1 10. lean operations: process synchronization and improvement lean operations: process...

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10. Lean Operations: Process Synchronization and Improvement

Lean Operations: Process

Synchronization and Improvement

Chapter 10

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Introduction

Lean Operations:

– Perfected by Japanese automaker - Toyota

– A more efficient process

– Adopted in USA by the aerospace industry in 1990’s

– Some turnaround times were lowered by 30-50%

– Maintenance productivity improved by 25-50%

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Introduction

Overall:

– Many industries have adopted lean operations

Why??Improved performance

including: Cost Quality Response time

$

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Introduction

Responsiveness

Operations Frontier

A

B

C

PriceHigh Low

Quick review:

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10.1 Processing Networks

Processing Networks: consists of information and

material flows of multiple products through a sequence of

interconnected processes.

Process 5

Process 1

Process 2

Process 3

Process 4

Process 6

Product A

Product B

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10.1 Processing Networks

Plants & Supply Chains—

– Two different levels:

Plants: any singly owned, independently

managed and operated facility (i.e.,

manufacturing site, service unit, storage

warehouse)

Supply Chain: a network of interconnected

facilities

Diverse ownership

Flows of information and materials between

the facilities (i.e., raw materials suppliers,

finished goods producers, wholesalers,

distributors, retailers)

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10.2 The Process Ideal: Synchronization & Efficiency

What is an “Ideal Process”?

A process that achieves synchronization at the lowest possible cost

Process Synchronization

The ability of the process to meet customer demand in terms of their quantity, time, quality and location requirements.

Process Efficiency

Measured in terms of the total processing costs. Less cost, more efficient!!.

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10.2 The Process Ideal: Synchronization & Efficiency

Perfectly Synchronized Process that is LEAN will

develop, produce and deliver these ONLY on

demand:

– Exactly what is needed (not wrong or defective

products)

– Exactly how much is needed (neither more or less)

– Exactly when it is needed (not before or after)

– Exactly where it is needed (not somewhere else)

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10.2 The Process ideal: Synchronization & Efficiency

Just-In-Time (JIT)– When the four “just rights” come

together—

– Action is taken only when it

becomes necessary!!!

– In Manufacturing - production of

only necessary flow units in

necessary quantities at necessary

times!!!

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10.2 The Process ideal: Synchronization & Efficiency

Synchronized Networks:

– Outflow of one process is the inflow to

another process!!!!

– REQUIRES PRECISE MATCHING OF

SUPPLY & DEMAND

– All stages are required to be tightly linked

with flow of information and product

– Ideally – the processing stages are achieved

for lowest possible cost!!!!

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10.3 Waste and Its Sources

ANYTHING LESS THAN IDEAL PERFORMANCE IS AN

OPPORTUNITY FOR IMPROVEMENT!!!

Low Efficiency = High Processing Costs

Lack of Synchronization

Defective products, high inventories, delays, stock outs

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Sources of Waste:

– Producing defective products

– Producing too much product

– Carrying inventory

– Waiting due to unbalanced workloads

– Unnecessary processing

– Unnecessary worker movement

– Transporting materials

Waste: producing inefficiently, producing wrong or defective products, producing in quantities that are too small/large, delivering early/late

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Waste Elimination:

– Short term strategies

include:Cycle & Safety inventories

Safety capacity

Non-Value adding activities

(transportation, inspection,

rework, process control)

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Waste Elimination (cont’d):

– Long-Term Strategy

– Improve the overall processes

– Build in flexibility, predictability,

stability to eliminate temporary

fixes.

i.e.→ Reduce setup costs to make

it more economical to produce

small batches.

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The River Analogy: The boat can sail in shallow water (lean operations) if we are

able to find ways to remove the imperfections on the river bottom!!!

FM WIPFG

Defective Materials Machine Breakdowns

Defects

Long Setups

Long Lead Times Unsuitable EquipmentUneven Schedules

Unreliable Suppliers

Inefficient LayoutsAbsenteeism

Rigid Work Rules

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10.4 Improving Flows in a Plant: Basic Principles of Lean Operations

Many buzz-words for

managing and achieving

efficiency within a plant:– Lean operations

– Just-in-time production

– Zero inventory program

– Synchronous manufacturing

– Agile manufacturing

– Toyota Production System (TPS)

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LEAN OPERATIONS HAS FOUR OBJECTIVES:

1. To improve process flows

Efficient plant layout and fast/accurate flow of materials and

information

2. To increase process flexibility

Reducing equipment changeover times & cross-functional training

3. To decrease process variability

Flow rates, processing times, and quality

4. To minimize processing costs

Eliminate non-value adding activities (transportation, inspection,

rework)

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WHY?????– First three goals improve Process Synchronization

– Last goal improves Cost Efficiency

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Classic Example:– Efficiency/Synchronization for mass production:

Henry Ford’s Rouge, Michigan plant

– Totally integrated with – steel mill, glass factory,

machine tools, electrical systems, assembly line, well-

trained (well-paid) workers

– Minimal low time & cost

– Everything in place except product variety!

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Efficiency/Synchronization for Mass ProductionFord Motor Company 1910

Rouge, Michigan Plant

Source: <http://www.shadetreemechanic.com/ford_centennial_in_atlanta.htm>

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10.4.1 Improving Process Architecture: Cellular Layouts

Process Architecture: the network of

activities and resources One method:

FUNCTIONAL LAYOUTS Different product types follow different routings through

the resource pools…enabling each flow unit to be sent to

any available station in the pool.

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10.4.1 Review of Process Architectures: Job Shop

AC

BD

Product 1

Output

Input

Product 2

Functional Layout: Resources that perform the same function are physically pooled together–

JOB SHOPS

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Alternate to Process-based Functional Layout:

CELLULAR LAYOUT

All workstations that perform successive operations on a given product are grouped

together to form a “CELL”

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OutputInput A CB

Product 1

Example: Henry Ford’s Assembly Line for the Model T

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Facilitates synchronous flow of

information and materials

between processing stations

Physical proximity of cells

reduce transportation of low

units

Moves small batches of flow

units quickly

Encourages teamwork & cross

functional skill development

Improved communication

between stations

Improves synchronization

where each station produces

parts only if the next station

needs them

Easier to recognize and report

problems

Quicker ability to correct

defects

ADVANTAGES+ +

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Resources are dedicated to

specific cells

Resources cannot be used by

other cells

Lose advantage of resource

pooling

Worker incentives must be

“team” oriented, not individual

performance based

REMEDIES:

– Use flexible resources that

are cross functional

– Peer pressure to control

productivity of team

members

DISADVANTAGES- -

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10.4.2 Improving Information & Material Flow: Demand Pull

TWO APPROACHES

1. PUSH: Input availability triggers production where

emphasis is on “keeping busy” and maximize

resource utilization (as long as there is work)

Planning Tool: MRP (Material Requirements

Planning)

MRP: End-Product demand forecasts are “exploded”

backwards to determine parts requirements at each

station

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PUSH works well under these conditions if:

– All information is accurate

– Forecasts of finished goods are correct

– There is no variability in processing times

If one of these conditions at any stages is not met will

DISTURB PLANNED FLOW AND DESTROY

SYNCHRONIZATION THROUGHOUT THE PROCESS!!

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2. Demand-Pull: Where demand from a customer station

triggers production.

Consequences of Demand-Pull -- -- -- Each station produces only

on demand from its customer station

The demand is actually “downstream”

Two requirements to make a pull system work:

1. Must have a well-defined customer with a well-defined

supplier process.

2. Must produce the quantity needed only when signaled to

do so by its customer

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SUPPLY PUSH: Input availability triggers production

DEMAND PULL: Output need triggers production

Supplier

Supplier

Inputs

Inputs

Process

Process Outputs

Outputs Customer

Customer

Information Flow: Material Flow:

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Demand Signaling: Customer needs a way to signal

(inform) the supplier of its need.

Customer’s demand starts a chain reaction –

For withdrawals and replenishments of intermediate parts

EOQ-ROP system is a “Pull” system where ROP triggers

production at the supplier and EOQ determines the quantity

produced

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Synchronized Pull: When the delivery of parts are in

sequence

[Suppliers must have greater ability and capability to

achieve a synchronized pull effectively]

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10.4.3 Improving Process Flexibility: Batch-Size Reduction

Each station must know HOW MUCH TO PRODUCE AT A TIME Level Production: where small quantities are produced frequently

to mach customer demand

[i.e., if demand is 10000 sedans and 5000 SUVs, the production would call

for producing 2 sedans and then 1 SUV, and then repeat the sequence]

Changeover Costs and Batch Reduction: Goal of level production

is reduction of changeover costs (fixed setup or transportation costs

of each batch)

I.E. In auto production expensive parts like seats are produced in

batches of one, wipers in larger batches Study the Changeover process to: use special tools to speed it up,

customize some machines, keep some machines already set up.

Consider “small-batch” production

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10.4.4 Quality at Source: Defect Prevention & Early Detection

Defective flow units increase average flow time and cost!!!

WHY? It necessitates inspection and rework!!!

Anticipate and then Compensate for the problem:

– Hold extra safety inventory in the buffer

– This increases avg. flow time and cost

Plan and control Quality:

1. Prevent defects for occurring in the first place

2. Detect and correct them as soon as they appear

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Defect Prevention– Careful design of both product and process

– Simplification & standardization

– Mistake-proofing (poka yoke) Parts are designed to halt automatically when defective units are fed

into them (parts are designed to minimize chances of incorrect

assembly)

Defect Visibility– Early detection/corrections more effective &

economical

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Defect visibility (cont’d)

– Early detection helps tracing to the source

– Contribution to better synchronization and lower costs

– Early detection requires constant vigilance and monitoring!!

Decentralized Control

– Employees must be empowered

with authority and the means to

identify & correct problems at the local level

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Decentralized Control (cont’d)

– In typical plants, line workers don’t feel the

responsibility, motivation or security to point out

problems.

BEST STRATEGIES OF LEAN OPERATIONS ARE:

1. Preventing problems through better planning

2. Highlighting problems as soon as they occur

3. Delegating problem solving to the local level

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10.4.5 Reducing Processing Variability: Standardization of Work Maintenance, and Safety Capacity

Reduce Variability:

– Standardize work at each stage and specify it clearly

Advantages to Standardization:

– Reduces variability from changing personnel

– Reduces variability from one production cycle to the

next

– Makes it easier to identify sources of waste that can

be eliminated

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10.4.5 Reducing Processing Variability: Standardization of Work Maintenance, and Safety Capacity

Lean Operations try to:

– Minimize carrying safety inventory due to increased

flow time

– Maintain some safety capacity as production against

variability

These could be extra machines, workers, overtime

These forms of safety capacity should be flexible so that it can

be used as needed!!

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10.4.6 Visibility of Performance

1. A company needs to “see”“see” (measure) process

performance from the customer’s perspective

– I.E. Time per call

2. Measure Percentage of Customers that had a problem

resolved with one call

3. Actual performance (along with expectations) should be

visible at each work cell

4. Not for punishment, but to provide quick feedback for

corrective action

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10.4.7 Managing Human Resources: Employee Involvement

SYNCHRONIZATION WITHIN A PLANT REQUIRES:

1. Cooperation

2. Contribution

3. Commitment

Elton Mayo’s “Hawthorne Experiments” at Western Electric

showed that:

Research has shown that workers involved in the decision-making

process are better motivated and productive

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10.4.7 Managing Human Resources: Employee Involvement

In Companies with Lean Operations:

• Workers are cross-trained to provide the company with flexible workers.

• Workers are in work teams in cells and may perform certain managerial duties such as material ordering, hiring, scheduling

• Great importance on recruiting and training of workers

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10.4.8 Supplier Management: Partnerships

Outsourcing: Provides a flexible alternative to

producing in-house

BUT- - - purchased materials account for a major portion

of product cost and are a major source of quality

problems!!

Lean approach:

– Choose only a few capable suppliers

– Cultivate cooperative, long-term relationships

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In Lean Operations:

– Suppliers are an extension of the plant

– Processing without inventories or quality inspection

– Synchronization requires defect-free material

– Frequent deliveries, small batches

– Supplier’s process be able to produce small quantities

on demand

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YOU ARE TREATING THE SUPPLIERS AS

PARTNERS

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10.4.1 – 10.4.8 SUMMARY

Lean Operations aim to sustain continuous flow processing in an economical manner:

1.Synchronize material and information flows

2.Increase flexibility

3.Reduce variability

4.Decrease processing costs

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Chapter 10

Lean Operations:

Process Synchronization and Improvement

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