Operations_Management

Diploma in Logistics and Supply Chain Management Module: Operations Management Title : The gospel for Manufacturing and Operations Salvation: LEAN This dissertation is submitted in part fulfilment of the requirement for the CILT Diploma in Logistics and Supply Chain Management. Presented by: Roland Ywuong Presented to: Pat Mullen Date of Completion: 23.02.2013 ETHICAL DECLARATION I declare that this dissertation is wholly my own work except where I have made explicit reference to the works of others. Table of Contents Summary 3 Introduction 3 1 The evolution of philosophies of success 4 1.1 A brief history of lean 4 1.2 The development of TPS 5 2 What is Lean' 6 2.1 Lean Action Plan 7 2.2 Case study 7 Conclusion 9 Recommendations 9 Bibliography 10 Summary: This assignment provides an analysis and evaluation on the concept of Lean who is today the gospel for Manufacturing and Operations salvation. Lean processes provide a way to do more with less-less human effort, less equipment, less time, and less space-while coming closer and closer to providing customers with exactly what they want , when they want it , where they want it , and at a price that meets their cost/value expectations. We will talk about the origins of lean, his development and how it can be implement today in our modern industry. Our works finds that, after years of benchmarking and observation in organisations around the world as USA Vaacum, we found that converting a classic batch-and-queue production system to lean production helps organisation achieve the following results for manufacturing: Labour productivity is almost doubled all the way through the system for direct, managerial, and technical workers and from raw materials to delivered product; Errors reaching the customer and scrap within the production process are typically cut in half; time-to-market for new products is often halved, meaning that a wider variety of products within products families can be offered at very modest additional cost. Introduction: The world of manufacturing as reached a turning point. Reeling from seemingly unending waves of change, manufacturing companies and those who advise them redefined what it means to be a manufacturer. New rules have been developed for inventories policies, plant floor layout, and optimal flow patterns of products through the plant, supplier relations, and cost constraints. These new rules have led to new competitive strategies fuelled by quantum improvements in throughput, effectiveness, and responsiveness. At the heart of this onslaught of change to the basic tenets of manufacturing lies the concept of lean. Being lean is based on three simple but radical concepts: eliminate waste, continuous improvement, and respect for people. Invented by Toyota, lean production is rapidly becoming the dominant paradigm in manufacturing, driving many of the performance improvements now taking place around the world. 1 The evolution of philosophies of success Where did Lean and Agile and WCM philosophies come from' The avoidance of waste has a long history. In fact many of the concepts now seen as key to lean have been discovered and rediscovered over the years by others in their search to reduce waste. Lean manufacturing build on their experiences, including learning from their mistakes. 1-1 A Brief history of Lean Most of the Basic goals of lean manufacturing are common sense, and documented examples can be seen as early as Benjamin Franklin’s The Way to Wealth says the following about carrying unnecessary inventory. “You call them goods; but, if you do not take care, they will prove evils to some of you. You expect they will be sold cheap, and, perhaps, they may be bought for less than they cost; but, if you have no occasion for them, they must be dear to you” He added that avoiding unnecessary costs could be more profitable than increasing sales :“A penny saved is two pence clear. A pin a-day is a groat a-year. Save and have” .Frederic W. Taylor began to look at individual workers and work methods. The result was Time Study and Standardized work. He called his idea Scientific Management. Frank Gilberth added Motion Study and invented Process Charting. And then, there was Henry Ford who starts the ball rolling. Ford continued this focus on waste while developing his mass assembly manufacturing system. Ford lined up fabrication steps in process sequence wherever possible using special-purpose machines and go/no-go gauges to fabricate and assemble the components directly to line-side. Ford’s success has startled almost the world, financially, industrially, mechanically. The problem with Ford’s system was not the flow: He was able to turn the inventories of the entire company every few days. Rather it was his inability to provide variety. The model T was not just limited to one colour. It was also limited to one specification so that all model T chassis were essentially identical up through the end of production in 1926. When the world wanted variety, including model cycles shorter than 19 years for the Model T, Ford seemed to lose his way. 1-2The development of TPS Toyota development of ideas that later became Lean may have started at the turn of 2oth century with Saki chi Toyoda , in a textile factory with looms that stopped themselves when a thread broke, this became the seed of autonomation and Jidoka . Toyota’s journey may have started back in 1934 when it moved from textiles to produces its first car. Kiichiro Toyoda, The founder of Toyota Motor Corporation, directed the engine casting work and discovered many problems in their manufacture. He decided he must stop the repairing of poor quality by intense study of each stage of the process. In 1936, when Toyota won its first truck contract with the Japanese government, his processes hit new problems and he developed the “Kaizen” improvement teams. 2 What is Lean' “Lean is a systematic approach to identifying and eliminating waste through continuous improvement, flowing the product at the pull of the customer in pursuit of perfection” (Mullen P., Logicert 2003, P. 56) The leading edge and successful companies are now pursuing Lean and Agile Operations and world Class Business (WCB). “Lean and Agile have become the gospel for operation Salvation. These Systems have evolved as Best Practice as companies continue to grapple and experiment to become more effective to secure competitive advantage.” (Mullen P., Logicert 2003. P.53) “Lean businesses use the myriad of best practice tools that have been available for many years including the Japanese Kaizen or continuous improvement approach , which looks for small incremental improvements on a continuous basis” (Mullen Pat. Logicert, 2003p.56) 2-1Lean Action Plan While every individual or company embarking on a lean journey will have different challenges based on their particular set of circumstances, there are several crucial steps that can help reduce resistance, spread the right learning, and engender the type of commitment necessary for lean enterprise. 1. Develop a clear sense of urgency to change. 2. Build the sense of urgency within the senior Management Team. 3. Create a Business Plan and Strategic Vision with clear superior performance goals throughout the organisation. 4. Communicate the vision, Lean Implementation Plan, and Superior Performance Goals to the organization. 5. Empower and train the group that will start the implementation. 6. Implement a pilot with a liberal time line to demonstrate the feasibility and success of the plan. 2-2Case Study USA Vacuum USA Vacuum is a manufacturer of residential and commercial vacuum cleaners for The Tacony Corp, in St.Louis, Missouri. The majority of their production is made under their flagship brand of simplicity and Riccar. Prior to 1997,the Tacony Corp purchased Simplicity and Riccar vacuum cleaners from Zeng Hsing Industrial Co., Ltd in Taiwan. A joint venture with the Taiwanese manufacturer in 1997 led to the start of the USA Vacuum production facility in St James, Missouri. The plant currently employs approximately 60 people from the St.james and Rolla, Missouri area. After USA started preliminary production in their new facility, they decided to make a variety of improvements to their operation. Initially, USA Vacuum was struggling to produce vacuum cleaners in sufficient quantity to support their short and long-term sales forecasts. Consequently, their reserve finished goods stock was dwindling rapidly. Daily issues included process variations, component quality issues, and supplier delivery problems. Also, inventory was disorganized with inaccurate quantities. USA’s primary need was a method to control their assembly processes and balance the assembly line workstations. Their secondary need was to redesign the assembly line to allow for balanced just-in-time production of subassemblies and finished goods. The company contacted Missouri Enterprise for help in an overall operation review (CITE Survey) and a warehouse improvement project. Additionally, the Centre provided technical assistance in the implementation of lean manufacturing in their assembly processes. The initial activity with the project involved identification and time study of all operations involved in the vacuum cleaner assembly. With this information, the production lines were broken down into workstations with assigned operator activity for each station, bringing balance and consistency to the assembly process. The production staffs were organized into improvement teams that focused on process and workstation design improvements. Utilizing the information gathered during team meetings, two new productions lines were designed with connected subassembly cells and Kanban materials replenishments for the workstations. Support areas, including the warehouse and receiving department were also redesigned to support the new production lines. Over a two-month period, Missouri Enterprise and USA Vacuum personnel implemented the new designs to the physical plant. The bottom line result to the project is that USA vacuum is now able to meet their customer’s demand for vacuum cleaners. The line balances create an atmosphere of smooth, predictable production. Additionally, they have a system in place to control all of their production activity and implement changes in a controlled manner. The use of instructional process graphic s assist operator training, and limit operator error due to model changeover. The Kanban replenishment system for workstation materials has reduced model changeover time, as all models’ materials are present at the workstation. The reusable Kanban containers have greatly reduced the assembly line housekeeping issues by reducing the presence of cardboard boxes. Subassemblies are produced on an ‘as needed’ basis, reducing WIP and scheduling headaches. As result of these changes, USA Vacuum believes they will save $1.5 million in inventory costs and $100.000 in labor costs. USA Vacuum Testimonial “Tacony Corporation had been a distribution company for 50 years, but had no manufacturing experience. We quickly learned that manufacturing was very different and very challenging. Missouri Enterprise identified area when we really needed help during the CITE Survey and then provided us a proposal with firm ‘deliverables’, i.e., production levels that we needed but doubted could be obtained. By providing a team of knowledgeable, hands on engineers, they designed and implemented a system that gave us the ability to consistently meet the deliverable quantities and to lower our costs. We will definitely continue to rely on them for future projects.” Bill Hinderer, Executive Vice President, Tacony Corporation. Conclusion The benefits of implementing lean manufacturing are substantial while the cost of not being able to meet customers’ expectations; especially short delivery cycles, are significant. The benefits reported in the case study are typical. If the improvements had not been made, the company would have ceased to exist or market share and market share growth would have been sacrificed in the name of “we have always done it this way and it has worked in the past”. The global economy is changing and becoming much more competitive. Companies must focus on customer requirements, these customers being part of the “right now” culture. Recommendations The core of lean is founded on the concept of continuous product and process improvement and the elimination of non-value added activities. Governments and policy makers can create environment for businesses to be competitive, but individual companies need to constantly improve their operations to be effective and efficient. If Irish companies are to compete globally they must embrace the principles of best practice. “Lean is about doing the most with the least; using less time, less stock, less people, less space and less money” (Mullen Pat. Logicert, 2003 p.56) “Lean businesses use the myriad of best practice tools that have been available for many years including the Japanese Kaizen or continuous improvement approach , which looks for small incremental improvements on a continuous basis” (Mullen Pat. Logicert, 2003p.56) Bibliography Mullen, Pat “Logicert Training Manuel, Module 3. Operations Management” 2003 www.lean.org/workshops/ WorkshopDescription.cfm'WorkshopId=81 (10.02.2013) www.codexx.com/pdf/Lean%/20is%not%enough.pdf (12.02.2013) www.google.ie (14.02.2013) www.lean101.ca (23.02.)