CH 16 - Lean Operations PDF

Operations Management: Sustainability
and Supply Chain Management Outline

Thirteenth Edition, Global Edition
• Global Company Profile: Toyota Motor Corporation
• Lean Operations
Chapter 16 • Lean and Just-in-Time

Lean Operations • Lean and the Toyota Production System
• Lean Organizations
• Lean in Services
Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Toyota Motor Corporation (1 of 2) Toyota Motor Corporation (2 of 2)

• One of the largest vehicle manufacturers in the world with • Central to TPS is employee learning and a continuing
annual sales of over 10 million vehicles effort to produce products under ideal conditions
• Success due to two techniques, JIT and TPS • Respect for people is fundamental
• Continual problem solving is central to JIT • Small building but high levels of production
• Eliminating excess inventory makes problems immediately • Subassemblies are transferred to the assembly line on a
evident JIT basis
• High quality and low assembly time per vehicle
TPS Elements Learning Objectives (1 of 2)
When you complete this chapter you should be able to:
16.1 Define Lean operations
16.2 Define the seven wastes and the 5Ss
16.3 Identify the concerns of suppliers when moving to
supplier partnerships
16.4 Determine optimal setup time
Learning Objectives (2 of 2) Lean Operations (1 of 3)

When you complete this chapter you should be able to: • Lean operations supply the customer with exactly what
the customer wants when the customer wants it, without
16.5 Define kanban
waste, through continuous improvement
16.6 Compute the required number of kanbans
• Driven by “pulling” customer orders
16.7 Identify six attributes of Lean organizations
16.8 Explain how Lean applies to services
Lean Operations (2 of 3) Lean Operations (3 of 3)
• Just-in-time (JIT) focuses on continuous forced problem • Encompasses both JIT and TPS
solving
• Sustains competitive advantage and increases return to
• Toyota Production System (T PS) emphasizes stakeholders
continuous improvement, respect for people, and standard
• Three fundamental issues
work practices in an assembly-line environment
– Eliminate waste
– Remove variability
– Improve throughput
Eliminate Waste (1 of 2) Ohno's Seven Wastes

• Waste is anything that does not add value from the • Overproduction
customer point of view
• Queues
• Storage, inspection, delay, waiting in queues, and
• Transportation
defective products do not add value and are 100% waste
• Inventory
• Motion
• Overprocessing
• Defective products
Eliminate Waste (2 of 2) The 5Ss (1 of 2)
• Other resources such as energy, water, and air are often • Sort/segregate – when in doubt, throw it out
wasted
• Simplify/straighten – methods analysis tools
• Efficient, sustainable production minimizes inputs, reduces
• Shine/sweep – clean daily
waste
• Standardize – remove variations from processes
• Traditional "housekeeping" has been expanded to the 5Ss
• Sustain/self-discipline – review work and recognize
progress
The 5Ss (2 of 2) Remove Variability

• Sort/segregate – when in doubt, throw it out • Variability is any deviation from the optimum process
• Simplify/straighten – methods analysis tools • Lean systems require managers to reduce variability
caused by both internal and external factors
• Shine/sweep – clean daily
• Inventory hides variability
• Standardize – remove variations from processes
• Less variability results in less waste
• Sustain/self-discipline – review work and recognize
progress
Two additional Ss
• Safety – built-in good practices
• Support/maintenance – reduce
variability and unplanned downtime
Sources of Variability (2 of 2)
Sources of Variability (1 of 2) • Poor processes resulting in improper quantities, late, or
non-conforming units
• Poor processes resulting in improper quantities, late, or • Inadequate maintenance
non-conforming units
• Unknown and changing customer demands
• Inadequate maintenance
• Incomplete or inaccurate drawings, specifications, or bills of
• Unknown and changing customer demands material
• Incomplete or inaccurate drawings, specifications, or bills
tion
of material
re duc ing
y
ory ntif
nv ent in ide ty
i i
nd ols iabil
JIT a tive to f var
th c o
Bo e effe uses
ar ca
Improve Throughput (1 of 2) Improve Throughput (2 of 2)

• The rate at which units move through a process • By pulling material in small lots, inventory cushions are
removed, exposing problems and emphasizing continual
• Each wasted minute products are in the process, costs
improvement
accumulate and competitive advantage is lost
• Manufacturing cycle time is reduced
• A pull system increases throughput
• Push systems dump orders on the downstream stations
regardless of the need
Lean and Just-In-Time JIT and Competitive Advantage (1 of 2)
• Powerful strategy for Figure 16.1
improving operations
• Materials arrive where they
are needed only when they
are needed
• Identifying problems and
driving out waste reduces
costs and variability and
improves throughput
• Requires a meaningful
buyer-supplier relationship
JIT and Competitive Advantage (2 of 2) Supplier Partnerships

Figure 16.1 • Supplier partnerships exist when a supplier and
purchaser work together to remove waste and drive down
costs
• Four goals of supplier partnerships are:
– Removal of unnecessary activities
– Removal of in-plant inventory
– Removal of in-transit inventory
– Improved quality and reliability
JIT Partnerships Concerns of Suppliers
Figure 16.2 • Diversification – ties to only one customer increases risk
• Scheduling – don't believe customers can create a smooth
schedule
• Lead time – short lead times mean engineering or
specification changes can create problems
• Quality – limited by capital budgets, processes, or
technology
• Lot sizes – small lot sizes may transfer costs to suppliers
Lean Layout Distance Reduction

• Reduce waste due to movement • Large lots and long production lines with single-purpose
machinery are being replaced by smaller flexible cells
Table 16.1
• Often U-shaped for shorter paths and improved
Lean Layout Tactics communication
Build work cells for families of products
Include a large number of operations in a small area • Often using group technology concepts
Minimize distance
Design little space for inventory
Improve employee communication
Use poka-yoke devices
Build flexible or movable equipment
Cross-train workers to add flexibility
Increased Flexibility Impact on Employees
• Cells designed to be rearranged as volume or designs • Employees may be cross-trained for flexibility and
change efficiency
• Applicable in office environments as well as production • Improved communications facilitate the passing on of
settings important information about the process (poka-yoke
functions can help)
• Facilitates both product and process improvement
• With little or no inventory buffer, getting it right the first time
is critical
Reduced Space and Inventory Lean Inventory

• With reduced space, inventory must be in very small lots • Inventory is at the minimum level necessary to keep
operations running
• Units are always moving because there is no storage
Table 16.2
Lean Inventory Tactics
Use a pull system to move inventory
Reduce lot sizes
Develop just-in-time delivery systems with suppliers
Deliver directly to point of use
Perform to schedule
Reduce setup time
Use group technology
Reduce Variability (1 of 3) Reduce Variability (2 of 3)
Figure 16.3 Figure 16.3
Reduce Variability (3 of 3) Reduce Inventory

Figure 16.3 • Reducing inventory uncovers
the "rocks"
• Problems are exposed
• Ultimately there will be
virtually no inventory and no
problems
• Shingo says "Inventory is
evil"
Reduce Lot Sizes (1 of 2) Reduce Lot Sizes (2 of 2)
Figure 16.4 • Ideal situation is to have lot sizes of one pulled from one
process to the next
• Often not feasible
• Can use EOQ analysis to calculate desired setup time
• Two key changes necessary
– Improve material handling
– Reduce setup time
Setup Time Example Reduce Setup Costs (1 of 2)

D = Annual demand = 400,000 units • High setup costs encourage large lot sizes
d = Daily demand = 400,000/250 = 1,600 per day
p = Daily production rate = 4,000 units • Reducing setup costs reduces lot size and reduces
Qp = EOQ desired = 400 average inventory
H = Holding cost = $20 per unit
• Setup time can be reduced through preparation prior to
S = Setup cost (to be determined)
shutdown and changeover
Setup time = $2.40/($30/hour) = 0.08 hr = 4.8 minutes

Lower Setup Costs Reduce Setup Costs (2 of 2)
Figure 16.5 Figure 16.6
Lean Scheduling (1 of 2) Lean Scheduling (2 of 2)

• Schedules must be communicated inside and outside the • Better scheduling improves performance
organization
Table 16.3
• Level schedules Lean Scheduling Tactics
– Process frequent small batches Make level schedules
– Freezing the schedule helps stability Use kanbans
Communicate schedules to suppliers
• Kanban Freeze part of the schedule
– Signals used in a pull system Perform to schedule
Seek one-piece-make and one-piece-move
Eliminate waste
Produce in small lots
Make each operation produce a perfect part
Level Schedules Scheduling Small Lots
• Process frequent small batches rather than a few large Figure 16.7
batches
• Make and move small lots so the level schedule is
economical
• Freezing the schedule closest to the due dates can
improve performance
Kanban (1 of 6) Kanban (2 of 6)
• Kanban is the Japanese Figure 16.8
word for card
• The card is an authorization
for the next container of
material to be produced
• A sequence of kanbans
pulls material through the
process
• Many different sorts of
signals are used, but the
system is still called a
kanban
• When there is visual contact
– The user removes a standard-size container of parts
from a small storage area, as shown in Figure 16.8.
– The signal at the storage area is seen by the producing
department as authorization to replenish the using
department or storage area. Because there is an
optimum lot size, the producing department may make
several containers at a time.
• When the producer and user are not in visual contact, a • Kanban cards provide a direct control and limit on the
card can be used; otherwise, a light or flag or empty spot amount of work-in-process between cells
on the floor may be adequate
• A complicating factor in a manufacturing firm is the time
• Usually each card controls a specific quantity of parts needed for actual manufacturing (production) to take place
although multiple card systems may be used if there are
several components or if the lot size is different from the
move size
The Number of Kanban Cards or
Containers Number of Kanbans Example
• Need to know the lead time needed to produce a container
of parts
• Need to know the amount of safety stock needed
Advantages of Kanban Lean Quality

• Small containers require tight schedules, smooth • Strong relationship
operations, little variability – Lean cuts the cost of obtaining good quality because
• Shortages create an immediate impact Lean exposes poor quality
– Because lead times are shorter, quality problems are
• Places emphasis on meeting schedules, reducing lead exposed sooner
time and setups, and economic material handling
– Better quality means fewer buffers and allows simpler
• Standardized containers reduce weight, disposal costs, Lean systems to be used
wasted space, and labor
Lean Quality Tactics Toyota Production System (1 of 3)
Table 16.4 • Continuous improvement
– Build an organizational
culture and value system
Lean Quality Tactics that stresses
Use statistical process control improvement of all
Empower employees processes, kaizen
Build fail-safe methods (poka-yoke, checklists, etc.) – Part of everyone’s job
Expose poor quality with small lots • Respect for people
Provide immediate feedback – People are treated as
knowledge workers
– Engage mental and
physical capabilities
– Empower employees
Toyota Production System (2 of 3) Toyota Production System (3 of 3)

• Processes and standard work practice • Processes and standard work practice
– Work shall be completely specified as to content, – Stopping production because of a defect is called
sequence, timing, and outcome jidoka
– Internal and external customer-supplier connections – Dual focus
are direct ▪ Education and training of employees
– Material and service flows must be simple and directly ▪ Responsiveness of the system to problems
linked to the people or machinery involved
– Result is continuous improvement
– Process improvement must be made in accordance
with the scientific method at the lowest possible level of
the organization
Lean Organizations Building a Lean Organization (1 of 2)
• Understanding the customer and the customer's • Transitioning to a Lean system can be difficult
expectations
• Build a culture of continual improvement
• Functional areas communicate and collaborate to make
• Open communication
sure customer expectations are met
• Demonstrated respect for people
• Implement the tools of Lean throughout the organization
• Gemba walks to see work being performed
Building a Lean Organization (2 of 2) Lean Sustainability

• Lean systems tend to have the following attributes • Two sides of the same coin
– Respect and develop employees • Maximize resource use and economic efficiency
– Empower employees
• Focus on issues outside the immediate firm
– Develop worker flexibility
– Develop collaborative partnerships with suppliers • Driving out waste is the common ground
– Eliminate waste by performing only value-added
activities
Lean in Services Copyright
• The Lean techniques used
in manufacturing are used in This work is protected by United States copyright laws and is
provided solely for the use of instructors in teaching their
services courses and assessing student learning. Dissemination or sale of
– Suppliers any part of this work (including on the World Wide Web) will
destroy the integrity of the work and is not permitted. The work
– Layouts and materials from it should never be made available to students
– Inventory except by instructors using the accompanying text in their
– Scheduling classes. All recipients of this work are expected to abide by these
restrictions and to honor the intended pedagogical purposes and
the needs of other instructors who rely on these materials.

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Operations Management: Sustainability

and Supply Chain Management Outline

Chapter 16 • Lean and Just-in-Time

Toyota Motor Corporation (1 of 2) Toyota Motor Corporation (2 of 2)

Learning Objectives (2 of 2) Lean Operations (1 of 3)

Eliminate Waste (1 of 2) Ohno's Seven Wastes

The 5Ss (2 of 2) Remove Variability

Improve Throughput (1 of 2) Improve Throughput (2 of 2)

JIT and Competitive Advantage (2 of 2) Supplier Partnerships

Lean Layout Distance Reduction

Reduced Space and Inventory Lean Inventory

Reduce Variability (3 of 3) Reduce Inventory

Setup Time Example Reduce Setup Costs (1 of 2)

Setup time = $2.40/($30/hour) = 0.08 hr = 4.8 minutes

Lean Scheduling (1 of 2) Lean Scheduling (2 of 2)

Advantages of Kanban Lean Quality

Toyota Production System (2 of 3) Toyota Production System (3 of 3)

Building a Lean Organization (2 of 2) Lean Sustainability

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