Deborah Nightingale ? 2002 Massachusetts Institute of Technology 1 Fundamentals of Lean Professor Deborah Nightingale September 9, 2002 Deborah Nightingale ? 2002 Massachusetts Institute of Technology 2 Lean is a New Approach to Managing Enterprises null Origin and evolution of lean concepts null Core lean principles & practices null How lean differs from craft and mass production models of industrial organization null Lean implementation steps null Value stream mapping Deborah Nightingale ? 2002 Massachusetts Institute of Technology 3 Lean was Born out of Necessity: How to Withstand the Mass Production Behemoths null On August 15, 1945 -- end of war with Japan -- Toyota faced a daunting challenge: How to succeed against Western mass production auto giants poised to enter Japanese market? null Kiichiro Toyoda to Taiichi Ohno (father of lean production): “Catch up with America in three years.” null Ohno’s challenge: How to design a production system exploiting central weaknesses of mass production model null Japan faced many dilemmas: small & fragmented market, depleted workforce, scarce natural resources, little capital null Lean evolved as a coherent response to this challenge over a number of decades -- a dynamic process of learning and adaptation later labeled as “lean production” by Western observers Deborah Nightingale ? 2002 Massachusetts Institute of Technology 4 Lean Response: Use Less of Everything, Offer Greater Variety of Higher Quality & More Affordable Products in Less Time null Best Japanese auto companies developed a fundamentally different way of making things null These companies changed the dynamics of international competition null New goals in manufacturing systems -- combined benefits of craft and mass production null Improved quality null High productivity null Efficiency at low volumes null Production flexibility null Rapid, efficient development cycle null Product mix diversity null Lean production contrasts with traditional mass production paradigm null Systemic principles are transferable Deborah Nightingale ? 2002 Massachusetts Institute of Technology 5 What The removal of muda! Muda- Is a Japanese word for waste Waste- any activity that absorbs resources & creates no value! Source: by Womack & Jones is Lean Thinking? LeanThinking Deborah Nightingale ? 2002 Massachusetts Institute of Technology 6 More Japanese Terms null Kaikaku- radical improvement null Kaizen- continuous incremental improvement Deborah Nightingale ? 2002 Massachusetts Institute of Technology 7 Taiichi Ohno (1912-1990) Toyota Executive null Types of Muda: null Mistakes which require recertification null Production of items no one wants null Processing steps which really aren’t needed null Employee or goods movement/transport from one place or another without any purpose Deborah Nightingale ? 2002 Massachusetts Institute of Technology 8 Taiichi Ohno (1912-1990) Toyota Executive null Types of Muda: null People in downstream activity waiting because upstream activity has not delivered on time null Goods and services that don’t meet the need of customer Deborah Nightingale ? 2002 Massachusetts Institute of Technology 9 Antidote to Muda: Lean Thinking null Provides way to specify value null Line up value creating actions in best sequence null Conduct activities without interruption whenever someone null Perform them more and more effectively null Provides a way to make work more satisfying requests them Deborah Nightingale ? 2002 Massachusetts Institute of Technology 10 Lean Thinking is the Dynamic Process of Eliminating Waste with the Goal of Creating Value for all Enterprise Stakeholders null Customer-focused: “pull” enterprise activities null Knowledge-driven: Draws upon knowledge and innovation from everyone -- workers, suppliers null Eliminating waste: Stresses elimination, not just reduction, of all types of waste null Creating value: Puts premium on “growing the pie”, not just reducing costs, to benefit all stakeholders null Dynamic and continuous: Pursues on-going systemic as well as incremental improvement -- both innovation and continual improvement Customer needs and expectations Deborah Nightingale ? 2002 Massachusetts Institute of Technology 11 Lean Encompasses a Set of Mutually-Positively- Reinforcing Concepts, Practices and Tools Creating a Virtuous Cycle null Synchronizing flow and pull: “Pull” based just-in-time production enabled by kanban system null Striving for perfect quality: Completely defect- free parts must flow to each subsequent process; variability reduction; quality designed- in, not based on inspection null Flexibility and responsiveness: Small lot sizes and quick set-up times; ability to respond to shifts in demand null Trust-based relationships: Mutual commitments and obligations, internally and externally with suppliers null Continuous improvement (Kaizen): Continuous improvement through work standardization, productive maintenance, error proofing, root cause analysis, and worker training & empowerment Deborah Nightingale ? 2002 Massachusetts Institute of Technology 12 5 Steps to Becoming Lean Northrop Grumman ISS * 4 3 2 1 5 Deborah Nightingale ? 2002 Massachusetts Institute of Technology 13 1. Define Value 2. Identify the Value Stream 3. Flow the Product 4. Pull 5. Strive for Perfection Customer Follow the Product Eliminate Waste Produce Just-in-Time Continuously Improve 5 Steps to Becoming Lean Deborah Nightingale ? 2002 Massachusetts Institute of Technology 14 Definition Information/Material in a Form That the Customer Customer Is Willing to Pay for Value is Defined Defined by the Customer Value is Created Created by the Producer 1. Define Value Deborah Nightingale ? 2002 Massachusetts Institute of Technology 15 Who’s the customer? C user C shareholder C environmental C employee Who’s the Customer? Deborah Nightingale ? 2002 Massachusetts Institute of Technology 16 The Value Stream Consists of Tasks Required to Bring a Specific Product Through Three Critical Processes: Design - Problem-solving From Concept Through Detailed Design and Engineering to Production Launch Order - Information Management From Order-taking Through Detailed Scheduling to Delivery Make - Physical Transformation from Raw Materials to Finished Product In the Hands Of the Customer C U S T O M E R 2. Identify the Product’s Value Stream the Actual Product: Component Procurement Supplier: XXX Product: Vehicle Customer: U.S. Government Value: – Affordable – High Quality – High Performance Product – On Time Delivery Perform Detail Design J. Wessels 4/27/2001 Rev. 4 - Specs - Environmental Criteria - Standard Parts - Standard Designs - Design Handbook - Geometric Design & Tolerancing - Mfg. Process Capability - Etc. Des. Ref. Library Release BTP ? Build to Package ? Buy to Package ? CDRLs ? Reports Des.Proc. Guidance - Design for Manufacturing - Design for Assembly - Design to Cost - Design for Key Characteristics - Design for Supportability - Design for 6 Sigma - Design for .......... Define Structural Arrangement ? Finalize Conceptual Design ? Conduct Structural Configuration/Cost/Mfg. Trades ? Perform Airframe Analysis - Weights - Finite Element Model - Environmental Model - Internal Loads - Observability Model ? Develop Material Allowables ? Define Arrangement - Production Breaks ? Develop ICDs Prepare Prelim.Design ? Develop Layouts ? Create Assemblies ? Create Sub-Assemblies ? Perform Structural Analysis - Stress - Environmental - Weight ? Production Factory Requirements Analysis ? Develop Adv. Mfg. Plan Tooling & Mastering Concepts ? Design Parts & Details ? Perform Structural Analysis Pre-Contract Req’m’nts & Concept’l Des. Component Procurement Spec To All Processes Shown Manage Program Systems Engineering Manage Team Apply Program Plans Apply Technical Plans Apply Processes & Tools Apply Resources Allocate Requirements to Component Allocate Requirements to Structure Prime System Spec Prime Contractor/ Team Process System Req’m’ts Review Prelim. Design Review Critical Design Review @ 80% BTP Release zz months yy months 0 months Iterate Test System ? Development ? Verification ? Validation Program Req’m’nts SEMP Req’m’nts Structure Specs ICDs System Design Review Produce Product ? Fab Tooling ? Build & Inspect ? Deliver Analyze Rework Root Cause Procure Suppliers ? Build and ? Assemble Change / Rework Iterate xx months Example: Structural Design Value Stream Map Deborah Nightingale ? 2002 Massachusetts Institute of Technology 18 2. Piece Where possible 3. Focus on the Product and Its Needs Rather Than the Organization or the Equipment 1. Activities That Are Pure Waste 4. Focus on actual object and never let it out of sight from beginning to completion 5. Ignore traditional boundaries of jobs, careers, functions, and organizations to form a Lean enterprise removing all impediments to the continuous flow of the product 6. Rethink specific work practices and tools to eliminate backflows, scrap, and all stoppages 3. Prefer One Flow Eliminate Flow the Product Deborah Nightingale ? 2002 Massachusetts Institute of Technology 19 What Is a Value-Added Activity? A value-added activity is any action that transforms information/material into a capability for our ultimate customer at the right time and the right quality. Definition Deborah Nightingale ? 2002 Massachusetts Institute of Technology 20 Definition Any Activity That Consumes Resources Yet Adds No Value Waste Deborah Nightingale ? 2002 Massachusetts Institute of Technology 21 Batch Production Example A C D = Different Processes Processing Time = 1Min./ Unit 0 A C D E L A P S E D T I M E M I N Processes - Oriented Layout With Transfer Lot Size of Five 5 A C D 10 A C D 15 A C D 20 A BB D Throughput Time (5 Units) = 5x1 + 5x1 + 5x1 + 5x1 = 20 Min. Work in Process 5 + 5 + 5 + 5 = 20 Units B B B B B C Deborah Nightingale ? 2002 Massachusetts Institute of Technology 22 Batch Production Example A D = Different Processes Processing Time = 1Min./ Unit 0 A C D E L A P S E D T I M E M I N Processes - Oriented Layout With Transfer Lot Size of Five 5 A C D 10 A C D 15 A C D 20 A BB D Throughput Time (5 Units) = 5x1 + 5x1 + 5x1 + 5x1 = 20 Min. Work in Process 5 + 5 + 5 + 5 = 20 Units C B B B B B C A C 1 A C 2 A C 3 A C 4 A C 5 A C 0 Product-Oriented Layout With Lot Size Of One E L A P S E D T I M E M I N 6 A C 7 A C 8 A C One - Piece Flow Example A C D = Different Processes Processing Time = 1Min./ Unit Throughput Time (5 Units) = 1x4 + 1x1 + 1x1 + 1x1 + 1x1 = 8 Min. Work in Process 1 + 1 + 1 + 1 = 4 Units Deborah Nightingale ? 2002 Massachusetts Institute of Technology 23 B D B D B D B D B D B D B D B D B D B A C 1 A C 2 A C 3 A C 4 A C 5 A C 0 Product-Oriented Layout With Lot Size Of One E L A P S E D T I M E M I N 6 A C 7 A C 8 A C One - Piece Flow Example A C D = Different Processes Processing Time = 1Min./ Unit Throughput Time (5 Units) = 1x4 + 1x1 + 1x1 + 1x1 + 1x1 = 8 Min. Work in Process 1 + 1 + 1 + 1 = 4 Units Deborah Nightingale ? 2002 Massachusetts Institute of Technology 24 B D B D B D B D B D B D B D B D B D B Deborah Nightingale ? 2002 Massachusetts Institute of Technology 25 4. null Definition null Letting the Customer Pull Value from the Enterprise null Don’t Make Anything Until It Is Needed null Then Make It As Quickly As Possible Pull Deborah Nightingale ? 2002 Massachusetts Institute of Technology 26 Pull null Concept of letting the customer pull product from as needed instead of pushing it on them null Reduces inventories and produces one time cash windfall & return on investment Deborah Nightingale ? 2002 Massachusetts Institute of Technology 27 5. null Definition null Continuous Process Improvement null Pursue Perfection, Not the Competition null There Is No End to the Process of Reducing Efforts, Space, Costs and Mistakes Strive for Perfection Deborah Nightingale ? 2002 Massachusetts Institute of Technology 28 Perfection null Continuous radical and incremental improvement null Continuous banishment of muda Deborah Nightingale ? 2002 Massachusetts Institute of Technology 29 Seven Categories of Waste null Over Production …………...… Making Ahead of Demand null Waiting ………………………... Delay From Previous Processing Steps null Transportation ……………….. Unnecessary Transport of Materials null Over Processing …………….. Doing More Than Is Necessary null Inventories ……………………. More WIP Than the Absolute Minimum null Movement …………………….. Unnecessary Movement of People During the Course of Their Work null Making Defective Products … Products Do Not Meet Customer Requirements Some General Product Definition Wastes ? Task to Be Accomplished (New, In-work, etc.) ? Undocumented Information ? Prioritization ? Too Much Information ? Inaccurate / Incomplete Information ? Inadequate Analysis ? Requirements Creep ? Change / Multiple Tools ? Inadequate Testing ? Generating More Info Than Required ? Excessive Iterations, Don’t Stop at Good Enough ? Fine Tuning Beyond Required ? Over Designing ? Unnecessary Interim Drawings for Build ? Over Analysis ? Excessive Test Points ? Duplicate Tasking ? Tasks Finished Before Required, e.g. Making Drawings Before They Are Needed ? Access to Data Storage ? People Are Not Co-located ? Walk to Tools (Printer, Copier, CADAM, Etc.) ? Hand Carry Product for Signatures ? Travel to Meetings ? Transferring Data From One Database to Another ? Physical Movement of Product ? Unnecessary Movement of Data (Physical or Electron Flows) ? Required to Stop a Given Task Due to Unavailable, Inaccurate, And/or Late Information ? Jobs in Queue Waiting for Resources ? Setup Time (Computer Logon, Printers, Xerox, etc.) Seven Types of Waste Making Ahead of Demand Delay From Previous Processing Steps Unnecessary Transport of Materials Doing More Than Is Necessary More WIP Than the Absolute Minimum Unnecessary Movement of People During the Course of Their Work Products Do Not Meet Customer Requirements Making Defective Products (Rework) Inventories Waiting Movement Transportation Over Processing Over Production Deborah Nightingale ? 2002 Massachusetts Institute of Technology 30 Exercise – Specific Examples You Encounter Seven Types of Waste Making Ahead of Demand Delay From Previous Processing Steps Unnecessary Transport of Materials Doing More Than Is Necessary More WIP Than the Absolute Minimum Unnecessary Movement of People During the Course of Their Work Products Do Not Meet Customer Requirements Making Defective Products (Rework) Inventories Waiting Movement Transportation Over Processing Over Production Deborah Nightingale ? 2002 Massachusetts Institute of Technology 31 Deborah Nightingale ? 2002 Massachusetts Institute of Technology 32 Apply Five Simple Principles: null Specify value from the standpoint of end customer null Identify the value stream for each product family null Make the product flow null So the customer can pull null As you manage toward perfection Deborah Nightingale ? 2002 Massachusetts Institute of Technology 33 Lean Thinking Differs Sharply from Craft and Mass Production in Important Ways FOCUS CRAFT MASS PRODUCTION LEAN THINKING Focus Task Product Customer Operations Single items Batch and queue Synchronized flow and pull Overall aim Mastery of craft Reduce cost and increase efficiency Reduce waste and add value Quality Integration (part of craft) Inspection (a second stage, after production) Prevention (built in by design & methods) Business strategy Customization Economies of scale and automation Flexibility and adaptability Improvement Master-driven continuous improvement Expert-driven periodic improvement Workforce-driven continuous improvement Source: Lean Aerospace Initiative Deborah Nightingale ? 2002 Massachusetts Institute of Technology 34 Value Stream Mapping Deborah Nightingale ? 2002 Massachusetts Institute of Technology 35 SUPPLIERS The CUSTOMER’S CUSTOMERS CUSTOMER VALUE STREAM FLOW VALUE PULL PERFECTION The EXTENDED ENTERPRISE NORTHROP GRUMMAN Lean/Value Stream Philosophy Deborah Nightingale ? 2002 Massachusetts Institute of Technology 36 What is a Value Stream Map? null A Visual Representation of Every Process in the a Product’s Path from Order to Delivery null Includes: null Information and Materiel Flow Integration null Product Through-Put and Cycle Times null Resources Utilized null Value Added Times null Location of Significant Waste Deborah Nightingale ? 2002 Massachusetts Institute of Technology 37 Why Value Stream Map? null Systems Approach To: null Visualize the Entire Product Flow null Identifies the Sources of Waste null Basis of an Lean Implementation Plan null Determine Future Operating State Deborah Nightingale ? 2002 Massachusetts Institute of Technology 38 Product Current-State Drawing Future-State Drawing Work Plan Business Case Justification Understanding how the product currently flows Designing a lean flow How to get there Using the Value Stream Mapping Tool