AGILE AND LEAN MANUFACTURING

IM-515
LECTURE – 3
Dr. M Fahad
Associate Professor (IMD)
 Becoming Lean!
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Five Steps Procedure

1. Define Value Customers

2. Identify the Value
Follow the Product
Stream
3. Flow the Product Eliminate Waste
4. Pull Production Produce Just in Time
5. Strive for Perfection Continuous Improvement

Lecture Presentation by Dr. M Fahad

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 Value Creation and Waste:

Activities can be grouped into following Two types:

 Value Adding Activities

 Non – Value Adding Activities

Lecture Presentation by Dr. M Fahad

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Value Adding Activity

 Activities which transform the material into exact
product that the customer require
 Activities within the company or supply chain for which
the customer would be happy to pay for
 An activity that changes the size, shape, fit, form or

function of material or information as to satisfy

customers’ demands and requirements
 Casting, Machining, Paint/Coating etc

Lecture Presentation by Dr. M Fahad

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Non-Value Adding Activity

 That do not contribute directly to satisfying customers’
requirements
 That consume resources but do not meet the customers’
demands or requirements
 That aren’t required for transforming the materials into
the product that the customer wants (not willing to pay)
 Setup, Counting etc.
Lecture Presentation by Dr. M Fahad
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 According to Lean Enterprise Research Centre (LERC) in the United

Kingdom (for a typical manufacturing company):
 Value-added activity 5%

 Total non value- added activity 95%

 Non value-added activity 60%

 Necessary non value-added activity 35%

 This implies that up to 60% of the activities at a typical manufacturing

company could potentially be eliminated.

Lecture Presentation by Dr. M Fahad

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Common Activities
 Storage
 Any step within the process where the product or work in progress is
delayed or is put into storage, either temporarily or long term.
 Indicates
 Organization's ability to anticipate supply and demand for the
product.

 Mainly considered NVA

 Factory Warehouse vs Bank Lockers

Lecture Presentation by Dr. M Fahad

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Common Activities
 Transportation
 Any step within the process where the product or work in progress must
be moved from one area or location to another.
 Indicates
 Isolated processes

 Mainly considered NVA

 Delivery of a Car vs Delivery of Pizza at your doorstep

Lecture Presentation by Dr. M Fahad

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Common Activities
 Inspection
 Any step within the process where the product or work in progress is
stopped for review, inspection or approval.
 Indicates
 Inability to produce a good product

 Mainly considered NVA

 Many End – Use items vs B2B items (SGS, BV, LRQA)

Lecture Presentation by Dr. M Fahad

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Common Activities
 Production
 Make and do steps within the process where the enhancement in the
product takes place.
 Indicates
 Ability to perform skilled work

 Mainly considered VA
 Work vs Rework

Lecture Presentation by Dr. M Fahad

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Waste
Anything other than the minimum
amount of equipment, materials, parts,
and working time absolutely essential to
production.
Anything that adds Cost to the
product without adding Value
Lecture Presentation by Dr. M Fahad
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Waste
Broader Classification
 Waste (Muda)
 Irrationality (Muri)
 Inconsistency (Mura)
Capacity exceeds load
Load exceeds capacity
Sometimes load exceeds capacity
Sometimes capacity exceeds load

Lecture Presentation by Dr. M Fahad

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Ohno Defined Seven types of Waste (MUDA)

1. Defects
Defects
2. Over
Overproduction
production
3. Waiting
Waiting time
time
4. Non-utilized
Non-utilizedpeople
people
5. Transportation
Transportation
6. Inventory
Inventory
7. Motion
8. Excess
Excessprocessing
processing
Lecture Presentation by Dr. M Fahad
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Over-production
Producing:
 What is unnecessary
 When it is unnecessary
 And in an unnecessary amount
Worst of All Types of Wastes as it hides other wastes (Waiting,
Movement, Transportation)
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How to Respond to Waste

Type Causes Effects Responses

•Over staffed and/or •Obstacle to flow goods

Over over equipped •Once piece flow
Production •Large lot production •Increase in inventory
•Implementation of
Making what is •Lowering of capital Kanban, Supermarkets
unnecessary, •Machines are too turnover
when it is big/fast •Worker hour
unnecessary and •Occurrence of defects
in an reduction
•Use of special
unnecessary •Anticipatory buying of
amount devices/tools for high •Production Leveling
rate materials/tools

Lecture Presentation by Dr. M Fahad

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Defects
Physical defects which directly add to the costs of goods sold:
 Inspection
 Customer complaints
 Scrap/Rework
Also Includes:
 Errors in paperwork
 provision of incorrect information about the product
 late delivery
 production to incorrect specifications
Results in Disruptions to the smooth flow and generates
bottlenecks
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How to Respond to Waste

Type Causes Effects Responses

•Human automation
Defects •Omission of standard
•Higher material expenses •Standard processes
Costs due to working procedures
inspection of •Poka-Yoke
defects in •No defined inspection •Lower productivity
materials & standards •Floor space occupation •Building quality at
processes,
customer
each station
•Downstream •Rework/Scrap
complaints &
repairs
operation response •Reduction in work
movements

Lecture Presentation by Dr. M Fahad

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Inventory
Unnecessarily high levels of:
 Raw materials
 Works-in-Progress(WIP)
 Finished Goods

Symptoms of a Sick Factory

Extra inventory leads to:
 higher inventory financing costs
 higher storage costs
 higher defect rates
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How to Respond to Waste

Type Causes Effects Responses

•Increased delivery
•Acceptance of deadlines •Production leveling
inventory as a norm •Defects hidence
Inventory •Implementation of
Anything that is
•Poor equipment layout •Creation of need for Kanban
retained within
•Large lot production transportation/inspection •Customer-Supplier
factory including
RM, WIP and FG •Low profitability relations
•Anticipatory/idea
based production •Reduced ability to cope •Cell layout
with product changes

Lecture Presentation by Dr. M Fahad

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Motion
Major part of a typical operator’s work
Includes unnecessary physical motions
Too fast or slow movements
Difficult physical movements, due to poorly
designed ergonomics, which slow down/strain the
workers
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How to Respond to Waste

Type Causes Effects Responses

•Increase in staff and

•Gradual switch to flow
worker hours
production
•Isolated operations
•Unsteadiness or instability
Motion •U shaped cell layout
•Lower morale among in operation
Unnecessary of equipment
employees
movement, too •Creation of need for
slow or too fast •Improving operations
•Large lot production transportation/inspection
movement
•Distinction between
•Lack of training •Unutilized capacity
superficial and real
(machines not working
standardization
during worker movement)
Lecture Presentation by Dr. M Fahad
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Extra (over) processing

Unintentionally doing more processing work than
required
Typically performed in the name of Quality
May also include setup and Changeover
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How to Respond to Waste

Type Causes Effects Responses

•Review of operations
•Increased number of and procedures
•Inadequate study of
operations
process and procedures •Improvement of jigs
Over •Increased worker and fixtures using
Processing •Incorrect design of
hours/processing time human automation
Unnecessary jigs/fixtures
processing, •Increased operation •Implementation of
setups and •Lack of standardization
complexity value analysis/value
changeovers
•Lack of information engineering
•Increased defective
about material techniques
production
Lecture Presentation by Dr. M Fahad •Standardization
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Transportation
Any movement of materials such as
 Moving materials between workstations
 Picking up/ setting down items

Ideally, output of one process should be

immediately used as the input for the
next process
Transportation between processing stages
results in:
 Prolonging production cycle times
 Inefficient use of labor and space (source
of minor production stoppages)
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How to Respond to Waste

Type Causes Effects Responses

•U shaped cell layout

•Space occupancy
•Poor layout •Training of workers for
Transport •Single-skilled workers •Increased worker hours multi-skills
Unnecessary due to moving materials
•Review part
moving, picking •Part complexity
up, setting down •Dented/damaged parts design/complexity
or pilling up •Slow moving
items •Increased •Optimize
conveyors/handling
transportation/handling conveyor/material
equipment
equipment handling equipment
size and speed
Lecture Presentation by Dr. M Fahad
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Idle Time
Time spent waiting for something by:
 Operator (Material, Tooling)
 Machine (Previous Operation, Inspection, Monitoring)

Bottlenecks or inefficient production flow on the factory floor

Results in a significant cost as it increases labor costs and
depreciation costs per unit of output
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How to Respond to Waste

Type Causes Effects Responses

•Obstructions in flow or •Increased labor/operation

•U shaped cell layout
material time
Idle Time •Poor layout
•Poka-Yoke
Waiting for •Reduced utilization of
material by equipment and machines •Quick changeover
•Problems at upstream
worker/machine
process •Increased in-process •Production
inventory (WIP) leveling/line balancing
•Capacity imbalance

Lecture Presentation by Dr. M Fahad

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Sources of Waste
 Layout (distance)  Functional organization

 Long setup time  Excessive controls

 Incapable processes  No back-up / cross training

 Poor maintenance  Unbalanced workload

 Poor working methods  No decision rules

 Lack of training  No visual control

 Lack of adherence  Supplier quality

 Ineffective scheduling  Lack of workplace

 Poor supervisory skills organization

 Inconsistent performance
measures Lecture Presentation by Dr. M Fahad