Deborah Nightingale © 2002 Massachusetts Institute of Technology 1
Fundamentals of Lean
Professor Deborah Nightingale September 9, 2002
Deborah Nightingale © 2002 Massachusetts Institute of Technology 2
Lean is a New Approach to Managing Enterprises
¾ Origin and evolution of lean concepts ¾ Core lean principles & practices ¾ How lean differs from craft and mass
production models of industrial organization ¾ Lean implementation steps ¾ Value stream mapping
Deborah Nightingale © 2002 Massachusetts Institute of Technology 3
Lean was Born out of Necessity: How to Withstand the Mass Production Behemoths
¾ On August 15, 1945 -- end of war with Japan -- Toyota faced a daunting challenge: How to succeed against Western mass production auto giants poised to enter Japanese market?
¾ Kiichiro Toyoda to Taiichi Ohno (father of lean production): “Catch up with America in three years.”
¾ Ohno’s challenge: How to design a production system exploiting central weaknesses of mass production model
¾ Japan faced many dilemmas: small & fragmented market, depleted workforce, scarce natural resources, little capital
¾ Lean evolved as a coherent response to this challenge over a number of decades -- a dynamic process of learning and adaptation later labeled as “lean production” by Western observers
Deborah Nightingale © 2002 Massachusetts Institute of Technology 4
Lean Response: Use Less of Everything, Offer Greater Variety of Higher Quality & More Affordable
Products in Less Time
¾ Best Japanese auto companies developed afundamentally different way of making things
¾ These companies changed the dynamics ofinternational competition
¾ New goals in manufacturing systems --combined benefits of craft and mass production ¾ Improved quality ¾ High productivity ¾ Efficiency at low volumes ¾ Production flexibility ¾ Rapid, efficient development cycle ¾ Product mix diversity
¾ Lean production contrasts with traditionalmass production paradigm
¾ Systemic principles are transferable
Deborah Nightingale © 2002 Massachusetts Institute of Technology 5
What
The removal of muda! Muda- Is a Japanese word for waste Waste- any activity that absorbs resources & creates no
value!
Source: by Womack & Jones
is Lean Thinking?
LeanThinking
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More Japanese Terms
¾ Kaikaku- radical improvement
¾ Kaizen- continuous incremental improvement
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Taiichi Ohno (1912-1990) Toyota Executive
¾ Types of Muda: ¾ Mistakes which require recertification
¾ Production of items no one wants
¾ Processing steps which really aren’t needed
¾ Employee or goods movement/transport from one place or another without any purpose
Deborah Nightingale © 2002 Massachusetts Institute of Technology 8
Taiichi Ohno (1912-1990) Toyota Executive
¾ Types of Muda: ¾ People in downstream activity waiting because
upstream activity has not delivered on time
¾ Goods and services that don’t meet the need of customer
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Antidote to Muda: Lean Thinking
¾ Provides way to specify value ¾ Line up value creating actions in best sequence ¾ Conduct activities without interruption whenever
someone ¾ Perform them more and more effectively ¾ Provides a way to make work more satisfying
requests them
Deborah Nightingale © 2002 Massachusetts Institute of Technology 10
Lean Thinking is the Dynamic Process of Eliminating Waste with the Goal of Creating Value for all
Enterprise Stakeholders
¾ Customer-focused: “pull” enterprise activities
¾ Knowledge-driven: Draws upon knowledge and innovation from everyone -- workers, suppliers
¾ Eliminating waste: Stresses elimination, not just reduction, of all types of waste
¾ Creating value: Puts premium on “growing the pie”, not just reducing costs, to benefit all stakeholders
¾ Dynamic and continuous: Pursues on-going systemic as well as incremental improvement -- both innovation and continual improvement
Customer needs and expectations
Deborah Nightingale © 2002 Massachusetts Institute of Technology 11
Lean Encompasses a Set of Mutually-Positively-Reinforcing Concepts, Practices and Tools Creating
a Virtuous Cycle
¾ Synchronizing flow and pull: “Pull” based just-in-time production enabled by kanban system
¾ Striving for perfect quality: Completely defect- free parts must flow to each subsequent process; variability reduction; quality designed-in, not based on inspection
¾ Flexibility and responsiveness: Small lot sizes and quick set-up times; ability to respond to shifts in demand
¾ Trust-based relationships: Mutual commitments and obligations, internally and externally with suppliers
¾ Continuous improvement (Kaizen): Continuous improvement through work standardization, productive maintenance, error proofing, root cause analysis, and worker training & empowerment
Deborah Nightingale © 2002 Massachusetts Institute of Technology 12
5 Steps to Becoming
Lean
Northrop Grumman ISS
* 4
3 2
1
5
Deborah Nightingale © 2002 Massachusetts Institute of Technology 13
1. Define Value 2. Identify the Value
Stream 3. Flow the Product 4. Pull
5. Strive for Perfection
Customer Follow the Product
Eliminate Waste Produce Just-in-Time Continuously Improve
5 Steps to Becoming Lean
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Definition
Information/Material in a Form That theCustomerCustomer Is Willing to Pay for
Value is DefinedDefined by the Customer Value is CreatedCreated by the Producer
1. Define Value
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Who’s the customer?
CCuseruser
CCshareholdershareholder
CCenvironmentalenvironmental
CCemployeeemployee
Who’s the Customer?
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The Value Stream Consists of Tasks Required to Bring a Specific Product Through Three Critical Processes: Design -Problem-solving From Concept Through Detailed Design and Engineering to Production Launch
Order -Information Management From Order-taking Through Detailed Scheduling to Delivery
Make -Physical Transformation from Raw Materials to Finished Product In the Hands Of the Customer
C U S T O M E R
2. Identify the Product’s Value Stream
the Actual
Product: Component
Procurement
Supplier: XXX
Product: Vehicle
Customer: U.S. Government
Value: – Affordable – High Quality – High Performance
Product – On Time Delivery
Perform Detail Design
J. Wessels 4/27/2001 Rev. 4
- Specs - Environmental
Criteria - Standard Parts - Standard Designs - Design Handbook - Geometric Design &
Tolerancing - Mfg. Process
Capability - Etc.
Des. Ref. Library
Release BTP
• Build to Package • Buy to Package • CDRLs • Reports
Des.Proc. Guidance
- Design for Manufacturing
- Design for Assembly
- Design to Cost - Design for Key
Characteristics - Design for
Supportability - Design for 6 Sigma - Design for ..........
Define Structural Arrangement
• Finalize Conceptual Design • Conduct Structural
Configuration/Cost/Mfg. Trades • Perform Airframe Analysis
- Weights - Finite Element Model - Environmental Model - Internal Loads - Observability Model
• Develop Material Allowables • Define Arrangement
- Production Breaks • Develop ICDs
Prepare Prelim.Design
• Develop Layouts • Create Assemblies • Create Sub-Assemblies • Perform Structural Analysis
- Stress - Environmental - Weight
• Production Factory Requirements Analysis
• Develop Adv. Mfg. Plan Tooling & Mastering Concepts
• Design Parts & Details
• Perform Structural Analysis
Pre-Contract Req’m’nts &
Concept’l Des.
Component Procurement Spec
To All Processes Shown
Manage Program
Systems Engineering
Manage Team Apply Program Plans Apply Technical Plans Apply Processes & Tools Apply Resources
Allocate Requirements to Component Allocate Requirements to Structure
Prime System Spec
Prime Contractor/
Team Process
System Req’m’ts Review
Prelim. Design Review
Critical Design Review
@ 80% BTP Releasezz
months yy
months 0
months
Iterate
Test System
• Development • Verification • Validation
Program Req’m’nts
SEMP Req’m’nts
Structure Specs ICDs
System Design Review
Produce Product
• Fab Tooling • Build & Inspect • Deliver
Analyze Rework Root Cause
Procure Suppliers
• Build and • Assemble
Change / Rework
Iterate
xx months
Example: Structural Design Value Stream Map
Deborah Nightingale © 2002 Massachusetts Institute of Technology 18
2. Piece Where possible
3. Focus on the Product and Its Needs Rather Than the Organization or the Equipment
1. Activities That Are Pure Waste
4. Focus on actual object and never let it out of sight from beginning to completion
5. Ignore traditional boundaries of jobs, careers, functions, and organizations to form a Lean enterprise removing all impediments to the continuous flow of the product
6. Rethink specific work practices and tools to eliminate backflows, scrap, and all stoppages
3.
Prefer One Flow
Eliminate
Flow the Product
Deborah Nightingale © 2002 Massachusetts Institute of Technology 19
What Is a Value-Added Activity?
A value-added activity is any action that transforms information/material into a capability for our ultimate customer at
the right time and the right quality.
Definition
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Definition
Any Activity That Consumes Resources Yet Adds No Value
Waste
Deborah Nightingale © 2002 Massachusetts Institute of Technology 21
Batch Production Example
A C D = Different Processes
Processing Time = 1Min./ Unit
0 A C D E L A P S E D
T I M E
M I N
Processes - Oriented Layout With Transfer Lot Size of Five
5 A C D
10 A C D
15 A C D
20 A BB D
Throughput Time (5 Units) =
5x1 + 5x1 + 5x1 + 5x1 =
20 Min.
Work in Process
5 + 5 + 5 + 5 =
20 Units
B
B
B
B
B
C
Deborah Nightingale © 2002 Massachusetts Institute of Technology 22
Batch Production Example
A D = Different Processes
Processing Time = 1Min./ Unit
0 A C D E L A P S E D
T I M E
M I N
Processes - Oriented Layout With Transfer Lot Size of Five
5 A C D
10 A C D
15 A C D
20 A BB D
Throughput Time (5 Units) =
5x1 + 5x1 + 5x1 + 5x1 =
20 Min.
Work in Process
5 + 5 + 5 + 5 =
20 Units
C B
B
B
B
B
C
A C 1
A C 2
A C 3
A C 4
A C 5
A C 0
Product-Oriented Layout With Lot Size Of One
E L A P S E D
T I M E
M I N
6 A C
7 A C
8 A C
One - Piece Flow Example
A C D = Different Processes
Processing Time = 1Min./ Unit
Throughput Time (5 Units) =
1x4 + 1x1 + 1x1 + 1x1 + 1x1 =
8 Min.
Work in Process
1 + 1 + 1 + 1 =
4 Units
Deborah Nightingale © 2002 Massachusetts Institute of Technology 23
B D
B D
B D
B D
B D
B D
B D
B D
B D
B
A C 1
A C 2
A C 3
A C 4
A C 5
A C 0
Product-Oriented Layout With Lot Size Of One
E L A P S E D
T I M E
M I N
6 A C
7 A C
8 A C
One - Piece Flow Example
A C D = Different Processes
Processing Time = 1Min./ Unit
Throughput Time (5 Units) =
1x4 + 1x1 + 1x1 + 1x1 + 1x1 =
8 Min.
Work in Process
1 + 1 + 1 + 1 =
4 Units
Deborah Nightingale © 2002 Massachusetts Institute of Technology 24
B D
B D
B D
B D
B D
B D
B D
B D
B D
B
Deborah Nightingale © 2002 Massachusetts Institute of Technology 25
4.
¾ Definition ¾ Letting the Customer Pull
Value from the Enterprise ¾ Don’t Make Anything Until It
Is Needed ¾ Then Make It As Quickly As
Possible
Pull
Deborah Nightingale © 2002 Massachusetts Institute of Technology 26
Pull
¾ Concept of letting the customer pull product from as needed instead of pushing it on them
¾ Reduces inventories and produces one time cash windfall & return on investment
Deborah Nightingale © 2002 Massachusetts Institute of Technology 27
5.
¾ Definition ¾ Continuous Process
Improvement ¾ Pursue Perfection, Not
the Competition ¾ There Is No End to the
Process of Reducing Efforts, Space, Costs and Mistakes
Strive for Perfection
Deborah Nightingale © 2002 Massachusetts Institute of Technology 28
Perfection
¾ Continuous radical and incremental improvement
¾ Continuous banishment of muda
Deborah Nightingale © 2002 Massachusetts Institute of Technology 29
Seven Categories of Waste
¾ Over Production …………...… Making Ahead of Demand
¾ Waiting ………………………... Delay From Previous Processing Steps
¾ Transportation ……………….. Unnecessary Transport of Materials
¾ Over Processing …………….. Doing More Than Is Necessary
¾ Inventories ……………………. More WIP Than the Absolute Minimum
¾ Movement …………………….. Unnecessary Movement of People
During the Course of Their Work
¾ Making Defective Products … Products Do Not Meet Customer Requirements
Some General Product Definition Wastes
• Task to Be Accomplished (New, In-work, etc.)
• Undocumented Information
• Prioritization • Too Much
Information
• Inaccurate / Incomplete Information
• Inadequate Analysis • Requirements Creep • Change / Multiple Tools • Inadequate Testing
• Generating More Info Than Required
• Excessive Iterations, Don’t Stop at Good Enough
• Fine Tuning Beyond Required
• Over Designing • Unnecessary Interim
Drawings for Build • Over Analysis • Excessive Test Points • Duplicate Tasking
• Tasks Finished Before Required, e.g. Making Drawings Before They Are Needed • Access to Data Storage
• People Are Not Co-located • Walk to Tools (Printer, Copier,
CADAM, Etc.) • Hand Carry Product for Signatures • Travel to Meetings
• Transferring Data From One Database to Another
• Physical Movement of Product • Unnecessary Movement of Data
(Physical or Electron Flows)
• Required to Stop a Given Task Due to Unavailable, Inaccurate, And/or Late Information
• Jobs in Queue Waiting for Resources
• Setup Time (Computer Logon, Printers, Xerox, etc.)
Seven Types of
Waste Making Ahead of Demand
Delay From Previous Processing Steps
Unnecessary Transport of Materials
Doing More Than Is Necessary
More WIP Than the Absolute Minimum
Unnecessary Movement of People During the Course of
Their Work
Products Do Not Meet Customer Requirements
Making Defective Products (Rework)
Inventories
Waiting
Movement
Transportation
Over Processing
Over Production
Deborah Nightingale © 2002 Massachusetts Institute of Technology 30
Exercise – Specific Examples You Encounter
Seven Types of
Waste Making Ahead of Demand
Delay From Previous Processing Steps
Unnecessary Transport of Materials
Doing More Than Is Necessary
More WIP Than the Absolute Minimum
Unnecessary Movement of People During the Course of
Their Work
Products Do Not Meet Customer Requirements
Making Defective Products (Rework)
Inventories
Waiting
Movement
Transportation
Over Processing
Over Production
Deborah Nightingale © 2002 Massachusetts Institute of Technology 31
Deborah Nightingale © 2002 Massachusetts Institute of Technology 32
Apply Five Simple Principles:
¾ Specify value from the standpoint of end customer
¾ Identify the value stream for each product family
¾ Make the product flow
¾ So the customer can pull
¾ As you manage toward perfection
Deborah Nightingale © 2002 Massachusetts Institute of Technology 33
Lean Thinking Differs Sharply from Craft and Mass Production in Important Ways
FOCUS CRAFT MASS PRODUCTION
LEAN THINKING
Focus Task Product Customer
Operations Single items Batch and queue Synchronized flow and pull
Overall aim Mastery of craft
Reduce cost and increase efficiency
Reduce waste and add value
Quality Integration (part of craft)
Inspection (a second stage, after production)
Prevention (built in by design & methods)
Business strategy
Customization Economies of scale and automation
Flexibility and adaptability
Improvement Master-driven continuous improvement
Expert-driven periodic improvement
Workforce-driven continuous improvement
Source: Lean Aerospace Initiative
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Value Stream Mapping
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SUPPLIERS
The CUSTOMER’S CUSTOMERS
CUSTOMER VALUE
STREAM
FLOW
VALUE
PULL
PERFECTION
The EXTENDED ENTERPRISE NORTHROP GRUMMAN
Lean/Value Stream Philosophy
Deborah Nightingale © 2002 Massachusetts Institute of Technology 36
What is a Value Stream Map?
¾ A Visual Representation of Every Process in the a Product’s Path from Order to Delivery
¾ Includes: ¾ Information and Materiel Flow Integration ¾ Product Through-Put and Cycle Times ¾ Resources Utilized ¾ Value Added Times ¾ Location of Significant Waste
Deborah Nightingale © 2002 Massachusetts Institute of Technology 37
Why Value Stream Map?
¾ Systems Approach To:
¾ Visualize the Entire Product Flow ¾ Identifies the Sources of Waste ¾ Basis of an Lean Implementation Plan ¾ Determine Future Operating State
Deborah Nightingale © 2002 Massachusetts Institute of Technology 38
Product
Current-State Drawing
Future-State Drawing
Work Plan
Business Case Justification
Understanding how the product currently flows
Designing a lean flow
How to get there
Using the Value Stream Mapping Tool