Chapter Five: Lean Manufacturing

Lean manufacturing is production philosophy and a way of mapping the overall manufacturing
process from raw material to finished goods all the way to customer with aim of eliminating or
reducing wastes and non- value adding activities to improve productivity, quality, customer
satisfaction etc.

In traditional manufacturing approach if improving productivity is required then hiring more

employees, buy more new equipment, or build additional factories. This result in increasing
value adding activities and output rate as well as non-value adding activities. Focus on increasing
value adding activities (increasing the spindle speed in machining) may increase dramatically the
output rate but it may not increase the overall system efficiency. However, lean manufacturing
approach follows a different way.in order to improve productivity, quality… additional
employees, equipment; factories… are not required rather redirecting non- value adding activities
into value adding activities. Hence, focusing on converting non-value adding activities into
value adding activities by identifying root causes of non- value adding activities and then
eliminating or minimizing them enables to improve productivity, quality and system efficiency.

Theory on constraint (TOC): deals with the factors that limit the performance of a system. SO,
focusing on the vital few system constraints (like 80:20 Pareto principle) helps to improve the
system performance. Focusing on everything is synonymous with not focusing on anything.

5.1. Value adding, non - value adding operations and wastes

What is value?

Value is the capability provided to the customer (for thing a customer pays for it without regret)
at the right time and at an appropriate price. From lean perspective value is defined by customer.

Ask yourself this, „Would I be willing to pay for this activity/task if I were buying this product?‟

If the answer is yes, then the activity is value adding activity.

Value of a product is the ratio of the worth or utility of the product to its price or cost.

Value = or

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It is obvious from above relation that the value of an item or service can be enhanced by

• Reducing the price for the same worth,

• Increasing the worth for the same price, and

• Reducing the price and increasing the worth simultaneously.

The three categories of Operations

(1) Value adding Operation

• Part of the operation (net operation) that adds value to make parts and products

Examples: Milling, Turning, Grinding, Assembling and Welding

(2) Non-Value adding Operations but necessary

• Operation that adds no value but cannot be avoided

Example: Setting up, Inspecting, Picking up parts, Removing drill chips, scheduling

(3) Non - value adding operations and not necessary/Waste

Waste is defined as everything that does not add value to the end product from the user's
perspective. It is anything unnecessary in operation and can be eliminated immediately. In other
words, it contains activities which use resources, time or cost without adding value.

Discussion: what is the purpose of classifying operations?

Example: Very Simple Drill to show the three categories of Operations

Operation: to staple two papers using a stapler when work place is disorganized

Materials and tools

– Two pieces of paper

– Stapler

– Staples

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Result in a disorganized environment

N0. Activities Time Type of Operation Action How

1 Searching for 35 Waste eliminate 5S(Set-in-

Stapler sec order)
2 Searching for 30 Waste eliminate 5S(Set-in-
Staples sec order)
3 Putting the Staples 8 sec Non-Value minimize Load staples
into the stapler Adding but necessary ahead

4 Putting the two 3sec Non-Value - -

papers Adding but necessary
together
5 Staple the papers 2sec Net Operation - -
(Value Adding)

Lessons from the drill operation

 Total time of operation =78 Sec

 Net Operation (Value adding) =2 Sec (2.6%)
 Non-Value adding operation but necessary =11 Sec (14.1%)
 Non-Value adding and Unnecessary operation (Waste) =65Sec (83.3%)

Can you imagine by how much the total time of the operation can be improved if we try to
eliminate the waste (Muda) and minimize non value adding operations by applying 5S?

• What if the job order was to produce a car? Imagine the MUDA.

NOTE:

Since 75-90 of activities in most organizations are non -value adding, map your value stream and
get leaner!

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Value Stream Mapping

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VSM symbols

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6
Example

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  To communicate with all concerned people so as to use resources efficiently

It is best for repetitive production system but it is difficult for job shop production system. This
due to value stream mapping needs consistency in flow of activities.

Steps for creating a value stream mapping

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 5.2 Lean production

Lean production (often called the Toyota Production System (TPS), is a philosophy and a way of
working. It is used to improve quality and productivity and it is based on two philosophies:
respect for people and elimination of wastes. It is externally focused on the customer and it
concentrates on eliminating all forms of waste. All inventions and innovations of products and
services are come from people‟s (employee‟s mind) mind and those products and services are
bought by people (customer). So, people must be respected by the company. Multi-skilled
employees are required in lean production system. In order to have this, Firms can develop
flexible workforces through cross training in which a worker is trained to perform more than one
operation rather than being limited to the single operation assigned to him.

Waste is defined as anything that does not add value in the production process and supply chain
which a customer does not like. Lean manufacturing is the implementation of the concept that
anything that does not create value in the product is to be eliminated. It is the concept o f more
value for less work. As trained industrial engineers, it seems pretty basic to us. However, before
removing waste, it is important to identify its sources, which are listed below.

Nine Types of Wastes

1. Overproduction: Production of any product involves costs associated with direct material, direct
labor, and manufacturing overhead, which can include factory overhead, shop expense, and indirect
costs. This means that the quantities produced per period of time from a manufacturing cell should be
set to match the demand so that all the items made can be sold. Production should never be set to keep
the resources busy. Any amount over the demand is waste because it costs money as we have wearing
of machines.
If there is a mistake in producing the first product and if no one notice the mistake and all subsequent
products become defective and it is a great loss. Even it may be very difficult to know the root cause
of the problem, at which stage it originated, when it happened.
Overproduction is similar to excess inventory in that there‟s simply too much stuff. The difference
between the two is that overproduction is the making of too much stuff; while excess inventory is the
carrying of too much stuff (it may include raw materials without production).
Note: overproduction is the worst of all other wastes because it magnifies most of other
wastes.

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2. Unnecessary Motion: Motions around your working area such as looking for goods, bending,
stretching, lifting, and reaching etc. associated with either workers or material handling
/equipment more than is required to perform the processing) consumes time and energy, and any
motion that does not add value is a waste. Therefore, workplace and corresponding processes
should be designed to eliminate non- value-added motions and to include ergonomic and safety
considerations.

3. Excessive Transportation: it involves physically moving further distances than motion. This
includes the moving of things between work-cell and storage area that are not actually required
to perform the processing. Excessive movements should be minimized. Toolkits can be placed
close to the point-of- use (POU). Materials can be stored and oriented in such a way that they can
be fed to the cell easily.

4. Waiting: If a material or work- in-process (WIP) is waiting in queue for a proper machine or
worker to be processed, operator is waiting to get information from his boss to start production,
sitting of production personnel till a machine is fixed etc. These are kind of waste and causes
longer throughput time. Production in small batches with coordinated order processing reduces
excessive WIP and cycle time.

5. Excessive setup time : Every time a tool setup is changed, it requires motion, time, and
energy. A workplace should be designed to minimize the number of setups and setup times.

6. Excessive Inventory: Inventory involves costs of space, obsolescence, damage, opportunity

cost, and handling. Therefore, excessive inventory should be eliminated. It mainly focuses on
purchased items, raw material, WIP, and finished goods inventory rather than wastes related to
production of items.

7. Defective products: Defective products cause two problems: cost of material and other
resource, and poor customer satisfaction. The excessive effort involved in inspecting for and
fixing/scrapping defects are waste. Therefore, quality of the system, process, and products should
be monitored continually to decrease defective products.

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8. Over processing: over processing due to poor tool or product design is waste. Process more
than required is waste. For example, sewing 4 times even though 3 times is enough; washing
dishes twice though once is required.

9. Underutilized resources: If resources including people working in a manufacturing ceIl or a

production system are not utilized completely, i.e., there is no enough work for all of them, this
is also a waste.

(Source: from Shigeo Shingo in Robert W. Halls Book Attaining in manufacturing Excellence,
1987)

Discussion

What do you think the possible causes for excessive motion and transportation?

Features of Lean Production

What it demands?

lean production demands “Pull” system, high level of quality at each stage of the process, strong
supplier relationship and a fairly predictable demand for the end product, Employee
participation, Industrial engineering/basics, Continuing improvement(kaizen) ,Total quality
control and Small lot sizes.

What it does?

• Attacks waste

• Exposes problems and bottlenecks

• Achieves streamlined production

What it assumes?

The assumptions or acceptance factors are: Stable environment, companywide awareness of

business goal and understanding of lean principles to reach these goals, genuine commitment of
all managers and employees, acceptable work pace, standardized work, training when for
continuous improvement.

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Benefits of lean

 Shorter lead time

 Higher quality
 Lower cost
 Higher productivity
 Higher System efficiency
 excellent customer service

5.2.1 Lean tools

i) To identify wastes and find their causes

Value Stream Mapping, Five S (5S), Pareto analysis, Cause-effect analyses, and 5 Why analysis;
are used to understand existing situation , to identify various types of wastes exists, to prioritize
wastes, and find their root causes in the selected industry which does not add any value to the
overall production process.

ii) To elimination of Wastes

There are many ways (lean tools) to eliminate wastes. Some of them are:

1. JIT production- producing what is needed, when needed and no more. It is an inventory
control system whose goal is reduce inventory to a bare minimum.

2. 5S (sort, set in order, shine, standardize and sustain)-see drill example above

i. Sort

• Discriminating necessary things from unnecessary things,

• And disposing the unnecessary ones.

ii. Set-in order

• Putting things in appropriate places in appropriate manners

• with clear indication so that they can easily be accessed.

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iii . Shine

• Cleaning up the facilities and the machines in the workplace,

• and carefully checking their conditions

iv. Standardize

• Maintain implementing sort, set in order, and Shine activities in order to keep the
workplace clean, simple and safe

• Establish policies and procedures to ensure 3S.

•Make up the rules and follow them!

v. Sustain

Make it part of everyday life.

• Getting familiarized to and following the rules.

• Self- discipline

• Establishing routines and procedures for maintaining and improving on the first four

(S‟s)

3. Layout (product, process, or cellular)

Let us see Group technology /cellular layout- Instead of transferring jobs from one department
to another, consider all operations required to make similar parts(families) and group the
corresponding machines together (machine cell). This will eliminate movements, queue, reduce
work in process inventory and cycle time, there will be ease of quality and production control.

4. Quality at the source-do it right the first time and if something goes wrong, stop the process
line immediately and make sure the same problem should not be repeated immediately. Here,
workers are highly responsible for the quality of their output. Automated inspection or robotics
can be used. If the defective product reaches to the customer there are added costs such as recall,
warranty, liability etc. Quality at the source principle helps to eliminate such costs.

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5. Visual management techniques such as status board, right size storage space or inventory
control, colored bins or containers. The goal of all Visual management techniques is to highlight
the problems so as to fix them quickly.

6. Minimize/eliminate setup times(single minute exchange of dies-SMED): aim for single digit
setup times (less than 10 minutes) or "one-touch" setup -- this can be done through better
planning, process redesign, and product redesign. A good example of the potential for improved
setup times can be found in auto racing, where a NASCAR pit crew can change all four tires and
put gas in the tank in under 20 seconds. (How long would it take you to change just one tire on
your car?) The pit crew‟s efficiency is the result of a team effort using specialized equipment
and a coordinated, well-rehearsed process.

Quick and Economic Set Ups

generally, firms manufacture their products in large lots leading to lower number of machine set
ups. The following is the procedure to reduce set-up times:

1. Analyze existing set-up procedures: The existing set- up procedure is recorded on videotapes
and the management collects information such as all steps of the process with their changeover
time. Changeover time consists the time spent on the following activities: pulling out the
fixtures, equipment etc., running sample parts, inspecting those sample parts, making
adjustments, modifying the process as needed and re- inspecting parts until the process is finally
able to good parts The procedures are then analyzed to determine ways to improve them.

2. Separation of internal and external set-up activities: External set-up activities are those that
can be performed without stopping the current production process. By the time a machine has
finished processing its current operation, the worker should have completed the external setup
and be ready to perform the internal setup for the next operation. Internal setup has to be
performed while the machine is stopped; it cannot take place until the machine has finished with
the previous operation. Applying this concept alone can reduce setup time by 30 to 50 percent.
Thus, the time is saved on the production process.

3. Convert internal set-up activities into external set-up activities: The management of the
firm should then try to convert its internal set-up activities into external activities by changing

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work methods, adding work aids, or by purchasing duplicate sets of tools or equipment. The
following are actions that would enable conversion of internal set-up activities into external set-
up activities.

 Heating: Instead of heating materials or machines before beginning a production process as

a part of the internal setup, materials or machines can be pre-heated outside the set-up so that
the actual heating activity can be finished in less time. example: preheating an injection mold
 Cleaning: Workers can replace contaminated equipment with a clean set to continue the
production process while the contaminated equipment is cleaned externally.

4. Streamline all aspects of set up: improve all remaining internal and external activities

In order to do this, Parallel operations and tool identification and coloring system can be
implemented. Time and motion study principles can be used to simplify set up. Set-up times can
be reduced by simplifying the internal activities and by streamlining the work in a firm. For
Example: A set of tools can be provided to each work center so that workers need not wait for a
standard tool required while another process is going on. Internal setup activities can be reduced
by simplifying or eliminating by precoding desired settings, using quick fasteners and locator
pins, preventing misalignment, eliminating tools, and making movements easier.

5. Eliminate non-essential activities

6. Create standardized work instructions: standardizing components, parts, raw materials and
set up procedures can reduce and sometimes eliminate setup requirements.

Note: Perform setup activities in parallel (adding an extra person to the setup team) or eliminate
them entirely can reduce setup time considerably.

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Example: some of Dramatic improvements using SMED

 At Toyota, an operation that required 8 hours for the exchange of dies and tools for a bolt
maker was reduced to only 58 seconds.
 At Mitsubishi heavy industry, a tool changing operation for a boring machine was
reduced from 24 hours to only 2 minutes and 40 seconds.

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Note:

1. First piece is the trial product that ensures whether the changed over process is making good
parts or not.

2. the Pareto chart shows where a majority of time is being spent.in this example, most of the
time is being spent with the fixture change. So in order to reduce the changeover time, efforts
should focus on the fixture change.

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SMED Improvement area

In order to improve set up time you should focus on work place organization and planning (as
shown above) through tools such as 5s and work study rather than spending too much money on
products, tools and equipment.

7. Uniform plant loading-smoothing the production flow to dampen the reaction wave

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8. Preventive maintenance : use machine and worker idle time to maintain equipment and
prevent breakdowns.

9. Kanban production control system- kan= “card‟‟, Ban=“signal”

It is a pull system that uses a signaling device such as cards to regulate JIT flows. In other words,
it is a method of regulating the flow of goods (production and inventory) and indicates when
more goods are required within the factory, suppliers and customers based on manual
replenishment through signal cards. So, a signal must be triggered to the earlier workstation
whenever there is a requirement on the next station. Otherwise, no part is sent to the next station
unless a signal is shown. Now a days electronic kanban such as alarms, sensors, fax , email or
central information processing system are used. It eliminates wastes from overproduction.

The kanban Pull System

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Steps of Kanban pull Production system

1. Worker at B receives empty container tagged with production kanban from “customer” - >
worker B must fill container .

2. Worker at B withdraws required full container of material from B input area and uses it to
produce enough to fill empty container in step (1).

3. To replenish the empty container in input area, worker at B sends withdrawal kanban to output
area of A.

4. Worker at A attaches withdrawal kanban to a full container in output (A) and sends to B.

5. Worker at B takes production kanban from full container and places it on an empty container

- > worker A must fill container.

6. Worker at A removes container of materials from its input area, and then uses a withdrawal
kanban to generate a request for more material from upstream station.

10. Work study (standardized method and time) and standard operating procedure (SOP)

 Set a standard method-a best way of doing thing with minimum cost and
 set a standard time- determine the standard time by considering performance rating of
workers and allowances
 SOP- a simple documentation that contains what should be done at each work station
including production step and the overall workflow from start to finish.

11. Keeping the work place/ work stations flexible such as adjustable workbench, chair, etc.

A flexible plant layout and work station will allow quick changes if customer orders change.

Case studies

Layout as a lean tool

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The square and rectangular boxes represent machines and the white circular and elliptical shapes
represent the people and their standing point.

Alternative 1: Modification of the layout with 3 people

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Alternative 2: Modification of the layout with 1 people

Result

By properly organizing the layout and improve the skill set and salary, only one person can
operate and manage all machines. In this case, 5 excess people are eliminated.

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Note: excess people and unnecessary motions are eliminated and, space has been reduced.
Therefore, due to layout modifications the system become more productive, efficient and
effective.

5.2.1.1 JUST-IN-TIME (JIT) System

Toyota Motor Co. developed JIT. JIT is one of the lean production tools. JIT (also known as
stockless production) is “a philosophy of manufacturing based only customer demands, on
planned elimination of all wastes and continuous improvement of productivity instead of making
products based on forecasted demand”. It also has been described as an approach with the
objective of producing the right part in the right place at the right time (in other words, “just in
time”). Waste results from any activity that adds cost without adding value, such as the
unnecessary moving of materials, the accumulation of excess inventory, or the use of faulty
production methods that create products requiring subsequent rework. In other words, Just- in-
time means achieving the level of production that precisely and flexibly matches customer
demand and consists of processes that employ minimal (ideally zero) inventory through a
strategy where each operation supplies parts or products to successor operations at the precise
time they are demanded(implementation of EOQ can be successful in JIT environment).

JIT should improve profits and return on investment by reducing inventory levels (increasing the
inventory turnover rate), reducing variability, improving product quality, reducing production

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and delivery lead times, and reducing other costs (such as those associated with machine setup
and equipment breakdown). In a JIT system, underutilized (excess) capacity is used instead of
buffer inventories to protect against problems that may arise.

JIT focuses more on inventory management. JIT sets out to cut costs by reducing the amount of
goods and materials a firm holds in stock. JIT involves:

 parts „just in time‟ to go into partly finished goods

 partly finished goods „just in time‟ to be assembled into finished goods
 producing and delivering finished goods „just in time‟ to be sold

Additional JIT philosophies

 JIT is built on simplicity- the simpler the better.

 Focuses on improving every operation- small Continuous improvement – Kaizen.
o Suggestions and ideas from teams and individuals are fuels for continuous
improvement
 Visibility – all problems must be visible to be identified and solved.
 Flexibility to produce different models/features.

JIT implementation requirements

1) JIT layouts and design flows : It requires the plant layout to be designed to ensure a balanced
workflow (leveled and continuous flow production) with minimum WIP inventory.

2) JIT application for line flows: in a pure JIT environment, no employee does any work until
the product has been pulled from the end of the line by the market.

3) JIT application for job shops: JIT is commonly applied to line flows; but JIT can be applied
to job shops if demand can be stabilized to permit some repetitive manufacturing.

4) Total Quality Control (TQC) and Total Quality Management (TQM): TQC and TQM are
the practice of building quality in to the process and not identifying quality by final inspection.
They also refer to the theory of employees assuming responsibility for the quality of their own
work.

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5) Work with vendor: just as customers and employees are the key components of the JIT
system, vendors are also important to the process.

6) A stable schedule: JIT firms require a stable schedule over a lengthy time horizon

7) products have to be produced at the rate that is determined by takt time.

Benefits of JIT

 Reduce inventory levels

 Improves cash flow-reduce capital tied up
 Reduces space requirements
 Reduce tardiness and earliness-JIT
 Reduce lead time
 Reduce failure
 smooth work flow
 improve quality as a result of:
o scrap and defect reduction
o Parts are moved in the system in small batches, defects can be identified and
solved quickly before defective inventories build up
o 100% inspection is possible since small batches moves in the system
 reduce cost
 improve flexibility
 improve productivity
 improve supplier and customer relations

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JIT case study

Comparison of conventional and JIT system

conventional JIT
some defects are acceptable zero defect
surplus inventory provides safety inventory other than for inherent process
variability is waste
push system Pull system
Breakdown maintenance is enough Preventive maintenance is essential

Note: buffer inventories between successive work stations provide a means of smoothing
production process. However, buffer inventories mask problems. A popular analogy is to compare
a production process with a river and the level of inventory with the level of water in the river.
When the water level is very high, the water will cover the rocks. Likewise, when the inventory
level is high, problems are masked. However, when the water level (inventory) is low, the rocks
(problems) are visible. The less WIP is designed in the system , the better balanced the various
steps in the process need to be.

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Note: suppliers and manufactures must be located in close proximity if the JIT is designed to
include the suppliers.

5.3 Theory Of Constraint (TOC)

So far we have examined two approaches to production planning and control system design
(MRP and JIT). In this section, we examine a third approach called TOC. Developing PPC
system would be simple except for the existence of seemingly random problems ( machine
breakdowns, tool breakages, worker absenteeism, scraps, reworks, customers who change their
order timing and quantity, etc and the fact that operations are dependent one on the other. Hence,
we shall refer to these problems as the problem of random fluctuation and dependent events.

The traditional, or MRP, approach to the problem of random fluctuation events is to eliminate by
having a large inventory at every work station whereas the JIT approach is tries to eliminate the
random problems by seeking out the root cause of each problem and correcting it. For example,
machine breakdown may be eliminated using preventive maintenance.

The most limited resource is called the constraint. TOC breaks dependency by holding inventory,
but TOC holds only for the constraint. TOC agrees with JIT that inventory is waste if the
inventory is planned at a non-constraint station .However, holding inventory for random
fluctuation and dependency problems at constraint station does add value and hence it is not
waste.

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A constraint is defined as anything that limits a system from achieving higher performance. TOC
concentrates on the manufacturing system‟s constraints and the implications of exploiting these
constraints. Its goal is to maximize output, which it achieves by identifying and exploiting the
bottleneck resources.

TOC is simply similar to the following saying: „„A chain is only as strong as its weakest link!‟‟
so focus on the weakest link.

Types of constraints

i) physical- like the physical capacity of the machine

ii) non-physical- like demand for a product

Main constraints

1) Demand /market constraints: it is a constraint on the output. Symptoms include large

amounts of finished product inventory or a production line running at a fraction of full capacity
.this is because either you have a problem. With marketing (your customer does not know about
your high quality product; or you have a low quality (obsolete) product undesired by customers,
regardless of the marketing effort.

2) Production constraints

i) Policy constraints: company or union policies or practices create constraint and impede the
achievement of its long term goal. e.g. working only a single shift. Sadly, the most frequent
constraint is policy constraint.

ii) Machine capacity constraints: a single or small number of machines whose capacity is equal
or less than the demand placed up on are a bottleneck resource or resources. Work in process
inventories between the productions stages are often a symptom of production constraint.

iii) labor constraints: insufficient labors(either skilled operators or the general labor pool) that
were needed to run a line at full capacity, including extra shifts if needed.)

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iv) Raw material constraints: it includes shortages in the short or long term of the one or more
essential ingredients necessary to make a product. This is why a strong relationship with vendor
is so important.

Solution

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TOC Rule

Assumption

There is only one bottleneck

Rule

Step 1: identify the bottleneck

Step 2: compute the ratio of profit to time

Step 3: put the ratios in decreasing order

Step 4: produce the product with higher ratio first and then accordingly

Note: TOC gives the optimal solution when there is only one bottleneck

Example

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What to produce and how much to produce based on TOC rule?

Solution

Assume 5days/week and 8hrs/day

Can we produce 70 of A, 80 of B and 60 of C based on available capacity?

No because M1 is a bottleneck and a constraint i.e 3050>2400. Hence M1 prevents us from

making all of 70 of A, 80 of B and 60 of C.

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Therefore, we should produce 70 of A, 39.375 of B and 60 of C.

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Steps in TOC

Step 1: Identification of system constraint: This step is to prioritize the constraints according to
their impact on the goal.

Step 2: Determination of how to exploit the system‟s constraints: Once it is believed that there
are only a few constraints that are limiting performance, then all other resources are not
constraints.

Step 3: Subordination of everything else to the above decision: This step is included to ensure
that the other resources are subordinated to the constraints. There is no point to spend extra time
managing resources that are not constraints to improve performance.

Step 4: Improvement of system‟s constraints: This step is essential so that action is taken to
reduce their impact and improve performance.

Step 5: go to the next constraint: This step is essential to make sure that we move forward and
find the next constraint.

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 THE END!

Prepared by Fantahun G.&Dobosha A.2011E.C

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