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  1. 1. Achieving World-Class Organizational Results
  2. 2. WHAT IS LEAN MANUFACTURING? Lean Manufacturing can be defined as: "A systematic approach to identifying and eliminating waste (non-value-added activities) through continuous improvement by flowing the product through flow processes based on a signal from the customer."
  3. 3. What is Lean Manufacturing?  Lean manufacturing is the process of analyzing the flow of information and materials in an environment and continuously improving the process to achieve enhanced value for the enterprise. It uses the building blocks of: standardized work, workplace organization, visual controls, effective plant layout, quality at the source, batch reduction, teams, customer demand-based manufacturing, point-of-use storage, quick changeover, one- piece flow, cellular manufacturing, and Takt time. Lean manufacturing also applies the modern elements and technologies of scrap reduction, process improvements in machining and tool selection as well as material selection, set-up reduction, Just-In-Time, Kaizan, world class manufacturing, synchronous manufacturing, and inventory management.
  4. 4. CUSTOMER FOCUS A lean manufacturing enterprise thinks more about its customers (internal & external) than it does about running machines fast to absorb labor and overhead. Ensuring Internal and External customer input and feedback assures quality and customer satisfaction,
  5. 5. FOCUS ON WASTE The aim of Lean Manufacturing is the elimination of waste in every area of the organization including •Customer relations (Sales) •Accounting • Product design • Supplier Networks •Quality •HR •Safety •Manufacturing •Engineering
  6. 6. LEAN GOALS Goal is to IMPROVE EVERY PROCESS WITHIN AN ORGANIZATION REQUIRING: •Less human effort •Less materials •Less inventory •Less time •Less space To become highly responsive to customer demand while producing top quality products in the most efficient and economical manner possible
  7. 7. In 1945, Toyoda challenged Taiichi Ohno to learn how to compete with US Automakers not on building large volumes of similar models, but many models in low volume. Ohno was given 3 years to develop a system to achieve this goal.
  8. 8.  Ohno went to the US and studied Ford mass assembly processes at the Rouge River Plant.  Ohno learned a lot from this experience, but felt Ford stopped short of a better system.  Ohno also studied the supermarket concept of ordering and replenishing stock by a signal system. This resulted in Ohno applying the KANBAN concept to the system he would develop.
  9. 9. It took Ohno over 20 years to develop the system that became known as The Toyota Production System (TPS) It took until the 1974 Oil Crisis before outsiders and others in Japan really took notice of the TPS system that Ohno built and the way it was allowing Toyota to compete when others were faltering.
  10. 10. Typical use of automation which results in running parts faster and faster but result in increased inventory as downstream cells cannot use the product as fast as the upstream equipment is producing the parts. Increases inventory which is waste
  11. 11.  Lean Manufacturing came to the US with James Womack’s Book, “ The Machine That Changed The World” in 1990.  Focused on Toyota Production System Concepts and Why Toyota was able to so successful over US Auto Manufacturers.
  12. 12. Glossary of Lean Manufacturing Terms  Following is a short list of terms often used in explaining lean manufacturing techniques. Cellular Manufacturing - linking of manual and machine operations into the most efficient combination to maximize value-added activities while minimizing waste. A cell layout is typically U-shaped and utilizes one- piece flow. Kanban System - a pull system that uses color-coded cards attached to parts or part containers to regulate the upstream production and delivery flow. Lean Manufacturing - the process of analyzing the flow of information and materials in a manufacturing environment and continuously improving the process to achieve enhanced value to the customer. Non-Value Added - Any activity that does not add market form or function or is not necessary. (These activities should be eliminated, simplified, reduced or integrated.)
  13. 13.  Pull System - method of controlling the flow of resources by replacing only what has been consumed. A pull system relies on customer demand. Push System - resources are provided to the consumer based on forecasts or schedules. (Lean manufacturing encourages the elimination of push systems.) Takt Time - customer demand rate. Takt time sets the pace of production to match the rate of customer demand and becomes the heartbeat of any lean system. It is calculated by taking the work time available and dividing it by the number of units sold. Value Added - Any activity that increases the market form or function of the product or service. (These are things the customer is willing to pay for.)
  14. 14.  Most waste is invisible. Nor is elimination easy. A set of techniques that identify and eliminate waste has evolved into "Lean Manufacturing."  Cellular Manufacturing  Takt Time  Kanban  Setup Reduction  Implementing  Kaizen  Group Technology  Small and frequent Lot Sizing
  15. 15. Transforming small manufacturers to high performance requires that they address TOOLS ASSOCIATED WITH LEAN
  16. 16. Understand the Current State Start
  17. 17. Present State Value Stream Map
  18. 18. Future State Value Stream Map
  19. 19. Improve processes (manufacturing; engineering; HR; Safety; Quality; Sales; Accounting) by looking at building “cells” of operations that are small complete factories of their own instead of moving products, materials and information by large lots throughout a large facility or office- Quick response Processing results
  20. 20.  A work cell is a work unit larger than an individual machine or workstation but smaller than the usual department. Typically, it has 3- 12 people and 5-15 workstations in a compact arrangement.  An ideal cell manufactures a narrow range of highly similar products/information/procdesses. Such an ideal cell is self-contained with all necessary equipment and resources.  Cellular layouts organize departments around a product/information/process or a narrow range of similar products. Materials sit in an initial queue when they enter the cell.
  21. 21.  Once processing begins, they move directly from process to process (or sit in mini-queues). The result is very fast throughput.  Communication is easy since every person is close to the others. This improves quality and coordination. Proximity and a common mission enhance teamwork.  Simplicity is an underlying theme throughout cellular design. Notice the simplicity of material/information/process flow. Simpler Scheduling, supervision and many other elements also reflect this underlying simplicity.
  22. 22. This complicated flow becomes a much improves and simpler flow between areas that are adding value
  23. 23. Key Element Functional Cellular Inter-department Moves Many Few Travel Distance 500'-4000' 100'-400' Route Structure Variable Fixed Queues 12-30 3-5 Throughput Time Weeks Hours Response Time Weeks Hours Inventory Turns 3-10 15-60 Supervision Difficult Easy Teamwork Inhibits Enhances Quality Feedback Days Minutes Skill Range Narrow Broad Scheduling Complex Simple Equipment Utilization 85%-95% 70%-80
  24. 24. An Example  A firm that assembles air-handling products faced high inventories and erratic delivery. They originally assembled units on a traditional line. Long setups and logistics required long production runs. Often, they pulled products from finished goods and rebuilt them for custom orders.  Twelve small (1-3 person) assembly work cells that were always set up and ready. People worked in different cells each day and assembled to customer order. Finished Goods Inventory dropped by 96%. Lead-time was 24 hours. Productivity improved by 20%-30%.
  25. 25. Traditional Manufacturing Lean Manufacturing Scheduling Forecast - push Customer Order - pull Production Stock Customer Order Lead Time Long Short Batch Size Large - Batch & Queue Small - Continuous Flow Inspection Sampling - by inspectors 100% - at source by workers Layout Functional Product Flow Empowerment Low High Inventory Turns Low - <7 turns High - 10+ Flexibility Low High COGS High and Rising Lower and Decreasing
  26. 26. Continuous Improvement Firm (CIF) versus Mass Production (MP) firm Issues MP CIF Strategic advantage Large volume of homogenous output Production flexibility Workforce Narrow specialization Multi-skilled Output based on Forecasted demand Real demand Productivity success factors Quality of management; its ability to plan and to direct the implementation of those plans The ability of the entire work force, not just management, to constantly improve both the product and the processes whereby it is produced
  27. 27. ISSUE OLD INDUSTRIAL ECONOMY NEW ECONOMY Economic Development Steady and linear, quite predictable Volatile - extremely fast change, sudden downturns, and chaotic - the direction of the changes is not perfectly clear4 Market changes Slow and linear Fast and unpredictable Economy Supplier-driven Customer-driven Lifecycle of Products and Technologies Long Short Key Economy Drivers Large industrial firms Innovative firms Scope of Competition Local Global hyper-competition Competition: Name of the Game Size: The big eats the small Speed Marketing: Name of the Game Mass marketing Differentiation
  28. 28. DEFINITION OF WASTE Essentially, "waste" is anything that the customer is not willing to pay for.
  30. 30. is Usually Disguised as:  Lost Time/Injury Accidents  Scrap/Rework  Machine Setups  Machine Downtime  3rd Party Inspection  Calibrations  Inventory Storage  Counting Inventory  Supplier Lead-times  Product Test  Profit Reductions  Falling Market Share
  31. 31.  Administrative Waste  Conflicting Department Goals – not everyone on the same page  Traditional Accounting Methods – rewarding people for creating waste, for example; inventory  Poor Product Design – designs which do not include the needs of the internal and external customers  Long Order Processing Time  Searching, Hunting, Looking – for files, orders, invoices, reports, memos etc.  Waiting Time – waiting for batched paperwork, instructions, supervision etc.  Purchasing Reorders, Transactions  Authorizations
  32. 32. What Types of Waste Do You Have in Your Facility?
  33. 33. Improves our ability to provide customer satisfaction, while reducing our overall costs!
  34. 34. Overproduction To produce more than is sold or produce it before it is needed.  It is visible as storage of material.  Overproduction means making more than is: - Required by the next process - Making earlier than is required by the next process, or - Making faster than is required by the next process.
  35. 35. Causes for Over Production  Just-in-case logic  Misuse of automation  Long process setup  Unleveled scheduling  Unbalanced work load  Over engineered  Redundant inspections
  36. 36. WAIT TIME Any time that is non-value added where the operator must stop producing good parts and wait for: materials; instructions; Team Leader; equipment downtime.
  37. 37. Causes of Wait Time Waste  Unbalanced work load  Unplanned maintenance  Long process set-up times  Misuses of automation  Upstream quality problems  Unleveled scheduling  Poor Communication
  38. 38. Inventory or Work in Process (WIP) Waste Represents the material between operations due to large lot production or processes with long cycle times One of the most frequent types of waste and one of the most expensive to have
  39. 39. Causes of Excess Inventory  Compensating for inefficiencies and unexpected problems  Product complexity  Unleveled scheduling  Poor market forecast  Unbalanced workload  Unreliable shipments by suppliers  Misunderstood communications  Reward systems
  40. 40. Over Processing Waste Doing more processing to the parts than the customer really requires . Over processing waste can be minimized by asking why a specific processing step is needed and why a specific product is produced. All unnecessary processing steps should be eliminated.
  41. 41. Causes for Over Processing Waste  Product changes without process changes  Just-in-case logic  True customer requirements undefined  Over processing to accommodate expected downtime  Lack of communication  Redundant approvals  Extra copies/excessive information
  42. 42. Transportation Waste Excess Material Handling either to production area or within production areas. Does not add any value to the product. Instead of improving the transportation, it should be minimized or eliminated (e.g. forming cells)
  43. 43. Causes of Transportation Waste  Poor plant layout  Poor understanding of the process flow for production  Large batch sizes, long lead times, and large storage areas
  44. 44. WASTED MOTIONS Any movement that does not add value. Examples: looking for tools; walking many steps to get parts or place parts into finished goods; more movements than necessary to perform an operation.
  45. 45. Causes of Motion Waste  Poor people/machine effectiveness  Inconsistent work methods  Failure to take ergonomic issues into consideration  Poor facility or cell layout  Poor workplace organization and housekeeping  Extra "busy" movements while waiting
  46. 46. SCRAP OR REWORK Requires additional resources and time to correct defects before shipping or replace parts that are scrapped due to defects.
  47. 47. Causes of Scrap or Rework  Little or no process control  Poor quality standards or inconsistent quality standards  Lack of or little planned equipment preventive maintenance  Inadequate education/training/work instructions  Product design (Process cannot produce to quality)  Customer needs not understood
  48. 48. UNDER-UTILIZED HUMAN RESOURCES The lack of involvement and participation of the employees in improving operations; quality and safety.
  49. 49. Causes of People Waste  Old guard thinking, politics, the business culture  Poor hiring practices  Low or no investment in training  Low pay, high turnover strategy  Management thinking it has to “drive” everything instead of involving those who know the process the best
  50. 50. SOME BASIC ELEMENTS OF LEAN •Elimination of waste •Equipment reliability •Process capability •Continuous flow •Material flows one part at a time •Less inventory required throughout the production process, raw material, WIP, and finished goods Defect reduction •Lead time reduction •Error proofing
  51. 51.  Stop the Line quality system  Kanban systems  Standard work  Visual management  In station process control  Level production  Takt Time  Quick Changeover  Teamwork  Point of use storage
  52. 52. KAIZEN The definition of Kaizen is "improvement" and particularly------"Continuous Improvement"-- slow, incremental but constant Small-scale improvements are easier and faster. The risks are lower because they generally have limited effect. However, the accumulated effect is often greater than a single large improvement
  53. 53. Takt Time The desired time between units of production and output, synchronized to customer demand. The concept carries backward through a process stream. Ideally, every step synchronizes with the final output. Takt Time is fundamental to Lean Manufacturing.
  54. 54. Takt time is useful for lean cells These are typical of the work cells at Toyota and what most people think of when they picture a cell. Such cells have:  Minimal Setups  A Single Routing  Identical Work Times for All Products  Job-shops and other low-volume, high-variety operations can also use cellular manufacturing, it's just a bit more complicated
  55. 55.  Small lot production (ideally one piece) is an important component of any Lean strategy. Lot size directly affects inventory and scheduling The larger the lot size the more time, materials, money, inventory, lead time, scrap is produced and lead time and scheduling is extended.
  56. 56. Batching has an even greater effect on inventory. This chart shows the minimum inventory on hand downstream of the work center. A lot size of 20 units generates an average inventory of 15 units. A lot size of 200 generates an average inventory of 93 units with wide fluctuations. This is a 600% increase! Actual inventory would be much larger than shown here because of the uncertainty of fluctuations, the difficulty of correcting a stock out and the need for coping with other contingencies.
  57. 57. The chart above shows the effect of large and small lots on one particular work center's production. A green line shows daily demand from the customer. It averages 50 units/day and does not vary more than about 20%. The black line shows the actual production if units are made in lots of 20 or about 0.4 days of demand. With this small lot size, required production tracks demand and even smoothes the demand a bit. Output is quite linear.
  58. 58. A lot size of 200 units is about 4.0 days of demand. The purple line shows production requirements. Here there are large, intermittent swings between 200 units and 0 units-- very non-linear. This kind of pattern complicates scheduling, precludes the use of kanban and generates large inventories. The slightest glitch can cause stock outs
  59. 59. Leaders must lead! Everyone must be involved without exception! Lean applies to the office and shop floor and it “paves the approach” necessary for all other improvements which are the long-term hope for a company’s survival. “You will achieve the level of excellence that you demonstrate you want to achieve.” Dupont