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An Introduction to
LEAN MANUFACTURING
History of Manufacturing
CRAFT
• Made customer specific
• Each product is unique
• Variable quality /expensive
MASS
• Interchangeable –Whitney
• Division of labor-Fredrick Taylor
• Assembly lines and flow variety-Ford
LEAN
• High variety
• Small batches
• Six sigma quality
What is LEAN?
• “Lean is the elimination of anything not absolutely
  required to deliver a quality product or service, on
  time, to our customers.”
• LEAN is fundamentally different business logic
• LEAN is based on eliminating unnecessary action
• LEAN links value activity in a continuous sequence
• “Only a small fraction of total time and effort in an
  organization adds value for end customer”
Why LEAN?
• Severe Competitions in all walks of business
• Firms face reduction in margins to keep the
  market share
• Every little saving will improve the economy
• Time for every available resource to perform the
  best
• Operation cost reduction is critical to our survival
• Profits =price-cost (price dictated by the market
  and cost incurred by us)
• Cost = activities involved (VA+NVA)
LEAN- Some myths
• LEAN is a factory thing
• LEAN will not work here
• We tried it, it is another kaizen event
• 5S is all about cleaning up your office or
  workstation
• We are different, it can’t apply to our business
• Its an excuse to take our jobs away
• Zero inventory
LEAN System -Benefits
The Hard ones (typical)
• 15% growth in 1 year
• 12% Productivity increment in one year
• 20% space saving in one year
• 90% on time delivery in full
• 28% throughputs lead time reductions
• Improved supplier performance
• Improved customer quality
• Progressive MUDA elimination
LEAN System -Benefits
The Soft ones
• Flexible structures assigned to business goals
• Roles & Responsibilities assigned to business
  goals
• Process driven culture
• Visual demonstration of achievements
• Increased employee ability and morale
• Visual abnormal situations
• Focused application of resources for best return
• Believable prediction of results
LEAN Principles
• Specify what creates value from customer’s
  perspective
• Identify all steps across the whole value
  stream
• Make those actions that create the value flow
  at the pull of the customer
• Involve and power emplyoees
• Strive for perfection by continually eliminating
  the successive layers of waste
What is Value?
• Value is what the customer wants, when they
  want it in the expected quantity and quality
• To establish the “customers wants” employ
  the QFD (Quality functional deployment)
  technique
• To analyze the customers wants using KANO
  model
KANO Model
• Classify Characteristics as Basic, performance
  and delighter
• Ask two questions
1. What if the characteristics is present?
2. What if the characteristics is absent?
• If 1=neutral, & 2=bad it is basic
• If 1=good & 2=neutral, it is delighter
Define values in the eyes of customer
•   What product / service?
•   What attribute / features?
•   What quality levels?
•   What delivery?
-   Rate
-   Response time expectations
•   Are we measuring it? If yes, how?
What is a Value Stream?
A value stream involves all the steps in a process, both
value added and non value added, required to complete a
product or service from beginning to end.



                  What is a Value Stream Map?
•   Visual Representation of a Value Stream or the work process
•   Pencil & Paper Tool with lots of post its
•   Helps Reveal Waste & Problems with the Flow
•   It Establishes a common language to document a process
•   Provides a blueprint for improvement
What is WASTE?

Any Activity that DOES NOT increase the
Market Form or Function of the Product or
Service based on the Critical Customer
Requirements.




 These are things the customer is NOT
          willing to pay for.

                                            13
Value Added
Any activity that increases the market form or function of
the product or service. (These are things the customer is
willing to pay for.)

                Non-Value Added
Any activity that does not add market form or function or
is not necessary. (These activities should be eliminated,
simplified, reduced, or integrated.)




                                                             14
Where is the Waste?
   •   Defects – incomplete or incorrect information
   •   Overproduction – releasing work before next
       process can work on them, unbalanced work loads
   •   Waiting – unbalanced work loads, slow system response,
       incomplete information, approvals
   •   Not Utilizing Employees – old guard thinking, politics, high
       turnover, low investment in training
   •   Transportation – poor layout, poor flow
   •   Inventory – large batches, complexity to complete task
   •   Motion – poor organization, no standard work
   •   Excess Processing – excess communication, lack of
       communication, unnecessary approvals, customer
       requirements are not clearly understood


Typically 95% of all lead time is non-value added
                                                                      15
Prerequisites of Value Stream
                Mapping
•Understanding the Process

•Information and Material Flow

•Data Driven Decision Process




            94% if Failures are due to Poor Systems
              6% are caused by Worker Mistakes

                                                      16
Taiichi Ohno’s 7 Wastes (muda)

 types of waste:
    overproduction
    waiting time
    transport
    process
    inventory
    motion
    defective goods
7 Service Wastes
•   Delay – customers waiting for service.
•   Duplication – having to re-enter data, repeat details etc.
•   Unnecessary movement - poor ergonomics in the service encounter.
•   Unclear communication – having to seek clarification, confusion over use of
    product/service.
•   Incorrect inventory – out of stock.
•   Opportunity lost – to retain or win customers.
•   Errors – in the transaction, lost/damaged goods.
The 5S’s
• The 5S‘s are simple but effective methods to organise the
  workplace.
• The methodology does however, go beyond this simple
  concept, and is concerned with making orderly and
  standardized operations the norm, rather than the exception.
• Posters bearing the 5S terms can be found on the walls of
  Japanese plants, and are a visual aid to organisational
  management.
The Japanese Origins
• Seiri          Sort
       • This requires the classifying of items into two categories,
         necessary and unnecessary, and disregarding or removing the
         latter.
• Seiton         Straighten
       • Once Seiri has been carried out Seiton is implemented to classify
         by use, and arrange items to minimise search time and effort. The
         items left should have a designated area, with specified maximum
         levels of inventory for that area.

• Seison         Shine
       • Seison means cleaning the working environment. It can help in the
         spotting of potential problems as well as reducing the risk of
         fire/injury by cleaning away the potential causes of accidents.
The Japanese Origins
• Seiketsu Systematise
       • Seiketsu means keeping one's person clean, by such
         means as wearing proper working clothes, safety
         glasses, gloves and shoes, as well as maintaining a clean
         healthy working environment. It can also be viewed as
         the continuation of the work carried out in Seiri, Seiton,
         and Seison.
• Shitsuke Sustain
   – Shitsuke means self-discipline.
       • The 5 S‘s may be viewed as a philosophy, with
         employees following established and agreed upon rules
         at each step. By the time they arrive at Shitsuke they
         will have developed the discipline to follow the 5 S‘s in
         their daily work.
Lean Building Blocks



                                KAIZEN

                  Pull/Kanban       Cellular/Flow      TPM

           Quality at Source    POUS      Quick Changeover

            Standardized Work     Batch Reduction     Teams
                                                              Value
                 5S System       Visual       Plant Layout    Stream
                                                              Mapping



 Principles for Implementing
Lean Manufacturing
Push Production/Distribution Systems
• A push system produces finished goods
  inventory in advance of customer demand using
  a forecast of sales.
• Parts and subassemblies are “pushed” through
  the operating system based on a predefined
  schedule that is independent of actual customer
  demand.
• A traditional automobile factory and distribution
  system is a good example of a push system.
TAKT time
• The available operating time to satisfy
  customer demands
• Establishes the pace, beat or cadence of the
  process
• TAKT time is used to balance the various loads
  and identify the bottlenecks in the process
Flow

• Using one piece flow by linking
  of all the activities and
  processes into the most
  efficient combinations to
  maximize value-added content
  while minimizing waste.
• The waiting time of work in
  progress between processes is
  eliminated, hence adding value
  more quickly.
Pull
• Pull = response to the customer’s rate of
  demand i.e. the actual customer demand that
  drives the supply chain.
• Based on a supply chain view from
  downstream to upstream activities where
  nothing is produced by the upstream supplier
  until the downstream customer signals a
  need.
Perfection

• The journey of continuous
  improvement.
• Producing exactly what the customer
  wants, exactly when, economically.
• Perfection is an aspiration, anything
  and everything is able to be
  improved.
Summary
• Lean manufacturing was developed by the Japanese.
• Lean is a philosophy that seeks to eliminate waste in all
  aspects of a firm’s production activities.
• Lean is principally associated with manufacturing industries
  but can be also equally applicable to both service and
  administration processes.
• Works on 5 basic principles.
• Cornerstone of Lean is the Toyota Production System.
• Considers 7 Wastes (muda).
• Utilises 5 S methodology.

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Lean manufacturing

  • 1. An Introduction to LEAN MANUFACTURING
  • 2. History of Manufacturing CRAFT • Made customer specific • Each product is unique • Variable quality /expensive MASS • Interchangeable –Whitney • Division of labor-Fredrick Taylor • Assembly lines and flow variety-Ford LEAN • High variety • Small batches • Six sigma quality
  • 3. What is LEAN? • “Lean is the elimination of anything not absolutely required to deliver a quality product or service, on time, to our customers.” • LEAN is fundamentally different business logic • LEAN is based on eliminating unnecessary action • LEAN links value activity in a continuous sequence • “Only a small fraction of total time and effort in an organization adds value for end customer”
  • 4. Why LEAN? • Severe Competitions in all walks of business • Firms face reduction in margins to keep the market share • Every little saving will improve the economy • Time for every available resource to perform the best • Operation cost reduction is critical to our survival • Profits =price-cost (price dictated by the market and cost incurred by us) • Cost = activities involved (VA+NVA)
  • 5. LEAN- Some myths • LEAN is a factory thing • LEAN will not work here • We tried it, it is another kaizen event • 5S is all about cleaning up your office or workstation • We are different, it can’t apply to our business • Its an excuse to take our jobs away • Zero inventory
  • 6. LEAN System -Benefits The Hard ones (typical) • 15% growth in 1 year • 12% Productivity increment in one year • 20% space saving in one year • 90% on time delivery in full • 28% throughputs lead time reductions • Improved supplier performance • Improved customer quality • Progressive MUDA elimination
  • 7. LEAN System -Benefits The Soft ones • Flexible structures assigned to business goals • Roles & Responsibilities assigned to business goals • Process driven culture • Visual demonstration of achievements • Increased employee ability and morale • Visual abnormal situations • Focused application of resources for best return • Believable prediction of results
  • 8. LEAN Principles • Specify what creates value from customer’s perspective • Identify all steps across the whole value stream • Make those actions that create the value flow at the pull of the customer • Involve and power emplyoees • Strive for perfection by continually eliminating the successive layers of waste
  • 9. What is Value? • Value is what the customer wants, when they want it in the expected quantity and quality • To establish the “customers wants” employ the QFD (Quality functional deployment) technique • To analyze the customers wants using KANO model
  • 10. KANO Model • Classify Characteristics as Basic, performance and delighter • Ask two questions 1. What if the characteristics is present? 2. What if the characteristics is absent? • If 1=neutral, & 2=bad it is basic • If 1=good & 2=neutral, it is delighter
  • 11. Define values in the eyes of customer • What product / service? • What attribute / features? • What quality levels? • What delivery? - Rate - Response time expectations • Are we measuring it? If yes, how?
  • 12. What is a Value Stream? A value stream involves all the steps in a process, both value added and non value added, required to complete a product or service from beginning to end. What is a Value Stream Map? • Visual Representation of a Value Stream or the work process • Pencil & Paper Tool with lots of post its • Helps Reveal Waste & Problems with the Flow • It Establishes a common language to document a process • Provides a blueprint for improvement
  • 13. What is WASTE? Any Activity that DOES NOT increase the Market Form or Function of the Product or Service based on the Critical Customer Requirements. These are things the customer is NOT willing to pay for. 13
  • 14. Value Added Any activity that increases the market form or function of the product or service. (These are things the customer is willing to pay for.) Non-Value Added Any activity that does not add market form or function or is not necessary. (These activities should be eliminated, simplified, reduced, or integrated.) 14
  • 15. Where is the Waste? • Defects – incomplete or incorrect information • Overproduction – releasing work before next process can work on them, unbalanced work loads • Waiting – unbalanced work loads, slow system response, incomplete information, approvals • Not Utilizing Employees – old guard thinking, politics, high turnover, low investment in training • Transportation – poor layout, poor flow • Inventory – large batches, complexity to complete task • Motion – poor organization, no standard work • Excess Processing – excess communication, lack of communication, unnecessary approvals, customer requirements are not clearly understood Typically 95% of all lead time is non-value added 15
  • 16. Prerequisites of Value Stream Mapping •Understanding the Process •Information and Material Flow •Data Driven Decision Process 94% if Failures are due to Poor Systems 6% are caused by Worker Mistakes 16
  • 17. Taiichi Ohno’s 7 Wastes (muda) types of waste:  overproduction  waiting time  transport  process  inventory  motion  defective goods
  • 18. 7 Service Wastes • Delay – customers waiting for service. • Duplication – having to re-enter data, repeat details etc. • Unnecessary movement - poor ergonomics in the service encounter. • Unclear communication – having to seek clarification, confusion over use of product/service. • Incorrect inventory – out of stock. • Opportunity lost – to retain or win customers. • Errors – in the transaction, lost/damaged goods.
  • 19. The 5S’s • The 5S‘s are simple but effective methods to organise the workplace. • The methodology does however, go beyond this simple concept, and is concerned with making orderly and standardized operations the norm, rather than the exception. • Posters bearing the 5S terms can be found on the walls of Japanese plants, and are a visual aid to organisational management.
  • 20. The Japanese Origins • Seiri Sort • This requires the classifying of items into two categories, necessary and unnecessary, and disregarding or removing the latter. • Seiton Straighten • Once Seiri has been carried out Seiton is implemented to classify by use, and arrange items to minimise search time and effort. The items left should have a designated area, with specified maximum levels of inventory for that area. • Seison Shine • Seison means cleaning the working environment. It can help in the spotting of potential problems as well as reducing the risk of fire/injury by cleaning away the potential causes of accidents.
  • 21. The Japanese Origins • Seiketsu Systematise • Seiketsu means keeping one's person clean, by such means as wearing proper working clothes, safety glasses, gloves and shoes, as well as maintaining a clean healthy working environment. It can also be viewed as the continuation of the work carried out in Seiri, Seiton, and Seison. • Shitsuke Sustain – Shitsuke means self-discipline. • The 5 S‘s may be viewed as a philosophy, with employees following established and agreed upon rules at each step. By the time they arrive at Shitsuke they will have developed the discipline to follow the 5 S‘s in their daily work.
  • 22. Lean Building Blocks KAIZEN Pull/Kanban Cellular/Flow TPM Quality at Source POUS Quick Changeover Standardized Work Batch Reduction Teams Value 5S System Visual Plant Layout Stream Mapping Principles for Implementing Lean Manufacturing
  • 23. Push Production/Distribution Systems • A push system produces finished goods inventory in advance of customer demand using a forecast of sales. • Parts and subassemblies are “pushed” through the operating system based on a predefined schedule that is independent of actual customer demand. • A traditional automobile factory and distribution system is a good example of a push system.
  • 24. TAKT time • The available operating time to satisfy customer demands • Establishes the pace, beat or cadence of the process • TAKT time is used to balance the various loads and identify the bottlenecks in the process
  • 25. Flow • Using one piece flow by linking of all the activities and processes into the most efficient combinations to maximize value-added content while minimizing waste. • The waiting time of work in progress between processes is eliminated, hence adding value more quickly.
  • 26. Pull • Pull = response to the customer’s rate of demand i.e. the actual customer demand that drives the supply chain. • Based on a supply chain view from downstream to upstream activities where nothing is produced by the upstream supplier until the downstream customer signals a need.
  • 27. Perfection • The journey of continuous improvement. • Producing exactly what the customer wants, exactly when, economically. • Perfection is an aspiration, anything and everything is able to be improved.
  • 28. Summary • Lean manufacturing was developed by the Japanese. • Lean is a philosophy that seeks to eliminate waste in all aspects of a firm’s production activities. • Lean is principally associated with manufacturing industries but can be also equally applicable to both service and administration processes. • Works on 5 basic principles. • Cornerstone of Lean is the Toyota Production System. • Considers 7 Wastes (muda). • Utilises 5 S methodology.