Chapter 14 – Lean Operations

1. Chapter 14 – Lean Operations Production Environments; Lean Operations (“JIT”) History, Goals and Building Blocks; Maintenance SJSU Bus 140 - David Bentley

2. Part 2 Summary to Date - 1 • Forecasting demand is basis for all planning • Approaches • Judgment • Associative (for cycles) • Historical • Multi-period pattern (for trend and seasonal) • Single period patternless (other) • Measures of forecast error SJSU Bus 140 - David Bentley

3. Part 2 Summary to Date - 2 • Aggregate planning • Sales plan • Production plan (most likely in $) • Long range resource plan (LRRP) • Disaggregate to intermediate range • Demand forecast (include “other” demand) • Master production schedule (MPS) • units of product (or “end items”) • Rough cut capacity plan (RCCP) • Only resources critical to meeting the MPS SJSU Bus 140 - David Bentley

4. Part 2 Summary to Date - 3 • MPS drives the next level • Material Requirements Plan (MRP) • All assemblies, subassemblies, fabricated parts, components, “raw” material • “Predicts” shortages • Suggests action through messages • Capacity Requirements Plan (CRP) • All labor, equipment, other important resources SJSU Bus 140 - David Bentley

5. Part 2 Summary to Date - 4 • MRP terms • Gross requirements • Derived from planned order releases at higher level • Scheduled receipts • Date and quantity for delivery of existing orders • Projected availability • Starts with current on hand • If negative = net requirements, MRP must plan action • Planned order releases • Created by MRP, don’t exist outside the computer SJSU Bus 140 - David Bentley

6. Part 2 Summary to Date - 5 • MRP processing • Driven by MPS • Proceeds level by level • Projects available inventory until shortage • Then suggests push, pull, cancel • If not adequate, creates planned order • Order quantity determined by lot sizing rule • Order release date determined by lead time SJSU Bus 140 - David Bentley

7. Part 2 Summary to Date - 6 • Evolution of MRP Systems • MRP (Joseph Orlicky) • Closed Loop MRP (Oliver Wight) • MRP II (Oliver Wight) • ERP (Gartner Group) • Latest “hot buttons” • Supply chain management • E-commerce SJSU Bus 140 - David Bentley

8. Production Environments • Product Characteristics (continuum) • Customized <--------------> Commodity • Operation Types (continuum) • Project ¯|¯ • Job Shop | • Batch | • Repetitive/Assembly | • Continuous flow _|_ SJSU Bus 140 - David Bentley

9. History of Lean Operations (“JIT”) • Japanese Post-WW II conditions • Emphasis on quality and eliminating waste • Also called “lean manufacturing” or the “Toyota production system” • U.S. attention as a result of oil embargo • Change in philosophy needed in U.S. • Also called “Zero Inventory” in U.S. SJSU Bus 140 - David Bentley

10. Obstacles to “JIT” in the US • Emphasis on MRP systems • Fit job shops most closely • APICS, Oliver Wight and others • Cost Accounting • Traditional job accounting • Management • Reluctance to empower employees • Focus on high utilization • Limited allowance for training SJSU Bus 140 - David Bentley

11. Key Contributors to “JIT” - 1 • Japan (developer) • TaichiOhno (Toyota Motor Company) • Toyota Production System • Aka Lean Production or Lean Manufacturing SJSU Bus 140 - David Bentley

12. Key Contributors to “JIT” - 2 • US (popularizers) • RichardSchonberger (U of Nebraska, U of Washington) • Emphasized concepts, management aspect • “Japanese Manufacturing Techniques” • “World Class Manufacturing” • RobertHall (U of Indiana) • Emphasized specific tools and techniques • “Zero Inventories” SJSU Bus 140 - David Bentley

13. Lean Operations Goals • Eliminate waste • Smooth the flow • Minimize disruptions • Minimize inventory • Reduce queue, setup, wait, transit times • Reduce lead time • Introduce flexibility • Reduce cost SJSU Bus 140 - David Bentley

14. Lean Operations Requirements • Management commitment • Quality • Training • Worker involvement / ownership • Flexibility - people and equipment • Process changes • Supplier partnerships SJSU Bus 140 - David Bentley

15. Building Blocks - 1 • Product design • Standard parts • Modular design • Capable production systems SJSU Bus 140 - David Bentley

16. Building Blocks - 2 • Process design • Quality improvement • Small lot sizes • Setup time reduction • Manufacturing cells • Limited WIP • Production flexibility • Minimal inventory storage SJSU Bus 140 - David Bentley

17. Building Blocks - 3 • People • View employees as assets • Cross-training • Commitment to continuous improvement • Cost accounting (big obstacle in U.S. due to job costing bias) • Leadership SJSU Bus 140 - David Bentley

18. Building Blocks - 4 • Manufacturing planning and control • Level loading • Pull systems • Visual signals (Kanban) • Container, card(s), cart, taped space on floor or counter, colored lights (??), golf balls (??) • Supplier partnerships • Reduced transaction processing • Preventive maintenance and housekeeping SJSU Bus 140 - David Bentley

19. Making the change • Insure true management commitment • Provide employees training • Focus on internal operations before moving on to suppliers • Start small (one line) and at end of process • Deal with cost accounting issues early • Now extend to your suppliers SJSU Bus 140 - David Bentley