Conceptual Discussion
To synchronize externally is to supply the product to our customer at their needed demand rate, normalized to our production schedule. We want to supply all of the cus- tomer needs but we do not want to overproduce and create excess inventory. These tools allow this balance to be achieved.
In order to properly synchronize to the customer we need to meet the contractual volume demand and, in addition, we will need to handle the normal variations in both supply and demand. In a mature make-to-stock production system, with good raw materials supply, reliable production equipment, stable cycle times, and high quality yields, our supply variation should be low. However, we will still have sup- ply variations, therefore we will need a safety stock inventory to compensate for these variations. In addition, there will be demand variations to contend with if we wish to be synchronized to the customer. This variation will require buffer stock inventory.
Tools Used
• The Takt Calculation will allow us to understand at what rate the customer will normally wish to have product supplied. This is the basic starting point for all production rate calculations. This is often referred to as rate-leveling.
We want to avoid the ups and downs of normal production and rather stabilize the rate.
• Cycle, Buffer, and Safety Stocks are inventories, but they are the definition of necessary inventories. Cycle stock is necessary to assure normal pickup deliveries are in place, buffer stocks will handle the demand variations, and safety stocks will take care of internal supply variations. In this way, we will assure we meet demand, but have the minimum inventory on hand. These inventories are designed to handle normal variations in both supply and demand and therefore
allow the production process to stay at takt and remain as stable as possible.
(Chap. 3 has an example set of inventory calculations.)
• Leveling of Model Mixes or Products is used when more than one product is made on a given production line. The goal of leveling is to avoid making a batch of model A and then a batch of model B, and instead make both products, simultaneously, one at a time at the demand rate of the customer. We are trying to synchronize externally to the demand rate of the customer. To level production in amount and by model mix, we will frequently use a heijunka box. If leveling is not achieved, cycle, safety and buffer stocks must be much larger and, of course, we want the inventory to be a minimum.
Wastes Reduced
Overproduction Overproduction is the waste targeted here. However, when over- production is reduced, all other wastes are reduced as well; especially the waste of inventory. In addition, this strategy to synchronize externally is the key to on-time delivery. It will allow smooth production line operations so the line can produce at a constant rate, using the safety and buffer stocks to take up the supply and demand variations. In addition, it will allow the supply to be both more flexible and more responsive.
Summary of Synchronize Externally
To establish the production rate at takt is absolutely crucial. This, coupled with the establishment of Lean inventories will allow you to maintain supply to your cus- tomer and run the process at a level and stable rate. This is always the first, and the most important, step. It is often difficult to redesign the work stations for leveling of the model mix since it often requires changeovers, and so on. If that is the case for you, then do the model mix leveling later, but make sure you are producing at takt and also have inventories set up to protect your supply to the customer. A word of caution is in order. If you found that your production rate was unstable while doing the systemwide evaluations, carry extra inventory. Seek advice from your sensei as to how much. This inventory then becomes the protection that will allow you to both assure supply to the customer as well as reduce the variations on your line from your planning systems.
Frequently, you will want to install a heijunka board and a production kanban system right away. You may have kanban training scheduled for later. However, implement kanban here anyway, if at all possible. Have your sensei make the calculations and do a short training for just those involved in this system. This type of JIT training will often be necessary and it is not unusual to improvise from time to time like this.
Strategy 2: Synchronize Production, Internally
Conceptual Discussion
To synchronize production internally is to divide the necessary work in processing steps such that each processing step takes the same time. The ideal is that all processing steps perform at a cycle time equal to takt. The following Lean tools are used:
Tools Used
• Balancing is done by completing the basic time study and then designing the work at each work station to be the same. Normally, some accommodation is made for OEE (Overall Equipment Effectiveness) to account for pro duction losses caused by availability issues, quality dropout, and cycle-time losses. The end result of balancing should be work stations that are synchronized.
• Standard work is the technique used to review the performance, including the cycle time of a production process, production cell, or a production work station.
It is a key tool in evaluating and assisting the production process to achieve synchronized production.
Wastes Reduced
Waiting is the key waste removed, and while inventory is often reduced, the goal is one-piece flow.
Summary of Synchronize Internally
The key tool used to synchronize internally is the basic time study coupled with the balancing study and chart. The balancing chart will show at a glance three major aspects of the process.
• The relative cycle times of each step: the balance
• The waste of waiting due to the imbalance
• The process bottleneck
From this balancing chart, the work begins and is comprised of two major steps.
First, the production cycle time must be calculated. It is normally the takt time multi- plied by the actual OEE, if that is known. So if takt is seven minutes and OEE is 0.80 or 80 percent, the cycle time of the process will need to be 5.6 minutes. With this known, it is now time for the second task, which is to design all work stations to have a 5.6 minute cycle time. With these two steps we have balanced the process steps (synchronized internally) to a production cycle time that will achieve takt (synchronized externally).
To synchronize the process internally, always create a huge to-do list.
In the application of this strategy, it is best to go to the end of the value stream and work backwards, as much as practical. For example, if there are three work cells in series that comprise the value stream, work on the cell closest to the storehouse first.
This order, of starting at the customer and working backwards in the flow, should also be employed with the following two strategies of creating flow and installing pull- demand systems.
Strategy 3: Create Flow
Conceptual Discussion
The concept of flow is such that we do not want the production units to stop, except for value-added work. The flow concept has both overall measures and local measures.
The local measure would be cycle time. That is the increment of time between consecu- tive production units. If work is done, one piece at a time, it is also the processing time
at the work station. The overall measure of flow is production lead time. It is the overall time it takes for a unit to complete the entire production process. In every case, if we can reduce cycle time or if we can reduce lead time, we will make process improvements.
Obstacles to flow include:
• Inventory
• Batches and batch processes
• Distance
• Any defect-creating process
• Variation
• Process steps with mismatched cycle times
• Changeovers
• Non-valued-added work steps
Creating flow is “the basic condition” and this strategy has some strategies of its own, including:
• Rate balancing of all steps in the value stream from the customer all the way through the raw materials supply
• Removal of inventory
• Reduction of distances between stations
• Elimination of defects, which we call jidoka
• Elimination of non-value-added work Tools Used
• Minimum lot sizes with the ideal being one-piece flow.
• Cellsand other techniques to close-couple process to achieve short transpor- tation distances and one-piece flow.
• SMED (Single Minute Exchange of Dies, quick changeovers) to reduce changeover times and the needed inventory to sustain production.
• Jidoka(see the section at the end of this list).
• Problem solving by all, for the elimination of defects and to achieve process improvements. The goal should be Rapid Response PDCA (Plan-Do-Check-Act).
• CIP (Continuous Improvement Philosophy) and Kaizen to organize the problem-solving activities.
• 5 Whys is the key problem-solving tool used.
• Reduction of variation is a key tool used in inventory reduction.
• OEEis a key metric to use in prioritizing if quality yield,availability, or cycle time performances must be addressed to achieve and increase flow rates.
• Availability improvements through the use of TPM (Total Productive Maintenance).
P
oint of Clarity These eight obstacles to flow will be the focus of the majority of your lean improvement activities from this day forward.Jidoka Jidoka is not only the most important strategy to implement, it is also one of the most difficult. However, it is the one I find most often slighted. The danger is that early in the implementation, other effects will be much more pronounced in terms of achiev- ing goals. There is always significantly more quantity control reduction to be made in reducing the wastes of inventory, batches, and transportation than the waste caused by defects. Hence, these aspects get more attention, at the expense of the jidoka concept. In addition, most companies, although not very effectively, have been working on defect reduction for some time. However, I have yet to see even one company that had a jidoka concept in place—at this point in the implementation—that even remotely resembled the TPS model. However, later, this weak jidoka system will undermine literally all other activities. I cannot stress enough that jidoka must be given top priority, even though the current gains may not seem to warrant it. Return to Chap. 6 and the section titled, “The Implementation of Jidoka Is Always a Fundamental Weakness” for further information.
Wastes Reduced
• Transportation is reduced by the reduction of distances traveled by using cells, for example.
• Waiting is reduced because the production lines, while flowing, have little downtime.
• Overproductionis dramatically reduced on a local basis since local inventories and batches do not need premature replenishment.
• Defectreduction is the objective of jidoka.
• Inventoryreduction is achieved by several of the techniques, including problem solving, SMED, and minimum lot sizes, to name just a few.
• Movement is reduced when transportation is reduced and distances are reduced. In addition, since availability is up, there are fewer instances of reassignment and wholesale personnel movement.
• Excess processing is reduced as all non-value-added activities are reduced.
Summary of Creating Flow
This strategy is simply removing all inventory possible, moving process steps as close together as possible, and eliminating non-value-added work—plus, the most important aspect of implementing jidoka.
Strategy 4: Establish Pull-Demand Systems
Conceptual Discussion
Pull systems have two characteristics. First, they have a fixed inventory, so the cycle stock, plus the buffer and safety stocks need to be determined. Second, they are acti- vated when product is removed and this signals the upstream process to produce—no signal, no production. All kanban systems provide this function. However, for some simple systems such as pull systems within a close coupled cell, for example, the most effective pull signal often is the “kanban space.”
With a kanban space, when the customer removes the upstream production, the customer has “opened” the kanban space—this is the pull signal. Afterward, the upstream process produces more product, but not before. It is the perfect “take one
make one” system. Operationally in pure pull systems, it means you do not send anything anywhere. If it leaves, someone came to pick it up. However, it is not pos- sible to have a pure pull system in all cases. Wherever there is inventory, this inven- tory will delay the pull signal from the customer. This is the basis used in kanban design.
Inkanban, the kanban card, for example, is removed from the product as product is consumed. The card is then placed in a kanban post and the kanban card is then trans- ported back to the heijunka board to signal replenishment. Second, since we can not always use pure pull signals, the pull signals need to be time responsive to the needs of the customer. The time it takes—from the receipt of the signal by the customer (product is removed and the kanban card is placed in kanban post) until the replacement product arrives at the storehouse—is called the replenishment time. This is effectively “pull signal delay.” We strive to minimize pull signal delays. Simply stated, we work to min- imize replenishment time.
The perfect pull system is “take one, make one.” For more information on replen- ishment time, refer to Chap. 3, the section “Finished Goods Inventory Calculations”
and Fig. 3-1. The opposite of a pull system is a push system. In a push system, product is made at an upstream station and then “pushed” to the downstream station indepen- dent of the need of the downstream station. Push system allows local machine optimi- zation at the expense of overall system optimization. They overproduce and create not only excess finished goods inventory but excess WIP also.
Tools Used
• Kanbanis the second most important tool used in creating a pull system. The most important tool is training. It is critical that all employees understand the concept of pull production. For example, in a close coupled manufacturing cell, there are no kanban cards, but pull is practiced fully.
• JIT(Just In Time), support of all types,especially JIT staff planning support.
Wastes Reduced
Overproduction and inventory (in the form of WIP) is reduced.
Summary of Pull-Demand Systems
In most pull-demand systems, we will establish a signal to produce and then work to reduce the time in the replenishment cycle.
Almost surely, if you have central planning or even a local MRP program designed to do the scheduling, this will need to be altered. This will be a huge cultural change. To bypass this planning step is normally not very hard technically, but it must be done carefully since you will uncover all kinds of non-Lean activities going on. You will find that the planning program does not work as designed and requires a great deal of human interaction to make it work. This human interaction is often just variation by another name.
The first thought most engineers have is to implement kanban, or rather the first thought should be training. It will be a huge cultural change to get people out of the practice of delivering. It may be some time before you can set up good delivery loops with materials handlers to take care of WIP. Consequently, often in the early stages of implementation, operators are still moving goods from one station to the next. This needs to be changed from delivering to picking up.
For raw materials delivery, and finished goods pickup, many facilities already have a skeleton kanban system in place. If that is the case, teach these people the proper use ofkanban and implement kanban properly—employing all six rules.
Early on, get the planning people involved so they can begin the integration of your planning system with the new Lean tools. They have much work to do.
Chapter Summary
The process used to make a value stream Lean consists of implementing four strategies, which are:
• Synchronize supply to the customer, externally
• Synchronize production, internally
• Create flow
• Establish pull-demand systems
To apply the strategy, the basic diagnostic tools include:
• Thetakt calculation
• The basic time study and balancing analysis
• A spaghetti diagram
• Present state value stream map
• Future state value stream map
The goal is to apply the strategy, using the diagnostic tools to eliminate the seven wastes, which are:
• Transportation
• Waiting
• Overproduction
• Defects
• Inventory
• Movement
• Excess processing