Lean Operations

Question 1

Toyota Production System

Toyota is often associated with high quality as well as overall operational excellence.

Let’s compare the history of Toyota Motor Company with that of Ford Motor Corporation:

Answer 1

Ford Motor Company

• Inspired by moving conveyor belts in abattoirs.
• Model T was the first mass-produced vehicle that was assembled on a moving assembly line using interchangeable parts.
• Using interchangeable parts allowed Ford to standardize assembly tasks.
• Ford’s focus was on utilizing his expensive production equipment as much as possible

Toyota Motor Corporation

• Started as a manufacturer of automated looms just before World War II.
• Supported the Japanese army during the war by supplying military trucks.
• Shortages after the war: no domestic market for vehicles and no cash for expensive production equipment.
• Out of this environment of scarcity, Toyota’s management created the various elements of the system that we now refer to as the Toyota Production System.
• Toyota became the world’ top automaker in 2008
• Major crisis: 2009 and 2011

Question 2

Toyota Production System Framework

Answer 2

Question 3

General Motors Framingham Assembly Plant vs. Toyota Takaoka Assembly Plant in 1986

Answer 3

The difference come from: non-value added activities (muda)

Question 4

Seven Sources of Waste:

Answer 4

1. Overproduction: producing too much too soon leads to additional waste in the forms of material handling, storage, and transportation.
2. Waiting
   
   • Resource waits for the flow units
   • Flow unit waits for the resource
3. Internal Transport: design the layout to minimize the distance flow units must travel within a process.
4. Over-processing: works often spend more time on flow units than necessary.
5. Inventory: not only is inventory non-value adding, it often hides the problem in the process as it leads to long information turn-around times, and also eases pressure to find and eliminate the underlying root causes
6. Rework: exists both in manufacturing and service. “Do it right the first time”
7. Motion: Every task should be carefully analysed and optimized.

Note: zero waste, zero inventory and zero defects are only aspirational objective rather than numerical ones!

Question 5

Overall Equipment Effectiveness (OEE) Framework:

Answer 5

OOE = Downtime Losses * Speed Losses * Quality Losses

Question 6

JIT: Matching Supply with Demand

Answer 6

Create a process that forms a smooth flow, giving customers exactly what they need, when they need it.

The following steps should be taken in the order presented:

1. Achieve a one-unit-at-a-time flow
2. Produce at the rate of customer demand
3. Implement a pull system using Kanban or make-to-order production

Question 7

1 • Achieve a one-unit-at-a-time flow

Answer 7

• Use a product layout instead of functional layout so that the flow units can flow one unit at a time from one resource to the next
  
  • What if variety is high and a functional layout becomes essential? use cellular layout instead.
• Use mixed model production (__heijunka__)
  
  • Evenly distributing the production of different products over a period of time
  • Changeover or setup times must be small: Singe Minute Exchange of Dies (SMED)

Question 8

Cellular Layout:

Answer 8

• Functional layout does not lead to a synchronized flow:
  
  • Long flow times, jumbled flows and significant accumulation of inventory along the way.
  • Each worker focuses on performing only a part of total processing, therefore not being able to see the whole picture.
• Cellular layout: all work stations that perform successive operations on a given family of products are grouped together to form a cell.

Question 9

Mixed Model Production:

Answer 9

Support you have a production facility with capacity of 8 items per day. You need to produce three items, Green, Yellow and Red with average demand of 2, 4, and 2 items per day. We compare two different production models given a 5-day week.

Conventional batch production: three batches each month.

Mixed model production: See image

Question 10

2 • Produce at the Rate of Customer Demand

Answer 10

• Make sure that flow rate is in line with demand to minimize the inventory of end products.
• Just like an orchestra needs to follow a common tact imposed by conductor, a JIT process should follow the tact imposed by demand.

Takt time=1/Demand

For instance, if demand is 20 insurance policies per days, with 400 min available during a day, takt time=1/20 day=20 min

Question 11

3 • Implement a Pull System

Answer 11

Not only the end product inventory should be synchronized with demand, the in-process inventory should also be paced by demand.

• Push approach: flow units are allowed to enter the process independent of the current inventory in the process. Input availability triggers production in each process not the downstream process demand, leading to substantial inventory in the process
• Pull approach: The external demand is transferred step by step through the process. Demand from a customer triggers production so that each station produces only on demand from its customer station.

Question 12

How to implement pull systems:

Answer 12

Kanban-based pull: the upstream replenishes what demand has withdrawn from the downstream

Make-to-order pull: work is released into a system only when a customer order has been received for that unit.

Question 13

Kanban system :

Answer 13

• There can never be more inventory between two resources than what has been authorized by Kanban cards: production stops when all container are full (no cards in the receiving post).
• “Makes what needed when we need it”
• In contrast in a push system, the upstream resources continue to produce as long as they have work.

Question 14

Quality Management:

Answer 14

• Defect prevention: fool-proofing assembly operations (poka-yoka)
• Rapid defect detection: if problems occur, discover and isolate the problem as quickly as possible (jidoka), e.g. pulling the Andon cord adjacent to the assembly line by workers when they detect a defect.
• Delegating problem solving to the local level

Jidoka is not just a necessity to make progress towards

the zero inventory principle; it also benefits from it.

Question 15

Exposing Problems Through Inventory Reduction:

Answer 15

Question 16

Volume Flexibility:

Answer 16

• Volume Flexibility: given fluctuations in demand volumes, TPS attempts to create processes with sufficient flexibility to meet such fluctuations.
• This requires a multi-tiered workforce consisting of high-skilled full time employees and a pool of (less skilled) temporary workers that can be called upon when demand is high.

•

•Example: suppose each activity takes one min.

Question 17

Scope Flexibility:

Answer 17

The ability of process to produce multiple products

A chained configuration creates almost all benefits of full flexibility but at much lower cost

Question 18

Standardization of Work:

Answer 18

• Variability is a key inhibitor in creating a smooth flow.
• Variability in processing often comes from imprecise specification of the work, quality defects, and machine breakdown.
  
  • Standardize work at each stage and specify it clearly
  • Do planned preventive maintenance
• It is impossible to remove all sources of variability: carry some safety inventory or keep some safety capacity

Question 19

Employee Involvement:

Answer 19

Lean requires cooperation, contribution and commitment on the part of all employees.

• Hawthorne experiment: if workers are involved in the decision making processes that affect their jobs, they are better motivated to contribute substantially to productivity improvement.