LEAN PRODUCTION
Operations Management
Ron Lembke
Waste
Waste is ‘anything other than the minimum amount of
equipment, materials, parts, space, and workers’ time
which are absolutely essential to add value to the
product.
--Shoichiro Toyoda, Chairman, Toyota Motor Co., 1992-99
If you put your mind to it, you can squeeze water from a
dry towel.
-- Eiji Toyoda, President 1967-1982
Just-in-Time

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Downstream processes take parts from upstream as
they need.
Like an American Supermarket:
 Get
what you want
 when you want it
 in the quantity you want.
7 Types of Waste (Ohno 1988)
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Overproduction
Time on Hand (waiting time)
Transportation
Stock on Hand - Inventory
Waste of Processing itself
Movement
Making Defective Products
Seven Elements to Eliminate Waste
1.
2.
3.
4.
5.
6.
7.
Focused Factories
Group Technology
Quality at the Source
JIT production
Uniform Plant Loading
Kanban production control system
Minimized setup times
1. Focused Factories

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Small, specialized plants
No huge, vertically integrated plants
Small plants easier, cheaper to build
Tom Peters, “The Pursuit of Wow.”
 Group
size of 150
 Know everyone else in the group
2. Group Technology

Products grouped into families
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Benefits

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Work cell can produce whole family
Cellular layout, not functional
Much less inventory sitting around
Less material movement
Fewer workers
Cross-training

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Keep skills sharp (managers too)
Reduce boredom & fatigue
Understand overall picture, more new ideas
3. Quality at the Source
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Do it right the first time
Stop process, correct errors immediately
Not a lot of parts to sift through to find a good one
Can’t afford high defect rates
Since low WIP, get quick feedback on errors
Lowering Inventory Reduces Waste
WIP hides problems
Lowering Inventory Reduces Waste
WIP hides problems
Lowering Inventory Reduces Waste
Reducing WIP makes
problem very visible
STOP
Lowering Inventory Reduces Waste
Remove problem, run
With less WIP
Lowering Inventory Reduces Waste
Reduce WIP again to find
new problems
Performance and WIP Level
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Less WIP means products go through system faster
reducing the WIP makes you more sensitive to
problems, helps you find problems faster
Stream and Rocks analogy:
Inventory (WIP) is like water in a stream
 It hides the rocks
 Rocks force you to keep a lot of water (WIP) in the stream

4. Just In Time-- What is It?

Just-in-Time: produce the right parts, at the right
time, in the right quantity
 Requires
repetitive, not big volume
 Batch size of one
 Short transit times, keep 0.1 days of supply
5. Uniform Plant Loading (heijunka)

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Any changes to final assembly are magnified
throughout production process
Sequencing:
If mix is 50% A, 25% B, 25% C, produce
A-B-A-C-A-B-A-C…

Takt Time

Takt time:
Beat or cycle
 Master production schedule: 10,000 /mo.
 500 day, 250 a shift
 480 minutes means 1 every 1.92 minutes

6. Kanban
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Japanese for ‘signboard’
Method for implementing JIT
In order to produce, you need both:
material to work on, and
 an available kanban.
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Each work station has a fixed # kanbans.
6. Kanban
Flow of work
1
2
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3
Worker 2 finishes a part, outbound moves over
2 has a brown triangle tag available, so 2 gets
another part to work on:
2 takes off 1’s blue circle tag giving it back to 1, and
 puts on her brown triangle tag and moves it into position.

6. Kanban
Flow of work
1
2

3
When 3 finishes a part,
 Finished
parts move over one spot
 He has to have a yellow square tag to put on,
 He gets a part from 2’s outbound pile,
 And gives the brown triangle back to 2
6. Kanban – “Pull” Production
Flow of work
1
2
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When 3 finishes a part,
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Finished parts move over one spot
He has to have a yellow square tag available to put on,
He gets a part from 2’s outbound pile,
And gives the brown triangle back to 2
3’s production will be taken by 4, offstage right.

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3
Tag goes back into 3’s bin
End customers pull products through the factory
6. Kanban – “Blocking”
2
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Worker #3 finishes his part next.
2
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3
3
But customers haven’t freed up any of the yellow square
kanbans, so there is nothing for 3 to work on now.
3 could maintain his machine, or see anyone needs help
How is this Different?
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Processes can become idled (blocked) or starved
 Starved:
authorization (kanban card) but no material to
work on
 Blocked: material to work on, but no authorization
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This makes you painfully aware of problems in your
system.
Material moves through the system so quickly no inprocess recordkeeping is needed.
Importance of Flow
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Ohno was very clear about this:
“Kanban is a tool for realizing just-in-time. For this tool to
work fairly well, the process must be managed to flow as
much as possible. This is really the basic condition. Other
important conditions are leveling the product as much as
possible, and always working in accordance with standard
work methods.
-- Ohno, 1988, p. 3
7. Setup Reduction
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Can’t afford to do huge runs
Have to produce in small batches
Toyota Die Change: 3 hours down to 3
SMED: Single Minute Exchange of Dies
 under ten minutes
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Techniques
Make internal setups into External
 Eliminate Adjustments
 Eliminate the Setup
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Continuous Process Improvement, anyone?
Lexus -- the early years
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First two Toyotas imported to U.S. 1957
 Toyopet
Crowns
Eiji Toyoda’s Ambitious Plans
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Post-WWII Japanese industry in ruins
Early 1950s – toured Rouge plant
 2,500
cars in 13 years. Ford: 8,000 per day
 “Catch up to Americans in 4 years!”
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Toyoda made delivery trucks and motorcycles, and
not many of either
Elimination of Waste
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Knew they wouldn’t beat U.S. with product
innovation, concentrated on licensing patents, and
producing more efficiently
Costs prevented mass-production, volume strategy
of American firms.
Find ways to reduce waste, cost
Shigeo Shingo (at right)
& Taiichi Ohno, pioneers
Couldn’t Emulate GM
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GM huge batches in huge factories
Japan’s area is 10% less than California and 70%
agricultural.
Put entire population of CA into 30% of state, then
add 6 times as many people. (and you thought LA
was crowded).
Land extremely expensive
Sprawling factories not an option
Small Batches
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GM’s large batches require large amounts of
storage space.
GM produces in large batches because of
significant setup costs.
If Toyota had the same large setup costs, it could
never afford small batches.
Reduce setup cost to reduce batch size.
GM didn’t think of doing this.
A contrasting opinion
“Inventory is not the root of all evil, inventory is the
flower of all evil.
- Robert Inman,
General Motors
Ask ‘Why’ 5 Times
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5W = 1H
1. Why did the machine stop? Overload and fuse blew
2.
3.
4.
5.
Why the overload? Not lubricated
Why not lubricated? Oil pump not pumping?
Why not pumping? Pump shaft worn out.
Why worn out? No screen, scrap got in
Preventative Maintenance
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Unexpected loss of production is fatal to system
and must be prevented
Additional maintenance can prevent downtime, or
minimize length of interruptions, when they do occur
Capacity Buffers
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System is inflexible, no inventory buffers, so to
respond, need excess capacity
Schedule less than 24 hours per day
‘Two-Shifting’ 4-8-4-8
Cross Training
Characteristics of JIT Partnershps
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Few, nearby suppliers
Supplier just like in-house upstream process
Long-term contract agreements
Steady supply rate
Frequent deliveries in small lots
Buyer helps suppliers meet quality
Suppliers use process control charts
Buyer schedules inbound freight
Supplier Relationships
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American model:
keep your nose out of my plant.
 Gain info to force price cuts
 Lack of trust between suppliers
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Firm encourages suppliers to share knowledge,
because they don’t worry about competing
Firm helps supplier increase quality, reduce costs
Lessons Learned from JIT
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The environment can be a control - don’t take
setups for granted
Operational details are very important (Ford,
Carnegie)
Controlling WIP is important
Flexibility is an asset
Quality can come first
Continual improvement is necessary for survival