Lean Production: Concept and a way of thinking

By Pritam: 10 March, 2014,

Definition

Lean production is a sociotechnical production system with a primary objective of eliminating waste by concurrently reducing or minimizing supplier, customer and internal variability. (Verma and Boyer, 2010)

How was it invented?

The two dominant but fundamentally different approaches to production in the 20^thcentury have been the conversion and flow models respectively. (Koskela, 1992)

Mass production systems have been considered to focus primarily on the process of conversion illustrated in the above diagram. The conversion model of production breaks the manufacturing process down to a series of activities, each of which converts an input to an output. This can be seen in the diagram below. This model uses the batch and queue theory. (Womack, 1996)

The theory states that for machines to achieve a high utilization rate they must be run continually. Parts are hence manufactured in large batches at one process within a plant and then queued for the next process. This results in large inventories from high work-in-progress levels (WIP), bottlenecking and other manufacturing problems.

(Diekmann, et.al., 2004)

The above diagram represents a generalized flow model of production. The idea of production as a flow process is central to lean production. The flow process does not view the production stream only as a group of conversions, but as a mixture of value adding and non-value adding activities. (Koskela, 1992)

The above diagram shows how the flow model contributes in improving efficiency of the value adding activities and reducing their cost, but also minimize or eliminate non value adding activities. All elements of the production process are enhanced as a result of waste elimination and improvements in conversion activity. The flow process emphasizes the constant movement of components from one value adding activity to next, eliminating large buffers, also reducing the WIP levels. This is also referred to as single-piece flow (Womack, 1996). A drop in WIP levels leads to reduction in the amount of inventory space required. Capital required to produce and stock extra inventories of partially completed products also drops. Low setup times and WIP levels can help manufacturers to be more responsive to market conditions. The producer as a result, lets the customer or market pull the production.

(Diekmann, et al., 2004)

The concept of lean production has its roots in the assembly line manufacturing methodology developed by Toyota for efficient automobile manufacturing, known as the Toyota Production System (TPS). The idea of producing only required units, at the time needed and in the needed quantities, to eliminate unnecessary and intermediate and finished product inventories is central to the Toyota Production System.

(Verma and Boyer, 2010)

As an aftermath of the Second World War, businesses like the Toyota Motor Company (established in 1937) were facing material shortages coupled with small production volumes. This enforced the need to raise the levels of productivity to those found in large volume production, but with utilizing materials efficiently to produce only the required amount of products.

(Toyota Global, 2014)

The company hence adopted an improvised version of the Ford Production System developed by Henry Ford during the early part of the twentieth century. Some scholars still credit Henry Ford for founding the original principles of lean thinking in doing so. One of Toyota’s lead engineers, Taiichi Ohno had studied the Ford Production System in America. Ohno studied and mastered the system and was tasked with conceptualizing the Ford Production System in a Japanese context. Ohno introduced new, additional principles and approaches to further enhance the effectiveness of the Ford Production System.

(Verma and Boyer, 2010)

The aim of lean production is combining the quality and flexibility offered by craftsmanship with the low cost advantages of mass production. Lean production is regarded as the third step in a historical progression in industry that began with the age of craftsmanship, followed by the methods of mass production to an era that combines the best of both worlds. (The Economist, 2009)

Lean Thinking

Lean production as a concept was originally developed for manufacturing automobiles. The same principles and techniques however, can be applied to companies that operate in other industries. It is argued that lean thinking is more than a set of techniques and approaches but rather a mindset for all employees and managers with waste elimination and variability reduction in all business processes being the main focus.

(Verma and Boyer, 2010, p 449)

Womack, Jones and Roos (1991) describe the five core components of a lean production system as follows:

Lean Principal 1: The value in a lean production system should be defined from the customer’s point of view for each product family.

Lean Principal 2: Each production step should be evaluated in terms of its contribution to value creation. Those actions that do not add value should be eliminated.

Lean Principal 3: the value creating sequence of steps should be organized in a tight and integrated sequence to develop smooth flow toward the customer.

Lean Principal 4: Instead of organizing production to push finished products to the customers, products pulled by the customers should be the driver for planning, organizing, and scheduling upstream production activities.

Lean Principal 5: All members of the organization should pursue perfection through continuous improvement.

(Verma and Boyer, 2010, p 450)

In the above diagram Shah and Ward (2007) state a lean production system to be comprised of three constructs related to customers, suppliers and internal processes. Each individual construct relies on different underlying concepts. A just-in-time inventory management system, customer involvement, different aspects of production processes are some examples of these concepts.

(Verma and Boyer, 2010)

Waste elimination in Lean Production

The idea of value from a customer’s point of view is central to lean thinking. Customers will refuse paying for a product or service that fails to offer value.

In a lean thinking framework, all production activities are carefully evaluated, ensuring that the customer finds the finished product or service valuable. This enforces the need of eliminating or minimizing all non-value added activities. The types of waste in a production system can be broadly categorized as follows:

Muda: A Japanese term for production activities that are wasteful and do not add value to the goods or services.

Mura: Waste associated with the unevenness of the processes.

Muri: Waste resulting from overburden or unreasonableness.

(Verma and Boyer, 2010, p 450)

The three general types of wastes namely muda, mura and muri are found in different forms within manufacturing and service systems. The above diagram provides a breakdown of the different forms of waste in system that contribute in overproduction, loss of time, lengthy production processes, increased waste as a result of large inventories and so on. Reducing the impact of different forms of waste shown above requires careful systems thinking, long-term commitment to continuous improvement and the co-operation of all members of the organization to identify wastes, troubleshoot and formulating approaches that lead to reduce all wastes.

The Toyota Production System

By Pritam: 10 March, 2014

Although lean production has been applied in areas other than manufacturing, the Toyota Production System (TPS) is one of the best examples of advantages offered by adopting this approach.

The above diagram shows how Toyota successfully adopts and implements just-in-time (JIT) inventory management using a kanban system.

Just-in-time: An inventory management system designed to make the “right amount of inventory available at the right time” at all times.

Kanban: Japanese for “card” or “visible record”, referring to the cards used to control the flow of production through a factory.

Each container of raw materials, parts, work-in-progress inventory is attached with a card with respective production or process instructions. When the user empties the container, the card is removed and the container is put on a receiving post. The next batch of parts is produced only when the card on a container signals the user to do so. The cycle begins again when the user receives the container with the card attached. The kanban system used by Toyota is often called the “super market method”, as super markets use product control cards on which product-related information such as product code, product name and storage location is entered.

(Verma and Boyer, 2010)

Producing good and services according to customer expectations is an important characteristic of the Toyota Production System. Toyota practices the philosophy of kaizen to build quality into the production process rather than inspecting finished goods for quality defects. Kaizen is a Japanese term that means “continuous improvement”. Each employee acts as his or her own quality inspector, preventing a defective unit from leaving a work station and moving on to the next process. This practice is also called quality “at the source”.   (Verma and Boyer, 2010)

Another approach used by Toyota to minimize or eliminate quality defects and problems from recurring repetitively is jidoka. Verma and Boyer (2010) define jidoka as an approach for automated quality monitoring of equipment guided by a human touch. As shown in the above diagram, whenever a defective part or equipment malfunction is discovered, the concerned machine stops immediately. Production resumes once the problem is sorted and any improvements are incorporated in the standard workflow. Operators stop work and correct the problem. Hence the definition: “automation with a human touch”.

The philosophy of kaizen, the methods and approaches of jidoka, just-in-time and kanban, are important building blocks in the House of Toyota. More information on these concepts can be found in the following video:

Lean Production System & applying to lean managed hospital

By Gabriel Li Velasco; 24 Feb 2014

Lean production is an approach of management that targets on excluding waste while maintaining the quality of production or services and only focused on essential to the processes, such as quantities, units and time by eliminating unnecessary transition. The original concept of lean were developed by Henry Ford then adopted by Toyota manufacture automobile that would enhance the effectiveness of (FTS) and now known as Toyota Production System (TPS) (Verma and Boyer, 2009, Pp.449-450) the aim of elimination waste of lean and Toyota defined three types of waste know as Muda, Muri and Mura.

Those are the waste that adds no value and can be eliminated such as unnecessary financing cost, storage cost and worthless old items. Muda distinguished seven categories that are frequently wasted

ü  (Unnecessary) Transportation – unnecessary movement of information, products or components and unnecessary transport which detects movements

ü  Inventory – inventories, which are only required or needed therefore controlling inventory can save money and space in terms of over stocks of inventory

ü  (Unnecessary) Motion – moving work space will cost time and effort therefore motion is being poor working standard practices

ü  Waiting time – If manufacturing processes are not being transported or processed therefore production time is wasted and it will increase the cost of production. Waiting can cause by poor machinery or poor production line

ü  Over-processing – those are process which has additional steps than required. This may result on error in rework process, poor process design or bad communication and not checking customer requirements.

ü  Over-production – When producing additional product or component could effect rework rate, inventory, processing and waiting as unnecessary motion and transportation

ü  Defects or rework – those are the product or component that are being damage and has to rework of the product. This cause by bad manufacturing process, human or machine errors as a consequence of time and manufacturing cost.

Sources: (Manufactus, 2014)

Muri (English: Overburden): Eliminating overburden of machinery or people, this means that even identifying waste (Muda) there are still chances that could lead to waste due to overwork load, unless limiting project, work capability and capacity of an organization would help the business effectively in other words, staffs or projects are being pressured in the operation can cause defect on the production and this will eventually go through the processes again and time is wasted creating delays therefore unnecessary stress or difficult operation are likely create waste. Limiting it can help the operation workflow more effectively in order to balance other members or machinery to correct standard work. (The Lean Thinker, 2014)

Mura (English: Unevenness or irregularity): focused on eliminating unevenness or irregularities in the production process in order to avoid fluctuation processes in other words uneven demand occur day to day or month to month therefore the production line would sometimes rush or settle down during the operation moreover sometimes people are encourage poor behavior when staffs are idling or under stressed. For example lets assume in week one the customers demand 1,000 products then 10,000 in week two after that 5,000 on week three, usually customers appear to be unpredictable however it does shows pattern that can correct the average that should be produce therefore the best approach to this issue is to balance in order to smoother the production line and more predictable schedule. (Lean manufacturing tool, 2014)

Applying lean to hospitals

Lean is not a list of tool that applies only to factories but also can be applied through hospital as strategy and day-to-day operating approach. The Avera Mckennan Hospital implemented the lean management in the laboratory by using the lean such as eliminating 1000 square feet of space (motion) as a result of productivity increased more than 10% therefore the hospital continues to apply this method and taught lean management to all staffs and every department. It helps also improved patient discharge process, (Waiting time) allowing next patient to use the room preventing overcrowded patient in the waiting line. (Mura) improving unexpected changes helps employees without pressuring them to work faster or sacrificing the quality thus creating standardize work and schedule for employees. (Muri) Overwork condition are more likely to make mistakes that could harm the patients, stressed were caused by the seven aspect of (Muda) we mentioned above, balancing helps the workload allows productivity and quality upgraded. Avera Mckenan has completed lean projects in many departments such, laboratory and histology, pharmacy, emergency department, operative services, business office and health information management and more. Lean management provides effective method for improving safety, quality and cost while preventing delay and increasing employee satisfaction. (OHSU, 2014)