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Procedia CIRP 50 (2016) 478 – 483

26th CIRP Design Conference


Value-focused design of lean production systems based on a system dynamics
approach
a,* b a a,b
Tom Drews , Paul Molenda , Oliver Oechsle , Rolf Steinhilper
aFraunhofer IPA Project Group Process Innovation, Universitaetsstrasse 9, 95447 Bayreuth, Germany
b
University of Bayreuth, Chair Manufacturing and Remanufacturing Technology, Universitaetsstrasse 9, 95447 Bayreuth, Germany

Corresponding author. Tel.: +49-921-78516-431; fax: +49-921-78516-105. E-mail address: tom.drews@uni-bayreuth.de

Abstract

Lean principles are the central core of many industrial companies for improving their production system. In order to be able to optimize
their manufacturing and logistics processes, companies have to choose the most suitable lean principles to solve problems or to reach their
target state. To solve this decision problem, it is important to identify objectives based on values of the decision-maker and to determine
effects of lean principles and objectives. This paper presents a value-focused thinking driven identification of objectives and a system
dynamics approach for understanding the interdependencies and dynamics of lean principles and objectives. This provides a transparency
and better understanding for these interactions for the decision-maker in the decision-making process. Based on this knowledge, the most
effective lean principles for the design of the production system can be chosen and successfully applied.
© 2016 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
c
(http://creativecommons.org/licenses/by2016TheAuthors.Publishedby-Elseviernc-nd/4.0/B.V.).
Selection and peer-review under responsibility of Professor Lihui Wang.
Peer-review under responsibility of the organizing committee of the 26th CIRP Design Conference
Keywords: Lean principles, design of production systems, value-focused thinking, system dynamics

1. Introduction recognized within other scientific approaches e. g. information


technology process models and manufacturing support process
Due to the continuous globalization, shorter product life analysis. [8,9] The adaption of the lean philosophy for the
cycles and diversified customer demands, it is crucial for design of logistics processes supports the current market-driven
manufacturing companies to optimize their production system requirement of a high performance at the least possible costs.
to maintain a long-term and sustainable competitiveness [1]. Companies are able to gain a competitive advantage and effec-
An optimization potential arises especially for manufacturing tively optimize their processes by meeting these requirements,
companies through a continuous and holistic integration of through the design of lean production systems. [7,10]
increasing logistics activities in the overall production process.
Research studies show that the holistic integration and con- The effective design of lean production systems is on the
tinuous optimization of manufacturing and logistics processes one hand characterized by the underlying principles of a
are the key to reduce production costs up to 25 %. [2] The continuous orientation on processes, which are value-added in
importance and the overall advantages of the integration are terms of the lean philosophy. On the other hand, the design
reflected by a current survey among manufacturing companies. depends even more on the effective selection of suitable lean
Therefore, 94 % of the companies identify the integration of methods and begins with an analysis of the current state. This
manufacturing and logistics processes as an efficiency analysis is very important for the entire decision-making
advantage for their production system. [3] process and is often a problem for the decision-maker. [11]
Furthermore the selection of lean methods differs from
The integration of manufacturing and logistics processes company to company due to individual problems, subjective
and their corresponding systems leads to lean production objectives of decision-makers and different circumstances of
systems. This integration is implemented through the appli- the company. [4]
cation and adaption of lean production principles for logistics
processes to eliminate the parts of processes, which have no To solve these problems, this paper presents a value-focused
value from a customer point of view. [4–7] Similar applications driven approach after Keeney [12] for the identification of ob-
and adaptions of the principles of the lean philosophy can be jectives, the effective design of lean production systems and
their integration in an exemplary system dynamics model after
Sterman [13]. The underlying system of objectives for a value-
2212-8271 c 2016 The Authors. Published by Elsevier B.V. added production system was introduced by Drews et al. [14]
Selection and peer-review under responsibility of Professor Lihui Wang.

2212-8271 © 2016 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND
license (http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the organizing committee of the 26th
CIRP Design Conference doi:10.1016/j.procir.2016.05.058
Tom Drews et al. / Procedia CIRP 50 (2016) 478 – 483 479

2. System dynamics
The complexity arises especially through the interconnect-
2.1. Thinking in systems edness of the system elements. If the problem is characterized
by a high structural complexity, the challenge is to find the op-
System dynamics was developed in the late 50’s of the 20th timal constellation of variables. [25] However, complexity can
century at the Massachusetts Institute of Technology (MIT), also occur in a low structural degree of complexity. [26] The
under the leadership of Forrester. [15] Due to the primary reason are not the interdependencies in the system, but the fre-
application in industrial companies, Forrester used initially the quency and intensity of changes over time of the system struc-
term “Industrial Dynamics”. [16] Considering the ability to ture. In these cases, one speaks of dynamic complexity. The
apply this approach to a variety of possible fields, the todays differentiation in a structural component and dynamic compo-
customary term “System Dynamics” enforced later. [17] nent of complexity is agreed upon within the scientific com-
munity and can be found in various disciplines e. g. the anal-
The investigation of systems is the subject of various ysis of remanufacturing [27], product complexity [28], ecologi-
scientific disciplines such as physics, biology, sociology and cal transparency [29], production logistics [30], effects on orga-
engineering. [18] Von Bertalanffy describes the constitutive nizations [31] and effects on companies [24,32]. Derived from
elements of a system in his system theory with at least two this general understanding and based on the nature of system
interrelated elements that results in a specific structure. [19] dynamics, a classification of systems in terms of complexity
The simplest form of the relationship between two elements is and potential applications of system dynamics can be evaluated
a one-sided cause-effect relationship. In feedback relationships, (see Fig. 2).
the influence of an element reacts on this. If this happens
indirectly, through the interaction with another element, there
high Methods for the decision support
is a feedback loop. In addition, there is the possibility that in context of system complexity

elements directly influence to their own state. [20] Dynamic Complex


systems systems
Dynamic complexity
Optimization algorithms
Based on these common definitions of systems and their
components, a general understanding of systems is established
among the various scientific disciplines (see Fig. 1). Human cognition
Simple Complicated
Exogenous area System structure System output systems systems
System dynamics
low
SE I
SE III
low Structural complexity high
System elements

Feedbacks

SE II
SEIV
Fig. 2. Complexity of systems and application of System Dynamics [25,33,34]

2.3. Structure and behavior of dynamic systems


System
System input System boundary Endogenous area The main aim of system dynamics is to show the system be-
havior on the basis of the interaction of the system components.
From this endogenous principle, it follows that the number of
the system’s exogenous variables should be kept as low as
Fig. 1. General understanding of the basic components of a system [21] possible. [35] A variable is exogenous, if its expression is given
and is not explained or derived from the system’s behavior.
Westkamper¨ shows that the system “production” is a com- Endogenous variables are explained by the components of the
plex and socio-economic system, which consists of partly au- system. [36] The question of the optimal number of variables
tonomous elements or subsystems. [22] System dynamics con- cannot be answered conclusively. A high number of variables
siders these dynamics relations and interdependencies on a ensures, that the model is more able to reflect the reality, but
strategic level and was therefore chosen as the basis modeling each additional variables also increases the complexity of the
approach to gain a deeper understanding of the effects of the model. This trade-off is also known as “Bonini’s paradox”. [37]
identified value-focused objectives and lean principles. [23]
System dynamics is based on the assumption, that the sys-
2.2. Complexity in systems tem behavior results mainly from the endogenous interactions
of the system elements. Furthermore, any system behavior can
The term “complexity” has a variety of different meanings be attributed to two basic forms (positive and negative feedback
in system thinking. Due to its relevance, it is essential to loops) or to a combination of these two basic forms. [13,38] In
question what exactly it means and what effects it has on addition to the two basic forms, more typical types of behav-ior
decision-making behavior. In common usage, a situation is occur, if e. g. existing time delays, predetermined or desired
considered to be complex, if it is difficult to overview all goal values or restricted factors are implemented (see Fig. 3).
interdependencies. This type of complexity is directed to the The implemented time delays e. g. cause corrective actions to
number of elements and their relationships with each other and continue even after the state of the system reaches its desired
will be referred as a structural complexity. [24] goal, forcing the system to adjust too much, and triggering a
480 Tom Drews et al. / Procedia CIRP 50 (2016) 478 – 483

)XQGDPHWDOPRGHVRIG\QDPLFEHKDYLRU 3. System dynamics approach for a value-focused


([SRQHQWLDOJURZWK *RDOVHHNLQJ 2VFLOODWLR
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design of lean production systems
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diagramming notation using the example of a finished goods
1HW 6WDWHRIWKH 6WDWHRIWKH inventory stock with the corresponding stock and flows. This
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example is part of the system dynamics model which is de-
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scribed in Sec. 4 and uses basic but also strategic elements such
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as the overall machine capacity and production rate. These el-
&RPPRQPRGHVRIEHKDYLRULQG\QDPLFV\VWH ements are important for an effective design of lean production
PV system and are building the basis for the integration of the ob-
6VKDSHGJURZWK 6VKDSHG*URZW 2YHUVKRRWDQGFROODSV
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H jectives, which are derived from the value-focused thinking ap-
6
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proach during the decision-making process.

3.1. Decision-making with value-focused thinking


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To achieve a lean production system, it is necessary to ana-lyze
6WDWHRIWKH 6WDWHRIWKH 6WDWHRIWKH
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general, the full identification of objectives is demanding. The
&DSDFLW\
IDFWRU IDFWRU RI&DSDFLW\ value-focused thinking approach after Keeney is an effective
6 6WDWHRIWKHV\VWHP 6LJQLILFDQWGHOD\ W 7LPH 5 6HOIUHLQIRUFLQJ % %DODQFLQJ
starting point for the identification and the sys-tematic structuring
of objectives. It focused on values of the decision-maker and
Fig. 3. Fundamental modes of dynamic behavior and common modes of
examines first, what they want to achieve and selects afterwards
behav-ior in dynamic systems [13,40]
the appropriate alternatives. This will be evaluated in accordance
new correction in the opposite direction. The illustrated modes with the aimed at objectives. In general, decision-makers usually
of the fundamental and common behavior in dynamic systems focus on the choice among al-ternatives (“alternative-focused
in Fig. 3 represent a very large part of the possible system be- thinking”). But we should be spending more of our decision-
havior for any kind of scientific discipline and are therefore making time on what is impor-tant: articulating and understanding
also called “archetypes”. [39] our values and using these values to evaluate more carefully the
desirability of the alterna-tives that help to make better decisions.
[10,12] Tab. 1 provides a comparative overview between of the two
2.4. Stock and flows
approaches value-focused and alternative-focused thinking.
System elements of system dynamics are modeled with the
help of stocks and flows. Stocks are accumulations. They
Table 1. Comparison of the sequences of activities for a decision problem
describe the state of the system and generate the information with value-focused thinking and alternative-focused thinking [12]
upon which decisions and actions are based. In general, stocks
provide system’s inertia with memory. Flows include the in- Sequence Value-focused thinking Alternative-focused thinking
crease and decrease rates, which changes the stock. Stocks and 1. Recognize a decision problem Recognize a decision problem
flows are suffice for any simulation. It is often helpful to define 2. Specify values Identify alternatives
auxiliary variables and constants for easy communication. [13] 3. Create alternatives Specify values
4. Evaluate alternatives Evaluate alternatives
Auxiliary variables influence the flow rate by transforming in- 5. Select an alternative Select an alternative
coming information into actions. [17] While auxiliary variables
are variable, so they can assume different values, constants are
fixed, which do not change during the simulation time. [41]

Finished goods inventory stock


In reference to Buchanan et al. and Corner et al. an addi-
Finished goods input rate [QU] Finished goods output rate tional visual differentiation between value-focused thinking
[QU/TU]
Production rate
[QU/TU]
Distribution rate
and alternative-focused thinking is shown in Fig. 5. [42,43]

3.2. Identifying and structuring objectives for a system of ob-


[QU/TU] [QU/TU]
Machine capacity Sales prognosis Price Distribution capacity jectives for the design of lean production systems

The first identification of objectives was based on scientific


[QU/TU] [QU/TU]
Legend
[MU/QU] [QU/TU]
approaches (e. g. engineering standards, technical guidance,
Constant Flow Source or drain Stock with level
standard reference works and scientific papers) applied in the
Auxiliary variable Information relation Flow rate
field of manufacturing and logistics. Afterwards the value-
focused thinking approach was used to identify more objec-
MU = Monetary unit QU = Quantity unit TU = Time unit tives. There are several techniques that stimulate the identifica-
tion of possible objectives. [10,12,14,44] By using these tech-
Fig. 4. System dynamics model of an exemplary finished goods inventory stock
Tom Drews et al. / Procedia CIRP 50 (2016) 478 – 483 481

Alternative-focused Value-added

Fundamental

objectives
thinking production system
Value-focused
thinking
Maximize Minimize Maximize
performance costs sustainability

Maximize Minimize Improve


flexibility waste humanity

meansobjectives
Maximize Minimize adminstration

Firstlevel
effect iveness
Minimize consumption
availability and system costs of resources

Maximize Minimize
efficiency fixed assets

Maximize

Alternatives or Attributes or Criteria or Maximize


choices characteristics values delivery performance

Fig. 5. Differentiation of value-focused thinking and alternative-focused Fig. 6. System of objectives for the design of a lean production system [14]
think-ing [42,43]
4. Modeling process and integration of derived value-
niques, a master list with over 60 objectives for lean produc-tion focused thinking objectives
systems could be identified. The value-focused thinking techniques
were used during workshops with decision-makers and helped to 4.1. Origin of the base model and integration of derived value-
identify various objectives based on values for future decisions. If focused objectives
certain objectives were already identified before the actual
identification process, the approach can help to identify further The base model for the system dynamics lean production system
objectives since it is easier to recognize re-dundant objectives than model is based on the model after Sterman “The Manu-facturing
it is to identify missing ones. [45] Af-ter the full identification of Supply Chain”. [13] This model shows the stock man-agement
objectives, they must be structured in a system of objectives in a structure in a production, which is based on changes of the material
hierarchical structure including fundamental and means objectives. flow over time. Material deliveries increase the material inventory
Means objectives serve to achieve a higher-level objective. They and production (use of material) decreases it. The material
thus serve as a means to achieve another objective. Fundamental availability determines the dispatching of produc-tion orders. The
objectives however, are pursued for their own sake. In order to release of orders increases the inventory in pro-duction. By the
determine whether it is a fundamental or a means objective, completion of a production order the inventory in production falls
objectives should be subject to the WITI-Test (“why is this and the stock of finished goods increases. Shipments to the
important?”). [10,46,47] A part of the develop system of objectives customer reduces the stock of finished goods. The idea of the
with the fundamen-tal and first-level means objectives is shown in value-focused design of lean production systems based on a system
Fig. 6. It is generic and universal for all types of manufacturing dynamics approach is the holistic integration of the generic and
compa-nies and consists of the three fundamental objectives universal system of objectives introduced by Drews et al. Using the
“maximize performance”, minimize costs” and “maximize system dynamics model a variety of lean principles can
sustainability”, which are decomposed into various means implemented through the representation of direct influences
objectives through a multi-level hierarchy. [10,14] The developed through constants and variables within the model or the modeling
system of objec-tives and its operationalization through of time-dependent cause-effect relation-ships of such influences.
performance indicators is a first step towards a solution of the The fundamental idea of this approach and the principal integration
current gap between per-formance measurement system, objectives of objectives is shown in Fig. 7.
of the company and thus values of the decision-makers and new
holistic lean pro- 4.2. Enhancement and adjustment of the base model
duction systems. Recent studies of Gunthner¨ and Dornh¨ofer¨
e. g. show that for 53 % of the companies in the automotive Sterman’s model focused particularly on the inventory of the
industry with a predominant logistic background, a connection production. The included dispatching rate depends on the
between performance measurements and company objectives is availability of materials. Any restrictions due to the availability
missing or independent from each other. [48] of staff or overall machine capacity are not considered in the

System of objectives Maximize


performance
+
Production output
Enhanced system
dynamics model
+ +

Number of <actual
- set-ups dispatching rate> Number of
Maximize Maximize Lot size +
Maintenances
efficiency availability +

… Maximize staff +
Period under Staff
availability observation Maintenance Maintenance

… Maximize machine Time of machine interruption + availability range


time +

availability +
-

Waiting time
+ +
Maximize material
Interruption due to Stuff
Minimize availabili ty
+ +
production time
Total set-up time <Material TABLE-functionWaiting
+
time + Number of consumption
… Set-up Waiting time time
interruptions
Minimize set-up

+
rate> +

time
time

Minimize waiting
Waiting time Material
time during during production availability
production Interruption
+
+
-

… of production
-
Waiting time during +

Minimize intern
material flow Working time
material flow per week
time Machine
+ +

availability <Period under


Minimize waiting

time during
material flow +

Possible production time observation>



in period under observation

Fig. 7. Visualization and excerpt of the integration of objectives within the system dynamics model based on the fundamental objective “maximize performance”
482 Tom Drews et al. / Procedia CIRP 50 (2016) 478 – 483

base model. For a holistic model of a lean production system 5. Evaluation of selected lean principles
they are also important and have to be integrated as well. The
enhancement of the base model also required a model During the evaluation of selected lean principles the effects
implementation e. g. of productivity, machine availability, staff of these were analyzed with the help of defined experiments.
availability and throughput time. The experiments are based on time series, which represent the
behavior of selected lean principles. The effect of a certain lean
Based on the addition of the restrictions of staff and over-all principle on an individual means objective are derived from
machine capacity an auxiliary variable for a bottleneck test for expert opinions and analysis of cause-effect relationship [2,4].
the specific assessment of the three stocks overall machine The design of the experiments uses primary settings of the base
capacity, staff and material was implemented as well. This bot- model of Sterman e. g. 150 weeks of simulation time, 250
tleneck test is an enhancement of the base model and serves workdays per year and 40 hours of work per week.
two main purposes. First, the approach enables the developed
enhanced model to be easily connected to the base model of 5.1. Single minute exchange of die
Sterman and it’s underlying principles. Second, through the
addition of these stocks and their submodels and variables the The lean principle “single minute exchange of die” (SMED)
developed system of objectives could almost be fully integrated targets the reduction of set-up time. Shingo, the founder of
in the system dynamics model. An overview of the developed SMED provides the results of over 40 successfully implemen-
model is illustrated in Fig. 8. tations with an average reduction of set-up time of over 90 %.
For the experiments in this paper a overall reduction of the set-
up time of 80 % is assumed. This progress is implemented in
Enhanced model
three steps over a predefined period of time of 10 weeks. The
component
first results of simulation experiments are shown in Tab. 3.
Purchase Overall machine Depreciation rate
capacity
Machine availability
+ Desired dispatching rate Table 3. Exemplary results of simulation experiments with and without SMED
Dispatching

+ +
rate

Possible dispatching rate due to total capacity Objective Without SMED With SMED Delta
of new staff

Enhance
+
Possible dispatching rate due to staff
Base model component

Set-up time 30.0 min 6.0 min - 80 %


d model +
Engagement

+ Throughput time 4.0 weeks 3.7 weeks - 7.5 %


compone +
+ Bottleneck test Semi finished
Semi finished goods inventory 37,500 units 34,650 units - 7.6 %
nt +
Productivity Staff availability goods
Production

+
Material usage rate + +
Staff Possible dispatching rate due to material stock 5.2. Kaizen
rate

+
rate Reduction

Maximum material usage rate


Material usage per product
-
Kaizen is a holistic approach which emphasizes a lot of dif-
+
ferent areas within manufacturing companies. The constitutive
Material idea behind this philosophy is a continuous optimization of ex-
Material delivery rate Material usage rate
isting processes in small steps. A tool which is often referred
Base model to kaizen is the plan-do-check-act procedure, which underlines
component
the incremental improvement of the kaizen principle. The
Fig. 8. Overview of the components and elements of the enhanced and base effect of kaizen was modeled with the help of linear learning
model of the holistic system dynamics model curves and specific auxiliary variables. The first results of
simulation experiments are shown in Tab. 4.
In total the system of objectives consists of 48 means ob-
jectives and an exemplary overview of the considered means Table 4. Exemplary results of simulation experiments with and without kaizen
objectives is shown in Tab. 2. These objectives form the con-
nection to different lean principles and methods and enable the Objective Without kaizen With kaizen Delta
evaluation of different effects for a decision-maker. Productivity 100 % 115 % +15 %
Production time 15 hours 12.8 hours - 14.7 %
Table 2. Excerpt of means objectives and level of implementation Staff requirements 200 worker 175 worker - 12.5 %

Case 1: Means objectives which are not considered

• Maximize adaptive flexibility • Maximize vertical integration 6. Conclusion and outlook


• Minimize energy consumption • Meet standards
This paper presents a value-focused thinking driven identi-
Case 2: Means objectives which are constant or indirectly influenced
fication of objectives, the effective design of lean production
• Minimize test time • Minimize set-up time systems and their integration in an exemplary system dynam-ics
• Minimize lot size • Minimize order picking time
• Material usage per product • Minimize transport time model after Sterman.
With the two exemplary principles
Case 3: Means objectives which are endogenous of SMED and kaizen the authors show a holistic
• Maximize machine availability • Minimize inventory approach for the decision-making process for the
• Maximize material availability • Minimize production time design of lean production systems. The presented
• Minimize waiting time • Minimize assembly time
approach emphasizes the importance of subjective
values of the decision-maker and enables with the
help of a generic and universal system of objectives
as well as a individual system dynamic model a
strategic and holistic view.
Tom Drews et al. / Procedia CIRP 50 (2016) 478 – 483 483

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