OM Ch.16

Toyota Production System

*Continuous improvement* - Build an organizational culture and value system that stresses improvement of all processes, kaizen - Part of everyone's job *Respect for people* - People are treated as knowledge workers - Engage mental and physical capabilities - Empower employees

The 5Ss

- *Sort/segregate* - when in doubt, throw it out - *Simplify/straighte*n - methods analysis tools - *Shine/sweep* - clean daily - *Standardize* - remove variations from processes - *Sustain/self-discipline* - review work and recognize progress Additional S's: - *Safety* - built in good practices - *Support/maintenance* - reduce variability and unplanned downtime

TPS Elements

- Andon - Pull System / Kanban - Standard Work Practices - Minimal Machines - Kaizen Area - Jidoka - Level Schedules - JIT - Respect for People / Empowered Employees - Assembly Components

Lean Operations

- Broader than JIT in that it is externally focused on the customer - Starts with understanding what the customer wants - Optimize the entire process from the customer's perspective

Increased Flexibility

- Cells designed to be rearranged as volume or designs change - Applicable in office environments as well as production settings - Facilitates both product and process improvement

Supermarket - Pull system

- Customers choose exactly what they want - Supply merchandise in a simple, efficient, timely manner - Each production line is the customer for the preceding line - Following line comes and chooses the items it needed and only those items - Preceding line would replace only the replacement items for the ones that the following had selected

Impact on Employees

- Employees may be cross trained for flexibility and efficiency - Improved communications facilitate the passing on of important information about the process - With little or no inventory buffer, getting it right the first time is critical

Reduce Setup Costs

- High setup costs encourage large lot sizes - Reducing setup costs reduces lot size and reduces average inventory - Setup time can be reduced through preparation prior to shutdown and changeover

Just-In-Time, TPS, and Lean Operations

- JIT focuses on continuous forced problem solving - TPS emphasizes continuous improvement, respect for people, and standard work practices in an assembly-line environment - Lean operations emphasize understanding the customer

Remove Variability

- JIT systems require managers to reduce variability caused by both internal and external factors - *Variability* is any deviation from the optimum process - Inventory hides variability - Less variability results in less waste

Kanban

- Japanese word for "card" - The card is an authorization for the next container of material to be produced - A sequence of kanbans pulls material through the process - Many different sorts of signals are used, but the system is still called a kanban

Distance Reduction

- Large lots and long production lines with single-purpose machinery are being replaced by smaller flexible cells - Often U-shaped for shorter paths and improved communication - Often using group technology concepts

Eliminate Waste (2)

- Other resources such as energy, water, and air are often wasted - Efficient, sustainable production minimizes inputs, reduces waste - Traditional "housekeeping" has been expanded to the 5Ss

Sources of Variability

- Poor production processes resulting in improper quantities, late, or non-conforming units - Unknown customer demands - Incomplete or inaccurate drawings, specifications, or bills of material -> Both JIT and inventory reduction are effective tools in identifying causes of variability

Just-In-Time (JIT)

- Powerful strategy for improving operations - Materials arrive where they are needed when they are needed - Identifying problems and driving out waste reduces costs and variability and improves throughput - Requires a meaningful buyer-supplier relationship

Level Schedules

- Process frequent small batches rather than a few large batches - Make and move small lots so the level schedule is economical - Freezing the schedule closest to the due dates can improve performance

Reduce Inventory

- Reducing inventory uncovers the "rocks" - Problems are exposed - Ultimately there will be virtually no inventory and no problems - Shingo says "Inventory is evil"

Building a Lean Organization

- Use JIT techniques - Build systems that help employees produce perfect parts - Reduce space requirements - Develop partnerships with suppliers - Educate suppliers - Eliminate all but value-added activities - Develop employees - Make jobs challenging - Build worker flexibility

Eliminate Waste

- Waste is anything that does not add value from the customer point of view - Storage, inspection, delay, waiting in queues, and defective products do not add value and are 100% waste

Kanban (2)

- When the producer and user are *not in visual contact*, a card can be used; otherwise, a light or flag or empty spot on the floor may be adequate - Usually each card controls a specific quantity or parts although multiple card systems may be used if there are several components or if the lot size is different from the move size

Reduced Space and Inventory

- With reduced space, inventory must be in very small lots - Units are always moving because there is no storage

JIT Inventory

-> Inventory is at the *minimum level* necessary to keep operations running

JIT Partnerships

-> exist when a supplier and purchaser work together to remove waste and drive down costs Four goals of JIT partnerships are: - Removal of unnecessary activities - Removal of in-plant inventory - Removal of in-transit inventory - Improved quality and reliability

Ohno's Seven Wastes

1) Overproduction 2) Queues 3) Transportation 4) Inventory 5) Motion 6) Overprocessing 7) Defective products

JIT/TPS/Lean Operations

Good production systems require that managers address three issues that are pervasive and fundamental to operations management: eliminate waste, remove variability, and improve throughput

CHAPTER 16

JIT, TPS, and Lean Operations

JIT Scheduling

Schedules must be communicated inside and outside the organization Level schedules - Process frequent small batches - Freezing the schedule helps stability Kanban - Signals used in a pull system

JIT Quality

Strong relationship: - JIT cuts the cost of obtaining good quality because JIT exposes poor quality - Because lead times are shorter, quality problems are exposed sooner - Better quality means fewer buffers and allows simpler JIT systems to be used