operations managnment

Operations Management MGT 320

CHAPTER 14

Lean Operations

and JIT

Chapter 14: Learning Objectives

 You should be able to: 1. Explain what is meant by the term lean operations system

2. List each of the goals of a lean system and explain its importance

3. List and briefly describe the building blocks of lean

4. List the benefits of a lean system

5. Outline the considerations important in converting a traditional mode of operations to a lean system

6. Describe lean tools

Lean Operations (Ref. pg-609)

• Lean operation • A flexible system of operation that uses considerably less resources than a

traditional system • Tend to achieve

• Greater productivity

• Lower costs

• Shorter cycle times

• Higher quality

• JIT

Lean Systems & TPS (Ref. pg-610-611)

• Some of the characteristics of a lean system • Waste reduction

• Continuous improvement

• Teams

• High quality…..

• Numerous benefits, but also some risks

• Many methods were developed by Toyota

Ultimate Goal of Lean (Ref. pg-612)

• The ultimate goal: • Achieve a system that matches supply to customer demand; supply is

synchronized to meet customer demand in a smooth uninterrupted flow

• A balanced system • One that achieves a smooth, rapid flow of materials and/or work through the system

Goals and building blocks of lean systems (Ref. pg-612)

Lean: Supporting Goals (Ref. pg-613)

• The degree to which lean’s ultimate goal is achieved depends upon how well its supporting goals are achieved: 1. Eliminate disruptions

2. Make the system flexible

3. Eliminate waste, especially excess inventory

Waste (Ref. pg-613)

 Waste  Represents unproductive resources

 Eight sources of waste in lean systems: 1. Inventory

2. Overproduction

3. Waiting time

4. Unnecessary transporting

5. Processing waste

6. Inefficient work methods

7. Product defects

8. Under utilized skills of people

Lean: Building Blocks (Ref. pg-614)

• Product design

• Process design

• Personnel/organizational elements

• Manufacturing planning and control

Building Blocks: Product Design (Ref. pg-614)

• Standard parts

• Modular design

• Quality

• Concurrent Engineering

Building Blocks: Process Design (Ref. pg-615- 620) • Eight aspects of process design that are important for lean systems:

1. Small lot sizes

2. Setup time reduction

3. Manufacturing cells

4. Quality improvement

5. Production flexibility

6. A balanced system

7. Little inventory storage

8. Fail-safe methods

Process Design: Fail-Safe Methods (Ref. pg- 620) • Poka-yoke (Fail Safing)

• Building safeguards into a process to reduce or eliminate the potential for errors during a process • Examples

• Electric breakers

• Seatbelt fastener warnings

• ATMs that signal if a card is let in a machine

• Designing parts that can only be assembled in the correct position

Personnel/Organizational: Continuous Improvement (Ref. pg-621) • Continuous improvement

• Workers in lean systems have greater responsibility for quality, and they are expected to be involved in problem solving and continuous improvement

• Lean workers receive training in • Statistical process control

• Quality improvement

• Problem solving

Personnel/Organizational: Cost Accounting (Ref. pg-622) • Cost accounting

• Activity-based costing • Allocation of overhead to specific jobs based on their percentage of activities

Manufacturing Planning and Control: Pull Systems (Ref. pg-622, 624)  Push system

 Work is pushed to the next station as it is completed

 Pull system  A workstation pulls output from the preceding workstation as it is needed

 Output of the final operation is pulled by customer demand or the master schedule

 Pull systems are not appropriate for all operations  Large variations in volume, product mix, or product design will undermine the system

MPC: Visual Systems (Ref. pg-625)

 Kanban

 Card or other device that communicates demand for work or materials from the preceding station

 Kanban is the Japanese word meaning “signal” or “visible record”

 Paperless production control system

 Authority to pull, or produce, comes from a downstream process.

 Two main types of kanbans:

1. Production kanban (p-kanban): signals the need to produce parts

2. Conveyance kanban (c-kanban): signals the need to deliver parts to the next work center.

Lean vs. Traditional Philosophies (Ref. pg-630)

Factor Traditional Lean

Inventory Much to offset forecast errors, late

deliveries

Minimal necessary to operate

Deliveries Few, large Many, small

Lot sizes Large Small

Setup; runs Few, long runs Many, short runs

Vendors Long-term relationships are unusual Partners

Workers Necessary to do the work Assets

Lean Tools (Ref. pg-631)

• Value Stream Mapping • A visual tool to systematically examine the flow of materials and information.

• 5W2H framework

• Six Sigma

• JIT in Supply Chain

• ERP systems

Transitioning to Lean Systems (Ref. pg-633)

1. Make sure top management is committed and that they know what will be required

2. Decide which parts will need the most effort to convert

3. Obtain support and cooperation of workers

4. Begin by trying to reduce setup times while maintaining the current system

5. Gradually convert operations, begin at the end and work backwards

6. Convert suppliers to JIT

7. Prepare for obstacles

Lean Services (Ref. pg-634)

• In service the focus is often on the time needed to perform the service because speed is often the order winner

• Lean benefits can be achieved in the following ways: • Eliminate disruptions

• Make system flexible

• Reduce setup and lead times

• Eliminate waste

• Minimize WIP

• Simplify the process

Just in Time (JIT II) (Ref. pg-637)

• JIT II: • A supplier representative works right in the company’s plant, making sure

there is an appropriate supply on hand

• It is often referred to as vendor managed inventory (VMI)

Operations Strategy (Ref. pg-637)

• Be careful to study the requirements and benefits of lean systems before making a decision to convert operations • Evaluate strengths and weaknesses of current operations

• The decision to convert can be sequential

• Weigh the pros and cons of a lean approach to inventories

• Supplier management is critical to a lean operation