Lean Operations & JIT
Chapter 14
Learning Objectives
You should be able to:
1. Explain what is meant by the term lean operations
system
2. List each of the goals of a lean system and explain its
importance
3. List and briefly describe the building blocks of lean
4. List the benefits and risks of a lean system
Instructor Slides
Lean Operations
Lean operations
A philosophy that encompasses every aspect of
the process, from design to after the sale of a
product.
Pursues a system that functions with minimal
levels of inventory, waste, space and transactions.
A flexible system of operation that uses
considerably less resources (activities, people,
inventory, space) than a traditional system
Tends to achieve
Greater productivity
Lower costs
Shorter cycle times
Higher quality
14-3
Lean: Ultimate Goal
The ultimate goal:
Achieve a system that matches supply to
customer demand; supply is synchronized to
meet customer demand in a smooth
uninterrupted flow
A balanced system
One that achieves a smooth, rapid flow of materials
and/or work through the system
History of Lean Operation & Just In Time
14-4
Goals and building blocks
of lean systems
14-5
Lean:
Supporting Goals
The degree to which leans ultimate goal is achieved
depends upon how well its supporting goals are
achieved:
1. Eliminate disruptions
Poor quality (lean systems do not carry extra
inventory), equipment breakdowns, schedule changes,
late deliveries.
2. Make the system flexible
Mix of products, levels of output.
Require reducing setup-times & lead-times.
3. Eliminate waste, especially excess inventory
Minimize inventory
14-6
Waste
Represents unproductive resources
Seven sources of waste in lean systems:
1. Inventory
Idle resource, requires space, cost
2. Overproduction
Overuse of manufacturing resources
3. Waiting time
Require space, WIP
4. Unnecessary transporting
Handling cost, WIP inventory
5. Processing waste
Unnecessary production steps, scrap
6. Inefficient work methods
Reduced productivity, increased scrap, increased WIP
7. Product defects
Rework costs, customer dissatisfaction
14-7
Lean: Building Blocks
1. Product design
2. Process design
3. Personnel/
organizational
elements
4. Manufacturing
planning and control
14-8
Building Blocks
1. Product Design
Four elements of product design important for
lean systems:
1. Standard parts
Fewer parts, less training, lower costs, routine purchasing,
handling and quality inspection. Can use standard processing.
2. Modular design
Fewer parts, simpler assembly, purchasing, handling, training.
3. Highly capable systems with quality built in
small lot sizes and absence of buffer stock.
Quality designed into the product and production process.
Standardized products, methods and equipment, workers
familiar with their jobs.
4. Concurrent engineering
Bringing together design and manufacturing personnel together
early in the design phase to prevent engineering changes. 14-9
Building Blocks
2. Process Design
Seven aspects of process design that are
important for lean systems:
A.
B.
C.
D.
E.
F.
G.
H.
Small lot sizes
Setup time reduction
Manufacturing cells
Quality improvement
Production flexibility
A balanced system
Little inventory storage
Fail-safe methods
14-10
2. Process Design
A. Small Lot Sizes
In the lean philosophy, the ideal lot size is 1.
Goal: reduce lot size as much as possible (given
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practical considerations)
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Benefits of small lot size
2 DS
2(annual demand)(se tup cost)
Reduced in-process inventory QO
H
annual per unit holding cost
Lower total carrying costs
Inspection and rework costs are lower when quality problems
do occur
Permits greater flexibility in scheduling = better response to
customer demands.
Less inventory to work off before implementing product
improvements
Increased visibility of problems
Increased ease of balancing operations
14-11
2. Process Design
B. Setup Time Reduction
Small lot sizes and changing product mixes
require frequent setups
Unless these are quick and relatively inexpensive, they can
be prohibitive
Setup time reduction requires deliberate
improvement efforts
Workers are trained to do their own setups
Single-minute exchange of die (SMED)
A system for reducing changeover time (e.g. 1982 Toyota
from 100 to 3 minutes).
Convert activities form internal to external.
14-12
What is die?
Instructor Slides
13
2. Process Design
D. Quality Improvement
Quality defects during the process can disrupt the
orderly flow of work
Focus on finding and eliminating the causes of
problems.
Autonomation (jidoka)
Automatic detection of defects during production
Two mechanisms are employed
1. One for detecting defects when they occur
2. Another for stopping production to correct the cause of the
defects (force immediate attention to the problem)
14-14
2. Process Design
F. Balanced System
Line balancing helps to achieve a rapid work flow.
Work assigned to each workstation must not exceed
cycle time (Takt time).
Takt time
The cycle time needed to match customer demand for final
product.
Sometimes referred to as the heartbeat of a lean system
Procedure:
1. Determine the net time available per shift
2. If there is more than one shift per day, multiply the net
time by the number of shifts
3. Compute the takt time by dividing the net available time
by demand
Using takt time minimizes WIP inventory.
14-15
2. Process Design
G. Inventory Storage
Lean systems are designed to minimize inventory (waste)
Inventories are buffers that tend to cover up recurring problems that are
never resolved
partly because they are not obvious
partly because the presence of inventory makes them seem less
serious
The lean approach is to gradually reduce inventories in order to
uncover problems and then resolve them.
Advantages:
Lower carrying cost
Less space
Less dependence on buffers
Less rework
Less need use current inventory before implementing design
improvements.
Risks:
No safety stock
Opportunity loss when problems arise
14-16
Building Blocks
3. Personnel/Organizational
Five personnel/
organizational elements
that are important for lean
systems:
A. Workers as assets
B. Cross-trained workers
C. Continuous
improvement
D. Cost accounting
E. Leadership/project
management
14-17
3. Personnel/Organizational:
A. Workers as Assets
Workers as assets
Well-trained and motivated workers are the
heart of the lean system
They are given greater authority to make decisions
but more is expected of them
14-18
3. Personnel/Organizational
B. Cross-Trained Workers
Cross-trained workers
Workers are trained to perform several parts of a
process and operate a variety of machines
Facilitates flexibility
Helps in line balancing
14-19
3. Personnel/Organizational
C. Continuous Improvement
Continuous improvement (Kaizen, )
Workers in lean systems have greater responsibility
for quality, and they are expected to be involved in
problem solving and continuous improvement
Teams of workers and managers who routinely
work on problems.
Problem solving culture: workers are encouraged
to report problems and potential problems.
Andon: System of lights used at each workstation
to signal problems or slowdowns (green, amber,
red lights)
14-20
Building Blocks
4. MPC
Seven elements of
Manufacturing Planning and
Control (MPC) are
particularly important for
lean system:
A.
B.
C.
D.
E.
F.
Level loading
Pull systems
Visual systems
Limited work-in-process (WIP)
Close vendor relationships
Reduced transaction
processing
G. Preventive maintenance and
housekeeping
14-21
4. MPC
B. Pull Systems
Push system
Work is pushed to the next station as it is completed (without
regard to the next stations readiness).
Work may pile up at workstations that fall behind schedule.
Pull system
Work moves on in response to demand from the next stage in the
process.
A workstation pulls output from the preceding workstation as it is
needed
Output of the final operation is pulled by customer demand or the
master schedule
Pull systems are not appropriate for all operations
Require fairly steady flow of reparative work.
Large variations in volume, product mix, or product design will undermine
14-22
the system
4. MPC
B. Pull Systems:
Communication
Communication moves backward through the
system from station to station
Each workstation (customer) communicates its
need for more work to the preceding workstation
(supplier)
Assures that supply equals demand
Work moves just in time for the next operation
Flow of work is coordinated
Accumulation of excessive inventories is avoided
14-23
4. MPC
C. Visual Systems
Kanban (
Card or other device that communicates demand
for work or materials from the preceding station
Kanban is the Japanese word meaning signal or visible
record
Paperless production control system
Authority to pull, or produce, comes from a
downstream process.
14-24
4. MPC
C. Visual Systems - kanban
Kanban
A kanban card is affixed to each container
When a workstation needs to replenish its supply of
parts, a worker withdraws on container
Each container holds a predetermined quantity
The worker removes the kanban card from the
container, posts it, and take the container to the
workstation.
The posted card is picked up by a stock person who
replenishes the stock with another container
and so on down the line.
14-25
4. MPC
E. Close Vendor Relationships
Relatively small number of suppliers.
Close relationships with (certified) vendors
They are expected to provide frequent, small deliveries of
high-quality goods
The burden of ensuring component quality is shifted to the
vendor.
Local supplier are preferred in order to reduce lead
time (of small frequent deliveries)
Ideally the suppliers themselves will be operating
under JIT.
The suppliers become part of an extended
integrated JIT system.
14-26
Lean Services
In service the focus is often on the time needed to perform
the service - speed is often the order winner
Provide services when they are needed
Lean benefits can be achieved in the following ways:
Eliminate disruptions
e.g., avoid having service providers also answer phones.
Make system flexible
Train workers to handle more variety.
Reduce setup and lead times
Estimate what parts and tools are frequently needed and have them on hand
Eliminate waste
Eliminate errors and duplicate work.
Minimize WIP
e.g., orders waiting to be processed, calls waiting to be answered, packages
waiting for delivery, truck waiting to be loaded/unloaded etc.
Simplify the process
e.g., self-service systems such as in retail, ATMs, vending machines, service
systems
14-27
Lean vs. Traditional Philosophies
Factor
Traditional
Lean
Inventory
Much to offset
forecast errors, late
deliveries
Minimal necessary to operate
Deliveries
Few, large
Many, small
Lot sizes
Large
Small
Setup; runs
Few, long runs
Many, short runs
Vendors
Long-term
relationships are
unusual
Partners
Workers
Necessary to do the
work
Assets
14-28
Lean Systems
Key benefits:
Key Risks:
Reduced waste
Absence of buffers
inventory levels
(personnel,
inventory) to fall
scrap and rework
back on if something
space requirements
goes wrong.
High quality
Possible loss off sale
Flexibility
and lost customers.
Reduced lead times
Increased productivity
and equipment
utilization
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