2015/5/31 Lean Operations and TPS The History of Toyota Seven Sources of Waste JIT and Quality Improvement Flexibility, Standardization, and HR Practices Henry Ford and Model T Interchangeable parts and moving assembly line streamlined the production process and reached an unmatched economy of scale. 2 1
2015/5/31 The History of Toyota Toyota switched from automated looms to military trucks just prior to WWII. Shortage of supplies led to simplistic design of its vehicles. Mass production, with its emphasis on scale economies and large investment in machinery did not fit Toyota’s environment of a small domestic market and little cash. Secondhand equipment and high unit costs forced Toyota to reduce waste and improve quality whenever possible. TPS is the outcome of a long evolution. 3 Comparing Toyota, GM, and Ford 10000 GM 9000 8000 Toyota 7000 6000 Ford 5000 4000 3000 2000 1000 0 1965 1988 2000 2006 Stock Price in US$ 160 140 Toyota 120 100 80 60 GM 40 20 Ford 0 Aug-89 Aug-90 Aug-91 Aug-92 Aug-93 Aug-94 Aug-95 Aug-96 Aug-97 Aug-98 Aug-99 Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 4 2
2015/5/31 Global Benchmarking by IMVP The first true proof of superiority of TPS. GM failed to reduce non ‐ value ‐ added activities that did not contribute the production of the vehicle. 5 TPS Framework Zero non ‐ value added activities (muda) 10.3 Zero defects, zero breakdowns, zero inventory, zero set ‐ up Production flow synchronized with Quality methods to reduce defects demand (JIT) Fool ‐ proofing (poka ‐ yoke) and visual feed ‐ back Detect ‐ stop ‐ alert (Jidoka) One ‐ unit ‐ at ‐ a ‐ time flow 10.4 Defects at machines (original Jidoka) Mixed model production (heijunka) Defects in assembly (Andon cord) Piece ‐ by ‐ piece transfer (ikko ‐ nagashi) Build ‐ in ‐ quality (tsukurikomi) Match production demand based on Takt time 10.5 Pull instead of push Supermarket / Kanban Reduce inventory to Make ‐ to ‐ order expose defects 10.6 Adjustment of capacity to meet takt ‐ time Flexibility 10.7 Multi ‐ task assignment (takotei ‐ mochi) Reduction of Variability Quartile Analysis Standardization of work 10.8 Standard operating procedures Quality circles (Kaizen) Worker involvement 10.9 Fishbone diagrams (Ishikawa) Skill development / X ‐ training 6 3
2015/5/31 10.3 Seven Sources of Waste Overproduction: too much or too early Waiting: idle time and low utilization Transport: internal transport does not create value Over ‐ processing: use expensive materials or spend too much processing times Inventory: hide problems and leads to long flow times Rework: “Do it right the first time” Motion: use the right tool and avoid unnecessary body movements 7 Example: SMED 快速換模 Large set up cost Large production lot size Large inventory 事先調整定位、 簡易拆卸、預熱 模具 8 4
2015/5/31 The Concept of Waste for Hospitals Most nurses spend too much time on non ‐ nursing activities. This waste leads to heavy workload for nurses, poor care for patients, and high costs for health care institutions. Only 60% of the capacity of an operating room is used productively because gaps in the schedule procedure is cancelled room cleaning time procedure delays because of late arrivals 9 10.4 JIT: Achieve One-Unit-at-a-Time Flow An elevator is a batch process which leads to long wait times. Escalators keep people moving constantly without waiting. mixed model production 10 5
2015/5/31 JIT: Produce at the Rate of Customer Demand Most large scale operations have operated based on MRP and forecasts. Extensive periods of large inventories or customer backorders exist. TPS aims at reducing FGI by operating its process in synchronization with customer orders. Customer demand is translated into takt time to control the production rate. 11 JIT: Implement Pull Systems In a push system, flow units are released to the process regardless of the current amount of inventory in process. In a pull system, the resource closest to the market is paced by demand. It also relays the demand information to the next station upstream. 12 6
2015/5/31 Example: Kanban Systems 看板是一種控制物料的方法，看板在物料生產過程中提供相 關資訊，包括時間、規格、數量、運送地點等 13 Kanban Flow Control 上游 4 6 2 1 P 看板 P 看板 市場 W 看板 W 看板 5 B 2 B A A 6 3 前製程 後製程 運送看板 (Withdrawl) ：各站完成加工的產品 必須得到下游的運送看板才能前進 生產看板 (Production) ：各站等待加工的產品 必須得到該站的生產看板才能進行加工 14 7
2015/5/31 JIT Delivery and Focused Factory Networks 減少零組件庫存 直接配送至生 產線使用地點 少量多次補貨 簡化訂貨與驗收 協助供應商改善品質 選擇鄰近供應商 quality at the source 發展成中衛體系 15 Make-to-Order vs. Kanban Systems Make ‐ to ‐ order: every flow unit in the process is assigned to one specific customer order. Low volume and large variety Customers are willing to wait Inventory is expensive Kanban: a flow unit in the process is not designated to fill any specific customer order High volume and low variety Short order lead times Costs and efforts to store the components are low 16 8
2015/5/31 10.5 Quality Improvement Zero defects lead to operations without buffers and no waste of rework. Pokayoke (fool ‐ proofing) reduces the possibility of making mistakes. Jidoka means stopping the process immediately whenever a defect is detected. Quality inspection is built in at every step, as opposed to relying on the final inspection. 17 10.6 Exposing Problems thru Inventory Reduction Inventory covers up problems. Gradually reducing inventory exposes problems and forces improvement. Toyota argument: “Decrease inventory” Buffer argument: “Increase inventory” Inventory in process 18 9
2015/5/31 10.7 Flexibility of the Workforce Need flexible processes to meet demand fluctuations. Flexible processes requires multiple ‐ skilled workers. If demand is high, If demand is low, takt time=1 minute takt time = 2 minutes Step Step Step Step Step Step Step Step Step Step Step Step 1 2 3 4 5 6 1 2 3 4 5 6 The management should provide standard operating procedures, cross ‐ training, job rotation, and skill ‐ based payment. 19 10.9 Human Resource Practices The eighth source of waste: human intellect “In our company, we all have two jobs: (1) to do our job and (2) to improve it.” Quality circles bring workers together to jointly solve production problems. Lifelong employment for the core workers. Strong emphasis on skill development Financial rewards 20 10
2015/5/31 Fishbone Diagram: 5 Whys for Continuous Improvement 21 Summary There is more to a successful operational turnaround than the application of a set of tools. An emphasis on flow, matching supply with demand, and a close eye on the variability of the process. A management infrastructure based on right performance measures. Mindsets of employees are involved in the process. 22 11
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