SCMA 331 Chapter 16 Notes PDF

Preview

Summary

Chapter 16 notes...

Description

SCMA CH 16: LEAN OPERATIONS (639-651) Lean Operations ● Lean operations: supply the customer with exactly what the customer wants when the customer wants it, without waste, through continuous improvement -- driven by workflow initiated by the “pull” of the customer’s orders ● Just in time (JIT): approach of continuous and forced problem solving via a focus on throughput and reduced inventory. ● Toyota production system (TPS): w/ emphasis on continuous improvement, respect for people, and standard work practice, is particularly suited for assembly lines ● Issues fundamental to operations improvement: eliminate waste, remove variability, and improving throughput Eliminate Waste ● Lean producers set their sights on perfection: no bad parts, no inventory, only valueadded activities, and no waste -- any activity that does not add value in eyes of customer is a waste. Customer defines product value, if customer doesn’t want to pay for it, then its waste. TPS identified 7 categories of waste and cover many ways organizations waste or lose money… ○ Overproduction: producing more than the customer orders or producing early (before it is demanded) is waste ○ Queues: idle time, storage, and waiting are wastes (they add no value) ○ Transportation: moving materials between plants or between work centers and handling it more than once is waste ○ Inventory: unnecessary raw material, work in process (WIP, finished goods, and excess operations supplies add no value and are waste ○ Motion: movement of equipment or people that adds no value is waste ○ Overprocessing: work performed on the product that adds no value is waste ○ Defective product: returns, warranty claims, reworks, and scrap are wastes ● Other resources such as energy, water, and air, are often wasted but should not be.. Efficient, sustainable production minimizes inputs & maximizes outputs, wasting nothing ● Managers have pursued “housekeeping” for a neat, orderly, and efficient workplace and as a means of reducing waste -- op managers use checklist, now known as 5S which the Japanese developed -- it provides an easy vehicle with which to assist the culture change that is often necessary to bring about lean operations -- 5S follows: ○ sort/aggregate: keep what is needed and remove everything else from work area; when in doubt, throw it out. Identify nonvalue items and remove them. Getting rid of these items makes space available and usually improves workflow ○ simplify/straighten: arrange and use method analysis tools to improve workflow and reduce wasted motion. Consider long run and short run erogonmic issues. Label and display for easy use only what is needed in the immediate work area. ○ shine/sweep: remove variations from the process by developing standard operating procedures and checklists; good standards make the abnormal obvious. Standardize equipment and tooling so that cross training time and cost are reduced. Train and retain the work team so that when deviations occur, they are readily apparent to all

○

sustain/self-discipline: review periodically to recognize efforts and to motivate to sustain progress. Use visuals wherever possible to communicate and sustain progress ● US managers have two additional Ss that contribute to establishing and maintaining lean ○ Safety: building good safety practices into the preceding five activities ○ support/maintenance: reduce variability, unplanned downtime, and costs. Integrate daily shine tasks w/ preventive maintenance ● Ss support continuous improvement and provide a vehicle with which employees can identify -- an orderly workplace reduces waste, releasing assets for other, more productive, purposes Remove Variability ● Managers seek to remove variability caused by both internal and external factors. Variability: any deviation from the optimum process that delivers a perfect product on time, everytime. Less variability in system = less waste -- most variability caused by tolerating waste or by poor management. Among many sources of variability are: ○ Poor processes that allow employees and suppliers to produce improper quantities or nonconforming units ○ Inadequate maintenance of facilities and processes ○ Unknown and changing customer demands ○ Incomplete or inaccurate drawings, specifications, and bills of material ● Inventory reduction via JIT is an effective tool for identifying causes of variability -precise timing of JIT makes variability evident, just as reducing inventory exposes variability -- defeating it allows managers to move good materials on schedule, add value at each step of the process, drive down costs, and ultimately win orders Improve Throughput ● Throughput: rate at which units move through a process -- each minute product remains on the books, costs accumulate, and competitive advantage is lost. ● Manufacturing cycle time: time that an order is in the shop -- time between arrival of raw materials and the shipping of finished product -- driving down manufacturing cycle time can make a major improvement in throughput ● Pull system: pulls a unit to where it is needed just as it is needed -- standard tool of lean. Uses signals to request production and delivery from supply stations to stations that have production capacity available -- used both within the immediate production process and with suppliers -- by pulling in small lots, just as needed, waste and inventory are removed - clutter is reduced, problems are evident, and continuous improvement is emphasized ● A push system: dumps orders on the next downstream workstation, regardless of timeliness and resources availability. Antithesis of lean -- push mode typically lowers costs and improves schedule performance, enhancing customer satisfaction

●

Lean and Just in Time JIT places added demands on performance, but that is why it pays off -- focus on rapid throughput and reduced inventory, powerful lean component. Materials arrive where they

are needed only when they are needed. JIT focuses attention on problems by driving out waste and delay -- it reduces inventory, cuts variability and waste, and improves throughput -- often yields a competitive advantage (figure 16.1 pg 642) Supplier Partnerships (figure 16.2 pg 642) ● Exist when a supplier and purchaser work together w/ open communication and a goal of removing waste and driving down costs -- trust and close collaboration critical to lean success -- some specific goals are: ○ Removal of unnecessary activities: such as receiving, incoming inspection, and paperwork related to bidding, invoicing, and payment ○ Removal of in-plant inventory: by delivery in small lots directly to the using department as needed ○ Removal of in-transit inventory: by encouraging suppliers to locate nearby and provide frequent small shipments. Shorter the flow of material in the resource pipeline, the less inventory, which can be reduced through a technique known as consignment. Consignment inventory: variation of vendor-managed inventory, means the supplier maintains the title to the inventory until it is used. ○ Obtain improved quality and reliability: through long term commitments, communication, and cooperation ● Leading organizations view suppliers as extensions of their own organization and expect suppliers to be fully committed to constant improvement -- supplier concerns include: ○ Diversification: suppliers may not want to tie themselves to long term contracts w/ one customer. Supplier’s perception is that they reduce their risk if they have a variety of customers ○ Scheduling: many suppliers have little faith in the purchaser’s ability to produce orders to a smooth, coordinated schedule ○ Lead time: engineering or specification changes can play havoc w/ JIT bc of inadequate lead time for suppliers to implement necessary changes ○ Quality: supplier’s capital budgets, processes, or technology may limit ability to respond to changes in product and quality ○ Lot sizes: supplier may see frequent delivery in small lots as a way to transfer buyers’ holding costs to suppliers

Lean Layout ● Reduce another kind of waste - movement -- movement of material on a factory floor does not add value -- managers want flexible layouts that reduce the movement of both people and materials. Lean layouts place materials directly in the location where

needed. When a layout reduces distance, firms often save labor and space and may have the added bonus of eliminating potential areas for accumulation of unwanted inventory (figure 16.1 pg 643 tactics) ● Distance reduction: reducing distance is a major contribution of work cells, work centers, and focused factories -- firms now use work cells, often arranged in U shape, containing several machines performing different operations and often based on group technology codes -- group tech helps identify components w/ similar characteristics so they can be grouped into families -- result can be thought of as a small product oriented facility where the “product” is actually a group of similar products -- cells produce one good unit at a time, and ideally, they produce the units only after a customer orders them ● Increased flexibility: modern work areas are designed so they can be easily rearranged to adapt to changes in volume and product changes -- almost nothing is bolted down. Concept of layout flexibility applies to both factory and office environments -- equipment is modular, and layout flexibility aids the changes that result form product and process improvements that are inevitable at a firm w/ philosophy of continuous improvement ● Impact on employees: when layouts provide sequential operations feedback, including quality issues, can be immediate allowing employees working together to tell each other about problems and opportunities for improvement -- workers produce one unit at a time and test each product/component at each subsequent production stage -- before lean, defective products were replaced from inventory but bc surplus inventory isn’t kept in lean facilities, there are no such buffers, getting it right is critical - lean layouts allow cross trained employees to bring flexibility and efficiency to the work area, reducing defects bc they are waste ● Reduced space and inventory: when there is little space, inventory travels less and must be moved in very small lots or even single units that are always moving bc there is no storage -- which reduces all around costs Lean Inventory ● Is the minimum inventory necessary to keep a perfect system running so the exact amount of goods arrives at the moment it is needed, not a minute before or after. Some tactics are use a pull system to move inventory, reduce lot size, develop JIT delivery systems w/ suppliers, deliver directly to the point of use, perform to schedule, reduce setup time, and use group technology ● Reduce inventory and variability: idea is to eliminate variability in the production system hidden by inventory. Reducing it uncovers “rocks” that represent the variability and problems currently being tolerated. Management chips away at the exposed problems and after the lake is lowered, manager make additional cuts in inventory and continue to chip away at the next level of exposed problems (figure 16.3 ON TEST) ● Accountants book inventory as an as set, but operation managers know it is a cost ● Firms w/ technology sensitive products estimate that the rapid product innovations can cost as much as ½ to 2% of the values of inventory each week. ● Reduced lot sizes: reduces waste by cutting the investment in inventory. Key to slashing inventory is to produce good product in small lot sizes. Reducing size of batches can be major help in reducing inventory and inventory costs -- when inventory

●

●

●

● ●

●

usage is constant, the avg inventory level is the sum of the maximum inventory plus the minimum inventory divided by 2 -- lower the order size increases the number of orders, but drops inventory levels (figure 16.4 pg 644) Ideally, order size is one and single units are being pulled from one adjacent process to another.. More realistically, analysis of the process, transportation time, and physical attributes such as size of containers used for transport are considered when determining lot size -- once lot size is determined EOQ production order quantity model can be modified to determine the desired setup time ○ Qp = √((2DS / (H (1-(d/p)))) ■ D = annual demand ■ S = setup cost ■ H = holding cost ■ d = daily demand ■ p = daily production ○ Setup time = ((Qp^2)(H)(1-(d/p))) / (2D)) ■ Qp = lot size Only two changes need to be made for small-lot material flow to work. First, material handling and workflow need to be improved. w/ short production cycles, there can be very little wait time. Improving material handling is usually easy and straightforward. Second change is more challenging, and that is a radical reduction in setup times Reduced setup costs: both quantity of inventory and cost of holding it down as the inventory reorder quantity and the maximum inventory level drop -- bc inventory requires incurring an ordering or setup costs that is applied to the units produced, managers tend to purchase (or produce) large orders; larger the order the less the cost to be absorbed by each unit -- consequently, the way to drive down lot sizes and reduce inventory cost is to reduce setup cost, which in turn lowers the optimal order size Reduced lot sizes must be accomplished by reduced setup times. Effect of reduced setup costs on total cost and lot size -- smaller lot sizes hide fewer problems, in a manufacturing facility, setups usually require a substantial amount of preparation -- much preparation required by setup can be done prior to shutting down the machine or process -- setup can be reduced substantially (figure 16.5 pg 646) Just as setup cost can be reduced at a machine in a factory, setup time can also be reduced during the process of getting the order ready in the office -- reducing setup time (and cost) is an excellent way to reduce inventory investment, improve productivity, and speed throughput

Lean Scheduling ● Effective scheduling is required for effective use of capital and personnel -- better scheduling also improves the ability to meet customer orders, drives down inventory by allowing smaller lot sizes, and reduced work in process -- many companies now tie suppliers to their final assembly schedule -- (figure 16.3 pg 647 has tactics) -- two of these are paramount, level schedules and kanban

●

●

●

● ●

●

●

Level schedules: process frequent small batches rather than a few larger batches. (figure 16.7) contrasts a traditional large lot approach using large batches with a level schedule using many small batches -- op manager’s task is to make and move small lots so the level schedule is economical -- as lots get smaller, constraints may change and become increasingly challenging. At some point processing a unit or two may not be feasible. Constraints may be the way units are sold and shipped, or an expensive paint changeover, or the proper number of units in sterilizer -- schedule may find that freezing: holding a portion of the schedule near due dates constant, allows the production schedule system to function and the schedule to be met. Op managers expect the schedule to be achieved w/ no deviations Kanban: on way to achieve small lot sizes is to move inventory through the shop only as needed rather than pushing it on to the next workstation whether or not the personnel there are ready for it -- when inventory is moved only as needed, referred to as pull system, and ideal lot size is one -- japanese call it kanban bc allows arrivals at a work center to match (or nearly match) the processing time Kanban: japanese word for card, in an effort to reduce inventory, use pull system -often use a card to signal the need for another container of material -- card is authorization for the next container of material to be produced. Signal exists for each container of items to be obtained. An order of containers is initiated by each kanban and “pulled” from the producing department or supplier -- sequence of kanbans pulls materials through the plant In some cases a card isn’t used and an empty position on the floor is sufficient indication that the next container is needed. Or a signal using a flag or rag can be used. (fig 16.8) Where there is visual contact between producer and user, the process works like this: ○ User removes a standard-size container of parts from a small storage area ○ The signal at the storage area is seen by the producing department as authorization to replenish the using department or storage area. Bc there is an optimum lot size, the producing department may make several containers at a time Several additional points regarding kanbans may be helpful: ○ When the producer and user are not in visual contact, a card can be used; otherwise, a light, flag, or empty spot on floor may be adequate ○ Usually each card controls a specific quantity of parts, although multiple card systems are used if the work cell produces several components or if the lot size is different from the move size ○ The kanban cards provide a direct control (limit) on the amount of work-inprocess between cells Determining the number of kanban cards or containers: it sets the amount of authorized inventory, management must first set the size of each container which is done by computing the lot size, using a model such as the production order quantity model -- setting the number of containers involves knowing 1) lead time needed to produce a container of parts, 2) amount of safety stock needed to account for variability or uncertainty in the system

○

# of kanbans (containers) = (demand during lead time + safety stock) / (size of container) ● Advantages of kanban: containers typically small, usually a matter of few hours of production -- system requires tigth schedule, w/ small quantities being produced several times a day. Must run smoothly w/ little variability in quality or lead time bc any shortage has an almost immediate impact on entire system -- kanban places emphasis on meeting schedules, reducing the time and cost required by setups, and economical material handling -- in-plant systems use standardized, reusable containers to reduce weight and disposal costs, generate less wasted space, and require less labor to pack, unpack and prepare items Lean quality ● No lean w/o quality -- lean “pull” production, smaller batch size, and low inventory all enhance quality by exposing bad quality -- savings occur bc scrap, rework, and inventory investment, and poor product are no longer hidden in inventory, meaning fewer bad ones produced -- lean exposes it while inventory hides it ● Lean shrinks queues and lead time, keeps evidence of errors fresh and limits number of potential error sources -- lean creates an early warning system for quality problems so that fewer bad units are produced and feedback is immediate -- advantages occurs both within and the firm and w/ goods received from outside vendors ● Better quality means fewer buffers are needed, so easier to maintain inventory system can exist --- when consistent quality exists, lean firms can reduce all costs associated w/ keeping inventory (figure 16.4 lean quality tacts pg 649) Lean and Toyota Production System ● Toyota motor’s Eiji Toyoda and Taiichi Ohno are given credit for this system Continuous improvement ● Means building an organizational culture instills in its people a value system stressing that process can be improved -- kaizen: japanese word for change for the good, aka continuous improvement -- kaizen event: occurs when members of a work cell group or team meet to develop innovative ways to immediately implement improvements in the work area or process -- kaizen is implemented by a kaizen event -- kaizen means making a multitude of small or incremental changes as one seeks elusive perfection -instilling continuous improvement begins at personnel recruiting and continues through extensive and continuing training

Respect for people ● Respect for people brings the entire person to work -- aided by aggressive cross training and few job cla...