Chapter 15 - Lean Systems Summary

Chapter 15 - Lean Systems Summary - Chapter 15: Chapter 15:...

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Unformatted text preview: Chapter 15: Chapter 15: Lean Systems Just In Time What is Lean? • • Drive out waste. • Focus on adding value. D.C. Krueger JIT Systems 2 Lean Systems • GOAL: – To create efficient processes. • TOOLS: – – – – – – Operations strategy Quality Capacity Layout Supply Chains Inventory D.C. Krueger JIT Systems 3 Dell Example • D.C. Krueger JIT Systems 4 Introduction to Lean Systems • Key aspects of Lean Systems: – – Reduce waste Increase speed (reduce cycle time) • Just­in­Time (JIT) techniques are used to create lean systems. D.C. Krueger JIT Systems 5 JIT Origins • Developed at the Toyota Motor Company in Japan by Taiichi Ohno and several of his colleagues. • Influenced by: – Culture • Japanese are very sensitive to waste and inefficiency. • Scrap and rework are waste; inventory is evil. – Henry Ford’s ideas in operating the Rouge plant. • • D.C. Krueger Included a glass factory and a steel plant. Conversion from raw material to cash in approximately 33 hours. JIT Systems 6 Ford’s Rouge Plant ( ) • • • “The Ford River Rouge Complex (commonly known as the Rouge Complex or just The Rouge) is a Ford Motor Company automobile factory complex located in Dearborn, Michigan, along the Rouge River, upstream from its confluence with the Detroit River at Zug Island. Construction began in 1917, and when it was completed in 1928 it had become the largest integrated factory in the world.” “The Rouge measures 1.5 miles (2.4 km) wide by 1 mile (1.6 km) long, including 93 buildings with nearly 16 million square feet (1.5 km²) of factory floor space. With its own docks in the dredged Rouge River, 100 miles (160 km) of interior railroad track, its own electricity plant, and ore processing, the titanic Rouge was able to turn raw materials into running vehicles within this single complex, a prime example of vertical­integration production. Over 100,000 workers were employed there in the 1930s.” “Some of the Rouge buildings were designed by Albert Kahn. His Rouge glass plant was regarded at the time as an exemplary and humane factory building, with its ample natural light coming through windows in the ceiling. More recently, several buildings have been converted to "green" structures with a number of environmentally friendly features. However, many D.C. Krueger JIT Systems vehicular skeletons remain buried on the grounds of the 7 JIT Philosophy • Eliminate waste by cutting unnecessary inventory and removing non­value­added activities in operations. • Goals: – – Produce goods and services as needed. Continuously improve the value­added benefits of operations. D.C. Krueger JIT Systems 8 JIT System • The organization of resources, information flows, and decision rules that can enable an organization to realize the benefits of the JIT philosophy. D.C. Krueger JIT Systems 9 Eight Forms of Waste 1. 2. 3. 4. 5. 6. 7. 8. Overproduction Waiting Time Transport Process Inventory Motion Defective Goods Human Potential D.C. Krueger Total Quality Eliminate Waste 6σ People Preparation Lea n (adapted from Harrison, 1992) JIT Systems 10 Examples • Overall: • Example – waffles • • • Discussion: • D.C. Krueger JIT Systems 11 Waste Other examples ­ (1:53 Waffles) (1:53 review summary) (4:06 with animations) Defective Goods ­Not doing it right the first time Motion ­Method too complicated ­Poor housekeeping Inventory ­Stocks ­Buffers ­Large batch sizes D.C. Krueger Overproduction ­Too early ­Too much Elimination of Waste Process ­Design ­Maintenance ­Too big ­Too fast ­Too variable JIT Systems Waiting Time ­By machines ­By materials ­By manpower Transport ­Double handling ­Movement of materials (Harrison, 1993) 12 Key Elements of JIT • • • • • • • High quality levels Production smoothing Low inventories Small lot sizes Quick, low­cost setups Layout Preventive maintenance and repair D.C. Krueger Multifunctional workers A cooperative spirit Few, reliable suppliers A pull system of moving goods • Problem solving • Continual improvement • • • • JIT Systems 13 • • • A Sea of Inventory The boat represents production. The water is inventory or staffing levels. The rocks are problems that can hinder production. D.C. Krueger (Illustration adapted from Stevenson, 1993) JIT Systems 14 • • • A Sea of Inventory The boat represents production. The water is inventory or staffing levels. The rocks are problems that can hinder production. Lower inventory reveals problems. D.C. Krueger (Illustration adapted from Stevenson, 1993) JIT Systems 15 • • • A Sea of Inventory The boat represents production. The water is inventory or staffing levels. The rocks are problems that can hinder production. When the problems are found, they can be addressed and solved. Then, inventory can be lowered even more. D.C. Krueger (Illustration adapted from Stevenson, 1993) JIT Systems 16 Push vs. Pull • Push system – Output pushed to next station (or final inventory) – Ready or not! – How much can we get the customer to buy? D.C. Krueger • Pull System – Parts moved on to next step only when needed. – What can we do to satisfy the customers needs? JIT Systems 17 Example: Quarter Pounder with Cheese, Please Fry Patty Toast Bun Add Condiments Add Burger Wrap Burger Restock Inventory 7­min. limit! Burger Maker D.C. Krueger Final Assembler JIT Systems 18 Push: Quarter Pounder with Cheese, Please Ready or not! Burger Maker D.C. Krueger Final Assembler JIT Systems 19 Pull: Quarter Pounder with Cheese, Please Yes Is inventory low? Order 6 Burgers No Don’t order Final Assembler D.C. Krueger Make 6 Burgers Burger Maker JIT Systems Wrap Burgers and Restock Inventory Final Assembler 20 Demand Pull Consumer Needs Production Called into Action Wal­Mart 14 seconds Use of Material Provided by Suppliers Strategic Work Stations with Easy Accessed Material JIT Techniques Reduced Set­up Times Cellular Manufacturing Linkage through the Kanban Final Product (Adapted from Cheng & Podolsky, 1993) D.C. Krueger Customer Satisfaction JIT Systems 21 • Advantages Push Systems – Spread overhead costs. – Continually utilize people and equipment. – Provide visibility in the plant to compare actual to planned production. – Are most familiar to employees due to common use. – Flexibility allows production of various product types. D.C. Krueger • Disadvantages JIT Systems – Increase WIP due to poor linkage between operations. – Lack coordinated team effort. – Produce inventory that is expensive to maintain and is laden with inaccuracies. – Require numerous assumptions. – Lack responsiveness. 22 • Advantages Pull Systems • Disadvantages – Link various production operations. – Keep a low and stable level of inventory. – Add value to units which are required to meet demand. – Are relatively inexpensive. – Reduces documentation and errors related to inventory. – Much more responsive than a Push System. D.C. Krueger Problems are detected JIT Systems – People and equipment may not be fully in use at all times. – Inventory costs may not be spread across all operations. – Do not provide the same degree of visibility as push systems. – Employees are required to observe and take action. – Unfamiliar to many people. 23 Discussion • What would Push and Pull systems look like for Marketing professionals? • What would Push and Pull systems look like for financial advisors? D.C. Krueger JIT Systems 24 Value­Stream Mapping • Current State • Future State D.C. Krueger JIT Systems 25 Discussion • How can JIT tools be used in – – Product design? Process design? • What kind of roles might functional areas such as purchasing or accounting have in implementing JIT tools? D.C. Krueger JIT Systems 26 Review • Wastes • (Part 1) • Problems with inventory • http:// (Part 2) D.C. Krueger JIT Systems 27 References • Cheng, T.C.E. & Podolsky, S. (1993). Just­in­time manufacturing: An introduction. London: Chapman & Hall. • Harrison, A. (1992). Just in time manufacturing in perspective. London: Prentice Hall. • Ritzman, L.P. & Krajewski, L.J. (2003). Foundations of operations management. Upper Saddle River, NJ: Prentice Hall • Stevenson, W.J. (1993). Production/operations management, fourth edition. Homewood, IL: Irwin. D.C. Krueger JIT Systems 28 ...
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