Pull Manufacturing Kanban Just in Time Demand Flow

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Outline n n n n Why Pull Manufacturing? The Problem of Inventory Just In Time Kanban One Piece Flow Demand / Pull Standard Work & Takt Time Production Smoothing © 2004 Superfactory™. All Rights Reserved. 3

Why Pull Manufacturing? Lean manufacturing is really about minimizing the need for overhead n which is about concentrating precisely on only what is necessary n which is about linking interdependent supply system decisions, and actions n which needs to be visual, responsive and simple to manage © 2004 Superfactory™. All Rights Reserved. 4

Push Vs. Pull Scheduling n n Push Scheduling • traditional approach • “move the job on when finished” • problems - creates excessive inventory Pull scheduling • coordinated production • driven by demand (pulled through system) • extensive use of visual triggers (production/withdrawal kanbans) © 2004 Superfactory™. All Rights Reserved. 5

Inventory: Root of all evil If the meaning of production control is truly understood,

Inventory Hides Problems Work in process inventory level (hides problems) Unreliable Vendors © 2004

Lowering Inventory Reveals Problems Accommodate lower inventory levels by: • Reducing variability • Eliminating waste • Streamlining production and material flows • Accurate information Unreliable Vendors © 2004 Superfactory™. All Rights Reserved. Scrap WIP Capacity Imbalances 8

What is Just-in-Time? n n Management philosophy of continuous and forced problem solving (forced by driving inventory out of the production system) Supplies and components are ‘pulled’ through system to arrive where they are needed when they are needed Goal: Achieve the minimal level of resources required to add the necessary value in the production system. © 2004 Superfactory™. All Rights Reserved. 9

Objective of JIT To eliminate waste by Producing the needed item at the right

Objective of JIT n n n Produce only the products the customer wants Produce products only at the rate that the customer wants them Produce with perfect quality Produce with minimum lead time Produce products with only those features the customer wants © 2004 Superfactory™. All Rights Reserved. 11

Objectives n n Produce with no waste of labor, material or equipment -every movement must have a purpose so that there is zero idle inventory Produce with methods that allow for the development of people © 2004 Superfactory™. All Rights Reserved. 12

JIT Principles n Create flow production • one piece flow • machines in order of processes • small and inexpensive equipment • U cell layout, counter clockwise • multi-process handling workers • easy moving/standing operations • standard operations defined © 2004 Superfactory™. All Rights Reserved. 13

JIT Principles n n Establish “TAKT” time • rate at which the customer buys

JIT Tactics n n n n Single Minute Exchange of Dies (SMED) Statistical Process Control Use of standard containers Doable stable schedules with adequate visibility TAKT-Time 5 -S Program Kaizen Event © 2004 Superfactory™. All Rights Reserved. n n n Visual control Flexible workers Tools at the point of need Product redesign Group Technology Total Productive Maintenance 15

Just-in-Time Success Factors Flexible/ Empowered Employees Suppliers Quality Total Productive Maintenanc e © 2004 Superfactory™. All Rights Reserved. JIT Flexible Layouts and Processes Small Lot Production/ Short Setup Demand/Pul l Scheduling 16

JIT Scheduling Tactics n n n Build products to stock or order Plan level schedules (Constant rate of production) Produce in small lots/mixed model production (dictated by set -up and thru put times) Demand initiates lower level production/supplier deliveries— Use of kanbans Suppliers plan to forecast/build to demand © 2004 Superfactory™. All Rights Reserved. 17

Quality enables JIT n n Processes are easy to understand—visible Quality issues are apparent immediately Scope of problems are limited because of lower inventory levels TQM management methods are very important Quality of execution typically determines how low inventories can be reduced! © 2004 Superfactory™. All Rights Reserved. 18

Characteristics of JIT Suppliers n n n Few Nearby (if possible) Repeat business/Longer Term Agreements Analysis to enable desirable suppliers to become or stay price competitive JIT Logistics: n n n Frequent Deliveries/Smaller Quantities Exact Quantities Consumption initiates deliveries Deliveries directly to the point of use Perfect Parts Concurrent engineering design practices © 2004 Superfactory™. All Rights Reserved. 19

Streamlined Production Traditional Flow Production Process (stream of water) Suppliers Flow with JIT Suppliers Customers Inventory (stagnant ponds) Material (water in stream) Customers © 2004 Superfactory™. All Rights Reserved. 20

JIT Reduced Waste at Hewlett-Packard Waste Reduction (%) Setup Time 20% Scrap 30% Finished Goods Space 30% 40% Lead Time 50% Raw Material Work-in. Process 50% 82% 0% © 2004 Superfactory™. All Rights Reserved. 20% 40% 60% 80% 100% 21

JIT production, AKA… n n n n n ZIPS (Zero Inventory Production System) -- Omark industries MAN (Material As Needed) -- Harley Davidson (Also: “Quality Machine Through Jelly-Beans, ” where jelly beans refers to running one-piece lots, or mixed models, in final motorcycle assembly) MIPS (Minimum Inventory Production System) -- Westinghouse Stockless Production -- Hewlett Packard, Greeley Div. Continuous Flow Manufacturing (CFM) -- IBM Kanban -- Many companies both in North America and Japan Toyota System -- Many companies in Japan Ohno System (after Taiichi Ohno, a Toyota vice president and mastermind of the system) -- Many companies in Japan Just-In-Time (JIT) Production -- Most popular term both in North America and Japan Lean Manufacturing -- The most recent term © 2004 Superfactory™. All Rights Reserved. 22

JIT Logic in two simple formulas n Formula 1: Little’s Law Average WIP n = Throughput Rate X Average Production Lead Time Formula 2: Average Production Lead Time = Average Processing Time X Measure of System Utilization Measure of variance in the processing times of jobs © 2004 Superfactory™. All Rights Reserved. X Measure of variance of interarrival times of customer orders 23

Effects of JIT production (F) Heightened awareness of problems and problem causes Ideas for cutting lot sizes Ideas for improving JIT delivery performance Lot size reductions (A) Less inventory in the system Ideas for controlling defects JIT production (H) Reduced buffer inventories and/or workers (E) Fast feedback on defects Deliberate withdrawal of buffer inventories / workers (G) Smoother output rates (B) Scrap/quality control (I) Less indirect cost for: interest on idle inventory, space and equipment to handle inventory, inventory accounting, physical inventory control (C) Fewer rework labor hours (D) Less material waste Less material, labor, and indirect inputs for the same of higher output = higher productivity Less inventory in the system = faster market response, better forecasting, and less administration. © 2004 Superfactory™. All Rights Reserved. 24

How to accomplish JIT production 7) Improve Product Design -Standard product configuration -Standardize and reduce number of parts -Process design with product design -Quality expectations 6) Reduce Inventory More -Look for other areas -Stores -Transit -Carousels -Conveyors 5) Work with Vendors -Reduce lead times -Frequent deliveries -Project usage requirements -Quality expectations © 2004 Superfactory™. All Rights Reserved. 1) Design Flow Process -Link operations -Balance workstation capacities -Re-layout for flow -Emphasize preventive maintenance -Reduce lot size -Reduce setup/changeover time Concurrently Solve Problems -Root Cause -Solve permanently -Team approach -Line and specialist responsibiity -Continual education Measure Performance -Emphasize improvement -Track trends 2) Total Quality Control -Worker responsibility -Measure: SQC -Enforce compliance -Fail-safe methods -Automatic inspection 3) Stabilize Schedule -Level schedule -Underutilize capacity -Establish freeze windows 4) Kanban Pull -Demand pull -Backflush -Reduce lot sizes 25

Limitations of JIT n Preconditions to JIT • trust must be present • labor/management • suppliers/consumers • • recognition of processes familiarity with problem solving quality at the source agreement over value and waste © 2004 Superfactory™. All Rights Reserved. 26

Limitations of JIT n Right Settings • applicable in growth to maturity phases of Product Life Cycle • standard product • Steinway and JIT • standard/fixed pay-rate • problems with piece-rate scheme n Universal agreement that change needed © 2004 Superfactory™. All Rights Reserved. 27

Theoretical Benefits of JIT n n n Unpleasant surprises eliminated Less computerization • visual control Improved quality WIP reduced Better communications © 2004 Superfactory™. All Rights Reserved. n n n Less pressure on receiving docks and incoming inspection areas Lower costs Change in attitude • Defects are treasures 28

Dealing with Variance n n Four major stances: • Buffer against it • Ignore

JIT & Variance n n Variance a fact of life Comes from many sources • internal scheduling changes, scheduling practices, manufacturing planning & control systems, absenteeism, process variability • external changes in forecasts, actual demand, customer requested changes, government, competition, vendors © 2004 Superfactory™. All Rights Reserved. 30

Kanban n n Japanese word for card Authorizes production from downstream operations based on physical consumption May be a card, flag, verbal signal etc. Used often with fixed-size containers Kanban quantities are a function of lead-time and consumption rate of the item being replenished (min qty=(demand during lead-time + safety stock)/ container quantity) © 2004 Superfactory™. All Rights Reserved. 31

Kanban Production Control Systems Production Kanban Withdrawal Kanban A Machine Center Assembly Line B

Kanban Squares X X X Flow of work Flow of information © 2004 Superfactory™.

Kanban Card Unique Part # 46 -281247 p 1 27” Al Rim Qty 23 Where to find part when bin is empty Stock Loc: Line Loc: RIP 1 Asm. 1 © 2004 Superfactory™. All Rights Reserved. Description Kanban Qty Where to return filled Kanban 34

Quality at the Source n For JIT & Kanban to work, quality must be high n There can be no extra inventory to buffer against the production or use of defective units n Producing poor-quality items, and reworking or rejecting them is wasteful n The workers must be responsible for inspection & production quality n The philosophy is, “NEVER pass along defective item” © 2004 Superfactory™. All Rights Reserved. 35

One Piece Flow n A philosophy that rejects batch, lot or mass processing as wasteful n States that product should move (flow) from operation to operation, only when it is needed, in the smallest increment n One piece is the ultimate (one-piece-flow) © 2004 Superfactory™. All Rights Reserved. 36

Continuous Flow • Line up all of the steps that truly create value so they occur in a rapid sequence • Require that every step in the process be: • Capable – right every time (6 Sigma) • Available – always able to run (TPM) • Adequate – with capacity to avoid bottlenecks (right-sized tools) © 2004 Superfactory™. All Rights Reserved. 37

Continuous Flow n Linking manual and machine operations into the most efficient combinations to maximize value-added content while minimizing waste n Elimination of work stagnation in and between processes n Ideal creation of one piece flow: making one part and moving one part (in contrast to batch and queue material handling) n In order to really get and hold the benefits of flow production the organization must transition from a functional structure to a product-focused, cross-functional structure © 2004 Superfactory™. All Rights Reserved. 38

Pull Production n Actual customer demand drives the manufacturing process n It creates a system of cascading production and delivery instructions from downstream demand to upstream production in which nothing is produced by the upstream supplier until the downstream customer signals a need n The rate of production for each product is equal to the rate of customer consumption © 2004 Superfactory™. All Rights Reserved. 39

Pull Production • Through lead time compression & correct value specification, let customers get exactly what’s wanted exactly when it’s wanted: • For the short term: Smooth pull loops to reduce inventory • For the near term: Make-to-order with rapid response time • For the long term: Diagnostics and prognostics in a stable relationship to take out the surprises for consumers and producers © 2004 Superfactory™. All Rights Reserved. 40

Pull System Production Schedule Customers A Leveled assembly instructions C A B A Fab

Pull - The Continuing Need! Batch Action B tote 20 Action A 20 Customer

Standardized Work n Standardized work consists of three elements: n Takt time Matches the time to produce a part or finished product with the rate of sales. It is the basis for determining workforce size and work allocation n Standard in-process inventory The minimum number of parts, including units in machines, required to keep a cell or process moving n Standard work sequence The order in which a worker performs tasks for various processes Once a standard work is set, performance is measured and continuously improved n © 2004 Superfactory™. All Rights Reserved. 43

Standardized Work n Standardized work is the documentation and application of the best practices of a manufacturing process n It may include photographs and/or drawings n It ensures that production operations are performed the same way each time n It is developed with the process/production operators n It is posted at each workstation © 2004 Superfactory™. All Rights Reserved. 44

Standardization/Simplification n n Eliminate inherent sources of variance Eliminate opportunity for human discretion error Examples • Container sizes • Mac. Donalds with interaction with customers Consistent with Deming Wheel • Standardize expose problems solve problems implement new methods © 2004 Superfactory™. All Rights Reserved. 45

Work Balancing / TAKT Time n Work balancing maximizes operator efficiency by matching work content to TAKT time n TAKT time is the rate at which customers require your product n TAKT time is calculated as follows: Available work time per day Daily required customer demand in parts per day © 2004 Superfactory™. All Rights Reserved. 46

TAKT Time n TAKT • the beat • (Net Available Operating Time) / Customer

TAKT Time Example n n n Net Available Operating Time • Time per shift 480´ (minutes) • Breaks (2 @ 10´) - 20´ • Clean-up - 20’ • Lunch - 30’ • NAOT/shift 410´ Customer Requirements • Monthly 26, 000 units/month • No. Working Days 20 days/month • CR/Day 1, 300 units/day TAKT Time • 410’ x 60” x 3 shifts (73, 800) divided by 1, 300 • 57. 769 seconds per part or 57" © 2004 Superfactory™. All Rights Reserved. 48

Production Smoothing / Leveling n Averaging both the volume and the production sequence of different model types on a mixed-model production line n Example: Toyota Manufacturing Toyota makes 3 car models - a convertible, hardtop, and an SUV. Assume that customers are buying nine convertibles, nine hardtops, and nine SUVs each day. What is the mostefficient way to make those cars? © 2004 Superfactory™. All Rights Reserved. 49

Production Smoothing / Leveling One solution would be for Toyota to make all nine convertibles in the morning, all nine hardtops in the afternoon, and all nine SUVs in the evening. That would allow people to concentrate on one kind of work at a time. . However, the people who make parts for the convertibles would be busy in the morning, but they and their equipment would be idle in the afternoon and evening. Similarly, the people and equipment that make the parts for the hardtop and SUVs would be busy sometimes and idle at other times. © 2004 Superfactory™. All Rights Reserved. 50

Production Smoothing / Leveling In the staging lot, vehicles would pile up between the plant and the dealers. Customers don't buy nine convertibles in the morning, nine hardtops in the afternoon, and nine SUVs in the evening. They buy different kinds of cars through the day and week. Ideally, an automaker needs to make different types of vehicles at more or less the same pace that customers buy them. Otherwise, they will end up with a lot of extra inventory in the form of unsold cars. Parts Factory © 2004 Superfactory™. All Rights Reserved. Car Factory Dealer 51

Production Smoothing / Leveling Toyota solved the problem by production leveling. If customers are buying nine convertibles, nine hardtops, and nine SUVs each day, Toyota assembles three of each in the morning, three of each in the afternoon, and three of each in the evening. It also distributes the production of convertibles, hard tops, and SUVs as evenly as possible through each shift: convertible, hard top, SUV, and so on. © 2004 Superfactory™. All Rights Reserved. 52

Production Smoothing / Leveling production also helps to avoid the problem of excess inventory of finished vehicles. The vehicle plants make the different types of cars at about the same pace that customers buy those cars. They can adjust the pace of production as buying patterns change. As the result, dealers only need to maintain a minimal inventory of cars to show and sell. Parts Factory © 2004 Superfactory™. All Rights Reserved. Car Factory Dealer 53

Wrap-up - Pull Manufacturing Lean manufacturing is really about minimizing the need for overhead n which is about concentrating precisely on only what is necessary n which is about linking interdependent supply system decisions, and actions n which needs to be visual, responsive and simple to manage © 2004 Superfactory™. All Rights Reserved. 54