Intro To Process

141
Chapter Fourteen
McGraw-Hill/Irwin Copyright 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
142
Copyright 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
LO141: Explain what lean production
is.
LO142: Illustrate how lean concepts
can be applied to supply chain processes.
LO143: Analyze supply chain processes
using value stream mapping.
LO144: Apply lean concepts to service
processes.
143
Lean production - integrated
activities designed to achieve Involves the timing of
high-volume production using Involves the elimination of production resources (i.e.,
minimal inventories (raw waste in production effort parts arrive at the next
materials, work in process, workstation just in time)
and finished goods)
Value chain - each step in the

supply chain should create Customer value - something Waste - anything that does
value for which the customer is not add value from the
If it does not create value, it should willing to pay customers perspective
be removed
144
Lean is based on the logic that nothing
will be produced until it is needed.
A sale pulls a replacement from the last

position in the system.
This triggers an order to the factory

production line.
Each upstream station then pulls from

the next station further upstream.
145
146
Elimination of Waste Respect for People
Waste from Lifetime employment
overproduction for permanent
Waste of waiting time positions
Transportation waste Maintain level
Inventory waste payrolls even when
business conditions
Processing waste deteriorate
Waste of motion Company unions
Waste from product Bonuses
defects
View workers as
assets
147
Lean Lean Lean Lean Lean
suppliers procurement warehousing logistics customers
Optimized mode
selection and
Able to respond to pooling orders Understand their
changes business needs
Key is automation Combined multi-
(e-procurement) stop truckloads
Optimized routing
Eliminate non-
value-added steps Value speed and
Lower prices
and waste in flexibility
storage process
Cross docking
Suppliers must see

into the customers Import/export
operations and transportation
customers must see processes Establish effective
into their suppliers
Higher quality partnerships with
operation
Backhaul suppliers
minimization
148
Group technology
Lean
Quality at the source
Layouts
JIT production
Lean Uniform plant loading

Production
Schedules Kanban production control system
Specialized plants
Lean
Supply Work with suppliers
Chains
Building a lean supply chain
149
Plant layout is designed to ensure
balanced work flow with a minimum of
WIP inventory
Preventive maintenance is emphasized

to avoid downtime.
Operators perform much of the
maintenance to keep equipment reliable.
1410
Group technology: a philosophy in which similar parts
are grouped into families
The processes required to make the parts are
arranged in a manufacturing cell.
Eliminates movement and queue time between
operations, reduces inventory, and reduces employees.
Instead of Group
specialized technology
work- manufacturing
centers cells
1411
Quality at the source: do it right the first
time and if something goes wrong, stop
the process immediately
Workers are personally responsible for the
quality of their output.
Workers become their own inspectors.
Workers are empowered to do their own
maintenance.
1412
JIT production: producing what is
needed when needed and nothing more
Anything over the minimum is waste.
Typically applied to repetitive
manufacturing.
Ideal lot size is one.
Vendors ship several times a day.
JIT exposes problems otherwise hidden by
inventory
1413
1414
Freeze windows the period of
Level schedule pulls material
time during which the schedule
into final assembly at a constant
is fixed and no further changes
rate
are possible
Lean
Backflush calculation of how

Uniform plant loading
many of each part were required
smoothing the production flow
to produce the actual quantity
to dampen schedule variation
of finished products built
1415
Kanban Worker takes the first part A from a full container.
means sign
or Worker takes the withdrawal Kanban from the container and takes the
card to the machine center storage area.
instruction
card in
In machine center, worker finds a container of part A.
Japanese
Cards or Worker removes the production Kanban and replaces it with the
containers withdrawal Kanban.
are used
The freed production Kanban is placed on a rack by the machine center,
Make up the which authorizes the production of another lot of material.
Kanban pull
system The cards on the rack become the dispatch list for the machine center.
1416
Marked spaces on
Kanban the floor to identify
squares where material
should be stored
The container is
Container
used as a signal
system
device
Appropriate golf
Colored
ball signals
golf balls
production
1417
Setting up a Kanban
= Expected demand during lead time+Safety Stock
system requires Size of the container
determining the number k = number of Kanban card sets

of Kanbans cards (or
D = average number of units
containers) needed. demanded over a given time
Each container period
represents the minimum L = lead time to replenish an

production lot size. order (in same time units as
demand)
An accurate estimate of
the lead time required to S = safety stock expressed as a
percentage of demand during
produce a container is lead time
key to determining how
many Kanbans are C = container size
required.
1418
Average number of units
demanded over a given
time period (D) = 8 per
hour
Lead time to replenish an

order (L) = 4 hours
Round up to 4 containers
Safety stock (S) = 10%
Container size (C) = 10

units
1419
Reductions in setup
and changeover
times are necessary
to achieve a smooth
flow.
Kanban significantly
reduces the setup
cost.
The organization
will strive for a lot
size of one.
1420
Small specialized plants rather than large vertically
integrated manufacturing facilities
Specialized Can be constructed and operated more cheaply
plants
Important part of process
Collaboration Share projections with suppliers

with
suppliers
Link with suppliers online
1421
Value must be defined jointly for each product family based on
the customers perception.
All firms along the value stream must make an adequate

return on their investments.
Building
a Lean Firms must work together to eliminate waste (muda).
Supply
Chain When cost targets are met, firms will conduct new analyses to
identify remaining waste and set new targets.
Every participating firm has the right to examine every

activity relevant to the value stream as part of the joint search
for waste.
1422
Value stream mapping: a special type of
flowcharting tool used to analyze where
value is or is not being added as
material flows through a process
Requires a full understanding of the

business, including production processes
1423
Value stream mapping is a two-part process:
Depict the current state of the process (see Exhibit
14.8: next slide)
Map of the same process with suggested improvements
(Exhibit 14.10: see two slides over)
The future state map has been annotated using

Kaizen bursts that suggest the areas for
improvement. Kaizen bursts identify specific short-
term projects that teams work on to implement
changes to the process.
1424
Exhibit 14.10 is a totally redesigned process:
The individual production operations have been
combined into a workcell operated by three
employees.
In addition, rather than pushing material
through the system based on weekly schedules
generated by production control, the entire process
is converted to a pull system that is operated
directly in response to customer demand.
Lead time in the new system is only 5 days,
compared to the 34 days in the old system.
1425
1426
1427
1428
times
in task
Uncertainty
roles
production
Customers
in demand
Uncertainty
1429
Organize problem-solving groups
Upgrade housekeeping
Upgrade quality
Clarify process flows
Revise equipment and process technologies
Level the facility load
Eliminate unnecessary activities
Reorganize physical configuration
Introduce demand-pull scheduling
Develop supplier networks

1430

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141

Value chain - each step in the

A sale pulls a replacement from the last

This triggers an order to the factory

Each upstream station then pulls from

Suppliers must see

Lean Uniform plant loading

Preventive maintenance is emphasized

Backflush calculation of how

determining the number k = number of Kanban card sets

represents the minimum L = lead time to replenish an

Lead time to replenish an

Safety stock (S) = 10%

Container size (C) = 10

Important part of process

Collaboration Share projections with suppliers

All firms along the value stream must make an adequate

Every participating firm has the right to examine every

Requires a full understanding of the

The future state map has been annotated using

Clarify process flows

Revise equipment and process technologies

Level the facility load

Eliminate unnecessary activities

Reorganize physical configuration

Introduce demand-pull scheduling

Develop supplier networks

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