Chapter 8: Lean Operations & the Toyota Production System

Number of Kanban cards formula

# of Kanban Cards = (Demand during replenish time + Safety Stock) / Container Size When demand during replenish time is computed as.. Demand During Replenish Time = Replenish Time x Demand rate

Examples of Waste: figure 8.1

-idle time -meaningless transport -stockpiling inventory -fixing defects

Examples of Non-value-added work: figure 8.1

-receiving parts -unpacking input material -pressing a button on a machine

The amount of Kanban containers put into a system is dependent upon what factors? (4)

1. Container size 2. the demand rate 3. the replenish time 4. the safety stock

Single Unit flow has many desirable properties, but requires some changes in the process. What are the process changes?

1. Implementing a pull system 2. Transferring units piece by piece (no transport batching), which typically requires a change in the facility's layout. 3. Operating on takt time. 4. 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.

To implement a pull system, TPS advocates two forms of process control: What are they?

1. Kanban-based pull 2. Make-to-order

How does a single unit flow expose and reduce waste? (6)

1. Less inventory 2. Shorter response times to demand (shorter flow times) 3. Faster Feedback 4. Simpler and more flexible staffing 5. Shorter Processing times 6. More transparency

Process layouts for a single-unit flow (3)

1. Organize work stations matching the flow units of materials 2. Create baton passing zones 3. U-shaped Lines

What are the 4 principles driving the operational success at Toyota.

1. Philosophy 2. Processes 3. People & Partners 4. Problem Solving

What 2 metaphors does Ohno use to illustrate the benefits of smooth flow?

1. Run like the tortoise, not the hare. 2. It takes 8 men to row a boat

What are the seven sources of production waste?

1. Waiting (time on hand) 2. Overproduction 3. Inventory 4. Transport 5. Overprocessing or incorrect processing 6. Rework 7. Unnecessary motions or movements

What are the 2 types of worker movements distinguished by Ohno?

1. Waste (muda) 2. Work a) Non-value-added work b) Value-added work

Many forms of waste exist, however which two forms are most helpful to distinguish?

1. Waste of time at a resource. 2. Waste of time of a flow unit.

Waste of flow time becomes visible by taking one of these two approaches. What are the 2 approaches?

1. taking the perspective of the flow unit. 2. looking at inventory

What is overprocessing or incorrect processing (in terms of waste)

A close analysis of activity times reveals that workers often spend more time on a flow unit than necessary. A worker might excessively polish the surface of a piece of metal he just processed or a doctor might ask a patient the same questions that a nurse asked 5 minutes earlier.

Describe: it takes 8 men to row a boat

A crew of eight 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.

Example of Non-value-added work?

A customer does not value a worker moving from one machine to another, but this work is necessary given the present process.

What is rework (in terms of waste)

A famous saying in the Toyota Production System and the associated quality movement has been "Do it right the first time." As we have discussed in conjunction with the Louis Vuitton handbags, rework requires repeating a particular operation, which takes away time that could be used for regular production.

Who is Taiichi Ohno?

A former chief engineer at Toyota and the founder of TPS, also had a deep interest in how members of the workforce spent their time. -"Moving is not working"

Describe Philosophy.

A long-term approach that favors quality and capabilities over short-term financial goals.

What is the TPS House?

A representation of the Toyota Production System in the shape of a house with the roof capturing the main goal of the TPS, which is waste reduction. The pillars are: 1. Just-in-time flow 2. Built-in-quality The foundation is process improvement.

Detect and address defects when and where they occur and prevent them from reoccurring, is known as what?

Built-in Quality

Describe Processes.

Continuous process flows that match supply with demand, aiming to reduce wastage of flow time and capacity.

Describe a Push System

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 with inventory.

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 (just like standing next to a printer and watching the pages come out).

What is transport (in terms of waste)

Internal transport, be it carrying around half-finished computers, wheeling patients through the hospital, or carrying around folders with insurance claims, 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.

Little's Law formula

Inventory = Flow Rate x Flow Time

What is Inventory (in terms of waste)

Inventory is a result of overproduction and, as we have discussed throughout this book, 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.

The term _____ reflects the operations goal to eliminate waste from the system.

Lean

Example of Waste Time at a resource: Louis Vuitton bag

Louis Viton used to have 50% of their $1000 bags returned because of a defect. This is waste. Waste is also the time it takes for a factory worker to transport these "half-completed" bags.

What is waste of worker intellect?

Not leveraging the insights of the frontline employees and allowing them to improve the process (kaizen) is an important element of the TPS.

OEE formula

OEE = Value-added time / total available time

_____________ is a key element of good (and lean) operations.

Observation

Describe Problem Solving.

Ongoing improvement of the operations leveraging the experience of the front-line employees.

What is a single unit flow?

Operate at a flow of one unit at a time from one resource to the next instead of operating based on transfer batches.

Describe Make to Order.

Refers to the release of work into a system only when a customer order has been received for that unit.

Describe People & Partners.

Respectful interactions with employees and partners emphasizing skill development and growth.

Total Available Time formula

TAT = 60min/hour x 10hours/day (of operation) = 600 min/day

What is Total Available Time?

The amount of time a resource has available to fulfill demand.

Example of Waste of time of a flow unit: Louis Vuitton bags

The flow time used to be 8 days for a bag due to the defect. Now the flow time is 1 day with the adjustment. The improvement is a result of reducing flow time.

What is "overproduction"

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 Waste (muda)

The needless waste of time and worker movements that ought to be eliminated immediately. Ex. idle time or fixing broken units

What is overall equipment effectiveness? (OEE)

The percentage of total available time that is used in a way that adds value to the customer

Describe Kanban-based flow.

The upstream resource replenishes what demand has withdrawn from the downstream resource.

What is Waste of time of a flow unit?

The waste of time from the perspective of a flow unit, which makes the flow time of that unit longer than what is needed in the eyes of the customer.

What is waste of time at a resource?

The waste of time from the perspective of a resource, which reduces the capacity of the resource.

What are unnecessary motions or movements (in terms of waste)?

There are many ways to perform a particular task, such as the tightening of a screw on the assembly line or the movement of a patient from a wheelchair into a hospital bed. But, according to the early pioneers of the industrial revolution, including the previously mentioned F.W. 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 the main advantage of a Kanban System?

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 container, 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

What is Non-value-added work?

Those movements that do not add value in the eyes of the customer but must be done under the current conditions of the process in order to complete the 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.

Value-added percentage formula:

Value-added % = Value-added time of a flow unit / Flow time

Describe "looking at inventory".

We don't have to observe flow time to know it is 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 is 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.

As an alternative to the kanban system, we can implement...

a pull system using a make-to-order process.

We can define an operation as lean if it simultaneously strives for.....?

a reduction of waste in its capacity and in the time a flow unit spends in the system.

What is the moral of the 2 metaphors from Ohno?

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)

Must be careful when considering an exact analysis for OEE because...

a worker can be productive during "down time" which could overestimate amount of waste if not considered.

A Kanban system should be used for products or parts...

a) that are processed in high volume and limited variety. b) that are required with a short lead time so that it makes economic sense to have a limited number of them pre-produced. c) for which the costs and efforts related to storing the components are low.

A Make-to-order system 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 units.

If we are currently capacity-constrained, improvement potential can take the form of....?

an increased flow rate.

Describe "taking 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.

Holding everything constant, shortening _______ _______ improves the extent to which we consider an operation as lean.

flow time

In the eyes of Ohno, _______ _______ are impatient. Meaning, they don't like sitting in inventory wasting their flow time without receiving value-added work.

flow units

Describe Ikko-nagashi

flow units can flow one unit at a time from one resource to the next.

To reduce inventory, we need to reduce demand during replenishment time, which is...

holding demand rate and processing times constant, equivalent to

Safety stock can be reduced by...?

improving the reliability of our replenishment.

Kanban System: 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.

If we are currently demand-constrained, improvement potential can take the form of __________ because of a redeployment of resources.

lower costs

How can we get a sense of improvement potential? The goal is to....

measure what percentage of a machine's or a worker's capacity is used productively.

OEE framework supports a..

much more systematic observation and analysis.

Capacity is wasted because of idle time, but also by...

performing what we define as waste and non-value-adding work.

Lean operations is about....?

reducing waste. -whether it be in the form of wasted flow time or wasted capacity.

Ohno distinguished the ______________________________ to enable workers and managers to see waste.

seven sources of production waste

Run like the tortoise, not the hare illustrates....?

steady work, even when slow, is better than bursts of speed followed by periods of no movement.

What is Just in Time (JIT) Production?

supplying a unit of demand when and where it is needed, thus avoiding unnecessary inventory.

The term Kanban refers to..

the card attached to each container.

Value-added flow time is related to, but not identical to....?

the definition of labor content. -Labor content = sum of processing times

The number of Kanban containers is equivalent to...

the maximum amount of inventory authorized.

Define value-added percentage.

the percentage of flow time used for value-added work.

The OEE framework provides a good estimate for...?

the potential for process improvement before engaging in waste reduction.

Ohno views the first objective of a business?

the reduction of waste

Moving to a single unit flow that matches demand is a key flow concept in TPS and helps with...

the reduction of waste.

Describe a "Pull system"

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 two electronics components into a computer, it relays the demand for two 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.

Kanban System: Standardized returnable parts containers circulate between..

the upstream and downstream resources.

Scholars of TPS often refer to an 8th source of waste, hat is it?

the waste of worker intellect.

Improvement sin operations should come from 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. (T/F)

true

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.

Shorter response times to demand (shorter flow times): Little's Law defines that less inventory translates to shorter flow times, therefore...

whether we are customizing what we produce or producing new products.. we will be more responsive to the market if we have less inventory.

Kanban cards are frequently called...

work authorization forms