Lecture 9 MBF2213 Operations Management Prepared by Dr Khairul Anuar L9: Lean synchronization 1
Lean operations Operations strategy Design Improvement Lean operations Planning and control The market requires specified time, quantity and quality of products and services The operation supplies the delivery of products and services only when needed
Key operations questions Lean synchronization Slack et al. identify the following key questions: What is lean synchronization? How does lean synchronization eliminate waste? How does lean synchronization apply throughout the supply network? How does lean synchronization compare with other approaches?
Lean operations The key principle of lean operations is relatively straightforward to understand, it means moving towards the elimination of all waste in order to develop an operation that is faster, more dependable, produces higher quality products and services and, above all, operates at low cost.
Lean operations (Continued) Synonyms Continuous flow manufacture High value-added manufacture Stockless production Low-inventory production Fast-throughput manufacturing Lean manufacturing Toyota production system Short-cycle time manufacturing.
Traditional approach Lean operations (Continued) JIT material flow Stage A Buffer inventory Stage B Buffer inventory Stage C JIT approach Orders Orders Stage A Stage B Stage C Deliveries Deliveries
Lean operations (Continued) Traditional approach More production at each stage Focus on highcapacity utilization Extra production goes into inventory because of continuing stoppages at earlier stages More stoppages because of problems High inventory means less chance of problems being exposed and solved Lean approach Lower-capacity utilization, but Focus on producing only when needed No surplus production goes into inventory Fewer stoppages Low inventory so problems are exposed and solved
Lean operations (Continued) The lean philosophy of operations Eliminate waste Involve everyone Continuous improvement Lean as a set of techniques for managing operations Basic working practices TPM Design for manufacture Set-up reduction Operations focus Total people involvement Small, simple machines Visibility Flow layout JIT supply Lean as a method of planning and control Pull scheduling Kanban control Levelled scheduling Mixed modelling Synchronization
Inventories of materials. Information or customers have similar characteristics Of material (queue of material) Inventory Of information (queue of information) Cost Ties up working capital Less current information and so worth less Of customers (queue of people) Wastes customers time Space Needs storage space Needs memory capacity Need waiting area Quality Defects hidden, possible Defects hidden, possible Gives negative perception damage data corruption Decoupling Makes stages independent Makes stages independent Promotes job specialization/ fragmentation Utilization Stages kept busy by work-in-progress Stages kept busy by work in data queues Servers kept busy by waiting customers Coordination Avoids need for synchronization Avoids need for straightthrough processing Avoids having to match supply and demand Source: Adapted from Fitzsimmons, J.A.
Lean Systems Lean systems affect a firm s internal linkages between its core and supporting processes and its external linkages with its customers and suppliers. One of the most popular systems that incorporate the generic elements of lean systems is the just-in-time (JIT) system. The Japanese term for this approach is Kaizen. The key to kaizen is the understanding that excess capacity or inventory hides process problems. The goal is to eliminate the eight types of waste.
Wastes Activities that consume time, resources and space, but do not contribute to satisfying customer needs. TABLE THE EIGHT TYPES OF WASTE OR MUDA Waste Definition 1. Overproduction Manufacturing an item before it is needed. 2. Inappropriate Processing Using expensive high precision equipment when simpler machines would suffice. 3. Waiting Wasteful time incurred when product is not being moved or processed. 4. Transportation Excessive movement and material handling of product between processes. 5. Motion Unnecessary effort related to the ergonomics of bending, stretching, reaching, lifting, and walking. 6. Inventory Excess inventory hides problems on the shop floor, consumes space, increases lead times, and inhibits communication. 7. Defects Quality defects result in rework and scrap, and add wasteful costs to the system in the form of lost capacity, rescheduling effort, increased inspection, and loss of customer good will. 8. Underutilization of Employees Failure of the firm to learn from and capitalize on its employees knowledge and creativity impedes long term efforts to eliminate waste.
Waste (Continued) Over-production Make more than is required by the customer, or to make it earlier than required. Taking multiple copies of the document which are not required. Waiting time Any delay between when one process step/activity ends and the next step/activity begins. Waiting for a manager to approve an application.
Waste (Continued) Transport Movement of work between departments or offices that do not add to the value of the product or service. Multiple approvals across different departments. IT LPC Underwriting Operations 2 (Over) Processing Operations 1 Adding more value to a service or product than customers want or will pay for. Capturing extra information from the customer which is not used.
Waste (Continued) Inventory More materials or information on hand than is currently required. 100 applications waiting together for data entry. Motion Needless movement of people. While transportation refers to the movement of the work, motion involves movement of workers. Running to a printer on a different floor for a printout.
Waste (Continued) Defects/Inspection Any aspect of the service that does not conform to customer needs. Incorrect customer details captured in the system.
Some daily examples Activity Making extra copies, just in case Document movement between departments Supervisory approval delays Files waiting to be worked on Multiple calls to the customer for same issue Incorrect customer address Cupboard full of office supplies Capturing additional fields in the system Running for photocopier to other floor on building Incorrect processing of salary Customer on hold Forms moving different locations Waste Category Over-production Transport Waiting Inventory Over-production Defect Inventory Over-processing Motion Defect Waiting Transport.
Close supplier ties Supply Chain Considerations Low levels of capacity slack or inventory Look for ways to improve efficiency and reduce inventories throughout the supply chain JIT In-plant representative Benefits to both buyers and suppliers Small lot sizes Reduce the average level of inventory Pass through system faster Create uniform workload and prevent overproduction Increase setup frequency
Process Considerations Pull method of work flow Push method Pull method
Process Considerations Standardized components and work methods Flexible workforce Automation Five S (5S) practices Total Preventive Maintenance (TPM)
Lean operations The 5Ss TABLE 5S DEFINED 5S Term 5S Defined 1. Sort Separate needed from unneeded items (including tools, parts, materials, and paperwork), and discard the unneeded. 2. Straighten Neatly arrange what is left, with a place for everything and everything in its place. Organize the work area so that it is easy to find what is needed. 3. Shine Clean and wash the work area and make it shine. 4. Standardize Establish schedules and methods of performing the cleaning and sorting. Formalize the cleanliness that results from regularly doing the first three S practices so that perpetual cleanliness and a state of readiness are maintained. 5. Sustain Create discipline to perform the first four S practices, whereby everyone understands, obeys, and practices the rules when in the plant. Implement mechanisms to sustain the gains by involving people and recognizing them via a performance measurement system.
Designing Lean System Layouts Line flows recommended Eliminate waste One worker, multiple machines (OWMM) Group technology Group parts or products with similar characteristics into families
One Worker Multiple Machines (OWMM) Figure One-Worker, Multiple-Machines (OWMM) Cell
Value stream mapping Value stream mapping focuses on value-adding activities and distinguishes between value-adding and non-value - adding activities. It is similar to process mapping but different in four ways: It uses a broader range of information than most process maps. It is usually at a higher level (5 10 activities) than most process maps. It often has a wider scope, frequently spanning the whole supply chain. It can be used to identify where to focus future improvement activities.
Figure House of Toyota House of Toyota Highest quality, lowest cost, shortest lead time by eliminating wasted time and activity Just in Time (JIT) Takt time One-piece flow Pull system Culture of Continuous Improvement Operational Stability Jidoka Manual or automatic line stop Separate operator and machine activities Error-proofing Visual control Heijunka Standard Work TPM Supply Chain Product leveling/smoothing - technique for reducing the muda (waste) Jidoka - automation with a human touch (eg machine stops when there is a problem) Takt - German word Taktzeit, translated best as meter, sets the pace for industrial manufacturing lines so that production cycle times can be matched to customer demand rate
Figure House of Toyota House of Toyota Highest quality, lowest cost, shortest lead time by eliminating wasted time and activity Just in Time (JIT) Takt time One-piece flow Pull system Culture of Continuous Improvement Operational Stability Jidoka Manual or automatic line stop Separate operator and machine activities Error-proofing Visual control Heijunka Standard Work TPM Supply Chain Product leveling/smoothing - technique for reducing the muda (waste) Jidoka - automation with a human touch (eg machine stops when there is a problem) Takt - German word Taktzeit, translated best as meter, sets the pace for industrial manufacturing lines so that production cycle times can be matched to customer demand rate Heijunka is a technique for reducing the Mura (Unevenness) which in turn reduces muda (waste). It was vital to the development of production efficiency in the Toyota Production System and lean manufacturing. The goal is to produce intermediate goods at a constant rate so that further processing may also be carried out at a constant and
Operational Benefits and Implementation Issues Organizational considerations Human costs of lean systems Cooperation and trust Reward systems and labor classifications Process considerations Inventory and scheduling Schedule stability Setups Purchasing and logistics
Waste is a large part of most processes Mapping the Value Stream Example High-level process steps for a loan application process High-level process steps Acquire the customer Prepare application Process application Advise customer Disburse funds Step-by-step activity analysis for value-add to our customer Activities which add value to the customer: e.g. the credit decision Activities which don t add value to the customer but are required by regulation: e.g. Banking laws Activities which neither add value nor are required by regulation: e.g. carrying files from one desk to another Actual value-add activity may only be 1 10% of the total process time.
Delivering smaller quantities more often can reduce inventory levels Inventory levels Inventory levels
The problem with inventory Productivity problems WIP Defective materials Scrap Downtime Rework Reduce the level of inventory (water) to reveal the operations problems WIP Defective materials Productivity problems Scrap Downtime Rework
Small machines Conventional Western approach is to purchase large machines to get economies of scale. These often have long, complex set-ups, and make big batches quickly creating waste. Changeovers Inventory levels Time
Small machines (Continued) Using several small machines rather than one large one allows simultaneous processing, and is more robust and more flexible. Inventory levels Time
Flow principle A process consists of 3 steps A, B and C. It takes one minute to finish each step of the process (A, B and C). Batch Flow (units processed in batches of 10) How much time will it take for 10 units to move through the process? A B C 10 Minutes + 10 Minutes + 10 Minutes = 30 Minutes
Flow Principle (Continued) A process consists of 3 steps A, B and C. It takes one minute to finish each step of the process (A, B and C). Continuous Flow (unit processed individually, that is, process one, move one) How much time will it take for 10 units to move through the process? A B C 1 Minute + 1 Minute + 10 Minutes = 12 Minutes
Single-piece flow Traffic lights typical batch processing Flow of traffic in batches may cause uneven loads of traffic traffic may jam on one side while no vehicle come from other directions. Roundabout single-piece flow Traffic flows as soon as there is capacity in the roundabout piece by piece.