1. Five Steps to Lean • Define end-customer value for a specific product • specific capabilities • specific price • specific time • Identify entire value stream for each product and eliminate waste • product realization • order fulfillment • production • Make the remaining value steps flow • no waiting, downtime, scrap within or between steps • continuous flow instead of batch-and-queue

2. Five Steps to Lean (continued) • Design and provide what the customer wants only when the customer wants it –let the customer pull the product from the value stream • Pursue perfection • by refining definition of value • getting value to flow faster

3. Old System for MakingStretch Wrappers Storage of raw materials Sawing Machining Welding Subassembly Storage of finished goods Storage of incoming components Storage of parts in process Storage of Painted Frames Crating Touch-up Final Assembly Frame Painting

4. Evils of Batch-and-Queue • Increases work-in-process inventory • Hides inefficiencies, lost opportunities • Lengthens replenishment cycle • Creates finished good inventory • Slows customer response time • Risks obsolete products

5. New Continuous Flow System Incoming materials Frame painting Ship finished goods

6. One Cell’s Continuous Flow Frame Painting Sawing Machining Welding Final assembly work Subassembly of roll carriage Subassembly of control module Testing and shipping

7. Old System for Processing Orders Sales staff Purchasing Regional Sales Coordinator Quoting Order entry/scheduling MRP master schedule Production work orders Engineering. Applications Design and BOM Production expediters Credit checking

8. New Continuous Flow Systemfor Processing Orders Order entry/Credit checking Scheduling by product Sales Eng. app. by product Purchasing by product Quick response team for price quotations Mfg.

9. Old and New Systems for Developing New Products Product definition Marketing Ind. Eng. Purchasing Engineering Specs Team Leader Design in concurrent Development Mech. Eng. Launch Elec. Eng Mech. Eng. Elec. Eng. Mfg. Eng. Mfg. Eng. Ind. Eng.

10. Outcomes • Number of shipped machines doubled • Produce a machine in half the space • Number of defects fell from 8 per machine to .8 • Better understanding of costs • Assigned freed-up workers to Kaikaku team • MRP used only to provide suppliers with long-term production forecasts • Kanban system used to order parts • S-Series was developed in ¼ time of predecessor, ½ of engineering hours

11. Lean Production Principles -Henderson and Larco Lean Production Workplace safety, order, cleanliness JIT Production Six Sigma Quality Pursuit of Perfection Empowered Teams Visual Management

12. The Toyota 5S System • Sort - Separate out all items that are unnecessary and eliminate them complete from the workplace. • Straighten - Arrange all essential items so that that the are clearly marked and easily accessed, e.g., kanban squares. • Scrub – Scrub all machines and the work environment to maintain immaculate cleanliness • Systematize – Make cleaning and organizing a routine practice as part of the work day • Sustain – Sustain commitment to the previous four steps and provide a constantly improving process

13. JIT Production • JIT production means “build to customer demand” • Single piece flow means there is a maximum of one piece between each operation • Value-added activities should move along without interruption, and non-value-added activities eliminated (aided by process-mapping) • Takt time is the “drum beat of consumption” • All tasks should take about the same time. Rebalance them if demand fluctuates or workers are absent. Multi-skilled workers facilitate this. • Kanban links customer demand to final assembly, and then to internal and external suppliers (synchronization) • Changeover time should equal one takt time for final assembly operations

14. Takt Time If customers order 100 products per day, what is the takt time? If customers order 80 products per day, what is takt time? If customers order 120 products per 8 hour shift, what is takt time? What if some workers are idle part of the time? What if some workers build inventory in front of their work stations?

15. Visual Management • Scoreboards, e.g., output compared to goals, sales and profits to date, quality, inventory turns, training schedules • Kanban cards, kanban squares, shadow boards • Flow through racks • Limited number of rework bays • Color-coded lines, parts • Andon lights