Operations Management

Introduction and lean principles

Balázs Sztrapkovics
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 Exercises during the semester
• There will be two homeworks during the
semester
1. You have to find 5 examples in your every day life
when you can use a lean tool to improve your
processes
2. You have to choose a lean tool and make 10 minute
PPT presentation, about the choosen lean tool, and
its application in th industry
• There will be one test at the end of the semester

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 Homeworks schedule
Date Lecture Seminar
2019.02.15. Introduction lean principles Introduction lean principles

2019.02.22. Lean management creativity techniques Brainstorming, NGT

2019.03.01. 5S, and Kaizen Problem finding tools

Calculating indicators, of lean
2019.03.08. Lean wastes, and VSM
systems

2019.03.15. National Holiday National Holiday

SPRING HOLIDAY
2019.03.29. Philosophy of pull system Presentations of HW1 part 1
2019.04.05. Material supply methods in lean management Presentations of HW1 part 2
2019.04.12. FMEA Presentations of HW2 part 1
2019.04.19. Easter Easter
2019.04.26. Six Sigma Presentations of HW2 part 1
Test results, possibility to view
2019.05.03. Final test
your test, final grade calculation
Test results, possibility to view
2019.05.10. Test retake
your test, final grade calculation
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Lean chronology I.
1574 – Henrik III., produce one galley less than
1 hour (continous production)

1760 – Jean-Baptiste de Gribeauval standardize

1799 – Whitney, interchangeable parts
1807 – Marc Brunel woodmaker machine (automated 22 steps)
1850 –The U.S. Army use guns which made from
commutable parts
1890 – Sakichi Toyoda’s fabricated a loom
wood from wood
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Lean chronology II.
1902 – Sakichi Toyoda automatic loom machine
1905 – Frank and Lillian Gilberth starting to
examine the importance of the
ergonomic workplace
1906 – Vilfredo Pareto drew up the unbalance of
the economy (80/20)
1908 – Henry Ford introduced model T
1910 – Henry Ford had the factory moved to
Highland Park
1911 – Sakichi Toyoda visited the Ford
factory,
where the model T was made
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Some thoughts about Henry Ford
• Interchangeable components
• Specialized manufacturing machines for
components’ production
• Continuous production system
(or ribbon-like production)
1863 – 1947
• Specialized machines
• One machine can produce one component (no change-over time)
• Just-in-time supply of materials

“People can have the Model T in any color –

so long as it’s black.”
Henry Ford
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Lean chronology III.
1911 – Fredrick Winslow Taylor
„The principles of scientific management”
1914 – Ford drew up the continous production
with flow
1929 – Sakichi Toyoda Sakichi Toyoda sold the
patent of the automatic loom
1935 – German Army, takt time, Mitsubishi
1937 – Be established the Toyota Motor Corporation (Toyoda vs Toyota)
1938 – Toyoda AA mass production
– Development of Just-in-time conception
1940 – Deming introduce the control sample,
which was initiated in Japan & USA
1943 – Taiichi Ohno became the CPO of
Toyota Motor Corporation
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Some thoughts about Taiichi Ohno
• Termékközpontú a gépcsoportokat
• Véget vet az "egy ember egy gépet
kezel" gyakorlatnak
• Folyamat- mozdulat- és ciklusidő
elemzéseket végez
• Sormegállítási jog az operátoroknak
• Veszteségek 7 csoportba gyűjtése, 1912-1990
•“AllJIT
wetovább fejlesztése,
are doing is looking at the time line from the moment the
• customer
Húzó-elvgives us an order to the point when we “collect” the
bevezetése,
cash. And we are reducing that time line by eliminating the non-
• Ohno-kör,
value adding wastes.”
• szupermarket Taiichi Ohno (1978)
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Lean chronology IV.

1947 – Deming went to Tokio as a consultant

(guru of statistics)
1951 – J. M. Juran published his book:
The Quality Control Handbook
1961 – TQC was used against the formation of defect
1962 – Toyota started the implementation of pull logistics and kanban
in the company
1969 – Toyota launch a Supplier Improvement program for the 10
biggest supplier
1973 – The oil crisis ruin the economy of Japan except Toyota (it’s still
profitable)
1975 – The first TPS handbook in English (Sugimori, Cho, Ohno)
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Lean chronology V.
1985 –Shingo published his books: SMED,
Poka Yoke, Study of Toyota
1988 – John Krafcik, appearance of lean as an expression
1990 – Womack and Jones:
The Machine That Change The World
1996 – Womack and Jones: Lean Thinking
1998 – Mike Rother John Shook: Learning to See
(about VSA)
2007 – The Lean conception (or philosophy) is used in more and more
industry, even in administrative processes
2009 – Economy crisis, where the only possibility for many companies to
survive is to introduce the lean philosophy into the corporate
culture

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Lean production system ≠ Horse sense

• Further consideration of Ford system

• The best practice
• Experience of TOYOTA } Toyota Production
System
(From 1950’s)

 „flow” in the whole production line

 The machines are arranged according to the production steps
 The current process step gives a sign of demand to the
previous one (Pull principle)
 Quick change-over for the machines to produce different parts
(Shigeo Shingo)
 Simple and accurate information flow
 Recognition of waste (Taiichi Ohno)

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5 principles of Lean philosophy

Value Value is what the customer pays for

Identification of the processes required to create

Value stream value

Flow Achieve the continuous flow of the products

Pull
We organize production for purchase orders

Strive for perfection by identifying and eliminating

Perfection
wastes 12
Value & waste

• Value
– Activity which forms raw materials or information
according to the customer demand
– Changes the shape, the character or the form of the
product according to the customer demand
– Activity wherefor the customer is able to pay, and have
willingness to pay
• Waste
– Activity which puts time, resource, place to use, but
doesn’t add a value to the material or doesn’t serve the
customer satisfaction  the customer will not pay for it

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Lean house

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Lean house

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Toyota-way philosophy - diversity

The great variety of the workers is true but just

out of the Toyota!

The two most important values of the company appear at the top
level of the philosophy :

• The permanent improvement of

the production process (KAIZEN)
• The respect of the (wo)man

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14 principles of Toyota-way
1. Base your management decisions on a long-term philosophy, even at the expense of short-term
financial goals
2. Create a continuous process flow to bring problems to the surface
3. Use "pull" systems to avoid overproduction
4. Level out the workload (heijunka). (Work like the tortoise, not the hare)
5. Build a culture of stopping to fix problems, to get quality right the first time
6. Standardized tasks and processes are the foundation for continuous improvement and employee
empowerment
7. Use visual control so no problems are hidden
8. Use only reliable, thoroughly tested technology that serves your people and processes
9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others
10. Develop exceptional people and teams who follow your company's philosophy
11. Respect your extended network of partners and suppliers by challenging them and helping them
improve
12. Go and see for yourself to thoroughly understand the situation (Genchi Genbutsu).
13. Make decisions slowly by consensus, thoroughly considering all options; implement decisions
rapidly (Nemawashi).
14. Become a learning organization through relentless reflection (hansei) and continuous
improvement (Kaizen). 17
Toyota-way – perfection

There is no perfect process!

• Search for challenges
• Sustained work, strong commitment and
creativity
• Continuous improvement (kaizen)
• Application of the 3 GEN principles (genba,
genbutsu, genjitsu)
• Don’t make short-term plans, plan for the next
decades
• Employees are the main value of a firm 18
Toyota-way – Respect for a human
„First we build people, and just after that cars.”
The main value of the company is a human because
he/she can:
– Recognize and understand the correlations
– Efficiently operate the processes
– Permanent search for the waste

Then the man is the further source of improvement!

Fire a man is the only and excusively the last option for reducing
costs! 19
Visual management I.

It’s a practical tool for gathering the information

and support the quick and efficient decision-
making.

Display of rules, results, information, problems

in a way that means the same for Everyone.

The operators become their own

supervisor on field of technical and
process standards. 20
What am I supposed to do?
Form your environment so it speaks to you…

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Color management

• If we use it consequently then it gives us extra information

• Use it more broadly

• Use a color to distinguish the quality of the product, clothes of

the workers, places or status

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Visual management II.

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Visual tools & management

Visual tools
• Such indexes/signs which give us information about the
production and support that
• Shows the current state compared to the planned one
• Easy to understand „for the first sight”
• Purpose of creation and maintainance is to indicate the
difference from the standard

Visual management
• Manage the different visual tools which help the business

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Visual management tools I.

Informative boards

Shadow boards for

tools

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Visual management tools II.

Colors

Painted lane
(communicating)

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Andon

To sign the status or any related information about

production!
In general it’s an electic tool which indicates the
operation statuses with different colors:
• Green: Normal business
• Yellow: The machine is in operation but e.g. waiting
for materials (sign for the material supplier)
• Red: The machine is out of order (sign for the
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maintainer)
Further example from Andon

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Standarization

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Standardization
Definition
It is the practice of defining, communicating, following
and improving standards.

Goal
It is to achieve a sure base, a foundation from where
we can leap forward (improve further)
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The standard is …
• The rule based on that we create the clear expectations to reach
our aim,
• Define the best and the most trustworthy method or operation
sequencing (the only way to apply the workers),
• have to be in a harmony with the takt of the customer demand
• let to know in a simple and easy way for Everyone (like a comic
strip, USA),
• before application everybody has to practice the standard method,
• have to standarize the process of creation where the standard
comes from,
• continuous way of changing for the optimal work,
• Easier way to teach the work method to the new employee.
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Why do we need them?

India, China Indiai video

Europe

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Standardization ≠ piece-rate

• The best way of working which is known

• The brilliance of the method (expert vs. operator)
• Three basic steps of standard work:
– takt time
– operation sequencing
– in process stock
• Keep and maintain the standard
• Only the repetitive tasks can be standardized
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Steps of standard work
Without any standard we can’t prove
our improvement!

If the standard operation is working the creativity, numbers of

development proposal and the satisfaction are increasing!
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PDCA – SDCA cycles

1. Plan: Define the problem, the aim,

and the improvement method Workshop, testing
stage
2. Do: Training, implementation
3. Check: Check the effect
4. Act: Appropriate intervention
5. Standardization: Spread the
standard method
6. Do: have standard method kept
7. Check: Examine the long term effect
8. Act: Intervention, repeated
waste hunting 35
„7 steps” method
1. Choose a topic, define the problem

2. Collect the data and analyse

3. Cause & effect, and data analysis

4. Design the solution and implement

5. Evaluate the results

6. Finalize (standardize)

7. Supervise the process and pick the next problem!

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7 steps– PDCA merge

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Standardization in practice

1. Need a task what is done quite often. Start with defining the
steps of the process!
2. Ask someone who does almost the same work that looks through
the steps to agree with him about the steps (consensus)
3. If you have an agreement, start to write  measure each other
4. Examine that you are able to write the process as a standard
(80/20)
5. If the standard process is written down share with others
6. If someone has a better idea he has to implement it into the
stanadard

„Where there is no standard, there can be no kaizen”

Taiichi Ohno 38
Documents of standardization
It has to contain:
1. Aim of the standard
2. Easy to use tables, numbers,
pictures
3. Checking and any other
management indicator
4. Checking points in two
different group (compulsory &
recommended)

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Good to know

According to an adult training research:

• One remembers 10 % that is read

• One remembers 20 % that is seen
• One remembers 30 % that is listened and used
• One remembers 70 % that is said
• One remembers 90 % that is said and done

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Advantages of standardization

For the company:

• Reduce the variability, wastes and costs
• Improve the quality, reduce lead time and makes it
more predictable
• It is a help to get a ISO certification

For the worker:

• Easy to learn the new operation

• Make it simpler to move the workers and the tasks
• Help on to discover the problems and the participation in
elimination
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Heijunka

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Heijunka
One of the biggest waste is the unappropriate production
planning!

Heijunka is a technique of achieving even output flow

by coordinated sequencing of very small production
batches throughout the manufacturing line. So it
causes smooth production.

There are wastes that we cannot avoid or reduce then we have to

calculate them. That is the only way to get the right image about our
production

Pl.: product change: tool change, adjustment, parts change, parts

renovation, maintain ... 43
Haste makes waste – Slow and steady
In a plant where required numbers actually dictate production, I
like to point out that the slower but consistent tortoise causes
less waste and is much more desirable than the speedy hare
who races ahead and then stops occasionally to doze. The
Toyota production system can be realized only when all the
workers become tortoises.
Taiichi Ohno

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Heijunka box
In one column there are cards
of products have to be done in
one unit of time

One product in
one row

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Heijunka box in practice

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Story…
The planned customer demand for toaster will be 100 red,
50 blue, 25 green based on the orders and the forecast. So I
have the toaster produced 100 red, the whole amount of
blue and the brighting green of course
That’s great till the worst come true in the life of mass
production. Let us suppose that when we already have
produced 98 red ones we get a call from the salesman
Salesman:
„Hello, I’ve got really good news! I’ve just got our customer
to buy 200 blue toaster. Is it cool, isn’t it? The blue is really
cool! Oh I’ve just forgot to say that they need only 25 red. So
please adjust your perfect MRP system for this, okay? Thx
you’re the best ;)”
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Advantages of Heijunka
• Large inventory is sub-optimal
– Change in customer demand
– Capital employed
– Warehousing cost
• Reducing Whiplash-effect
• More efficient
resource usage

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Heijunka in the office
Define the condition and according to that you stock the finishing
tasks into the right shelf!
E.g.:
 Daily tasks can be put to the top of the wheel, into
intervals that we choose
 Weekly tasks can be put to the bottom of the
wheel
 Dossiers of tasks in progress should be turned
upside down
 Dossiers of tasks already finished should be turned
back (normal orientation)
Heijunka wheel
Advantages:
• Worker knows exactly how many tasks are • Manager sees the problems, and
there for him/her can intervene
• Should someone fall behind, he/she can
call help 49
Heijunka in the restaurant
Restaurant:
• There is a big restaurant with many waiters
• Each waiter responsible for some tables
• Every waiter gets the tip from his own tables nevertheless
there is a wage differential among others. Why?
• There are some customer
who are satisfied with the
quickness of the serving, but
the others no, why?

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Just In Time (JIT)
If the customer demand leads the
production then the amount of raw
materials that is required is what we will
have.
„Just in time”
• in a right place,
• needed materials,
• in a needed quantity,
• in right quality,
• are available.

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Jidoka – built in quality
• Japanese expression: Provide the machines and
the equipments with a human sense
• Goal: to immediately stop production of rejects
 Provide machines with sensors that signal
the creation of rejects  the process stops
immediately Sakichi Toyoda

Principles:
1. Machines are able to automatically stop
when malfunction happens
2. Separation of machine and human work
(worker is not the guard of the
machine...)
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0 defect conception

• The quality is built in the process

• If there is a defect we immediately stop the production
• Against the defect escalation: OPF, andon
• Stable technical background: 5S, TPM

„Stop the process in order to never to stop” (not exact phrase)

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Taiichi Ohno
Poka-Yoke – error free!
Prevent the creation of error (or at least reduce its
probability)
• Poka: unintentional error
• Yokeru: prevent
ポカヨケ
Goals:
• Eliminating human error
• Preventing the creation of flawed
products, rejects
• Minimalizing the cost of control
processes
• Creating error-free environment 54
Human errors
„The human is not a machine: forgets something, makes a
mistake”
• Surprise, unexpected error
• Haste, hurry, precipitance
• Lack of supervision
• Carelessness
• Forgetting
• Intentional, willfulness
• Misunderstanding
• Mistake
• Untrained
• Fatigue, tiredness 55
Technical errors

• Missing process
• Process error
• Malfunction
• Bad positioning
• Missing piece
• Wrong piece
• Wrong process
• Bad condition

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Poka-Yoke techniques

We use a system of Hard (Poka-Yoke) for technical

errors, Soft (Poka-Yoke) for human errors in practice:

• Shape: connectors
• Audio-visual: safety belt
• Colour: electric cables
• Control: train doors

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Everyday Poka-Yoke

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Example for Poka-Yoke

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4 steps of Jidoka

1. Detect the abnormality.

2. Stop.
3. Fix or correct the immediate condition.
4. Investigate the root cause and install a
countermeasure.

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5S

1. Seiri 2. Seiton

3. Seiso

5. Shitsuke
4. Seiketsu

„Everything has a place and everything is in its place”

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History of 5S
• Originally in Toyota factory Taiichi Ohno drew up with
4S method at first in 50’ decades, as tool of an
workplace improvement and visualization

• In 60s completed to 5S method: The aim of this

methodology is to develop and sustain a work
environment which is suitable for efficient, high-
quality and safe work.

• In 90s the the American manufacturing companies

added an extra „S” standing for Safety, thus at some
place it is known as 6s method 62
Goals of 5S, preparation

Development and maintainance of effective, safety

and ready for qualitative work environment.

• People and change

• 5S strategy
• Design the detailed plan
• Training for the workers
• Competition of slogan
• Starting audit

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Eliminate the unnecessary things

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Placed the necessary things

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30 s
Systematic cleaning of the workplace

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Standardization

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Sustain continuous improvement

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Steps of 5S implementation

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Sustain of 5S, scoring
Seiri Pieces Score
1How many unnecessary things did you find?
2How many unnecessary things didn’t get a sign?
Seiton
1How many things are there which is not in its place?
How many things are there which hasn’t got definite
2
place?
3How many deficient or damaged sign are there?
Seiso
1How many source of contamination did you find?
How many contaminated tools, machines materials
2
did you find?
How many cleaning tools search their place, missing
3
or worn?
Seiketsu/
Sitsuke
How many proposal, idea or tip were put into the
1
computer system by the employees?
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Sum
Before - after I.

Before After

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Before - after II.

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Before - after III.

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5S examples

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Why do we need the 5S?

• Less accidents increase safety

• 0 defect takes a higher level of quality
• 0 waste causes lower costs
• Less failure increases the utilization of the machine
• 0 change-over time brings wide assortment
• Delivery on time gives us a higher level of reliability
• 0 complaint gives us a higher level of confidence and creditability
• Contributes to the activization of the organization and improves
the athmosphere
• Improves the brand and the image of the company
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76
77

Teamwork

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78

Teamwork
Two stonemasons are asked what they do at a
cathedral building site

The first one:

I am just cutting the stones to a
certain size.

The second one:

I am part of a team that builds his
magnificent cathedral:

It is up to the management! 78
79
Teamwork in nature (1)
Fact #1:
Wild geese fly in V-shape. The turbulences help the latter ones to
fly more easily. This way, they can fly 71% longer routes.
Moral:
We reach our goal faster with help.

Fact #2:
When the leader gets tired, another goose replaces it at the front.
Moral : We need to step up for the team.
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Teamwork in nature (2)
Fact #3: If a goose gets sick/injured, two others land with it, and tend
to it.
Moral: We need to help each
other out in need.

Fact #4:
During flight, the ones in the back
gaggle to cheer the others.
Moral:
Everybody needs some support. Be positive
about it.
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KAIZEN ( ) thinking
Kaizen
“Kai” “zen”
“change” “better”

Philosophy
• Improvements made by employees, workers.

• Continuous

• Not (just) management

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82
Kaizen principles
1. Shorten (transport movements)
– is there unnecessary step in our processes?
2. Connect (processes that can be done two at a time)
– Can be combinated?
– Can be done together?
– Can be done simultaneously?
3. Variate (steps of a process, materials, technologies)
4. Simplify

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Kaizen examples

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84

Kaizen in context
Scales of improvement
– Kaizen

– Kairyo Improvement
– Kaikaku

Time
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 10 Kaizen thumb rules 1
1. Discard Conventional Fixed Ideas
Be creative like you were at 10 years old

2. Think “How” to do it not why it can’t be done

Penalize negative thinking..quarter per “Can’t”

3. We do not have bad people just bad processes

3
2
The process needs to be simple enough anyone can follow it 4
1

4. Do not seek perfection. Do it right away

Quick and crude is better than slow and elegant

5. Correct mistakes Immediately

5
Defects inhibit flow

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 10 Kaizen thumb rules 2
6. Do not spend money for Kaizen
All that proves is that you have a lot of money
7. Question Everything - Ask “why” 5 times
If you don’t want your parts to sleep you must get rid of the beds and hotels
8. Seek the wisdom of ten people rather than the knowledge of one
8
Read your success of kaizen in the faces of your operators 7
9
6
9. Wisdom will surface when faced with hardship

10. Ideas are infinite

10

86
Kaizen not about financila solutions

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One week kaizen event process

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89
Excuses
• „I’m too busy”
• „Good idea, but takes too long to implement”
• „We don’t have money”
• „Theory is not practice”
• „We can’t pause the work”
• „It doesn’t match the firm’s policy”
• „Not my job”
• „You can’t make it better than it is”

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 BUDAPEST UNIVERSITY OF
TECHNOLOGY AND ECONOMICS

Balázs Sztrapkovics

email: [email protected]

BME FACULTY OF TRANSPORTATION ENGINEERING AND VEHICLE ENGINEERING

32708-2/2017/INTFIN COURSE MATERIAL SUPPORTED BY EMMI