chapter 12 manufacturing

THE LEAN START-UP COMPANY

The approach calls for creating a Minimum Viable Product (MVP) that is pushed to the market quickly and then updated based on customer feedback. Learning the size of the market for a start-up can be time consuming and difficult. The MVP might not be perfect, but the low cost and quick customer feedback offered by the lean approach is ideal for your start-up.

This approach will not work when the cost of failure is high, but for low-cost consumer products that can be inexpensively returned by

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unhappy customers, the lean approach is ideal.

lean production.

The most significant operations and supply management approach of the past 50 years is lean production. In the context of supply chains, lean production refers to a focus on eliminating as much waste as possible. Moves that are not needed, unnecessary processing steps, and excess inventory in the supply chain are targets for improvement during the leaning process. Some consultants in industry have coined the phrase value chain to refer to the concept that each step in the supply chain processes that deliver products and services to customers should create value. If a step does not create value, it should be removed from the process. Lean production may be one of the best tools for implementing green strategies in manufacturing and service processes.

Customer value,

in the context of lean production, is defined as something for which the customer is willing to pay. Value-adding activities transform materials and information

Waste,

therefore, is defined as anything that does not add value from the customer's perspective. Examples of process wastes are defective products, overproduction, inventories, excess motion, processing steps, transportation, and waiting.

Waste elimination

is a reasonable goal in service operations, just as it is in manufacturing operations, but there is a difference in the sources of variation that cause the waste. Manufacturing operations, compared to service operations, are far more controllable. Uncertainty does result from material and labor inputs, but those can be anticipated and controlled to a great extent. The workers, the design of the product, and the production tools are all under the control of operations to a very large extent. If sales and marketing are part of the process, the demand uncertainty also can be reduced.

Lean production

Integrated activities designed to achieve high-volume, high-quality production using minimal inventories of raw materials, work-in-process, and finished goods.

contrast, services operate in a sea of uncertainty and variability that are much harder to control. Let's look at these sources.

• Uncertainty in task times. The nature of service products is that the execution of each service delivery has some uniqueness. This variability typically leads to a negative exponential distribution of task times. Simply put, this means that while most task executions will fall within some tight range, some executions will take a long time. Consider airplane boarding. There's uncertainty here, yet Southwest found a way to reduce the uncertainty and achieve faster turnaround times at airports, increasing effective capacity.

• Uncertainty in demand. While service demand can be forecasted, no forecast is 100 percent perfect. Manufacturers can buffer this forecast uncertainty with some finished goods inventory. The simultaneous production and consumption in services precludes this tactic. The capacity must be available when the demand arises. Think about the number of available tables needed in a restaurant for peak dining hours.

• Customers' production roles. Uncertainties in both task time and demand have much to do with customer involvement in service operations. Because customers typically have some role to play in the production of a service, variability is introduced based on how well the service provider performs their role. Customers usually have to provide information to service agents to initiate service, and they typically have tangible tasks to perform.
  Lean production and Six Sigma work best in repeatable, standardized operations.

• Uncertainty in task times.

• The nature of service products is that the execution of each service delivery has some uniqueness. This variability typically leads to a negative exponential distribution of task times. Simply put, this means that while most task executions will fall within some tight range, some executions will take a long time. Consider airplane boarding. There's uncertainty here, yet Southwest found a way to reduce the uncertainty and achieve faster turnaround times at airports, increasing effective capacity.

• Uncertainty in demand.

• While service demand can be forecasted, no forecast is 100 percent perfect. Manufacturers can buffer this forecast uncertainty with some finished goods inventory. The simultaneous production and consumption in services precludes this tactic. The capacity must be available when the demand arises. Think about the number of available tables needed in a restaurant for peak dining hours.

• 

• Customers' production roles.

• Uncertainties in both task time and demand have much to do with customer involvement in service operations. Because customers typically have some role to play in the production of a service, variability is introduced based on how well the service provider performs their role. Customers usually have to provide information to service agents to initiate service, and they typically have tangible tasks to perform.
  Lean production and Six Sigma work best in repeatable, standardized operations.

Lean production is an

integrated set of activities designed to achieve production using minimal inventories of raw materials, work-in-process, and finished goods.

Parts arrive at the next workstation just-in-time and are completed and move through the process quickly. Lean is also based on the logic that nothing will be produced until it is needed. L Exhibit 12.1 illustrates the process. Production need is created by actual demand for the product. When an item is sold, in theory, the market pulls a replacement from the last position in the system-final assembly in this case. This triggers an order to the factory production line, where a worker then pulls another unit from an upstream station in the flow to replace the unit taken. This upstream station then pulls from the next station further upstream and so on back to the release of raw materials. To enable this pull process to work smoothly, lean production demands high levels of quality at each stage of the process, strong vendor relations, and a fairly predictable demand for the end product.

The Toyota Production System

In this section, we develop the philosophy and elements of lean production developed in Japan and embodied in the Toyota Production System-the benchmark for lean manufacturing. The Toyota Production System was developed to improve quality and productivity and is predicated upon two philosophies that are central to the Japanese culture: elimination of waste and respect for people.

Elimination of Waste

Waste is anything that is not absolutely essential to production. An expanded lean definition identifies seven prominent types of waste to be eliminated from the supply chain:

(1) waste from overproduction,

(2)

waste of waiting time,

(3)

transportation waste,

(4)

inventory waste,

(5)

processing waste,

(6)

waste of motion, and

(7)

waste from product defects.

Respect for people

is a key to the Toyota Production System. They have traditionally strived to ensure lifetime employment for permanent positions and to maintain level payrolls even when business conditions deteriorate. Permanent workers (about one-third of the total workforce of Japan) have job security and tend to be more flexible, remain with a company, and do all they can to help a firm achieve its goals. (Global recessions and the recent pandemic have caused many Japanese companies to move away from this ideal.)

The value stream

consists of the value-adding and non-value-adding activities required to design, order, and provide a product or service from concept to launch, order to delivery, and raw materials to customers. This all-inclusive view of the system is a significant expansion of the scope of application of the lean concepts pioneered by Toyota.

waste reduction

When applied to supply chains, waste reduction relates to the optimization of the value-adding activities and the elimination of non-value-adding activities that are part of the value stream. In the next section, the value stream analysis tool is discussed.

In the following paragraphs, we discuss the different components of a supply chain and what would be expected using a lean focus:

Lean Suppliers Lean suppliers are able to respond to changes. Their prices are generally lower due to the efficiency of lean processes, and their quality has improved to the point that incoming inspection at the next link is not needed. Lean suppliers deliver on time, and their culture is one of continuous improvement. To develop lean suppliers, organizations should include them in their value stream planning. This will help them fix problems and share savings.

Lean Procurement A key to lean procurement is automation. The term e-procurement relates to automatic transaction, sourcing, bidding and auctions using web-based applications, and the use of software that removes human interaction and integrates with the financial reporting of the firm. The key to lean procurement is visibility. Suppliers must be able to "see" into the customers' operations, and customers must be able to "see" into their suppliers' operations. The overlap of these processes needs to be optimized to maximize value from the end-customer perspective.

Lean Manufacturing Lean manufacturing systems produce what the customers want, in the quantity they want, when they want it, and with minimum resources.

Applying lean concepts in manufacturing typically presents the greatest opportunities for cost reduction and quality improvement.

Lean Warehousing This relates to eliminating non-value-added steps and waste in product storage processes. Typical functions include the following: receiving material; putting-away/storing; replenishing inventory; picking inventory; packing for shipment; and shipping. Waste can be found in many warehousing processes including shipping defects, which creates returns; overproduction or overshipment of products; excess inventory, which requires extra space and reduces warehouse efficiency; excess motion and handling; waiting for parts; and inadequate information systems.

Lean Suppliers

Lean suppliers are able to respond to changes. Their prices are generally lower due to the efficiency of lean processes, and their quality has improved to the point that incoming inspection at the next link is not needed. Lean suppliers deliver on time, and their culture is one of continuous improvement. To develop lean suppliers, organizations should include them in their value stream planning. This will help them fix problems and share savings.

Lean Procurement

A key to lean procurement is automation. The term e-procurement relates to automatic transaction, sourcing, bidding and auctions using web-based applications, and the use of software that removes human interaction and integrates with the financial reporting of the firm. The key to lean procurement is visibility. Suppliers must be able to "see" into the customers' operations, and customers must be able to "see" into their suppliers' operations. The overlap of these processes needs to be optimized to maximize value from the end-customer perspective.

Lean Manufacturing

systems produce what the customers want, in the quantity they want, when they want it, and with minimum resources.

Applying lean concepts in manufacturing typically presents the greatest opportunities for cost reduction and quality improvement.

Lean Warehousing

This relates to eliminating non-value-added steps and waste in product storage processes. Typical functions include the following: receiving material; putting-away/storing; replenishing inventory; picking inventory; packing for shipment; and shipping. Waste can be found in many warehousing processes including shipping defects, which creates returns; overproduction or overshipment of products; excess inventory, which requires extra space and reduces warehouse efficiency; excess motion and handling; waiting for parts; and inadequate information systems.

Lean Logistics

Lean concepts can be applied to the functions associated with the movement of material through the system. Some of the key areas include optimized mode selection and pooling orders; combined multistop truckloads; optimized routing; cross docking; import/export transportation processes; and backhaul minimization. Just as with the other areas, these logistics functions need to be optimized by eliminating non-value-adding activities while improving the value-adding activities.

Lean Customers

have a great understanding of their business needs and specify meaningful requirements. They value speed and flexibility and expect high levels of delivery performance. Lean customers are interested in establishing effective partnerships with their suppliers. Lean customers expect value from the products they purchase and provide value to their customers!

The benefits of a lean supply chain

primarily are in the improved responsiveness to the customer. As business conditions change, the supply chain

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adapts to dynamic needs. The ideal is a culture of rapid change with a bias for change when it is needed. The reduced inventory inherent in a lean supply chain reduces obsolescence and reduces flow time through the value-added processes. The reduced cost along with improved customer service allows the firms using a lean supply chain a significant competitive advantage when competing in the global marketplace.

Value stream mapping. (VSM)

is a special type of flowcharting tool that is valuable for the development of lean processes. The technique is used to visualize product flows through various processing steps. The tool also illustrates information flows that result from the process, as well as information used to control flow through the process. The aim of this section is to provide a brief introduction to VSM and to illustrate its use with an example.

To create a lean process,

one needs to have a full understanding of the business, including production processes, material flows, and information flows. In this section, we discuss this in the context of a production process where a product is being made. VSM is not limited to this context and can be readily applied to service, logistics, distribution, or virtually any type of process.

Value stream mapping

is a two-part process-first, depicting the current state of the process, and second, a possible future state. $ Exhibit 12.4 depicts another map of the same process with suggested improvements. The map has been annotated using Kaizen bursts that suggest the areas for improvement. Kaizen is the Japanese philosophy that focuses on continuous improvement. The Kaizen bursts identify specific short-term projects (often referred to as. Kaizen events) that teams work on to implement changes to the process. In this exhibit, we see a totally redesigned process where the individual production operations have been combined into a workcell operated by three employees. In addition, rather than "pushing" material through the system based on weekly schedules generated by production control, the entire process is converted to a pull system that is operated directly in response to customer demand. Note that the lead time in the new system is only 5 days, compared to the 34-day lead time with the old system.

first two sets of principles relate to internal production processes. These are the processes that actually create the goods and services within a firm. The third category applies lean concepts to the entire supply chain. These principles include

Lean Concepts

く

1. Group technology

2. Quality at the source

3. JIT production

2. Lean Production Schedules

1. Uniform plant loading

2. Kanban production control systems

3. Determination of number of kanbans needed

4. Minimized setup times

3. Lean Supply Chains

1. Specialized plants

2. Collaboration with suppliers

3. Building of a lean supply chain

Lean Concepts

1. Group technology

2. Quality at the source

3. JIT production

Lean Production Schedules

1. Uniform plant loading

2. Kanban production control systems

3. Determination of number of kanbans needed

4. Minimized setup times

Lean Supply Chains

1. Specialized plants

2. Collaboration with suppliers

3. Building of a lean supply chain

Lean Concepts

Lean requires the plant layout to be designed to ensure balanced workflow with a minimum of work-in-process inventory. Each workstation is part of a production line, whether or not a physical line actually exists. Capacity is balanced using the same logic for an assembly line, and operations are linked through a gull system.

In addition, the system designer must visualize how all aspects of the internal and external logistics system tie to the layout.

Preventive maintenance

is emphasized to ensure that flows are not interrupted by downtime or malfunctioning equipment. Preventive maintenance involves periodic inspection and repair designed to keep a machine reliable. Operators perform much of the maintenance because they are most familiar with their machines and because machines are easier to repair, since lean operations favor several simple machines rather than one large complex one.

Preventive maintenance Def

Periodic inspection and repair designed to keep equipment reliable.

Group technology

is a philosophy in which similar parts are grouped into families, and the processes required to make the parts are arranged in a manufacturing cell. Instead of transterring jobs from one specialized department to another, group technology considers all operations required to make a part and groups those machines together. ° Exhibit 12.5 illustrates the difference between the clusters of different machines grouped into cells versus departmental layouts. The group technology cells eliminate movement and queue (waiting) time between operations, reduce inventory, and reduce the number of employees required. Workers, however, must be flexible to run several machines and processes. Due to their advanced skill level, these workers have increased job security.

Quality at the source

means do it right the first time and, when something goes wrong, stop the process or assembly line immediately. Factory workers become their own inspectors, personally responsible for the quality of their output. Workers concentrate on one part of the job at a time so quality problems are uncovered. If the pace is too fast, if the worker finds a quality problem, or if a safety issue is discovered, the worker is obligated to push a button to stop the line and turn on a visual signal.

JIIT Production

means producing what is needed when needed and no more. Anything over the minimum amount necessary is viewed as waste because Page 410 effort and material expended for something not needed now cannot be utilized now. This is in contrast to relying on extra material just in case something goes wrong.

JIT is typically applied to repetitive manufacturing, which is when the same or similar items are made one after another. JIT does not require large volumes and can be applied to any repetitive segments of a business regardless of where they appear. Under JT, the ideal fot size or production batch is one. Although . workstations may be geographically dispersed, it is important to minimize transit time and keep transfer quantities small-typically one-tenth of a day's production.

Vendors even ship several times a day to their customers to keep lot sizes small and inventory low. The goal is to drive all inventory queues to zero, thus minimizing inventory investment and shortening lead times.

When inventory levels are low, quality problems become very visible. L Exhibit 12.6 illustrates this idea. If the water in a pond represents inventory, the rocks represent problems that could occur in a firm. A high level of water hides the problems (rocks). Management assumes everything is fine, but as the water level drops in an economic downturn, problems are presented. If you deliberately force the water level down (particularly in good economic times), you can expose and correct problems before they cause worse problems. JIT manufacturing exposes problems otherwise hidden by excess inventories and staff.

level schedule

is one that requires material to be pulled into final assembly in a pattern uniform enough to allow the various elements of production to respond to pull signals. It does not necessarily mean that the usage of every part on an assembly line is identified hour by hour for days on end; it does mean that a given production system equipped with flexible setups and a fixed amount of material in the pipelines can respond to the dynamic needs of the assembly line.

As noted earlier, lean production requires a stable schedule over a lengthy time horizon.

This is accomplished by level scheduling, freeze windows, and underutilization of capacity.

The term freeze window

refers to that period of time during which the schedule is fixed and no further changes are possible. An added benefit of the stable schedule is seen in how parts and components are accounted for in a pull system.

Here, the concept of backflush

is used where the parts that go into each unit of the product are periodically removed from inventory and accounted for based on the number of units produced.

Uniform Plant Loading

Smoothing the production flow to dampen the reaction waves that normally occur in response to schedule variations is called uniform plant loading. When a change is made in a final assembly, the changes are magnified throughout the line and the supply chain. The only way to eliminate the problem is to make adjustments as small as possible by setting a firm monthly production plan for which the output rate is frozen.

Kanban Production Control Systems

uses a signaling device to regulate JIT flows. Kanban means "sign" or "instruction card" in Japanese. In a paperless control system, containers can be used instead of cards. The cards or containers make up the kanban pull system. The authority to produce or supply additional parts comes from downstream operations.

Kanban

means "sign" or "instruction card" in Japanese.

kanban pull system.

. In a paperless control system, containers can be used instead of cards. The cards or containers make up the kanban pull system.

Kanban squares.

Some companies use marked spaces on the floor or on a table to identify where material should be stored. When the square is empty, the supplying operations are authorized to produce; when the square is full, no parts are needed.

Container system.

Sometimes the container itself can be used as a signal device. In this case, an empty container on the factory floor visually signals the need to fill it. The amount of inventory is adjusted by simply adding or removing containers.

Colored golf balls.

At a Kawasaki engine plant, when a part used in a subassembly is down to its queue limit, the assembler rolls a colored golf ball down a pipe to the replenishment machine center. This tells the operator which part to make next. Many variations have been developed on this approach.

Accurately estimating the lead time

needed to produce a container of parts is the key to determining the number of containers. This lead time is a function of the processing time for the container, any waiting time during the production process, and the time required to transport the material to the user. Enough kanbans are needed to cover the expected demand during this lead time plus some additional amount for safety stock. The number of kanban card sets is

Expected demand during lead time + Safety stock/size of container

Minimized Setup Times

The reductions in setup and changeover times are necessary to achieve a smooth flow. - Exhibit 12.10 shows the relationship between lot size and

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setup costs. Under a traditional approach, setup cost is treated as a constant, and the optimal order quantity is shown as six. Under the kanban approach, setup cost is significantly reduced, and the corresponding optimal order quantity is reduced. In the exhibit, the order quantity has been reduced from six to two under lean methods by employing setup time-saving procedures. This organization will ultimately strive for a lot size of one.

Lean Supply Chains

Building a lean supply chain involves taking a systems approach to integrating the partners. Supply must be coordinated with the need of the production facilities, and production must be tied directly to the demand of the customers for products. The importance of speed and steady, consistent flow that is responsive to actual customer demand cannot be overemphasized. Concepts that relate to lean network design are discussed next.

Specialized Plants

Small specialized plants rather than large vertically integrated manufacturing facilities are important. Large operations and their inherent bureaucracies are difficult to manage and not in line with the lean philosophy. Plants designed for one purpose can be constructed and operated more economically. These plants need to be linked together so they can be synchronized to one another and to the actual need of the market. Speed and quick response to changes are keys to the success of a lean supply chain.

Collaboration with Suppliers

Just as customers and employees are key components of lean systems, suppliers are also important to the process. If a firm shares its projected usage

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requirements with its vendors, they have a long-run picture of the demands that will be placed on their production and distribution systems. Some vendors are linked online with a customer to share production scheduling and input needs data. This permits them to develop level production systems.

Confidence in the supplier or vendor's delivery commitment allows reductions of buffer inventories. Maintaining stock at a lean level requires frequent deliveries during the day. Some suppliers even deliver directly to a location on the production line and not at a receiving dock. When vendors adopt quality practices, incoming receiving inspections of their products can be bypassed.

James Womack and Daniel Jones, in their seminal work Lean Thinking, provide the following guidelines for implementing a lean supply chain:

• Value must be defined jointly for each product family along with a target cost based on the customer's perception of value.

• All firms along the value stream must make an adequate return on their investments related to the value stream.

• The firms must work together to identify and eliminate muda (waste).

• When cost targets are met, the firms along the stream will immediately conduct new analyses to identify remaining muda and set new targets.

• Every participating firm has the right to examine every activity in every firm relevant to the value stream as part of the joint search for waste.

To summarize: To be lean, everyone's got to be on the same page!

Here are 10 of the more successful techniques applied to service companies:

Organize Problem-Solving Groups Honeywell is extending its use of quality teams from manufacturing into its service operations. Other

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corporations as diverse as First Bank/Dallas, Standard Meat Company, and Miller Brewing Company are using similar approaches to improve service. British Airways used quality teams as a fundamental part of its strategy to implement new service practices.

1. Upgrade Housekeeping Good housekeeping means more than winning the clean broom award. It means that only the necessary items are kept in a work area, that there is a place for everything, and that everything is clean and in a constant state of readiness. The employees clean their own areas.
   Service organizations such as McDonald's, Disneyland, and Speedi Lube have recognized the critical nature of housekeeping. Their dedication to housekeeping has meant that service processes work better, the attitude of continuous improvement is easier to develop, and customers perceive that they are receiving better service.

2. Upgrade Quality The only cost-effective way to improve quality is to develop reliable process capabilities. Process quality is quality at the source-it guarantees first-time production of consistent and uniform products and services.
   McDonald's is famous for building quality into its service delivery process. It literally "industrialized" the service delivery system so that part-time, casual workers could provide the same eating experience anywhere in the world. Quality doesn't mean producing the best; it means consistently producing products and services that give the customers their money's worth.

3. Clarify Process Flows Clarification of flows, based on JT themes, can dramatically improve the process performance. Here are three examples:
   First, FedEx Corporation changed air flight patterns from origin-to-destination to origin-to-hub, where the freight is transferred to an outbound plane heading for the destination. This revolutionized the air transport industry. Second, the order entry department of a manufacturing firm converted from functional subdepartments to customer-centered work groups and reduced the order processing lead time from eight to two days. Finally, Super Maids sends in a team of house cleaners, each with a specific responsibility, to clean a part of each house quickly with parallel processes. Changes in process flows can literally

Organize Problem-Solving Groups

Honeywell is extending its use of quality teams from manufacturing into its service operations. Other

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corporations as diverse as First Bank/Dallas, Standard Meat Company, and Miller Brewing Company are using similar approaches to improve service. British Airways used quality teams as a fundamental part of its strategy to implement new service practices.

1. Upgrade Housekeeping

1. Good housekeeping means more than winning the clean broom award. It means that only the necessary items are kept in a work area, that there is a place for everything, and that everything is clean and in a constant state of readiness. The employees clean their own areas.
   Service organizations such as McDonald's, Disneyland, and Speedi Lube have recognized the critical nature of housekeeping. Their dedication to housekeeping has meant that service processes work better, the attitude of continuous improvement is easier to develop, and customers perceive that they are receiving better service.

1. Upgrade Quality

1. The only cost-effective way to improve quality is to develop reliable process capabilities. Process quality is quality at the source-it guarantees first-time production of consistent and uniform products and services.
   McDonald's is famous for building quality into its service delivery process. It literally "industrialized" the service delivery system so that part-time, casual workers could provide the same eating experience anywhere in the world. Quality doesn't mean producing the best; it means consistently producing products and services that give the customers their money's worth.

1. Clarify Process Flows

1. Clarification of flows, based on JT themes, can dramatically improve the process performance. Here are three examples:
   First, FedEx Corporation changed air flight patterns from origin-to-destination to origin-to-hub, where the freight is transferred to an outbound plane heading for the destination. This revolutionized the air transport industry. Second, the order entry department of a manufacturing firm converted from functional subdepartments to customer-centered work groups and reduced the order processing lead time from eight to two days. Finally, Super Maids sends in a team of house cleaners, each with a specific responsibility, to clean a part of each house quickly with parallel processes. Changes in process flows can literally

1. Clarify Process Flows

1. Clarification of flows, based on JIT themes, can dramatically improve the process performance. Here are three examples:
   First, FedEx Corporation changed air flight patterns from origin-to-destination to origin-to-hub, where the freight is transferred to an outbound plane heading for the destination. This revolutionized the air transport industry. Second, the order entry department of a manufacturing firm converted from functional subdepartments to customer-centered work groups and reduced the order processing lead time from eight to two days. Finally, Super Maids sends in a team of house cleaners, each with a specific responsibility, to clean a part of each house quickly with parallel processes. Changes in process flows can literally revolutionize service industries.

1. Revise Equipment and Process Technologies

1. Revising technologies involves evaluation of the equipment and processes for their ability to meet the process

esc

requirements, to process consistently within tolerance, and to fit the scale and capacity of the work group.

Speedi Lube converted the standard service station concept to a specialized lubrication and inspection center by changing the service bays from drive-in to drive-through and by eliminating the hoists and instead building pits under the cars where employees have full access to the lubrication areas on the vehicle.

A hospital reduced operating room setup time so it had the flexibility to perform a wider range of operations without reducing the operating room availability.

1. Level the Facility Load

1. Service firms synchronize production with demand. They have developed unique approaches to leveling demand so they can avoid making customers wait for service. McDonald's offers a specialbreakfast menu in the morning. Retail stores use take-a-number systems. The post office charges more for next-day delivery. These are all examples of the service approach for creating uniform facility loads.

1. Eliminate Unnecessary Activities

1. A step that does not add value is a candidate for elimination. A step that does add value may be a candidate for reengineering to improve the process consistency or to reduce the time to perform the tasks.

1. Reorganize Physical Configuration

1. Work area configurations frequently require reorganization during a lean implementation. Often, manufacturers accomplish this by setting up manufacturing cells to produce items in small lots, synchronous to demand. These cells amount to microfactories inside the plant.
   Most service firms are far behind manufacturers in this area. However, a few interesting examples do come out of the service sector. Some hospitals-instead of routing patients all over the building for tests, exams, X-rays, and injections-are reorganizing their services into work groups based on the type of problem.
   Teams that treat only trauma are common, but other work groups have been formed to treat less immediate conditions like hernias. These amount to microclinics within the hospital facility.

1. Introduce Demand-Pull Scheduling

1. Due to the nature of service production and consumption, demand-pull (customer driven) scheduling is necessary for operating a service business. Moreover, many service firms are separating their operations into "back room" and "customer contact" facilities. This approach creates new problems in coordinating schedules between the facilities. The original Wendy's restaurants were set up so cooks could see cars enter the parking lot. They put a preestablished number of hamburger patties on the grill for each car. This pull system was designed to have a fresh patty on the grill before the customer even placed an order.

1. Develop Supplier Networks

1. The term supplier networks in the lean context refers to the cooperative association of suppliers and customers working over the long term for mutual benefit. Service firms have not emphasized supplier networks for materials because the service costs are often predominantly labor.
   Notable exceptions include service organizations like McDonald's, one of the biggest food products purchasers in the world, which has been developing lean practices. Manpower and other employment agencies have established lean-type relationships with a temporary employment service and a trade school to develop a reliable source of trained assemblers.