YALIN ENSTİTÜ

LEAN THINKINGwww.yalinenstitu.org.tr

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• Introduction

• A Brief History of Manufacturing Systems

• Mass Production

• Lean Thinking

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INTRODUCTION

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PROBLEMS

No more space for

inventories

Decreasing profit

margins

High costs

Defective products, customer returns

Insufficient sales

Competition

Backorders

Equipment breakdowns

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What Should Be Done?

What were the ideal systems in the industrial evolution ?

Which one is the ideal system?

Which is the way to the

ideal system?

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A BRIEF HISTORY OF MANUFACTURING

SYSTEMS

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A BRIEF HISTORY OF MANUFACTURING SYSTEMS

• CRAFT PRODUCTION– By using handtools– Non-repetitive ( one-off, unique )– Customer and product focused

• INDUSTRIAL REVOLUTION– Steam energy - machines – Process oriented layout, general purpose machines– Repetitive products– Inter-changeable parts (maintenance and repair are

economic ) – “Factory System/American System”– More production / unit time

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A BRIEF HISTORY OF MANUFACTURING SYSTEMS

• MASS PRODUCTION

– Pioneered by Henry Ford, mass production adds the following to the industrial revolution era’s principles :

• Standard products and operational efficiency• Flow ( Usage of conveyors at final assembly )• Economies of Scale

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A BRIEF HISTORY OF MANUFACTURING SYSTEMS

• MASS PRODUCTION• Special purpose machinery ( product specific )• Go - No go gauges• More precise parts for easy assembly

– Problems with the Ford System• Lack of ability to provide product variety• Lack of model changeover ability because nearly

all machines are focused on producing one specific part.

• Customers’ demand for a product life cycle less than 19 years ( Model-T ).

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A BRIEF HISTORY OF MANUFACTURING SYSTEMS

• MASS PRODUCTION– The Case For Others

• To supply for customers’ product variety demands• Therefore process focused manufacturing

systems – ( long throughput/lead time )• Bigger and faster machines that reduce costs per

process step• As a result of this longer throughput/lead time and

much larger inventories• Sophisticated MIS requirements due to long

delays between processes and complex product routings.

• Necessity to use MRP systems.

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A BRIEF HISTORY OF MANUFACTURING SYSTEMS

• LEAN MANUFACTURING

– TOYOTA – JAPAN

• Mentality of avoiding waste due to hard times

• Flexibility imposed by small scale market

• Global competition and regulations

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-1880 Local Markets Craft Mfg.

1880 – 1920 National Market Mass Production

1920 – 1960 International Trade Economies of

and Market Sharing scale

MANUFACTURER DOMINATIONPERIOD

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CUSTOMER DOMINATIONPERIOD

1960 - 1980 Saturated Markets Marketing

1980 – Global Competition Presenting Value to the

Customer

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MASS PRODUCTION SYSTEM

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“As farmers became obsessed with

batch production ( harvesting once a year )

and inventories ( grain silos ),

they drove the hunters’ wisdom of doing things one by one to extinction”

Taiichi Ohno

MASS PRODUCTION

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Basic Characteristics of Mass Production

• Production lot sizes as big as possible• Layout according to Machine type• Long changeover times• Holding safety inventory for production problems • Detailed work division• Single-skilled workers• Control based quality• Management based on central planning• Production planning based on sales forecasts• Point efficiencies• Priority of capacity utilization

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Process 2

WITH SMALLER LOTS

Process 1

Process 2

A B A B

A+B

A B A B

A+B A+B A+B

Mass Production

A B

A+B

Process 1

B BB B BB

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Problems With Mass Production

• Long delivery times• Weakness in responding to customer demands • Increase in inventories• Decrease in quality• Increase in non value adding activities• Work becoming more complex everyday• Increasing hierarchy and bureaucracy• Additional costs• Difficulty in adapting to variations• Long term planning necessity • More capital reqirement

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Inventory level

downtime

supply / material flow

labor forceplanning

set-up

defects / rework

capacity

Mass Production

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Source of Problems

Continuing the habit of producing the maximum number of standart products

and emphasizing the importance of capacity utilization as a principal of

MASS PRODUCTION

of the Manufacturer Domination Period !

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Mass Procution works when:

– Product or process technology is superior• Lucent Technologies

– The company is the leader in a growing sector• IBM during the 80’s

– There is no Lean Competitors• GM and Ford before Toyota

Mass Production

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LEAN THINKING

WASTE

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What is “Lean” ?

• “Lean : The part of meat that consists principally of lean muscle

( fat-free)

• Lean Thinking is an approach that Lean Thinking is an approach that aims to get rid of all the wastes aims to get rid of all the wastes (fats) that bring a burden to the (fats) that bring a burden to the system.system.

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Lean Thinking

• Presenting the customer the perfect value– In terms of price, quality, delivery, conformity with

the changing demands

• Value creating processes– design (concept to launch)– production (order to delivery)– service (during product life cycle)

• Waste-free lean processes

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• In MIT, • Between the years 1985-1990,• By spending 5 million US Dollars• With the leadership of James P. Womack, Daniel

T. Jones, Daniel Roos• Global benchmark study about the Automotive

Industry in the areas of:– Product development– Supply chain management– Manufacturing operations– Customer relations

• In MIT, • Between the years 1985-1990,• By spending 5 million US Dollars• With the leadership of James P. Womack, Daniel

T. Jones, Daniel Roos• Global benchmark study about the Automotive

Industry in the areas of:– Product development– Supply chain management– Manufacturing operations– Customer relations

CONCLUSION: Japanese manufacturers are CONCLUSION: Japanese manufacturers are far ahead in every aspectfar ahead in every aspect

International Motor Vehicles Programme

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IMVP Research - 1989Japanese in

Japan

Japanese in North

America

American in North

AmericaAll Europe

Productivity ( hours / veh. ) 16,8 21,2 25,1 36,2Quality (assembly defects/100 veh.) 60 65 82,3 97Space (sq.ft/vehicle/year) 5,7 9,1 7,8 7,8Size of Repair Area (as % of assy space) 4,1 4,9 12,9 14,4Inventories (days for 8 sample parts) 0,2 1,6 2,9 2AutomationWelding % 86 85 76 77Painting % 55 41 34 38Assembly % 1,7 1,1 1,2 3,1Work Force% of Work Force in Teams 69 71 17 0,6Job Rotation ( 0 = none, 4 = frequent ) 3 2,7 0,9 1,9Suggestions / Employee 61,9 1,4 0,4 0,4Number of Job Classes 11,9 8,7 67,1 14,8Training of New Production Workers (hours) 380 370 46 173

Summary of Assembly Plant Characteristics, Volume Producers, 1989

( Averages for Plants in Each Region )

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IMVP Research - 1989

Japanese Producers

American Producers

European Volume

Producers

European Specialist Producers

Avg. Engineering Hours per New Car ( millions ) 1,7 3,1 2,9 3,1Avg. Development Time per New Car ( in months ) 46 60 57 60

Supplier Share of Engineering 51% 14% 37% 32%

Die Development Time ( months ) 14 25 28

Prototype Lead Time ( months ) 6 12 11Time from Production Start to First Sale ( months ) 1 4 2Return to Normal Productivity After New Model ( months ) 4 5 12Return to Normal Quality After New Model ( months ) 1,4 11 12

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The Machine That Changed The WorldThe Machine That Changed The World

Published inPublished in 19901990Over 5Over 500.000 00.000 sold in more than 11 sold in more than 11

languageslanguages

- James P. Womack- James P. Womack- Daniel T. Jones- Daniel T. Jones- Daniel Roos- Daniel Roos

The Machine That Changed The WorldThe Machine That Changed The World

Published inPublished in 19901990Over 5Over 500.000 00.000 sold in more than 11 sold in more than 11

languageslanguages

- James P. Womack- James P. Womack- Daniel T. Jones- Daniel T. Jones- Daniel Roos- Daniel Roos

The Machine That Changed The World

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• Between 1992-1996,• 50 Companies of different sizes, of different ages

( old-new ), and active in different sectors, from The USA, England, Germany and Japan have been examined. Sales over 300.000 ( English )

Lean Thinking Lean Thinking

– Published in 1996– James P. Womack– Daniel T. Jones

• Between 1992-1996,• 50 Companies of different sizes, of different ages

( old-new ), and active in different sectors, from The USA, England, Germany and Japan have been examined. Sales over 300.000 ( English )

Lean Thinking Lean Thinking

– Published in 1996– James P. Womack– Daniel T. Jones

“Lean Enterprise” Project

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General Motors Framingham, USA versus Toyota Takaoka, JAPAN versus NUMMI Fremont, USA 1987

Assembly Hours per Car

Assembly Defects per 100 Cars

Assembly Space per Car

Inventories of Parts ( Average )

Space used for Rework

Absenteeism

16

45

0,45

2 hours

none

none

31

130

0,75

2 weeks

15%

15%

General Motors Toyota

19

45

0,65

2 days

7%

1,5%

NUMMI

Source : IMVP World Assembly Plant Survey, 1989

NUMMI PLANT IS A JOINT VENTURE BETWEEN GENERAL MOTORS and TOYOTA. NUMMI IS BEING MANAGED BY JAPANESE MANAGERS and

OPERATED BY AMERICAN WORKERS IN THE USA.

Universality

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The GOALAs competition increases getting Lean is compulsory

• Producing only the products demanded by the customer

• At the exact time the customer demands• By consuming less resources• And focusing on the activities that create value

for the customer

FROM MASS PRODUCTIONFROM MASS PRODUCTION LEAN MANUFACTURINGLEAN MANUFACTURING

TOTO

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Basic Principals of Lean Thinking

Value

Value Stream

Flow

Pull

Perfection

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Benefit presented to the customer

1. Value

• Lean thinking originates from “ value ”

• Value is created by the producer

• Value can only be defined by the customer

Value is :• Product and/or service with definite specifications,• for which the customer is ready to pay for, • and that meets the customer’s requirements in a given

period of time, • with a definite price.

Definition of Value

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Unavoidable waste ( Incidental work )

Value adding work

Waste ( Muda )

ELIMINATE

DECREASE

Value and Waste

3 Types of Activities 3 Types of Activities

in a Value Stream :in a Value Stream : • Value Adding

– Transformation of raw material

to product according to the customers’ demands

• Necessary Non-Value Adding – Die change, adjustment, get/drop tool

• Non-Value Adding– waiting, counting, sorting, defect, rework

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“7 big sins”

Wastes

• Defects in product

• Overproduction

• Inventories

• Unnecessary motion of people

• Excessive transportation of material

• Waiting people, machines and products

• Inappropriate processing

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The Causes of Waste

• Insufficient working methods• Long changeovers• Insufficient processes• Lack of training• Insufficient maintenance• Long distances• Lack of leadership

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Represents the 3 critical management tasks a specific product ( goods and / or services ) should pass through :

2. Value Stream

• Problem Solving : Starting with concept, continuing with detailed design and engineering and ending with the launch of production

• Information Management : Starting with order, continuing with detailed scheduling and ending with delivery to the customer

• Physical Transformation : Starting with raw material, continuing with production and ending with the realization of the final product.

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process

Lots of companies

One Plant

process process process

2. Value Stream

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R & D Planning Production Distribution Sales

R & D Planning Production Distribution Sales

Lead Time

Model

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BOKSİTMADENİ

Haddehane

Eritme ocağı

Sıcak çekme

Soğuk çekme

Kutu imalatı

MISIRTARLASI

Mısır stokları

Karamel tesisi

Karamel deposu

Esans tesisi

PANCARTARLASI

Pancar deposu

Şeker fabrikası

Şeker deposu

KÖKNARORMANI Kağıt

sanayiKarton

fabrikasıKartondeposu DOLUM

Dağıtım deposuMağazaEv

Avustralya

Norveç

Almanya

İsveç

İngiltere

İngiltere

Value Stream- Canned Coke

Total Time : 319 days

Total Process time : 3 hours

Tesco - England

BEET FIELD

BEET WAREHOUSE

SUGAR FACTORY

SUGAR WAREHOUSE

CORN FIELD

CORN INVENTORY

CARAMEL PLANT

CARAMEL INVENTORY

EXTRACT PLANT

BOXITE MINE

Australia

ROLLING MILL

Norway

MELTING PLANT

HOT EXTRUSION

COLD EXTRUSION

Germany

Sweden

CAN PRODUCTION

FIR TREE FOREST

PAPER INDUSTRY

CARTOON FACTORY

CARTOON WAREHO-USE

BOTTLING FACTORY

England

DISTRIBUTION WAREHOUSE

England

SHOPPING CENTER

HOME

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In Plant Value Stream

MÜŞTERİTEDARİ KÇİ

Siparişemri

Siparişemri

PROSES

1

PROSES

1

PROSES

1

Production programme

PLANLAMA

MRP

minutesminutes

weeksweeks

SUPPLIERORDER

PLANNINGORDER

CUSTOMER

PROCESS PROCESS PROCESS

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Lead Time

design production delivery

The GOAL

Value Adding Activity Waste (Muda)

To Decrease Lead timeTo Decrease Lead time

To Increase Value Added Time %To Increase Value Added Time %

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The GOAL

• Financial gains by freeing up resources• Producing according to real demand instead

of forecasts• Providing customer satisfaction• Providing traceability of quality• Reducing unnecessary part inventories • Reducing the risk of being outdated• Reducing fluctuation due to promotions

When we decrease the lead time by eliminating wastes:

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Manufacturing Lead time

99 % 1%

A typical manufacturing company

Time

Time90 % 10 %

Lean Manufacturing ApproachValue Added

Waste (Muda)

99.5 % 0.5 %

Improvement results with traditional methods

Time

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Produce one - deliver one without waiting

3. Continous Flow

• By performing the real value creating steps consecutively, transform the raw material into a product and deliver it to the end user

• Perfect every step (KAIZEN)

– capable – right every time (6 SIGMA)

– available – always available (TPM)

– appropriate – flexible and at the desired scale ( LEAN )

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Batch and Push Manufacturing

Lead Time : for the whole lot 30 ++ minutes

Process A: 10 minutes Process B: 10 minutes Process C: 10 minutes

One Piece Flow

BB B B B

All processes are 1 minute, 3 consecutive processes and lot size ( batch ) of 10

BBB B C CC C

B C

3 min. 12 min.

Continous Flow “produce one, deliver one”

Lead Time: 12 minutes

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Continous Flow

• Ford, 1913, model T – Continous flow at the final assembly– Sequential layout of machines – 90% resource savings – Same model for 19 years

• Today;– Demand for small lots– Continous flow for all products– Adaptation to fluctuations in customer demand– High product variability demanded by the

customer

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Example : Mass Production

Material Warehouse

FinishedGoods

Warehouse

Packaging Painted Parts Storage Touch up

Semi Finished Product WarehouseParts

Warehouse

Cut to length

Lathe Welding

Semi finished product

assembly

Final Assembly

Painting

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Example : Flow Production

Product A CellIncomingPartsWarehouse

FinishedGoods Warehouse

PAINTING

Space gained for new products

Gains :

50% decrease in workforce,

45% decrease in space

94% decrease in lead time

Product B Cell

Product C Cell

Product D Cell

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All steps demand from the previous

4. Pull

• Producing what the next process (customer) demands, at the desired quantity ( not more / not less ) and at the desired time ( not before or later ).

• Following all steps backwards starting from the end customer’s demand

• A simple way to put production under control

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Pull System

CUSTOMER

I demand one now

I need one more

RAW MATERIAL

Value should flow, at the time,

for the products,

and at the speed,

demanded by the customer.

Here you are

Here you are

Here you are

Here you are

I need one more

I need one more

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Benefits of Pull Systems

• Resources are only allocated to products that are demanded

• No inventories are formed on the value chain• Financial turnover ( cash flow ) speeds up• Regulates the value stream according to the

customer• Problems like ; Obsolete finished goods

inventory at hand; rework or scrapping of products due to design changes; discount campaigns for undemanded products, do not arise.

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... What if a machine breaks down?

... What if there are defective parts among the products?

... What if the deliveries are late?

ALL STOP !!

Assembly

Tier 2 Supplier

Painting

Welding

Stamping

Tier 1 Supplier

Lean Flow

Main Distributor

Dealer

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Current State

Future State

Perfection ( Ideal State )

Original State

Perfection

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Principles of Lean Thinking - Summary

1. VALUE : Specify value for the product

2. VALUE STREAM : Identify the value stream for every product family

3. FLOW : Make the identified value flow

4. PULL : Make the customer pull the value

5. PERFECTION : Manage towards perfection.

To avoid focusing solely on the technics ,To avoid focusing solely on the technics ,

always repeat the principles !always repeat the principles !

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BenefitsParameters Gains

Product Design Lead Time 75%

Manufacturing Lead time 90%

Productivity 100%

Defects 80%

Inventories 90%

Area used 50%

Work Accidents 50%

New Investments Too little

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Gains

Reduction in scrap and rework

Reduction in overtime

Increase in delivery performance

Reduction in inventories

Increase in present product sales

Bringing outsourced production in the plant

Adding extra value to the products

Reduction in support function department costs

Improvement in cash flow

Reduction in manpower costs

New products

SHORT TERM MIDDLE TERM LONG TERM

New sales via better service

Utilization of freed up space

Reduction in obsolete inventories

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Lean Company Model

JIT JIDOKA

LEAN MANUFACTURING

SYSTEM

LEAN LEADERSHIP

Lean Supply Chain

Development

Lean organization

and processes

Respect for People and Mutual Trust

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JIDOKA

ONE PIECE FLOW

LEAN MANUFACTURING TECHNIQUES

5 S

KAIZEN

KANBAN

JIT

POKA YOKE

TPM

SMED

SHOJINKA

DOE

QFD VA/VE

TAKT

VALUE STREAM MAPPING

HEIJUNKA

“The key to lean is in the thinking and not just in the tools”

James WOMACK

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Paradigm shift

• Adequate quality

• Don’ let the production stop

• Everything’s all right

• GOAL: Production quantity

• Inventory is safety

• High volume low variety

• Functional responsibility

• Being unidirectional

• Hierarchial organization

• Zero defects

• Don’t let the breakdown happen again

• Continous improvement

• GOAL: Customer satisfaction

• Inventory is waste

• Low volume high variety

• Value stream responsibility

• Being multidirectional

• Lean organization