LEAN PRODUCTIONFOR COMPETITIVE

ADVANTAGE

A Comprehensive Guide to Lean

Methodologies and Management Practices

John Nicholas

L-oC) CRC Press>V^ J Taylor & Francis Group

Boca Raton London New York

CRC Press is an imprint of theTaylor & Francis Group, an informa business

A PRODUCTIVITY PRESS BOOK

Contents

Preface xxi

Acknowledgments xxv

1 Race without a Finish Line 1Competitive Advantage: Better, Cheaper, Faster, More Agile 2Lean Production and Total Quality Management 3Lean Production and the Production Pipeline 3The Lean Difference 4Evolution of Manufacturing 5

The Machine That Changed the World 5Craftsmanship Yields to Industrialization 5Craft Production of Automobiles 6Ford's Mass Production System 6Emergence of Modern Mass Production 7Mass Production around the World 8Toyoda and Ohno 8

Toyota Production System—Prototype for Lean Production 8Reduced Setup Times 9Small Lot Production and One-Piece Flow 9Employee Involvement and Empowerment 10Quality at the Source 10Equipment Maintenance 10Pull Production 11Standard Work 11Supplier Partnerships 11

America's Fall from Manufacturing Grace 12Climbing Back 13Modern Developments 13

The Imperative 14Organization of Book 14Notes ~ 16Suggested Readings 16Questions 17Research Questions 17

vii

viii • Contents

SECTION I CONTINUOUS IMPROVEMENT, WASTE ELIMINATION,CUSTOMER-FOCUSED QUALITY

2 Fundamentals of Continuous Improvement 21Continuous Improvement as Tactics and Strategy 22

Incremental Improvement: Kaizen '. ." 22Innovation Improvement 24Making the Leap 24Improvement as Strategy 26

Finding and Implementing Improvements... 28PDCA Cycle 28

Plan Step 29Do Step 29Check Step 30Act Step 30

Five-Why Process 30Value Analysis/Value Engineering 31

Value Analysis Procedure 31Process Reengineering .33

Reengineering Fundamentals 33Employee-Driven Kaizen 34Kaizen Projects 35Basic Problem-Solving and Improvement Tools 37

Check Sheet 37Histogram 37Pareto Analysis 38Scatter Diagram 40Process Flow Chart 41Cause-and-Effect Analysis ." 42Run Diagram 43

Value Stream Mapping 44Consensus Building 46

Nemawashi 46A3 Report.. 48

A3 Format and Purpose 48A3 Process 48Problem-Solving A3 49

Summary 51Notes 52Suggested Readings 53Questions 53

3 Value Added and Waste Elimination 57Value-Added Focus 58

Necessary and Unnecessary Activities 58Support Organization 58Employee Involvement 59

Contents • ix

Sources of Waste 60Toyota's Seven Wastes 60

Producing Defects 60Transportation and Material Handling 61Inventory : 61Overproduction 63Waiting 63Processing 63Motion 64

Canon's Nine Wastes 65Lean to Green 65

Lean Principles 66Simplification 66

Product, Process, and Procedure Simplification 66Concurrent Engineering 69

Cleanliness and Organization 69Improvement Kickoff. 69The Five Ss 71Benefits 71

Visibility 73Cycle Timing 75Agility 75Measurement 77

Grass Roots Measurement 77Visual Management: Information Post-Its 78Getting to the Bottom Line 78

Variation Reduction ...r. 79Lean Principles beyond Manufacturing 80

The Meaning of Lean Production • 81Implementation Barriers 82

Attitudes 82Time Commitment 82Quality Commitment 83

Misunderstanding Lean Production 83Social Impact of Lean 83First Things First 83Learn as You Go 84

Summary 85Notes 86Suggested Reading 87Questions 87

4 Customer-Focused Quality 89Quality Defined 89

Customer's Perspective 90Producer's Perspective 90

i Contents

Quality of Design 91Quality of Conformance 91

Total Quality Management 91TQM Integrative Framework 92

Marketing, Sales, and Finance 92Product Design and Manufacturing Design 93Purchasing and Suppliers 94Production Management and Frontline Workers 95Customer Service 95

Six Sigma 96Statistical Interpretation 96DMAIC Improvement Process 97Belts and Certification 98

Statistical Process Control (SPC) 98Control Chart 99Process Stability 100Process Capability 101Nonstatistical Process Control 101

Employee Involvement and Quality Ownership 101Frontline Worker Responsibility 101Process Orientation 102Quality Training and Education 102

Implementing TQM 103Barriers to Successful TQM 103

TQM and Lean Production 104Summary 105Notes 105Suggested Readings 106Questions : 106

SECTION II ELEMENTS OF LEAN PRODUCTION

5 Small Lot Production I l lLot Size Basics I l l

Dollar Costs Associated with Lots 112Lot Sizing and Setup Reduction 112Kind of Lots 113

Lot Sizing 113Process and Purchase Batches 113

Lot-for-Lot 113Period Order Quantity 114Economic Order Quantity 115Economic Manufacturing Quantity 116

EOQ-Based Methods: Discussion 117Transfer Batches 118

Lot Size Reduction 119

Contents • xi

Effect of Lot Size Reduction of Competitive Criteria 119Lead Time 120Carrying Cost 121Setup and Handling Cost 121Quality 122Flexibility 123

Case for Larger Process Batches 125Minimal Lot Size 125Small Buffer Stock 126

Demand Variability 127Lead Time Variability 127

Facilitating Small Lot Sizes 127Process Batches 127Purchase Quantities 127Transfer Batches 128Delivery and Shipping Batches 128

Continuous Improvement 129Summary 129Notes 130Questions 131

6 Setup-Time Reduction 135Improve Setups? Why Bother? 135

Traditional Approaches 135Find Another Way 136Benefits of Simplified Setups 137Setup: A Case in Neglect 138

Setup-Reduction Methodology 138Shingo and SMED : 138SMED Methodology for Setup Reduction 139

Stage 1: Identify Internal and External Steps 139Stage 2: Convert Internal Steps to External 140Stage 3: Improve All Aspects of the Setup Operation 141Stage 4: Abolish Setup 142

Techniques for Setup Reduction 143Separate Internal and External Activities 143

Checklists 143Equipment Checks and Repairs 144Setup Schedules 144

Improve Internal Setups 144Parallel Setup Tasks 144Attachment Devices 145Eliminate Adjustments 147

Improve External Setups 149Storage 149Setup Kits and Carts 150Material Handling 150

xii • Contents

Abolish the Setup 152Setup-Reduction Projects 153

Scope of Project 153Setup Reduction Team 154Ready, Get Set, Shoot! 154Analysis of Video Recording 154Generating and Selecting Ideas 155Continuous Improvement 156

Summary 157Notes 157Suggested Reading 158Questions 158

7 Maintaining and Improving Equipment 161Equipment Maintenance 161

Breakdown Repair 162Equipment Problems and Competitiveness 162Preventive Maintenance 163Total Productive Maintenance 163

Benefits of TPM 163Equipment Effectiveness 164

Equipment Losses 164Maintainability 165Reliability 165

Failure Pattern 166Mean Time between Failure 167

Availability 168Availability and Downtime for Repair 168Availability and All Downtime 168Repair Downtime Variability 169

Efficiency 170Rate Efficiency 170Speed Efficiency 171

Quality Rate 171Overall Equipment Effectiveness 172

Preventive Maintenance Program 172Causes of Equipment Problems 172Maintain Normal Operating Conditions 173Maintain Equipment Requirements 173Keep Equipment and Facilities Clean and Organized 174Monitor Equipment Daily 174Schedule Preventive Maintenance 174

Ways of Scheduling PM 175Scheduled PM and Failure Pattern 175

Manage Maintenance Information 179Use Predictive Maintenance 182Role of Operators 183

Contents • xiii

Total Productive Maintenance 184Perform TPM Preventive Maintenance 184Develop In-House Capability to Restore and Redesign Equipment 185Eliminate Human Error in Operation and Maintenance 187

Education and Training:.... 187Foolproofing 187Improving Maintenance Procedures 189

Implementing TPM 191Program Feasibility 191Program Objectives and Master Plan 192Target Areas 192Target Area Committees 193Plantwide Issues 193Management Support 194Maintenance Organization 194

Decentralization :194Central Maintenance 195

Summary 195Notes 196Suggested Reading 197Questions 197

8 Pull Production Systems 201Production Control Systems 202Pull Systems and Push Systems 202

Pull Production Process 203Why Pull Production Cannot Be Stockless 204Push Production Process 206Pull Production and Push Production Contrasted 209Containers and Cards 209Rules for Pull Production 210

How to Achieve Pull Production 211Pull System as a Fixed-Quantity/Reorder-Point System 212Containers in a Buffer 214

Container Size 214Material Handling 214Outbound and Inbound Buffers 215

Conveyance Kanbans 216Production Kanbans 218

Safety Factor 220Another Single-Card System 220Signal Kanban 221What, More Cards? 225

Express Card 225Temporary Card 226Odd-Number Card 226

xiv • Contents

Other Mechanisms for Signal and Control 226Wheeled Carts 226Kanban Squares 227Golf Balls 227Electronic Kanban 227Clothespin Clips 228Milk Run 228Kanban Sequence Board 229

Process Improvement 232Practical Matters 232

Necessary Conditions for Pull Production 233Pull Production and Repetitive Production 234When Pull Does Not Work 234Pull and Push Systems, Both at Once 235Getting Started 235

Summary 236Notes 237Suggested Reading 237Questions 237

9 Focused Factories and Group Technology 243Ways of Doing Work 244

Variety—Efficiency Tradeoff 245Facilities Layout 245

Fixed-Position Layout 245Process Layout 246Product Layout 247Variety-Volume Tradeoff 248

Group Technology : 249Product Coding and Classification Schemes 249

Hierarchical (Monocode) Structure 249Chain (Polycode) Structure 250Hybrid Structure 251

Product Families and Focused Factories 251GT and Product Design 251To Code or Not to Code 252

Focused Factory 252On What to Focus 252Microdesign Issues 256

Flexible Flow Lines 256Flexible U-Lines and S-Lines 257Working Out the Final Layout 257

Product-Quantity Analysis 258Establishing Product and Machine Groups 259

Coding and Classification 260Cluster Analysis 260

Contents • xv

Production Flow Analysis 261Binary Ordering Algorithm 262

Dense Blocks, Then What? 265Advantages and Disadvantages of Focused Factories 267

Summary 269Notes 270Suggested Reading 271Questions 271

10 Workcells and Cellular Manufacturing 275Workcell Concepts 276

Workstations, Workers, and Machines 276Workcell Output and Number of Workers 276

Workcell Applications 277Typical Workcell End Items 277Linked Workcells and Subcells 277

Workcell Design 280Brief Digression: Cycle Time Concept 280Assembly Workcells 281Machining Workcells 285Workcell Capacity 288Cost-Capacity Tradeoff Analysis 289

Cells for Batch Size = 1 290Sequential Changeover Tasks 291Productivity Improvement 292Quality Control 293Workcells Beyond Manufacturing 293

Workers in Cells .'. 294Staffing a Workcell '. 294Simultaneous Staffing of Multiple Cells 295

Equipment Issues 296Machine Sharing 296Machine Acquisition 297Special Operations 297

Cell Automation 298Implementing Cellular Manufacturing 299

Planning and Control -. 299Organizational Issues 300

Roles and Responsibilities 300Incentive Plans 301Time and Rate Standards 301Team Education and Training 303

Attitudinal Issues 304Shop-Floor Workers 304Supervisors 304Management 304

xvi • Contents

Getting Started 305Summary 305Notes 306Suggested Readings 307Questions 307

11 Standard Operations 311Standard Operations 311

Shop-Floor Relevancy 311Shop-Floor Involvement 312Benefits 312

TaktTime 313Completion Time Per Unit 313

Time to Complete a Task or an Operation 313Completion Time per Unit 315Production Capacity 316

Standard Operations Routine 316Kinds of SORs 316SOR Sheet 317Operations Routine and Process Routing Sequence 320Idle Time 321

Standard Quantity of WIP 321Standard Operations Sheet 322

Improvement Tool 323Conditions for Successful Standard Operations 326Standard Operations in the Service Sector 327Summary 328Notes 328Suggested Reading .- 329Questions 329

12 Quality at the Source and Mistake-Proofing 331SPC Limitations 331100% Inspection (Screening) 332

Self-Checks and Successive Checks 332Self-Checks 332Successive Checks 332

Requirements for Self-Checks and Successive Checks 333Check Targets 333

Feedback and Action 333Consideration and Support for Workers 334

Automation 334Cycle Time 335Pursuit of Perfection: Limits of Inspection 335

Jidoka 336Autonomation 336Andons 336

Contents • xvii

Source Inspection and Pokayoke 337Source Inspection 338Pokayoke Functions 340

Regulatory Pokayokes 340Setting Pokayokes 340

Pokayoke Ideas 342Continuous Improvement 344

Summary 344Notes 345Suggested Reading 346Questions 346

SECTION III LEAN PRODUCTION PLANNING, CONTROL, ANDSUPPLY CHAINS

13 Uniform Flow and Mixed-Model Scheduling 351Production Leveling 351

Leveling Production with Buffer Stocks 353Leveling Production with Uniform Schedules 353Requirements for Leveling Production Schedules 355

Continuous, Stable Demand 355Short Setup Times 356Production = Demand 356

Leveling Focus 356Leveling the Master Schedule 357

Leveling One Product Group 357Leveling Multiple Products 358

Leveled Schedules: A Cooperative Effort 361Level Scheduling in Pull Production •. 362

Mixed-Model Production 362Final Assembly Schedule 362Heijunka: Mixed-Model Production 363Batch Size 363MMP and Production Smoothing 363

The MMP Schedule 364Requirements for MMP 365

Flexible Workers 366Effective Quality Assurance 366Small-Lot Material Supply 366

Advantages of MMP 366Elimination of Losses Due to Line Changeover 366Process Improvement 367Balanced Work Loads 367Fewer Losses from Material Shortages 367

Production Planning and Scheduling in Different Circumstances 367Production Philosophy 367

Make to Stock 367

xviii • Contents

Assemble to Order 368Make to Order 368

Final Assembly Scheduling versus Master Production Scheduling 369MTS: Uniform Load Production Schedule 370Assemble to Order 372

Modular Bills 372Modularization Procedure 373Planning Bills 375Alternative to Planning Bills 376Role of Concurrent Engineering 376

Make to Order 377Scheduling with Backlogs 377Minimizing Scheduling Problems 378

Hybrid Systems 380Summary 381Notes 382Suggested Reading 383Questions 383

14 Synchronizing and Balancing the Process 389Synchronization 389

Synchronized Cycle Times 390The Essence of Cycle Time 392

Bottleneck Scheduling 393Principles 393

Throughput Pace 393Buffer Stock 393Process Scheduling 393Drum-Buffer-Rope : 393

Pull from Bottleneck 394Balancing 394

Line Balancing 395Balancing for MMP 397Other Ways to Achieve Balance 400

Dynamic Balance 400Parallel Line 400

Balancing for Synchronous Flow 401Balancing through Worker Reassignment 402Maintaining Synchronization 403

Adapting to Schedule Changes 404Alter the Production Workday 404Alter the Production Rate (Adjust Cycle Time) 405In Practice: Adjusting to Schedule Changes 405

Summary 406Notes 407Suggested Readings 407Questions 407

Contents • xix

15 Planning and Control in Pull Production 411The Whole Enchilada 412

Centralized System 412Decentralized System 413

Centralized Planning and Control System 414Monthly Planning 414

Planning MPSs for Future Periods 414MPSs for Shop Floor Planning 415

Daily Scheduling 415Integrating Recent Demand Information 415Daily Order Alterations 416Material Procurement Forecast 417Kanban Supplier Link 417MRP Supplier Link 418

Decentralized Planning and Control System 418Detailed Capacity Planning 418

Initial Capacity Planning 418Capacity Fine-Tuning 419

Shop-Floor Control 419Visual Management, Again 419

Role of Worker Teams 419Adapting MRP-Based PPC Systems to Pull Production 420

Simplified Bills of Materials 420FlatBOMs 421Phantom Records 423

Stock Areas and Point of Use 424Postdeduct and Deduct Lists 426Rate-Based Master Schedules 427Implementing Pull Production with MRP PPO 428

Step 1: Create a Logical Flow; Improve Material Handling 429Step 2: Introduce the Pull System 429Step 3: Create a New Layout; Reduce Reliance on MRP 430Step 4: Continuously Improve Processes 430

Summary 430Notes 431Suggested Readings 432Questions 432

16 Lean Production in the Supply Chain 437Produce versus Buy 438Relying on Suppliers 438

Core Competency 438Supply Chain Management 439

Process and Customer Focus 440Customer-Supplier Relationships 440

Joint Problem Solving 441

xx • Contents

Quality at the Source 441Information Sharing 441Partnership Relationships 441

Purchase Criteria 442Design Source 443Number of Suppliers 443Type of Agreement 444Terms of Agreement 444Customer—Supplier Interaction 445It Doesn't Come Easy 447Small-Customer, Big-Supplier Partnership 448

Supplier Selection 448Certification 448

Certification by Customer 449Certification by Industry Standard or Award 450

Evaluation 450Purchasing 451

Evolution of Purchasing 451Role of Purchasing in Lean Production 451

Lean in the Supply Chain 453Facilities Layout 453Teamwork 455Setup Reduction and Small-Batch Shipping 455Preventive Maintenance 458Kanban 458Communication and Scheduling 460

Share Plans, Maintain Uniform Schedules 460Point-to-Point Communication 461

Getting Started: Begin at Home ; 463Summary 463Appendix: Supplier Kanban 464Notes 466Suggested Readings 467Questions 467

Index 471

About the Author 499