S17 Lean Operations Fall 2024 PDF

Session 17 Lean Operations Fall 2024 Department of Business Administration UC3M Professor Gemma Berenguer Toyota Production System Philosophy “The most important objective of the Toyota system has been to increase production efficiency by consistently and thoroughly eliminating waste. Th...

Session 17 Lean Operations Fall 2024 Department of Business Administration UC3M Professor Gemma Berenguer Toyota Production System Philosophy “The most important objective of the Toyota system has been to increase production efficiency by consistently and thoroughly eliminating waste. This concept and equally Gemma Berenguer Operations Management important respect for humanity are the foundation for the Toyota Production System.” -Taiichi Ohno, Founder of TPS 2 Toyota Production System Lean Production Gemma Berenguer Operations Management 3 www.lean.org The Seven Deadly Wastes (TIMWOOD) 1. Transportation: moving materials between workstations without adding value. Gemma Berenguer Operations Management 2. Inventory: the costs associated with loss, obsolescence, and damage to inventories, as well as the cost of excess inventory itself. 3. Motion: movement that is not related to adding value to the product. 4 The Seven Deadly Wastes (TIMWOOD) 4. Waiting time: workers who are idle because they have completed their work or who watch machines but cannot prevent problems. Gemma Berenguer Operations Management 5. Overproduction: producing more than is required by the market. 6. Over-processing: workers spend more on a flow unit than necessary 7. Defects: the costs of scrap and rework and, most important of all, the costs associated with defective output reaching the customer. 5 Forms of waste Transportation Inventory Motion Gemma Berenguer Operations Management Waiting time Overproduction Over-processing Defects 6  Operations Management 7 Gemma Berenguer Forms of waste Transportation Inventory Motion Gemma Berenguer Operations Management Waiting time Overproduction Over-processing Defects 8 Reducing waste: Increase Problem Visibility Lower the Water to Expose the Rocks Too Much Gemma Berenguer Operations Management Missed Due Dates Space Late Deliveries Inventory Too much paperwork Scrap & Engineering Rework Change Orders Poor 100% inspection Long queues Machine Quality Downtime 9 Expose Problems Lower Inventory  Increase Problem Visibility Lower the Water to Expose the Rocks Production High W.I.P. Poor quality Long Poor Bad 10 lead- maintenance material time  Remove the obstacle WIP reduced Poor quality Poor Bad Long maintenance 11 material lead- time  Remove the obstacle again! WIP reduced further Poor quality Poor Long maintenance 12 lead- time  Poor quality Poor maintenance 13  Reducing Waste: Cut Batch Sizes Example Process: A B C D 1 min/job 1 min/job 1 min/job 1 min/job Batch Shop (Lot size = 5) Flow Shop (Lot size = 1) Space Space Gemma Berenguer Operations Management 0 5 0 1 1 1 1 2 2 1 3 3 1 4 4 1 5 5 5 A B C D A B C D 10 5 10 15 5 15 14 Time 20 5 20 How to run Lean Operations: Managing Variety Monthly Production Requirement: Model Quantity Required Gemma Berenguer Operations Management A: Sedan 1,000 B: Coupe 1,000 How to schedule production for the month? Reducing Waste: Heijunka Leveled/Balanced Production Unleveled Production Schedule Leveled Production Schedule (AAAAABBBBB..) (ABABAB...) A A B B Inv Inv Time Time 16 Tradeoff? Switchover costs vs Inventory costs. Similar tradeoff to EOQ… Forms of waste Transportation Inventory Motion Gemma Berenguer Operations Management Waiting time Overproduction Over-processing Defects 17 Overproduction: synchronization with demand PUSH: Inputs availability triggers execution Supplier Process Customer inputs outputs Gemma Berenguer Operations Management PULL: Outputs need triggers execution Customer demand pulls product Supplier Process Customer inputs outputs Taiichi Ohno (1912-1990): idea based on US grocery stores 18 Implementation of pull system: Kanban Card - typically carried in transparent covers. Various systems using one or more Kanban cards Example using two cards (come in matching sets): Gemma Berenguer Operations Management Move (Withdrawal ) Kanban (card) Production Kanban. Move Kanban Production Kanban Item no. : P447 Item no. : P447 Box Capacity : Process: Preceding process: Xxx: Subsequent process: Yyy: 19 Other systems: Kanban squares, Container system, Colored golf balls.  Kanban card Operations Management 20 Gemma Berenguer Video Kanban Kanban System example: https://www.youtube.com/watch?v=5hoTWwtYEQo Gemma Berenguer Operations Management 21 Forms of waste Transportation Inventory Motion Gemma Berenguer Operations Management Waiting time Overproduction Over-processing Defects 22  Operations Management 23 Gemma Berenguer Forms of waste Transportation Inventory Motion Gemma Berenguer Operations Management Waiting time Overproduction Over-processing Defects 24  Reducing Waste Pays Off: Quality at the Source Defects Own Next End Final End User’s Process Process of Line Inspection Hand Found at: Impact on the Gemma Berenguer Operations Management company: Very Minor Rework Significant Warranty costs Minor delay rework Administrative Reschedule Delay in costs of work delivery Reputation loss Additional Loss of market inspection share Poka-Yoke (Fool-proof Design) 26 JIT Fundamental principals 2. Reduce Inventory. 1. Eliminate Waste. 2.1 Expose hidden problems. 1.1 Over production. 3. Meet exact needs Gemma Berenguer Operations Management 1.2 Excess inventory. 1.3 Products waiting in at exact time. queues. 3.1 Small lot size. 1.4 Unnecessary moves (poor layout, operation 3.2 Pull system. sequence). 3.2.1 High degree of planning. 1.5 Large set-up times. 3.2.2 Flexibility. 1.6 Waiting (due to shortage / 3.2.3 Level production. scheduling). 3.2.4 Minimum difference in 1.7 Expediting. products 27 Standardize Gemma Berenguer Operations Management Improved Box A Box B design Box B Using common handles on both boxes, you can achieve overall savings, although cost of handle may be higher on for box B. 28 Jidoka (autonomation) Andon cord 29 Root Cause Analysis - 5 Whys “Many flat head screws break during the assembly process”; WHY? Gemma Berenguer Operations Management “Many screws rust before we use them on the assembly line”; WHY? “Screws get rained and weathered”; WHY? “Screws are stored outside”; WHY? “Because all our indoor racks are full”; WHY? 30 “Because we have too much inventory.” Continuous Improvement (Kaizen) Self-Learning process “Produce a part and learn how to produce better next time” “Serve a client AND learn how to serve better next time” Gemma Berenguer Operations Management “Teach a class and learn how to teach better next time” 31 Summarize TPS TPS is a production management system that aims for the “ideal” through continuous improvement (kaizen); Includes, but goes way beyond JIT; Pillars: Gemma Berenguer Operations Management Synchronization: Heijunka Quality at Source: Jidoka, Poka-Yoke Continuous Improvement: Kaizen, Waste reduction....  Comparison of systems Factor Traditional JIT Inventory Much to offset forecast Minimal necessary to errors, late deliveries operate Deliveries Few, large Many, small Lot sizes Large Small Setup; runs Few, long runs Many, short runs Vendors Long-term relationships Partners are unusual Workers Necessary to do the Assets work Video: Noodles and Co. This is an excellent example on how lean production is used in a service company (restaurant). Pay attention to how the company designs their process to Gemma Berenguer Operations Management offer fast and good quality service/food: https://mediaspace.itap.purdue.edu/media/MGMT460_Noodles%26Co_100824/1_jbp4v 8wx 34 Noodles and Co. Waste type Examples of how Noodles reduces each waste type Transportation Customers order first, take their beverages, and sit down at the table Gemma Berenguer Operations Management Inventory The cooking happens after the order occurs, so no FG inventory Two preps of Work-in-progress a day, so reduced WIP Motion The kitchen layout is like an assembly line Waiting time Customers don’t wait more than 5 minutes on averagee No tips Overproduction Make to order process Over-processing Each dish is cooked in separate pants (no batch cooking) 35 Defects FIFO of ingredient usage, Quality control is high TPS applied to a hospital Reduce overproduction by reducing the number of MRIs done to the patients with backpain unless extensive criteria was met. Reduce waste in the form of motion for nurses by placing supplies to the rooms as opposed to a central facility. Nurses can spend more time with patients instead of going to collect supplies. Reduce waiting time for patients by better managing the appointment system. This implies an elimination of the waiting rooms (with consequent reduction in the cost of this type of rooms) Create the figure of the MA (flow manager) that works with the Doctors as a dyad to improve the flow of all the processes in the hospital 36 When does JIT not work? Requires an implementation throughout the supply chain. A unilateral implementation by a single vendor/manufacturer will not work; JIT requires a cultural change within an organization Gemma Berenguer Operations Management Workers need to accept responsibility for making process changes, managers should be willing to cede control; Kanbans are reactive. Hence may not work when every job is unique, requiring different components and some degree of customization; JIT is also based on aggregate forecasts for planning purposes. The system may not work when end product demand is highly variable