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OM4 C17 IM

OM4 Chapter 17: Lean Operating Systems Discussion Questions 1.

Provide some examples of different types of waste in an organization with which you are familiar, such as an automobile repair shop or a fast-food restaurant. In a fast food restaurant, for example, we often see overproduction (food sitting under hot lamps with no immediate sale), customer waiting, incorrect and under- and over cooked orders that must be discarded, employees running around the kitchen not having clearly defined jobs, and so on. Students can identify many other examples in their areas of interest and experience. Exhibit 17.1 provides many generic examples and Toyota examples of waste are cited in the chapter.

2.

Compare the lean service system of Southwest Airlines to a full service airline such as United Airlines or British Airways on the following: (a) airplane boarding process, (b) cabin service, (c) ticket transfer to other Southwest flights, (d) frequent flyer program, (e) baggage handling, (f) seat assignment system, and (g) service encounters.

Operating System Boarding process

Southwest Full Service Airline Stand in line in A.B, and C boarding priority zones First class boards first, board by assigned seat rows Cabin service No in-flight meals due to shorter routes, drinksIn-flight and meals especially on long flights peanuts only Ticket transfer to other SW flights Ticketless travel, if miss flight use ticket Paper and electronic ticketing, complex relater and no charge reservation system and rebooking fees Frequent flyer program Simple free flight after 8 paid flights but loyalty Complex point systems and rewards program (with points) being implemented Baggage handling Luggage-flys-free Mostly checked baggage-charge/fees Seat assignment No assigned seats but A, B, C group boardingSystem to assign seats Service encounters Cross-trained employees, friendly and fun Jobs defined by unions with little crosstraining, professional games, tell jokes -- flight attendants, boarding, etc.

3.

Recycle Technologies manufacturers and sells recycled antifreeze that is 20 percent cheaper and has a carbon footprint about 80 percent smaller than new antifreeze made from original raw materials. The company is trying to reduce waste in the traditional antifreeze supply chain. Would you buy this recycled antifreeze and put it into your vehicle? Explain the pros and cons of your decision. Some pros are “going green and saving the planet”, reducing global waste and the need for many raw materials, lower price, and less energy required to remanufacture versus find and source raw materials, produce, etc. Cons of buying recycled antifreeze include the remanufactured antifreeze may “harm” 1

OM4 C17 IM my engine, new is always better than old, and is there a warranty identical to the new antifreeze. You can also work into the discussion of topic of product labels including carbon footprint information such as how much carbon dioxide emissions per gallon of new versus recycled antifreeze. 4.

Do you think applying operations management concepts and methods such as Six Sigma and lean principles can reduce U.S. health care costs? Explain. Provide examples that show how OM can help the U.S. health care industry. The resounding answer is yes. There are many examples of waste in the U.S. health care system that currently is 15 to 18 percent of Gross Domestic Product (GDP). If this percentage goes to 20 percent, as some forecast, it will bankrupt many U.S. corporations as they compete in a global marketplace. A computer search of articles on health care, hospitals, waste, Six Sigma, and lean practices will result in many good examples. One hospital, for example, thinks it can reduce electric power, water, and paper product consumption by 20 percent over a three-year improvement initiative. Students will find many examples of where six sigma and lean principles are being applied to health care. For example, take a look at "The Elephant in the Operating Room," by Greg Brue, Quality Digest, June 2005, pp. 49-55. You can also tie this in to government health care initiatives if you want. OM skills are the keys to making health care processes more efficient!

5.

What types of “setups” do you perform in your work or school activities? How might you reduce the setup times? Some examples might be gathering all materials needed to study for an exam, booting up a computer and locating all necessary files to do an assignment, or making up a schedule for the day. For the computer example, putting all materials in a single class folder and automatically launching programs might reduce set up times. Other student examples include the time to boot up your computer, commuting to school, faculty member getting video setup before class, setup time for exams, and gathering all class materials prior to leaving the residence. Students will probably have many other creative ideas from their work and school experiences. The 5Ss can also be worked into this discussion —sort, set in order, shine, standardize, and sustain.

Problems and Activities 1.

Interview a manager at a local company that uses JIT. Report on how it is implemented and the benefits the company has realized. Many companies use JIT so it should not be difficult to find one. Suppliers, original equipment manufacturers, broadcasting, and retail companies are possibilities. Managers are usually strong proponents of the process so students can learn a lot from talking with them.

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2.

Research JIT practices and how they impact purchasing. How do you think JIT systems affect purchasing functions and practices? Answer this question in a short paper of no more than two typed pages. JIT practices make purchasing a much more demanding job. Fast transport time, frequent and sometimes small order sixes, minimal inventory, global markets and suppliers, new product introductions, certified suppliers, vendor managed inventory in retail stores, real-time on-line status of decision variables, delays in the global supply chain, and so on place great demands on the supply chain and its purchasing managers and employees. A pull supply chain (make what you sell only) is a very demanding situation.

3.

Research and briefly describe one or two lean initiatives in service organizations and then make an argument for or against adopting lean principles in service businesses. What is different about applying lean in a factory versus a service situation? Describe your findings in a two-page paper. Starbucks is a good example of trying to adopt lean principles in a service business with mixed results. The CEO noted, “The majority of cost reductions we’re achieved come from a new way of operating and serving our customers. Over the quarter, we began to rollout our “better way” initiatives—a series of process improvements in our stores using lean principles. We’re improving customer engagement. ” Service speed increased, cost were dramatically reduced, waste was eliminated, and customer service results had mixed results. Many customers complained that the human experience had become unsatisfactory. You might ask your students, “Is lean best suited to assembly lines and goods-producing factories, not service-providing organizations?” Lean is based on an assumption of repeatable routines but are Starbucks service encounters repeatable? The seven differences between goods and services in Chapter 1 is a good place to anchor this discussion.

4.

Research and write a short paper on the impact of global supply chains on JIT. Use Exhibit 17.3 to focus student attention. You can ask the students “How do each of these JIT characteristics and best practices work when the supply chain is global?” Long global supply chains are problematic for JIT success and require more global buffer inventories, longer lead times, disaster planning, dual sourcing to reduce risks, and so on. If you Google “JIT global sourcing” you reveal about 800,000 hits so there is plenty of information for the students. One article that you might find interesting is: “Just‐in‐time and logistics in global sourcing: an empirical study,”Ajay Das; Robert B. Handfield, International Journal of Physical Distribution & Logistics

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OM4 C17 IM Management, Volume 27 (3/4): 16 Emerald Publishing – April 1, 1997. Other information is as follows: The manufacturing process produces and supplies products to the distribution channels based on past forecasts. Manufacturing processes must be flexible to respond to market changes and must accommodate mass customization. Orders are processes operating on a just-in-time (JIT) basis in minimum lot sizes. Also, changes in the manufacturing flow process lead to shorter cycle times, meaning improved responsiveness and efficiency in meeting customer demand. Activities related to planning, scheduling and supporting manufacturing operations, such as work-inprocess storage, handling, transportation, and time phasing of components, inventory at manufacturing sites and maximum flexibility in the coordination of geographic and final assemblies postponement of physical distribution operations. 5.

Choose one of the lean tools and approaches from Section 2 of this chapter and Research and write a short paper (2 pages maximum) on how organizations use this tool, and provide specific examples. This might entail the 5s, visual controls, single minute exchange of dies (SMED), single piece flow, continuous improvement and quality at the source, and total productive maintenance.

6.

Search the Internet for manufacturing or service tours similar to the ones in this chapter. Classify their practices according to the four lean principles in a manner similar to the examples. The text describes Timken and Southwest Airlines using the four basic lean principles: 1. elimination of waste 2. increased speed and response 3. improved quality 4. reduced cost The objective of this question is to apply lean principles to an organization of interest to students such as restaurants, universities, hospitals, and manufacturers. One student answered this question for a newspaper with many interesting issues such as sustainability, limited shelf life, time-pressures, and how the paper used the four lean principles to improve operational performance.

7.

Search the Internet for images of visual controls. Select five of them and explain how they contribute to achieving one of the four principles of lean operating systems. If you search under Images on Google for “visual controls,” many pages pop up. Students should select some meaningful examples. Here is one example that

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OM4 C17 IM shows production line output data that provides workers information on performance and can help improve speed and response.

Here is another (health care) focused on improving quality:

8.

A catalog order-filling process can be described as follows: [endnote: Modeled after an example in Soren Bisgaard and Johannes Freiesleben. “Six Sigma and the Bottom Line,” Quality Progress, Vol. 37, No. 9, September 2004, 57-62.] Telephone orders are taken over a 12-hour period each day. Orders are collected from each person at the end of the day and checked for errors by the supervisor of the phone department, usually the following morning. The supervisor does not send each one-day batch of orders to the data processing department until after 1:00 p.m. In the next step—data processing—orders are invoiced in the one-day batches. Then they are printed and matched back to the original orders. At this point, if the order is from a new customer, it is sent to the person who did the customer verification and setup of new customer accounts. This process must be completed before the order can be invoiced. The next step—order verification and proofreading—occurs after invoicing is completed. The orders, with invoices attached, are given to a person who verifies that all required information is present and correct to permit typesetting. If the verifier has any questions, they are checked by computer or by calling the customer. Finally, the completed orders are sent to the typesetting department of the print shop.

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OM4 C17 IM a. Develop a flowchart for this process (see Chapter 7).

b. Identify opportunities for improving the process using lean principles. The most serious problem from the standpoint of customer service is the potential for a 12-hour delay before an order reaches the supervisor for error checking, and another 3-4 hours may be required before entry into the computer. Obviously too much checking and handling of the order occurred, and much of it was many hours after the customer and order information had originally been taken. Suggestions for improvement include: a) processing small batches of orders (perhaps within 1-2 hours, or less); b) building in error 6

OM4 C17 IM checking, perhaps through direct entry of telephone orders into the computer; c) processing information needed for customer verification and setup of new accounts at the time the order is taken; d) having the phone department supervisor simply audit or sample orders for errors; e) developing a computerized method of matching orders and invoices, so that manual verification is not required; generating an exceptions report after step (e), with proofreading required for printing information that cannot be computerized, if order verification and proofreading is a vital step. 9. A team at a hospital studied the process of performing a diagnostic CT scan. The current process can be described as follows. The CT tech enters a “send for patient” request into a computer when the CT is available for the next patient. The computer prints a request for transport and an orderly is assigned to take the patient for the scan. The orderly walks to radiology and gets the ticket and patient information. The orderly takes the elevator to the patient’s unit and goes to the nurse’s station, locates the nurse in charge and obtains the patient’s chart. He or she signs out the patient and walks to the patient’s room and waits for a nurse to help transfer the patient. The patient is transferred to a mobile bed and then taken to the elevator and brought to radiology. The chart is given to the CT technician while the patient waits in the hall. When the CT is ready, the patient is moved to the CT machine and the scan is performed. The orderly is called back to take the patient back to his or her room. Draw a flowchart of this process, identify the value-added and non-value added activities, and describe how lean thinking can be applied to shorten the throughput time to perform the CT scan. Students will draw a flowchart similar to Exhibit 7.7. They may or may not be able to identify value and non-value added time but they definitely can apply the four lean principles to this situation. Lean Principles Eliminate Waste

Value & Non-Value Added Discussion Issues Why print out a hard copy scan ticket? Why not read scan ticket from hand held device or PC? Why does process require a patient bed transfer (two beds)? Why not take bed in room (no wheels?) to radiology?

Increase Speed and Response

Timely pickup by orderly of scan ticket; orderly trying to find nurse; orderly and nurse must obtain patient’s chart (why not electronic medical records?); elevators take time; the process is reversed when taking patient back to their room. Service management skills for both orderly and nurse since they are in high contact with patient and family; patient waits in the hallway (not good service quality); clinical quality requires accurate patient medical records; patient privacy in transport and waiting in hallway; safety is always a concern during patient transfer; can orderly use service elevators, not the public use elevators. Partially electronic and paper based information flows that

Improve Quality

Reduce Cost

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OM4 C17 IM need improvements. Are two beds necessary? Labor intensive process with much waiting in practice.

10. Some companies use a technique called heijunka, which is a Japanese term that refers to production smoothing in which the total volume of parts and assemblies are kept as constant as possible. Research and write a short paper (2 pages max) about this technique and how it relates to lean principles. Try to illustrate a case study of a company that has used it. A Google search reveals about 60,000 hits for “heijunka.” For lean managers who accept the notion that leveling by volume and mix produces benefits throughout the value stream, the problem remains of how to control production so that true heijunka (leveling) is consistently achieved. Toyota came up with a simple answer many years ago in the form of the heijunka box. A typical heijunka box has horizontal rows for each member of a product family, in this case five. It has vertical columns for identical time intervals of production, in this case 20 minutes. Production control kanban are placed in the slots created, in proportion to the number of items to be built of a given product type during a time interval.

In this example, the shift starts at 7 a.m. and kanban are withdrawn by a material handler every 20 min. for distribution to the pacemaker point along the value stream. (In a lean production system of this type, there is only one pacemaker point along the value stream where production instructions are introduced. From that point back up the stream, parts are replenished at each break in continuous flow by means of simple pull loops from upstream parts supermarkets.) In the first 20 min., the value stream will produce one kanban of Type A, two kanban of Type B, one kanban of Type C and one kanban of type D. Whereas the slots represent the timing of material and information flow, the 8

OM4 C17 IM kanban in the slots each represent one pitch of production for one product type. (Pitch is takt time multiplied by pack- out quantity. This concept is important because it represents the minimum amount of material that can be moved from one operation to the next, and the number of items called for by a kanban are sized to this amount.) In the case of Product A, the pitch is 20 min., and there is one kanban in the slot for each time interval. However, the pitch for Product B is 10 min., so there are two kanban in each slot. Product C has a pitch of 40 min., so there are kanban in every other slot. Products D and E share a production process with a pitch of 20 min. and a ratio of demand for Product D versus Product E of 2:1. Therefore, there is a kanban for Product D in the first two intervals of the shift, and a kanban for Product E in the third interval, and so on in the same sequence. Used as illustrated, the heijunka box consistently levels demand by short time increments, 20 min. in this case. This is in contrast to the mass-production practice of releasing a shift’s, or aday's or a week's worth of work to the production floor. Similarly, the heijunka box consistently levels demand by mix. For example, it ensures that Product D and Product E are produced in a steady ratio in small batch sizes. Production process stability introduced by leveling makes it vastly easier to introduce lean techniques ranging from standard work to continuous flow cells. As the mura (unevenness in productivity and quality) and muri (overburden of machines, managers and production associates) introduced by traditional production control recede, muda (waste) declines as well. When every process is leveled by volume and mix, it is a different world for employees -- who are no longer overburdened; for customers -- who get better products on the date promised; and for manufacturers -- who get to keep the money saved when muda, mura and muri are all reduced. This information was excerpted from “Heijunka: Leveling Production,” published in “Manufacturing Engineering” magazine, August 2006. 11. Research and ...