean Ops Human Resources
issues

• Advantages
• Consistent with the moral ideal of autonomy.
• Empowers the workforce through participation and
  autonomy in managing daily activities
• Gives unprecedented responsibility to workers
• Immediate and impartial feedback of problems
• Investigation of process improvements
• Monitoring quality
• They also gain better understanding of the
  process
• Challenges
• Less WIP means more tight coupling and less
  autonomy
• Rigid procedures and interdependence of cells
• Team dynamics incentives, team pressure,
• From monthly 30-day goals before to 3-minute
  goals now
• Does not leave much room for variability

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Lean Tool 4 Quality at the Source
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Quality at the Source

• Fool-proof/Fail-safe design (Poka-Yoke)
• Inspection
• Self
• Automated (Jidoka)
• Line-stopping empowerment (Andon)
• Human infrastructure

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How to run Lean Operations Managing Variety

• Monthly Production Requirement

• How should production be scheduled for the month?

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Synchronize Heijunka Mixed Level/Balanced
Production

• Batch Production Schedule Mixed Production
  Schedule
• (AAAABBBB..) (ABAB...)
• Product Apr/12.................15............
  ...............30
  Apr/12....................15......................
  .30
• A
• B

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Reducing Waste Reduced Setup Times

• What happens if we have long setup/changeover
  times?
• How do synchronized production with variety
  (product mix)?

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Synchronize Heijunka Uniform Plant Loading

• This does not mean building a single product.
• Rather
• maintain a stable mix of products,
• and firm frozen schedules based on actual orders
• Benefits
• Costs Must reduce scale economies

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Reducing Waste Mixed-Load Pickup and Delivery
Part A Plant
Individual Pickup
Assembly Line
Part B Plant
Part C Plant
Part A Plant
Mixed-Load Pickup
Assembly Line
Part B Plant
Part C Plant
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THE DICE GAME
INPUT Buffer
OUTPUT Buffer
Unfair Dice which rolls into either 3 or 4
6 Face Fair Dice
Average Capacity of Each Step
Average Capacity of Each Stage
Average Process Capacity
Average Capacity of The Process
Play The Game
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The impact of inventory and variability Output
of Match Game
2-face die (s0.7)
6-face die (s1.9)
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Reducing waste Increase Problem
Visibility Lower the Water to Expose the Rocks
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Time plays the role of Inventory in Lean Service
Operations
TIME
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Toyota Motor Manufacturing, USA
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Toyota financial performance
Fig 1 The Economist, 2005. Fig 2 Barrons 2004.
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Impact of Toyota Name on Resale Value
2002 ModelYear MSRP 2005 ResaleValue w/45K miles Resale/MSRP
Corolla
CE 12,568 10,050 80
S 12,793 10,800 84
LE 13,383 10,500 78

Prizm
Base 14,330 8,725 61
Lsi 16,395 9,580 58

Resale values taken from Cars.com for average condition January, 2005. Resale values taken from Cars.com for average condition January, 2005. Resale values taken from Cars.com for average condition January, 2005. Resale values taken from Cars.com for average condition January, 2005.
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The Changing Cost of Warranty Management
Warranty Problems per Vehicle vs. Warranty Costs
()
()
()JD Power 1QS, May 2001
() Business Week Article, June 25, 2001.
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Continuous Improvement Kaizen

• Increase visibility of waste
• Targeted improvements
• Active worker involvement
• Time for experimentation
• Supplier involvement
• Exploratory stress
• Human infrastructure

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Lean Operations Best Implementation is TPS

• TPS is a production management system that aims
  for the ideal through continuous improvement
• Includes, but goes way beyond JIT. Pillars
• Synchronization
• Quality at Source
• Continuous Improvement (Kaizen) through
  visibility empowerment

....
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Learning Objectives Lean Operations

• Paradigm of Lean Operations
• Strive for the ideal by eliminating waste
• Flow Synchronization
• Reduced batch sizes
• Level Mixed Production Heijunka
• Pull production control systems (vs. push)
• Implementation Kanban
• Layout Cellular operations
• Quality at the source
• Continuous Improvement
• Increase problem visibility (river analogy)
• Kaizen