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Lean Manufacturing - Toyota Production System

Overview on the Toyota production system principles, techniques and theories.

The presentation include:
-Lean Manufacturing Principles
-Productivity Measurement, Analysis and Improvement
-Effect & Elimination of the Manufacturing 7-Wastes
-Lean Improvement Techniques
-Lean Management for Making Improvement & Gaining Sustainability

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Lean Manufacturing - Toyota Production System

  2. 2. LEAN MANUFACTURING 2 Lean Manufacturing Principles and Techniques Presented by:- Eng. Mohammed Hamed Ahmed Soliman Copyright 2014 © Mohammed Hamed Ahmed Soliman
  3. 3. Content: 1. Lean Manufacturing Principles 2. Productivity Measurement, Analysis and Improvement 3. Effect & Elimination of the Manufacturing 7-Wastes 4. Lean Improvement Techniques 5. Lean Management for Making Improvement & Gaining Sustainability LEAN MANUFACTURING 3
  5. 5. TOYOTA BUSINESS 5 Overview on the Toyota Performance & Business Success Toyota’s annual profit at the end of its fisical year in March 2003 , was 8.13$ Billion-larger than the combined earnings of Chrysler, GM, and Ford. Toyota has a profit margin of 8.3 times higher than the industry average. While the stock prices of the big three was falling in 2003, Toyota’s shares had increased 24% over 2002. Toyota’s market capitalization was 105$ Billion as of 2003. The return on asset is 8 times higher than the industry average.
  6. 6. TOYOTA BUSINESS 6 The company has made a profit every year over the last 25 years and has 20$-30$ billion in its cash war chest on a consistent basis. Toyota has for decades been the number one automaker in Japan and distance fourth behind the big 3 automakers in North America. But in AUG 03, for the first time, Toyota sold in North America more than one of the 3 big automakers (Chrysler). In 2003, Toyota was on track to sell more vehicles in the US than either of the two brand names that have led US sales for the past 100 years—Ford and Chevrolet. Camry was top- selling US passenger car in 2003. Corolla was the top-selling small car in the world. Toyota became the leader in producing luxury cars when they introduced the Lexus firstly in 1989. Toyota invented the lean production, known inside Toyota as Toyota Production System TPS.
  7. 7. TOYOTA BUSINESS 7 Toyota has the fastest product development process in the world. New cars and trucks take 12 months or less to design, while companies require typically 2 or 3 years. Toyota automobiles have been consistently been at the top of quality rankings by JD Powers and Associates, Consumer Reports, and others for many years. In the small cars category (Toyota Corolla, Ford Focus/Escort, Crysler Neo, GM Cavalier), Toyota won each of the last three years for overall reliability, as well as the prior three years, and predicted reliability for 2003 model year. For family sedans, the Toyota Camry beat out the Ford Taurus, the GM Malibu, and Dodge Intrepid, wining in the last three years, the three prior years, and predicited reliability for the 2003 model year. More than half of all Toyota used cars are singled out as “recommendedfor purchase,” compared with less than 10% of the fords, 5 percent of the GMs, and none of the Chryslers.
  8. 8. TOYOTA BUSINESS 8 Toyota Lexus has dominated the J.D Powers “initial quality” and long-term durability rankings for years. Toyota Lexus was again the #1 most reliable car, according to the J.D. Powers 2003 quality survey, Followed by Prosche, BMW, and Honda. Toyota’s Profit in 2014 Was Around 18-19$ Billion Announced as per the Fisical Year March 2015, Bigger than the Combined Profit of Volkswagen and General Motors In 2015, Toyota keeps top global automaker crown, sells 10.15 million cars. Compared to 9.93m for Volkswagen and 9.8m for Chevrolet.
  9. 9. Lean Principles LEAN MANUFACTURING 9
  10. 10. The five principles of lean Lean has some goals, intentionally looking from the perspective of the customer. The five principles of lean are defined below: 1. Value: Specify what adds value to the customer and what doesn’t. Customer needs a good quality, good prices and good delivery speed. Quality should meet the customer expectation, no exception. Non values added processes are those that customers are not willing to pay for. They add cost to the product and delay the manufacturing process. 2. Value stream: This involves every step of the process starting from the supplier and ending with the customer. Every step must bring the product closer to the completion and add value to it. LEAN MANUFACTURING 10
  11. 11. 3. Make the product flow: All obstacles that are constraining the flow of the parts through the manufacturing processes must be removed. Lean strive for one piece flow, which is about providing smooth flow for each piece of product with no wastes in time, performance, and quality, in order to deliver the product quickly to the customer. 4. Pull not push: Producing what the customer needs, and avoid over productivity that creates the most of ever wastes in the production processes. 5. Strive for perfection: There must be a vision for perfection. Companies should strive to continuously improve the process rather than being good at what they are doing. The seven-wastes are those non-value added steps that obstacle the flow of the stream, add cost to the product, reduce quality, and delay the process. LEAN MANUFACTURING 11
  12. 12. Non-Value Added & Value-Added Value is something that adds to the process or to the customer. Value added is good, non-value added is bad. Value actually is what customer want to pay for. Value stream. This present every step from the start to the end of the process. Every step of the process should bring the product closer to the completion. Add value What adds value to the customer which customer is willing to pay for. Non-add value essential Activities that support the process. Will need to be minimized. Ex. The maintenance, quality check points, changeovers..etc. Unnecessary non-add value Ex. The seven wastes. This need to be completely eliminated. LEAN MANUFACTURING 12
  13. 13. TOYOTA BUSINESS 13
  14. 14. 7 Wastes: Commonly known in lean language as Muda “which is a Japanese term”. It has been given a shortcut as “TIMWOOD” T=Transportation, I=Inventory, M=Motion, W=Waiting, O=Over processing, O=Over productivity, D=Defects. LEAN MANUFACTURING 14
  15. 15. For example, if there is a manufacturing process consist of several processes such as cutting, casting, assembly, handling, maintenance, inspection, and changeovers. The added value works which involve making what the customer needs is just a few processes which are cutting, casting, and assembly. The others are those non-value added works that need to be removed or minimized. The seven wastes define those non-value added in terms of transportation, inventory, motion, waiting, over processing, over productivity, and defect. They have been given the abbreviation Timwood. The 8th waste is the underutilization of human capabilities or untapped human potential. LEAN MANUFACTURING 15
  16. 16. Cutting process Lathe Process Changeover Maintenance Downtime Machine Setting Re Work Absent Wait for Tools TransportationValue Added Non-Value Added Weld Drill Flow Flow Flow Main goal is to reduce the Lead Time & increase productivity rate per hour Assembly LEAN MANUFACTURING 16
  17. 17. Takt Time One of the most important calculations in lean is the takt time, which is the rate of customer demand for group or family of products produced by one process. Takt time is calculated by dividing the effective operating time of a process (for example per shift or per day) by the quantity of items customers require from a process in that time period. LEAN MANUFACTURING 17
  18. 18. ࢚ࢇ࢑࢚ ࢚࢏࢓ࢋ = ࢟࢕࢛࢘ ࢋࢌࢌࢋࢉ࢚࢏࢜ࢋ ࢕࢖ࢋ࢘ࢇ࢚࢏࢔ࢍ ࢚࢏࢓ࢋ ࢖ࢋ࢘ ࢙ࢎ࢏ࢌ࢚ (quantity customer require per shift) LEAN MANUFACTURING 18
  19. 19. Example. Takt time calculations The effective operating time for a process is 25,200 seconds per shift. The effective operating time = operating time-allowances Allowances such as planned downtime, lunches, breaks, team meeting, cleanup, and planned maintenance. The changeovers, unplanned downtimes are those variables that need to be improved to have the best effective operating time. Customer demand rate= 420 pieces in a shift Takt time= 25200/ 420= 60 seconds Based on the available time, on average the customer is currently buying one unit every 60 seconds. LEAN MANUFACTURING 19
  20. 20. The actual intended cycle time of an assembly process, called planned cycle time, is usually less (faster) than the takt time. In less than one hour, we expect this machine to produce 60 pieces of product. Any interference would reduce the productivity rates of this machine, and delay the product for the customer. Seconds 10 20 30 40 60 50 Process Output Cycles An unstable process LEAN MANUFACTURING 20
  21. 21. The OEE could present those interferences in terms of availability, performance, and quality. Many of us track pieces produced per hour or shift and therefore unable to answer the question “at how many seconds per piece should this process be cycling?” LEAN MANUFACTURING 21
  23. 23. OEE Overall Equipment Efficiency Overall equipment efficiency (OEE) is a total productive maintenance (TPM) module; machine capacity is a part of all three terms: availability, performance, and quality. Each term present numerous improvement opportunities. LEAN MANUFACTURING 23
  24. 24. How OEE is related to productivity and capacity? OEE measures the ratio (%) of what product is actually made which is defect less and sellable, to what could be made according to the design. One hundred percent of OEE is the design or maximum capacity a process or a machine is designed to make with zero defects. The intention is to find why this process is not working as what have been expected, and why the real output is low. Then, some actions should be taken to maximize the current process capabilities, fix problems, and improve productivity. Why use OEE & what is the intention behind this? ࡾࢋࢇ࢒ ࡰࢋࢌࢋࢉ࢚࢒ࢋ࢙࢙ ࡻ࢛࢚࢖࢛࢚ / Design Output LEAN MANUFACTURING 24
  25. 25. OEE Metrics OEE involves three metrics, described as follow: 1. Availability this is a time metric that is usually measures as a percentage of the operating time. Machine availability is a measure of how much time this machine was available to run product. A machine that is busy or can’t make product is considered unavailable. Improving the machine available time by reducing wastes and excess motions from the process will improve: Costs Utilization of both operating time & resources Time required to make a product Overtimes LEAN MANUFACTURING 25
  26. 26. 2. Performance: This is one of the most debate issues. It takes into account the factors that are affecting the speed of the machines. Most of companies take the number of pieces produced and compare it to the design, count quality and availability, then, assume the problem is a machine speed that has been caused by in proper maintenance. Actually, the performance can be affected by many other factors: 1. Untrained operators 2. Bad/insufficient operation instructions 3. No instructions LEAN MANUFACTURING 26
  27. 27. What is the effect of working at lower performance or speed? Consume more resources Waste money Longer production lead time More operators Some companies plan their productivity according to the current situation and the current process capability, making a few hours job last the whole shift. With no trial to evaluate the process or see if it can be improved, the process will never run efficient. LEAN MANUFACTURING 27
  28. 28. 3. Quality This is one of the greatest wastes in the process. Quality is so important for customers, adding value to your customer is what keeps you in business. If a process is producing a number of defected pieces, the required working time to compensate those defects and re produce sellable items will reduce the capacity of making a new product and will consume more resources. Cost of producing a defected piece plus the cost of re working it could be more than double the cost of making it right at the first time. And if a defected product passed to the customer, this can lead to complete business loss. It is more important to make sellable parts rather than focus on just making high number of parts. Reducing the defects ratio will improve the real output of the machine, increase the capacity of making product, reduce the inspection effort, reduce costs, and add value to your business. Quality Cost Defect Parts Re Work Parts LEAN MANUFACTURING 28
  29. 29. Find: What waste time? What slow the speed? What degrades the quality? Production availability & time analysis As shown in fig.1, availability of the machine can be affected by any of these factors. Each problem in fig1 presents a different type of improvement. Availability often presents the waiting waste which is one of the most common wastes in terms of muda (seven-wastes). It can be seen in the most of process improvement events. Unfortunately, many people use the availability as a measure of uptime subtracting many other wastes, and present the formula by this way: ࢀ࢕࢚ࢇ࢒ ࢝࢕࢘࢑࢏࢔ࢍ ࢚࢏࢓ࢋ (࢛࢖࢚࢏࢓ࢋ + ࢊ࢕࢝࢔࢚࢏࢓ࢋ) − ࢀ࢕࢚ࢇ࢒ ࢊ࢕࢝࢔࢚࢏࢓ࢋ ࢀ࢕࢚ࢇ࢒ ࢝࢕࢘࢑࢏࢔ࢍ ࢚࢏࢓ࢋ LEAN MANUFACTURING 29
  30. 30. The above formula tends to focus on an individual process which is the machine downtime, often caused by preventive maintenance, routines, adjusting, calibration, overhaul and the other maintenance activities. The maintenance folk’s main goal is the uptime-keep the equipment working which does not means that this equipment is available to run product. There are still many factors influence the availability of the process or machine as presented in fig.1. But by considering only downtime, this means reducing the PM time or the mean time to repair (MTTR) and losing the opportunity to improve the overall process effectiveness. The main goal of the OEE is to understand the obstacles and wastes that are lowering the productivity rate. For this reason, the availability should be presented by this formula: ܶ‫݈ܽݐ݋‬ ‫݊݋݅ݐܿݑ݀݋ݎ݌‬ ‫݃݊݅݇ݎ݋ݓ‬ ‫݁݉݅ݐ‬ − ܶ‫݈ܽݐ݋‬ ‫݊݋݅ݐܿݑ݀݋ݎ݌‬ ݀‫݁݉݅ݐ݊ݓ݋‬ ܶ‫݈ܽݐ݋‬ ‫݊݋݅ݐܿݑ݀݋ݎ݌‬ ‫݃݊݅݇ݎ݋ݓ‬ ‫݁݉݅ݐ‬ LEAN MANUFACTURING 30
  31. 31. Productivity time Non-Value Add Activities Wait for loading Machines setting time for changeovers No operators Break-times Operation Losses Value-add Figure 1. Most common availability and time lost issues during the operating time Maintenance downs Wait to get tools Wait for quality inspection Wait for CNC program loading Wait for instructions Wait for materials Wait for spare parts Electric cut-off Wait for the manufacture drawing LEAN MANUFACTURING 31
  32. 32. Performance Analysis In many times, the primary cause of performance issues is hidden and overlap with the availability metric. Performance Maintenance issues Data Management programs like ERPs don’t provide solution or root cause of the problem. The reason of low machine output regardless of the quality issue and availability can be the speed of the machine Operator Skills Training Skills LEAN MANUFACTURING 32
  33. 33. It is hard to catch the performance reasons by a software. It will require a deep observation at the gemba. LEAN MANUFACTURING 33
  34. 34. Quality Analysis It is not difficult to know how many defects exist using a simple sheet to record the number of the defected parts which can’t be sold. What is not easy to know is the cause of this defect which requires an intensive effort to understand the source of variation that is causing the quality problem. It will be necessary to perform an in deep process analysis in order to grasp the real situation for elimination of the root causes. Toyota way of analyzing & solving quality problems : 1. Genchi genbutsu (Observe the real situation at the gemba) 2. Mistake-proofing (Poka Yoka) 3. Simple tool like Pareto for data analysis 4. Ask 5 whys to find the root causes. What Six Sigma and other complex analysis tools can do? LEAN MANUFACTURING 34
  35. 35. Code Equip description Downtime hrs (average) frequency Percentage A1 Product Changeover 5 4 12.50% A2 Maintenance downtimes 4 6 10.00% A3 Bringing tools 4 2 10% A4 Waiting for material 3 2 7.50% A5 Quality check 2.5 1 6.25% A6 Preventive maintenance 2.5 1 6% A7 Wait for instructions 1 1 3% A8 Electric current problems 0.5 1 1.25% A9 Others 0.2 1 0.50% A10 ---- ---- ---- Data Analysis & Priority Identification Production downtime weekly report. Total Operating time= 40 hours LEAN MANUFACTURING 35
  36. 36. Equipment Code Equip description Downtime hrs (average) frequency Percentage K1920 Cutting 7 4 17.5% K1921 Skimming 5 6 12.5% K1922 Attachment 4 4 7.5% K1923 Forming 3 3 10% K1924 Assembly 3.7 2 9.25% Production Downtime Analysis by Eq LEAN MANUFACTURING 36
  37. 37. Pareto Analysis A problem solving tool that breaks data down into manageable groups and identifies the greatest opportunity for return on investment. The analysis is based on the Pareto Principle, also known as the 80:20 Rule. Simply stated, the principle says that 20% of a population will cause 80% of the problems associated with the population 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 0 1 2 3 4 5 6 LEAN MANUFACTURING 37
  38. 38. How to set priorities for Improvement Start? Which machine or line to begin with? A famous question that is being discarded in every improvement debate is which process to start analyzing first and calculate OEE for? Which production line? Or which machine? There is a recommendation to start analyzing the pacemaker process. In the automotive industry, pacemaker is the assembly process; this process is connected to various external customers and can affect the customers directly. LEAN MANUFACTURING 38
  39. 39. Which problem to start with? After reviewing the metrics details, the next question become which problem to work on to understand it better with “go and see” approach and improve it? Pareto analysis is a good answer. Process can be analyzed and each factor influenced the efficiency of the process is given a weight depending on its greatest effect in terms of money. However, it is not always the best to start with the biggest problem that poses the great cost. Pareto may not work if the situation at the process changed, this will lead to something called Pareto paralysis. This is something that should be avoided, and people can spend long time searching for the right first step to take! LEAN MANUFACTURING 39
  40. 40. Actually, defining where to start may depend on the current culture driven by the company. For example, if managers and directors are resisting the improvement, then it is better to start with the one that can be fixed quickly and easily to present the benefits from the process improvement, and get the support as needed from the top management for continuously improving the other processes. LEAN MANUFACTURING 40
  41. 41. Gemba or genchi genbutsu LEAN MANUFACTURING 41
  42. 42. Go and See to observe the real situation. A place where the value creating works happen. A place where real problems solving should be carried. A place for developing leaders. A place where the improvement is carried. A place where hidden problems exist. What is Gemba? LEAN MANUFACTURING 42
  43. 43. LEAN MANUFACTURING 43 Grasp the real situation at the Gemba
  44. 44. LEAN MANUFACTURING 44 Benchmarking is a tool for quality analysis and improvement
  46. 46. 1st Transportation Transportation is about material handling. It involves all material movements from the supplier to the customer. What creates most of wastes in the manufacturing process is the movement of the parts through the production processes. It adds more cost on the product, and could affect external customers directly, causing a delay in orders delivery. LEAN MANUFACTURING 46
  47. 47. Factors affecting the transportation efficiency The layout of the plant. Distance between the different manufacturing process steps Distance between machines inside each workstation How close are the workstations and machines to the tools How far are the inventory warehouses from the production facilities How far are the other service departments such as the maintenance workshops from the production lines. LEAN MANUFACTURING 47
  48. 48. Considerations to minimize transportation: Mistakenly, many manufacturers tend to arrange machines by similarity rather than by the sequence of the process steps. For example, if there are two processes, cutting and skimming, and a process of heat treatment that is required between both, then, the oven should be placed between the cutting machine and the skimming machine. Long distance between the process steps increases the time it takes to produce one piece of product and more resources will be needed to move one product from a process to another. LEAN MANUFACTURING 48
  49. 49. Machines arrangement should take into consideration the following things: Minimizing the work in process WIP inventory Minimizing the time it takes to produce one piece of product Be faster than the takt time which is the customer demand rate for a product or group of products. Consider all workstations, machines, and operation tools to be as close as possible to avoid waiting for tools or parts issue and what is called ergonomics in the workplace. LEAN MANUFACTURING 49
  50. 50. Cost effects of transportation: Cost of the transportation equipment like forklifts. Cost of operators driving forklifts Safety risks due to using forklifts in the area Labor wages, Cost of resources The risk of product deterioration during the handling process The effect of delays on the customer. LEAN MANUFACTURING 50
  51. 51. Cost Benefit Analysis Involve in Decision Making A common thinking that the transportation problems has no solution if the root cause came up to a point where the company must re arrange machines and processes to be closer. This action is considered very costly, so many companies won’t even think about it. This is not exactly correct, as long as the main goal is to have an efficient process with minimum wastes and shortest lead time for long- term benefit. Such wastes could affect any organization financially on both long and short terms. Also, this may affect the external customers too, and customers satisfaction worth more than money. If a cost benefit analysis is carried to determine whether to re arrange the process steps by sequence or keep them as they are, the accumulative cost of keeping the current condition over weeks, months, and years could be much higher than the cost of doing the job once and forever. So, this is the key point. The cost of losses must be estimated over months and years. Also, when the company decides to make the changeover, this can be performed gradually. LEAN MANUFACTURING 51
  52. 52. Toyota way of thinking about cost-benefit analysis They believe that management decisions should be based on long-term improvement that matches the company’s vision and goals. And As long as this improvement is in the company’s vision, cost benefit analysis is only being carried to determine the best method to make the improvement not to decide whether to make it or not. Toyota principle: Base you management decisions on long term financial improvement even at the expense of the short-term benefit LEAN MANUFACTURING 52
  53. 53. 2nd Inventory This is one of the greatest wastes. Inventory issues are greatly affected by the production system. But the improper sales forecasting, and the bad procurement planning are also reasons for inventory problems. Reducing the inventory storing value became the main goal of any industrial company. The just in time JIT theory and approaches like Kanban have been utilized to serve the manufacturers demands in reducing the inventories, and keep some buffer for emergencies. LEAN MANUFACTURING 53
  54. 54. The high inventory turns became an indication of how this organization is profitable. You want to spend money on materials and quickly get the return by selling the finished goods. The total selling revenue recover profits, and other costs such as indirect salaries, direct salaries, plant expenses, manufacturing overheads, depreciation, taxes, and insurance. ࡵ࢔࢜ࢋ࢔࢚࢕࢘࢟ ࢀ࢛࢘࢔࢙ ࡾࢇ࢚࢏࢕ = ࢀ࢕࢚ࢇ࢒ ࡭࢔࢛ࢇ࢒ ࡼ࢘࢕ࢊ࢛ࢉ࢚ ࡿ࢕࢒ࢊ ࡭࢜ࢋ࢘ࢇࢍࢋ ࡵ࢔࢜ࢋ࢔࢚࢕࢘࢟ ࢏࢔ ࡿ࢚࢕ࢉ࢑(࢘ࢇ࢝ ࢓ࢇ࢚ࢋ࢘࢏ࢇ࢒ + ࢃࡵࡼ + ࡲ࢏࢔࢏࢙ࢎࢋࢊ ࡳ࢕࢕ࢊ࢙ Inventory types are the raw material inventory, the work in process WIP inventory, and the finished product inventory. LEAN MANUFACTURING 54
  55. 55. LEAN MANUFACTURING 55 E.g. if the cost of goods sold in the period was 1000 and the inventory was 100, then the ITO was 1000/100 = 10 times. The ITO can as well be expressed as throughput time (TPT). If the ITO is expressed as times a year, then the TPT is calculated as 365/ITO days. In the example the TPT would be 365/10 = 36.5 days. To measure the ITO for a single item, you can simply calculate units sold/units in inventory. Trim Master, Inc (seats supplier) for Toyota Motor Kentucky has a ITR of 135times per month!
  56. 56. Cost effects of inventory: The direct cost of the inventory carrying can be estimated through the following parameters: 1. Return on investment ROI: Any investment should have a return. The quicker you get this return, and the better it will be. If money has been spent to buy some materials needed for the production process, a quick return is good; a delay in selling the finished product to the customer is bad. The idea is that this investment amount could have been spent on something else, or putted in the bank. Delay in getting the return involves the interest losses during this period, and what is called opportunity cost. This money could have been invested in another profitable opportunity or project rather than being wasted on some sluggish materials. LEAN MANUFACTURING 56
  57. 57. 2. Risk: The risk of parts deterioration and damage varies. It depends on the product type. If this product has an expiration date like food, or glue, then it will be very risky to store them. Therefore, most of fast moving consumer goods FMCG companies try to accelerate the inventory movement and keep as minimum value as possible in their warehouses. Furthermore, stocking too much inventories, put the business on risk if there was a market change like change in the raw material prices or in the currency value. There is also the risk of accidents such as fires. At the same time, having no inventory, puts the business in another risk, if the supplier has went down unexpectedly due to economic problem or a nature disaster like the earth quakes in Japan, and tsunami. LEAN MANUFACTURING 57
  58. 58. LEAN MANUFACTURING 58 Toyota are best and the leader of inventory management. They stock parts from more than one supplier, indeed two suppliers for each part type. When the tsunami and japan quake occurred, some suppliers went down, but Toyota has taken numerous actions to rectify the issues quickly.
  59. 59. 3. Material handling: This is the cost of transporting goods. Some accountants see stocking the inventory one time per year is economically good from the cost of transporting view, but actually this puts the whole business in risk and affect the profitability of the company. 4. Space: Inventory takes much space and requires additional space renting or buying. The space is valuable whether this space is rented or owned by the manufacturer. The company may found itself has to re buy more spaces for more production lines to expand their business, while there is a lot of inventory taking much space in the factory. It is better to minimize the inventory rather than buying more spaces to store it. Either, those additional spaces will need more resources such as a ventilation system, manpower, equipment, energy, and data recording system. LEAN MANUFACTURING 59
  60. 60. 5. Insurance and taxes: Spaces need insurance, as well as the insurance for all transportation equipment and the manpower. Also taxes are applied in some areas on the inventory. It is clear that higher inventory turns is a good sight, low turns is an indication of lazy system and unprofitable one. An example of the inventory turns ratio at one of the Toyota suppliers. In 1994, Toyota set up Trim Master, Inc TMI as a joint venture plant to supply seats for the opening of its new plant in Georgetown, Kentucky. The TMI had an inventory turns of 135 turns per month! This has been reported by Jeff in his bestselling book Toyota Way. The author thought that he has caught an error and the number of turns is per year, but it was really per month! Carrying cost in industrial companies is 25-55% from the total inventory amount LEAN MANUFACTURING 60
  61. 61. WIP Inventory Hidden Costs: Hides many issues behind it Problems are not visible Increase waiting between the process steps Increase lead times Root cause finding of quality problems is difficult More wastes Delay in customer delivery LEAN MANUFACTURING 61
  62. 62. Rocks signify quality, downtimes, and other production problems LEAN MANUFACTURING 62
  63. 63. Considerations to minimize inventory Production style affect the inventory. Pull or Push? Building too much work in process WIP inventory between the process steps or using a production system based on large batches, will constraint the parts flow through the manufacturing processes. A process might have to wait for parts that need to be made until they are all finished with the other process that supplies it. The main lean goal is to make one piece flow through the production processes, and minimize the work in process WIP inventories. Producing small batches is also a good idea, and will help facilitate the transportation without using heavy equipment like forklifts. Trolley and other light equipment are preferable for both cost and safety issues. LEAN MANUFACTURING 63
  64. 64. The main lean goal is to make one piece flow through the production processes, and minimize the work in process WIP inventories. Producing small batches is also a good idea, and will help facilitate the transportation without using heavy equipment like forklifts. Trolley and other light equipment are preferable for both cost and safety issues. Minimum Wastes Maximum Delivery Speed Minimum WIP Inventory Shortest Lead Times LEAN MANUFACTURING 64
  65. 65. Should we have zero WIP inventory? At the same time, having zero WIP inventory will put the process in risk of stoppage if another process is supplying it with parts has been went down unexpectedly. Using an inventory buffering system is a good idea to avoid emergencies. Materials or parts can still be pulled to the production lines but with a little bit of safety stock using a technique like Kanban to provide the needed materials on time and with the right quantity. LEAN MANUFACTURING 65
  66. 66. 3rd Motion This is the ergonomics. The operator needs to have his tools and parts handed to him in exactly the right orientation to eliminate wasted walking and handling losses. 5S is a good technique to eliminate the operator searching for tools issue. By ensuring there are enough tools available in place, and give them a location so they are being returned after use. By arranging the tools and putting them in a clear place, access to the tools became much easier now. Shadow boards would be helpful to realize if a tool is missed. Basically the tools are outlined and a missing tool show a shadow when it is not there. The board should be followed up regularly to ensure tools are returned after use. LEAN MANUFACTURING 66
  68. 68. Tools should be returned after use Someone should follow up the board regularly to ensure tools are available, in good condition, and returned after use. Each tool should be outlined on the board, if one is missed, it will be recognized. LEAN MANUFACTURING 68
  69. 69. 4th Waiting This is the time waste factor, and it involves the following activities: • Waiting for materials. • Waiting for spare parts. • Waiting for the quality inspection process. • Waiting for services such as waiting for maintenance crafts • Waiting for quality inspectors. • Low machine performance/speed. LEAN MANUFACTURING 69
  70. 70. When calculating the takt time, and customer demand rate, those are the variables than need to be eliminated to improve the effective operating time. • Waiting due to machine downtime, repairs, and preventive maintenance. • Waiting for operators to get tools or spare parts. • Waiting for changeovers from one product to another. • Waiting for CNC machine loading program. • Waiting for instructions or design drawing. LEAN MANUFACTURING 70
  71. 71. Over productivity and inventory issues are related. Over productivity creates most of production wastes. Making product more than what is actually needed or over the capacity of the selling department is a waste of money in enormous rates. The losses are the costs that have been spent to make this product. Even if this product is going to be sold later, there is still a problem with the return on investment for the raw materials and the other resources that have been used to make this product. Pulling product to customer is one of the main lean goals. And if the product is computer or a modern technology, so the company will be in troubles. Technology changes fast, and cannot be stored for a period of time. 5th Over productivity LEAN MANUFACTURING 71
  72. 72. In additional, for any goods that have an expiration limitation date, producing with mass of quantities with no realization of where this product is going to be sold, put them in danger of damage and deterioration. The goal is to make only what is needed and when needed. A method like Kanban can be used either with the finished goods to produce according to the customer demand. Basic Kanban or Pull System mechanism Kanban (pull system) LEAN MANUFACTURING 72
  73. 73. 1. The customer process (assembly process as shown in the fig) receives some form of production instruction. 2. The material handler serving this assembly process regularly goes to the up stream store and withdraw parts that the assembly process needs in order to fulfill the production instructions 3. The supplier process then produce to replenish what was withdraw from the supplier store. Kanban is an inventory buffer, and a production regulation tool. LEAN MANUFACTURING 73
  74. 74. The same machine The same machine What parts run on what machine? LEAN MANUFACTURING 74
  75. 75. PatternFlexible • Can run any part on any process • Many variables • Difficult to understand causes of problems • Strives to dedicated part numbers to processes • Easier to understand causes of problems LEAN MANUFACTURING 75
  76. 76. Cost effects of over productivity: Over productivity create the most of manufacturing wastes. Mass productivity holds many downtime problems Mass productivity holds many quality issues behind it. Increase the non-value added Longer lead time of making product Delay in delivery to customer Waste of money Producing one piece or small batches will help pointing out the production obstacles quickly and discover the root causes before problems are developed. LEAN MANUFACTURING 76
  77. 77. Traditional Mass Productivity Thinking VS Lean Thinking One of the most debate issues is the use of mass production technique. The approach involves making as many parts as possible using the maximum available resources and all available machines. It doesn’t take into consideration the customer demand rate or the sales forecasting. Furthermore, if you are making 500 parts, and there were a problem with the production process, a quality failure can occur with all of those parts. Problems are hidden with the mass productivity approach; it will be also so difficult to discover where the error is coming from. So the root causes will remain hidden. LEAN MANUFACTURING 77
  78. 78. If a supplier process is producing with mass productivity and building too much work in process WIP inventory, the downstream process will find all what it needs even if the supplier process has been went down suddenly. The downtime is hidden, and is not important; no one will consider preventing it in the future unless it has an obvious affection on the production process. Also if the operator at the supplier process is spending time getting tools or parts, the downstream process is still receiving the parts it needs to make. Mass productivity creates the inventory problems, hides many wastes behind it, and effect the delivery time to customers. If you are assembling one piece of product in 3 minutes, waiting for 10 pieces to be assembled will take 30 minutes. The cycle time of one piece became 30 minutes although the add value time is only 3 minutes. LEAN MANUFACTURING 78
  79. 79. Large batch processing LEAN MANUFACTURING 79
  80. 80. Continuous product flow LEAN MANUFACTURING 80
  81. 81. With pull concept, and producing only what is needed for each process step and between the production lines, there will be a minimum work in process WIP inventory. If a process is went down, the downstream process won’t be able to receive parts, and the upstream process won’t be able to produce and build WIP inventory. Problems are now surface and clear. And everyone will strive to fix downtime and prevent the recurrence of this downtime. LEAN MANUFACTURING 81
  82. 82. LEAN MANUFACTURING 82 Advantages of pull system: Problems are surfaced quickly Produce according to the customer needs saving cost & resources Reduce the WIP inventory Shorter lead time Increase value-added work Better quality control
  83. 83. CT=104 min CT=76 min CT=104 min CT=40 min CT=40 min Assembly SawLatheDrillWeld 0.75 days WIP 0.25 days WIP 1.7 days WIP 0.13 days WIP Lead times=3.75 days CT=Cycle Time WIP=Work In-Process LEAN MANUFACTURING 83
  84. 84. CT=105 minCT=103 min CT=108 min Weld 0.13 days WIP Inventory Min= 0 Max= 1 Lead times=0.80 days Saw, Lathe, Drill Assembly 0.13 days WIP Inventory Min= 0 Max= 1 LEAN MANUFACTURING 84
  85. 85. Before After Production Lead Time 3.75 days 0.8 days # of forklifts 11 1 Travel Distance per product piece 1700 ft. 1000 ft. Result of Lean Transformation LEAN MANUFACTURING 85
  86. 86. 6th Over processing It means making more steps in the process than what are actually needed or making steps that are not needed. By asking some questions while mapping the process, we can allocate the over processing: • Why do we do this step? Is this step needed? • Why do we do it now? • Why do we do it this way? Is there an easier way to do it? • Do we need this step? • Can we eliminate this step? Or reduce its time? • Can we do two steps together at the same time? Can the step be grouped with others and preassembled? • Could two tasks be done at the same time? • Would two peoples doing the job make it faster? LEAN MANUFACTURING 86
  87. 87. Many processes can be improved and reduced time through removal of the unnecessary steps. The improvement is not only limited to the manufacturing process itself, but also to the other processes such as changeover, maintenance, and material movement. The most common reason of why over processing is exist, is the work standardization. No standardization creates many wastes. Standardization is a good way to avoid over processing, mistakes, defects, and other wastes. LEAN MANUFACTURING 87
  88. 88. TOYOTA BUSINESS 88 Get This Book Available at Amazon Kindle Store
  90. 90. Mapping as a lean tool for process improvement LEAN MANUFACTURING 90
  91. 91. What is Mapping? it is a range of techniques for analyzing the steps (or stages) in process. Any process is suitable. As experience, the most common maps are in processes-the way a product is manufactured. Why Mapping? Mapping is used most often to analyze a process to find ways to improve how the task is carried out. If lean principles are applied, we can make any process more efficient. With a team skilled operators and engineers, we can identify any steps where errors are introduced and where they effect the rest of the process. LEAN MANUFACTURING 91
  92. 92. Is Lean a Positive or Just an Extra Work? The company/Managers/Engineers need to decide carefully whether to spend their cash on a promise of something better or a bit of equipment that will do something better. It is pretty much guaranteed that unless the improvements are embedded in the daily life and the culture of organization, they will evaporate away. For prolong success, the improvement work never must be regarded as extra work. It needs to be ongoing like the preventive maintenance program or the scheduled program. LEAN MANUFACTURING 92
  93. 93. •Basic Process Mapping •The Big Picture Map •Capacity Maps •Value Stream Mapping ”VSM” •Value and Capacity Stream Map •Swim Lanes Mapping. •SIPOC Maps. Commonly used for: -As a tool for problems finding and process improvement. -Pointing out inefficient process steps “non-value added”. -Allocate wastes and remove them. Mapping Tools: Process mapping is a workflow diagram to bring forth a clearer understanding of a process or series of parallel processes. LEAN MANUFACTURING 93
  95. 95. •Value Stream Maps. The non value added and the value added are being separated in the map, time of each is calculated and pointed out, so the time saving by eliminating the non-value is clear. Value add Non-value add Value add Value add Value add Non-value add Non-value add •Process Maps. Look for all details inside each dept, point out the wastes and improvement chances, , its the most common map. This is my preferred MAP, and will begin with it. Other maps can be discussed in the next report. Process MAP can zoom ++ for specific points and show up the wastes in wider scale. LEAN MANUFACTURING 95
  97. 97. Toyota Production Goals Zero Defects 100 percent value added One-Piece Flow, in sequence, on demand Security for people LEAN MANUFACTURING 97
  98. 98. LEAN MANUFACTURING 98 Phase#1 Preparation for the Kaizen Event 1. Clearly define the scope of work 2. Set the objectives: like improve quality, reduce costs, reduce lead times…etc. 3. Create preliminary current state map 4. Collect all relevant documents and data 5. Post the preliminary current state map on the wall in a room
  99. 99. Define the Customer Requirements Current State Map Future State Map Implementation Plan Do it Evaluate -Scope of Business -What is the value add to customer? -Measurable objectives -Process steps -Process flow -Point out non-value added & value added -Eliminate non-value added -Kaizen work -What? Who? When? -Communication and Training Plan -Begin workshop -Establish process metrics -Visually track progress -Continuous Improvement Data KaizenPhase (Phase#2) LEAN MANUFACTURING- 99
  100. 100. 1.Analyze Current-State MAP To complete this map you need the following: • Team should physically walk through the process • Obtain insight on how the process works • Surface issues and solicit ideas for improvement • Begin the analysis of the preliminary state map based on the data collected through the work This is the map that present the current situation, and all symptoms/problems and wastes that need to be improved. LEAN MANUFACTURING 100
  101. 101. LEAN MANUFACTURING 101 • Point out the value added, the pure non-value added, and the required non-value added • Calculated and summarize the metrics Metric Measurement Value added % Non-value added % Quality ratio % Lead times hrs Workers productivity % WIP inventory Batch size/ no of pieces/ tons Cost $
  102. 102. Process Actual/Current Best Possible (Target) Data Box (KPIs) Each task/process is presented with the current measurement and the target. LEAN MANUFACTURING 102
  103. 103. LEAN MANUFACTURING 103 Parking lot Process Actual/Current Best Possible Those are the tasks that you decided to work on later.
  104. 104. Process Map Analysis “Red Post-its Analysis”. Process /issue description Symptom/Problem Exists Total time LEAN MANUFACTURING 104
  105. 105. 2.Develop a Future State Vision/Future State Map This is the waste free map that has no waste in time or resources with the optimum/efficient cycle time and the no of resources needed. It also should present the right flow of the process steps. Tips: • Draw & write down all ideas of improvement from the team • Allow people who manage the work day by day and have intensive experience about the process to share their ideas • Consider the workers who do the work every day to put, and share their own ideas on how to improve these issues. LEAN MANUFACTURING 105
  106. 106. LEAN MANUFACTURING 106 This map would include: • The optimum lead time (cycle time) of each task in the process • The optimized flow of the process • The right no of resources • Seven wastes free • Use brainstorming for potential solutions • Create a parking lot for things that have been surfaced so you will work on later
  107. 107. 3.Implementation & Visual Tracking System The use of the visual tracking system on field during the kaizen work and before drawing the future state map is a good idea to present the following: • Obstacles found in the project. • The progress and the percentage of completion. • The responsibility of each task. • Postponed, in progress, and completed tasks. • Documentation & procedures. • Train people on the new process. LEAN MANUFACTURING 107
  108. 108. LEAN MANUFACTURING 108 Metric Unit of measure Target Improvement Owner Process Cycle time Days/hours Non-value added % Value added % No of workers Quality ratio % WIP inventory No of pieces/tons Lead time between processes Hours/days Delivery % on time Productivity % 4. Evaluate measuring performance
  109. 109. Value Stream Mapping is a tool to ensure that process improvement effort: 1. Fit together from a process to process so that a flowing value stream is developed. 2. Match with the organization’s targets. 3. Serve the requirements of the external customers. The tools you need onsite while observing the real situation: • A stop watch • A graph paper • A pencil • An eraser • Calculator LEAN MANUFACTURING 109
  110. 110. LEAN MANUFACTURING 110 Inappropriate actions commonly performed by lean leaders when using the value stream mapping for removal of wastes on shop floors: • Treats the VSM as a tool for process improvement rather than a method to ensure that process level improvement efforts: 1. Fit together from a process to process so that a flowing value stream is developed 2. Match with the organization’s targets 3. Serve the requirements of the external customers. • Focus on maximizing the efficiency of an individual process on behalf of others without understanding the real situation at the factory floor. For example, maximizing the material flow through the production processes using small batches will put more effort and load on the transportation department and the crew will have to make more batches.
  111. 111. LEAN MANUFACTURING 111 • Jump to the do phase to implement the plan without spending enough time gathering facts, colleting people’s ideas, training peoples. Processes tend to slip back if people have not been trained on the culture of continuous improvement. Also people who the work day by day must be allow putting their own ideas to improve their works and produce the future state map. They should believe that this is something to facilitate their work and make it much easier and safer. • Metrics are used by the senior managers to evaluate the results and control the employee performance at the factory floor without understanding the obstacles that need to be removed to get stable results. Managers should act as facilitators for the improvement process. Also metrics should be used by the employee themselves to measure their own progress and define the requirements of the next step.
  112. 112. Productivity & capacity improvement through finding the bottleneck Machine.1 Machine.2 Capacity=100 units per hour Capacity=70 units per hour A product is passing through two machines, one is capable of 100peices/hrs, the other is only capable of 70 pieces/hr. Assume perfect quality and no time waste, so what is the OEE for each machine? LEAN MANUFACTURING 112
  113. 113. Sustain Standardize Shine Sort Set in Order LEAN MANUFACTURING 113
  114. 114. Any successful 5S process must achieve the following: Eliminate the seven deadly wastes from the process Reduce ergonomics in the workplace Provide a secure and safe environment for the working labors and staff Increase workers morale and satisfaction Improve the factory appearance to attract the customers Increase the productivity of the workers LEAN MANUFACTURING 114
  115. 115. LEAN MANUFACTURING 115 A place for everything, and everything in its place
  116. 116. LEAN MANUFACTURING 116
  117. 117. 7 to 8 out of each 10 lean projects fail as companies try to treat lean as toolkit, copying and pasting the techniques without trying to adapt the employee culture, manage the improvement process, and develop peoples. Some Management Habits. What do you think about the following approaches? Management by Objectives Incentives and Rewarding System Sink or Swim Mentality Blame Culture Lean Failure! LEAN MANUFACTURING 117
  118. 118. Toyota’s main pillars “4P” LEAN MANUFACTURING 118
  119. 119. LEAN MANUFACTURING 119 Eng. MohammedEng. MohammedEng. MohammedEng. Mohammed Hamed AhmedHamed AhmedHamed AhmedHamed Ahmed SolimanSolimanSolimanSoliman The American University in Cairo Email: Tel: +201001309903 References: Liker, J. K. (2003). Toyota way. New York: MacGraw-hill. Liker, J. K., & Convis, G. L. (2012). Toyota way to lean leadership: Achieving and sustaining excellence through leadership development. New York: MacGraw-hill. Rother, M. (2009). Toyota Kata. New York: MacGraw-hill. Ahmed, M.H. (2013). Lean Transformation Guidance: Why Organizations Fail to Achieve and Sustain Improvement with Lean Methodology. International Journal of Lean Thinking, 4(1).