Operations Management: Toyota Production System and Lean Operations

Imperial College Business School

Operations Management

Imperial College Business School Imperial means Intelligent Business BUSI70185 Operations Management Jiankun Sun Session 9 Lean OperationsOutline

• Toyota Production System (TPS)
  • Philosophy
  • Practices & Principles
  • Tools

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Toyota Production System (TPS)

• Developed by Taiichi Ohno, Toyota's chief of production in the post-WW II period, and finely tuned over generations New Foreword With a The Story of Lean Production- and Afterword by the Authors Toyota's Secret Weapon in the Global Car Wars That Is Revolutionizing World Industry THE MACHINE THAT CHANGED THE WORLD JAMES P. WOMACK, DANIEL T. JONES, and DANIEL ROOS
• MIT researchers coined the term lean production to indicate this radically different approach to production in 1990s

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TPS: Goals and Philosophy

• Philosophy: eliminate waste Price Cost = Profit Non-vaNe-added (wastes) Value-added
  • Sources of wastes: overproduction, waiting, transport, overprocessing, inventory, rework, motion, ...
• Goals: reduce cost, improve quality, improve timeliness

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TPS: Two Principles

Just-In-Time (JIT)

Make and deliver products just what is needed, just when needed, and just in the amount needed. 1 Zero inventory € 1

Jidoka

Enable operations to detect when an abnormal condition occurs and immediately stop work. 1 Zero defect Defect m STOP!

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TPS House

Goal: Highest Quality, Lowest Costs, Shortest Lead Time

Just-in-Time

Continuous Flow Takt Time Pull System · Kanban Heijunka Standardization

Jidoka

Quality at Source · Andon · Poka-yoke Human-machine Separation Kaizen Stability

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Why JIT?

• What would a worker do if s/he finds a defect part in the buffer? Workstation 1 Workstation 2
• Inventory has benefits, but it can also hide problems.

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Reducing Inventory: Increase Problem Visibility

Missed Due Dates Late Deliveries Too much paperwork Engineering Change Orders Inventory Scrap & Rework Machine Downtime Poor Quality Capacity Imbalance Long queues

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Reducing Inventory: Increase Problem Visibility

• Reducing inventory helps reveal the real problems so they can be targeted and solved. Too much paperwork Engineering Change Orders Serap & Rework Inventory Machine Downtime Poor Quality Capacity Imbalance Long queues

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How to Reduce Inventory?

Workstation 1 Workstation 2

Type of Inventory

Buffer stock Cycle stock Pipeline stock

Root Cause

Variability Setup cost Distance

Possible Solutions

• Preventive maintenance
• Standardization
• Rebalance the line
• Single Minute Exchange of Die (SMED) to lower the setup time
• Locate closer to the supplier
• Reduce transport

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JIT Practice 1: Continuous Flow

A B C D 0 1 1 2 1 3 2 1 4 3 2 1 5 4 3 2 7 3 8 4 9 5 1 0 6 2 1 7 3 2 8 4 3 9 5 1 4 0 6 2 5 1 7 3 6 2 8 4 T 7 8 9 0 Batch Shop (Batch Size = 4) A B C D 0 1 2 3 4 T 5 1 Elapsed Time 6 2 Elapsed Time 4 3 4 Flow Shop (Batch Size = 1)

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JIT Practice 1: Continuous Flow

• Producing and moving one item at a time (or a small and consistent batch of items) through a series of processing steps
• Benefits:
  • Reduce work-in-progress inventory
  • Reduce waiting time
• Requirements:
  • Reduce setup times
  • Create a layout that reduces transport

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JIT Practice 2: Takt Time

• Produce at a rate in line with demand
  • Takt time = Total production time / Customer demand Takt Time Manufacturing Time to produce Customer Demand Rate of Sales
• Benefits: reduce finished goods inventory

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Kanban: Implementation of a Pull System

Take kanban to start production Return kanban to authorize production Kanban Kanban area Send container with kanban to storage area Storage area Transport materials and remove kanban

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JIT Practice 3: Pull System

• Push System: Material is "pushed" to downstream workstation Workstation 1 Workstation 2 Workstation 3 - Material Flow > Information Flow (via Production Schedule)
• Pull System: Material is "pulled" to a workstation given the downstream demand signal € Workstation 1 Workstation 2 Workstation 3 - Material Flow - - .-- > Information Flow (via Kanban System)
• Benefits of a pull system: reduce work-in-progress inventory

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Heijunka

Batch Production Schedule (AAAABBBB ... ) Product A Apr/12 15 30 B FGI time * FGI means finished goods inventory Mixed Production Schedule (ABAB ... ) Apr/12 15 30 FGI time

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Heijunka

• Level production by mixed product variants in small batches in sequencing
• Benefits:
  • Smoothed production schedule
  • Reduce inventory
  • Synchronization with customer demand
  • Smoothed demand on the upstream processes and suppliers
  • Balance use of labor and machines
• Requirements:
  • Short setup and changeover time

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Why Jidoka?

• What are the potential problems with the following process? Assembly Line Quality Control Repair & Rework

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Jidoka Practice 1: Quality at the Source

• Inspect quality during the production process
• Never pass on defective units to the next process Defects Found at: Own Process Next Process End of Line Final Inspection End User's Hand $ $ $ $ Impact to the · Very Minor · Minor Delay · Rework · Significant rework · Warranty costs · Delay in Delivery · Administrative costs · Additional inspection · Reputation · Loss of market share

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Andon System

$ Company · Reschedule of workAndon - A system that displays and alert operators and managers of real time status and problems of a process or product quality MAX MIN CHASSIS 3 SHO 1 2 3 4 5 6 7 8 9 10 11 TIERE TRIM 3 EQU ENT COV EXI 6 5 4 3 2 1 50 12 1110 9 8 7 L 123456 TOP 1-2 EXI COV ENT EQU 7 8 9 10 1 1 340 KAN K-25 1-28 C-3 C-2 1-3 150 KAN K-25 K-28 C-3 C-2 1-3 160 F-2 INS 350 KANBAN F-1 SHO IP T3E-15 5 Andon board Andon cord

• Costs and benefits of stopping a line:
  • Benefit: lower risk of snowballing waste due to defects
  • Cost: depend on the duration of line stop

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Poka-yoke

• "mistake-proofing" in Japanese
• A simple and low-cost method that prevents defects from being made or highlights a defect to the operator

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Jidoka Practice 2: Human-Machine Separation

• Design and execute the work with different timelines for the people and machines involved . If the machines are fully automated, people can do other work before returning to the machine and collect outputs Separate Man's Work and Machine's Work Automatic Feed Auto Ejectors
  • Reduce manual cycle time
  • 1 man - multi-machine

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Kaizen

• Engage every employee to continuously improve the process
  • Five Whys: find the root cause of a problem
  • PDCA Cycle (Deming Cycle) 1. Plan a change aimed at improvement 2. Execute the change Plan Do Act Check 4. Institutionalize the change or abandon or do it again 3. Collect data and evaluate results

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TPS House Overview

Goal: Highest Quality, Lowest Costs, Shortest Lead Time

Just-in-Time

Continuous Flow Takt Time Pull System · Kanban Heijunka Standardization

Jidoka

Quality at Source · Andon · Poka-yoke Human-machine Separation Kaizen Stability

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Lean Operations Today

TOYOTA H&M intel ALDI

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Successful Implementation of Lean Operations

• TPS is an integrated and interlinked system with many requirements.
  • Reduction in inventory requires reduction in defects
  • Takt time and pull system coordinate with Heijunka
  • A pull system requires close relationship with suppliers
  • Heijunka requires short setup times . ...
• Implementation of lean operations may require systematic changes and adaptions to different contexts.

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Summary of TPS

• Philosophy of TPS: reduce waste
• Two pillars of TPS: Just-in-Time (JIT) and Jidoka
  • JIT: continuous flow, takt time, pull system
  • Jidoka: quality at source, person-machine separation
• Foundations of TPS: Heijunka and Kaizen
  • Heijunka: smoothing production
  • Kaizen: continuous improvement
• "Lean" problem solving attitude: find the root cause of the problem

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