Lean Production

Ron Tibben-Lembke

Operations Management
Waste
Waste is ‘anything other than the minimum
amount of equipment, materials, parts,
space, and workers’ time which are
absolutely essential to add value to the
product.
--Shoichiro Toyoda President, Toyota Motor Co.
If you put your mind to it, you can squeeze
water from a dry towel.
-- Eiji Toyoda, President 1967-1982
Just-in-Time
 Downstream processes take parts from
upstream as they need.
 Like an American Supermarket:
 Get what you want
 when you want it
 in the quantity you want.
7 Types of Waste (Ohno
1988)
 Overproduction
 Time on Hand (waiting time)
 Transportation
 Stock on Hand - Inventory
 Waste of Processing itself
 Movement
 Making Defective Products
Seven Elements to Eliminate
Waste
1. Focused Factories
2. Group Technology
3. Quality at the Source
4. JIT production
5. Uniform Plant Loading
6. Kanban production control system
7. Minimized setup times
1. Focused Factories
 Small, specialized plants
 No huge, vertically integrated plants
 Small plants easier, cheaper to build
 Tom Peters
2. Group Technology
 Products grouped into families
 Work cell can produce whole family
 Cellular layout, not functional
 Benefits
 Much less inventory sitting around
 Less material movement
 Fewer workers
 Cross-training
 Keep skills sharp (managers too)
 Reduce boredom & fatigue
 Understand overall picture, more new ideas
3. Quality at the Source
 Do it right the first time
 Stop process, correct errors immediately
 Not a lot of parts to sift through to find a
good one
 Can’t afford high defect rates
 Since low WIP, get quick feedback on
errors
4. Just In Time-- What is It?
 Just-in-Time: produce the right parts,
at the right time, in the right quantity
 Requires repetitive, not big volume
 Batch size of one
 Short transit times, keep 0.1 days of supply
Lowering Inventory Reduces
Waste

WIP hides problems

Lowering Inventory Reduces
Waste

WIP hides problems

 Lowering Inventory Reduces
Waste
Reducing WIP makes
problem very visible

STOP
 Lowering Inventory Reduces
Waste

Remove problem, run

With less WIP
 Lowering Inventory Reduces
Waste

Reduce WIP again to find

new problems
Performance and WIP Level
 Less WIP means products go through system
faster
 reducing the WIP makes you more sensitive
to problems, helps you find problems faster
 Stream and Rocks analogy:
 Inventory (WIP) is like water in a stream
 It hides the rocks
 Rocks force you to keep a lot of water (WIP) in
the stream
5. Uniform Plant Loading
(heijunka)
 Any changes to final assembly are magnified
throughout production process
 Smoothing
 Master production schedule: 10,000 /mo.
 500 day, 250 a shift
 480 minutes means 1 every 1.92 minutes
 Sequencing:
 If mix is 50% A, 25% B, 25% C, produce
A-B-A-C-A-B-A-C…
6. Kanban
 Japanese for ‘signboard’
 Method for implementing JIT
 In order to produce, you need both
material to work on, and an available
kanban.
 Each work station has a fixed #
kanbans.
 6. Kanban Flow of work

2 3

 Worker 2 finishes a part, outbound moves over

 2 has a blue tag avaliable, so 2 gets another
part to work on:
 2 takes off 1’s green tag giving it back to 1, and
 puts on her blue tag and moves it into position.
 6. Kanban Flow of work

2 3

 When 3 finishes a part,

 Finished parts move over one spot
 He has to have a red tag available to put on,
 He gets a part from 2’s outbound pile,
 And gives the blue back to 2
 6. Kanban Flow of work

2 3

 When 3 finishes a part,

 Finished parts move over one spot
 He has to have a red tag available to put on,
 He gets a part from 2’s outbound pile,
 And gives the blue back to 2
 3’s production will be taken by 4, offstage right.
 Tag goes back into 3’s bin
 6. Kanban
2 3

 Red finishes his part next.

2 3

 But 4 hasn’t freed up any of the red kanbans, so

there is nothing for 3 to work on now.
 3 could maintain his machine, or see if 4 needs help
How is this Different?
 Processes can become idled (blocked)
or starved
 This makes you painfully aware of
problems in your system.
 Material moves through the system so
quickly no in-process recordkeeping is
needed.
Importance of Flow
 Ohno was very clear about this:
“Kanban is a tool for realizing just-in-time. For
this tool to work fairly well, the process must be
managed to flow as much as possible. This is
really the basic condition. Other important
conditions are leveling the product as much as
possible, and always working in accordance with
standard work methods.
-- Ohno, 1988, p. 3
7. Setup Reduction
 Can’t afford to do huge runs
 Have to produce in small batches
 Toyota Die Change: 3 hours down to 3 SMED:
under ten minutes
 Techniques
 Make internal setups into External
 Eliminate Adjustments
 Eliminate the Setup
 Continuous Process Improvement, anyone?
Elimination of Waste
 Knew they wouldn’t beat U.S. with product
innovation, concentrated on licensing patents,
and producing more efficiently
 Costs prevented mass-production, volume
strategy of American firms.
 Find ways to reduce waste, cost
 Shigeo Shingo (at right)
 & Taiichi Ohno, pioneers
 -- the early years
 First two Toyotas imported to U.S. 1957
JIT Origins in Japan
 Post-WWII Japanese industry in ruins
 “Catch up to Americans in 4 years!”
 Toyoda made delivery trucks and
motorcycles, and not many of either
Couldn’t Emulate GM
 GM huge batches in huge factories
 Japan’s area is 10% less than California
and 70% agricultural.
 Put entire population of CA into 30% of
state, then add 6 times as many people.
(and you thought LA was crowded).
 Land extremely expensive
 Sprawling factories not an option
 Small Batches
 GM’s large batches require large amounts
of storage space.
 GM produces in large batches because of
significant setup costs.
 If Toyota had the same large setup costs,
it could never afford small batches.
 Reduce setup cost to reduce batch size.
 GM didn’t think of doing this.
A contrasting opinion
“Inventory is not the root of all evil,
inventory is the flower of all evil.

- Robert Inman,
General Motors
Ask ‘Why’ 5 Times
 5W = 1H
1. Why did the machine stop? Overload and fuse blew
2. Why the overload? Not lubricated
3. Why not lubricated? Oil pump not pumping?
4. Why not pumping? Pump shaft worn out.
5. Why worn out? No screen, scrap got in
Preventative Maintenance
 Unexpected loss of production is fatal to
system and must be prevented
 Additional maintenance can prevent
downtime, or minimize length of
interruptions, when they do occur
Capacity Buffers
 System is inflexible, no inventory
buffers, so to respond, need excess
capacity
 Schedule less than 24 hours per day
 ‘Two-Shifting’ 4-8-4-8
 Cross Training
Characteristics of JIT
Partnershps
 Few, nearby suppliers
 Supplier just like in-house upstream process
 Long-term contract agreements
 Steady supply rate
 Frequent deliveries in small lots
 Buyer helps suppliers meet quality
 Suppliers use process control charts
 Buyer schedules inbound freight
Supplier Relationships
 American model:
 keep your nose out of my plant.
 Gain info to force price cuts
 Lack of trust between suppliers
 Firm encourages suppliers to share
knowledge, because they don’t worry about
competing
 Firm helps supplier increase quality, reduce
costs
 Lessons Learned from JIT
 The environment can be a control - don’t take
setups for granted
 Operational details are very important (Ford,
Carnegie)
 Controlling WIP is important
 Flexibility is an asset
 Quality can come first
 Continual improvement is necessary for
survival