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Lean

Manufacturing

Arun Arora – (Lecture -1)


September 16 , 2018
Lecture-1
• Module 1
– Introduction to the course
– Overall course guidelines
• Module 2
– Current global challenges and trends
• Competition
• Globalization
• Customer Preferences
• Technology
• Module 3
– Current global challenges and trends
• Government Regulations
• Uncertainty
• Environment
– What It Means

2
• Module 4
– Evolution of lean manufacturing
• Module 5
– Summary and wrap up

3
Module -1

Course Title Lean Manufacturing


Content Authors Arun Arora

No Course Objective
CO1 To familiarize students with the origins an principles of Lean
Manufacturing and Toyota Production System
CO2 To develop, among the students, an understanding of the tools of
Lean Manufacturing and Toyota Production System
CO3 To explain the softer, systemic side of Lean Manufacturing
including the role of leadership, supplier relations, and planning.
CO4 To develop, among the students, an appreciation for problem
solving, root cause analysis continual improvement and systems
thinking
Text Book(s) (T1 & T2 ) Reference book(s)( R1 to R7 )
T1 Jeffrey K. Liker, “The Toyota Way”, MaGraw-Hill Edition, New Delhi,
2004.
T2 Pascal Dennis, "Lean Production Simplified", 2nd Edition, Productivity
Press, 2007.
R1 Mike Rother, “Learning to See: Value Stream Mapping to Create Value & Eliminate
MUDA”, Lean Enterprise Institute, 2003.
R2 1. Jeffrey K Liker and Divid Meier, “The Toyota Way Field Book: A Practical Guide for
Implementing Toyota’s 4Ps”, Tata MaGraw-Hill Edition, 2006.
R3 Mike Rother, “Toyota Kata: Managing People for Improvement, Adaptiveness, and
Superior Results”, Tata MaGraw-Hill Edition, 2010.
R4 Womack, James P. and Daniel T. Jones. Lean Thinking: Banish Waste and Create Wealth
in Your Corporation, Revised and Updated, Second Edition. New York: Simon & Schuster,
2003.
R5 Womack, James P., Daniel T. Jones, and Daniel Roos. The Machine That Changed The
World: The Story of Lean Production. New York: Harper Perennial, 1991.
R6 Ohno, Taichi., The Toyota Production System: Beyond Large Scale Production. Portland,
OR: Productivity Press, 1988.
R7 Monden, Yasuhiro. Toyota Production System: An Integrated Approach to Just-In-Time,
Third Edition. Norcross, GA: Engineering and Management Press, 1998.
No Learning Outcomes
LO1 To understand and describe how Lean Manufacturing and the Toyota
Production System evolved from craft and mass manufacturing following
World War II
LO2 To gain knowledge of, and discuss, the principles and tools of Lean
Manufacturing and the Toyota Production System

LO3 To be able to identify sources of waste in systems and describe possible


ways of eliminating waste

LO4 To be able to draw value stream maps and suggest ways to improve
material and information flow in systems

LO5 To be able to differentiate between traditional attributes of traditional


management and lean leadership

LO6 To be able to describe the 5 Ss and to discuss the relevance o each in


improving productivity
L. Reference to Text
Topics/Objectives ( Mid-semester )
No Books
.
1 Introduction, manufacturing challenges, origins of the Toyoda T2 Chapter 1
family, evolution of lean manufacturing T1 Chapter 1
2 Understanding what is lean, origins of the term “lean,” elements of T2 Chapter 2
lean manufacturing, value and waste T1 Chapter 2
3 Understanding flow, Inventory, Value Stream Mapping T2 Chapter 5
T1 Chapter 8
4 Value Stream Mapping, Manufacturing Cells T2 Chapter 5
T1 Chapter 8
5 Machine Cells, Lean tools, Role of inventory, Lecture Notes
6 Short lead times, batch sizes, Poka-yoke, SMED T2 Chapter 5 and 6
T1 Chapter 9

7 Jidoka, Level production, pull, kanban, standard work T2 Chapter 4, 5 and


6
T1 Chapter 9, 11,
12
8 5 S and Visual Control T2 Chapter 3
T1 Chapter 13
L. Reference to
No.
Topics/Objectives
Text Books

9 Quality and Total Productive Maintenance in TPS T2 Chapter 3

10 The 14 Principles of Toyota way T1 Chapter 4


11 Kaizen, Continuous improvement T1 Chapter 18
T2 Chapter 7
12 The role of leadership in Lean T1 Chapter 15
13 Worker involvement, quality circles, engaging the suppliers T1 Chapter 16
and 17
T2 Chapter 7
14 What is planning? Why plan? problems with planning, hoshin T1 Chapter 19
planning, hoshin planning system T2 Chapter 8
15 Implementation of Lean, Lean as a test of hypothesis Lecture Notes
1 Special topics Lecture Notes
6
Evaluation Scheme:
No Name Type Durat Wei Day, Date, Session,
ion ght Time
EC-1 Quiz-I Online - 8%
Quiz-II Online 7%
EC-2 Mid- Closed 2 35%
Semester Book hours
Test
EC-3 Comprehensi Open 3 50%
ve Exam Book hours
• End of module 1

10
• Begin Module 2
– Current global challenges and trends
• Competition
• Globalization
• Customer Preferences
• Technology

11
Current Global Challenges
• Competition
• Globalization
• Customer Preferences
• Technology
• Government Regulations
• Uncertainty
• Environment

12
Competition
• Shrinking market share
• Lower margins
• Shorter product life cycles
• Higher variety
• Smaller volumes to depreciate fixed costs
• Globalization is an imperative
• Competition for customers as well as
employees
13
Globalization
• Goes beyond imports and exports
• Global markets and global sources
• Potential for increased markets
• Increased potential for lower costs, but
increased complexity due to international
regulations and other differences
• Greater risk due to currency fluctuations

14
Customer Preferences
• We cannot sell what we manufacture. We
must manufacture what we can sell.
• Need to reduce response and lead times
• Logistics needs to be better integrated
with the entire supply chain
• Need to keep a tight control on costs
• Need to bring new products to the market
faster
15
Technology
• Technology has to be harnessed. Don’t let
it control you
• Don’t be seduced by “sexy” gadgets
• Inefficient utilization of technology is
expensive
• Technology includes approaches such as
TQM, TPS, TPM, Six Sigma etc.

16
• End of module 2

17
• Begin Module 3
– Current global challenges and trends (contd.)
• Government Regulations
• Uncertainty
• Environment
– What It Means

18
Government Regulations
• Within a country, there may be laws
pertaining to inter-state commerce
• Environmental responsibility – green
production
• Labor laws
• Customs and other duties
• Tax laws
• Currency exchange rates
• Other
19
Uncertainty
• Growing uncertainty in the global market with
greater access to information
• Uncertainty has an impact on production and
delivery schedules and on the inventory
levels
• Some of the uncertainty is due to increased
climatic events, tsunamis, earthquakes, etc.
• There is also a growing threat due to the
increased incidence of terrorism and piracy
• Logistics systems need to be able to respond
to changing situations and conditions
20
Environmental Concerns
• Extended Producer Responsibility (EPR) is
becoming more prevalent
• Reverse logistics is assuming greater importance
as part of a company’s logistical activities
• Fuel emissions and spills and leaks in the ocean
are receiving more focus
• Companies are assuming a more responsible
position in regard to the environment
• Better planning, measurement (emissions), control
and use of sustainable technologies will have an
impact on logistics
21
What It Means
• Focus on
– The customer
– Value and waste
– Doing more with less
– The entire purchasing experience
– Flexibility
– Partnerships
– Longer term thinking
• Move away from
– Numbers games
– Fads
– Production focus alone
22
Business Formula
Selling price = Cost of manufacturing + cost
of delivery + profit

Profit = Selling price – cost of manufacturing


– cost of delivery

The critical factor is how we view the


formula
23
Competitive Priorities
• Price
– Ability to profit in price competitive markets
• Quality
– Ability to offer consistently low defect products
– Ability to provide high performance products
– Ability to provide reliable/durable product
– Ability to anticipate customer preferences
• Delivery
– Ability to provide fast deliveries
– Ability to make dependable delivery promises
– Ability to accommodate customer-generated changes
24
Competitive Priorities
• Service
– Make the purchase experience as effortless
as possible for the customer
– Ability to customize the product/service to suit
customer needs
– Ability to provide effective and efficient after-
sales service

25
• End of module 3

26
Session 1
• Begin Module 4
– Evolution of lean manufacturing

27
What is Lean?
• A lot of confusion exists about the term
• Term first mentioned in “The Machine That
Changed The World” in the 1980s
• It got further defined in “Lean Thinking” in
1994
• Today it is synonymous with Toyota
Production System

28
Evolution of Lean
• Craft manufacturing
• Mass Manufacturing
• Lean Manufacturing

29
Craft Manufacturing
• Craft Manufacturing have following
characteristics
➢ A work force comprising quasi-independent
trade man skilled at design , machining and
fitting .
➢ Low production volume and high prizes .
❖ It continues to survive in tiny niches ( small
market segment aimed at satisfying specific
market need as well as price range ) , usually
for luxury products . 30
Craft Manufacturing
• Craft Manufacturing have following
characteristics
➢ General purpose machines – used for cutting ,
drilling and grinding of parts .
➢ Decentralized organization – Small machine
shop provided most parts .The owner
coordinated the process and in direct contact
with contractors , workers and customers.
31
Craft Manufacturing
For example , companies like Lamborghini ,
Ferrari and Aston Martin continue to produce
small volumes of very high expansive
automobiles for buyers seeking prestige and
opportunity to deal directly with the factory .

32
Craft Manufacturing
It was the golden era when craftmanship counted
And companies gave personnel attention to each
Customer , but there were major disadvantages :
➢ Only the rich could afford the product
➢ Quality was unpredictable – each product was
essentially a prototype .
➢ Improvement activities were not widely shared
➢ Some trade organization saw improvement as
threat.
▪ Henry ford and F.W.Taylor sought to overcome
these problems 33
Craft Manufacturing
❖ Summary

• Each product unique


• Long lead times
• Inconsistent quality
• Close interaction between producer and
the customer
• High cost
34
Mass Manufacturing
• Advent of the moving conveyor
• Establishment of standardized,
interchangeable parts
• Development of standard methods of
production
• Increased productivity
• Lower costs

35
Mass Production Without
Variety in the 1920s
Schedule

Suppliers

Steel Stamping Painting

Mill

Foundry Fabrication Sub-assy Fin-assy


Dealers

From: “Profit Beyond Measure”, H. Thomas Johnson and


Customers
Anders Broms, 2000
36
Mass Producing Variety in
Batches by the 1970s
Forecast
Plan

Stamping
Orders

Foundry
100s
Final Dealers
0f
Power Train Assy
suppliers Whse
Body & Frame

Painting Customers

Rework
28
From: “Profit Beyond Measure”
Mass Manufacturing
• W.F. Taylor laid a foundation of mass
production .
• He systematically apply scientific principles to
manufacturing and invented industrial
engineering .
• Taylor’s system was based upon separating
planning from production .
• He emphasized ‘time’’ and ‘’motion’’ study
is the best way to do the job , leaving the
workforce to do short cycle , repetitive tasks
38
Mass Manufacturing
• His many invention included :
➢ Standardized work : Identifying the best and
easiest way to do the job .
➢ Reduced cycle time : the time it takes for given
process.
➢ Time and motion study : A tool for developing a
standardized work.
➢ Measurement and analysis to continually improve
the process ( a prototype of plan-do –act-cycle )
❖ The great pioneer of lean production from Taiichi
Ohno to Shigeo Shingo , have acknowledge their
debt to Taylor . 39
Mass Production
• Downsides( Growing dysfunction ).
– Quality
➢ End of line inspection became the norms .
➢ Quality specialists checked the finished products
➢ Army of repair technicians fixed the sub standard
products
.

40
Mass Production
• Downsides ( Growing dysfunction ) :
➢ Due to large expensive equipment that had
to be kept busy to justify the high cost,
production was in large batches, whether, or
not, this was required by the customer
➢ Due to management by numbers,
accounting became a very important
discipline. Inventory was treated as an
asset in accounting leading to high
inventories
41
Ford System
- Henry ford was trying to design a automobile that was
“Easy to manufacture’’ and Easy to repair
➢ The key to mass production was not the assembly line .
➢ It was “ Interchangeability of parts’’ and ease of assembly
➢ To achieve interchangeability , Ford used Standardized
Gauge through out his operations .
➢ Once parts could be standardized , design innovations
followed .
❖ He reduced number of moving parts in engines and
simplified the process.
❖ For example , Ford’s engine casting comprises a single
complex block , while competitors cast each cylinder
individually and bolted them together.
42
Ford System
- Henry ford was trying to design a automobile that was
“Easy to manufacture’’ and Easy to repair
➢ These innovations resulted in huge savings
➢ Parts fitting , which was expansive under craft
manufacturing was greatly reduced
➢ Easy repair by user become reachable .
➢ To reduce assembly hassles , Ford started delivering
parts to work area , thus reducing walking time of
assembly workers.
❖ He inspired the idea of moving assembly line that brought
the car past the stationary worker .
❖ Assembly line reduced walk time and linked sequential
processes .
❖ Result , slower worker speed up and faster worker slow43
slow down , achieving overall stability .
Ford System
- Henry ford’s principal innovations during this period were:
➢ Interchangeability and ease of assembly parts
➢ Reduction of actions required by each operator .
➢ Moving assembly line.
➢ These reduced the amount of efforts required to
assemble the vehicle .
❖ Cost reduction and cut price of car ..
Other’s developments
- Two other’s developments also influenced the
development of mass production :
➢ The managerial and marketing innovations of Alfred sloan
and General motors .
➢ The rise of mass production labour movement .. 44
Other’s developments
➢ Sloan recognized that mass production system required
professional management
➢ He decentralized operations into five divisions as profit
center
➢ Each profit center used standard measures to report to
senior management , which managed objectively ‘by the
numbers ‘
➢ Generally accepted accounting practice ( GAAP) Was
developed to support the system.
➢ His innovations advanced management science .
➢ Side effects of these were :
➢ Gap between management and shop floor widens
➢ Accounting practice came to encourage wasteful
manufacturing practice , building inventory than customer 45
demand
Other’s developments
➢ The rise of mass production labour movement .
➢ Mass production also proved a fertile environment for
a successful union movement
➢ The division of labour resulting in mind-numbing
and meaningless work.
➢ Role of management and union were recognized through
agreement as the nature of mass production work.
➢ Job seniority and Job right issues were addressed that
were reducing the overall efficiency of system.
➢ This is traditional mass production .

46
Mass Production
• Downsides( Growing dysfunction ) :
– Worker alienation
➢ Traditional mass production had its problem .
➢ Worker hated it , no body wanted to go at the plant
➢ Union continually fight to reduce working hours .
➢ There were little sense of partnership between
company and workers .
– Quality
➢ Defects rates were very high by current standards .
➢ Workers were not involved in organization of work
➢ They routinely withheld information that might
improve the process . 47
Mass Production
• Downsides( Growing dysfunction ) :
- Machinery
➢ Machinery became larger and larger in pursuit of
scale economies
➢ Stamping machines , eg often specialized in
stamping a single part .
➢ Higher capital costs leading to batch manufacturing
➢ Emphasized on building WIP and finished goods
inventories even absence from the customer.
➢ That also appeared as assets on company
balance sheet .
➢ Batch production also created quality problems ,a
defect would be replicated throughout the batch
before it was caught . 48
Mass Production
• Downsides( Growing dysfunction ) :
- Engineering
➢ Mass production also sowed the seeds of dysfunction in
engineering .
➢ Just as shop floor labour was minutely divided , so too
work of engineers .
➢ The led to design problem .
➢ Less engineer talk to each other , longer it took to bring a
product from design to production .
❖ Despite these problems , mass production system rolled
along
❖ US dominated the manufacturing world. It was also
diffused to Europe in Ford and GM , later in Fiat , Renault
49
Lean Production
• Evolved as a necessity
– Limited capital
– Limited space
– Need to protect domestic markets
– Focus on people and their capabilities
• Leading to
– The use of general purpose machines to produce a variety
of products in small batches
– Layouts to optimally utilize space
– Focus on quality
– Regular upgradation of people capabilities
50
Lean Production
• People policies
– Due to a major economic depression following the
war, Japan faced labor unrest when president Kiichiro
Toyoda tried to fire workers
– As part of the negotiations, workers who remained
were promised lifetime employment and were
permitted the use of company facilities – still in use
today
– Kiichiro Toyoda took responsibility for the situation
and resigned from the presidency of Toyota

51
TMMK(Toyota Motor Manufacturing ,kentuchy
(Production 1990s)
Single vehicle Batched
order orders
Stamping

Body weld Paint shop Final assy Dealers

Engine Seat
Build Plastics
Build Customers

From: “Profit Beyond Measure” 33


Lean Production
• In the spring of 1950’s
– Japanese engineer Eiji Toyada visted ford plant in
Detroit
– He studied the every corner of Rouge , world’s
biggest and most efficient manufacturing complex .
– Upon his return to Japan , Eiji Toyada and his
production genius , Taiichi ohno , concluded that
mass production system will not work in Japan.
– They also concluded , there were few possibility to
improve the production system.

53
Lean Production
• Toyota faced the daunting challenges :
– The domestic market was small and demanded
a wide range of vehicle
– The war torn Japanese economy was starved for
capital , resulting huge investment in latest
western technology was impossible .
– The outside market was full of established car
markers eager to establish themselves in Japan and
to defend their markets against Japanese exports .
– They also concluded , there were few possibility to
improve the production system.
54
Lean Production
• A novel concept :
– Employment security and involvement to reduce
wastages and improvements .
– Ohno brought together planning and production..
– Fledgling the Toyata system on Taylors ideas
• Time and motion study
• Standardized work .
• Continuous improvements
• Harmonious , humane workplace .

55
Lean Production
• Taiichi Ohno creation :
– Unavailability of capital spurred the development
of flexible , right sized machinery and quick
changeover.
– The legal restriction on worker’s layoff created the
image of company .
– Laid foundation for intense employee involvement
and problem solving .
❖ It took thirty years to perfect the system
❖ He set up OMCD ( operation management consulting
Division ) to support lean thinking in plant and
supplier . 56
Lecture -1
• End of module 4

58
Lecture - 1
• Begin Module 5
– Summary and wrap up

59
Summary
• Current business climate poses pressure
on manufacturers to be responsive and
efficient
• Manufacturers need to be able to meet
varied demand while controlling costs
• Lean grew as a response to meet the
requirements of a demanding customer
• Lean manufacturing evolved from craft
and mass manufacturing
60
Summary
• Craft manufacturing was close to the customer
but with no standardization and at a high cost
• Mass manufacturing brought about
standardization and low product cost, but with
distance from the customer and alienation of the
workers
• Lean manufacturing brings some of the benefits
of craft and mass manufacturing together

61
Session 1
• End Module 5
– Summary and wrap up

62