3. Introduction
• Financial Measures
– Profit greater than three world class
manufacturers (combined)
– Increased in share (24% in 2004), while
others decreased
– ROA 8 times greater than average industry
– This company has been no. 1 in the world
– Market share of close to 40% in Indonesia
4. Introduction
• Other measures
– Known for quality and efficiency
– Lasts longer than American cars
– Less repairs
– Produce fast, reliable, and less expensive
cars (not thru expense of workers‘ salary)
7. Customer Needs
Quality Cost Response
Enterprise Capability
Suppliers Capability
Operations Capability
R & D Distribution
Finance Marketing HR IT
8. Lean Production – House of
Lean
Customer Focus
Elimination of Waste
Just In Time
Production
Autonomation
Worker
Involvement
-Pull system
- SMED
- Prod
Leveling
- On time
Del.
- Zero Defect
- Flex
Workers
-Stop
process
- No
Overprod
- Error proof
- TPM
-Kaizen
- QC
- Visual mgt
- 5S
- Standard
work
10. Approaches
• Taichi Ohno (TPS founder)
– “Time line concept”
– Order received to cash received
– Eliminate any possible _____ along the time
line
11. Results
• Results
– Shorten lead time
– No “mass production”
– More responsive and flexible system
– One piece flow
– Management commitment
– Decades of lean thinking
12. Lean implementation
• Example (TSSC on Company X)
– 46% reduction on lead time (12 to 6.5 hrs)
– 83% reduction on WIP
– 91% reduction on finished products
– 50% reductions on over time
– 83% productivity increase (2.4 to 4.5
unit/worker hour)
16. And Now
• Toyota CEO (Katsuaki Watanabe)
– Dissatisfied with current progress
– Toyota is loosing competitive edge
– Other have adopted TPS and Lean; Toyota
has to find a different approach
– Kaskushin (revolutionary change)
• 50% in parts and redesign assembly line
• Reduce production cost by $1,000 (despite
increasing labor and material costs)
• Improve quality and productivity at a much faster
rate
18. Introduction
• Changes in customer demands
– Variety
– Price
– Delivery
– Quality
• Impacts on production capability
– Short set up and cycle times
– Quick response
– Low cost
– Zero defect, etc.
19. Lean Operations
• Definition
– “Doing more with less…”
• Less inventory, less space, fewer worker, etc.
• Coined by James Womack and Daniel
Jones
• Similar to Toyota Production System
(TPS)
– Initially known as Just-In-Time (JIT)
• Smoothing flow of material to arrive just as it is
needed
21. Lean Operations – Basic Elements
• Flexible resources
– Multifunctional workers, or
– General purpose machine
– Concentrate on worker productivity using time
motion studies
– Operating time of workers vs. machines
– One worker and 2, 3, and 4 machines
– Layout of different processes, common to a
group of parts
22. Lean Operations – Basic Elements
• Pull system
– Inventory as a cushion system
– Idea similar to US supermarkets
• Replenish only what’s needed
• Frequent visit
• Customer pull through the system
– Vs. Push system?
• Rely on predetermined schedules
– “Rely on customer demands”
23. Lean Operations – Basic Elements
• Small lots
– Vs. large lots?
– Require less space and capital investment
– Process can be moved together
– Simplified transportation
– Easier to detect quality problems
– Worker tend to provide more attention
– More dependency between processes
– Better customer contact and forecasting
25. Lean Operations – Basic Elements
• Small lots
– Lead time reduction
• Processing time
• Move time
• Waiting time
• Setup time
26. Lean Operations – Basic Elements
• Quick setups
– Definition
– Relationships with large lots
– 6 hours vs. 3 minutes
– SMED (single minute exchange of dies)
• Introduced by Shigeo Shingo
• Steps
– Separate internal vs. external setups
– Convert internal to external setups
– Streamline all aspects of setups
27. Lean Operations – Basic Elements
• Visual control
– Procedures that make problems visible
– Clear expectations for workers
– Kaizen (continuous improvements)
• Employee participation
• Employee empowerment
• E.g., 500 kaizens/year (99.8% implemented)
– Poka-yoke (fool-prove device)
• Prevent defect from occurring
29. Lean Operations – Basic Elements
• Jidoka
– Authority to stop production line
– The use of Andons
• Call light signaling quality problems
– Discuss issues at end of shifts
30. Lean Operations – Basic Elements
• Supplier networks
– Long term contracts
– Synchronized production
– Supplier certification
– Frequent deliveries
– Precise delivery schedule
– Standardized, sequenced delivery
31. Lean Operations – Basic Elements
• Summary – Benefits of lean
– Reduced inventory
– Improved quality
– Lower costs
– Reduced space requirements
– Shorter lead time
– Increased productivity
– Greater flexibility
– Better relationships with suppliers
– Increased capacity
– Better use of human resources
32. Lean Operations
• Note – managerial issues
– Cross functions and team work
– Re-structure?
• No more marketing vs. operations
– Learning individuals, teams, and organization
– Performance appraisal and reward system
– Managing human resource
• Excess capacity
• Training
– Top-down commitment and bottom-up involvement
33. Lean in Other Sectors
• Manufacturing
• Hospital
• Insurance
• Transportation and logistics
• Energy consumption
• Public services
