LEAN MANAGEMENT

By V K Saxena
SPME/NAIR

Basic

Advance

Some Definitions
Inventory
Inventory is all the money that the system has
invested in purchasing things which it intends to
sell
Operating
Expenses
All the money that the system spends in order
to turn inventory into throughput
Throughput
Throughput is the rate at which the system
generate money through sales
Definitions taken from THE Goal- by Eliyahu M

What is Lean Management ?

Lean is a Manufacturing or management
philosophy that shortens the lead time between
a customers orders and shipment of the parts
or services ordered through elimination of all
forms of waste (Japanese name MUDA).
Lean helps in reduction of cost, cycle time and
non value added activities.

History Of Lean
Most of the lean concepts are not new. Many of
them were being practiced at Ford Motor
Company during the 1920s or are familiar to
most industrial engineers.
A few years after World War II, Eiji Toyoda of
Japans Toyota Motor Company visited the
American car manufacturers to learn from them
and to transplant U.S automobile production
practices to the Toyota Plants.
With the
eventual assistance of Taiichii Ohno and Shingo,
the Toyota Motor Company introduced and
continuously refined a system of manufacturing
whose goal was the reduction or elimination of
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History Of Lean
The concepts and techniques that go into this
system are now known as Toyota Production
System (TPS), and were recently reintroduced
and popularised by James Womacks group in
the United States under the umbrella of lean
manufacturing.
Lean concepts are applicable beyond the shop
floor. Companies have realized great benefit by
implementing lean techniques in the office
functions of manufacturing firms, as well as in
purely service firms such as banks, hospitals,
and restaurants. Lean manufacturing in this
context is known as Lean enterprise.
6

Increase profit by Price Increase

Price to sell
Bigger profit
Some profit
Cost to produce

But, may lose customers!

7

Increase profit by Cost Reduction

Price to sell
Some profit

Bigger profit

Cost to produce

THREE TYPES OF ACTIVITIES

NON VALUE ADDING

Criteria of Value Added

activity
Customer is willing to pay
Change/Transformation is
taking place
Right first time

Canva
s

ATM

10

Productivity Increase
Productivity increase is not due to more work, but rather by minimizing wastes.

Increase by More Work

Decrease of Wastes

Waste and Value Added will

be increased to the same
part.

Value Added part will be

bigger in proportion to the
wastes

Page 11

Lead Times and Waste

Short lead times will be acheived by consequent reduction of wastes in the process.

Before
Value Added

Waste

Time

After
Value Added

Waste

Time

Page 12

The Seven Kinds of Waste

production
environment

Area /
Space

Rework
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Over-production

Over-production is the leading cause of waste

Root causes
Unstable processes
Compensation based on production
volume
Anticipated production

Results

Production for inventory increases handling cost

Increased inventory of semi-finished and finished products
Cost of inventory
Production capacities are restricted

Page 14

Inventory
High inventories hide problems and can increase lead times.
Root causes
Poor scheduling
Hiding of unstable processes
High variety of products

Results

High administration costs

Storage limitations
Production that decreases capacity
Products can be damaged
Scrapping of too high inventories...
Additional material movements

Page 15

Continual Improvement

A controlled lowering of the inventory uncovers the wastes

in processes

Inventory

Problems

Problems

Problems
are hidden

Problems
become visible

Machine failure

Easy Identification

Insufficient material
Insufficient personnel

Necessity of a fast
problem solving

Bottlenecks in
manufacturing

Set Workshops and

projects

Problems
Elimination of
the causes
The problem solution
allows a production
with lower inventory

Quality defects
Page 16

Transportation
Transportation can increase lead times and is a
potential quality risk.
Root causes
Plant layout based on technologies
Temporary storage
Transportation of empty containers

Results
High infrastructure cost
Usage of capacities (man / machine)
Consumption of plant floor space for transportation

Page 17

Waiting

Waiting increases lead times and headcount.

Root causes

Poor process leveling

Missing parts
Quality approval
Machine downtimes
Poor communication

Results

Increased personnel cost

Frustration
Improper identification
Delays

Page 18

Motion
Time wasted gathering the necessary components
and tools increase both the production and lead
time.
Root causes
Existing layout
Poor manufacturing control
Inefficient work plan

Results
Increase lead times
Usage of employee capacity
Hectic activities

Page 19

Area / space
Improper use of available space results in
unnecessary investments in more plant and office
space
Root causes

Unplanned growth
Inventory
Production scheduling
Inappropriate container sizes

Results
Unnecessary motions
Unnecessary usage of capacity and resources

Page 20

Quality Defects
Defective products reduce the available capacity.
Root causes

Process instability
Design restrictions
Lack of competence (workers)
Wrong or rather defective equipment

Results

Rework
Rejects
Additionnal controls
Additionnal transportation

Page 21

Production Areas vs. NonProduction-Areas

Production Areas

1. Physical material flow

2. Product characteristics
(=material) can be
considered as being
constant

Non-Production Areas

Processoptimization

1. Information flow
2. Characteristics
(=information) are
changing quickly and with
high frequency

3. Focus is on the physical

materials and waiting
time.

3. Organization, interfaces
and waiting times are in
focus for improvements

4. Relationships to internal
and external customers
can be quickly identified

4. High number of internal

and external customers not
clearly visible
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Value added in production and

administration
Value added ads to the value of the product from the (final) customers point of view.

Value added in production areas

welding
forging
hardening
grinding
assembly
.

Value added in admin. areas

customer consulting
obtaining an order
technical advisory
service availability
on time delivery
complete
delivery/service

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Wastes in administration and office

area
in production
in administrative
Bericht
Bericht

Bericht

Bericht

Bericht Teil 1

Bericht
Bericht Teil 3

Bericht
Bericht Teil 2
2

areas

Area / Space

Over-Production
Areas / Space
Transportation
Waiting time

Transportati
on

Inventory
Abt. 1

Abt. 2

Over-Production
Doppelarbeit

Abt. 3
Abt. 4

Motion / Interfaces
Waiting

Quality defects /
Repair
Motion
Inventory

Quality defects /
Repair

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Apply Five Simple Principles

Specify value from the
standpoint of end customer
Identify the value stream for
each product/service family
Make the product/service flow
So the customer can pull
As you manage toward
perfection

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VSM - Value Stream Mapping

Five S- Visual Management
Flow- Spaghetti Diagram
Cell Manufacturing
Kanban- Inventory Control
TPM- Total Productive
Maintenance
QCO- Quick Change Over
Poka-Yoke- Mistake Proofing
Kaizen- Continual Improvement
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VSM (Value Stream

Mapping)
Follow a Products Production path
from beginning to end, draw a visual
representation of every process in the
material & information Flow.
Then draw (using icons) a Future
State map of how value should flow.
Develop your ability to see the flow
and design future state value streams.

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VSM-Current State

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VSM-Future State

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LEAN Symbols

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5S in administrative Areas
Clean Desk
Policy

unnecessary documents
e.g. catalog, forms, files

Own office supply

storage

set up a
cleaning plan

seiri
seiton,
seiso
seiketsu
shitsuke

storage system
marked
floor spaces
mandatory
drive structure

always cleaned plant and

office furnishings
clean offices and buildings

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FLOW
Spaghetti Diagram
Material Movement
Document Movement
Person Movement

Page 32

CELL Manufacturing
Carrying out one-piece-at-atime
processing in order to
eliminate
stagnation of work (queue) in
and
between processing steps.
Cell
An arrangement of people,
systems, items, and methods
with
the processing steps placed
right
next to each other in
sequential
order, through which parts

A
B

B
A

Page 33

KANBAN
What is Kanban
Kanban is a Japanese word
meaning display
orinstruction card or
Signal
It is a card describing the
part number, the quantity of
parts, where they are from, to
where they are to be
delivered, and so on.

Cheque
Book

Pull System

Page 34

TPM
O.E.E- Overall Equipment
Efficiency
Combination of three
Factors
Availability
Performance
Quality

Operator ownership
60% Break down root causeCLIT
Clean,
Lubrication,
Inspection,
Tightening

Example
Total hours= 8
Available hours=6
Hourly output=100
So Total output=800
Available output =600
Performance=500
Quality out put=400
Available Ratio=
600/800
Performance Ratio=
500/600
Quality Ratio=400/500
O.E.E= 400/800= 50%
Page 35

 It is an approach for mistake-proofing

processes using automatic devices or
methods to avoid simple human error.

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KAIZEN
KAI

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Concept of 3M

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3 Type of Waste

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3 MUs
MURI

STRAIN

MURA

INCONSISTENCY / IMBALANCE

MUDA

WASTE

Muda

Mura

Muri

MURA =
Fluctuation

MURI = Unreasonable
/Irrational

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Synchronization with Customers

Working synchronous to the customer takt is based on the four Lean-Principles: Flow,
Takt, Pull and Zero-defect

Flow-principle

Takt-principle

Zero-defect-principle

Pull-principle

stable processes require:

"do not accept defect
products"
"do not create defect
products"
"do not pass on defect
products"
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BOEING MANUFACTURING

BOOKS
Machine That Change the
World
Toyata Way-

42

FOR CRITICS OF
BENCHMARKING

EACH WORK HAS TO

PASS THROUGH
RIDICULE, OPPOSITION
AND THEN
ACCEPTANCE.
SWAMI VIVEKANAND
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THANKS
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