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Introduction to Lean

Manufacturing

Module:

Causes of Excess Product Costs

Dr. Douglas L McWilliams

Department of Industrial TechnologyCollege of Technology

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What is manufacturing?

The activities of making or processing a raw material intoa finished product

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What is manufacturing?

Supply Chain

Raw

Material

Suppliers

Tier 2

SuppliersTier 1

Suppliers

Company

XYZ Customers

Manufacturing

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What is lean manufacturing

Originated from the Toyota Motor Company.Originated from the Toyota Motor Company.Lean manufacturing is also known as the Toyota Production SystemLean manufacturing is also known as the Toyota Production System

It is a management philosophy of production that emphasizes theIt is a management philosophy of production that emphasizes the

minimization of the amount of all the resources (including time)minimization of the amount of all the resources (including time) usedused

in the various activit ies to produce a good or servicein the various activit ies to produce a good or service

It involves identifying and eliminatingIt involves identifying and eliminating nonnon--valuevalue (waste) added activi ties(waste) added activi ties

which increase product costwhich increase product cost

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How does lean manufacturing classifymanufacturing activities?

Value-added Critical activities to produce the product or service

Non-value added

Essential activities to win the customers business Unnecessary activities that must be eliminated

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What are some causes of excessive product cost?

Seven common wastes Overproduction

Waiting

Excessive Transportation Inappropriate Processing

Unnecessary Inventories

Unnecessary Motion

Defects

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What are the causes of muda?

1. Overproduction Target and achievement unclear

Excessive lead time and storage times

2. Waiting

Operators waiting

Operators slower than production line

3. Excessive Transportation

Widely spaced equipment Forklifts not available when needed

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What are the causes of muda?

4. Inappropriate Processing

Variability in operators performance Processes not statistically capable

5. Inventory

Large safety stocks

Variable procurement lead times

6. Motion

Double handling

Non-standard layouts Equipment widely spaced from each other

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What are the causes of muda?

7. Defects Low material yields

Excessive process variability

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How does lean manufacturing eliminate muda?

Provides a way to specify value Line up value-creating actions in the best sequence

Conduct these activities without interruption

Produce them whenever someone request them

Perform them more and more effectively

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What are the five basic principles of lean

manufacturing?

1. Value2. Value stream mapping

3. Flow

4. Pull

5. Perfection

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What are the benefits of lean manufacturing?

Concept Traditional Lean

Inventory Asset Waste

Ideal EOQ Large One

People Utilization High Varies

Work Scheduling Build to forecast Build to demand

Labor Costs Variable Fixed

Work Groups Functional departments Cross-functional teams

Accounting Traditional Throughput

Quality End of process On-line process

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What are the benefits of lean manufacturing?

Key Element Traditional Lean

Travel Distance 500'-4000' 100'-400'

Queues 12-30 3-5

Throughput Time Weeks HoursInventory Turns 3-10 15-60

Supervision Difficult Easy

Quality Feedback Days MinutesSkill Range Narrow Broad

Scheduling Complex Simple

Equipment Utilization 85%-95% 70%-80%

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What are the benefits of lean manufacturing?

Performance GM Toyota

Inventory turnover 4 200

Lead time 3 months 2 days

Setup time 4 hours 10 minutes

Lot size 5000

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What are the results of lean manufacturing?

Lead Time reduced by 90%

Productivity increased by 50%

Work-In-Process reduced by 80%

Quality improved by 80%

Space Utilization reduced by 75%

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Acknowledgments

The author wishes to acknowledge the support from theSociety for Manufacturing Engineers - Education

Foundation, SME-EF Grant #5004 for Curriculum Modules

in Product Lifecycle Management.