8 Lean Systems

For Operations Management, 9e by

PowerPoint Slides
Krajewski/Ritzman/Malhotra
by Jeff Heyl © 2010 Pearson Education
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8–1
Lean Systems
 Lean systems affect a firm’s internal linkages
between its core and supporting processes and
its external linkages with its customers and
suppliers.
 One of the most popular systems that
incorporate the generic elements of lean
systems is the just-in-time (JIT) system.
 The Japanese term for this approach is Kaizen.
The key to kaizen is the understanding that
excess capacity or inventory hides process
problems.
 The goal is to eliminate the eight types of waste.

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8–2

Eight Wastes
TABLE 8.1 | THE EIGHT TYPES OF WASTE OR MUDA
Waste Definition
1. Overproduction Manufacturing an item before it is needed.
2. Inappropriate Using expensive high precision equipment when simpler
Processing machines would suffice.
3. Waiting Wasteful time incurred when product is not being moved or
processed.
4. Transportation Excessive movement and material handling of product between
processes.
5. Motion Unnecessary effort related to the ergonomics of bending,
stretching, reaching, lifting, and walking.
6. Inventory Excess inventory hides problems on the shop floor, consumes
space, increases lead times, and inhibits communication.
7. Defects Quality defects result in rework and scrap, and add wasteful
costs to the system in the form of lost capacity, rescheduling
effort, increased inspection, and loss of customer good will.
8. Underutilization of Failure of the firm to learn from and capitalize on its employees’
Employees knowledge and creativity impedes long term efforts to eliminate
waste.

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8–3

Continuous Improvement

Figure 8.1 – Continuous Improvement with Lean Systems

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8–4
Supply Chain Considerations
 Close supplier ties
 Low levels of capacity slack or inventory
 Look for ways to improve efficiency and reduce
inventories throughout the supply chain
 JIT II
 In-plant representative
 Benefits to both buyers and suppliers

 Small lot sizes

 Reduce the average level of inventory
 Pass through system faster
 Create uniform workload and prevent overproduction
 Increase setup frequency

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8–5

Process Considerations

 Pull method of work flow

 Push method
 Pull method
 Quality at the source
 Jidoka
 Poka-yoke
 Andon
 Uniform workstation loads
 Takt time
 Heijunka
 Mixed-model assembly
 Lot size of one

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8–6

Process Considerations

 Standardized components and work

methods

 Flexible workforce

 Automation

 Five S (5S) practices

 Total Preventive Maintenance (TPM)

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8–7

Five S Method

TABLE 8.2 | 5S DEFINED

5S Term 5S Defined
1. Sort Separate needed from unneeded items (including tools, parts,
materials, and paperwork), and discard the unneeded.
2. Straighten Neatly arrange what is left, with a place for everything and everything
in its place. Organize the work area so that it is easy to find what is
needed.
3. Shine Clean and wash the work area and make it shine.
4. Standardize Establish schedules and methods of performing the cleaning and
sorting. Formalize the cleanliness that results from regularly doing
the first three S practices so that perpetual cleanliness and a state of
readiness are maintained.
5. Sustain Create discipline to perform the first four S practices, whereby
everyone understands, obeys, and practices the rules when in the
plant. Implement mechanisms to sustain the gains by involving
people and recognizing them via a performance measurement system.

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8–8

Designing Lean System Layouts

 Line flows recommended

 Eliminate waste

 One worker, multiple machines (OWMM)

 Group technology
 Group parts or products with similar
characteristics into families

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8–9

One Worker Multiple Machines (OWMM)

Figure 8.2 – One-Worker, Multiple-Machines (OWMM) Cell

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 10
Group Technology
Figure 8.3 – Process Flows Before and After the Use of GT Cells

Lathing Milling Drilling

L L M M D D

D D
L L M M

Grinding

L L M M
G G

L L Assembly
G G
A A

Receiving and A A G G
shipping

(a) Jumbled flows in a job shop without GT cells

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 11

Group Technology
Figure 8.3 – Process Flows Before and After the Use of GT Cells

L L M D G Assembly
area
Cell 1 Cell 2 A A

Receiving L M G G

Cell 3

L M D
Shipping

(b) Line flows in a job shop with three GT cells

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 12

The Kanban System

Receiving post
Kanban card for Storage
product 1 area
Kanban card for
product 2

Empty containers

Assembly line 1

O2

Fabrication
cell
O1 O3
Assembly line 2

Full containers
O2

Figure 8.4 – Single-Card Kanban System

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 13

The Kanban System

Receiving post
Kanban card for Storage
product 1 area
Kanban card for
product 2

Empty containers

Assembly line 1

O2

Fabrication
cell
O1 O3
Assembly line 2

Full containers
O2

Figure 8.4 – Single-Card Kanban System

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 14

The Kanban System

Receiving post
Kanban card for Storage
product 1 area
Kanban card for
product 2

Empty containers

Assembly line 1

O2

Fabrication
cell
O1 O3
Assembly line 2

Full containers
O2

Figure 8.4 – Single-Card Kanban System

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 15

The Kanban System

Receiving post
Kanban card for Storage
product 1 area
Kanban card for
product 2

Empty containers

Assembly line 1

O2

Fabrication
cell
O1 O3
Assembly line 2

Full containers
O2

Figure 8.4 – Single-Card Kanban System

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 16

The Kanban System

Receiving post
Kanban card for Storage
product 1 area
Kanban card for
product 2

Empty containers

Assembly line 1

O2

Fabrication
cell
O1 O3
Assembly line 2

Full containers
O2

Figure 8.4 – Single-Card Kanban System

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 17

The Kanban System

Receiving post
Kanban card for Storage
product 1 area
Kanban card for
product 2

Empty containers

Assembly line 1

O2

Fabrication
cell
O1 O3
Assembly line 2

Full containers
O2

Figure 8.4 – Single-Card Kanban System

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 18

The Kanban System

Receiving post
Kanban card for Storage
product 1 area
Kanban card for
product 2

Empty containers

Assembly line 1

O2

Fabrication
cell
O1 O3
Assembly line 2

Full containers
O2

Figure 8.4 – Single-Card Kanban System

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 19

The Kanban System

1. Each container must have a card

Customer:

Supplier:

Lot Quantity:

Location:

Part Number:
2. Assembly always withdraws from
fabrication (pull system)

KANBAN
3. Containers cannot be moved without a
kanban
4. Containers should contain the same
number of parts
WS 116

WS 83

Bin 47
Aisle 5

1234567Z
5. Only good parts are passed along
6. Production should not exceed
authorization
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 20
Number of Containers

 Two determinations
 Number of units to be held by each container
 Determines lot size
 Number of containers
 Estimate the average lead time needed to produce a
container of parts
 Little’s law
 Average work-in-process inventory equals the average
demand rate multiplied by the average time a unit spends
in the manufacturing process

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 21

Number of Containers
WIP = (average demand rate)
 (average time a container spends in the manufacturing process)
+ safety stock

WIP = kc

kc = d (w + p )(1 + α)

d (w + p )(1 + α)
k= c
where
k= number of containers
d= expected daily demand for the part
w= average waiting time
p= average processing time
c= number of units in each container
α= policy variable
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 22
Number of Containers

 Formula for the number of containers

Average demand during lead time + Safety stock

k=
Number of units per container

WIP = (average demand rate)(average time a container

spends in the manufacturing process) + safety stock

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 23

Determining the Appropriate
Number of Containers
EXAMPLE 8.1
 The Westerville Auto Parts Company produces rocker-arm
assemblies
 A container of parts spends 0.02 day in processing and 0.08
day in materials handling and waiting
 Daily demand for the part is 2,000 units
 Safety stock equivalent of 10 percent of inventory

a. If each container contains 22 parts, how many containers

should be authorized?

b. Suppose that a proposal to revise the plant layout would

cut materials handling and waiting time per container to
0.06 day. How many containers would be needed?

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 24

Determining the Appropriate
Number of Containers
SOLUTION
a. If d= 2,000 units/day, b. Figure 8.5 from OM
p= 0.02 day, Explorer shows that
α= 0.10, the number of
w= 0.08 day, and containers drops to 8.
c= 22 units

2,000(0.08 + 0.02)(1.10)
k=
22
220
= = 10 containers
22

Figure 8.5 – OM Explorer Solver for

Number of Containers

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 25

Application 8.1
Item B52R has an average daily demand of 1000 units. The
average waiting time per container of parts (which holds 100
units) is 0.5 day. The processing time per container is 0.1 day. If
the policy variable is set at 10 percent, how many containers
are required?

d (w + p )(1 + α)
k= c
1,000(0.05 + 0.01)(1 + 0.1)
=
100

= 6.6, or 7 containers

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 26

Other Kanban Signals

 Cards are not the only way to signal need

 Container system

 Containerless system

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 27

Value Stream Mapping (VSM)

 Value stream mapping Product

is a qualitative lean family
tool for eliminating
waste
Current state
drawing

 Creates a visual “map”

of every process Future state
involved in the flow of drawing
materials and
information in a
product’s value chain Work plan and
implementation

Figure 8.6 – Value Stream Mapping Steps

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 28

Value Stream Mapping

Figure 8.7 – Selected Set of Value Stream Mapping Icons

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 29

Value Stream Mapping

Figure 8.8 – A Representative Current State Map for a Family of

Retainers at a Bearings Manufacturing Company
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 30
House of Toyota

 A key challenge is to bring underlying

philosophy of lean to employees in an
easy-to-understand fashion

 The house conveys stability

 The roof represents the primary goals of

high quality, low cost, waste elimination,
and short lead-times

 The twin pillars, which supports the roof,

represents JIT and Jidoka

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 31

House of Toyota

Highest quality, lowest cost,

shortest lead time by eliminating
wasted time and activity

Just in Time (JIT) Culture of Jidoka

 Takt time Continuous  Manual or automatic
Improvement line stop
 One-piece flow
 Pull system  Separate operator and
machine activities
 Error-proofing
 Visual control

Operational Stability
Heijunka Standard Work TPM Supply Chain

Figure 8.9 – House of Toyota

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 32
Operational Benefits and
Implementation Issues
 Organizational considerations
 Human costs of lean systems
 Cooperation and trust
 Reward systems and labor classifications

 Process considerations

 Inventory and scheduling

 Schedule stability
 Setups

 Purchasing and logistics

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 33

Solved Problem
A company using a kanban system has an inefficient machine
group. For example, the daily demand for part L105A is 3,000
units. The average waiting time for a container of parts is 0.8
day. The processing time for a container of L105A is 0.2 day,
and a container holds 270 units. Currently, 20 containers are
used for this item.

a. What is the value of the policy variable, α?

b. What is the total planned inventory (work-in-process and
finished goods) for item L105A?
c. Suppose that the policy variable, α, was 0. How many
containers would be needed now? What is the effect of the
policy variable in this example?

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 34

Solved Problem
SOLUTION
a. We use the equation for the number of containers and then
solve for α:

d (w + p )(1 + α)
k= c

3,000(0.8 + 0.2)(1 + α)
=
270
so
20(27)
(1 + α) = = 1.8
3,000(0.8 + 0.2)

α = 1.8 – 1 = 0.8

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 35

Solved Problem
b. With 20 containers in the system and each container holding
270 units, the total planned inventory is 20(270) = 5,400 units

c. If α = 0
3,000(0.8 + 0.2)(1 + 0)
k=
270

= 11.11, or 12 containers

The policy variable adjusts the number of containers. In this

case, the difference is quite dramatic because w + p is fairly
large and the number of units per container is small relative to
daily demand.

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 8 – 36