CHAPTER EIGHT

Lean Systems

McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.
 Learning
Learning Objectives
Objectives

1. Explain how lean systems improve internal and

supply chain operations

2. Describe the culture changes, tools and

techniques needed for implementation

3. Apply lean to product design

4. Recognize strengths and limitations of lean

systems

8–2
 Lean
Lean Systems
Systems Defined
Defined
• Just-in-time (JIT): an older name for lean systems
• Toyota Production System (TPS): another name for
lean systems, specifically as implemented at Toyota
• Lean Systems Approach: a philosophy of
minimizing the resources needed for processes
1. Only the good/services that customers want
2. As quickly as customers want
3. With only features customers want
4. With perfect quality
5. In minimum possible lead time
6. Without waste
7. With occupational development of workers
8–3
Cost
Cost Structure
Structure Changes
Changes

Figure 8-3 8–4

 Principle
Principle 1:
1: Specify
Specify Value
Value
• Customers determine value
• Suppliers must provide products/services with
customer desired
–Outcomes
–Product features
–Functionality
–Capabilities

Anything that doesn’t add value is waste

8–5
 Principle
Principle 2:
2: Indentify
Indentify Value
Value Stream
Stream
Waste is a symptom of a problem,
and does not add value
1. Overproduction: processing more than needed
2. Waiting: resources waiting for work/materials
3. Transportation: units moved unnecessarily
4. Processing: excessive or unnecessary steps
5. Inventory: units waiting for processing or delivery
6. Motion: unnecessary or excessive resource activity
7. Defects: scrap, rework or correction

8–6
 Canon’s
Canon’s Nine
Nine Wastes
Wastes

• Work-in-process
• Defects
• Equipment
• Expense
• Indirect labor
• Planning
• Human resources
• Operations
• Startup

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 The
The Five
Five Why’s
Why’s
Ask “Why” five times to get to the source of waste and the
cause of problems
• Question: What was the problem?
• Answer: A customer complained because we couldn’t serve
her.
• Question: Why?
• Answer: Because we had run out of stock.
• Question: Why?
• Answer: Because our suppliers were late in delivering.
• Question: Why?
• Answer: Because our order was sent in late.
• Question: Why?
• Answer: Because the purchasing department got behind
with all its orders.
• Question: Why?
• Answer: Because it used new staff who were not properly
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Principle
Principle 33 :: Make
Make Value
Value Flow
Flow

Inventory hides problems

and slows flow

Figure 8-4 8–9

 Principle
Principle 4:
4: Customers
Customers Pull
Pull Value
Value
• Pull System: processes are activated by
actual, not forecasted demand
• Customer get
– what they want
– when they want
– where they want

8–10
 Push
Push vs.
vs. Pull
Pull
• Push System
– Material is pushed downstream and inventory builds
regardless of resource availability
– Strong emphasis on production first
– Stock points and additional inventory can overflow
with parts and raw materials

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 Traditional
Traditional Push
Push Production
Production
System
System

Big purchase • Huge lot sizes Big “pushes”

shipments w/ • Lots of inventory of finished
• “Push” material to
lower per goods to
unit shipping
next stage warehouse or
cost customers

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 Pull
Pull vs.
vs. Push
Push
• Pull System
– The customer starts the production process by pulling
production when it is needed
– Material is moved to workstations as it is needed
– Stock points are kept at a minimum
– Waste is MINIMIZED

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 Pull
Pull Production
Production System
System

Smaller Goods are

• Smaller lots “pulled” by
shipments w/
• Faster setups
• Less inventory demand out
minimal /
no inventory of the plant
holding cost

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 Necessary
Necessary Conditions
Conditions For
For Pull
Pull

1. Planning and Control Responsibility

2. Producing to Meet Demand
3. Reduce In-Process Inventories
4. Preventative Maintenance
5. Quality Assurance
6. Setup and lead times Must be Small
7. Linking of All Operations
8. Demands Must Be Uniform.
9. Develop Cooperative Attitudes and
Teamwork
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 Achieving
Achieving Pull
Pull Production
Production

• Pull System as Reorder Point (ROP) System

ROP D( LT )  SS
D = demand (consumption rate)
LT = lead time (elapsed time btwn order and
replenishment
LT P  C
P = production time
C = conveyance time (time to convey order to
upstream process, plus time to move materials to
the downstream operation
SS = safety stock (number of parts)

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 Achieving
Achieving Pull
Pull Production
Production
• Standard-Sized Containers
– If Q = the capacity of a standard container, then ROP
as expressed in terms of the number of containers is
K, or the maximum number of completely full
containers in a buffer
D( P  C )
K
Q
• Container Size
– Container should hold about 10% of the daily demand

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 Principle
Principle 5:
5: Pursue
Pursue Perfection
Perfection
• Lean System Culture: places a high value on
respect for people
– Acceptance: agree to goals, veterans teach new employees
– Flexibility: responsive pull systems
– Teams: cross-functional & cross-organizational
– Employee empowerment: employees work to attack waste
– Manage with data: objective over subjective
– Waste as a symptom: attack root cause
– Goals are met: set realistic, achievable goals
– Standardization: reduces variation, simplifies problem solving
– Process focus: process change for outcome change
8–18
 Lean
Lean Tools
Tools and
and Techniques
Techniques
• Total Productive Maintenance (TPM):
prevention of breakdowns
• Group Technology: bring together resources to
process a family of items
• Focused Factories: processes designed to
satisfy specific customer segment
• Takt Time: synchronizing output rate with
demand rate
• Kanban (Pull): output generated in response to
actual demand

8–19
 Kanban
Kanban
• Kanban card shows typical production quantity
• Derived from two-bin inventory system
• Maintains pull production system
• A production kanban authorized production
• A withdrawal kanban authorizes material
handling

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 Kanban
Kanban
• Kanban card shows typical production quantity
• Derived from two-bin inventory system
• Maintains pull production system
• A production kanban authorized production
• A withdrawal kanban authorizes material
handling

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 Kanban
Kanban
• Kanban means “signboard”
– Kanban is a signal used to communicate production
cues in a pull production system

Production Withdrawal
Kanban Kanban
A

B
Machine Center Assembly Line
Storage
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 Sample
Sample Kanban
Kanban Card
Card

Part No.: 6934

Description: Servo motor

Box capacity: 30
From: Box type: AF To:
Assembly Issue No.: 06 Station
3 D-7

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 Sample
Sample Kanban
Kanban Card
Card

Market Address Kanban Number Line-Side Address

<<Market_Address>><<Kanban_Number>> <<Line_Side_Address>>

Part Number Route

<<Part Number>> <<Route>>

Bar Code Area

Part Description Dock Code
<<Part Number>> <<Dock Code>>
Supplier Code Quantity Serial Number

<<Supplier Code >> <<Quantity>>

Comment:
<<Comment>>
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Single-Card
Single-Card Kanban
Kanban System
System
Receiving post
Kanban card for Storage
product 1 area
Kanban card for
product 2

Empty containers

Assembly line 1

O2

Fabrication
cell
O1 O3
Assembly line 2

Full containers
O2

Figure 16.3
Number of Containers
Westerville Auto Parts

d = 2000 units/day p = 0.02 day a = 0.10

C = 0.08 day q = 22 units

k = 10 containers

Example 16.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved.
 Lean
Lean Tools
Tools and
and Techniques
Techniques cont’d
cont’d

• Level, Mixed Model (heijunka): build smaller

quantities more frequently
• Set-up Reduction: shorter, easier change- over
leads to smaller batches
• Single Minute Exchange of Dies (SMED):
Process for reducing set-up
• Statistical Process Control (SPC): use of
statistical tools to monitor processes
• Visual Control: performance and problems
easily, immediately visible

8–27
 Lean
Lean Tools
Tools and
and Techniques
Techniques cont’d
cont’d

• Kaizen Events: short-term, cross-functional

focused, intense process improvement
• Gemba: go see it in person
• Poka-Yoke: redesign so mistakes are impossible
or immediately detectable
• 5-S: effective housekeeping (sort, straighten,
scrub, systematize, standardize)
• Simplification/Standardization: removing non-
value add steps, making processes exactly
repeatable
8–28
 Lean
Lean Tools
Tools and
and Techniques
Techniques cont’d
cont’d

• Process Analysis/Value Stream Mapping:

graphical analysis flow through a process

Figure 8-5
8–29
 Application
Application of
of Lean
Lean
• Reduction of inventory, lead time and buffers
– Purchase for lowest total cost (not price)
–Geographically close partners
–Fewer suppliers
–Focus on root cause
–Work with, not against, suppliers
• Lean Design: strive to meet the objectives of:
–Exactly meet customer needs
–Support corporate strategy
–Reduce opportunities of waste

8–30
 Application
Application of
of Lean
Lean

Reducing Product Design Waste:

– Complexity: few, simple processes
– Precision: capability to attain specifications
– Variability: attainable specifications
– Sensitivity: not easily damaged
– Immaturity: tested technology
– Danger: customers & environment are safe
– High skill: ease for workers and customer

8–31
 Introduction
Introduction to
to JIT
JIT

Goal: Highest Quality, Lowest Cost, Shortest Leadtime

Standard
Work
Flexible
Work JIT
Systems
Value Total
Stream SMED Productive
Mapping Maintenance
5S Heijunka

Jidoka

32
 Toyota’s
Toyota’s Lean
Lean Production
Production House
House

Goal: highest quality, lowest cost, shortest leadtime

Just in Time (JIT) –

Jidoka JIT continuous flow, pull
system, or kanban

Heijunka 5S Standardized Work Kaizen

Stability – Stable Manufacturing Processes, 100% Quality, Total Preventative Maintenance

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 JIT
JIT Principles
Principles

• Simplification
• Cleanliness and organization
• Visibility
• Cycle timing
• Agility
• Variation reduction
• Measurement

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 Elements
Elements of
of JIT
JIT

• Meet daily • Reveal non-value added

• Discuss work practices practices
• Reduce buffer stock • Involve the workforce:
• Modify machinery – consultation instead of
reduced setup confrontation
• Expose problems

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 Benefits
Benefits of
of JIT
JIT

• Better quality products • Less inventory

• Reduced scrap and • Higher productivity
rework • Most skilled workforce
• Reduced cycle times • Reduced space
• Lower setup times requirements
• Smoother production flow • Higher work participation
• Cost savings

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 Lean
Lean Systems
Systems Summary
Summary

1. Corporate wide approach to indentify, control

and eliminate waste, within firm and across
supply chain
2. Seven major objectives
3. Multiple lean tools that work synergistically
4. Should be expanded across firm functions and
across the supply chain
5. Not universally applicable

8–37