LEAN MANUFACTURING 2012

ABSTRACT
In this world of competition without proper production management a company cannot survive. Using a manufacturing concept for competitive advantage is relatively a new concept. Lean manufacturing is a concept actually brought up by Toyota motor company, Japan. But it was popularized to the world by the book THE MACHINE THAT CHANGED THE WORLD by Womack, Jones and Roos of MIT in 1990. Adding value by eliminating waste, being responsive to changes, focusing on quality and enhancing effectiveness of workforce is what achieved by lean manufacturing. It needs a systematic and continuing search for non value added activities. This seminar provides an overview of basic elements, techniques and benefits of lean manufacturing.

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CONTENTS

CHAPTERS
1. A brief history of lean manufacturing 2. What is lean manufacturing? 3. Wastes in production 3.1 Over production 3.2 Waiting 3.3 Inventory or Work in Process (WIP) 3.4 Processing waste
3.5 Transportation 3.6 Motion 3.7 Making defective products

PAGE NUMBER
01 02 03 03 03 04 04
05 05 06

3.8 Underutilizing people 4. Elements of lean manufacturing 4.1 Elimination of wastes 4.2 Continuous improvement 4.3 Pull system 4.4 One-piece flow 4.5 Cellular manufacturing 4.6 5 Ss 5. Key to Lean success 6. Comparison between traditional and lean manufacturing 7. Benefits of lean manufacturing 8. Case study 9. Conclusion References

06 07 07 08 09 10 11 12 13 15 18 20 21 22

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CHAPTER 1 A BRIEF HISTORY OF LEAN MANUFACTURING

In 1900s U.S. manufacturers like Henry ford brought the concept of mass production. U.S. manufacturers have always searched for efficiency strategies that help reduce costs, improve output, establish competitive position, and increase market share. Early process oriented mass production manufacturing methods common before World War II shifted afterwards to the results-oriented, output-focused, production systems that control most of today's manufacturing businesses. Japanese manufacturers re-building after the Second World War were facing declining human, material, and financial resources. The problems they faced in manufacturing were vastly different from their Western counterparts. These circumstances led to the development of new, lower cost, manufacturing practices. Early Japanese leaders such as the Toyota Motor Company's Eiji Toyoda, Taiichi Ohno, and Shingeo Shingo developed a disciplined, process-focused production system now known as the "lean production." The objective of this system was to minimize the consumption of resources that added no value to a product. The "lean manufacturing" concept was popularized in American factories in large part by the Massachusetts Institute of Technology study of the movement from mass production toward production as described in The Machine That Changed the World, (Womack, Jones & Roos, 1990), which discussed the significant performance gap between Western and Japanese automotive industries. This book described the important elements accounting for superior performance as lean production. The term "lean" was used because Japanese business methods used less human effort, capital investment, floor space, materials, and time in all aspects of operations. The resulting competition among U.S. and Japanese automakers over the last 25 years has lead to the adoption of these principles within all U.S. manufacturing businesses. Now it has got global acceptance and is adopted by industries world over to keep up with the fast moving and competing industrial field.

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CHAPTER-2 WHAT IS LEAN MANUFACTURING?

Lean manufacturing is a manufacturing system and philosophy that was originally developed by Toyota, Japan and is now used by many manufacturers throughout the world. Lean Manufacturing can be defined as: "A systematic approach to identifying and eliminating waste (non-value-added activities) through continuous improvement by flowing the product at the pull of the customer in pursuit of perfection." The term lean manufacturing is a more generic term and refers to the general principles and further developments of becoming lean. The term lean is very apt because in lean manufacturing the emphasis is on cutting out FAT or wastes in manufacturing process. Waste is defined as anything that does not add any value to the product. It could be defined as anything the customer is not willing to pay for. Manufacturing philosophy is pivoted on designing a manufacturing system that perfectly blends together the fundamentals of minimizing costs and maximizing profit. These fundamentals are Man (labour), Materials and Machines (equipments) called the 3 Ms of manufacturing. A well-balanced 3M is resulted through lean manufacturing.

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CHAPTER-3 WASTES IN MANUFACTURING

The aim of Lean Manufacturing is the elimination of waste in every area of production including customer relations, product design, supplier networks, and factory management. Its goal is to incorporate less human effort, less inventory, less time to develop products, and less space to become highly responsive to customer demand while producing top quality products in the most efficient and economical manner possible. Essentially, a "waste" is anything that the customer is not willing to pay for. Typically the types of waste considered in a lean manufacturing system include:

3.1 Overproduction
To produce more than demanded or produce it before it is needed. It is visible as storage of material. It is the result of producing to speculative demand. Overproduction means making more than is required by the next process, making earlier than is required by the next process, or making faster than is required by the next process. Causes for overproduction waste include:

Just-in-case logic Misuse of automation Long process setup Unleveled scheduling Unbalanced work load Over engineered Redundant inspections

3.2 Waiting
For a machine to process should be eliminated. The principle is to maximize the utilization/efficiency of the worker instead of maximizing the utilization of the machines. Causes of waiting waste include:

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Unbalanced work load Unplanned maintenance Long process set-up times Misuses of automation Upstream quality problems Unleveled scheduling

3.3 Inventory or Work in Process (WIP)

This is material between operations due to large lot production or processes with long cycle times. Causes of excess inventory include:

Protecting the company from inefficiencies and unexpected problems Product complexity Unleveled scheduling Poor market forecast Unbalanced workload Unreliable shipments by suppliers Misunderstood communications Reward systems

3.4 Processing waste

It should be minimized by asking why a specific processing step is needed and why a specific product is produced. All unnecessary processing steps should be eliminated. Causes for processing waste include:

Product changes without process changes Just-in-case logic True customer requirements undefined Over processing to accommodate downtime Lack of communications Page 6

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Redundant approvals Extra copies/excessive information

3.5 Transportation
This does not add any value to the product. Instead of improving the transportation, it should be minimized or eliminated (e.g. forming cells). Causes of transportation waste include:

Poor plant layout Poor understanding of the process flow for production Large batch sizes, long lead times, and large storage areas

3.6 Motion
Motion of the workers, machines, and transport (e.g. due to the inappropriate location of tools and parts) is waste. Instead of automating wasted motion, the operation itself should be improved.

Causes of motion waste include:

Poor people/machine effectiveness Inconsistent work methods Unfavorable facility or cell layout Poor workplace organization and housekeeping Extra "busy" movements while waiting

3.7 Making defective products

This is pure waste. Prevent the occurrence of defects instead of finding and repairing defects. Causes of processing waste include: Dept. Of Mechanical Engg- S.I.T, TUMKUR Page 7

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Weak process control Poor quality Unbalanced inventory level Deficient planned maintenance Inadequate education/training/work instructions Product design Customer needs not understood

3.8 Underutilizing people

Not taking advantage of people's abilities. Causes of people waste include:

Old guard thinking, politics, the business culture Poor hiring practices Low or no investment in training Low pay, high turnover strategy Nearly every waste in the production process can fit into at least one of these

categories. Those that understand the concept deeply view waste as the singular enemy that greatly limits business performance and threatens prosperity unless it is relentlessly eliminated over time. Lean manufacturing is an approach that eliminates waste by reducing costs in the overall production process, in operations within that process, and in the utilization of production labor. The focus is on making the entire process flow, not the improvement of one or more individual operations.

CHAPTER-4 ELEMENTS OF LEAN MANUFACTURING

Those concepts that lead to the implementation of lean manufacturing successfully are called elements of lean manufacturing. The basic elements of lean manufacturing are waste elimination, continuous improvement, pull system, one-piece workflow, cellular manufacturing and 5Ss. When these elements are focused in the areas of cost, quality and delivery, this forms the basis for a lean production system.

4.1 Elimination of waste

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LEAN MANUFACTURING 2012 Waste is anything that doesnt add value to the product. Seeing whether the process is adding value to the product or not is the best way to identify wastes.

Is the activity adding value?

If YES Is this the best way to do it?

If NO Can it be eliminated? If not, can it be reduced?

Out of the complete processes in an industry only about 5 % actually add value to the product. Rest of the process does not add any value. Rest 35% activities are such that even though this doesnt add any value but still it cannot be eliminated as it is necessary. For eg. Inventory cannot be completely reduced, scrap materials cannot be made zero, it may take few minutes to load unload and load for next operation etc. So focus should be on complete elimination of waste activities and reducing the necessary non-value adding activities

4.2 continuous improvement

Japanese looked at improving their work every time they do it. This lead to the development of concept called continuous improvement. Japanese rather than maintaining the improvement they have achieved they concentrated in continuously improving their work. This improvement can be in any field like quality, error proofing, lead-time reduction etc. So the focus should be on how you can improve your work than the same done last time. Improvement is classified into innovations and kaizen. Innovations are those improvements which cause drastic changes. These occur due to huge technological advancements in the field of research and development. These are mostly done by high level engineers. Kaizen include small small improvements done by lower order employees. According to the level of employees the type of improvements each should focus are as shown below: Dept. Of Mechanical Engg- S.I.T, TUMKUR Page 9

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In order to achieve continuous improvement the work culture of the workers should be modified. The workers should be aimed at improving their work each time they do it.

4.3 Pull system

Manufacturing system can be divided into two 1) Push system Here the products are made according to the market forecast and not according to the current demand. So here the information flow is in the same direction as the product flow. So there may chance of piling of finished goods as there are always fluctuation in demand. Thus the product is pushed through the production line.

Information Flow
Fin. Process Goods C Customer

Ra Supplier w Ma tl

Process WIP A

Process B WIP

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Part Flow

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2)Pull system- Here the product is made according to the customer demand. So the information of the quantity and type of product flow in the opposite direction to that of the product. Here no piling of finished products occurs as the production is according to the customer demand. Hence the customer pulls the product through the production line.

Information Flow

Supplier

Ra w Mat l

Process A WIP

Process B

Fin. ProcessGoods Customer

Part Flow
4.4 One-piece flow
One piece flow is one of the important techniques in implementing lean manufacturing. Traditional batch production in mass production is replaced by one piece flow in lean manufacturing. Here batch size is reduced to almost one. This reduces the total lead time and also reduces waiting between operations or queuing. Following figures show how effective is one piece flow over batch production.

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Batch & Queue Processing

Proces s A Proces s B Proces s C

10 minutes 10 minutes

10 minutes

Lead Time:

30+ minutes for total order 21+ minutes for first piece

One piece flow

Proces Proces Proces s A s B s C

12 min. for total order 3 min. for first part

From the above example it is clear that the lead time can be reduced to almost 40% of the lead time when it was batch production. Also it can be noted that it takes about 85% less time for the first part to be produced. Thus product can be produced according to current demand quickly.

4.5 Cellular manufacturing

In traditional mass production machines are arranged according to its functions. But in cellular manufacturing machines are arranged according to the processes involved in production. The plants layout is designed in such a way that transportation between machineries is reduced to minimum. For the implementation of such a good plant layout deep knowledge of processes as well as proper analysis of processes involved in production is necessary.

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LEAN MANUFACTURING 2012 Following figures shows the diagrammatic representation of both forms of floor arrangement.

FUNCTIONAL

CELLS

CELL ADVANTAGES OVER FUNCTIONAL DEPARTMENT

1. Shorter Lead Time 2. Improved Quality - Quicker problem identification 3. Improved Quality - Less potential rework or scrap 4. Less Material Handling 5. Improved Coordination 6. Reduced Inventory 7. Departmental conflicts eliminated 8. Simplified Scheduling 9. Less Space Required

4.6 The 5 Ss
It is the Japanese method of keeping the work place clean and tidy. This helps in reducing many unnecessary movements. The 5Ss are: Sort (Seiri) - Perform Sort Through and Sort Out, by placing a red tag on all unneeded items and moving them to a temporary holding area. Within a predetermined time the red tag items are disposed, sold, moved or given away. Set in Order (Seiton) - Identify the best location for remaining items, relocate out of place items, set inventory limits, and install temporary location indicators. Dept. Of Mechanical Engg- S.I.T, TUMKUR Page 13

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Shine (Seiso) - Clean everything, inside and out. Standardize (Seiketsu) - Create the rules for maintaining and controlling the first 3Ss and use visual controls. Sustain (Shitsuke) - Ensure adherence to the 5S standards through communication, training, and self-discipline.

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CHAPTER-5 KEYS TO LEAN SUCCESS

Following are some considerations to successful lean implementation:

5.1 Prepare and motivate people

Widespread orientation to Continuous Improvement, quality, training and recruiting workers with appropriate skills

Create common understanding of need to change to lean

5.2 Employee involvement

Push decision making and system development down to the "lowest levels" Trained and truly empowered people

5.3 Share information and manage expectations 5.4 Identify and empower champions, particularly operations managers

Remove roadblocks (i.e. people, layout, systems) Make it both directive yet empowering

5.5 Atmosphere of experimentation

Tolerating mistakes, patience, etc. Willingness to take risks

5.6 Installing "enlightened" and realistic performance measures, evaluation, and reward systems
Do away with rigid performance goals during implementation

Measure results and not number activities/events Page 15

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Tie improvements, long term, to key macro level performance targets (i.e. inventory turns, quality, delivery, overall cost reductions) After early wins in operations, extend across ENTIRE organization.

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CHAPTER-6 COMPARISON BETWEEN TRADITIONAL AND LEAN MANUFACTURING

For years manufacturers have created products in anticipation of having a market for them. Operations have traditionally been driven by sales forecasts and firms tended to stockpile inventories in case they were needed. A key difference in Lean Manufacturing is that it is based on the concept that production can and should be driven by real customer demand. Instead of producing what you hope to sell, Lean Manufacturing can produce what your customer wants with shorter lead times. Instead of pushing product to market, it's pulled there through a system that's set up to quickly respond to customer demand. Lean organizations are capable of producing high-quality products economically in lower volumes and bringing them to market faster than mass producers. A lean organization can make twice as much product with twice the quality and half the time and space, at half the cost, with a fraction of the normal work-in-process inventory. Lean management is about operating the most efficient and effective organization possible, with the least cost and zero waste.

6.1 OVERALL ORGANIZATIONAL CHARACTERISTICS:

TRADITIONAL MASS PRODUCTION Business Strategy

LEAN PRODUCTION

Product-out strategy focused on Customer focused strategy focused on exploiting economies of scale of stable identifying and exploiting shifting product designs and non-unique competitive advantage. technologies Makes what engineers want in large quantities at statistically acceptable quality levels; dispose of unused inventory at sale prices Leadership by executive command Makes what customers want with zero defect, when they want it, and only in the quantities they order

Customer Satisfaction

Leadership

Leadership by vision and broad participation Flat structures that encourage initiative and encourage the flow of vital information that highlights defects, operator errors, equipment abnormalities, and organizational deficiencies.

Organization

Hierarchical structures that encourage following orders and discourage the flow of vital information that highlights defects, operator errors, equipment abnormalities, and organizational deficiencies.

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External Relations Information Management

Based on price Information-weak management based on abstract reports Culture of loyalty and obedience, subculture of alienation and labor strife

Based on long-term relationships Information-rich management based on visual control systems maintained by all employees Harmonious culture of involvement based on long-term development of human resources

Cultural

Production

Large-scale machines, Human-scale machines, cell-type layout, functional layout, minimal multi-skilling, one-piece flow, zero skills, long production runs, inventories massive inventories Dumb tools that assume an extreme division of labor, the following of orders, and no problem solving skills Maintenance by maintenance specialists Smart tools that assume standardized work, strength in problem identification, hypothesis generation, and experimentation Equipment management by production, maintenance and engineering

Operational capability

Maintenance

Engineering

"Isolated genius" model, Team-based model, with high input from with little input from customers and concurrent development of customers and little respect product and production process design for production realities.

6.2 MANUFACTURING METHODS:

TRADITIONAL MASS PRODUCTION Production schedules are based on Products manufactured to Production cycle times are Manufacturing lot size quantities are LEAN PRODUCTON

Forecast product is pushed Customer Order product is pulled through the facility through the facility Replenish finished goods inventory Weeks/months Fill customer orders (immediate shipments) Hours/days

Large, with large batches moving between operations; product is sent ahead of each operation By department function

Small, and based on one-piece flow between operations

Plant and equipment layout is Quality is assured

By product flow, using cells or lines for product families 100% at the production source

Through lot sampling

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Workers are typically assigned Worker empowerment is Inventory levels are

One person per machine

With one person handling several machines High has responsibility for identifying and implementing improvements Low small amounts between operations, ship often

Low little input into how operation is performed High large warehouse of finished goods, and central storeroom for in-process staging Low 6-9 turns pr year or less

Inventory turns are

High 20+ turns per year

Flexibility in changing manufacturing schedules is

Low difficult to handle and High easy to adjust to and implement adjust to

Manufacturing costs are Rising and difficult to control

Stable/decreasing and under control

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CHAPTER-7 BENEFITS OF LEAN MANUFACTURING

According to the study conducted in various industries world over the main benefits achieved by implementation of lean manufacturing is as shown below.

0 Lead Time Reduction Productivity Increase WIP Reduction Quality Improvement Space Utilization

Percentage of Benefits Achieved 25 50 75 100

(From ERC staff meeting, march 20,2002,Maryland University) Establishment and mastering of a lean production system would allow you to achieve the following benefits:

Lead time is reduced by 90% Productivity is increased by 50% Work in process is reduced by 80% Quality is improved by 80% Space utilization is increased by 75% These are areas in an establishment that directly affects its survival. There are many

other benefits also which directly or indirectly affects the performance of the industry.

OTHER BENEFITS
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LEAN MANUFACTURING 2012 Reduced scrap and waste Reduced inventory costs Cross-trained employees Reduced cycle time Reduced obsolescence Lower space/facility requirements High quality & reliability Lower overall costs Self-directed work teams Lead time reduction Fast market response Longer machine life Improved customer communication Lower inventories Improved vendor support and quality Higher labor efficiency and quality Improved flexibility in reacting to changes Allows more strategic management focus Increased shipping and billing frequencies

However, by continually focusing on waste reduction, there are truly no ends to the benefits that can be achieved.

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CHAPTER-8 CASE STUDY

SIX SIGMA AT MOTOROLA

In 1986, Motorola invented Six Sigma, a quality and business improvement methodology that is revolutionizing industry.Two decades and two Malcolm Baldridge Quality Awards later, Motorola is still finding new ways to reinvent itself using this techniques. -Dan Tegel,Global Director, Digital Six Sigma Business Improvement, Motorola.

INTRODUCTION
In 2002, the US based Motorola Inc. achieved the unique distinction of receiving the Malcolm Baldrige National Quality Award for the second time.Motorola became the only company in the world to have received this award twice, having won it earlier in 1988.For Motorola, quality improvement leading to total customer satisfaction is the key.In 1981, the company launched an ambitious and innovative quality drive for a ten-fold improvement in the quality of its products and services, after the company lost business to its Japanese competitors.Motorolas Six Sigma quality target aimed at achieving not more than 3.4 defects per million producyts.Between 1986 and 1988 alone, Motorola rweceived 50 quality awards.Motorola Senior Corporate, Vice President and Quality Director,said Six Sigma is not a product you can buy. Its a commitment. THE SIX SIGMA INITIATIVE AT MOTOROLA The term Six Sigma comes from the field of Statistics.Six Sigma is a measurement standard in product variation.Looking at the initiation of Six Sigma ; the US economy was experiencing a downtrend in the 1980s.As a technology-based company, Motorola faced several problems.Most worrying of all, the company started receiving an increasing number of complaints about warranty claims for defective products.Motorola was strongly criticized by the US media when it sold its TV division, Quasar,to Matsushita, a Japanese consumer electronic company.Under Japanese management, the factory began to produce TV sets with 1\20th number of defects that were made under Motorolas management. Later, when Motorola executives toured the Quasar factory, they were surprised to observe these changes.They focused on preventing errors at the source, there by dramatically reducing Dept. Of Mechanical Engg- S.I.T, TUMKUR Page 22

LEAN MANUFACTURING 2012 the defects and costs for rectifying them.This correlation between cost and quality-that the best quality resulted in lowest cost, surprised Motorola executives.Eventually, Motorola realized that its quality standards were very poor compared to its Japanese peers. Smith and Dr. Mikel Harry, a senior staff engineering at Motorolas Government Electronics Group(GEG),developed a four-stage problem-solving-approach-Measure,Analyse,Improve and control (MAIC).Later, the MAIC discipline became the road map for achieving Six Sigma quality standards. FOUR STAGE PROBLEM SOLVING APPROACH-MAIC MEASURE PHASE : Measure the existing systems. ANALYZE PHASE : Analyze the system to identify ways to eliminate the gap between the current performance and the desired goal. IMPROVE PHASE : In this phase, project teams seek the optimal solution and develop and test a plan of action for implementing and conforming the solution. CONTROL PHASE : Control the new systems.

THE IMPLEMENTATION
On January 15,1987,Galvin launched a long-term quality program, called The Six Sigma Quality Program, with the goal of achieving not more 3.4 defective parts per million.He said, There is only one ultimate goal: zero defects in everything we do. Motorola followed a six step program to achieve Six Sigma standards : 1. Identify the product you create or the service that you provide.[What do you do?] 2. Identify the customers(s) for your product or services, and determine what they consider important.[Who uses your product and services and why?] 3. Identify your needs (to provide a product/service that satisfies the customer).[What do you need to do in your work?] 4. Define the process for doing the work.[How do you do your work?] 5. Mistake-proof the process and eliminate wasted effort.[How can you do your work better?] 6. Ensure continuous improvement by measuring, analyzing and controlling the improved process.[How perfectly are you doing your customer-focused work?] Other measures for implementing Six Sigma are : 1. All departments of Motorola were taught benchmarking techniques to analyze competitors products and assess their manufacturing process, reliability, manufacturing cost and performance.Then, the employees were asked to exceed the competitors standards. Dept. Of Mechanical Engg- S.I.T, TUMKUR Page 23

LEAN MANUFACTURING 2012 2. Motorola managers carried with them printed cards bearing the corporate objective total customer satisfaction 3. Corporate executives and business managers carried pagers to make themselves available to customers all the time. 4. They regularly visited customers to find out their likes and dislikes regarding Motorolas products and services. 5. Based on feedback, along with the information collected through extensive customers surveys, complaint hotlines and field appraisals, new action plans designed for improvement. However, by 1992, Motorola aimed to achieve the overall quality level of per million, a little less than Six Sigma. 5.4 defects

EMPLOYEES TRAINING IN SIX SIGMA TOOLS

Training the employees in statistical tools of quality control was the most important part of Six Sigma implementation at Motorola. Six Sigma training program was designated with Karate-related titles : a) GREEN BELTS: This was the basic level training program. performing These candidates were employees at all levels who served as highteam members. Their role was to assist the black belts in more effective and quick completion of the projects. Green belt training took only six days. b) BLACK BELTS : The black belt holders were technically oriented employees, responsible for defining the organizational goals and looking after change management. They were expected to master a wide variety of technical tools in a relatively short period of time. c) MASTER BLACK BELT : This was the highest level of technical proficiency. The master provided technical leadership of the Six Sigma program. These were individuals who had a few years of experience as black belt. They received additional training in advanced statistical tools, business skills and team\leadership skills. d) CHAMPIONS : Champions were high-level individuals like Vice Presidents who had a high level of accountability and responsibility for the implementation of Six Sigma projects. e) LEADERSHIP : The leadership program was intended for the top-most personnel like the CEO. The training program was conducted for two days.

THE BENEFITS
After implementing Six Sigma, Motorola reaped the following benefits between 1987 and 1994 : Dept. Of Mechanical Engg- S.I.T, TUMKUR Page 24

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Reduced in- process defect levels by a factor of 200. Reduced manufacturing costs by $ 1.4 bn. Increased employee production on a dollar basis by 126%. Four-fold increase in stockholders share value.

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CHAPTER-9 CONCLUSION
LEAN can be said as adding value by eliminating waste being responsive to change, focusing on quality and enhancing the effectiveness of the work force. Although lean has its origin in the automobile industry it is being successfully used in other production industries. Lean manufacturing is now extended to fields like I.T, service etc in order to reduce production cost and meet changing customer needs. Since lean is completely customer oriented it is here to stay. It is also important as it emphasis customer satisfaction. Lean has made its way into curriculum of major universities around the world. In universities like MIT, Maryland university etc Lean manufacturing is included into the syllabus and it is given importance to new entrepreneurs. Many consulting firms are also functioning for proper guidance to those who are interested in lean. Lean manufacturing cannot be attained in one day or one week or one month or in a year. It needs lot of commitment and hard work. Also there is no end in lean manufacturing. The more you eliminate waste the more you become lean. That is why it is said that:

lean is a journey

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REFERENCES

1. Besterfield, Dale H.: Total quality management, (Pearson education) 2. www.advancedmanufacturing.com 3. www.1000ventures.com 4. www.mamtc.com

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