OPERATIONS MANAGEMENT

Unit 2 :Productivity and

Competitiveness
“Lean Part I”

Week : 05
OPERATIONS
MANAGEMENT
UNIT 2: PRODUCTIVITY AND COMPETITIVENESS
“ I N T R O D U C T I O N TO L E A N - J I T ”
WEEK: 05
 UNIT’S LEARNING OUTCOME
•Apply productivity concepts to both production and service
activities

Source: Stevenson, William J. Operations Management (2018). 13th Ed.

3
Prepared by Prof Augusto Choy
 Unit 2 : PRODUCTIVITY AND COMPETITIVENESS

INTRODUCTION TO LEAN OPERATIONS

oBrief History
oCharacteristics of Lean Systems
oPrinciples of Lean Systems
oBenefits and Risks of Lean Systems
oToyota Approach
oWastes of Lean Systems
oKaizen
oPrinciples to Achieve Lean
Source: Stevenson, William J. Operations Management (2018). 13th Ed.

4
Prepared by Prof Augusto Choy
 Operations Management
Introduction to JIT and Lean Operations
Brief history
Lean Operations began as lean manufacturing in the mid-1900s.
Developed by Toyota, Japan had limited resources and was very sensitive to waste and
inefficiency.
Waste is considered as anything that does not add value for the customer
Lean was exemplified in an automobile manufacturing plant that was closed in 1982 for its low
productivity.
It was reopened under a Joint Venture GM/Toyota, 80% of former workers were rehired. Lean
was applied.
By 1985 the plant exceeded all of GM’s plants in productivity and quality

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Brief history (continued)
GM realized that mass production which emphasizes the efficiency of individual operations and
leads to unbalanced systems and large inventories, was outmoded
Instead they discovered that lean methods involve demand-based operations, flexible
operations with rapid changeover capability, effective worker behavior and continuous
improvement efforts.

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Characteristics of Lean Systems

• Waste Reduction • High Quality

• Continuous Improvement • Minimal Inventory
• Use of Teams • Output only to match demand
• Work cells • Quick Changeovers
• Visual Controls • Small lot sizes
• Lean Culture

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles of Lean Systems

• Identify Customer Value

• Focus on Value creating
processes
• Eliminate waste to create
“flow”
• Produce on customers’
demand
• Strive for perfection

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Benefits and Risks of Lean Systems

Benefits
• Reduced waste
• Lower costs and inventories
• Increased quality – customer
focus and high-quality
processes
• Reduced cycle-time
• Increased flexibility
• Increased productivity
Prof. Augusto Choy
Risks
• Increased stress on workers
• More responsibilities
• More problem solving
• Improved quality and
processes
• Fewer resources
• Supply disruptions are more
likely
Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Toyota Approach

• Muda – Waste and inefficiency minimization

https://www.youtube.com/watch?v=e3D__vikjiY&ab_channel=ConsulmanSRL

• Kanban – Manual system used to control movement of parts or

materials. New containers are delivered to replace empty
containers https://www.youtube.com/watch?v=zkQxvkXSiuA

• Heijunka – Leveled workload to achieve steady flow of work

https://www.youtube.com/watch?v=k4NGXBzv1xw

• Kaizen – Continuous improvement https://www.youtube.com/watch?v=0dZYC2XBF2U

• Jidoka – Quality at the source. The machine automatically stops

if something is wrong https://www.youtube.com/watch?v=f97Nr4LS8l4
• https://www.youtube.com/watch?v=sv5VDP_fVuQ
Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Wastes of Lean Systems
• Inventory – excess inventory takes floor space and adds cost
• Overproduction – excessive use of manufacturing resources
• Waiting – waiting time requires space and adds no value
• Transport – unnecessary handling increases work-in-process
inventory
• Motion – waste resources by lower productivity
• Over-processing – adds production steps
• Defects – rework, repair, recycle or scrap
• Underutilization – waste of people’s talents and ideas
https://www.youtube.com/watch?v=8gExNBPzSJk
Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Kaizen

• Waste is the enemy, to eliminate it you must get your hands dirty
• Improvement should be done gradually and continuously
• Everyone should be involved
• Kaizen is built on a cheap strategy, doesn’t need great sums of
money or consultants
• It can be applied anywhere

https://www.youtube.com/watch?v=4clnbB_FyOE
Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Kaizen

• Supported by a visual system: total transparency of procedures,

processes and values
• It focuses attention where value is created
• It is process oriented
• Main improvement effort should come from new thinking and
new work style
• Learn while doing

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

• Product Design
• Process Design
• Personnel/organizational elements
• Manufacturing planning and control

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Product Design
• Standard parts
• Modular design
• Highly capable production systems with quality built in
• Concurrent engineering

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Process Design
• Small lot sizes
• Setup time reduction
• Manufacturing cells
• Quality improvement
• Production flexibility
• A balanced system
• Little inventory
• Fail-safe methods
Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Process Design
• Small lot sizes
• In-process inventory is smaller than in large lot sizes, reducing
carrying costs, space requirement and clutter
• Inspection and rework costs are less when quality problems
occur
• Greater flexibility in scheduling. Produce what is needed
when it’s needed

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Introduction to JIT and Lean Operations
Principles to Achieve Lean

Process Design
• Small lot sizes
Small-lot approach

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Large-lot approach

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Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Process Design
• Setup time reduction
• Small-lot sizes require setup time reduction and frequent
setups
• Long-setup times require larger holding inventories
• Effort is required to reduce set-up time and the worker needs
to be involved
• SMED is ideal for setup time reduction
https://www.youtube.com/watch?v=qzuBedo7eLw

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Process Design
• Manufacturing cells
• Lean uses multiple manufacturing cells
• Each cell contains tools and equipment for highly specialized
work
• Reduces changeover time, it utilizes equipment in an efficient
way
• Operators cross-train easily

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Process Design
• Quality improvement
• Never-ending quest for quality improvement to avoid defects
that disrupt flow
• Focus on finding and eliminating the causes of problems
• Autonomation (jidoka) helps reduce defects, stop when
defect occurs

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Process Design
• Production flexibility
• Process a mix of products or services in a smooth flow
• Bottlenecks when a portion of the system gets overloaded, is
an obstacle for this flexibility

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Process Design
• Production flexibility – How to increase production flexibility
• Reduce changeover time to reduce downtime due to
changeovers
• Preventive maintenance in key equipment to reduce
breakdown and downtime
• Cross-train workers so they can help when bottle-necks occur
• Train workers to handle equipment adjustment and minor
repair
Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Process Design
• Production flexibility – How to increase production flexibility
• Use many units of small capacity rather than one with large
capacity, it makes it easier to increase or reduce production
• Use offline buffers to store infrequently used safety stock
away from production to avoid congestion
• Reserve capacity for important customers

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Process Design
• A balanced system
• Line balancing of production lines helps to achieve a rapid
flow of work through the system
• Time needed to finish the assigned work must be equal or
smaller than cycle-time or takt-time (the heart beat of
production)

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Process Design
• Little inventory
• Inventory is waste, it needs to be minimized
• It’s used to compensate for machine breakdown, root causes
should be found to eliminate machine breakdown
• Pare down inventories gradually in order to uncover the
problems and solve them, once they are solved, remove some
inventory until you get to the desired levels

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Process Design
• Fail-safe methods (Poke-Yoke)
• This is a method that will warn workers when something is
not right or an error is about to occur
• This is a way of fool-proofing the process

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Personnel/Organizational Elements
• Workers as assets
• Cross-trained workers
• Continuous improvement
• Cost accounting
• Leadership/project management

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Problems are hidden by high wáter level (inventory). As water level

drops (inventory), the obstacles show-up such as bottlenecks, waste,
poor timing. We remove the obstacles in each iteration until it is
aceptable.

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Manufacturing Planning and Control

• Level loading
• Pull system
• Visual system
• Limited work-in-process
• Close vendor relationship
• Reduced transaction processing
• Preventive maintenance and housekeeping

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 Operations Management
Introduction to JIT and Lean Operations
Principles to Achieve Lean

Manufacturing Planning and Control

• Preventive maintenance and housekeeping
• 5S
• Sort
• Straighten
• Sweep
• Standardize
• Sustain

Prof. Augusto Choy Source: William J. Stevenson “Operations Management” 12th Ed Mc Graw-Hill
 References

Heizer, J. Render, B. & Munson, C. (2017). Operations Management,

Sustainability and Supply Chain Management. (12th Ed) Boston. Pearson.
James, T. (2011) Operations Strategy. (2011 Ed) Ventus Publishing ApS,
BookBoon.com
Stevenson, W.J. (2015). Operations Management. (12th Ed.) NY: Mc Graw Hill.

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Prepared by Prof Augusto Choy
Thank-you