INTRODUCTION

to
Operations Management
Chapter 7, Lean Thinking and Lean Systems

5e, Schroeder
McGraw-Hill/Irwin

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter Outline
Evolution of Lean
Lean Tenets
The Lean System
Stabilizing the Master Schedule
Controlling Flow with the Kanban System
Reducing Setup Time and Lot Sizes
Changing Layout and Maintaining Equipment
Cross-Training, Rewarding, and Engaging Workers
Guaranteeing Quality
Changing Relationships with Suppliers
Implementation of Lean
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Evolution of Lean
Toyota Production System (TPS)
Developed in the 1960s in Japan
Also known as Just-in-Time (JIT) manufacturing

First introduced into U.S.A. in 1981 at Kawasaki

motorcycle plant in Lincoln, Nebraska
Lean Production
Term coined in late 1980s
Popularized in 1990s by Womack, Jones & Roos,
The Machine That Changed the World
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Lean Tenets
Specify exactly what creates value
Improve the value stream
Design the flow to avoid waste
Produce only what the customer pulls
Strive for perfection

5 Whys
5S
Poka-yoke (mistake proofing)
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Elements of Lean System

Level master schedule
Use of Kanban system
Small lot sizes (lot size one)
Quick changeover (set-ups)
Multifunction workers
Efficient layout (linear flow, low inventories)
Quality and continuous improvement
Close relationships with suppliers
Frequent deliveries from vendors
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The Seven Wastes

Overproduction: Producing more than the demand for customers resulting in unnecessary
inventory, handling, paperwork, and warehouse space.
Waiting Time: Operators and machines waiting for parts or work to arrive from suppliers
or other operations. Customers waiting in line.
Unnecessary Transportation: Double or triple movement of materials due to poor
layouts, lack of coordination and workplace organization.
Excess Processing: Poor design or inadequate maintenance or processes requiring
additional labor or machine time.
Too much Inventory: Excess inventory due to large lot sizes, obsolete items, poor
forecasts or improper production planning.
Unnecessary Motion: Wasted movements of people or extra walking to get materials.
Defects: Use of materials, labor and capacity for production of defects, sorting our bad
parts or warranty costs with customers.

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Inventory as Waste
If all our suppliers are guessing, you end
up with inventory, which is the physical
embodiment of bad information.
Paul Bell, Dell, Inc. Europe.
Source: Economist, 1 April 2000, p. 57.

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Water Level

Figure 7.2, Inventory Covers

Problems

Bad
Design
Lengthy
Setups
Inefficient
Layout

Poor
Quality
Machine
Breakdown

Unreliable
Supplier

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Water Level Lowered To Expose

Problems

Water Level

Bad
Design
Lengthy
Setups
Inefficient
Layout

Poor
Quality
Machine
Breakdown

Unreliable
Supplier

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Water Level

Water Flows Smoothly

(Problems Pulverized)

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The Lean System

Affects every aspect of plant operations

Lot sizing
Scheduling
Layout
Suppliers
Labor relations

Affects the rest of the firm

Engineering
Marketing
HR
Finance
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Stabilizing the Master Schedule

Production horizon set according to demand
Production schedule repeated each day
Supply & demand matched through takt
time concept (speed of output)
Level production to create uniform load
Strive for production of lot size one
Produce the right quantity each dayno
more and no less.
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Kanban System
Kanban means marker
A pull production system
A physical (normally visual) control system
Normally composed of cards and containers
(production card and withdrawal card), but
can be any type of signal
Number of containers: n DT
C

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The Kanban System

Signals the need for more parts
The Kanban system uses simple cards or signals to
strictly control production
The basic idea is that no station is permitted to
produce more than is immediately required by the
succeeding station
This simple idea prevents the buildup of inventory
Reducing lead time is the key
No computer is required!
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Figure 7.4: Kanban System

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Figure 7.5: Kanban Cards

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Examples of Kanban Signals

Kanban cards
Tags on a board
Golf balls
Lights
Faxes/phone calls
Yelling
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Reducing Setup Times and Lot Sizes

Reducing setup times:

increases available capacity

increases flexibility
reduces inventory

Reduce setup times and run times simultaneously

to reduce lot sizes and throughput times
Single-digit setup Times (Shigeo Shingo [d. 1990]
or SMED System)
Small lots require short setups!
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Figure 7.7: Initial Layout Before Lean

Work Centers

Final
Assembly

Stockrooms
Supplier A

Supplier B

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Lean Layout
Final
Assembly

Supplier A

Supplier B

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Lean Layout with Group Technology

Final
Assembly

Line 1

Line 2

Supplier A

Supplier B

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Engaging Workers
Multifunction workers
Cross-training
New pay system to reflect skills variety
Teamwork
Suggestion systems
Need full worker understanding and
cooperation
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Guaranteeing Quality
Quality is essential in a lean system
Defects produce waste
No inventory to cover up mistakes
Defects discovered quickly by the next process
System designed to expose errors and get them
corrected
Makes continuous improvement possible
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Changing Relationships with

Suppliers
Suppliers required to make radical changes
Viewed as the external factory
Co-location
Fewer suppliers
Frequent deliveries to production line
No inspectionhigh quality
Integrated supplier programs
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Features of Integrated Supplier Programs

1. Early supplier selection, preferably in the
2.
3.
4.

design phase
Family of part sourcing to allow supplier to
take advantage of Group Technology
Long-term relationships with small number of
suppliers
Paperwork reduction in receiving and
inspection to reduce costs
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Implementation of Lean Systems

Establish a cross-functional team
Determine what value the customer needs
Construct a value stream map and use it to eliminate
waste
Flow or pull demand from the customer
Implement the changes
Repeat the cycle on another process

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Summary
Evolution of Lean
Lean Tenets
The Lean System
Stabilizing the Master Schedule
Controlling Flow with the Kanban System
Reducing Setup Time and Lot Sizes
Changing Layout and Maintaining Equipment
Cross-Training, Rewarding, and Engaging Workers
Guaranteeing Quality
Changing Relationships with Suppliers
Implementation of Lean
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End of Chapter Seven

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