Koç University Graduate School of Business
MBA Program
OPSM 501: Operations Management
Week 9:
Littlefield reflections
Lean Thinking
Zeynep Aksin
zaksin@ku.edu.tr
Toyota Production System:
Why did TPS develop?
 Economic conditions in Japan after WWII:
- low income
- low labour productivity
- low economies of scale compared to US
 But car buyers wanted to be offered variety,quality,
timeliness and a reasonable price.
Toyota was challenged to cut cost dramatically
TPS - aimed at cost reduction by
thoroughly eliminating waste.
Zero non-value added
activities (muda)
.
Zero defects, zero breakdowns, zero inventory, zero set-up
Production flow synchronized with demand (JIT)
Quality methods to reduce defects
One-unit-at-a-time flow
Fool-proofing (poka-yoke) and visual feed-back
Mixed model production (heijunka)
Detect-stop-alert (Jidoka)
.
Piece-by-piece transfer (ikko-nagashi)
Defects at machines (original Jidoka)
Match production demand based on Takt time
Defects in assembly (Andon cord)
Pull instead of push
Build-in-quality (tsukurikomi)
Supermarket / Kanban
Make-to-order
Reduce inventory to
expose defects
Flexibility
Adjustment of capacity to meet takt-time
Multi-task assignment (takotei-mochi)
Standardization of work
Reduction of Variability
Quartile Analysis
Standard operating procedures
Worker involvement
Quality circles (Kaizen)
Fishbone diagrams (Ishikawa)
Skill development / X-training
The Shingo System: Fail-Safe Design
 Shingo’s argument:
–
–
Defects arise when people make errors
Defects can be prevented by providing employees with feedback
on errors and putting controls in the process
 Poka-Yoke includes:
– Checklists
– Special tooling that prevents employees from making errors
– (Poka-Yoke: Japanese slang for “avoiding inadvertent errors” )
Which dial turns on the burner?
Stove A
Stove B
Pareto Analysis
Percentage
-100%
Frequency
-50%
A
B
C
D
E
F
-0%
Pareto Law (80/20 Rule):
“80 percent of the problems are due to 20 percent of the causes”
Fish-Bone Diagram
 Also known as cause-and-effect diagram, or
Ishikawa diagram
 Pareto analysis is used to identify key problems
or symptoms,
 Fish-Bone diagram is used to sort causes of the
problems
 Brain storming sessions of groups of workers
needed
 It is a very valuable educational tool
Fish-Bone Diagram
 Used to find problem sources/solutions
 Other names
– Fish-bone diagram, Ishikawa diagram
 Steps
– Identify problem to correct
– Draw main causes for problem as ‘bones’
– Ask ‘What could have caused problems in these
areas?’ Repeat for each sub-area.
Cause-and-Effect Diagram
(Fishbone Diagram)
The System of Lean Production (Toyota, Citroen, …)
Principles
Zero Inventories
Zero Defects
Flexibility / Zero set-ups
Zero breakdowns
Zero handling / non
value added
Organization
Autonomation
Competence and Training
Continuous Improvement
Quality at the source
Methods
Just-in-time Production
• Kanban
• Classical Push
• “Real” Just-in-time
Mixed Production
Set-up reduction
Inventory in process
Principles of Lean Production:
Zero Inventory and Zero Defects
• Avoid unnecessary inventory
• To be seen more as an ideal
• Two types of (bad) inventory:
a. resulting from defects / rework
b. absence of a smooth process flow
• Remember the other costs of inventory (capital, flow time)
Pictures: Citroen
Buffer argument:
“Increase inventory”
Toyota argument:
“Decrease inventory”
Principles of Lean Production:
Zero Set-ups, Zero NVA and Zero
Breakdowns
Avoid Non-value-added activities,
specifically rework and set-ups
• Flexible machines with short set-ups
• Allows production in small lots
• Real time with demand
• Large variety
• Maximize uptime
• Without inventory, any breakdown
will put production to an end
• preventive maintenance
Methods of Lean Production: Just-in-time
Push: make to forecast
• Classical MRP way
• Based on forecasts
• Push, not pull
• Still applicable for
low cost parts
Pull: Synchronized production
• Part produced for specific
order (at supplier)
• shipped right to assembly
• real-time synchronization
• for large parts (seat)
• inspected at source
Pull: Kanban
• Visual way to implement a pull system
• Amount of WIP is determined by
number of cards
• Kanban = Sign board
• Work needs to be authorized by demand
Methods of Lean Production:
Mixed Production and Set-up reduction
Production with large batches
Cycle
Cycle
Inventory
Inventory
Beginning of
Month
End of
Month
Production with small batches
Produce Sedan
Produce Sedan
Produce Station wagon
Produce Station wagon
Beginning of
Month
End of
Month
Organization of Lean Production:
Autonomation and Training
• Automation with a human touch
• Create local decision making rather
than pure focus on execution
• Use machines / tools, but avoid the
lights-off factory
• Cross training of workers
• Develop problem solving skills
10-15
Organization of Lean Production:
Continuous Improvement and Quality-at-thesource
• Solve the problems where they occur
- this is where the knowledge is
- this is the cheapest place
Defect found
End User
Own Process Next Process End of Line Final
Inspection
$
$
$
$
$
• very minor • minor
delay
• Rework
• Significant
• Reschedule
Rework
• Delayed
Defect fixed
delivery
• Overhead
• Warranty
cost
• recalls
• reputation
• overhead
• Traditional: inspect and rework
at the end of the process
• Once problem is detected, send
alarm and potentially stop
the production
10-16
Continuous Improvement
 Represents continual improvement of
process & customer satisfaction
 Involves all operations
& work units
 Other names
– Kaizen (Japanese)
– Zero-defects
– Six sigma
Process Improvement
 Measurement
– External and Internal
 Analysis
– Analyze Variation
 Control
– Adjust Process
 Improvement
– Reduce Variation
 Innovation
– Redesign
Product/Process
P
D
C
A
Innovate
P
D
C
A
Control
Improve
Improve
The River Analogy
Defects
Defective Materials
Machine Breakdowns
Long Set ups
Long Lead times
Unsuitable Equipment
Uneven Schedules
Unreliable Suppliers
Inefficient Layouts
Absenteeism
Rigid Work Rules
Ongoing objectives
 Improve process flows
– Efficient plant layout
– Fast and accurate flow of material and information
 Increase process flexibility
– Reduce changeover times
– Cross-training
 Decrease process variability
– Flow rates
– Processing times
– Quality
 Minimize processing costs
– Eliminate transportation, inspection, rework
How?
 Improve process flows
– Cellular layouts
– Demand pull mechanisms
 Increase process flexibility
– Fast changeovers
– Smaller lotsizes, level production
 Decrease process variability
–
–
–
–
Standardize
Improve supplier reliability and capacity
Safety capacity, preventive maintenance
Fast feedback and correction
 Minimize processing costs
– Improve quality, eliminate non-value-adding activities
Beyond production: Shouldice as a lean
enterprise
Shouldice
General Hospital
Focus on low risk cases
No focus, multiple goals
Clear single value prop.
Confusion of value prop.
Predictable process
Unpredictable process
Strive for perfection
Strive for threshold perf.
Eliminate waste
Tolerate some excess
Manage patient flows
View patients as functional tasks
Pull patients into process
Push patients through process
Womack and Jones (2000) From Lean Production to Lean Enterprise, HBR March-April 1994
Beyond production: Zara as a lean
enterprise
Zara
M&S
Clear focus on one customer type
and one process
No focus, multiple and
simultaneous goals
Unique and clear value prop.
Confusion of implicit value
proposition
Predictable process
Unpredictable and fuzzy process
Strive for perfection
Satisfied with threshold
performance
Eliminate waste
Tolerate some excess
Manage customer flows
View customers as a sequence of
tasks
Pull customers into process
Pushes customers through the
system
Some Japanese






Poka-Yoke
Kaizen
Muda
Jidoka
Heijunka
Kanban
Class next week
 Topic (newsvendor) not included in midterm
 However there is an in-class activity
 Please bring your laptop to class, will use some
Excel files to do an in-class exercise
 Will do it in pairs; one laptop per two is enough
but make sure you coordinate with each other
Midterm exam next week
 Study from the notes and book
 Solve some problems from the book: practicing
by solving problems is essential for success
 Go over cases and in-class exercises, games,
etc.