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Operations Management

Toyota Production System (TPS), Just-in-Time (JIT), and Lean Manufacturing Handout
Dr. Ahmad Syamil, CFPIM, CIRM, CSCP asyamil AT yahoo DOT com

• Old Name: The American Production and Inventory Control Society • New Name: The Association for Operations Management Advancing Productivity, Innovation, and Competitive Success. • APICS offers four internationally recognized professional certification programs:
1. CPIM: Certified in Production and Inventory Management 2. CFPIM: Certified Fellow in Production and Inventory Management = CPIM + extensive knowledge sharing with others through presenting, teaching, publishing, and other APICS educational activities. 3. CIRM: Certified in Integrated Resource Management 4. Beginning 2006: Certified Supply Chain Professional (CSCP) designation is designed for professionals interested in increasing their knowledge of supply chain management, those currently working in the field of supply chain management (SCM), and for those individuals working with enterprise resources planning (ERP) systems.

Why Toyota?

26 million cars and small trucks during the same period.348 million vehicles in the first three months of 2007. • General Motors (GM) is estimated to have sold 2.Toyota is now the world's largest carmaker • Toyota sold 2. .

Why Toyota? .

Why Toyota? .

1% of Chrysler to Cerberus Capital for $7.6 billion in its North American operations.000 hourly workers. • Chrysler reported a $1. but lost $1. • Ford is shutting 10 plants and laying off 25. . • GM's pension obligations under funded by about $31 billion • GM will eliminate 30.6 billion in 2005.000 jobs and close 12 North American factories by 2008 • Ford earned $2 billion worldwide.Why not Toyota? • GM lost $10. • DaimlerChysler finally sold 80.5 billion loss for the third quarter of 2006 and a $2 billion loss for the first quarter of 2007. • Daimler paid $36 billion for Chrysler in 1998.4 billion in May of 2007.

Why Toyota? .

History of Manufacturing Management .

developed the concept of Just-in-Time in the 1930s. PS: Shingo Prize is the highest manufacturing excellence award in the U. The prize is given both to companies and individuals who contribute to the development of manufacturing excellence. Toyota's chief of production in the postWWII period. He was THE main developer of Toyota Production System (TPS). the founder of the Toyota group of companies. He decreed that Toyota operations would contain no excess inventory and that Toyota would strive to work in partnership with suppliers to level production. • Kiichiro Toyoda. son of Sakichi and founder of the Toyota automobile business. • Taiichi Ohno. started Toyota as a textile machine company.S. • Dr.• Sakichi Toyoda. Shigeo Shingo: A consultant to Toyota. History .

mass production that it represented a completely new paradigm and coined the term lean production to indicate this radically different approach to production. a research assistant at MIT with the International Motor Vehicle Program in the late 1980s. Widespread recognition of TPS as the model production system grew rapidly with the publication in 1990 of The Machine That Changed the World: The Story of Lean Production. The term was coined by John Krafcik. • • • • . dissemination began in earnest with the creation of the Toyota-General Motors joint venture-NUMMI (New United Motor Manufacturing Inc.History (cont.) • Toyota Production System (TPS) drew wide attention from the industrial community because Toyota was the most profitable company in Japan after the oil embargo in 1970s. He then worked for General Motors and now is a Vice President of Hyundai. the result of five years of research led by the Massachusetts Institute of Technology. Outside Japan. U. The MIT researchers found that TPS was so much more effective and efficient than traditional.) in California in 1984.S.

and shortest lead time through the elimination of waste. lowest cost. and is often illustrated with the "house" shown on the next slide. Just-in-Time and Jidoka (autonomation) .Toyota Production System (TPS) • Definition: The production system developed by Toyota Motor Corporation to provide best quality. following Plan–Do-Check-Act (PDCA Cycle from Dr. Deming). or the scientific method. • TPS is maintained and improved through iterations of standardized work and kaizen (continuous improvement). • TPS is comprised of two pillars. .

House of Toyota .

Toyota Production System (TPS): Related Terms • Ohno System • MAN (Material as Needed) .Westinghouse • Stockless production .Harley Davidson • MIPS (Minimum Inventory Production Systems) .Hewlett Packard • Zero inventory production system • Lean Manufacturing/Production .MIT .

Some even argues that the profit added should be large enough to cover potential losses if the product does not sell well. Toyota accepts neither this formula nor these arguments! .How to make money? Profit equation: Sales – Cost = Profit Traditional pricing strategy: Cost + Profit = Selling price Example: When the cost goes up. the product selling price is raised to reflect the higher costs and maintain the desired level of profit.

will reduce lead time while increasing quality and customer satisfaction. • Toyota‘s paradox: Reducing cost (waste).Toyota‘s philosophy • • • • • Selling price – Cost = Profit Customers decide the selling price. Consequently. • How? We will discuss it soon. Profit is what remains after subtracting the cost from it. cost reduction through waste elimination should have the highest priority. . The main way to increase profit is to reduce cost.

House of Toyota .



• Attacks waste What Does Just-in-Time Do? • From the customer‘s perspective – Anything not adding value to the product • Exposes problems and bottlenecks caused by variability – Deviation from optimum • Achieves streamlined production – By reducing inventory .

materials.‘ — Shoichiro Toyoda Founder. space. . which are absolutely essential to add value to the product. parts. Toyota © 1995 Corel Corp. and worker‘s time.Introductory Quotation Waste (―muda‖ in Japanese) is ‗anything other than the minimum amount of equipment.


and suppliers produce units that do not conform to standards. are late. or are not the proper quantity • Engineering drawings or specifications are inaccurate • Production personnel try to produce before drawings or specifications are complete • Customer demands are unknown .Variability Occurs Because • Employees. machines.

Continuous Flow • Producing and moving one item at a time (or a small and consistent batch of items) through a series of processing steps as continuously as possible. with each step making just what is requested by the next step. move one. single-piece flow. It is also called the one-piece flow. and make one. .


Continuous Flow Production Traditional Flow Production Process (stream of water) Customers Suppliers Flow with JIT Suppliers Inventory (stagnant ponds) Material (water in stream) Customers .

Push versus Pull • Push system: material is pushed into downstream workstations regardless of whether resources are available • Pull system: material is pulled to a workstation just as it is needed .

Manufacturing Firm: Push (―old style‖ MRP / Material Requirements Planning System) • The production of items at times required by a given schedule planned in advance Work Station 1 WS 2 WS 3 Material Information (Production Schedule) .S.Traditional U.

Pull (JIT) System The production of items only as demanded for use or to replace those taken for use. Work Station 1 WS 2 WS 3 Material Information (via Kanban/Card) .

flag. verbal signal etc. • Used often with fixed-size containers – Add or remove containers to change production rate .Kanban • Japanese word for card – Pronounced ‗kahn-bahn‘ (not ‗can-ban‘) • Authorizes production from downstream operations – ‗Pulls‘ material through plant • May be a card.

Triangular Kanban Part # Part Description Location Date Triggered Lot Size Trigger (Reorder) Point Tool # Machine # .

Kanban .

Figure S12.5 .

Your start using them up over time. . Number of units on hand Q R Q Q 2.Basic Fixed-Order Quantity Model and Reorder Point Behavior 1. you place your next Q sized order. The cycle then repeats. When you reach down to a level of inventory of R. You receive an order quantity Q. L Time R = Reorder point Q = Economic order quantity L = Lead time L 3. 4.

Kanban The function of Kanban ≈ The function of Inventory Reorder Point (ROP) .

kanban – Produce only when authorized by P (Production).Kanban System • Single card – Move only containers with C (Conveyance)kanban) – e.kanban – e.g.: Kawasaki • Dual card – Move only container with C.g.5 .: Toyota Transparency 17.

Inventory • Traditional: inventory exists in case problems arise • JIT objective: Eliminate inventory • JIT requires – Small lot sizes – Low setup time – Containers for fixed number of parts • JIT inventory: Minimum inventory to keep system running .

final assembly) • Production quantities evenly distributed over time (e. 7/day) • Build same mix of products every day – Results in many small lots – 1 month = 20 working days – Item Monthly Quantity A 40 Daily Quantity 2 .g.g..Heijunka = Leveling (Smoothing) Production Schedule using Mixed Model Sequencing • Reduce ripple effect of small variations in schedules (e..

Small versus Large Lots amount JIT produces same JIT Small Lots A A B B B C A in same time if setup times are lowered A B B B C Time Small lots also increase flexibility to meet customer demands Large-Lot Approach A A A A B B B B B B C C Time .

4 .Photo S12.

7 4010 4 1010 1 Repeat 10 times per day .Heijunka = Leveling (Smoothing) Production Schedule using Mixed Model Sequencing Determining Production Sequence Product A B Monthly Demand 800  20  40 800  20  40 Daily Requirements 200  20  10 C Largest integer that divides into all daily requirements evenly is 10 Product Daily Requirements Divided by 10 A 4010 4 B C Mixed-model sequence A-B-A-B-A-B-A-B-C Transparency 17.

8 . B = 40 units.33 min/unit Product A B C Requirements 40 40 10 480 4012 480 4012 48010 48 Cycle Time Transparency 17.Cycle Times Working time per day = 480 minutes Daily requirements: A = 40 units. C = 10 units The system cycle time = 480/(40+40+10) = 5.

Lowering Inventory Reduces Waste Work in process inventory level (hides problems) Unreliable Vendors Scrap Capacity Imbalances .

Unreliable Vendors Scrap WIP Capacity Imbalances .Lowering Inventory Reduces Waste Reducing inventory reveals problems so they can be solved.

Unreliable Vendors Scrap WIP Capacity Imbalances .Lowering Inventory Reduces Waste Reducing inventory reveals problems so they can be solved.

Customer orders 10

Reducing Lot Sizes Increases the Number of Lots
Lot size = 5 Lot 2 Lot 1

Lot size = 2 Lot 1 Lot 2 Lot 3 Lot 4 Lot 5

…Which Increases Inventory Costs

Setup Cost
Smaller Optimal Lot Size Lot Size

Lot Size

Unless Setup Costs are Reduced

Setup Cost
New optimal lotOriginal optimal size lot size

Lot Size

Shigeo Shingo (a consultant to Toyota). and has proven its effectiveness in many companies by reducing changeover times (non-value added times) from hours to a less than 10 minutes .Quick setup = Quick changeover • Reducing setup cost ≈ reducing setup time • Setup reduction time is a prerequisite to lot size reduction • SMED: Single Minute Exchange of Dies • The method has been developed by Toyota and then expanded by Dr.

Setup Components • Internal Setup: consists of setup activities that must be performed while the machine is stopped. Convert as much internal setup to external setup 2. It is desirable to: 1. Improve the setup procedure . • External Setup: consists of setup activities that can be carried out while the machine is still operating.

Systematic Setup Reduction .

Setup Reduction .

Setup Reduction: Standardizing die holder heights reduces the need to exchange fastening bolts .


Setup Reduction Techniques .

Quality At The Source • Jidoka allows workers to stop production line • Andon lights signal quality problems • Under capacity scheduling allows for planning. problem solving & maintenance • Visual control makes problems visible • Poka-yoke prevents defects .

House of Toyota .

every production line. this simple concept found its way into every machine. • Sakichi Toyoda. Dr. founder of the Toyota group of companies. .Jidoka • Toyota Production System (TPS) is supported by two pillars: Just-inTime and Jidoka • Jidoka = Autonomation = Automation with ―human‖ intelligence. • This enabled great improvements in quality and freed people up to do more value creating work than simply monitoring machines for quality (separating people‘s work and machine‘s work). and every Toyota operation. Shigeo Shingo then developed his idea further. • Eventually. invented the concept of Jidoka in the early 20th Century by incorporating a device on his automatic looms that would stop the loom from operating whenever a thread broke.

proximity switches. – This device may take many shapes and designs. – Goal: Finding defects before they occur = Zero Defects – Statistical Quality Control (SQC): Finding defects after they occur • Visual management including using Andon Lamp . – Typical types of Pokayoke are sensors.Jidoka Techniques • Poka-yoke (mistake or error proofing) – A form of device for building-in quality at each production process. Simple circuitry is usually used to operate these electrical error proof devices as they should be of low cost and simple design. stencils. light guards and alignment pins.

10 Poka-Yoke Example .Exhibit 7.



call for help • Green .line stoppage • Yellow .normal operation .Visual Management Andon Lamp • Red .



.. commonly lasting five days. in which a team identifies and implements a significant improvement in a process.g. e. creating a manufacturing cell.Kaizen • Change for better = continuous improvement • Kaizen workshop or Kaizen event: A group of Kaizen activity.


GEMBA means the place where the products are made. . • The term is often used to stress the that real improvement can only take place when there is a shop-floor focus on direct observation of current conditions where work is done. producing and selling products. In a broad sense.. e.GEMBA • GEMBA" is a Japanese word meaning "real place". GEMBA means the sites of these three major activities. • Manufacturing companies have three main activities in relation to creating money: developing (designing). where the real action takes place. GEMBA is where the value-adding activities to satisfy the client are carried out. not only in the engineering office. • In a narrower context. however.g. In business.

Obey the master Imai. or equivalent. So what's gemba? It's the shop floor. Standardization is the managing part of getting good gemba. the first of which is 'When a problem (abnormality) arises. You also need good housekeeping (Imai is very keen on cleaning machines) and muda. Kaizen: The Key To Japan's Competitive Success. go to gemba first'.Five Golden Rules of Gemba • Masaaki Imai promoted Kaizen to people outside Japan through his two highly acclaimed books: 1. Once there. Five: standardize to prevent recurrence. Low-Cost Approach to Management • He preaches the Five Golden Rules of Gemba. 2. you apply Golden Rule Two: check with gembutsu (relevant objects). GO TO GEMBA! . Gemba Kaizen: A Commonsense. Three: take temporary counter-measures on the spot. But all hinges on getting away from your desk. Four: find the root cause. the elimination of waste.

and did not list the individual stages needed to complete the project.. Hinson Corp. Why didn't we do this? Because we were running behind on other projects. • • 5 Whys analysis as an effective problem-solving technique. Why did we underestimate the complexity of the job? Because we made a quick estimate of the time needed to complete it. • • • Why were we unable to meet the agreed-upon timeline or schedule for delivery? The job took much longer than we thought it would. Example: Why is our client. • . It is also used in Six Sigma. Why did it take so much longer? Because we underestimated the complexity of the job. We clearly need to review our time estimation and specification procedures. unhappy? Because we did not deliver our services when we said we would.5Whys: Finding the root cause of a problem.

Plan-Do-Check-Act (PDCA/Shewart /Deming Cycle)
• Plan: Go to the real place/factory flow (gemba), obverse the real thing/product (gembutsu), get the real fact (genjitsu). Focus on reducing response time, lead times, exposing wastes in your process • Do: Conduct Kaizen. Create models of excellence so others can aspire to. Flow everything: product, information material replenishment, services. • Check for direction by aligning activities with long-term business direction • Act: Take actions to sustain and accelerate improvement activities

Similarity between 3 Gs and MBWA
• The 3 G's (Gemba, Gembutsu, and Genjitsu, which translate into ―actual place‖, ―actual thing‖, and ―actual situation‖). • In the early days of Hewlett-Packard (H-P), Dave Packard and Bill Hewlett devised an active management style that they called Management By Walking Around (MBWA). Senior H-P managers were seldom at their desks. They spent most of their days visiting employees, customers, and suppliers. This direct contact with key people provided them with a solid grounding from which viable strategies could be crafted.

• •

5S: Workplace organization/Housekeeping
5s: Important part of Kaizen/Lean Manufacturing The S's stand for: – Seiri - keep only what is absolutely necessary, get rid of things that you don't need, i.e. simplify or sort. – Seiton - create a location for everything, i.e. organize or straighten. – Seiso - clean everything and keep it clean, i.e. cleanliness or sweep. – Seiketsu - implement Seiri, Seiton and Seiso plant wide, i.e. standardize. – Shitsuke - assure that everyone continues to follow the rules of 5S, i.e. stick to it or self discipline.

• • •

5S in the US: Sort, Straighten, Sweep, Standardize, Self Disciple 5S + 1S (Safety) = 6S (Hytrol, etc) 5S + 2S (Safety and Security) = 7 S (Agilent Technology that was part of Hewlett Packard)

or the item is taken out of the plant! . The items that people feel are necessary to "hold on to" must be justified to their superior.5S • 5S is simple to begin and gives good benefits. • Red tag attack: A red tag attack is the strategy of a group of people going through the plant and putting red tags on everything that has not been used within the last 30 days. • Each individual in an organization is asked to get rid of overburdening items.

5S in a Factory Factory tour: Toyota vs. others. .

5S in Office • Before 5 S • After 5 S .

. equipment. this is called Standard Work. and materials are used in the most efficient combination. performance is measured and continuously improved.Standard Work When manpower. There are three elements to Standard Work: 1) Takt Time 2) Work Sequence 3) Standard Work-in-Process Once a Standard Work is set.


4 min 2 Crew Size .Standard Work Sheet Scope of Operations From To Raw m er i al at Heat Tr eat m ent Date Reviewed: Janary 7.1 min Cycle Time 23. 2000 FG RM Quality Check Safety Precaution Standard Work in Process Standard WIP Quantity 10 TAKT Time 12.

You will go back to the original position before Kaizen. all improvement efforts using Kaizen to eliminate waste (muda) are not sustainable. .The Importance of Standardized Work: Without it.

Manufacturing Cell .

4 Cell 4 Cell 5 .Worker Routes Lengthened as Volume Decreases Cell 1 Cell 2 Worker 1 Worker 2 Worker 3 Cell 3 Figure 11.

• Is the key to adjust JIT lines to demand fluctuations • Requires flexible operators .Workload balancing • Aims at maximizing operator utilization based on the given takt time.

Production Line Balancing .

Improving Lead Time: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Current Situation Percent of Lead Time 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 20 VA NVA (Non Value Added) Approach # 1: Reducing Value Added (VA) Time by 50% VA NVA Approach # 2: Reducing Non Value Added (VA) Time by 50% VA NVA .

Provides a tool to visualize what is otherwise usually invisible. not from your office. not opinion or old data. and manufacturing process to identify waste. You need the real information.Value Stream Mapping What? Why? Who? When? • • • SM A visual tool for identifying all activities of the planning. Next page • . • Where? How? • On the shop floor. The leaders of each product family need to have a primary role in developing the maps for their own area. Develop a current-state map before improvements are made so that the efforts and benefits can be quantified.

000 units C/T = 30 sec C/O = 10 min 3 shifts 2% scrap rate = 1 day Finished goods Data box Inventory C/T = Cycle Time C/O = Change over or setup time Mon and Wed Push Physical pull Supermarket: the location of a predetermined standard inventory Shipment .Value Stream Map Symbols Spot weld ABC plating Process Vendor 3.

Current Value Stream Map .

Future Value Stream Map .

Attributes of Lean Producers .they • use JIT to eliminate inventory • build systems to help employees product a perfect part every time • reduce space requirements • develop close relationships with suppliers • educate suppliers • eliminate all but value-added activities • develop the workforce • make jobs more challenging • reduce the number of job classes and build worker flexibility • apply Total Productive Maintenance (TPM) .

Identify and categorize waste in the Current State. Step 2: Value Stream Mapping. Return to the first step and begin the next lean transformation. offering a product which is ever more nearly what the customer wants. Step 5: Perfection There is no end to the process of reducing effort. and eliminate it! Step 3: Create Continuous Flow Make the remaining steps in the value stream flow. and mistakes. the set of all specific actions required to bring a specific product through the three critical management tasks of any business: the problemsolving task. time. space. Express value in terms of a specific product. Step 4: Create Pull Production Let the customer pull products as needed.The Five Steps of Lean Production/Toyota Production System Implementation • • • • • Step 1: Specify Value Define value from the perspective of the final customer. cost. Identify the value stream. Create a map of the Current State and the Future State of the value stream. the information management task. Eliminate functional barriers and develop a product-focused organization that dramatically improves lead-time. and the physical transformation task. . which meets the customer's needs at a specific price and at a specific time.

Comparison of MRP (Material Requirements Planning). JIT. and TOC (Theory of Constraints) MRP Loading of operations Checked by capacity requirements Planning afterward One week or more JIT Controlled by kanban system Small as possible TOC Controlled by bottleneck operation Variable to exploit constraint Critical for bottleneck and feeder operations Fast Moderate Moderate Meet demand Maximize profits Bottleneck Need and plan Batch sizes Importance of data accuracy Speed of scheduled development Flexibility Cost Goals Planning focus Production basis Critical Slow Lowest Highest Meet demand Have doable plan Master schedule Plan Unnecessary Very fast Highest Lowest Meet demand Eliminate waste Final assembly schedule Need Transparency 17.17 (Exhibit 17.15) .