Operations Management: Lean Systems Study Notes

Operations Management: Lean Systems

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?

  • Definition: Lean systems are 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 (1 of 5)

  • Just-in-Time (JIT) System:

    • A key foundation of a lean system.

    • Represents a collection of practices aimed at eliminating waste (or muda).

    • Focuses on cutting excess capacity or inventory and removing non-value-added activities.

Continuous Improvement Using a Lean Systems Approach (2 of 5)

The Eight Types of Waste or Muda

Waste

Definition

1. Overproduction

Manufacturing an item before it is needed, making it difficult to detect defects and creating excessive lead times and inventory.

2. Inappropriate Processing

Using expensive high-precision equipment when simpler machines would suffice, leading to overutilization of expensive capital assets.

3. Waiting

Occurs due to unbalanced workstations; leads to idle time while waiting for processes that take longer or due to breakdowns and quality issues.

4. Transportation

Excessive product movement and handling that can cause damage and degrade product quality without adding customer value.

5. Motion

Unnecessary effort related to ergonomics, such as bending, reaching, and walking; jobs should be redesigned to minimize excessive motion.

6. Inventory

Excess inventory hides problems, consumes space, increases lead times, and inhibits communication. Resulting from overproduction and waiting.

7. Defects

Quality defects lead to rework, scrap, loss of customer goodwill, and wasteful costs associated with inspections and corrections.

8. Underutilization of Employees

Failure to learn from, and make use of, employees’ knowledge and creativity stifles long-term efforts to reduce waste.

Continuous Improvement Using a Lean Systems Approach (3 of 5)

The Role of Inventory in Traditional vs. JIT Systems

  • Metaphor:

    • Traditional systems use inventory (water) as a buffer against process problems (rocks) that cause disruption.

    • JIT systems view inventory as waste, aiming to lower inventory levels to expose and correct these problems, which must be corrected quickly to avoid process floundering.

Supply Chain Considerations in Lean Systems

  • Close Supplier Ties: Maintain strong relationships with suppliers to enhance responsiveness.

  • Small Lot Sizes:

    • Lot: Quantity of items processed together.

    • Single-digit setup: Aim for setup times of less than 10 minutes.

Process Considerations in Lean Systems (1 of 4)

  • Pull Method of Workflow (Lean): Customer demand activates production.

  • Push Method of Workflow (Not Lean): Production is based on demand forecasting, occurring prior to actual customer needs.

Process Considerations in Lean Systems (2 of 4)

  • Quality at the Source:

    • Jidoka: Automatically stops the process when issues arise to fix them on the line immediately.

    • Poka-Yoke: Mistake-proofing methods intended to minimize human error and design fail-safe systems.

Process Considerations in Lean Systems (3 of 4)

  • Uniform Workstation Loads:

    • Takt time: Cycle time that matches production rate to sales rates.

    • Heijunka: Leveling production loads.

    • Mixed-model assembly: Producing different models in smaller lots.

    • Lot size of one: Processes designed for throughput with individual units.

  • Standardized Components and Work Methods: Consistency in processes.

Process Considerations in Lean Systems (4 of 4)

  • Flexible Workforce: Adaptable staffing to meet demand variations.

  • Automation: Implementation of technology to aid lean practices.

  • Five S (5S) Practices:

    • A methodology for organizing and sustaining a productive work environment, consisting of:

    1. Sort: Separate needed from unneeded items.

    2. Straighten: Arrange items for easy access and efficiency.

    3. Shine: Keep areas clean and orderly.

    4. Standardize: Establish consistent processes and schedules for cleanliness.

    5. Sustain: Implement discipline to maintain these practices and recognize good performance.

Toyota Production System (TPS) Principles

  • Four Principles:

    1. Specification of work content, sequence, timing, and outcome in detail.

    2. Direct and clear connections between all customer-supplier interactions.

    3. Simplification of pathways for product and service delivery.

    4. Improvement guided by teachers using the scientific method.

Post-COVID-19 Pandemic Considerations in Lean Systems

  • Companies reassess their lean systems post-pandemic.

  • Increased responsiveness to supply chain disruptions through added operational slack.

  • The need for risk mitigation in managing lean systems.

Designing Lean System Layouts

  • One-Worker, Multiple-Machines (OWMM) Cell: A single worker manages multiple machines to achieve line flow.

  • Group Technology (GT): Implements line-flow layouts for low volume processes; creates multi-worker cells.

What is a Kanban?

  • Kanban: A Japanese term meaning "card" or "visible record"; refers to cards controlling production flow through a factory.

The Kanban System (Examples Step-by-Step)

  1. Steady state starting condition.

  2. Withdrawal of a part by a following process; return of empty box for refilling.

  3. Production of the part at the preceding process; withdrawal of another part and return of the empty box.

  4. Production of the next part at the preceding process and preparation for steady state.

  5. Transition back to steady state, awaiting production.

General Operating Rules for Kanban

  • A full container must always have a Kanban card.

  • The preceding process will not produce parts without a Kanban card.

  • The following process must post the Kanban card before retrieving parts.

  • Containers must consistently hold the same number of good parts; non-defective parts only.

Determining the Number of Containers

  • Considerations:

    • Units per container and the number of containers flowing between supplier and user stations.

  • Little’s Law: An equation relating average WIP inventory to average demand and time in process: extWIP=(extaveragedemandrate)imes(extaveragetimeinmanufacturing)ext{WIP} = ( ext{average demand rate}) imes ( ext{average time in manufacturing})

Example 1: Westerville Auto Parts Company

  • Scenario: Container processing time and demand analysis for rocker-arm assemblies:
    a. Calculations: a. Need for containers based on processing times and daily demand.
    b. Impact of revised layout on container requirements.

  • Calculations: Using elements of demand and processing times to optimize inventory handling.

Other Kanban Signals

  • Container System: Utilizing specific containers as signals for parts use.

  • Containerless System: Using visual cues on workbenches for completed units.

What is Value Stream Mapping?

  • Definition: A qualitative tool aimed at eliminating waste via current state and future state drawings along with an implementation plan.

VSM Metrics

  • Metrics in Value Stream Mapping include:

    • Takt Time

    • Cycle Time

    • Setup Time

    • Per Unit Processing Time = Cycle Time + Setup Time

    • Capacity

Example 2: Jensen Bearings

  • Scenario involves creating a VSM for retainers:

    • Demand, processing times, and WIP are detailed to evaluate efficiency.

  • Takt time calculation and lead time assessments across processes.

  • Total processing time from cycle times calculated.

Future State Map

  • Purpose: Eliminate sources of waste identified in the current state map.

  • Steps to Create:

    1. Assess process capability for takt time compliance.

    2. Identify elimination points for inventories.

    3. Develop pull systems for remaining inventories.

    4. Use implementation plans for achieving future states.

Organizational Considerations

  • Key Aspects:

    • Addressing human costs associated with lean systems.

    • Emphasizing cooperation and trust.

    • Designing reward systems to support lean methodologies.

Process Considerations for Lean Practices

  • Firms might need to adjust workflows through:

    • Layout changes

    • Station rearrangements

    • Material movement adjustments

    • Increasing delivery frequency

Inventory and Scheduling

  • Focus on stability in scheduling, efficient setups, and appropriate purchasing and logistics timelines.

Solved Problem 1

  • Scenario Example: Using a Kanban system to analyze an inefficient machine group.

  • Key questions include:
    a. Determining policy variable.
    b. Total planned inventory for parts.
    c. Evaluating policy variable effects on container needs.

Solved Problem 2

  • Metcalf, Inc. Scenario: Creating a VSM and analyzing production attributes in relation to processing and demand:

    • Details on current state mapping, demand assessments, and processing lead times are tackled thoroughly.