ch. 8
Ohno observed that inventory helps to what?
"cover up problems". High inventory and poor quality oftentimes go hand in hand. A commonly used metaphor of how inventory hides problems is: the freight of the boat is very valuable, so the company operating the canal wants to make sure the boat never hits a rock
what is Genchi genbutsu?
- "go and see it for yourself" - Gather first-hand information - Collect and analyze data
what is Andon: "Lantern"?
- Andon can help create quality at the source • Do it right the first time and if something goes wrong, stop the process immediately • Workers are personally responsible for the quality of their output
what are Common Lean tools for quality?
- Jidoka: detect-stop-alert • Visual Management and 5S • Andon - Root-cause analysis - Poka-Yoke: avoid recurrence
what is Japanese manufacturing post WWII?
- Lack of resources drove aversion to waste in automobile mfg - Aversion to excess inventory, space, movement, processes...etc. - Reduced batch sizes, reduced setup time, involved employees to contribute to continuous improvement efforts -> Toyota Production System (TPS)
what is traditional manufacturing?
- Mass production, economies of scale - Large batches, large lot sizes - Substantial set-up time - Substantial inventories: finished goods, work in process, raw materials - Not closely linked to market demand - This is how almost all US manufacturing operated until the 1980's, and many still do today.
what is heijunka?
- Process leveling or smoothing. - Avoid large batches and mix demand to produce a smooth flow. - is a strategy or technique that would reduce inventory in the operation
what is pull system pacing?
- Pull systems are paced by market demand - We already defined takt time - takt time= 1/D or available time / required quantity - If we operate more slowly than takt time • Need to speed up process - If we operate more quickly than takt time • Need to slow down process
what is visual management-5S?
- Sort, Straighten, Shine, Standardize, Sustain - Everything has a place so that it is actionable for anyone when something is out of place
what is kanban?
- Use of physical tools to signal production starts. - Control inventory by controlling number of physical signals. - Internal demand determines replenishment - example: Each Kanban authorizes 9 units and 4 Kanban in the system= Limits total inventory to 36.
the amount of kanban containers management should put into the system depends on what factors?
- container size - demand rate - replenishment time - safety stock
for autonomation to work, the equipment has to be capable of what?
- detecting that a problem exists - stopping production - alerting the operator
so, a smooth single-unit flow has many desirable properties, but it requires some changes in the process. The most significant process changes required are what?
- implementing a pull system - transferring units piece by piece (no transport batching), which typically requires a change in the facility's layout - operating on takt time - leveling the demand rate so that the takt time does not constantly change and providing the flexibility in the process to produce different variants of a product
what are the 2 concepts that characterize TPS's approach towards root-cause problem solving?
- kaizen - genchi genbutsu
when considering which form of a pull system one wants to implement, what should be kept in mind?
- kanban should be used for products or parts that are (a) processed in high volume and limited variety and (B) that are required with a short lead time so that it makes economic sense to have a limited number of them pre-produced and (C) for which the costs and efforts related to storing the components are low - make to order should be used for products or parts (a) that are processed in low volume and high variety (b) for which customers are willing to wait for their order (c) for which it is expensive or difficult to store the flow untis
to implement a pull system, TPS advocates what 2 forms of process control?
- kanban-based pull - make-to-order
there are several ways that a one-unit flow exposes and reduces waste. what are the most important ones?
- less inventory - shorter response times to demand (shorter flow times) - faster feedback - simpler and more flexible staffing - shorter processing times - more transparency
what does a process layout amenable to a single unit flow look like?
- organize workstations matching the flow materials= this has the simple benefit that it reduces transportation needs - create baton passing zones= instead of having fixed allocations of activities to workers, the idea of a baton passing zone is that the process can absorb variations in speed and starting time. this way, a line can be balanced without major reassignments of workers. of course, such baton passing zones require that stations be next to each other. - use U-shaped lines= the benefit of organizing the flow not in the shape of an "I" but of a "U" is that it allows for more flexibility and workers helping each other
what are the four principles driving the operational excellence at Toyota (4Ps of Toyota)?
- philosophy - processes - people and partners - problem solving
what is just-in-time?
- push vs pull mentality - kanban
C&A uses a line of 5 stations to make a product. The cycle time is 30 seconds per unit. The inventory between stations is 10 units. Inspection happens at the end of the process. Which of the following is a way to shorten the information turnaround time for a defect made at station 2?
- reduce the amount of inventory between stations - reduce cycle time - inspect at every station
Taiichi Ohno used 2 metaphors to illustrate the benefits of a smooth flow, what are they?
- run like the tortoise, not the hare - it takes eight men to row a boat
the waste of flow time becomes visible by taking one of the what 2 approaches?
- taking the perspective of the flow unit and - looking at the inventory
what are 7 sources of waste (muda)?
- waiting - overproduction - inventory - transport - overprocessing - rework - unnecessary movement
Ohno viewed the reduction of waste as the business's first objective. to enable workers and managers to see waste, he distinguished between seen sources of production waste. what are they?
- waiting (time on hand) - overproduction - inventory - transport - over processing or incorrect processing - rework - unnecessary motions and movements
what is shorter response times to demand (shorter flow times)?
By little's law, we know that less inventory also translates into shorter flow times; should we customize what we produce or should we introduce new products, we will be more responsive to the market if we have less inventory
what is piece-by-piece flow?
Difficult to achieve single unit flow from suppliers. • Control supplier batch size with Kanban! • Toyota co-locates with suppliers in many places. Within facility: facilitate with manufacturing cell.
what is the Ultimate goal: piece-by-piece flow?
Effect of transfer batch size: • Increase inventory • 𝐼=𝑅×𝑇 • Increase flow time
how long does it take to detect an issue?
It takes 7 time units (and 7 "bad" items) to detect the problem. ITAT = Information Turn Around Time Moving toward single-piece flow improves ITAT Andon system eliminates waste and ITAT
what are lean operations and the Toyota production system?
Lean operations is a way of thinking: reduce waste. - Waste of time of a resource - Waste of time of a flow unit Toyota production system (TPS) = lean operations + built-in quality
what is Overall equipment effectiveness (OEE)?
OEE= (value - added time) / (labor content + idle time) compare to utilization= labor content / (labor content + idle time) key idea: some labor content may be waste or non-value-added
what is the OEE formula?
OEE= value-added time / total available time
what is overproduction?
TPS seeks to only produce in the quantities demanded by the customer. The goal is to produce what the customer wants and when the customer wants it, a principle known as just-in-time (JIT) production. producing too much too soon will waste capacity. because there exists no demand for the output now (and maybe ever), the capacity should have been used to produce actual demand, or the process should have been slowed down with the goal of saving costs
what is visual management?
Visibility - visual management control • Complete stranger should be able to walk the production floor and understand within a few minutes the health of the operation • Visual management boards. Daily meetings at boards. Goals vs. actual for every process tracking lead time, quality, completions.
what is waste vs. work?
Waste (muda): needless activity Work: needs to be done - Non-value-added work: necessary to process but not to customer - Value-added work: necessary to customer
what is TPS?
Waste Elimination + Built-in Quality
what is over processing or incorrect processing?
a close analysis of activity times reveals that workers often spend more time on a flow unit than necessary.
what is it takes eight men to row a boat?
a crew of 8 amateur rowers will get slower if one of the rowers is substituted by a faster, professional rower. the boat, most likely, will get off course and, paradoxically, it is the fastest rower who does the most damage
what is rework?
a famous saying in the Toyota Production System and the associated quality movement has been "do it right the first time". rework requires repeating a particular operation, which takes away time that could be used for regular production
what is taking the perspective of the flow unit?
a good exercise that every process observer at some point in an analysis should take is the perspective of the flow unit. create a simple time line and document what the flow unit is doing at each moment in time it journeys through the process.
what is process layout?
a layout in which resources that are close to each other in the process flow diagram should also be co-located in physical space. this avoid unnecessary transports and reduces the need to form transport batches. this way, flow units can flow one unit at a time from one resource to the next (ikko-nagashi).
what is philosophy?
a long-term approach that favors quality and capabilities over short-term financial goals
the technique of reducing idle time is known as what?
a multitask job assignment
what is demand rate?
a process with a higher demand rate requires more inventory - when demand is 1000 units per day , 500 units of inventory is merely half a day of supply. in contrast, when demand is 100 units per day, 500 units of inventory would last 5 days
what is genchi genbutsu?
an important philosophy behind kaizen. problem solving should emphasize going out to the front line and observing the problem yourself, collecting data, and analyzing the data instead of emphasizing personal opinions or management seniority. everyone dealing with a specific problem should gather firsthand information from the situation. this principle explicitly includes senior management
the jidoka concept has been generalized to include what?
any mechanism that stops production in response to quality problems, not just for automated machines.
what is less inventory?
by producing to demand, we can reduce the finished goods inventory; also, by balancing the line, we can reduce the amount of work-in-process inventory (WIP), both of which are good for our inventory turns and thus good for working capital requirements
what is processes?
continuous process flows that match supply with demand, aiming to reduce wastage of flow time and capacity
what is stable processes?
create a stable and smooth flow with little variability and built-in flexibility - in this chapter= level production and built-in flexibility - in other chapters= variability and flow
having more stations to make a product will increase what?
cycle time and thus increase the information turnaround time
what is demand during replenishment time formula?
demand during replenishment time= replenishment time X demand rate
what is built in quality?
detect and address defects when and where they occur and prevent them from recurring - examples: in this chapter= detect-stop-alert (jidoka), inspection policy, and stop the line (andon). In other chapters= six sigma, process capability, and control charts
what is the TPS quality improvement framework?
detect-stop-alert (jidoka) -> root-cause analysis (kaizen, genchi genbutsu) -> avoid recurrence (poka-yoke) -> jidoka
what is container size?
each kanban authorizes filling one container with inventory. the bigger the containers, the fewer kanban cards needed
detect-stop-alert is at the heart of what?
exposing defects, shutting down the machine forces a human intervention in the process, which in turn triggers process improvement
holding everything else constant, shortening the flow time improves the what?
extent to which we consider an operation as lean
Frederick taylor, the father of scientific management, has also created Taylorism which has what?
for better or worse, become the symbol for how NOT to manage a lean operation.
the term lean reflects the operation's what?
goal to eliminate waste from the system.
the OEE framework introduced earlier supports a much more systematic observation and analysis. observation is a key element of ehat?
good (and lean) operations
to find the takt time of a process, we need what two pieces of information?
how many hours a day we produce or the available time and how many units of demand are requested
Taiichi Ohno, the former chief engineer at Toyota and the founder of TPS, also had a deep interest in what?
how members of the workforce spent their time and said that "moving is not working" and distinguished between 2 types of worker movement: waste (muda) and work.
what is faster feedback?
if a unit is defective, we want to know sooner rather than later. the problem with WIP, however, is that the pile of inventory that the flow unit will join after being completed at one resource will not provide feedback. but the worker at the next station downstream can, so the sooner we get the unit to the next station, the sooner we will get feedback and thus have the chance to correct our mistakes (this will be discussed further on in the section on built-in quality)
what is waiting (time on hand)?
if a worker waits for input from the previous step in the process flow, the worker is idle. idle time and our measures of labor utilization are thus the most obvious form of waste. a particular form of idle time that Ohno observed was operators of machines waiting for the machine to complete its work
flow units, in the eyes of Ohno, are what?
impatient. they don't like sitting in inventory wasting their flow time without receiving value-added work. our goal is to turn the incoming raw materials and other process inputs into fulfilled customer demand as quickly as possible
the output of a kaizen project is a validated idea for what?
improvement. oftentimes, such an idea will help prevent the previously detected defect from recurring by fool proofing an activity (poka-yoke). these ideas lead to new work standards or new pieces or equipment that prevent defects from recurring
instead of optimizing transfer batch sizes with a given process layout, TPS takes a different approach, what is it?
in TPS, the optimal transfer batch size is simple. the optimal transfer batch size is equal to 1. if this single unit batch size is not economical, we have to think about a different process layout.
what is transport?
internal transport, be it carrying around half-finished computer, etc., it corresponds to an additional waste of capacity. processes should be laid out such that the physical layout reflects the process flow to minimize the distances flow units must travel through a process
what is more transparency?
inventory helps to "cover up defects and imbalances"; with little or no inventory between stations, imbalances in speed across resources and defects can be easily detected
what is production leveling (heijunka)?
it attempts to lower the peaks of Productions and raise the Valley's in production as much as possible so that the flow at the surface is smooth
what is the kanban system?
it refers to a production and inventory control system in which production instructions and parts delivery instructions are triggered by the consumption of parts at the downstream step - Ohno and his colleagues had the idea for kanban when visiting U.S. supermarkets since they replenish their shelves only when customer take items from the shelf - in this system, standardized returnable parts containers circulate between the upstream and downstream resources. the upstream resource is authorized to produce a unit when it receives an empty container. in other words, the arrival of an empty container triggers a production order. the term kanban refers to the card attached to each container. consequently, kanban cards are frequently called work authorization forms
what is inventory?
it's a result of overproduction and the most visible form of supply - demand mismatch. an accumulation of inventory indicates that the JIT methods have not (yet) been implemented correctly. inventory is not only a sign of overproduction, it also leads to additional waste in the form of extra demand for material handling, storage, and transportation. moreover, inventory often hides other problems in the process because it decouples the process steps in the flow and thus leads to workers ignoring the dependencies that exist in the process
what is the "house-shaped" architecture of TPS?
it's widely adopted. - roof= the top we have the principle of waste reduction and the goal to match supply with demand. Better flow (no wasted time) and better use of resources (no wasted capacity) - 2 pillars: just-in-time production using a single-unit flow and built in quality - floor or foundation= a culture of process improvement and a stable environment with limited variability
once a problem is detected, we have to understand what?
its root cause: why did the problem occur in the first place?
moving to a single-unit flow (ikko-nagashi) that matches demand is a what?
key flow concept in TPS and helps with the reductionos waste.
the number of kanban containers- that is, the max amount of inventory authorized- is under the control os who?
management
both stories have the same what?
moral: a steady and even pace wins over a pace that is uneven across time (the hare) or across team members (the amateur boat with a single professional in it)
what are the subcomponents of work?
non-value-added work and value-added work
what is the number of kanban cards formula?
number of kanban cards= (demand during replenishment time + safety stock) / container size
what is waste of time of a resource?
one type of waste reflects the perspective of the resource. capacity is wasted because of idle time. But capacity is also wasted by performing waste and non-value-added work
what is problem solving?
ongoing improvement of the operations leveraging the experience of the front-line employees
sources of waste include what?
overproduction and inventory
there is another form of waste - not from the perspective of the resources in the process, but from the what?
perspective of flow units going through the process - the waste of time.
what is process improvement?
problem soling and process improvement are led by the workers (kaizen) - in this chapter= go and see yourself (genchi genbutso) - in other chapters= finding the root cause, control charts, pareto analysis, and fool proofing
what is just-in-time flow?
produce in the amounts needed, when needed, and where needed using a single-unit flow - example: in this chapter= pull production (kanban), piece-by-piece transfer (ikko-nagashi), and U-shaped lines/cells. In other chapters= takt time, mixed model production (heijunka), and fast changeovers
as an alternative to a kanban system, we can also implement a what?
pull system using a make-to-order process. typically, the products corresponding to these orders then flow through the process on a first-in-first-out (FIFO) basis. each flow unit in the make-to-order process is thereby explicitly assigned to one specific customer order
what is push vs pull production?
push mentality: - produce in advance of demand - maximize capacity and utilization rates - inventory is an asset pull mentality: - customer signals demand - signal travels up entire supply chain - inventory is waste
what is make-to-order?
refers to the release of work into a system only when a customer order has been received for that unit
what are people and partners?
respectful interactions with employees and partners emphasizing skill development and growth
Taylor believed in what?
scientific principles of designing work.
in a push system, inventory can what?
simple "happen" to management because their is theoretically no limit to the amount of inventory that can pile up after a resource. In contrast, a kanban system inventory becomes a managerial decision variable - the maximum inventory is controlled via the number of kanban cards in the process
while TPS is frequently associated with certain buzzwords, such as JIT, kanban, and kaizen, one should not assume that what?
simply implementing any of these concepts will lead to the level of operational excellence at Toyota
what is shorter processing times?
studies have shown that workers slow down when they have the comfort that there exist big buffers in the process. After all, when they slow down, nothing really happens because the station downstream is protected by a big buffer. In the absence of such a buffer, a worker slowing down will get immediate feedback from downstream- somebody will run out of work and hence have to stop
what is the takt time formula?
takt time= available time / demand rate
what is the target Manpower formula?
target manpower= labor content / takt time
the main advantage of a kanban system is what?
that there can never be more inventory between 2 resources than what has been authorized by the kanban cards- the upstream resource can only produce when it has an empty containers so production stops when all of the containers are full, thereby limiting the inventory to the number of containers. in contrast, with a push system, the upstream resource continues to produce as long as it has work to do
the most well-known form of jidoka is what?
the andon cord= a cord running adjacent to assembly lines that enables workers to stop production if they detect a defect
the value-added time of a flow unit is related to but not identical to, what?
the definition of labor content
improvements in operations should come from where?
the front line, rather than being designed by somebody who is not fully familiar with the process and thus has little data about the real operations of the process or opportunities to quickly validate ideas in practice
what is run like the tortoise, not the hare?
the hare ridicules the slow-moving tortoise who challenges the hare to a race. the hare quickly gains a significant lead and hence feels comfortable taking a little nap in the middle of the race. the tortoise, though tired, keeps on going at a steady pace. when the hare wakes up again, the hare is behind and has to witness the victory of the tortoise
what is automation with a human touch or jidoka (autonomation)?
the idea of merging the human intelligence required for handling exceptions with the mechanical power of a machine
our goal is to measure what percentage of a machine's or a worker's capacity is used productively. this gives us a sense of what?
the improvement potential - if we are currently demand-constrained, this improvement potential can take the form of lower costs because of a redeployment of resources - if we are currently capacity-constrained, this improvement potential can take the form of an increased flow rate
what is waste (muda)?
the needless waste of time and worker movement that ought to be elimintated immediately
emphasizing the role of quality and addressing quality problems correctly when and where they occur is what?
the second pillar supporting the house of TPS. the basic philosophy is that the production process should halt production when a quality problem is discovered. Lines that do not stop were, according to Ohno, either perfect (which is rare) or facing big problems (that were simply hidden/swept under the rug). Once a quality problem is found, it is addressed locally, hopefully preventing it from recurring
what is information turnaround time (ITAT)?
the time between creating a defect and receiving the feedback about the defect
what is a direct consequence of little's law?
the time between when the problem occurred at the upstream resource and when it's detected at the downstream resource depends on the size of the buffer between the 2 resources
smooth and continuous flows are at the heart of the what?
the toyota production system and they ensure that the process produces the right material in the right amounts at the right time; in short, that the process matches supply with demand
what is kanban-based pull?
the upstream resource replenishes what demand has withdrawn from the downstream resource
what is unnecessary motions and movements?
there are many ways to perform a particular task. but, according to the early pioneers of the industrial revolution, including Frederick Taylor, there is only one "right way". every task should be carefully analyzed and should be optimized using a set of tools that today is known as ergonomics. to do otherwise is wasteful.
what is replenishment time?
this includes the time to make the units in one container (including any potential setup times) and transport them to the receiver
what is non-value-added work?
those movements that do not add value in the eyes of the customer but most be done under the current conditions of the process in order to complete a unit
what is value-added work?
those movements valued by the customer as they are absolutely required to transform the flow unit from its inputs to being the output the customer wants
what is safety stock?
to account for breakdowns, defects, or other forms of variation, we allow for a little but of extra inventory in the system. how much extra inventory is a decision to be made by management in response to the variation in the process. if the process works really well, this safety stock can be small; if things go wrong more frequently, a larger safety stock would be more preferable
what's the idea behind genchi genbutsu ("go and see in the real place") and kaizen (process improvement)?
to avoid the tension between the observing managers and the hard-working employees, Ohno envisioned an operation in which those performing the work would also be the ones observing and improving this
what is the goal of scientific management?
to squeeze out the last bit of productivity from the workforce. this had substantial organizational consequences
what is the TPS "house"?
top roof: - goal: high quality, low cost, and short lead time left wall: - just-in-time - produce only what is needed, when and where needed right wall: - jidoka - built-in-quality - detect and address defects bottom floor: - stability - standardized work, level production (heijunka), kaizen
what is looking at inventory?
unless one takes the perspective of the flow unit, time itself is hard to observe. but we don't have to observe flow time to know it's there. instead, we can compute the flow time indirectly. we know from little's law that, as long as we hold the flow rate constant, flow time if proportional to the amount of inventory in the process. so instead of looking for flow time, we just have to look for inventory - and that tends to be much easier to observe
what is the value-added percentage formula?
value-added percentage= value-added time of a flow unit / flow time
what are the elements of flow time in a production process?
waiting customers -> casting -> wait for transport -> transport -> wait for the previous production cycle to end -> setup -> wait for other members of the batch -> machining -> wait for transport -> transport -> wait for assembly -> assembly
while there exist many forms of waste, we find it helpful to distinguish between two forms of waste, what are they?
waste of time of a resource and waste of time of a flow unit
what is waste of time of a flow unit?
waste that reflects the perspective of the flow unit. it decreases the amount of time it takes to make something. this improvement is mostly a result of reducing the flow time. because the number of items produced each unit of time has roughly stayed constant, shorter flow time is directly proportional to less inventory.
lean operations is about reducing waste , be it in the form of what?
wasted flow time or wasted capacity
what is simpler and more flexible staffing?
when we produce at a constant rate throughout the process, every resource gets staffed based on its processing time relative to its takt time. when demand goes up, the takt time goes down and you need to bring in extra workers. when demnd slows down, the takt time goes up and we need to staff a resource with fewer operators. No forecasting, no second-guessing demand- just produce to demand
what is a push system?
where the flow units are allowed to enter the process independent of the current amount of inventory in the process. especially if the first resources in the process have high capacities, they are likely to flood the downstream
what is a pull system?
where the resource furthest downstream (i.e., closest to the market) is paced by market demand. In addition to its own production, it also relays the demand information to the next station upstream, thus ensuring that the upstream resource also is paced by demand. If the last resource assembles 2 electronics components into a computer, it relays the demand for 2 such components to the next resource upstream. This way, the external demand is transferred step by step through the process, leading to an information flow moving in the opposite direction relative to the physical flow of the flow units
ideally, leveling should lead to what?
zero fluctuations in the final assembly line
what is kaizen?
• Continuous improvement • the process of making small changes to the process with the goal of eliminating waste • Changes come from front line workers - kaizen workshops are gatherings of small teams of front-line workers
