1. Unit 3
Inventory Management
and Modern
Manufacturing
3.1Digital Production
3.2 Green Manufacturing
3.3 Concept of TPM & 8 Principles
3.4 Just in time & Kaizen
2. TPM
TPM is a productive maintenance implemented
by all employees in an organization.
TPM involves everyone in the organization from
operators to senior management in equipment
improvement.
3. Total = All individuals in the organization
working together.
Productive = production of goods that meet or
exceed customer’s expectations.
Maintenance = keeping equipment and plant
in good condition at all times.
TPM in three words:
4. • This is an innovative Japanese concept,
developed in 1951.
• Nippondenso was the 1st company that
implemented TPM in 1960.
• Based on these developments Nippondenso
was awarded the distinguished plant prize
for developing and implementing TPM, by
the Japanese Institute of Plant Engineers (
JIPE ).
• This Nippondenso became the first
company to obtain the TPM certifications.
History
5. • Increase production quality.
• Increase job satisfaction.
• Using teams for continuous improvement.
• Improve the state of maintenance
• Empower employees
GOALS :
8. It is reactive approach.
Repairs and replacement of parts are
performed only when the breakdown occur.
e.g., an electric motor of a machine tool will not
start, a belt is broken, etc.
Under such conditions, production
department calls on the maintenance
department to rectify the defect.
After removing the fault, maintenance
engineers do not attend the equipment again
until another failure or breakdown occurs.
1. Breakdown maintenance
9. • The primary goal of preventive maintenance
is to prevent the failure of equipment before
it actually occurs.
• It is designed to preserve and enhance
equipment reliability by replacing worn
components before they actually fail.
• It is a daily maintenance which includes
cleaning, inspection, oiling and re-
tightening of equipments.
2.Preventive maintenance
10. • Improved system reliability.
• Decreased cost of replacement.
• Decreased system downtime.
• Better spares inventory management.
Long-term benefits of
preventive maintenance:
12. • In JH, the workers are taught that cleaning the
machines helps in discovering areas of equipment
malfunction.
• The workers are taken to the model machines and
explained the procedure of carrying out various
activities in cleaning and autonomous maintenance.
• The first step in JH is the initial cleaning of
machines and electrical parts.
• During this process of cleaning, if some abnormality is
observed a red tag is put immediately.
• The electrician responsible spots the problem and
mends the wires at the earliest.
Jishu Hozen/Autonomous
Maintenance
13. • The second step involves finding those areas in the
machine that are difficult to clean, lubricate, or
inspect.
• Appropriate measures are taken to make changes so
as to aid these cleaning, lubricating, and inspecting
activities on the machine.
• Machines are rated on criteria ranging from bad to
very good on the basis of accessibility for cleaning,
lubricating and inspection in difficult-to-reach areas.
• In the last step of JH, it is examined as to how
stickers and other devices can be useful in visual
control of the cleaning, lubrication and inspection
process.
14. • KK is to move towards zero losses of all kinds.
• Sixteen major kind of losses (i.e. breakdowns,
changeover times etc.) are identified, their
current level calculated and goals are set for
improvement in overall equipment efficiency
(OEE).
• Each company has to make up their list and
collect data.
• The highest losses will be the priority for the KK
pillar.
Kobetsu Kaizen (KK) or
Individual Improvement
15. • The following list is an example of
such losses.
– Loss no.1 : set up
– Loss no.2 : tool change
– Loss no.3 : start-up loss
– Loss no.4 :minor stoppages
– Loss no.5 : Reduced speed
– Loss no.6 : Management loss
– Loss no.7 : Line organization loss
– Loss no.8 : measurement and adjustment loss
– Loss no.9 : Tools, jigs, and consumable loss
– Loss no.10: Yield loss
16. • Three major losses can be prioritized in each area
to start the work. The objective here is to
demonstrate ultimate production efficiency
improvement.
• Kobetsu kaizen subcommittee, instructs the
project teams to work on losses in different
machines and areas on a priority basis.
• A master plan is developed in line with the
business or factory objectives such as
achievement of productivity, quality, costs
delivery, safety and morale targets (PQCDSM).
17. P-Productivity/production increase by
• Improved in OEE of machines
• Improvement in attaining effective man-
hours and
• Improvement in labor productivity.
Q-To bring defects to zero by analyzing
• Customer complaints and warranty returns
• In-house rejections
• In-house rework and
• Incoming material rejections
18. C-Cost reduction through
• OEE increase,
• Cycle time reduction in bottleneck machines
• Reduction of inventory on cutting tools.
• Reduction in consumption of cutting oils and
• Enhancement of tool life
D-To maintain delivery performance through
• OEE increase
• Improvement of bottleneck machines/process.
19. S-To achieve zero accident level by
• Providing training on machine operations
• Identifying unsafe actions and locations
and taking corrective actions to avoid
accidents
• Motivation of operating personnel through
involvement and participation and
• Analysis of accidents happened in the past
and near miss accidents through Why-Why
analysis and improved working conditions.
20. M-To improve morale of operations
through
• Involvement and participation in circle
activities,
• By encouraging generation of kaizen and
rewarding for suggestions/improvements
carried out.
21. • Cost benefit analysis can be performed through KK
by analyzing the data available on each loss. The
losses are categorized in the following categories;
• Loss of production
• Loss of man hours
• Loss of material
• Loss of energy
Rewards for kaizen:
• Worker suggesting kaizen can be rewarded either
monetarily or non-monetarily.
22. Planned Maintenance
• The PM pillar of TPM has an objective of improving
efficiency of the maintenance dept..
• It comprises of following types of maintenance:
– Preventive maintenance,
– Daily maintenance,
– Periodic maintenance,
– Time-based,
– Overhauls,
– Corrective maintenance,
– Breakdown maintenance, etc.
23. • It focuses upon setting targets for ensuring
the quality of products.
• These targets can be reduction in
– process failures,
– consumer complaints, and
– time of trucks for raw and processed materials
Hinshitsu Hozen or Quality
Maintenance
24. • Early management or development
management helps in drastically reducing
the time taken to receive, install, and set-up
newly purchased equipment.
• Early management can also be used for
reducing the time to manufacture a new
product in the factory.
Early management or
Development management
25. • Education and training emphasizes upon
‘hard’ engineering training, with production
operatives becoming familiar with the
equipment they operate and gaining the
practical skills to operate and maintain it.
• ‘Soft’ issues training is needed in the areas of
raising awareness of the responsibility of all
operatives towards quality, training operators
to work in teams, and educating all employees
about the importance of internal and external
customer requirements.
Education and Training
26. • The safety, health and environment pillar of
TPM strives to achieve the objective of zero
accidents and defects and reducing the level
of human effort required to attain a given
level of production.
Safety, Health and Environment
27. Office TPM
• Office TPM focuses upon improving the
productivity and infusing efficiency in the
administrative support functions of the org. by
identifying & eliminating losses.
• The efficiency losses are further break-down into
decision making losses, communication losses,
data & document processing losses.
28. • Monden (1981) defines JIT as ‘a production
system to produce the kind of units
needed, at the time needed and in the
quantities needed.’
• The basic idea of JIT was originally developed
by the Toyota Motor Company in Japan.
• At that time the approach was not known as
JIT but was called the ‘Toyota Manufacturing
System’.
• JIT manufacturing has become synonymous
with excellence in manufacturing.
Just-in-time
29. • JIT manufacturing in most common terms
is the continuous improvement of material
flow in either a factory or a combination of
factories.
• There are four techniques in JIT for
improving material flow as follows;
– Factory layout revision
– Set-up time and reduction
– Pull system implementation
– Better coordination with suppliers
JIT Manufacturing
30. Factory layout revision:
• The layout of factories can be revised to introduce
assembly line and manufacturing cells.
• Sometimes called continuous-flow manufacturing,
the purpose of these layout modifications is to
minimize material-handling activities and their
associated transactions, and to provide faster
quality feedback.
• Manufacturing cells produce a variety of completed
parts and the cells are developed using group
technology.
31. Set-up time reduction:
Factories can reduce set-up time in order to reduce lot sizes
and smooth production,.
For example: in manufacturing door and other sheet
metal parts of an automobile, the metal sheet is given
various shapes by using heavy presses containing metal
dies. This process is called stamping.
These dies have to be changed every time the body of a new
car mode is to be manufactured. Before the 1950s, these set-
up changes of dies required as long as a day.
By the late1950s, Taiichi Ohno, the then Vice President of
Toyota Motor Company, reduced the time required to change
dies from a day to three minutes.
32. • Reduced set-up times enable a factory to produce
smaller lot sizes economically.
• Smaller lot sizes enable a factory to produce a
broader variety of products, assemblies and parts
each day.
33. Pull system implementation:
Factories can implement a pull system of
production using kanban.
In a pull system, final assembly lines only produce
actual orders and kanban cards are used to signal
sub-assembly and part deliveries, and production
34. Better coordination with supplier:
• Factories can work with suppliers to reduce raw
material inventories and solve quality problems.
• The first three techniques are applicable to the
suppliers as well, for improving the material flow
between a firm and its suppliers.
• The goal is to make the supplier as extension of the
internal material flows, to avoid the problem
associated with shifting of inventories from
customers to suppliers.
35. • Kanban is a Japanese word meaning flag or signal,
and is a visual aid to convey the message that action
is required.
• The Kanban inventory control system was originally
pioneered by the Toyota Motor Company in Japan
and developed from the ideas of Toyota’s Vice-
presidents Taiichi Ohno.
• In this it become effective method by using a trigger,
or kanban, to alert the manufacturing area that the
assembly area was running low on components.
• Every component must have its own Knaban to
signal when it needs to be replenished.
Kanban Visual System
36. Step 1
• When a worker requires components, he goes to the
racks placed opposite of his workstation.
• These racks contain bins of components required by a
workstation, which form the work-in-process
inventory.
• Every bin has the requisition kanban card affixed on
it, which is removable.
• This card contains;
– The component name,
– Its identification number,
– The rack number,
– Self on the rack in the store where more bins of the component
are stored.
37. • The worker from the assembly line remove the
kanban card from the bin, hang it on a hook on the
rack, and take away the bin to their workstation for
using the components in assembly operations.
• These hanging kanban cards are thus clearly
visible from everywhere, signaling replenishment of
components from the store.
38. Step 2
• A supply worker called Mizosomashi in Japanese
keeps on moving the aisle across the racks with his
trolley.
• When he reached the racks opposite the assembly
line, he removes all the hanging requisition kanban
cards and the empty bins from the racks.
• He then takes these along with him through the
aisle to the racks in the store opposite the
manufacturing cell.
39. Step 3
• Mizoshomashi looks at the information on each
requisition kanban card and locates the position of
the rack and the shelf on the rack containing the bins
full of a particular component.
• Every bin in the store has the production kanban
card affixed on it, which is removable.
• The production Kanban card contains the name and
identification numbered of the component to be
manufactured in the cell.
40. • Mizosomashi takes off the bins from the rack
corresponding to the requisition kanban card he
had brought with him, and removes the
production kanban card from these.
• The empty bins that he had bough with him in
his trolley are placed on the racks.
• After loading all the required bins into the trolley
in this way, he takes the trolley to the racks
opposite the assembly line and places the bins in
the appropriate racks.
• Mizosomashi repeats this process at regular
intervals of time.
41. Step 4
• One worker from each of the manufacturing
cells goes to the rack placed opposite his cell
with his trolley.
• He removes the hanging production kanban
cards and places the empty bins from the rack
in his trolley.
• He takes these to his manufacturing cell, where
the different components mentioned on the
production kanban cards are manufactured in
exact quantities so as to fill the empty bins
completely.
42. • The filled-in bins with the production kanban
cards attached to them are then taken from the
manufacturing cell in the rack opposite the cell
and placed on the appropriate shelf mentioned in
the production kanban card.
43. Workstation 1 (WS 1) Workstation 3 (WS 3)
Workstation 2 (WS 2)
Car 1 Car 3
Car 2
Racks containing
bins of components
required at WS 1
Conveyor
The Assembly Line
Manufacturing
Cell 1 (MC 1)
Manufacturing
Cell 2 (MC 2)
Manufacturing
Cell 3 (MC 3)
Racks containing bins
of components
manufactured at MC 1
Racks containing bins
of components
manufactured at MC 2
Racks containing bins
of components
manufactured at MC 3
Racks containing
bins of components
required at WS 2
Racks containing
bins of components
required at WS 3
Store
Step 1 Step 1
Step 1
Mizosomashi or supply
worker (Step 2)
Step 3
Step 4
Step 4
Step 4
Kanban Visual System
44. Benefit of JIT
• JIT’s first benefit is the heightened awareness
of problems and causes in the organization.
• This leads to generation of ideas/suggestion on
the part of employees.
• Theses ideas for continuous improvement are
termed kaizen in Japanese.
45. Kaizen
• Kaizen in Japanese means continuous
improvement in every sphere of activity.
• Kaizen is subsystem of JIT.
• The management of the company
encourages suggestions or kaizen from
employees regarding possible improvements
in their respective work areas.
• The employees are rewarded for giving a
large number of useful suggestions.
46. Material Requirement
Planning
• In assembly operations of products, there are many
items which are themselves sub-assemblies.
• These sub-assemblies are made by joining small
components. The requirements of these
components depend on the number of finished
goods to be produced.
• Therefore, these components are called dependent
demand items.
• MRP is a system used for planning the future
requirement of dependent demand items.
47. • MRP is based on three inputs;
1. Number of items already in the inventory
(inventory status)
2. Number of finished good to be produced in
near future using these items (master
production schedule)
3. Number of units of the item required for
manufacturing a single unit of the finished
product (bill of material)
48. Product structure
• The product structure shows a product’s build-up.
• It shows diagrammatically the components
required to assemble it, their numbers, and the
sequence of assembly.
• Example:
• A sub-assembly A is made by joining one unite of
component B and two units of component C.
A
B(1)
C(2)
50. Inputs & Outputs in MRP
Bill of
Materials
(BOM)
Master
Production
Schedule
(MPS)
Inventory
Status
Order
Changes
Report
Planned
Orders
Report
Order
Release
Report
INPUTS
OUTPUTS
Inputs and Outputs in Material Requirements Planning
51. Input in MRP
• There are three input required by MRP
processing logic;
1. Bill of material (BOM)
2. Master Production Schedule (MPS)
3. Inventory status
52. 1. Bill of Material
• Bill of material is a document which tell us about;
– An item's production structure,
– The sequence in which components/ sub-
assemblies are assembled,
– Their required numbers,
– The workstation at which the item is assembled.
54. • When a computer program reads a BOM of a
product, it starts from top level i.e. Level 0.
• If an item appear at more than one level, its
number unit can not be determined unless the
computer scan reaches the lowest level.
• This results in inefficiency of program.
• To avoid this, a procedure low level coding is
adapted.
56. 2. Master Production
Schedule
• An aggregate production plan tells us about
how many units of product have to be
manufactured in coming 6-18 months on a
weekly or monthly basis.
• Example:
Month No. of cars
Jan. 10,000
Feb. 12,000
March 8,000
April 11,000
May 7,000
June 12,000
57. • The MPS tells us the number of units of different
models of a product to be manufactured on a
weekly or monthly basis.
• The MPS can contain information on sub-models of
a model, e.g. in a given week, how many Car will be
made with power steering, how many with power
window and so on.
58. 3. Inventory Status
• It tells us about the status of the inventory of
an item at present, or in a given interval of
time in the coming future.
• This include scheduled receipts of units of item
in that interval of time as a result of orders
placed in the recent past to suppliers.
• It also contains details about;
– The supplier of the item,
– he lead time taken by him to supply the item, and
– The size of each order to be placed to him.
59. Output in MRP
• The following three types of output are generated
by the MRP processing logic;
1. Planned orders report
2. Order release report
3. Order changes report
60. 1. Planned order report
• This report gives information about planned orders to
be released on some future date or during a given
interval of time.
• This report is helpful in preparing for the funds
required for payments to the suppliers in the future
according to the date and order sizes.
• Example:
– Suppose March is the current month and the finance
manager wants to see what quantities of raw material
purchases have to be made in June; this report helps him to
do so and prepare for fund required in June for Making
payments to the suppliers.
61. 2. Order release report
• This report gives information about planned orders
to be released on the present date.
• It helps the purchase managers to release
purchase orders to the suppliers.
• This is the most common report generated by the
MRP processing logic and it helps the purchase
manager to keep track of the POs that have to be
sent on a particular day.
• The MRP logic makes use of the lead time of items
in determining the release date of orders, so that
goods are supplied by the time the items are
required for production.
62. 3. Order Change Report
• Open orders are those which have been placed in the
past, and the supplier of the items is preparing for
these supplies to be made to the company.
• During the lead time, the MPS of the company may
fluctuate.
• Example,
• Some customer cancel their orders, leading to a
revision of the MPS.
• Because of this change in demand, open orders have
to be revised, i.e., suppliers are told to either cancel
the orders placed earlier by the company, postpone
them for some time or reduce the order size to suit
the current requirement.
63. General format of an MRP report:
• Item identification: 786, Bearing
• Lead time: 1 week
• Available inventory: 100 units
• Lot size: Lot-for-lot
• Safety stock: 0
• Allocated: 0
• Low-level code: 1
• Report date: 0
64. Calculation Of Order Size In
MRP
• There are four methods of calculating
the order size in MRP. These are;
1. Lot-for-lot method
2. EOQ method
3. Least total cost method
4. Least unit cost method
65. • Example:
• Ordering cost (OC) = Rs 50 per order
• Carrying cost (CC) = 0.5% per week
• Unit cost price = RS 20
• CC per unit per week = 20 * 0.5% = Rs. 0.1
Week Net Requirement
1 80
2 100
3 90
4 60
5 110
6 50
490
