Lean Production

Background and History

Eras in Manufacturing
• Craft production
– has existed for centuries
• Mass production
– developed after World War I
by Henry Ford and General
Motors’ Alfred Sloan Taiichi Ohno
www.automationhalloffame.org/. ../faces3/Ohno.jpg
– Based on principles of
Scientific Management
• Lean production
– developed in Japan after
World War II
– pioneered by Eiji Toyoda
and Taiichi Ohno of Toyota

Eiji Toyoda
www.ies-geneve.ch/.../ Toyota/Eiji_Toyoda.jpg
Craft Production
• Despite the extensive
hand craftsmanship,
early cars were
unreliable and trouble- Flintlock pistol, 1760
prone.
• The problem stemmed
from lack of part
standardization.
– No standard gauging
– No tools for cutting
hardened steel
• As a result, parts were
not interchangeable.
Flintlock Pistol, ~1690
Mass Production
• The mass production
techniques developed by
Henry Ford before World
War I put almost all the craft
producers out of business
• The key to mass production:
interchangeable parts. This
was necessary to make the
assembly line possible.
• Production of
interchangeable parts
required two major
advances:
– standardized gauging
– capability to machine
hardened steel
www.part.cz/.../ images/henry_ford_t.jpg
Mass Production
• Productivity was
increased by a fine
division of labour
– unskilled workers perform
simple, repetitive jobs
• Assembly workers must
be supported by narrowly
skilled indirect workers
– maintenance workers
http://www.marxists.org/history/ussr/art/photography/workers/
– quality inspectors
– rework specialists
Mass Production

• Division of labour within engineering has

lead to narrow specialization
– Design engineers
• design of products to meet functional requirements
– Manufacturing engineers
• design of production equipment and machine tools to
manufacture these products
– Industrial engineers
• design and allocation of assembly procedures
• design and analysis of manufacturing systems
• work study and ergonomics
Lean Production
• After the Second World War, Japanese
industry underwent complete rebuilding
• Manufacturers did not have the volume to
justify Detroit-type mass production assembly
lines, and needed a better way
• Lean production principles were developed by
Japanese engineers based on practical
considerations, and are largely a matter of
common sense
Other Names for Lean Production
• Toyota Production System
• Lean Manufacturing
• Just-in-time (JIT) manufacturing
• JIT/TQM (Total Quality Management)
• Flow manufacturing
Lean Production Buzzwords
• JIT • Cellular
• TQM manufacturing
• Kaizen • Focussed factories
• Poke Yoke
• Mixed-model
• Kanban production
• Andon
• Flexible
• 5S
manufacturing
• Six Sigma
• SPC
• SMED
• Quality circles • TPM
Comparison
Craft Mass Lean

highly skilled workers unskilled or teams of multiskilled

or artisans semiskilled workers workers

simple, flexible tools expensive, single highly flexible

purpose machines machines

unique, standardized large product variety

individualized, products
custom made
products
low productivity, and high productivity and high productivity and
high cost low cost low cost
Lean Production Vs. Mass
Production:
• half the human effort in the factory
• half the manufacturing space
• half the investment in tools
• half the engineering hours
• half the time to develop new products
• a fraction of the inventory
• few defects
What about CIM and Automation?
• By the 1980’s, computers and automation
technology reached the point where fully-
automated factories could be envisioned
• Faced by increasing Japanese competition,
western manufacturers believed that
automation was the solution
• General Motors spent about 80 billion dollars
on automation during these years
The automation buzzwords of the 1980’s
• Industrial robotics
• Numerical control machines
• Integrated computer control systems
• Automated Guided Vehicle Systems (AGVS)
• Automated Storage/Retrieval Systems (AS/RS)
• Group technology
• CAD/CAM
• Computer Aided Process Planning (CAPP)
• MRP
• Flexible Manufacturing Systems (FMS)
Is Automation the answer?
• It turns out the Japanese were not
more competitive because of their
automation, but because of their
adoption of lean production.
• Today, many companies are tearing
out their 1980’s automation, and
adopting lean manufacturing practices
How to be competitive today…
• Adopt proven lean production practices
• Use information technology to become
more agile
• Adopt automation strategically and
wisely, only where appropriate
Examples and Case Studies
Hewlett Packard’s Cupertino
California plant

1982 1986
(before JIT) (after JIT)

lead time 15 days 11.3 hours

work in process $670,000 $20,000

no. of back 200 2

orders
 The Lean Transformation at Lantech
Batch and Flow/1995
Queue/1991
Product Development Time 3-4 years 1 year
Employee hours per machine 160 80
Manufacturing space per machine 100 sq. ft. 55 sq. ft.
Delivered defects per machine 8 0.8
Dollar value of inventory (with doubled $2.6 million $1.9 million
sales)
Throughput time 16 weeks 14 hours – 5
days
Delivery lead time 4 – 20 weeks 1-4 weeks

From: Womack and Jones, Lean Thinking, p.121

Relative Performance in Auto
Industry
Toyota Japan USA Europe
(average) (average) (average)

Productivity
Assembly 100 83 65 54
1st-tier suppliers 100 85 71 62
Quality (delivered defects)
Assembly (per 100 cars) 30 55 61 61
1st-tier suppliers (PPM) 5 193 263 1373
2nd-tier suppliers (PPM) 400 900 6100 4723

1993-94, from Womack and Jones, Lean Thinking

 Relative Performance in Auto
Industry

Toyota Japan USA Europe

(average) (average) (average)

Deliveries (percent late)

1st-tier suppliers 0.04 0.2 0.6 1.9
2nd-tier suppliers 0.5 2.6 13.4 5.4
Stocks (1 -tier suppliers)
st

Hours Na 37 135 138

Stock turns (per year) 248 81 69 45

1993-94, from Womack and Jones, Lean Thinking

Porsche’s Lean Transition

1991 1993 1995 1997

Time 7 years - - 3 years
Concept to launch
Welding to finished car 6 weeks - 5 days 3 days

Inventories
Days on hand 17.0 4.2 4.2 3.2
Effort
Hours to assemble 120 95 76 45

Source: Womack and Jones, Lean Thinking

Porsche’s Lean Transition

1991 1993 1995 1997

Errors
Supplied parts (PPM) 10,000 4,000 1,000 100
Finished cars (index) 100 60 45 25

Sales 3,102 1,913 2,607 -

Profits +17 -239 +2 -

Hours to assemble

Source: Womack and Jones, Lean Thinking

Case Study – Pratt & Whitney
• Product: Turbine blades
• Problem: grinding the blade roots
• P & W replaced their existing system
with a new system
• Which of the following two alternatives
was the new system?
 Alternative One
Grind Grind Grind EDM EDM Weld

Grind Grind Grind Grind Grind Wash

Eight identical cells

Eight 3-axis grinding machines
Two EDM machines
Quick-change fixtures
Manual part movement
Total machining time: 75 min.
 Alternative Two
Twelve custom-made
Hauni-Blohm blade
grinding centres

Encapsulate Gauge Grind Gauge Decapsulate

AGVs
X-ray

Automated storage
Inspect Acid clean
and retrieval system

Total machining time: 3 min.

 Activities that add value…
This adds value –
the rest is waste!

Encapsulate Gauge Grind Gauge Decapsulate

AGVs
X-ray

Automated storage
Inspect Acid clean
and retrieval system
Monuments
• The existing system, Alternative Two, is
a “monument”
• A monument is a machine that is too
big to move, and must be operated in
batch mode
• Monuments are bad!
Lean versus Monumental Machining
Automated Blohm Lean Cells
Grinder
Actual machining time 3 minutes 75 minutes

Space/product cell (sq.ft.) 6,430 2,480

Part travel (ft.) 2,500 80

Inventory (average per cell) 1,640 15

Batch size (number of blades) 250 1

Throughput time (sum of cycle 10 days 75 minutes

time)
Environmental Acid cleaning and X- No acid, no X-ray
ray
Changeover time 480 minutes 100 seconds

Grinding cost per blade 1 .49

New blade tooling cost 1 .3

Capital cost $80 million $13.6 million

The Principles
Lean Principles (Womack and Jones)
• Specify value
– defined by the customer
• Identify value stream
– eliminate all activities that don’t add value
• Flow
– products should flow along value stream
The Principles (Deming)
• Optimize the system to satisfy the
customer
• Reduce complexity
– In other words, simplify
• Continuous improvement
The Principles (Nicholas)
• Continuous Improvement
• Eliminate Waste
• Customer focus (TQM)
The Principles
• Continuous Improvement
• Eliminate Waste (JIT)
• Customer focus (TQM)
Continuous Improvement Strategy
• Continuous incremental improvement:
Kaizen
• Periodic big leaps: Innovation
improvement
Incremental Improvement: Kaizen
• Incremental Performance
improvement
(kaizen)
• Improvement
follows S-curve, and
eventually slows

Effort
Innovation Improvement
• Further Performance
improvement New
requires major process
Old
innovation process
• Process
reengineering is
often used Discontinuity

• Then, kaizen starts

again Effort
Making the Leap

Steam locomotive Diesel electric

Propeller plane Jet plane

Vacuum tubes Transistors

The Principles
• Continuous Improvement
• Customer focus (TQM)
• Eliminate Waste (JIT)
Total Quality Management
• Traditional:
– Establish acceptable quality levels
– Detect and rework or scrap defects
• TQM
– Focus entire company on all aspects of
quality, with emphasis on the customer’s
perspective
– The customer is interested in Value, which
combines quality and cost
What is Quality?

• The concept of quality is subjective and

difficult to define
• Certain aspects of quality can be
identified
• Ultimately, the judgement of quality
rests with the customer
Quality: Customer’s Perspective
• Quality of design
– Fitness for use
– Performance
– Features
– Reliability
– Conformance
– Durability
– Serviceability
– Aesthetics
– Perceived value
Quality: Producer’s Perspective
• Quality of conformance
– Satisfaction of requirements or
specifications
– Emphasis on defect detection and defect
prevention
Cost of Quality
• Prevention costs
– build it right the first time
• Appraisal costs
– inspection and testing
• Internal failure costs
– scrap and rework
• External failure costs
– warranty claims, recalls, lost business
“Quality is Free”

• For the average company, the cost of

quality is about 25% of total sales
• The cost of prevention is a fraction of
the cost of fixing mistakes after they
are made
• Investments in prevention can
drastically reduce the total cost of
quality
Three Areas to Improve Quality
• Quality of design
– meet the customer’s needs
– design for manufacturability
– build quality in
• Quality of conformance
– minimize and control process variation to satisfy
the design specifications every time
• Quality of service
– The customer must come first
An Effective Design Process

• Matches product characteristics with

customer needs
• Meets customer requirements in
simplest, most cost-effective manner
• Reduces time to market
• Minimizes revisions
Measures Of Design Quality
 Number of component parts and
product options
 Percentage of standard parts
 Use of existing manufacturing resources
 Cost of first production run
 First six months cost of engineering
changes
Measures Of Design Quality
 First year cost of field service repair
 Total product cost
 Total product sales
 Sustainable development
Distribution Of Design Changes
Company 1
Number of Design Changes

Company 2

90% of Total
changes
complete

21 12 3 Production 3
Months begins
 Design Simplification
(a) The original design (b) Revised design (c) Final design

One-piece base & Design for push-and-snap

Assembly using elimination of fasteners assembly
common fasteners
Source: adapted from Russell, R.S., and B.W. Taylor III, Operations
Management, 3rd edition, Prentice Hall, 2000
Matching Product Design to Market
Demand
• Concurrent engineering reduces the
design cycle
• Greater product variety is achieved
through modular design
• Reduced number of parts and
components is achieved through good
design, and through standardization
and reuse of common items.
Mass Customization
• Provide every customer with an
individualized product
• Make to order (customer pull)
• Maximize value
Keys to Mass Customization
• Define value (QFD)
• Design modular product architectures
• Standardize components, minimize
unnecessary variety
• Configure individual products from
standard modules
Zero Defects
• The traditional assumption is that a certain
level of defects is unavoidable
• Traditional manufacturing measures defect
rates and compares them to acceptable
quality levels
– acceptance sampling
– average outgoing quality
• JIT strives to eliminate once and for all the
causes of defects
Quality At The Source
• Jidoka is authority to stop production
line
• Andon lights signal quality problems
• Undercapacity scheduling allows for
planning, problem solving &
maintenance
• Visual control makes problems visible
• Pokayoke prevents defects
Visual Control
Tool board Visual kanbans

Work station Library shelf

How
to

sensor

30-50 Machine controls

Good Better Best

The Principles
• Continuous Improvement
• Customer focus (TQM)
• Eliminate Waste (JIT)
JIT: Value Added and Waste
Elimination
• Lean production focuses on eliminating
waste
• Anything that doesn’t add value is
waste
Value-added Focus
• Distinguish necessary and unnecessary
activities
• Improve the necessary ones, eliminate
the unnecessary ones
• Unnecessary activities are waste
Toyota’s Seven Wastes
• Producing defects
• Transportation
• Inventory
• Overproduction
• Waiting time
• Processing
• Motion
Canon’s Nine Wastes
• Work-in-process
• Defects
• Equipment
• Expense
• Indirect Labour
• Planning
• Human resources
• Operations
• Startup
 Examples of Waste
• Watching a machine run
• Waiting for parts
• Counting parts
• Producing parts that aren’t needed
• Moving parts over long distances
• Storing inventory
• Looking for tools or parts
• Machine breakdown
• Rework and scrap
• Products that don’t meet the needs of customers
Elements of JIT (Nicholas)
• Small-lot production
• Setup-time reduction
• Maintaining and improving equipment
• Pull production systems
• Focused factories and group technology
• Workcells and cellular manufacturing
• Standard operations
Reducing Inventories
• In traditional manufacturing, inventories are
seen as assets
• Inventories provide a safety buffer, and result
from maximizing machine utilization
• JIT views inventory as waste
• Inventory is evidence of poor design, poor
coordination, and poor operation of a
manufacturing system
Inventory Hides Problems

Bad
Design
Lengthy Poor
Setups Quality
Machine
Inefficient Unreliable
Breakdown
Layout Supplier
Lower Levels Of Inventory To Expose
Problems

Bad
Design
Lengthy Poor
Setups Quality
Machine
Inefficient Unreliable
Breakdown
Layout Supplier
Flow versus Batch and Queue
• Traditional manufacturing produces and
orders parts in batches, which often
spend time in queues
• Batch and queue introduces much
waste
• Lean production strives for smooth,
continuous flow
Small-lot Production
• Smooth flow requires production in
small lots, with frequent
changeovers
• JIT includes many interdependent
techniques and principles to make this
possible
Small-Lot Production

• Reduces inventory
• Requires less space & capital
investment
• Moves processes closer together
• Makes quality problems easier to detect
• Makes processes more dependent on
each other
Batch and Queue

Jobs pushed
to next
operation Next
Operation operation

Jobs waiting
in queue

High WIP inventory, long lead time

Pull Production
Replenishment signal
(kanban)

Next
Operation operation

Material flow

Low WIP inventory, short lead time

 Traditional Vs. JIT Inventory

Inventory
Traditional
Level

Average
Inventory
JIT

0 Time
Setup Time Reduction
• Small lots require short setups!
• Setup times can be reduced from hours
to minutes
• Shingo developed Single Minute
Exchange of Dies (SMED) system
– die change under 10 minutes
SMED Principles

1. Separate internal setup from external

setup
2. Convert internal setup to external
setup
3. Streamline all aspects of setup
4. Perform setup activities in parallel or
eliminate them entirely
Setup Reduction
Parallel Setup Tasks
• Ideally, two people
can do the job in
half the time as one
person
• Think about a pit
stop at a car race

Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Setup Reduction
Quick-attachment Devices

Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Setup Reduction
Quick-attachment Devices

Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Setup Reduction
Quick-attachment Devices

Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Setup Reduction
Eliminate Adjustments

Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Setup Reduction
Eliminate Adjustments

Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Setup Reduction
Improve External Setups
• Store fixtures, etc., near machine
• Prepare setup kits and carts
• Improve material handling

Source: Nicholas, John, Competitive Manufacturing Management, McGraw-Hill, 1998.

Maintaining and Improving Equipment

• Small lot production with little inventory

requires equipment that:
– Doesn’t break down
– Doesn’t produce defects
– Performs well
Preventive Maintenance
• Identify and eliminate causes of
equipment problems
– Deterioration
– Wrong equipment for the job
– Poor maintenance
– Wrong operating conditions
– Lack of skills of operators
Preventive Maintenance Elements
• Maintain normal operating conditions
• Maintain equipment requirements
• Keep equipment and facilities clean and
organized
• Monitor equipment daily
• Schedule preventive maintenance
• Manage maintenance information
• Use predictive (condition-based) maintenance
Role of Operators
• Best people to do routine maintenance
and monitoring are the operators
– Keep machine clean
– Routine lubrication and adjustments
– Visual inspection (cracks, oil leaks)
– Be aware of unusual sounds, heat,
vibration, etc.
Total Productive Maintenance (TPM)
• Ineffective equipment is a form of
waste
• TPM seeks to find the root causes of
equipment problems, and fix them
• Done using continuous improvement
methods
Elements of TPM
• Preventive maintenance done by operators
• Restore and redesign equipment to make it
better than new, and to extend its life
• Eliminate human error in maintenance and
operation
– Education and training
– Foolproofing
– Improved maintenance procedures
Flow Based Production using Cellular
Manufacturing
• Cellular manufacturing achieves the
benefits of flow based manufacturing
• This simplifies material flow compared
to a traditional process layout
• Ownership and responsibility for a
product rests with the operators of the
cell
Product Families
• Group Technology (GT) is commonly used to
identify product families based on similarities
in design or processing
• GT helps reduce unnecessary duplication in
product design
• GT identifies product families with similar
processing requirements
• These families can be manufactured in well-
defined manufacturing cells
Cellular Manufacturing Guidelines

• Group dissimilar machines in

manufacturing cell to produce family of
parts
• Work flows in one direction through cell
• One worker tends several machines
• Cycle time adjusted by changing
number of workers
Original Process Layout
Assembly

4 6 7 9

5 8

2 10 12

1 3 11

A B C Raw materials

Source: adapted from Russell, R.S., and B.W. Taylor III, Operations
Management, 3rd edition, Prentice Hall, 2000
Cellular Layout Solution
Assembly

8 10 9 12

11
4 Cell1 6 Cell 3
Cell 2

2 1 3 5

Raw materials A C B

Source: adapted from Russell, R.S., and B.W. Taylor III, Operations
Management, 3rd edition, Prentice Hall, 2000
 Manufacturing Cell With Worker
Routes
Machines
Enter

Worker 2
Worker
3
Worker 1

Exit

Key: Product route

Worker route
Cellular Manufacturing is Flexible
• Flexible labour
– multifunction, adaptable operators
– the number of operators can be changed to
change capacity
• Flexible equipment
– a variety of products are produced on the same
equipment
– this requires multifunctional machines
• Achievable with basic technology!
Production Leveling
• Production is most efficient when parts
and materials flow smoothly
• This can be achieved by using a
uniform daily production schedule
• This is much different than the
traditional batch approach
Level Scheduling in Pull Production
• Pull production requires a schedule only
for the last stage of production
• If this schedule is uniform, then flow
will be smooth
Mixed Model Production
• For products that require assembly, the
production schedule is know as the
final-assembly schedule (FAS)
• Producing several products on the same
line is known as mixed-model
production (MMP)
• Different models are interspersed so
that flow is uniform
Master Production Schedule
Product Time Period (Months)
1 2 3 4
A 1200 1200 1200 1200
B 400 400 400 400
C 1600 1600 1600 1600
D 400 400 400 400
E 600 600 600 600
F 600 600 600 600
Traditional Batch Schedule
Product Week 1 Week 2 Week 3 Week 4
A 1200
B 400
C 800 800
D 400
E 600
F 600

Total 1200 1200 1200 1200

Every week is different – bad!
Level Weekly Schedule
Product Week 1 Week 2 Week 3 Week 4
A 300 300 300 300
B 100 100 100 100
C 400 400 400 400
D 100 100 100 100
E 150 150 150 150
F 150 150 150 150

Total 1200 1200 1200 1200

Every week is the same – good!
Level Daily Schedule
Product Monday Tuesday Wednesday Thursday Friday
A 60 60 60 60 60
B 20 20 20 20 20
C 80 80 80 80 80
D 20 20 20 20 20
E 30 30 30 30 30
F 30 30 30 30 30

Total 240 240 240 240 240

Minimizing Scheduling Problems
• Simplify the BOMs
• Use group technology and standard
parts/modules
• Make only what is needed
• Produce in lot sizes that are small and easy to
count
• Use simple visual control systems
• Do not overload the shop
• Use short lead times
Advantages of Level Scheduling

• Batch production becomes repetitive

• Low inventories
• Flexible and responsive
• Simple to control - computers are not
needed!
The Relationship with Suppliers
• Traditional relationship with suppliers is
adversarial
– Relationships are short term, based solely
on cost
– Large number of suppliers are played
against one another
The Relationship with Suppliers
• JIT views the supplier relationship as critical
– Fewer suppliers
– The relationships are long-term, based on
cooperation
– Suppliers must strive to continuously improve
• To achieve frequent deliveries of small lots,
just in time, suppliers must adopt JIT
methods as well
Trends In Supplier Policies
1. Locate near to the customer
2. Use small, side loaded trucks and ship mixed
loads
3. Consider establishing small warehouses near to
the customer or consolidating warehouses with
other suppliers
4. Use standardized containers and make deliveries
according to a precise delivery schedule
5. Become a certified supplier and accept payment
at regular intervals rather than upon delivery
Benefits Of Lean Production
1. Reduced inventory 7. Greater flexibility
2. Improved quality 8. Better relations with
3. Lower costs suppliers
4. Reduced space 9. Simplified scheduling
requirements and control activities
5. Shorter lead time 10. Increased capacity
6. Increased productivity 11. Better use of human
resources
12. More product variety