Session 5: Lean Operations

Canan Adelman

UIC Business
IDS 532: Introduction to Operations Management

February 15, 2022

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Last class

1. Queueing phenomenon: balking, reneging, jockeying

2. Effective utilization as a capacity planning tool
3. Queueing theory
4. Effective operational structures for queues

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Lean Production

“Lean production is “lean” because it uses less of every-

thing compared with mass production – half the human
effort in the factory, half the manufacturing space, half
the investment in tools, half the engineering hours to de-
velop a new product in half the time. Also, it requires
keeping far less than half the needed inventory on site, re-
sults in many fewer defects, and produces a greater and
ever growing variety of products.”

– From The Machine that Changed the World, by Wom-

ack, Jones, and Roos (1990).

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What is Lean Operations?

Philosophy or set of methods?

BOTH

System of Management

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Lean Philosophy

Lean’s Essence
Increase productivity through
1. Continuous Improvement (Kaizen)
2. Respect for People.

Central Tenet
Eliminate waste and variability.

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Case Study

Goal: To understand how the work is done, identify problems that

occur in doing the work, and recommend how to do the work
better.

Click here for video clip.

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Toyota’s Four Rules
1. Activities: Unambiguous successful work methods

2. Connections: Unambiguous requests and responses

3. Pathways: Unambiguous assignments of responsibility

4. Improvement:
Scientific method, guided by a teacher, at the lowest
organizational level possible
Built-in Diagnostics
Source: Spear, Bowen. “Decoding the DNA of the Toyota Production System”, 1999.

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Connections and Pathways

Which is preferred?
System A:

System B:

“When something is everyone’s problem it becomes no one’s problem.” - SB

Variability reduction eliminates incentive to pool resources.

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Push versus Pull Philosophy

K1 K2

I Case 1: K1 = K2 = 0 (No buffers)

Starvation and blocking propagates immediately.
Minimal WIP.
PURE PULL
I Case 2: K1 = K2 = ∞ (Infinite buffers)
Delayed starvation propagation. No blocking.
Maximal WIP.
PURE PUSH
Which has higher effective capacity? Case 2.

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Efficient Frontier: WIP versus Production Rate

High
Production Rate

Low
WIP Inventory
Low High

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Efficient Frontier: WIP versus Production Rate

High
Pure Push

Production Rate

Pull

Low Pure Pull

WIP Inventory
Low High

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Definition of Pull

Pull
The existence of a binding WIP cap.

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Pull at Toyota

Case 3: K1 , K2 > 0 and not too large

PULL

K1 K2

I K1 and K2 equal the number of kanbans between the

segments.
I Available kanban = an empty buffer slot = “authorization to
work.”
I Blocking and starvation are mitigated with small amounts of
WIP.
I Forced idleness cascades over time.

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Heijunka: Mixed Model Production

I Consider the monthly mix of Products:

I 50% A
I 50% B
I Compare the production sequences:
I Traditional:
AAAAAAAAAAAAAAAAAABBBBBBBBBBBBBBBBBBBBB
I Heijunka:
ABABABABABABABABABABABABABABABABABABABA

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 Benefits of Heijunka

1. Lowers variability imposed on suppliers (hence their inventory)

2. Balances assembly line
3. Lowers finished goods inventory
4. Limits exposure to quality problems
5. Synchronizes production with the “takt” time of demand

Prerequisites:
1. Built shared capacity across models.
2. “Zero” setup/changeover times
Batch sizes of one

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Reduce batch size

I Let B = batch size, s = setup time
I The time to produce a batch of size B is s + B ts

1/t s s=0

reduce s

We cannot simply
Effective
reduce batch sizes
Capacity =
B without sacrificing
s+B ts
capacity

B, batch size

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How to Reduce Set-up Costs?

I Internal Set-Up Costs : performed while the machine is idle

I External Set-Up Costs : performed while the machine is busy
I Goal: Move Internal costs to External
I That is, perform as much of the set-up as possible while
machine is still running!
I Examples:
I Die changes from 6 hours to 3 minutes.
I Auto racing pit crews.

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Just-In-Time Production

Just-in-Time
Make items only when necessary and in necessary quantities.

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 Lean Operations and the Toyota Production System

Eliminate waste and variability

Just−in−Time (JIT)
To sync production with demand

Pull/Kanban

Single−unit flow

Heijunka

Takt time

Operational Stability
Standardized work Supplier collaboration

Total productive maintenance Integrated design & mfg

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Toyota Motor Manufacturing, USA

Let’s visit the Georgetown plant....

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Process Flow Diagram of Seat Problem

Seat Supplier

Seat Assembly

Code 1/
Rework
Other defects Overflow parking

Why do we care?
Should we stop the line?

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Andon Cord Mechanics

A worker encounters a problem.

Worker pulls cord ⇒ Team leader ⇒ Group leader

1. Are team and group leaders adding value?

2. What are their qualifications?
3. How often is the cord pulled?
800 team members × 12 pulls/day each ≈ 10,000 pulls/day!!!!

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Responsibility Reversal

Who is responsible for what?

Management Workers
Traditional Quality Production rate
Toyota Production rate Quality

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Pull System with Andon Cord Pulls

Group
Leader

Team
Leader

K1 K2

Do andon cord pulls increase, or decrease, variability?

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A New Frontier

High
New Frontier Pure Push

Production Rate

Pull

Low Pure Pull

WIP Inventory
Low High

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Lean Improvement of a Pull System

K1 K2

In a pull system, how do we achieve higher production rate with

less WIP?
1. Increase capacity of any step.
Eliminate waste.
2. Andon cord pulls.
Lower variability!

The motivation for LEAN!

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The Goal

THE GOAL:
1. ↑ λ
2. ↓ INV
3. ↓ operating expenses

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Jidoka - Quality at the Source

I Detect-Stop-Alert
Jidoka
Andon cord pulls

I Identifying defects at the source lowers costs

Adam Mersereau Module 9: Course Overview

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Other Jidoka Tools

I Poka-Yoke
Foolproofing
I Visual control
I 5S
Sort, Store, Shine, Standardize, Sustain

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Types of Waste

Overproduction Waiting
Transport

Movement Inventory
Seven Wastes

Overprocessing
Defects

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Inventory Analogy

Missed
Unreliable Long
INVENTORY

due dates
supplier supplier OPERATIONAL
Too much lead-times
Large PROBLEM
space
batch sizes "ROCKS"
Poor Machine
supplier breakdowns Scrap/rework
quality

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Continuous Improvement Process

The Ideal Operation

Delta = deviation from ideal

The Actual Operation Continuous

Improvement Increase visibility of Delta

Process

Reduce Delta

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Scientific Method to Problem Solving

1. Specify:
How work is to be done and what output is expected
2. Test:
Embed self-diagnostic tests that compare actuals to expectations.
3. Improve:
If deviation, then investigate problem using 5 Why’s and implement
countermeasures.

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Theory and Experimentation at Toyota

“The Toyota Production System creates a community of scien-

tists. Whenever Toyota defines a specification, it is establishing
sets of hypotheses that can then be tested. In other words, it is
following the scientific method. To make any changes, Toyota
uses a rigorous problem-solving process that requires a detailed
assessment of the current state of affairs and a plan for improve-
ment that is, in effect, an experimental test of the proposed
changes. With anything less than such scientific rigor, change
at Toyota would amount to little more than random trial and
error - a blindfolded walk through life.” – Spear and Bowen, “Decoding the
DNA of the Toyota Production System,” 1999.

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Hidden Treasure

Paradox of Flexibility through Rigidity

“To understand Toyota’s success, you have to unravel the para-
dox – you have to see that the rigid specification is the very
thing that makes the flexibility and creativity possible.”
– Spear and Bowen, “Decoding the DNA of the Toyota Production System,” 1999.

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Back to Toyota’s Seat Problem

1. What specification was being violated?

“When eight cars filled up this limited clinic space, the assembly
line was shut down under a “Code 1” status and Friesen and
his assistant managers gathered to discuss countermeasures.” –
TMM case, page. 6.

2. Who was responsible? manager of repair clinic

3. Why was it being violated? Lack of visual control
4. Countermeasure?
Tape off an area, bulletin board

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Jidoka Improvement

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Lean Operations and the Toyota Production System

Eliminate waste and variability

Just−in−Time (JIT) Workforce Built−in Quality

To sync production with demand To reduce defects
Learning−centric
Pull/Kanban Poka−yoke
Empowered
Single−unit flow Andon/Jidoka
Capable

Heijunka Flexible/Cross trained Visual control

Teams/Cells
Takt time 5S
Job rotation

Operational Stability
Standardized work Supplier collaboration

Total productive maintenance Integrated design & mfg

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A Lean Hospital

A “Lean Hospital” is “lean” because it uses less of every-

thing compared with other hospitals, yet produces half the
medical errors, half the infections, half the patient harm,
half the waiting time, half the length of stay, half the
nurse turnover, half the medical cost, half the complaints
from patients and physicians, and treats a greater and ever
growing variety of patient needs.1

1
Adapted from Lean Hospitals by Mark Graban, 2012.

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Virginia Mason

A “model” lean hospital.

Click here for video clip.

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Software Development: Waterfall

Source: wikipedia.org

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Software Development: Agile

Source: wikipedia.org
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Is “lean production” a new idea?

Original Ford assembly at River Rouge.

Moving assembly line, interchangable parts,
scientific management (Taylor).

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River Rouge

I Steel continuously delivered “just-in-time”

I Material smoothly flowed from raw material to finished
product
I No waste, no build-up of inventory
I A true JIT operation!
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How did Ford stray?

I “The customer can have any color car

as long as it’s black.” – Ford
I Explosion in variety of products
I Hundreds of suppliers
I Thousands of output variations

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Taiichi Ohno’s Toyota Production System

Originally, make many models in small numbers at low cost,

without Ford’s economies of scale.

I Initially developed by Toyota’s Taiichi Ohno, 1945.

I Resource-constrained Japan post WWII.
I How to achieve smooth JIT flow of defect-free products?
From assembly line, extended to whole plant, and throughout
supply chain?
I Methods, Philosophy

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The Power of Lean

A system of management that has the power to transform entire

industries:
I Manufacturing
I Healthcare
I Others...

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