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Lean Manufacturing - APICS discussion

Eight Conditions for Flow Production

1st condition

From: Norman Bodek
Sent: February 21, 2005

Condition 1: “To lay out the facilities in the sequence of the process.”

When we attempt to convert the production process with our existing facilities from large lot production to one-piece flow the waste of transportation immediately is understood.  With our past production methods (Hirano calls this “Dumpling production.”) workers normally stood in front of one machine producing in large lots.  This was understood by managers and of course, by our accountants as the most productive and efficient method.
We would achieve high productivity, high utilization of equipment, and hopefully minimum downtime of machines.  We accepted change-over times as a given and accepted a certain level of defects (plus or minus 3% was the industry standard).  Non-value adding wastes in this older method were at times enormous.  With lot inspection methods if the lot didn’t meet our standard, often the entire lot was discarded or we had to sit down and do 100% inspection of the parts to separate the acceptable from the defective.

Re-work was also enormous and probably worst of all was the long lead times. I remember in 1980 when I bought a Buick Station Wagon, it took General Motors 13 weeks to deliver the automobile to me.  I was shocked when I went to Japan in the early 1980’s to find that Toyota could build and ship a new car to the customer within a week.  Back in 1980, GM turned over inventory four times a year while Nippon Denso, a Toyota subcontractor had a turnover ratio over 350, less than one days inventory in the plant.

In the late 1980’s I would visit with Mr. Ohno, at the time he was chairman of Toyota Gosei, on each of my semi-annual study missions.

“When Ohno would speak to our study mission group, his lecture was always very simple and basic.  He would start by giving us his famous ‘river example.’  
“Inventory[1] is like a river of water and as it flows through the plant it hides problems and other wastes.  It hides the machine problems, quality/defect problems, and many others.  All of these problems add to the cost of manufacturing.”

To address this issue Ohno recommended that we start by slowly reducing inventory, ‘reducing the level of water in the river.’  “As you lower the level of inventory, problems rise to the surface of your awareness, [2] then one by one you solve those problems and eliminate them, then you can lower the river again,” Ohno said.  You continue to do this eliminating those non-value added wastes.

Lowering the river of inventory is the heart of lean manufacturing.  Keep this centered in your mind and practice it.  People have a tendency to complicate things.   It is only because they really don’t fully understand and appreciate the simplicity and power of reducing inventory.

If you had a batch size of 100 parts, Ohno would tell you to lower the batch size to 99 and see what happens.  If a problem occurs then solve it and then take away another piece.

The process of lowering the inventory levels led to the concept of one-piece flow, but when you cannot get to one-piece flow you use the Kanban[3] system and work with small batch sizes.

One-piece flow is producing only one part at a time then moving that part immediately to the next machine.  The machine in a cell often has a device to hold the part while being machined then it is either moved automatically to the next machine or carried there by the worker.  There is virtually no inventory built up between these machines.”[4]

A wonderful tool “To lay out the facilities in the sequence of the process,” is called Value Stream Mapping.  Goals are to shorten the lead time, arrange the process into cells and to deliver to the customer products
and services “Just-in-time,” the right product, at the right time, in the right quantity and in the right quality.

Laying out the facilities in the sequence of processes eliminates the mountains of work-process-inventory found between machine centers.

            Let’s here from you.

            Norman Bodek

 

Notes:

[1] Since Ohno’s death Toyota has slightly reversed the trend to completely remove inventory and has additional inventory to protect them against disasters.  But, Toyota is still probably the best JIT Company in the world.

[2] These problems could be machine failures.  If one machine goes down, excess inventory allows the process to continue without having to immediately fix the machine. If there was a quality defeat inventory allows you to work without having to get to the root cause of the problem.

[3] In December 1980 we interviewed Yasuhiro Monden, professor of accounting at the State University of New York at Buffalo and author of the Toyota Production System.   We titled the article Kanban – The Coming Revolution for we liked the name Kanban better than the Toyota Production System but Kanban is only a subset and JIT became the term of choice.   Kanban means signboard and is a vehicle to switch the manufacturing process from a “push” to a “pull” system.  The subsequent process goes back to the previous process and presents a production order, the Kanban, to allow the previous process to produce.

[4] The above paragraphs are from my last book “Kaikaku The Power and Magic of Lean.”


From: Chuck Lamb
Sent: February 21, 2005

Norman,

Very interesting start.  Looks like a combination of Lean and TOC.  Your extra inventory seems to be what is called "Buffer" in the TOC world.  I've found that they both are valuable (Lean and TOC) and can be better than one or the other in whole.  I'm looking forward to the other conditions.

Regards,
Chuck Lamb


From: Prasad Velaga
Sent: February 21, 2005

Norman,

I view the existence of large inventory in a different way. In my view, large inventories were maintained for negotiating with problems concerning machine breakdowns, rework/rejection due to quality problems, labor issues, uncertainty in supply and quality of raw materials, lack of demand forecasting, deesire for not loosing potential sales, and other problems. I don't know whether any management maintained inventories only to hide such problems.

Inventory is a necessary evil until these problems are eliminated.

Regards,

Prasad


From: April Wicker
Sent: February 22, 2005

Hi Norman

Nothing new here, but it helps all of us to be reminded. It really is that simple. When my company began to reduce inventory, we discovered just how poorly our suppliers were performing. With lots of inventory, we could afford to accept a thousand parts, cull the bad ones, and move the good ones to production. Now, we don't have time nor room for inspection, we need our suppliers to supply all good parts all of the time.

When we accomplish all good parts all of the time, who knows what we will find to improve next!

April Wicker


From: B. Hauser
Sent: February 22, 2005

Norman - good stuff.  Keep it coming, and correct me if my understanding is wrong below....

Prasad - you are right in saying that the inventory "buffers" against down-time, etc.  Managers may not be purposefully hiding those problems with inventories, but in effect that is what is happening.  If a company is protecting against these problems, there is no urgency to eliminate them. I believe what Ohno was saying is to slowly remove the buffer, exposing 1 problem at a time (ie: a quality problem).  Now the problem has some urgency, and it will focus the proper resources to fix it.  Once the quality problem is fixed, lower the inventory a little more, then focus on solving the next problem.

Similar to following the 5 focusing steps in TOC.


 

 

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