OPERATIONS MANAGEMENT - IIPGDM(PT) : 2015

Course Instructor:

Dr. Goutam Sengupta

MANUFACTURING

Lesson: 2

It is about doing more with less – less time, less space, less people, less money and so on.

The word ‘Manufacturing’ in defining Lean Manufacturing at times is misrepresented, as the concepts and the techniques are equally applicable in all types of organizations, be it manufacturing or service. The basic focus of this concept is in ‘Getting More with Less’.

Lean systems encompass the company’s strategy, processes, quality management, constraint management, layout, supply chain design, technology and innovation, and can be used by both service and manufacturing firms. Like a manufacturer, each service business takes order from a customer, delivers the service and collects revenue. Each of these activities typically contains huge amounts of waste. Lean principles can be applied to make service processes lean, whether they are front office, hybrid office, or back office designs.

LEAN MANUFACTURING

Lean is a philosophy. It is primarily a set of management techniques focusing on continuous elimination of waste in order to add value to every process or task to get the desired output at a cost for which the customer is willing to pay for.

Top management must embrace the lean philosophy and make it a part of organizational culture and learning, as was done by Toyota. The Toyota Production System (TPS) is an excellent example of Lean Systems.

LEAN MANUFACTURING…. contd.

Lean Benefits

Half the hours of human effort in the factory Half the defects in the finished product One-third the hours of engineering effort Half the factory space for the same output A tenth or less of in-process inventories

“The Machine That Changed The World”; James P. Womack, Daniel T. Jones & Daniel Roos 

What is Waste?

Waste is an activity that does not add value to the end customer. Toyota Production System (TPS) was designed using Japanese concept of waste – ‘muda’, ‘Mura’ and ‘Muri’. These three words beginning with the prefix ‘mu’ which in Japan are widely recognized as a reference to improvement program or campaign. Muda is a traditional Japanese Term for an activity that is wasteful, while Mura means unevenness and Muri means overburden.

Waste

• muda – waste• mura - inconsistency • muri - overburden

Anything that adds cost to the product or service without adding value.

The 3M’s of the processes are the wastes in different forms:

Value Added & Non-Value Added Activity

Value Added

Any activity that delivers value to the customer. (these are things the customer is willing to pay for)

Non-value addedOnce value added activities are separated then remaining activities are all wastes (these are things the customer is not willing to pay for) which can be further sub-divided into ‘needs to be done but non-value adding waste’ or ‘pure waste’. The identification of ‘needs to be done but non-value adding waste’ vis-à-vis ‘pure waste’ is crucial with respect to identifying the assumptions and beliefs behind the current processes and to challenge them in due course in future.

9

Lean = Eliminating the WastesValue Added

The Eight Wastes

• Defects• Over-production• Waiting• Transportation• Inventory• Motion• Over Processing• Latent Skill (the eighth waste identified)

Typically 10% to 40% turnover of an organization goes into cost of non-quality

TIMWOODS (Mnemonic)

The 7 Wastes

Overproduction

Waiting

Inventory

Transportation Motion

Over Processing

Rework

1

6

7

5 4

3

2

To produce sooner,fasteror in greater quantitiesthan customer demand.

Raw material, work in progressor finished goods

which is not having value added to it.

People or parts that wait for

a work cycle tobe completed.

Unnecessary movementof people, parts ormachines within

a process.Unnecessary movement of peopleor parts between processes.

Non rightfirst time.Repetitionor correctionof a process.

Processing beyondthe standardrequired by thecustomer.

is the Japanese word for WASTE.MUDA

Seek it out and get rid!1

234

56

7

An 8th waste is the wasted

potential of people

THE EIGHT TYPES OF WASTE OR MUDA1. Overproduction Manufacturing an item before it is needed, making it difficult to detect

defects and creating excessive lead times and inventory.2. Inappropriate Processing Using expensive high precision equipment when simpler machine would

suffice. It leads to overutilization of expensive capital assets. Investment in smaller flexible equipment, immaculately maintained older machines, and combining process steps when appropriate reduce the waste associated with inappropriate processing.

3. Waiting Wasteful time incurred when product is not being moved or processed. Long production runs, poor material flows, and processes that are not tightly linked to one another can cause over 90 percent of a product’s lead time to be spent waiting.

4. Transportation Excessive movement and material handling of product between processes, which can cause damage and deterioration of product quality without adding any significant customer value.

5. Motion Unnecessary effort related to the ergonomics of bending, stretching, reaching, lifting and walking. Jobs with excessive motion should be redesigned.

6. Inventory Excess inventory hides problems on the shopfloor, consumes space, increases lead times, and inhibits communication. Work-in-progress inventory is a direct result of overproduction and waiting.

7. Defects Quality defects results in rework and scrap, and add wasteful costs to the system in the form of lost capacity, rescheduling effort, increased inspection, and loss of customer good will.

8. Underutilization of Employees

Failure of the firm to learn from and capitalize on its employees’ knowledge and creativity impedes long-term efforts to eliminate waste.

Lost Sales Overtime to correct errorsProcess downtime Loss of goodwill

Extra inventory Paperwork errorsLost discounts Delays

Damaged goods Obsolete inventoryPremium freight costs Incorrect orders shippedCustomer allowances Extra process capacity

Reprocessing

Rejects Sorting Inspection

Customer Returns

Warranty Downgrading expenses of products

Hidden costs of poor quality

Waste Elimination

Value Add Waste

Traditional Focus• Work Longer-Harder-Faster• Add People or Equipment

Lean Manufacturing• Improve the Value

Stream to Eliminate Waste

LEAD TIME

The value adding parts of the process are obvious, so companies mistakenly focus on them go faster. The waste is not obvious, so it is not addressed. Lean focuses on eliminating the waste.

2

3

4

6

Cost per Unit

Quality

Profit per Unit

Cost of non-quality could be as high as 10%-30% of firms revenue

- Lesser down time- Lesser rework- Lesser customer complaint- Lesser leakages- Lesser paper work

$

Quality

LEAN TRANSITION IN QUALITY, COST & PROFIT

Tools of Lean Kaizen (continuous improvement) 5S SMED Kanban Just-in-Time (JIT) Andon Jidoka (autonomation) Poka-yoke (visual signals) Flexible manufacturing Lean Quality Circle Ishikawa Diagram (Fishbone Diagram) Glass Wall Management (GWM) Mini Company Technique (MCT) Value Stream Mapping Lean Six Sigma

KAIZENKaizen is based on the simple principle that, whatever the filed in our lives, be it social life, working life, domestic life or even leisure life, we need continuous improvement in order to progress and advance as opposed to status quo and stagnancy. For such an effort we must have participation and involvement of one and all whether it is society or an enterprise.

MASAKI IMAI

The Japanese economic miracle is attributable to this unique approach in all walks of their lives and we could see the demonstrative evidence of this continuous improvement in all their products or service.

In Industry, they felt that, to stay in business and compete, there should be an unending improvement and progress to provide the leverage against other competitors.

Japanese term – “Kai” means “Change” (Continuous) “Zen” means “Good” (Improvement)

Standardize Improvement (S) Small step continuous improvements (K)

Automatically stopping the process when something is wrong and then fixing the problems on the line itself as they occur is also known as Jidoka in the Toyota production System (TPS). Jidoka represents a visual management system whereby conformance at all stages of production flow is clearly visible to workers on the floor at all times. An opposite to Jidoka or quality at the source is the traditional practice of pushing problems down the line to be resolved later. This approach is often ineffective.

JIDOKA

One successful approach for implementing quality at the source is to use poka-yoke, or mistake proofing methods aimed a designing fail-safe systems that attack and minimize human error. A company makes modular products. The company could use the poka-yoke method for making different parts of the modular product in such a way that allows them to be assembled in only one way – the correct way. Similarly, a company’s shipping boxes could be designed to be packed only in a certain way to minimize damage and eliminate all chances of mistakes. At Toyota plants, every vehicle being assembled is accompanied by an RFID chip containing information on how many nuts and bolts need to be tightened on that vehicle for a given operation at a given workstation. A green light comes on when the right number of nuts have been tightened. Only the does the vehicle move forward on the assembly line.

• Error-proofing makes it difficult or impossible to do the job the wrong way.

• Slots and keys, for example, prevent parts from being assembled the wrong way.

• Process recipes and data entry also can be error-proofed

POKA-YOKE

Shigeo Shingo

The term adopted, by Shigeo Shingo as part of the Toyota Production system

Another tool for implementing quality at the source is andon, which gives machines and machine operators the ability to signal the occurrence of any abnormal condition such as tool malfunction, shortage of parts, or the product being made outside the desired specifications. It can take the form of audio alarms, blinking lights, LCD text displays, or chords that can be pulled by workers to ask for help or stop the production line, if needed. Stopping a production line can, however, cost a company hugely. Needless to say, management must realize the enormous responsibility this method puts on employees and must prepare them properly.

ANDON

Ishikawa Diagram (Fish Bone Diagram)Cause-and-Effect Diagram

The technique was first developed by Kaoru Ishikawa.

The cause-and-effect diagram sometimes is called a fishbone diagram. The main performance gap is labeled as the fish’s ‘head’, the major categories of potential causes as structural ‘bones’, and the likely specific causes as ‘ribs’. When constructing and using a cause-and-effect diagram an analyst identifies all the major categories of potential causes for the problem. These might be personnel, machines, materials, and processes. For each major category the analyst lists all the likely causes for the performance gap. Under personnel might be listed ‘lack of training’, ‘poor communication’, and ‘absenteeism’. Creative thinking helps the analyst identify and properly classify all suspected causes. The analyst then systematically investigates the causes listed on the diagram for each major category, updating the chart as new causes become apparent. The process of constructing a cause-and-effect diagram calls management and worker attention to the primary factors affecting process failures.

Kaoru Ishikawa

SUPPLY SOURCES

PURCHASING SYSTEMS

POOR DELIVERY

RELIABILITY

Multiple Unreliable Vendors

No ESI

No Supplier Joint Planning

No self certified vendor

No Partnership

Forecasts not integrated with market

Manual & discrete

Frequent changes

Adhoc

PLANNING PROCESSES

Fragmented, not coordinated

No cross-functional process

Little focus on Evaluation & Rating

No Upstream Management

Inspection & Rework

No Vendor Certification Programme

No PQC

QUALITY MANGEMENT

PROCESSES

Low Morale

No TQM

Low Motivation

PEOPLE

Discrete and non-continuous

No compatibility with suppliers or

customer’s systems

Too many manual interventions

INFORMATION MANAGEMENT

PROCESS ES

FINDING OUT THE ROOT CAUSE OF POOR DELIVERY RELIABILITY

SUPPLIERS

HIGH INVENTORY

Poor Quality of Supplied Parts

Unreliable Supplier Base

No Self Certified Vendor

Over ordering

Lack of coordination

PURCHASE & STORES

Inaccurate Forecast

Frequent changes in forecast

Changes in shopfloor schedule

PLANNING

QUALITY

Multiple Supplier

Low Supplier Morale

Ordering not as per plan

Poor morale of Staff

Vendors are ignorant of specifications

High rejection

Lack of rework

Limited visibility to marketing and customer plans

No Rolling PlanNo Review

No Process Control

FINDING OUT THE ROOT CAUSE OF HIGH INVENTORY

Lean Quality Circle

Quality Circle (QC) activities are in practice in Japan since 1962. This was adopted by many countries including India where Quality Circle activities commenced from 1981.

Quality Circle activities are carried out by a small group of First Line employees, normally number of members are 6 to 8 in a group, who operate autonomously in solving problems found in their work place, products and services. They use simple Quality Circle tools and techniques for which they were trained. These activities aim at promoting self and mutual development of members, enhance capabilities, and contribute to building a pleasant and vibrant work place in addition to solving chronic quality problems encountered by them in their work place. They typically follow 12 problem solving steps in a conventional QC exercise as depicted below:

Problem Solving Steps followed by conventional QC

Step 1 - Identification of ProblemsStep 2 - Selection of ProblemStep 3 - Define the ProblemStep 4 - Analysis of the Problem Step 5 - Identification of causesStep 6 - Finding out the root causesStep 7 - Data AnalysisStep 8 - Developing SolutionStep 9 - Foreseeing probable resistanceStep 10 - Trial implementation and check performanceStep 11 - Regular implementationStep 12 - Follow up review

Overview of the simple Tools & Techniques

No. Name of Tool Purpose / use1. Flow Diagram To enable understanding of the process/flow and locate a problem

2. Brainstorming For generation of ideas in problem listing; listing of causes in problem analysis and for finding solutions.

3. Data Collection To understand the magnitude of the problem and understand the problem. It is the foundation for statistical analysis.

4. Graphs Presentation of large amount of data in a cohesive manner in the pictorial form to enable better understanding of the data and the problem and also to comprehend the trend at a glance.

5. Stratification To segregate data according to contributing source (Suppliers, machines, operators, etc.)

6. Cause & Effect Diagram To map out all probable causes and relate the logical linking of causes to the problem to help narrow down to the cause or causes.

7. Pareto Chart For identification / selection of major problem or area for improvement or control; to differentiate between vital and trivial problems.

8. Scatter Diagram For examining relationship between two variables, nature and strength of relationship between process factors and product quality. In a way, it is also a cause and effect approach between two variables.

9. Histogram For study of process variation and asses process capability. This is an off-line quality control method.

10. Control Charts For maintaining running control on a process. It is a tool for on-line quality control.

Emergence of Knowledge Workers – Need for higher challenges and emergence of Lean Quality Circles

Emergence of Knowledge Workers who has learned to use advanced statistical tools like process capability, six sigma levels, design of experiments etc and who can view the organization holistically and not only from section or department’s perspective gave rise to Lean Quality Circle (LQC) concept. In LQC, the 12 problem solving steps of conventional QC are reduced to Five Steps using the similar concept as used by six sigma teams, as DMAIC; D (Define), M (Measure), A (Analyse), I (Improve) and C (Control). In LQC, unlike conventional QC, where members are from same workplace, the members are from cross-functional areas and even two members can form a LQC group. Unlike conventional QC, in LQC the team meetings take place as per the need and there are no regular fixed meetings. Management can also assign chronic quality problem to LQC team, whereas in conventional QC the members choose their own problems from their work place. In LQC, gain in terms of space, time, people, money, safety are important whereas in conventional QC, learning and solving work related issues are important. In summary, Lean Quality Circles work on the principles of ‘Lean’ where the Circles are focused with few Knowledge Workers who form cross functional team to bring larger gains for the organization in lesser time spans.

FIVE S Practices

Five S (5S) is a methodology for organizing, cleaning, developing, and sustaining a productive work environment. It represents five related terms, each beginning with an S, that describe workplace practices conducive to visual controls and lean production. These five practices of sorting, straightening, shining, standardizing and sustaining are done systematically to achieve lean systems. They are not something that can be done as a stand-alone program. As such, they serve as an enabler and an essential foundation of lean systems. Table below shows the terms represent the 5S and what they imply.

5S TERM DEFINITION

1. Sort Separate needed items from unneeded items (including tools, parts, materials and paperwork) and discard the unneeded.

2. Straighten Neatly arrange what is left with a place for everything and everything in its place. Organize the work area so that it is easy to find what is needed.

3. Shine Clean and wash the work area and make it shine.4. Standardize Establish schedules and methods of performing the cleaning and sorting.

Formalize the cleanliness that results from regularly doing the first three S practices so that perpetual cleanliness and a state of readiness are maintained.

5. Sustain Create discipline to perform the first four S practices, whereby everyone understand, obeys, and practice the rules when in the plant, implement, mechanisms to sustain the gains by involving people and recognizing them through a performance measurement system.

It’s commonly accepted that 5S forms an important cornerstone of waste reduction and removal of unneeded tasks, activities, and materials. 5S practices can enable workers to visually see everything differently, prioritize tasks, and achieve a greater degree of focus. They can also be applied to a diverse range of manufacturing and service settings including organizing work spaces, offices, tool rooms, shop floors, and the like. Implementation of 5S practices have been shown to lead to lowered costs, improved on time delivery and productivity, higher product quality, better use of floor space, and a safe working environment. It also builds the discipline needed to make the lean systems work well.

FIVE S (5S)

1S SEIRI (Shift and Sort) (Organize)2S SEITON (Stabilize) (Orderliness)3S SEISO (Shine) (Cleanliness)4S SEIKETSU (Standardize) (Adherence)5S SHITSUKE (Sustain) (Self-discipline)

Objective

To highlight the information related to concerned zone about the details of the members, Five S score obtained, problems identified and graphical representation of the score achieved for the successive audits.

Five S Score Board

Details on the Five S Score Board

Group / Zone name:

Leader :

Dy Leader:

Members:

1.

2.

3.

4.

5.

SCORE

1 2 Average

Jan

Feb

Mar

…..

…..

Nov

Dec

Problem of the section

S.N Problem Date of Identification

1.

2.

3.

4.

5.

6.

Scor

e %

Jan Feb AprMar

Graph

FIVE ‘S’ AUDIT SHEET (PLANT)

Dept./ Section _____________________

Zone Name ________________________

Date ________________

Zone No. ________________

Sl. No. Check Item Evaluation Criteria Marks

1 Parts & Material i) How spare parts/ work in progress kept?ii) Are they having proper identification?iii) Is their proper place for materials a. To be repaired b. To be replaced c. for disposable and defective items

2 Machine & Equipment

i) How equipments are identified?ii) Do they have caution boards in unsafe areas?iii) Do they have proper guards in required area as per safety

requirements?iv) How clean equipments are?

3 Visual Control Can all unnecessary items be distinguished at a glance?

4 Standard for disposal Is there clear standards for disposal?

5 Storage Labels i) Do they stock and store at prefixed place?ii) Condition of items in almirahs and tool boxesiii) Have they been properly identifiediv) Is storage space properly marked for maximum and minimum level

of storing?

6 Ease of use Is Storage designed for easy and faster access?

7 Orderly Storage Is everything stored in a fixed location?

8 Aisles & display areas

All dividing lines, path ways and notice boards. Have they clearly marked?

Sl. No. Check Item Evaluation Criteria Marks

9 Floors i) Are there grooves, cracks or bumps on the floor which hinder work or safety?

ii) Is the floor always clean (bolts, nuts components papers and other materials are not found on the floor)?

10 Working Area i) How clean and neat?ii) Do they have adequate lighting and ventilation?iii) Are safety measures proper and is noise level with in control?

11 Lubrication i) Have they marked in proper place lubrication point schedules? ii) Have they provided lubricant identification marking and oil

spillage tray?

12 Wastage Storage System of waste storage and removal

13 Lunch Room i) Is there spillage of water inside the lunch room?ii) Is there any foul odouriii) Is condition of lighting and ventilation system is proper?iv) How they ensure general cleaning and neatness?

14 Water Taps i) Are they neat and clean?ii) Is there any water leakage?iii) Is there sign board for drinking water and display of water

conservation related slogans?

15 Toilets i) Is there any water leakage?ii) Is there any foul odour?iii) Condition of lighting and ventilation systemiv) General cleaning and neatness

16 General Alertness Do all employees use safety appliances?

Sl. No. Check Item Evaluation Criteria Marks

17 Uniform Has wearing uniform become a habit?

18 Participation What is the level of participation of all employees in Five S activities?

19 Retrievability Is it possible to retrieve of all items in one minute?

20 Rules and Regulation

Are all rules and regulation strictly observed?

Total

Marking Criteria

1 = Very Bad

2 = Bad

3 = Average

4 = Good

5 = Very Good

Auditor’s Name and Signature

Please conduct an 5S Audit of your workplace and submit in next class

HOME ASSIGNMENT

Kanban System

One of the most publicized aspects of lean systems, and the TPS in particular is the Kanban system developed by Toyota. Kanban meaning ‘card’ or ‘visible record’ in Japanese, refers to cards used to control the flow of production through a factory. In the most basic kanban system, a card is attached to each container of items produced. The container holds a given percent of the daily production requirements for an item. When the user of the parts empties a container, the card is removed from the container and put on receiving post. The empty container is then taken to the storage area and the card signals the need to produce another container of the part. When the container has been refilled, the card is put back on the container, which is then returned to a storage area. The cycle begin again when the user of the parts retrieves the container with the card attached.

Lean System whether in a manufacturing or in a service organization can never be implemented without changing the culture of an organization. It is thus highly recommended to go for a transparent work place culture where all members of the organization can view the discrepancies in the process vis-à-vis the best competition in the market place. Knowledge of discrepancy stimulates the motivation for change. This is a proven and established concept followed by many global organizations such as Philips world-wide, Motorola and others

ENERGY FOR CHANGE

AWARENESS OF DISCREPENCY

GLASS WALL MANAGEMENT

MINI COMPANY

TECHNIQUE

Like Glass Wall Management, the Mini Company Technique is related to change of organizational culture to facilitate introduction of lean system in a manufacturing or in a service organization. This concept works on the power of employee empowerment, where the feeling of ‘ownership’ enhances the level of organizational commitment of the employee and helps in rapid implementation of lean system.

Lean Building Blocks

ValueStreamMapping

Visual Controls

The Lean Factory

5S System

Quick SetupsMistake Proofing

PULL / Kanban Cellular Layout TPM

Standard Work

Self Inspection

Batch Reduction

41

Value Stream Mapping

Value Stream Mapping (VSM) is a widely used qualitative lean tool aimed at eliminating waste or muda. Waste in many processes can be as high as 60 percent. Value Stream mapping is helpful because it creates a visual ‘map’ of every process involved in the flow of materials and information in a product’s value chain. These maps consist of a current state drawing, a future state drawing and an implementation plan. Value Stream Mapping spans the entire supply chain, from the firm’s receipt of raw materials to the delivery of the finished good to the customer. Thus, it tends to be broader in scope. Creating such a big picture representation helps managers identify the source of wasteful non-value-added activities.