operations management
jenny2000000
LeanSystems.pptxClass 18 Lean Systems
Instructor: Mani Lakshmanan
P300 Introduction to Operations Management
Review: Design quality & Conformance quality
How well a product’s designed features match up to the requirements of a given customer group.
Whether or not a delivered product meets its design specifications
Cost of Quality (COQ) Analysis
Prevention costs
Appraisal costs
Internal failure costs
External failure costs
A defect found in later stages is much more costly than a defect found in earlier stages
Exercise 2
What would the standard deviation in the temperature of her oven need to be if she settled for a “Three Sigma” level of quality?
If her oven exactly meets this quality level, what percentage of the time would her oven be operating at a temperature outside the acceptable range?
| Sigma Level | Defects per Million |
| 3σ | 66,807 |
| 4σ | 6,210 |
| 5σ | 233 |
| 6σ | 3.4 |
Six Sigma quality (3.4 defects per million units produced) is probably a bit much to ask of Kristen’s old oven.
Six Sigma
| Sigma Level | Defects per Million |
| 2σ | 308,537 |
| 3σ | 66,807 |
| 4σ | 6,210 |
| 5σ | 233 |
| 6σ | 3.4 |
OM Triangle
Capacity
Inventory
Variability
reduction
Capacity, inventory, and variability reduction (information) are substitute ways to satisfy customers’ demand for products/services.
Quality and Six Sigma, Chapter 6
House Building Game
Lean Operations and TPS, Chapter 8
What is lean?
Operational processes can be described as being lean when they are very efficient and have few wasted resources.
Several terms are used to describe lean systems:
Just-in-time manufacturing (JIT)
Stockless production
Zero inventories
Toyota production systems (TPS)
Outline
Lean Systems Approach
Origins of Lean Systems
Strategic Benefit of Lean Systems
Guiding principles
Implementing Lean Systems: Tools and Techniques
Lean Systems Approach
The lean system approach is a philosophy of operations management
Emphasizes the minimization of the amount of all the resources used in the various activities of the enterprise.
Origins of Lean Systems
Taiichi Ohno, a prominent Japanese businessman, is considered to be the father of the Toyota Production System, which became Lean Manufacturing in the U.S.
Henry Ford’s mass production system
Efficient OM practice such as work standardization, ongoing employee training
Large amounts of inventory and rework
Supermarkets
Customers get
What is needed
At the time needed
In the amount needed
Lean system
View the earlier processes in the production line as a kind of store.
Outline
Lean Systems Approach
Origins of Lean Systems
Strategic Benefit of Lean Systems
Guiding principles
Implementing Lean Systems: Tools and Techniques
Strategic Benefit of Lean Systems
Fact:
Before: American laborers in automobile manufacture were nine times as productive as Japanese laborers in 1937
After: Japanese-owned automotive plants following lean were 30% more productive than U.S.-owned plants using traditional methods
Strategic Benefit of Lean Systems
Principle
Contribution Margin:
The difference between price and the firm’s direct costs (traced to specific product)
Fixed Cost:
Cost of facilities, equipment, capital, and support labor such as management and engineering
$
Production Quantity
Break-even
The amount a firms needs to sell in order to make profit
Strategic Benefit of Lean Systems
Principle
By increasing contribution margin and decreasing fixed costs lean firms reduce the break-even point
Outline
Lean Systems Approach
Origins of Lean Systems
Strategic Benefit of Lean Systems
Guiding principles
Implementing Lean Systems: Tools and Techniques
Guiding principle 1. Precisely specify value for each specific product
Decide functions and features of products and services by consumers’ requirement
Any action that does not generate value must ultimately be regarded as waste
Guiding principle 2. Identify the value stream for each product
Identify value-adding and non-value-adding steps
Optimization of the value-adding activities
Elimination of non-value-adding activities, i.e., waste
Seven Basic Types of Waste
Transportation: units moved unnecessarily
Inventory: units waiting for processing or delivery
Motion: unnecessary or excessive resource activity
Waiting: resources waiting for work/materials
Overproduction: processing more than needed
Over Processing: excessive or unnecessary steps
Defects: scrap, rework or correction
Guiding principle 2. Identify the value stream for each product
Identify value-adding and non-value-adding steps
Optimization of the value-adding activities
Elimination of non-value-adding activities, i.e., waste
Reduce waste by quantify the amount of waste, uncover the underlying root causes, and then attack these root causes
Guiding principle 3. Make Value Flow without Interruptions
Inventory represents an interruption to material flows
Inventory often hides or covers other types of waste
Buffers that hide problems
Removes the urgency needed to identify and address problems
Used to satisfy shortages caused by problems
The more inventory needed for the system to work, the less healthy the system is.
Missed Due Dates
Scrap & Rework
Machine Downtime
Late Deliveries
Too much paperwork
Inventory
Inventory hides problems and slows flow
20
Missed Due Dates
Scrap & Rework
Machine Downtime
Late Deliveries
Too much paperwork
Inventory
Inventory hides problems and slows flow
21
Guiding principle 4. Let the Customer Pull Value from the Producer
Pull System: processes are activated by actual, not forecasted demand
Customer get
what they want
when they want
where they want
Kanban (Pull) Scheduling: output generated in response to actual demand
Uses a signaling device to regulate flows
Guiding Principle 5. Pursue Perfection
Continuous improvement is always possible.
Outline
Lean Systems Approach
Origins of Lean Systems
Strategic Benefit of Lean Systems
Guiding principles
Implementing Lean Systems: Tools and Techniques
Implementing Lean Systems: Tools and Techniques
Total Productive Maintenance (TPM)
Reduce the variability of equipment breakdowns
Goal of zero unplanned downtime
Focus on preventing problems rather than fixing them
Focused Factories
Reduce the variability of customer demand
Group together similar customers and then designing and implementing production systems to serve these specific customers
Implementing Lean Systems: Tools and Techniques
Kanban (Pull) Scheduling: output generated in response to actual demand
Reduce variability of WIP/Inventory caused by random demand
Uses a signaling device to regulate flows
Kanban Scheduling
8–27
Storage Part A
Storage Part A
Machine Center
Assembly Line
Material Flow
Card (signal) Flow
Withdrawal kanban
Production kanban
Implementing Lean Systems: Tools and Techniques
Setup Reduction: shorter, easier changeover leads to smaller batches
Single Minute Exchange of Dies (SMED) approach
Statistical Process Control (SPC): use of statistical tools to monitor processes
Quality at the Source (Q@S): eliminating defects at their origination points
Simplification/Standardization: reduce lead time and process variances of all sorts.
Reduce variability in conformance quality
