Chapter 13. Lean and Sustainable Supply Chains

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1 1 Chapter 13 Lean and Sustainable Supply Chains

2 2 OBJECTIVES Lean Production Defined The Toyota Production System Lean Implementation Requirements Lean Services

3 Lean Production 3 Lean Production can be defined as an integrated set of activities designed to achieve high-volume production using inventories (raw materials, work in process, and finished goods) Lean Production also involves the of waste in production effort Lean Production also involves the of production resources (i.e., parts arrive at the next workstation just in time )

4 Here the customer starts the process, pulling an inventory item from Final Assembly Pull System 4 Then sub-assembly work is pulled forward by that demand Customers Final Assembly Sub Fab Fab Vendor Vendor The process continues throughout the entire production process and supply chain Sub Fab Vendor Fab Vendor

5 Features of Lean Production 5 WHAT IT IS Management philosophy Pull system though the plant WHAT IT DOES Attacks Exposes problems and Achieves streamlined production WHAT IT REQUIRES Employee participation Industrial engineering/basics Continuing improvement Total quality control Small lot sizes WHAT IT ASSUMES Stable environment

6 The Toyota Production System 6 Based on two philosophies: 1. of waste 2. for people

7 Elimination of Waste 7 1. Focused factory networks 2. Group technology 3. Quality at the source 4. JIT production 5. Uniform plant loading 6. Kanban production control system 7. Minimized setup times

8 Minimizing Waste: Focused Factory Networks 8 These are small specialized plants that limit the range of products produced (sometimes only one type of product for an entire facility) Coordination System Integration Some plants in Japan have as few as 30 and as many as 1000 employees

9 Minimizing Waste: Group Technology (Part 1) Note how the flow lines are going back and forth 9 Using Departmental Specialization for plant layout can cause a lot of unnecessary material movement Saw Saw Saw Grinder Grinder Heat Treat Lathe Lathe Lathe Press Press Press

10 Minimizing Waste: Group Technology (Part 2) 10 Revising by using Group Technology Cells can reduce movement and improve product flow Saw Grinder Lathe 1 2 Lathe Press Heat Treat Saw Grinder Lathe A B Lathe Press

11 Minimizing Waste: Uniform Plant Loading (heijunka) 11 Suppose we operate a production plant that produces a single product. The schedule of production for this product could be accomplished using either of the two plant loading schedules below. Not uniform Jan. Units Feb. Units Mar. Units Total 1,200 3,500 4,300 9,000 or Uniform Jan. Units Feb. Units Mar. Units Total 3,000 3,000 3,000 9,000 How does the uniform loading help save labor costs?

12 Minimizing Waste: Inventory Hides Problems 12 Work in process queues (banks) Paperwork backlog Machine downtime Vendor delinquencies Engineering design redundancies Inspection backlogs Change orders Design backlogs Decision backlogs Example: By identifying defective items from a vendor early in the production process the downstream work is saved Example: By identifying defective work by employees upstream, the downstream work is saved

13 Minimizing Waste: Kanban Production Control Systems Once the Production kanban is received, the Machine Center produces a unit to replace the one taken by the Assembly Line people in the first place Withdrawal kanban This puts the system back were it was before the item was pulled 13 Machine Center Storage Part A Storage Part A Assembly Line Production kanban The process begins by the Assembly Line people pulling Part A from Storage Material Flow Card (signal) Flow

14 14 Determining the Number of Kanbans Needed Setting up a kanban system requires determining the number of kanbans cards (or containers) needed Each container represents the minimum production An accurate estimate of the lead time required to produce a container is key to determining how many kanban are required

15 The Number of Kanban Card Sets 15 Expected demand during lead time Safety stock k Size of the container DL(1 S) C k = Number of kanban card sets (a set is a card) D = Average number of units demanded over some time period L = lead time to replenish an order (same units of time as demand) S = Safety stock expressed as a percentage of demand during lead time C = Container size

16 Example of Kanban Card Determination: Problem Data 16 The control-panel for the Coffee! Kaffee! Caffè! Espresso machine requires a variety of sensors, switches and other electronic parts. The sensor assembly is produced in batches of 4 units from an upstream assembly area and delivered in a special container to a downstream control-panel assembly operation. The sensor assembly area can send a container of switch assemblies in 2 hours (however, it can produce the sensors quite rapidly). The delay is caused by production, transportation, setup (negligible in this case), and plant pacing. The control-panel assembly area requires 5 sensor assemblies per hour. Safety stock has been set at 10% of needed inventory How many Kanban cards are required?

17 Example of Kanban Card Determination: Calculations 17 k Expected demand duringlead time Safety stock Size of thecontainer DL(1 S ) C 5(2)(1.1) 4 Always round up! 2. 75, or 3

18 Respect for People 18 Level payrolls Cooperative employee unions Subcontractor networks Bottom-round management style Quality circles (Small Group Involvement Activities or SGIA s)

19 19 Toyota Production System s Four Rules 1. All work shall be highly specified as to content, sequence, timing, and outcome 2. Every customer-supplier connection must be direct, and there must be an unambiguous yes-or-no way to send requests and receive responses 3. The pathway for every product and service must be simple and direct 4. Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization

20 Lean Implementation Requirements: Design Flow Process 20 Link operations Balance workstation capacities Redesign layout for flow Emphasize preventive maintenance Reduce lot sizes Reduce setup/changeover time

Outline. Push-Pull Systems Global Company Profile: Toyota Motor Corporation Just-in-Time, the Toyota Production System, and Lean Operations

Outline. Push-Pull Systems Global Company Profile: Toyota Motor Corporation Just-in-Time, the Toyota Production System, and Lean Operations JIT and Lean Operations Outline Push-Pull Systems Global Company Profile: Toyota Motor Corporation Just-in-Time, the Toyota Production System, and Lean Operations Eliminate Waste Remove Variability Improve