Operation Managements

Lean

History of Lean

• Sakichi Toyoda, the founder of the Toyota group of companies, started Toyota as a textile machine company.
• Kiichiro Toyoda, son of Sakichi and founder of the Toyota automobile business, developed the concept of Just-in-Time in the 1930s. He decreed that Toyota operations would contain no excess inventory and that Toyota would strive to work in partnership with suppliers to level production. 
• Taiichi Ohno, Toyota's chief of production in the post-WWII period. He was THE main developer of Toyota Production System (TPS).
• Dr. Shigeo Shingo:  A consultant to Toyota. PS: Shingo Prize is the highest manufacturing excellence award in the U.S. The prize is given both to companies and individuals who contribute to the development of manufacturing excellence.
• Toyota Production System (TPS) drew wide attention from the industrial community because Toyota was a profitable car company in  Japan during and after the oil embargo in 1970s.
• Outside Japan, dissemination began in earnest with the creation of the Toyota-General Motors joint venture-NUMMI (New United Motor Manufacturing Inc.) in California in 1984.
• Widespread recognition of TPS as the model production system grew rapidly with the publication in 1990 of The Machine That Changed the World: The Story of Lean Production, the result of five years of research led by the Massachusetts Institute of Technology.
• The MIT researchers found that TPS was so much more effective and efficient than traditional, mass production that it represented a completely new paradigm and coined the term lean production to indicate this radically different approach to production.
• The term was coined by John Krafcik, a research assistant at MIT with the International Motor Vehicle Program in the late 1980s. He then worked for General Motors and now is a Vice President of Hyundai, U.S.

Essentially, lean is centered on preserving value with less work. Lean manufacturing is a management philosophy derived mostly from the Toyota Production System (TPS) and identified as "Lean" only in the 1990s [1-2]. TPS is renowned for its focus on reduction of the original Toyota seven wastes to improve overall customer value, but there are varying perspectives on how this is best achieved. The steady growth of Toyota, from a small company to the world's largest automaker [3], has focused attention on how it has achieved this success. 

Figure 1: History of Management

Toyota Production System (TPS)

• Definition: The production system developed by Toyota Motor Corporation to provide best quality, lowest cost, and shortest lead time through the elimination of waste.
• TPS is comprised of two pillars, Just-in-Time and Jidoka (autonomation) , and is often illustrated with the "house" shown on the next slide.
• TPS is maintained and improved through iterations of standardized work and kaizen (continuous improvement), following Plan-Do-Check-Act (PDCA Cycle from Dr. Deming), or the scientific method.

Figure 2: Toyota Production System House

Toyota’s philosophy

• Selling price – Cost = Profit
• Customers decide the selling price.
• Profit is what remains after subtracting the cost from it.
• The main way to increase profit is to reduce cost.
• Consequently, cost reduction through waste elimination should have the highest priority.
• Toyota’s paradox: Reducing cost (waste), will reduce lead time while  increasing quality and customer satisfaction.

Lean is the set of "tools" that assist in the identification and steady elimination of waste (muda). As waste is eliminated quality improves while production time and cost are reduced. A non-exhaustive list of such tools would include: SMED, Value Stream Mapping, Five S, Kanban (pull systems), poka-yoke (error-proofing), Total Productive Maintenance, elimination of time batching, mixed model processing, Rank Order Clustering, single point scheduling, redesigning working cells, multi-process handling and control charts (for checking mura).

Principles for Implementing Lean Manufacturing

Definition of Lean Manufacturing

“A systematic approach to identifying and eliminating waste (non-value-added activities) in a company’s operations. Lean emphasizes flowing the product at the pull of the customer.” Lean is implemented through both rapid and continuous improvement.

Kaizen- “kai’ means “little” or “ongoing”.  “Zen” means “for the better” or “good.” Small continuous improvements on everyone’s part leads to world class manufacturing.

Concept of Value-Added Activity

Value-Added Time

Any activity that increases the market form or function of the product or service.  (These are things the customer is willing to pay for.)

Non-Value Added Time (Waste or muda)

Any activity or use of resources that does not add market form or function or is not necessary.  (These activities should be reduced, integrated, simplified, or eliminated.)

Reference :

1. Womack, J.P, Daniel, T.J, and Roos, D. (1990). “The Machine That Changed the World”
2. Holweg, M (2007). "The genealogy of lean production". Journal of Operations Management 25 (2): pp.420-437.
3. Bailey, D (24 January 2008). "Automotive News calls Toyota world No 1 car maker". Reuters.com. Reuters. Retrieved 19 April 2008.