Lean Enterprise

The "Lean Enterprise" concept represents a newparadigm in the way businesses are managed inhighly competitive market environments. Thisconcept embodies a collective set of principles,tools and application methodologies that enablecompanies to remove waste from the system andachieve dramatic competitive advantages in speedto market, cost, quality, and delivery performance.• © 2001 V2R Consulting Group

Lean Enterprise

• Uses time and the “relentless pursuit of wasteelimination” as competitive leverages

• Seeks to make value flow from raw materialthrough consumption– Using least amount of resources (time, people, materials, etc.)

• Creates a culture of never-ending improvementat all organization levels

• © 2001 V2R Consulting Group

Toyota Management System

J i d o k a J I T

H i g h Q u a l i t y

M M

A M

G L

T L

P r o c e s s

M i n i m u m L e a d T i m e

M e t h o d

M a n M a c h M a t ’ l M i n . I n p u t

M a x . O u t p u t

S t a n d a r d i z e d W o r k

S e n i o r M a n a g e m e n t - * B u s i n e s s O b j e c t i v e s * C u l t i v a t e a s u p p o r t i v e , f a c i l i t a t i v e m a n a g e m e n t s t y l e * M o d e l p r o c e s s m a n a g e m e n t a p p r o a c h t o a c h i e v e n e e d e d r e s u l t s . ( S e t a n e x a m p l e f o r o t h e r s t o f o l l o w ) * R e c o g n i z e e a c h l e v e l ’ s r o l e a n d t h e n r e i n f o r c e i n p r a c t i c e .

P r o d . A d m i n .

M a n a g e m e n t d e v e l o p e d t o s u p p o r t o p e r a t i o n i m p r o v e m e n t

O p e r a t i o n s d e v e l o p m e n t g r o u p t o s u p p o r t s h o p f l o o r

* F o r m e r m a n a g e r s f r o m s h o p f l o o r * C o n s u l t a n t s f o r s e r i o u s o p e r a t i o n s p r o b l e m s

A r e a M g m t .

* S u p p o r t s s e n i o r m a n a g e r s g o a l s , m i s s i o n s , a n d d i r e c t i v e s * P r a c t i c e o p s m g m t . O n a d a i l y b a s i s * D e v e l o p y o u r s t a f f e v e r y d a y * ” K a i z a n e y e ” l o o k s f o r i m p r o v e m e n t e v e r y w h e r e

C o n d i t i o n s * M u s t b e o p e n t o s u p p o r t a n d c o l l a b o r a t i o n * R e c o g n i z e f u t u r e n e e d s

O p e r a t i o n s M a n a g e m e n t S h o p F l o o r

• O p e r a t i o n r a t e • I n d i c a t o r s P r o b l e m S o l v i n g N e e d • K a i z a n O p p o r t u n i t i e s • C o l l a b o r a t i o n • O D G O p e r a t o r s • P r o j e c t A c t i v i t i e s

• S e t T a r g e t s • G r a s p S i t u a t i o n • S e t S t r a t e g i e s • P D C A

I m p r o v e d O p e r a t i o n s

* S i m u l a t i o n s * E d u c a t i o n * ” L i v e ” I m p r o v e m e n t p r o j e c t s * D e v e l o p s t a f f

E n a b l e r s * C a p a b l e s t a f f * O D G P r o j . E x p e r . * R e f e r e n c e M a t ’ l . * W i l l i n g / o p e n

C o l l a b o r a t i o n

To paraphrase Tom Peters’ “Turn Manufacturing into a Marketing Weapon,” a chapter in Thriving on Chaos

The Goal

Dr. C. W. Richards 1/12/99

Manufacturing as a Competitive Weapon

• Shorter throughput (order to delivery)

• Lower costs

• Higher quality

• More flexibilityDr. C. W. Richards 1/12/99

Toyota Motor Company, Toyota Production System, p. 2

The Strategy

Dr. C. W. Richards 1/12/99

The Plan

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Cost reduction is the goal

Manufacturing as a

Competitive Weapon

There are two ways to increase efficiency: 1) increase production quantity or 2) reduce the number of workers—Taiichi Ohno.

Over time, lower costs, higher quality, and faster development & production times will increase sales.

•Reduce people at all levels in the organization

“Cost Reduction Is the Goal”“Cost Reduction Is the Goal”

In the short term, you may

need to

Dr. C. W. Richards 1/12/99

A Lean Paradox(Just One of Many)

•Resolve how to maintain mutual trust while reducing people

Reducing costs means reducing people, but if you eliminate people as a result of improvement, you will get no more improvement.

Reducing costs means reducing people, but if you eliminate people as a result of improvement, you will get no more improvement.

The Toyota Production System clearly reveals excess manpower…

Management’s responsibility is to identify excess manpower and utilize it effectively.

Hiring people when business is good and production high just to lay them off is a bad practice.

On the other hand, eliminating wasteful and meaningless jobs enhances the value of work for workers.

Taiichi Ohno.Dr. C. W. Richards 1/12/99

Implementing the TPS

Develop A Lean Strategy

•Create a sense of urgency

•Throughout the enterprise, sell lean/TPS as the solution

•Hire a sensei & retain design talent

•Establish targets

•Resolve how to maintain mutual trust while reducing people

•Give preliminary thought to supplier issues

•Consider the competitive environment

Manufacturing as a

Competitive Weapon

Design The Manufacturing

System

•Identify the customer base and product range

•Identify takt time & its range

•Apply axiomatic design to create the basic factory system

•Eliminate non-essential infrastructure and layers above the factory floor

Establish Flow Within Cells

Establish Flow Establish Flow Within CellsWithin Cells

•Form cells based on takt time

•Define standard work content for each operation to be < takt time

•Separate worker from machine (jidoka)

•Develop quick setups & standard WIP (SMED)

•Standardize operations

•Form cells based on takt time

•Define standard work content for each operation to be < takt time

•Separate worker from machine (jidoka)

•Develop quick setups & standard WIP (SMED)

•Standardize operations

Establish Pull Between CellsEstablish Pull Establish Pull Between CellsBetween Cells

•Design an information system to produce only the products required by the downstream cells

•Incorporate takt time to drive flows

•Institute leveled production (heijunka)

•Use visual control systems

•Implement total productive maintenance

Strive For Perfection

•Institute kaizen& institutionalize 5Ss throughout organization

•Transfer ownership of all processes to work force

•Push lean down to suppliers

•Integrate product development

•Reduce people at all levels in the organization

All activities must support the goal of “shortening the time it takes to convert customer orders into deliveries.” Toyota Motor Corporation, 1992

All activities must support the goal of “shortening the time it takes to convert customer orders into deliveries.” Toyota Motor Corporation, 1992

••Apply axiomatic Apply axiomatic design to create design to create the basic factory the basic factory systemsystem

Dr. C. W. Richards 1/12/99

LEAN PRINCIPLES

• VALUE

• VALUE STREAM

• FLOW

• PULL

• PERFECTION

- “LEAN THINKING”

by JAMES P. WOMACK

and DANIEL T. JONES

LEAN PRINCIPLESVALUE

VALUE IS DEFINED BY THE CUSTOMER AND EXPRESSED IN TERMS OF A SPECIFIC PRODUCT WHICH MEETS THE CUSTOMER’SNEEDS AT A SPECIFIC PRICE AT A SPECIFIC TIME.

LEAN PRINCIPLESVALUE STREAM

THE VALUE STREAM IS THE SET OF ALL THE SPECIFIC ACTIONS REQUIRED TO BRING A SPECIFIC PRODUCT THROUGH THE THREE CRITICAL MANAGEMENTTASKS OF ANY BUSINESS: PROBLEM-SOLVING (RUNNING FROM CONCEPT TO PRODUCTION LAUNCH), INFORMATION MANAGEMENT (FROM ORDER-TAKING TO DELIVERY), AND PHYSICAL TRANSFORMATION (FROM RAW MATERIALS TO FINISHED PRODUCTS IN THE HANDS OF THE CUSTOMER).

VALUE STREAM ANALYSIS

IDENTIFY THREE TYPES OF ACTIONS:

1. THOSE THAT CREATE VALUE

2. THOSE THAT CREATE NO VALUE

BUT ARE UNAVOIDABLE GIVEN

CURRENT TECHNOLOGY3. THOSE THAT CREATE NO VALUE

AND ARE IMMEDIATELY

AVOIDABLE

LEAN PRINCIPLESFLOW

MAKE THE VALUE CREATING STEPS MOVE CONTINUOUSLY.

LEAN PRINCIPLESPULL

LET THE CUSTOMER PULL THE PRODUCT AS NEEDED.

LEAN PRINCIPLESPERFECTION

CONTINUOUSLY SEEK TO IMPROVE VALUE, MAKE FLOW MORE CONTINUOUS, AND THE ABILITY OF THE CUSTOMER TO PULL FASTER.

LEAN PRINICPLESKEY ACTIONS

1. TIME BASED COMPETITION2. MUDA (WASTE) ELIMINATION

MUDA - OHNO’S SEVEN WASTES PLUS

1. OVERPRODUCTION2. WAITING3. TRANSPORTING4. INAPPROPRIATE PROCESSING5. UNNECESSARY INVENTORY6. UNNECESSARY MOTIONS7. DEFECTS8. UNTAPPED HUMAN POTENTIAL9. INAPPROPRIATE SYSTEMS10. ENERGY AND WATER11. POLLUTION

ORGANIZATIONAL STRATEGIES

1. AGILITY2. VIRTUAL MANUFACTURING

DESIGN STRATEGIES

1. MASS CUSTOMIZATION2. DESIGN FOR PRODUCTION (DFP)

AND DESIGN FOR ASSEMBLY (DFA)3. QUALITY FUNCTION

DEPLOYMENT (QFD)4. TRIZ (CREATIVE PROBLEM

SOLVING)5. ROBUST DESIGN

IMPROVEMENT

1. 5S – SORT, STRAIGHTEN, SCRUB, STANDARDIZE, SELF-DISCIPLINE

2. KAIZEN3. KAIKAKU (KAIZEN BLITZ)4. ROOT CAUSE ANALYSIS5. TIME CHARTING (PROCESS FLOW

CHARTING)

PRODUCTION

1. KANBAN2. SET-UP REDUCTION3. MIXED MODEL PRODUCTION4. DEMAND SMOOTHING5. GROUP TECHNOLOGY6. BOTTLENECK REDUCTION

(THEORY OF CONSTRAINTS)

QUALITY

1. SHORT RUN STATISTICAL QUALITY CONTROL

2. POKAYOKE (FAILSAFING)3. ZERO DEFECTS4. SIX SIGMA

A TPS Glossary• 5Ss—five Japanese words, all beginning with an “s” sound, which

establish the cultural environment for continuous improvement• Cycle time—for a machine or cell, time from completion of one item to

completion of the next. Cycle times must harmonize with takt time(which defines balanced production). Often confused with throughput time, which is the length of time a part is in the cell (also, “factory throughput time,” from the start of production to delivery).

• Heijunka—(fm. Japanese*, “smoothing, making level”) production leveling. Involves producing in sequences like abacababac rather thanaaaaabbbcc (where a, b, and c are models or products). Solves problems inherent in the TPS that can cause queuing and line stoppages.

• Jidoka—(fm. Japanese, “automation with human characteristics”) separation of worker and machine. Implies that machines will stop if an error occurs. Alternative is “people watching machines work.” Allows manning of cell to vary with demand. Encourages teamwork and facilitates kaizen. *Many thanks to Lennart Kampman of the Copenhagen Business School for his

translations and interpretations.

Dr. C. W. Richards 1/12/99

A TPS Glossary, II• Just-in-time—“In a flow process, the right parts needed in assembly

reach the assembly line at the time they are needed and only in the amount needed.” (Ohno, p. 4). As Ohno explains, this does not imply that the parts must arrive exactly when needed. Instead, a pull (kanban) system is used. Toyota explains that the goal of JIT is “to translate each order into a delivery of a finished, quality vehicle as quickly and efficiently as possible.”

• Kaizen—(fm. Japanese “kai,” change, modify, improve and “zen,” goodness, virtue - not the zen in Zen, which comes from the original Chinese, “Chan”) continuous improvement. Activities carried out by the members of a cell or other unit in order to improve production within that unit. May involve work process or machines. Ultimategoal is to shorten throughput times and increase the ratio of processing (“value added”) time to total time, leading to an eventual reduction in manpower. Other improvement efforts are kaikaku, or radical change, carried out under the direction of sensei.

Dr. C. W. Richards 1/12/99

A TPS Glossary, III• Kanban—(fm. Japanese for “signboard”) Primary means for

controlling production in the TPS. Kanban are usually cards that the downstream cells take to the upstream cells in order to withdraw (pull) parts. The upstream cell then uses the kanban as shop orders toreplenish just the parts taken.

• Lean production—producing with a shorter delivery span, at lower cost, with greater quality, and with more flexibility (variety on the line; quicker introduction of new models)

• Sensei—teacher, commonly of the martial arts; used to denote an expert with a track record of implementing the TPS

• SMED—single minute exchange of dies. Very rapid set-ups so that heijunka sequences can be produced economically

Dr. C. W. Richards 1/12/99

A TPS Glossary, IV• Takt time—(fm. the German for meter or measure, as in

music) pace of customer demand. Time to produce one item sold, e.g., a car every 2 minutes or an aircraft every 8 days. Cycle times of all components of the factory must harmonize with takt time (axiomatic design ensures this), or shortages & build up of inventory will occur.

• Toyota Production System (TPS)—only known example of a lean production system. Pillars of the TPS are just-in-time (pull) and jidoka. These rest on leveled (heijunka) & balanced production, and lead time reduction, which depends on reducing set-up times to under 10 minutes (ideally less than 1). The basic form evolved at Toyota from 1948 to 1973, largely under the guidance of Taiichi Ohno.

Dr. C. W. Richards 1/12/99

A TPS Glossary, V• Total Productive Maintenance—ensuring that machines

are 100% available during the production period. Generally requires operating machines at well under full utilization to allow time for maintenance & modification

• Value added—a term used by Toyota only in connection with kaizen, where it is generally synonymous with “processing” (see Ohno, p. 57)

• Visual control—management by sight. The TPS arranges the factory so that abnormalities stand out and so can (and will) be eliminated.

More info? Most of these terms are well defined and illustrated in Lean Thinking, by James P. Womack and Daniel T. Jones (New York: Simon & Schuster, 1996)

Dr. C. W. Richards 1/12/99