169 8 Lean Manufacturing Adi Choudri The term “lean” has been coined relatively recently to summarize Japanese manu- facturing philosophy, especially as exemplified by the Toyota system. Lean practices have appeared in other forms such as “just-in time” manufacturing, and “synchro- nous” or “quick response” manufacturing in the sense that the underlying concepts are the same. The survival of an organization, whether profit or nonprofit, manufac- turing or service oriented, may ultimately depend on its ability to systematically and continuously eliminate waste and add value to its products from its customers’ perspective. Interestingly, lean practices in their simplest form are founded on common sense, and most of them are not even proprietary to any company. The business objective of lean is to make high-quality products at a lower cost with speed and agility (Figure 8.1). This can certainly lead to an expanded customer base, greater business and employment stability, and increased shareholder value. Because we are not talking about a magical approach here, this generally means that the relative success of lean manufacturing in a specific setting depends on how well the cultural, behavioral, and strategic aspects of the corporate entity were addressed during the lean journey. This also means that the vigor and sincerity of people, both hands-on and off-the-floor, will drive and guide the success of the lean approach. Lean practices are designed to eliminate waste and enhance the value of the company’s products to its customers. Lean businesses compete by creating temporary cost, quality, and speed advantages in focused business areas, but they cannot remain stagnant and rest on their laurels because, as mentioned before, these practices can and will be used by competitors probably with lessons learned. The only way to counter this is to develop a corporate mindset where everyone is focused on con- tinuous improvement every day in everything they do leading to customer delight. Lean manufacturing is not a secret technology in either the product or the process. It can be applied to all kinds of industries and all types of companies, including high volume, job shop, or process. We also know now that the culture and value system of the workforce probably have less to do with the success of lean. The key to lean manufacturing success lies in the careful integration of production and management practices into a complete management system that generates a collaborative atmosphere of mutual trust and respect between management and labor. Many manufacturing and management practices can be implemented individually and may result in cost and quality improvements. Such gradual change is consistent with the lean concept of continuous improvement and is frequently practiced by many corporations during their initial lean journey. However, an accelerating rate of improvement results when the different subsystems of the lean manufacturing system are in place and have been so for several years. For example, it is often found SL3003Ch08Frame Page 169 Friday, November 9, 2001 1:52 PM © 2002 by CRC Press LLC 170 The Manufacturing Handbook of Best Practices that sometimes a company will start with a total preventative maintenance (TPM) effort because it was having difficulty with equipment uptime or frequent production disruption due to breakdowns. In some cases (Figure 8.2), the company starts on the lean journey with a total quality management approach to improve yield or process capability and eventually ends up addressing all the subsystems of the lean manufacturing system. Sometimes a company can do a lean self-assessment as shown in Appendix 8.1 to get a feel for where its initial shortcomings are, and develop a lean implementation plan. It is important to note that a manufacturing company eventually needs to address all the different aspects of lean, no matter where it starts its lean journey, and must continue on that path until perfection is reached. 8.1 LEAN MANUFACTURING CONCEPTS AND TOOLS These concepts and tools can be organized into three levels. The first level encom- passes lean manufacturing objectives and basic principles such as value and waste. These are general concepts, which should be taught to all the employees of a lean manufacturing enterprise, and are increasingly being applied to nonmanufacturing support areas such as product development or business processes. FIGURE 8.1 Quality and cost. FIGURE 8.2 Lean start wheel. Quality Cost Lean Journey with Accelerating Speed People SL3003Ch08Frame Page 170 Friday, November 9, 2001 1:52 PM © 2002 by CRC Press LLC Lean Manufacturing 171 The next level contains lean manufacturing primary management and production strategies used to achieve the objectives and instill basic principles. The strategies are general rules for management behavior, and support one another as well as the basic principles. The third level of lean manufacturing consists of implementation techniques, which are the practices and procedures for implementing and maintain- ing the strategies. Although these levels are somewhat arbitrary and are not always followed rigorously outside the Toyota production system, it is important to note that each level is built on the solid foundation of the previous level. It helps under- score the point that without the complete system, long-term lean manufacturing success is not sustainable. Lean manufacturing objectives and principles are adapted from the Toyota produc- tion system and over the years have been enhanced by lean practitioners such as Jim Womack, Dr. Schoenberger, and numerous corporations and nonprofit organizations such as Lean Aerospace Initiative at MIT, Lean Enterprise Institute, and others. 8.1.1 L EAN O BJECTIVES The basic business objective of a manufacturing corporation is long-term profitability because it is essential to the continued existence of any corporation. To achieve long- term profitability, a company must (1) produce products with quality consistently as high as the best in its class, (2) ensure that production costs are competitive with most manufacturers, and (3) deliver a product–service mix that is competitive with the best in its class as well. Lean manufacturing helps a company stay competitive by serving its customers better and continuously reducing costs. Lean gives customers the product variety they want, in the quantity they want, and without paying extra for a small-lot size. Lean makes a company flexible enough so that customer demands for change can be accommodated quickly, using lean techniques such as small-lot production. Why do we need lean manufacturing? Simply, the answer is profit squeeze (Figure 8.3). In the past, companies simply passed costs on to the customer. The pricing formula was Cost + Profit = Price In today’s competitive market, customers insist on a competitive market as well as world-class quality and product features. This means that companies must reduce costs to make a profit: Price – Cost = Profit Lean manufacturing gives a company a key competitive advantage by allowing it to build high-quality products inexpensively because consumers, not manufacturers , set prices and determine the acceptability of the products and services they use. Lean manufacturing achieves the above three objectives by adhering to three key basic principles: definition of value, elimination of waste, and support the worker. SL3003Ch08Frame Page 171 Friday, November 9, 2001 1:52 PM © 2002 by CRC Press LLC 172 The Manufacturing Handbook of Best Practices These are shown in the basic lean manufacturing model (Figure 8.7). In addition, lean manufacturing can provide significant other benefits as demonstrated in Figure 8.4. FIGURE 8.3 Price – profit = cost equation. FIGURE 8.4 Typical lean benefits. 0 Left to Right 0 Left to Right Costs must be targeted Profit Cost Price Profit Cost Market Price BEFORE NOW Traditional Lean –100% –90% –80% –70% –60% –50% –40% –30% –20% –10% 0% Setup Time Lead Time Cycle Time Downtime # of Operators WIP Final Goods Inventory Distance Traveled–Part Floor Space Parts Required–Unit Cost Quality Rejects Rework Scrap Equip Req'd. Benefit %Reduction SL3003Ch08Frame Page 172 Friday, November 9, 2001 1:52 PM © 2002 by CRC Press LLC Lean Manufacturing 173 8.1.2 D EFINE V ALUE P RINCIPLE Whatever business a company is engaged in, before it starts on the lean journey, it helps to take a hard look at the existing product lines and how they are adding value for its customers. Ultimately, only the customer can define value. Value for a product or service is usually a function of price and the customer’s needs or requirements at a given time. Products with a complex customized design and sophisticated processing technologies are of little value if they do not satisfy the customer’s needs at a specific price and time. The employees or the suppliers of the corporation do not decide value, either. A stable workforce and a long-term network of suppliers may be necessary for the lean manufacturing system to work, but they do not define value. With the advent of information technology, especially the Internet, there have been significant advancements in the area of customer relationship management and product cus- tomization for individual customers. Several companies have started to define value based on individual customer choices and preferences. Value must be defined only from the ultimate customer’s perspective and should not be skewed by preexisting organizations, technologies, and undepreciated assets or even economy-of-scale considerations. The fundamental question that must be asked about any activity or product feature is whether the customer is willing to pay even a cent more for this processing step or that product feature? Everyone in the organization will not initially grasp this definition of value; however, this is the first step in the lean implementation process. 8.1.3 I DENTIFY V ALUE S TREAM Typically, in a manufacturing organization, products and services are provided to an existing base of customers. For any given product line, a value stream can be identified. These are all the specific actions required to bring a specific product or service through the three critical sets of tasks: (1) information management tasks , which consist of activities from order taking through detailed scheduling to delivery through its distribution channels to the ultimate customer; (2) physical transformation tasks , which convert raw materials to finished product through a series of processing steps; and (3) problem-solving tasks, which usually consist of activities such as bid and proposal through product design and prototyping. To keep things simple, a value-stream map for information and transformation tasks should be created for each product or product family. Tools and techniques for value-stream mapping for problem-solving tasks, such as product development, are still emerging and will be touched on briefly later in this chapter. A value- stream map will typically show how various activities are performed to move the final product from supplier to customer. Many of these activities will be value added as well as nonvalue added (waste), which have somehow existed in the organization for a variety of reasons. SL3003Ch08Frame Page 173 Friday, November 9, 2001 1:52 PM © 2002 by CRC Press LLC 174 The Manufacturing Handbook of Best Practices 8.2 ELIMINATION OF WASTE PRINCIPLE 8.2.1 D EFINITION OF W ASTE Waste, or muda, as it is known in the Toyota production system, is defined as any activity that absorbs resources such as cost or time but adds no value. Waste can be classified in a couple of different ways. Eliminating waste is a basic principle of the lean manufacturing system. To systematically eliminate waste, detailed concepts concerning the nature of the waste and its implication in manufacturing inefficiencies must be taught to every member of the organization. Whether analyzing worker operations, production, or production processes themselves, two fundamental types of waste must be considered: obvious (Type I) and hidden (Type II). Obvious waste is something that is easily recognizable and can be eliminated immediately with little or no cost. For example, an operator’s time spent cleaning up parts may be absolutely necessary unless arrangements can be made for parts to arrive ready to use. On the other hand, hidden waste refers to aspects of lean manufacturing that appear to be absolutely necessary under the current methods of operation, technology, or policy constraints but could be eliminated if improved methods were adopted. For example, using X-rays to inspect welds may be needed until welding technology improves. Either type of waste can further be classified into seven different categories. It is important to recognize and understand these, because equipped with this knowl- edge, one could simply walk through the shop floor and find many ways to eliminate waste immediately. 8.2.2 W ASTE OF O VERPRODUCTION This waste happens when companies produce finished products or work-in-process (WIP) for which they do not have customer orders, or they produce parts faster than required by the downstream process. Companies overproduce for a variety of rea- sons. Large-lot production, long machine setups, and making up for poor quality are some of them. Part of the root cause of this waste may be the logic of “Just in case somebody needs it,” an uneven production schedule, fear of worker idle time, or a misuse of automation, so that parts are produced unnecessarily to justify a large capital investment. 8.2.3 W ASTE OF I NVENTORY Inventory is an accumulation of finished products, WIP, and raw materials at all stages of the production process. Express inventory is usually a symptom of many other underlying problems such as defects, production imbalances, long setups, equipment downtime, and late or defective deliveries from suppliers. There are major costs associated with excess inventory. First, it hides process problems so people are not motivated to make improvements. Second, when processes make excess inventory, these items must be moved and stored, using up conveyors and forklifts and the time of the people who run them. This transport adds cost but provides no SL3003Ch08Frame Page 174 Friday, November 9, 2001 1:52 PM © 2002 by CRC Press LLC Lean Manufacturing 175 added value. Third, companies pay to carry this extra inventory in terms of floor space, people to keep track of stores, and other resources such as computer systems and support personnel. Fourth, inventory increases lead time and response time to the customer. Fifth, inventory can lead to handling damage due to excessive transport. Sixth, items can deteriorate over time and become obsolete due to changes in technology or customer demand. Finally, inventory is wasteful in itself because the company uses people, equipment, material and other resources to produce it; as long as that inventory stays in the plant or warehouse, the company is not repaid for its investment in these resources. As a matter of fact, that is why inventory is carried on the books as an asset. Inventory waste affects every production process that depends on a previous process for parts and materials. The impact of inventory is shown in Figure 8.5. When a plant has many products and processes, each handling items in large lots, the cumulative waste and foregone cost savings can be enormous — it has been estimated at 20 to 40% of a company’s revenue. To eliminate this waste, companies use the “pull system” to produce those items in the right amount and at the right time to satisfy customer need. It must be noted that inventory typically exists for a variety of reasons, and those underlying causes must be addressed before an attempt is made to reduce inventory. 8.2.4 W ASTE OF C ORRECTION Correcting or repairing a defect in materials or parts adds unnecessary costs because additional equipment, labor, and material will be needed. Other costs may be a delay in delivering orders to the customer or having to maintain excess inventory to make up for quality problems. Severe quality problems can create lower customer confidence FIGURE 8.5 Impact of inventory. Overproduction Inventory Wasted Space Transport/ handling Equipment People Storage Cost Obsolescence Energy Long lead-time Resource Tied up Defects Hidden Problems Uneven production Downtime Late deliveries SL3003Ch08Frame Page 175 Friday, November 9, 2001 1:52 PM © 2002 by CRC Press LLC 176 The Manufacturing Handbook of Best Practices and lead to the loss of future business. Some of the causes of this waste may be weak process control, poor product design, deficient equipment maintenance, inad- equate measurement systems, or ineffective worker training. The relationship between this waste and JIT is not always easily understood. Frequently companies undertake major quality or lean initiatives as if they are separate efforts. A lean manufacturing system such as JIT assumes high-quality outputs at all process levels. As a matter of fact, attempting to implement JIT without improving quality could be detrimental. 8.2.5 W ASTE OF M OVEMENT Any material, people, or information movement that does not directly support adding value for the customer is a waste. Poor shop layout, poor workplace organization and housekeeping, wrong work-order information, mislocated material, or excessive inspections can lead to this type of waste. Frequently, “spaghetti maps” or detailed “process maps,” as shown in Appendix 8.2, will identify this kind of waste. Both of these techniques follow the material from start to finish and take detailed observation of the movements of both material and people. Appendix 8.3 provides a blank form for collecting distances and cycle time information for a process step. 8.2.6 W ASTE OF M OTION Any motion of people or machines that does not add value to the product or service is a waste. This can lead to operator fatigue or wear and tear on machines and could sometimes lead to injury. Poor process design, an ineffective human-machine inter- face, bad workplace design, or inadequate planning generally causes this waste. 8.2.7 W ASTE OF W AITING This is probably one of the most pervasive areas of waste, especially in the factory floor processes, and it happens when people, equipment, or material wait for each other or for information. This can happen as a result of poor quality in upstream operations, a poor or uneven schedule, unreliable suppliers, or poor equipment reliability. Poor communication is also a frequent contributor to this waste. A related waste is worker frustration or loss of productivity. Lean manufacturing assumes that most people come to work to be productive and add value. 8.2.8 W ASTE OF O VERPROCESSING Processing efforts or steps that add no value to the product or service from the customer’s perspective can lead to this waste. Factors involved can include redundant approvals, poorly defined customer requirements, and redundant steps to make up for lack of process quality. Typing a note on good paper when a quick hand note on scrap paper will do is an example of this. Inspecting a part surface when the surface will later be machined off is another example. SL3003Ch08Frame Page 176 Friday, November 9, 2001 1:52 PM © 2002 by CRC Press LLC Lean Manufacturing 177 8.2.9 I MPACT OF W ASTE For a variety of reasons most manufacturing corporations do not realize the true impact of all these wastes. It may be due to lack of accounting tools that capture true costs, lack of awareness, or simply an acceptance of the way things have always been done. This is depicted in Figure 8.6. Closely related to the concepts of waste are two other lean manufacturing concepts: unevenness ( mura ) and overburden ( muri ). A lean manufacturing system is concerned with unevenness in workloads, schedules, material placement, or other aspects of the production process because unevenness contributes to waste and inefficiency. Similarly, overburdening workers, parts, tools, or machines is also seen as a cause of waste and inefficiency. 8.3 SUPPORT THE WORKERS PRINCIPLE Supporting the workers involves providing production workers with the tools, train- ing, and management support necessary to do their jobs effectively, combined with a policy that commits to “lay off as the last resort.” Although all employees are part of a lean manufacturing system, production work- ers’ needs take priority. Production workers or service providers are seen as the primary FIGURE 8.6 Traditional QC&Ls. Scrap Rework Inspection Warranty Rejects Traditional QC&Ls 5-8% 5–8% Lost Opportunity Lost sales Late delivery Engineering change orders Long cycle times Expediting costs Excess inventory (less obvious) Lost customer loyalty Long set-ups Time value of money Working capital Excessive material orders / planning 15-20% 15-20% The costs of the Hidden Factors are less obvious, but offer much more opportunity to improve. The costs of the Hidden Factors are less obvious, but offer much more opportunity to improve. SL3003Ch08Frame Page 177 Friday, November 9, 2001 1:52 PM © 2002 by CRC Press LLC 178 The Manufacturing Handbook of Best Practices value-adding agents because they directly manufacture or assemble parts or provide service. Since other labor does not directly add value to the product, it is justified only if it clearly supports direct production or if it helps tap the creative potential of workers who are directly involved in value-added activities. This principle includes support for work and nonwork needs. The system places high priority on providing good tools, machines that work, parts that fit, and the training required to the job effectively. Beyond work needs, the principle extends to workers’ needs for input into decisions which affect them and for recognition and respect. A truly successful lean manufacturing system treats every worker as a valued asset and recognizes the fact that employees at all organizational levels have unique talents and abilities that can make positive and significant contributions to the organization. Providing opportunities for employee involvement and recognition through techniques such as kaizen is therefore viewed as an important element in tapping their creative potentials. Thus, lean manufacturing managers and supervisors should be encouraged to build close relationships with work- ers. Workers are encouraged to know their teammates as individuals and not just co- workers. This encouragement may include off-hours socializing, some of it company paid. This focus on people as the most important asset should be reflected in the way people are hired, trained, and treated. These three basic principles are implemented by several key strategies and implementation techniques described below in a lean manufacturing system. As illustrated in Figure 8.7, these strategies and techniques form the building blocks of the whole system and will produce only partial and temporary benefits if imple- mented in isolation. The strategies are general guidelines for management behavior, FIGURE 8.7 System building blocks. Long- Term Profitability Quality, Cost and Delivery (QCD) Define Value Eliminate Waste Support the Workers Strategies Implementation Techniques Business Objectives Operating Objective Basic Principles SL3003Ch08Frame Page 178 Friday, November 9, 2001 1:52 PM © 2002 by CRC Press LLC [...]... Comments 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 199 © 2002 by CRC Press LLC SL3003Ch08Frame Page 199 Friday, November 9, 2001 1:52 PM Lean Manufacturing APPENDIX 8. 3 Process Map Data Sheet Spreadsheet format (tabular form) SL3003Ch08Frame Page 200 Friday, November 9, 2001 1:52 PM 200 The Manufacturing Handbook of Best Practices APPENDIX 8. 4 5S Evaluation Check Sheet Area Number of Problems Workplace... tools, and use of gauges, as well as be supported by a strong preventive maintenance program to assure that equipment works reliably Visual control and 5S techniques highlight problems and bring quality issues to the forefront © 2002 by CRC Press LLC SL3003Ch08Frame Page 184 Friday, November 9, 2001 1:52 PM 184 The Manufacturing Handbook of Best Practices 8. 5.1 POKA-YOKE DEVICE (MISTAKE PROOFING) Another... define the path of travel of a typical part Actually, drawing a spaghetti map of the routings of various components can sometimes be real eye-opener A process-based layout © 2002 by CRC Press LLC SL3003Ch08Frame Page 187 Friday, November 9, 2001 1:52 PM Lean Manufacturing 187 Cell B Cell A Lathe Mill Lathe Mill Drill Drill Shared X-ray FIGURE 8. 10 Process-based layout allows material and parts to flow... techniques such as standardized work and job rotation, they result © 2002 by CRC Press LLC SL3003Ch08Frame Page 188 Friday, November 9, 2001 1:52 PM 188 The Manufacturing Handbook of Best Practices Establish Vision and Objectives Form Steering Committee Identify Champion & Process Owner Define Scope, Business Case of Kaizen Implementation Define Skills and Resources for the Kaizen Team Conduct the Kaizen Event... STRATEGY In a pull system, the coordination of production and the movement of parts and components between processes is critical to avoid either excess or shortages To achieve this, many companies use a system called kanban This means cards or © 2002 by CRC Press LLC SL3003Ch08Frame Page 180 Friday, November 9, 2001 1:52 PM 180 The Manufacturing Handbook of Best Practices signal in Japanese These visual... COMPUTER SIGNALS 1 5 6 7 8 9 FIGURE 8. 8 What is kanban? planning to build batches of 12 As and 6 Bs, then what they really should do is to make 2As followed by a B all day long each day rather than doing 18 As today and 12 Bs tomorrow This is one of the counterintuitive aspects of lean This leveling of the schedule accomplishes a steady demand of resources, shortens the lead time of individual product... types of kanban cards: • Move kanban authorizes a process to get parts from the previous process • Production kanban authorizes the previous process to produce more parts • Supplier kanban authorizes an outside supplier to deliver more parts Examples of different forms of kanban are shown in Figure 8. 8 They all serve the purpose of communicating requirements between upstream and downstream processes 8. 4.2... keep the equipment from © 2002 by CRC Press LLC SL3003Ch08Frame Page 186 Friday, November 9, 2001 1:52 PM 186 The Manufacturing Handbook of Best Practices Machine Shop Weld Shop 1 Lathe Lathe wip Lathe Lathe 4 wip 2 Mill wip Mill Drill Drill 3 Mill X-ray Mill wip 5 Drill wip wip FIGURE 8. 9 Typical operation-based plant layout breaking down This, of course, must be done in cooperation with the maintenance... flexibility on a daily or even hourly basis to vary volume, production sequence, lot size, and mix within well-defined bounds © 2002 by CRC Press LLC SL3003Ch08Frame Page 182 Friday, November 9, 2001 1:52 PM 182 The Manufacturing Handbook of Best Practices 8. 4.3 TAKT TIME A key technique to implementing a pull schedule is a calculation called takt time Takt time is the rate at which each product needs to be... trust and to maintain open lines of communication A supplier development team consisting of procurement, production control, quality control, and financial control representatives must remain in regular contact with the supplier The purchasing department © 2002 by CRC Press LLC SL3003Ch08Frame Page 192 Friday, November 9, 2001 1:52 PM 192 The Manufacturing Handbook of Best Practices plays a lead role in . forefront. SL3003Ch08Frame Page 183 Friday, November 9, 2001 1:52 PM © 2002 by CRC Press LLC 184 The Manufacturing Handbook of Best Practices 8. 5.1 POKA-YOKE DEVICE (MISTAKE PROOFING) Another important. SL3003Ch08Frame Page 175 Friday, November 9, 2001 1:52 PM © 2002 by CRC Press LLC 176 The Manufacturing Handbook of Best Practices and lead to the loss of future business. Some of the causes of. Used COMPUTER SIGNALS CARDS EMPTY CONTAINER EXCHANGE Pull Signals (Kanbans) SL3003Ch08Frame Page 181 Friday, November 9, 2001 1:52 PM © 2002 by CRC Press LLC 182 The Manufacturing Handbook of Best Practices 8. 4.3 TAKT TIME A key technique to