The document discusses how lean production techniques can be enhanced through the use of information technology (IT). It covers how IT has been applied to areas like production planning, computer-aided production management systems, enterprise resource planning, and advanced plant maintenance to support lean practices. The document also discusses internal and external IT integration, and how "pull" systems can help reduce lead times when order information is transmitted through the supply chain using IT.

1. A Seminar
on
LEAN PRODUCTIONandINFORMATION TECHNOLOGY
SUBMITTEDBY:
A.Sowmya 13HM06
NITK
MBA2013-15

2. ABSTRACT
• Lean production or rather lean management, is an intellectual approach
consisting of a system of measures and methods which when taken all
together have the potential to bring about a lean and therefore particularly
competitive state in a company.
• The aim of lean production is to reduce the quantity of resources used.
• Lean production should mean less use of labor, materials, space and time.
• The main fields
 product development,
 the chain of supply,
 shop floor management
 after-sales service

3. Cont.…
• Four important topics studied are: the use of IT in
 Lean reduction
 Production logistics
 Computer-aided production management systems
 Advanced plant maintenance
• Companies using advanced ITs such as ERP are more successful with lean
practices
• E.g.. : standardization, levelled production, quick changeovers, and customer
relationship management.

4. INTRODUCTION
• Corporate world has been facing a challenge because of globalisation, product
innovations and due to competition. Customers are increasingly expecting for
more variety and increased quality, delivery in shorter lead times and products at
a lower price.
• To survive in such situations companies have developed two popular strategies
Lean practices implementation Integration of information technology (IT).
• To meet the competition and to reduce cost companies have chosen Lean
manufacturing techniques which helped them to cut cycle time and increase their
competitive edge.

5. Cont.…
• Three factors driving the need for broader use of technology in Lean
manufacturing.
• Lean initiatives to increase and spit in cycles.
• The Toyota Production System assembly line manufacturing methodology,
developed in the 1950s, says the importance of "getting the right things to the
right place at the right time, the first time, while minimizing waste and being
open to change".
• To gain the market where competitors produce the same product only lean
practices are not enough to reduce the costs.
• In such a situation Information Technology in Lean production comes into
picture.

6. HISTORY
• The industrialised countries faced a steady increase in demand. Many production
facilities had to be rebuilt and even lost the market.
• This modernisation and industrial rebuild had increased the demand but with the
scarce resources the competition was critical.
• Bullwhip, or Forrester effect :
The variability in demand increases through the supply chain.
• The main causes for this erratic behaviour is due to:
 a time delay in the information feedback system
 the use of incorrect inventory policies such as increasing safety stock as
demand increased
 the use of statistical forecasting techniques which assumed that the historical
demand patterns would prevail in the near future.

7. • The development of computerised information systems reduced both the
required time and the costs of integrated control.
• Industry had a tendency to use the systems mainly for
 administrative purposes such as ordering,
 maintaining the bills of materials,
 as well as recording price
 lead time information.
 tracking and tracing inventory.

8. Internal and External IT integration
• IT integration is categorised into two categories:
 internal integration and
 external integration
• Most discrete manufacturer’s implement their internal IT systems, such as
material requirements planning (MRP), first and then expand the scope of their
IT integration into the supply chain.
• If a firm does not have good between-firm IT(external) infrastructure in place it
cannot receive updated demand information, supplier information, and customer
information needed to support an effective within-firm IT (internal) system.

9. Internal IT integration
• Internal integration connects the different functions in a firm such as
manufacturing, purchasing, and materials management aimed at improving the
performance of cross-functional processes that make up the order- to- cash
process.
Eg. ERP
• Intra firm information systems enable manufacturers to offer a broader range of
products by shortening setup time, thus enabling small batch runs, both of which
result in reduced lead times.

10. External IT Integration
• External integration refers to information systems that connect a
firm with its suppliers and customers.
• IT integration with suppliers and customers lead to improved firm
performance.
• E.g.: Inter organizational information systems
• Insufficient data integration leads to delays, decreases in
communication, and greater distortion of meaning.
• Between-firm integration aids supply chain partners in reaching
joint decisions by facilitating information exchange, recollection,
and standardization.

11. IT Integration and Lean/JIT
• Increasing importance of supply chain considerations, contemporary lean/JIT
systems require not only local information from internal IT systems such MRP
and ERP but also need information from supply chain partners that is provided
through external IT integration.
• Internal IT systems such as advanced planning and scheduling can help
bottleneck/constraint removal and facilitate cycle-time reduction.
• External IT systems such as direct connections between suppliers and buyers can
help reduce production lot size, enhance pull-system effectiveness, and facilitate
agile manufacturing approaches.

12. • IT integration facilitate three lean practices:
 The use of pull systems
 With internal and external IT integration, pull systems can transmit the
order information through the entire supply chain and helps in reducing
customer lead time.
E.g. Dell pull production systems
 Lot-size reduction practices, which in turn reduce lead time.
 E.g.: Cisco
 Between-firm IT systems such as online customer service and/or help desk
can get information from customers and provide customer information to
lean/JIT production systems which facilitates lean/JIT practices and reduces
customer lead time.
 E.g.: Dell online customer service system

13. PULL & PUSH SYSTEMS
• A ‘pull’ system is known as one that explicitly limits the amount of work in
progress that can be in the system.
• A ‘push’ system, does not explicitly limit the amount of work that can be
released to the shop floor.
 E.g.: The MRP system and cyclical planning systems.
• Make-to-stock or assemble-to-order companies face different problems to make-
to-order or engineer-to-order companies has had a large impact on the
development of new production control mechanisms for Lean production
systems.
• ‘Pull’ systems became particularly popular due to the increased application of
Lean Production, which aims to minimise waste.

14. • Pull systems attempt to reduce throughput time by limiting the amount of work-
in-progress on the shop floor.
• Work-in-progress has an important function in smoothing production output.
• If the WIP in the production system is located ineffectively output might be
reduced.

15. What is information waste?
• One of the foundations of lean thinking is being able to identify and eliminate
waste.
• In any kind of business venue -- wasteful behaviour gets in the way of
companies ability to deliver value to the customer.
• Unfortunately, in the last few years there has been so much emphasis on cutting
costs that many companies have been cutting not just fat, but also cutting
essential resources, weakening the capability of IT to serve the customer .
• Organizations can solve these problems by taking a systematic approach,
implementing a data governance program that includes a master data
management system to ensure data integrity.

16. Computer-aided production management systems
• CAPM systems are information systems that include: transaction processing, maintaining,
updating and making available specifications, instructions and production records;
management information used for decision making, particularly relating to the allocation
of resources and priorities; and automated decision making.
• CAPM modules include support for planning :
 Master production scheduling
 MRP
 Capacity requirements planning (CRP)
• CAPM modules which support control
 Inventory control
 Shop floor control
 Vendor measurement

17. MRP systems
• Material requirements planning (MRP)assume infinite capacity, fixed leads lead-
times and a predetermined product structure.
• MRP works best in stable environments in which the demand for products is
very predictable.
• When there is uncertainty MRP needs to frequently reschedule.
• To cope with these changes in demand additional subsystems such as purchasing
and feedback loops were incorporated.
• The combination of master production scheduling, material requirements
planning and capacity planning together with the potential to provide feedback
from the shop floor and vendor management systems was termed ‘closed loop’
MRP

18. • The enterprise resources planning is defined as ‘‘a framework for organising,
defining and standardising the business processes necessary to effectively plan
and control and organisation so that the organisation can use its internal
knowledge to seek competitive advantage’’.
• Companies are increasingly using off-the-shelf ERP solutions.
• ERP systems can dramatically reduce the amount of time required to obtain
information relating to products and processes. They can help increase the speed
and quality of management decisions, while reducing costs.
• Many lean companies now use ERP based approaches for communicating
demand through the supply chain to facilitate just-in-time delivery.
• E.g. : Nissan Motors
• Computer-aided production management and Lean are now
complementary technologies.

19. MAINTAINANCE
• There is an increasing demand to improve product quality at the same time as
simultaneously reducing costs.
• Lean Production is particularly sensitive to quality problems and strives to
minimise waste.
• Current maintenance practice is usually heavily supported by information
technology (IT).
• There are four approaches to organising the maintenance function:
 TPM
 a combination of techniques and improvement campaigns aim to
improve the Overall Equipment Effectiveness

20. • CBM
 to detect initial failures long before their occurrence.
 CBM is appropriate when:
(i) time directed preventive maintenance is not feasible (because failures happen
randomly and/or an in-service failure not acceptable)
(ii) a measurable parameter which correlates with the onset of failure can be
identified
(iii) it is possible to determine a threshold value for the parameter when action is
to be taken.
• RCM
 a framework within which a maintenance system can be designed.
• Risk-based maintenance
 A preventive maintenance activities may be considered to be ‘waste’ as they add cost
but do not necessarily add value.

21. • Additional use of IT in support of the maintenance function :
 MMIS
 to process maintenance work-orders efficiently.
• Decision support systems
• Performance monitoring and evaluation

22. SUMMARY
• The use of IT in production planning and control systems; computer-aided
production management systems and enterprise resource planning; and advanced
plant maintenance along with which how IT integration has helped in the lean
reduction techniques are discussed.
• Though the origin of the different areas is similar but their developments followed
different directions.
• the developments in ‘pull’ system design focuses upon adapting well-known ‘pull’
mechanisms to different situations. The differences between the three systems relate
to the characteristics of different production environments.
• The developments also place new demands on the type of IT support needed to
implement these systems.
• The combination of Lean Production with computerised methods provides an
effective way to manage the supply chain.