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Operations Management: Processes and Supply Chains

Chapter 5: Lean Systems

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Learning Goals

5.1
  • Describe how lean systems can facilitate the continuous improvement of processes.
5.2
  • Identify the strategic supply chain and process characteristics of lean systems and how they have been affected in the post-Covid-19 environment.
5.3
  • Explain the differences between one-worker, multiple machine (OWMM) and group technology (GT) approaches to lean system layouts.
5.4
  • Understand Kanban systems for creating a production schedule in a lean system.
5.5
  • Understand value stream mapping and its role in waste reduction.
5.6
  • Explain the implementation issues associated with the application of lean systems.

What is a Lean System?

  • Lean Systems
    • Operations systems that maximize the value added by each of a company’s activities by removing waste and delays from them.

Continuous Improvement Using a Lean Systems Approach

Just-in-Time (JIT) System
  • Key foundation of a lean system.
  • Represents a collection of practices that eliminate waste, or muda, by:
    • Cutting excess capacity or inventory.
    • Removing non-value-added activities.
Table 5.1: The Eight Types of Waste or Muda
  1. Overproduction
    • Manufacturing an item before it is needed.
    • Challenges: Difficulty in detecting defects, excessive lead times, and high inventory.
  2. Inappropriate Processing
    • Using expensive high-precision equipment when simpler machines could suffice.
    • Leads to overutilization of expensive assets.
    • Solutions: Invest in smaller flexible equipment and combine process steps.
  3. Waiting
    • Caused by unbalanced workstations that make operators idle.
    • Can occur due to breakdowns, quality issues, or lack of information.
  4. Transportation
    • Excessive movement of products between processes.
    • Causes product damage and deterioration without adding value.
  5. Motion
    • Unnecessary efforts related to ergonomics (bending, stretching, etc.).
    • Recommendation: Redesign jobs to minimize excessive motion.
  6. Inventory
    • Excess inventory hides problems and consumes space.
    • Increases lead times and inhibits communication.
  7. Defects
    • Quality defects lead to rework, scrap, and additional inspection.
  8. Underutilization of Employees
    • Failing to leverage employees’ knowledge and creativity impedes long-term efforts to eliminate waste.
Figure 5.1: Continuous Improvement with Lean Systems
  • Role of Inventory in Traditional vs. JIT Systems
    • Traditional Systems use inventory as a buffer to problems (metaphor: water and rocks).
    • JIT Systems view inventory as waste and aim to lower inventory levels to expose underlying problems.
    • Quickly resolve identified issues; otherwise, processes may falter without the buffer of inventory.

Supply Chain Considerations in Lean Systems

  • Close Supplier Ties
  • Small Lot Sizes
    • Lot: A quantity of items processed together.
    • Single-digit setup: Aim for setup time of under 10 minutes.

Process Considerations in Lean Systems

Workflow Methods
  • Pull Method of Workflow (Lean)
    • Customer demand triggers production of items/services.
  • Push Method of Workflow (Not Lean)
    • Forecasting leads to production initiation before customer needs are defined.
Quality at the Source
  • Jidoka
    • Automatically stopping the process when issues arise.
    • Fixing problems immediately on the line.
  • Poka-Yoke
    • Mistake-proofing methods designed to minimize human error through fail-safe systems.
Uniform Workstation Loads
  • Takt Time
    • Cycle time required to match production with sales/consumption rate.
  • Heijunka
    • Leveling the production load by volume and product mix.
  • Mixed-model assembly
    • Producing different models in smaller lots.
  • Lot size of one
    • Producing a single unit in a repeated sequence.
Additional Considerations
  • Flexible Workforce
  • Automation
  • 5S Practices
    • A methodology for organizing, cleaning, and maintaining a productive work environment.
  • Total Productive Maintenance
Five S (5S) Practices
5S TermDefinition
SortSeparate needed items from unneeded items; discard the unneeded ones.
StraightenArrange remaining items neatly; each item must have a designated place.
ShineClean the work area, making it shine.
StandardizeEstablish cleaning and sorting schedules to maintain cleanliness.
SustainCreate discipline to maintain the first four S practices; involve people and recognize them through performance metrics.

Toyota Production System (TPS)

Four Principles of TPS
  1. All work must be clearly specified in terms of content, sequence, timing, and outcome.
  2. All customer-supplier connections should be direct and unambiguous.
  3. All pathways for services/products should be simple and direct.
  4. All improvements should follow scientific methods under teacher guidance.

Post-COVID-19 Pandemic Considerations in Lean Systems

  • Firms are reevaluating their lean systems in response to post-pandemic needs.
  • Organizations may increase their responsiveness to disruptions by including more slack in processes than prior to the pandemic.
  • Risk mitigation must be explicitly considered in the management of lean systems.

Designing Lean System Layouts

One-Worker, Multiple-Machines (OWMM) Cell
  • A cell operated by a single worker managing several machines simultaneously to achieve line flow.
Group Technology (GT)
  • Achieves line-flow layouts with low volume processes.
  • Creates cells that are not limited to a single worker and has a unique approach to task selection.

What is a Kanban?

  • Kanban
    • A Japanese term for "card" or "visible record" referencing cards used for controlling production flow through a factory.

The Kanban System

General Operating Rules
  1. A full container must always have a Kanban card.
  2. The preceding process will not produce parts without a Kanban card.
  3. The following process must display the Kanban card before consuming parts in the containers.
  4. Containers must consistently hold the same number of good parts.
  5. Only non-defective parts should be put into inventory with a Kanban card.

Determining the Number of Containers

  • Two Key Determinations
    • Number of units per container.
    • Number of containers flowing between supplier and user stations.
  • Little’s Law
    • Average work-in-process (WIP) inventory is equal to the average demand rate multiplied by the average time a unit spends in the manufacturing process.
WIP Calculation

extWIP=(extaveragedemandrate)imes(extaveragetime)+extsafetystockext{WIP} = ( ext{average demand rate}) imes ( ext{average time}) + ext{safety stock}
Where:

  • k = number of containers
  • c = number of units in each container
  • α = policy variable

Examples and Case Studies

Example 1: Westerville Auto Parts Company
  • A container of parts spends:
    • 0.02 days in processing.
    • 0.08 days in materials handling and waiting.
    • Daily demand: 2,000 units.
    • Safety stock: 10%.
    • If each container holds 22 parts, how many containers are needed?
    • If layout revision reduces handling/waiting time to 0.06 days, how many containers are needed then?
Example 2: Jensen Bearings Inc.
  • Produces retainers with specific operational data:
    • Average demand: 3,200/week.
    • Batch size: 40.
    • Process attributes and cycle/setup times detailed across steps.
    • Creation of a Value Stream Map (VSM) and calculations of takt time, production lead time, total processing time, and capacity across processes.

Future State Mapping

Steps to Creating a Future State Map
  1. Assess process steps' capability to produce according to takt time.
  2. Identify potential reductions in inventory by combining process steps.
  3. Design pull systems for managing remaining inventories.
  4. Use an implementation plan to achieve the future state.

Organizational Considerations

  • Address the human costs of implementing lean systems, emphasizing:
    • Cooperation and trust within teams.
    • Appropriate reward systems and labor classifications.

Process Considerations

  • Emphasize adjustments to process workflows, including:
    • Layout changes.
    • Rearranging workstations.
    • Modifications in material movement and logistics.
    • More frequent deliveries.

Inventory and Scheduling

Key Areas of Focus
  • Schedule stability.
  • Setup optimizations.
  • Purchasing and logistics strategies.

Conclusion

  • Lean systems aim to enhance operational efficiency by reducing waste and improving product flow.
  • Organizational and process considerations are critical for implementing lean practices effectively.
  • Adaptations are essential in a post-pandemic landscape to ensure resilience and responsiveness in supply chains.