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Modern Manufacturing Management

• JIT, Kanban, Toyota Production System (TPS)

• LEAN Manufacturing

• Theory of Constraints (TOC), Drum Buffer Rope (DBR)

• Quick Response Manufacturing (QRM)

• Agility (the ability of a firm to sense and respond to business opportunities in order to stay innovative and competitive in a turbulent and rapidly changing environment. )

APICS Definition of JIT

“A philosophy of manufacturing based on planned elimination of waste and continuous improvement of productivity ……”

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APICS Definition of JIT

“The primary elements of Just-in-Time are:– to have only the required inventory when

needed;

– to improve quality to zero defects;

– to reduce lead times by reducing setup times, queue lengths, and lot sizes;

– to incrementally revise the operations themselves;

– and to accomplish these things at minimum cost”.

JIT Synonyms

• IBM - Continuous Flow Manufacturing

• HP - Stockless Production

- Repetitive Manufacturing System

• GE - Management by Sight

• Motorola - Short Cycle Manufacturing

• Japanese - The Toyota System

• Boeing - Lean Manufacturing

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APICS Definition of Lean Manufacturing

“A philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. It involves:– … identifying and eliminating non-value-adding activities,

– … employing teams of multi-skilled workers,

– … using highly flexible, automated machines”

• American Production and Inventory Control Society (APICS) is an organization for professionals working in the field of Operations Management

Just in Time Manufacturing

ผลิตตามความตองการของลูกคา:

• ส่ิงท่ีตองการ• เวลาท่ีตองการ• ปริมาณท่ีตองการ

จุดสําคัญ - การผลิตอยางตอเนื่อง-ระบบดึง

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JIT Element - Pull System

Following processes withdraw what they need when they need it.Preceding processes replenish what is taken away.

UpstreamProcesse

s

Downstream

ProcessesNew

Product

NeededProduct

Pull

Withdrawal KanbanProduction Kanban

Store

ABCDEFGHIJKLMNOPQ

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Uncovering Production Problems

QualityQualityProblemsProblems

MaterialMaterialShortagesShortages

MachineMachineBreakdownsBreakdowns

WorkloadWorkloadImbalancesImbalances

WorkerWorkerAbsenteeismAbsenteeism

OutOut--ofof--SpecSpecMaterialsMaterials

QualityQualityProblemsProblems

InIn--ProcessProcessInventoryInventory

We must lower the water level!We must lower the water level! Visible ProductionVisible ProductionProblems are Only Problems are Only 5% of the Total!5% of the Total!

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Ideas for Cutting lot sizes

Ideas for improving JIT

delivery performance

Ideas for controlling

defect

Deliberate withdrawal of buffer inventories/workers

Productivity Improvement– Smaller lot size inventories

– Smaller buffer inventories

– Less scrap

– Less direct labor wasted on rework

– Less indirect cost of inventories

– Less space for inventories

– Less equipment to handle inventories

– Less inventory accounting

– Less physical inventory control effort

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Elimination of unnecessaries, especially inventory

Cost reduction

Increase of profit(P/L)

Increase of net worthTo total capital (B/S)

Increase of capital turnover ratio

Continuous flow of production

Just-in-time(produce necessary unitsIn necessary quantities

At necessary time)

Autonomation(autonomous

defects control)

Production methods Information systemControl by teamwork

QC

SmoothingOf

production

SmallLot size

ShortSetup time

Design ofprocesses

Multi-Functioned

worker

Standardizationof jobs

KanbanYo-i-don

System andAndon

AutomaticStop deviceBakayoke

Job finishingWithin

Cycle time

(Output)

The Toyota Production System

Changes Required for JIT

• JIT requires certain changes to the factory and the way it is managed:– Stabilize production schedules

– Make the factories more focused

– Increase work center capacities

– Improve product quality

– Cross-train workers

– Reduce equipment breakdowns

– Develop long-term supplier relations

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An Introductionto

Lean Manufacturing

เร็วกวาแข็งแกรงกวา

ปราดเปรียวกวา

• Definition and Introduction

• Lean Strategy

• Lean Principles

• Elements of Lean manufacturing

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Definition of “Lean”

• ลดเวลาในการทํางาน

• ลดขอบกพรองของผลงาน

• ลดเวลาสําหรับงานดานวิศวกรรม

• ใชพื้นท่ีนอยลง

• งานระหวางทํา(Work-in-process)ลดลง

Source: The Machine that Changed the WorldWomack, Jones, Roos 1990

ความสูญเปลา

“ส่ิงใดก็ตามท่ีเพิ่มตนทุนลงในผลิตภัณฑ โดยท่ีไมไดเพิ่มมูลคา”

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7 Forms of Waste

Typesof

Waste

CORRECTION

WAITING

PROCESSING

MOTION

INVENTORYCONVEYANCE

OVERPRODUCTION

Repair orRework Any wasted motion

to pick up parts or stack parts. Also wasted walking

Wasted effort to transportmaterials, parts, or finished goods into or out of storage, or between processes.

Producing morethan is needed before it is needed

Maintaining excessinventory of raw mat’ls,parts in process, orfinished goods.

Doing more work thanis necessary

Any non-work timewaiting for tools, supplies, parts, etc..

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The 5 Interdependent Lean Principles

After Womack and Jones,Lean Thinking, BanishWaste and Create Wealth in Your Corporation, Simon andShuster, 1996

1. Value Definition

• นิยามถึงความตองการของลูกคา

• ใชเปนตัววัดสมรรถนะของการดําเนินการ

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2. Value Stream Analysis

• จัดทําผังของกระบวนการเพ่ิมมูลคา(กระบวนการผลิต)

• ประเมินจุดท่ีเปนการเพิ่มมูลคาในแตละข้ันตอน

• กําจัดหรือลดกิจกรรมท่ีไมเปนการเพิ่มมูลคา(ขจัดความสูญเปลา)

A Current-State

13

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3. Flow

• จัดใหมีการไหลอยางตอเนื่องในกระบวนการเพิ่มมูลคา

• ผลิตสินคาแตละชนิดในแตละวันตามสัดสวนของปริมาณความตองการ

4. JIT/Pull

• ใชรูปแบบของการดึงงานผานกระบวนการเพ่ิมมูลคา– การผลิตเกิดโดยการอนุมัติจากข้ันตอนตัดไป

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5. Perfection

• กําหนดภาพท่ีชัดเจนของสภาพความสมบูรณแบบ– การผลิตในอุดมคติ– สิ่งที่ลูกคาตองการ

• ทําใหความสูญเปลาปรากฎใหเห็นอยางชัดเจน

• การแกปญหา

Quality functiondeployment

Target Costing

Value Engineering

Design for assembly / manufacturability

The Forms of Waste

Process mappingand analysis

Structural designfor flow

Group technology

Facilities layout

Work balance

Stability

Reliability

Quality

Total ProductiveMaintenance

Standardized WorkMistake-proofing

Lean inspectionstrategies

FlexibilityCapacityProduct Mix

Visibility

Visual ControlProductionstop policy

Machine idlepolicy

Right-sizedmachinery

Separate manfrom machine

Teamwork

Cross-training

Autonomation

Parameter control

Flexiblemachinery

Rapidsetup

DemandAnalysis

and Control

Takt time

Leveled pull

JIT ProductionControl

SupplyJIT

PropagationThrough

Supply Chain

JITLogistics

KaizenManager/teacher

Workeras empowered

Intellectual

Perfectionthe only

benchmark

Visibilityand

Standards

ProblemPrioritizattion

Team D.M.

ProblemSolvingMethods

One pieceflow ideal

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• LEAN is not tools!!””• LEAN focuses on Waste Prevention• LEAN focuses on Value• LEAN focuses on System• LEAN focuses on Process• LEAN focuses on Revolution and Evolution• LEAN focuses on Distributed Decisions• LEAN focuses on Service• LEAN focuses on Built to Order• LEAN focuses on Green• LEAN is only beginning• LEAN is Core

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Seven design practices of lean processes

1. Linked processes are placed near one another – move from a functional layout to a product layout.

2. Standardized procedures –documentation, quality checks, etc.

3. Efficient Process, no loop-backs –

Seven Design Principles (continued from 3. efficient process)

4. Set a common tempo – “takt” time.

5. Balance loads – balance work evenly among employees.

6. Segregate complexity – complex & long duration vs. simple & quick jobs.

7. Post performance results.

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Synchronous Manufacturing and Theory of Constraints

• Goldratt’s Rules

• Goldratt’s Goal of the Firm

• Performance Measurement

• Capacity and Flow issues

• Synchronous Manufacturing

OBJECTIVES

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Goldratt’s Rules of Production Scheduling

• Do not balance capacity balance the flow• The level utilization of a nonbottleneck

resource is not determined by its own potential but by some other constraint in the system

• Utilization and activation of a resource are not the same

• An hour lost at a bottleneck is an hour lost for the entire system

• An hour saved at a nonbottleneck is a mirage

Goldratt’s Rules of Production Scheduling (Continued)

• Bottlenecks govern both throughput and inventory in the system

• Transfer batch may not and many times should not be equal to the process batch

• A process batch should be variable both along its route and in time

• Priorities can be set only by examining the system’s constraints and lead time is a derivative of the schedule

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Goldratt’s Theory of Constraints (TOC)

• Identify the system constraints• Decide how to exploit the system

constraints• Subordinate everything else to that

decision• Elevate the system constraints• If, in the previous steps, the

constraints have been broken, go back to Step 1, but do not let inertia become the system constraint

Goldratt’s Goal of the Firm

The goal of a firm is to make money

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Performance Measurement:Financial

• Net profit– an absolute measurement in

dollars

• Return on investment– a relative measure based on

investment

• Cash flow– a survival measurement

Performance Measurement:Operational

• 1. Throughput– the rate at which money is generated by

the system through sales

• 2. Inventory– all the money that the system has invested

in purchasing things it intends to sell

• 3. Operating expenses– all the money that the system spends to

turn inventory into throughput

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Productivity

• Does not guarantee profitability– Has throughput increased?– Has inventory decreased?– Have operational expenses

decreased?

Unbalanced Capacity

• Balancing assembly lines– The goal was a constant cycle time

across all stations

• Synchronous manufacturing views constant workstation capacity as a bad decision

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Capacity Related Terminology

• Capacity is the available time for production

• Bottleneck is what happens if capacity is less than demand placed on resource

• Nonbottleneck is what happens when capacity is greater than demand placed on resource

• Capacity-constrained resource (CCR) is a resource where the capacity is close to demand placed on the resource

Time Components of Production Cycle

• Setup time is the time that a part spends waiting for a resource to be set up to work on this same part

• Process time is the time that the part is being processed

• Queue time is the time that a part waits for a resource while the resource is busy with something else

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Time Components of Production Cycle (Continued)

• Wait time is the time that a part waits not for a resource but for another part so that they can be assembled together

• Idle time is the unused time that represents the cycle time less the sum of the setup time, processing time, queue time, and wait time

Drum, Buffer, Rope

A B C D E F

Bottleneck (Drum)

Inventorybuffer

(time buffer)Communication

(rope)

Market

Exhibit 18.9

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Quality Implications

• More tolerant than JIT systems– Excess capacity throughout system

• Except for the bottleneck– Quality control needed before

bottleneck

Comparing Synchronous Manufacturing to MRP

• MRP uses backward scheduling

• Synchronous manufacturing uses forward scheduling

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Comparing Synchronous Manufacturing to JIT

• JIT is limited to repetitive manufacturing

• JIT requires a stable production level

• JIT does not allow very much flexibility in the products produced

Comparing Synchronous Manufacturing to JIT (Continued)

• JIT still requires work in process when used with kanban so that there is “something to pull”

• Vendors need to be located nearby because the system depends on smaller, more frequent deliveries

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Business Process Analysis

ภาพรวมของกระบวนการผลิต:What is a Process?

Inputs OutputsGoods

Services

Labor & Capital

Informationstructure

Network ofActivities and Buffers

Flow units(customers, data, material, cash, etc.)

Resources

ProcessManagement

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กระบวนการท่ีดีPerformance: Financial Measures

• Absolute measures: – revenues, costs, operating income, net

income

– Net Present Value (NPV) =

• Relative measures:– ROI, ROE

– ROA =

• Survival measure:– cash flow

Assets Total Average

TaxEBIT

T

tt

t

r

C

0 1

องคกรอยูรอดไดดวยการมีผลติภัณฑท่ีด ีซ่ึงจําเปนท่ีจะตองมีกระบวนการผลิตท่ีมคีวามเหนอืกวา

QualityQuality

FlexibilityVariety

Flow timeResponse time

CostCost

ความสามารถของกระบวนการ (Internal)

คุณลักษณะของผลิตภัณฑ(External)

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• Flow time T

• Throughput rate R

• Inventory I

• Quality Q

• Process Cost

การกําหนดและพิจารณาตัวชี้วดัผลการดาํเนินงาน

ความสัมพันธระหวางตัวช้ีวัด(flow time T, throughput R & inventory I) with Little’s Law

• Inventory = Throughput x Flow Time

I = R x T

• Inventory Turnover = Throughput /Inventory

= 1/ T

Inventory I[units]

Flow rate/Throughput R[units/hr]... ...... ......

Flow Time T [hrs]

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Little’s Law applied to different process flow examples

Customer Flow:รานอาหารแหงหนึง่โดยเฉลี่ยแลวจะบริการลูกคาได 1500 คนในชวงเวลา 15 ชั่วโมงของการเปดทําการในแตละวัน และในเวลาใดเวลาหน่ึงจะมีลูกคาในราน 75 คน

ดังนั้น R = 1500 คน/15 ชั่วโมง หรือ 100 คน/ชั่วโมง

I = 75เวลาท่ีลูกคาแตละคนใชเวลาอยูในราน T = I/R = 75/100 = 0.75 ชั่วโมง

Job Flow:สํานักงานบริษัทประกันแหงหนึ่ง ดําเนินการกับใบเคลม 10000 รายการตอป ระยะเวลาโดยเฉลีย่ในการดําเนินการกับแตละรายการคือ 3 สัปดาห กําหนดใหทํางานปละ 50 สัปดาห

R = 10000T = 3 สัปดาห =3 / 50 ป

ดังนั้นในขณะใดขณะหน่ึงจะมีเอกสารคางอยู I = R x T = 10000*3/50=600 รายการ

Little’s Law applied to different process flow examples

Material Flow:รานอาหารจานดวนแหงหนึง่ บริการอาหารใหกับลูกคาไดเปนจํานวน 5000 กิโลกรัมตอสัปดาหโดยเฉลี่ย โดยทั่วไปจะมีพัสดุคงเหลือ 2500 กิโลกรัม

ดังนั้น R = 5000

I = 2500และ T = I/R = 0.5 สัปดาห

ซ่ึงหมายความวา โดยเฉลี่ยแลววัตถุดิบจะใชเวลาประมาณคร่ึงสัปดาหเพื่อแปรสภาพเปนอาหาร

Cash Flow:โรงงานผลิตเหลก็แหงหนึง่ดําเนินการแปรสภาพวัตถุดิบท่ีมีมูลคา $400 ลานในแตละป โดยมีตนทุนในการแปรสภาพ(ตนทุนการผลิต)เทากับ $200 ลาน ปริมาณพัสดุคงคางโดยเฉล่ียมีมูลคา $100ลาน โดยมูลคาของพัสดุคงคางไดรวมเอามูลคาวัตถุดิบและตนทุนการแปรสภาพไวดวยกันแลว

R = $600I = $100T = I / R = 100/600 = 1/6 ป= 2เดือน

โดยเฉลี่ยแลวทุกๆหนึง่หนวยของเงินจะใชเวลาอยูในโรงงานนาน 2 เดือน