OPERATIONS MANAGEMENT - II

PGDM(PT) : 2015

Course Instructor:
Dr. Goutam Sengupta

Lesson: 2

MANUFACTURING

LEAN MANUFACTURING
It is about doing more with less less time, less space,
less people, less money and so on.
The
word
Manufacturing
in
defining
Lean
Manufacturing at times is misrepresented, as the
concepts and the techniques are equally applicable in
all types of organizations, be it manufacturing or
service. The basic focus of this concept is in Getting
More with Less.
Lean systems encompass the companys strategy,
processes,
quality
management,
constraint
management, layout, supply chain design, technology
and innovation, and can be used by both service and
manufacturing firms. Like a manufacturer, each service
business takes order from a customer, delivers the
service and collects revenue. Each of these activities
typically contains huge amounts of waste. Lean
principles can be applied to make service processes

LEAN MANUFACTURING
. contd.

Lean is a philosophy. It is primarily a set of

management techniques focusing on
continuous elimination of waste in order to
add value to every process or task to get
the desired output at a cost for which the
customer is willing to pay for.
Top management must embrace the lean
philosophy and make it a part of
organizational culture and learning, as was
done by Toyota. The Toyota Production
System (TPS) is an excellent example of
Lean Systems.

Lean Benefits

Half the hours of human effort in the factory

Half the defects in the finished product

One-third the hours of engineering effort

Half the factory space for the same output

A tenth or less of in-process inventories

The Machine That Changed The World; James P. Womack, Daniel T. Jones & Daniel Roos

What is Waste?
Waste is an activity that does not add value
to the end customer. Toyota Production
System (TPS) was designed using Japanese
concept of waste muda, Mura and
Muri. These three words beginning with
the prefix mu which in Japan are widely
recognized as a reference to improvement
program or campaign. Muda is a traditional
Japanese Term for an activity that is
wasteful, while Mura means unevenness and
Muri means overburden.

Waste
Anything that adds cost to the product or
service without adding value.
The 3Ms of the processes are the wastes
in different forms:

muda waste
mura - inconsistency
muri - overburden

Value Added & Non-Value Added

Activity
Value Added
Any activity that delivers value to the customer.
(these are things the customer is willing to pay
for)

Non-value added

Once value added activities are separated then remaining

activities are all wastes (these are things the customer is
not willing to pay for) which can be further sub-divided
into needs to be done but non-value adding waste or
pure waste. The identification of needs to be done but
non-value adding waste vis--vis pure waste is crucial
with respect to identifying the assumptions and beliefs
behind the current processes and to challenge them in
due course in future.

Lean = Eliminating the

Wastes
The Eight Wastes
Value Added

Defects
Over-production
Waiting
Transportation
Inventory
Motion
Over Processing
Latent Skill (the eighth waste identified)
TIMWOODS (Mnemonic)

Typically 10% to 40% turnover of an organization goes into cost o

non-quality
9

The 7 Wastes
MUDA

An 8th waste
is the wasted
potential
of people

is the Japanese word for WASTE.

5
1

7
4

2
3

Overproduction

Seek it out and get rid!

Over Processing
Processing beyond
the standard
required by the
customer.

Non right
first time.
Repetition
or correction
of a process.

Rework

Inventory

Transportation

To produce sooner,faster
or in greater quantities
than customer demand.

Raw material,
work in progress
or finished goods
which is not having
value added to it.

3
5

Unnecessary movement of people

or parts between processes.

Motion

Waiting
People or parts
that wait for
a work cycle to
be completed.

Unnecessary movement
of people, parts or
machines within
a process.

THE EIGHT TYPES OF WASTE OR MUDA

1.

Overproduction

2.

Inappropriate
Processing

3.

Waiting

4.

Transportation

5.

Motion

6.

Inventory

7.

Defects

Manufacturing an item before it is needed, making it

difficult to detect defects and creating excessive lead
times and inventory.
Using expensive high precision equipment when simpler
machine would suffice. It leads to overutilization of expensive
capital assets. Investment in smaller flexible equipment,
immaculately maintained older machines, and combining
process steps when appropriate reduce the waste associated
with inappropriate processing.
Wasteful time incurred when product is not being moved or
processed. Long production runs, poor material flows, and
processes that are not tightly linked to one another can cause
over 90 percent of a products lead time to be spent waiting.
Excessive movement and material handling of product
between processes, which can cause damage and
deterioration of product quality without adding any significant
customer value.
Unnecessary effort related to the ergonomics of bending,
stretching, reaching, lifting and walking. Jobs with excessive
motion should be redesigned.
Excess inventory hides problems on the shopfloor, consumes
space, increases lead times, and inhibits communication.
Work-in-progress inventory is a direct result of overproduction
and waiting.
Quality defects results in rework and scrap, and add wasteful
costs to the system in the form of lost capacity, rescheduling
effort, increased inspection, and loss of customer good will.

Reprocessing
Rejects

Sorting Inspection

Customer Returns
Warranty
expenses

Downgrading
of products

Lost Sales

Overtime to correct errors

Process downtime

Loss of goodwill

Extra inventory

Paperwork errors

Lost discounts

Delays

Damaged goods

Obsolete inventory

Premium freight costs

Incorrect orders shipped

Customer allowances

Extra process capacity

Hidden costs of poor quality

Waste Elimination
Traditional Focus
Work Longer-Harder-Faster
Add People or Equipment

Value
Add

Waste

LEAD TIME

Lean
Manufacturing
Improve the Value
Stream to
Eliminate Waste

The value adding parts of the process are obvious, so

companies mistakenly focus on them go faster. The
waste is not obvious, so it is not addressed. Lean
focuses on eliminating the waste.

LEAN TRANSITION IN QUALITY, COST & PROFIT

Cost per Unit
6
-

Lesser down time

Lesser rework
Lesser customer complaint
Lesser leakages
Lesser paper work

Quality

Cost of nonquality could

be as high as
10%-30%
of
firms revenue

Quality

Profit
per Unit

Tools of Lean

Kaizen (continuous improvement)

5S
SMED
Kanban
Just-in-Time (JIT)
Andon
Jidoka (autonomation)
Poka-yoke (visual signals)
Flexible manufacturing
Lean Quality Circle
Ishikawa Diagram (Fishbone Diagram)
Glass Wall Management (GWM)
Mini Company Technique (MCT)
Value Stream Mapping
Lean Six Sigma

KAIZEN
Kaizen is based on the simple
principle that, whatever the filed in
our lives, be it social life, working
life, domestic life or even leisure life,
we need continuous improvement in
order to progress and advance as
opposed
to
status
quo
and
MASAKI IMAI
stagnancy. For such an effort we
must
have
participation
and
involvement
one and all
whether
The Japaneseof economic
miracle
is attributable to
it
is society
an enterprise.
this
unique or
approach
in all walks of their lives and
we could see the demonstrative evidence of this
continuous improvement in all their products or
service.
In Industry, they felt that, to stay in business and
compete, there should be an unending improvement

Japanese term
(Continuous)

Kai means Change

Zen means Good

(Improvement)
Standardize Improvement (S)
Small step continuous
improvements (K)

JIDOKA
Automatically stopping the process when
something is wrong and then fixing the
problems on the line itself as they occur is
also known as Jidoka in the Toyota
production
System
(TPS).
Jidoka
represents a visual management system
whereby conformance at all stages of
production flow is clearly visible to workers
on the floor at all times. An opposite to
Jidoka or quality at the source is the
traditional practice of pushing problems
down the line to be resolved later. This
approach is often ineffective.

POKA-YOKE
One successful approach for implementing quality at
the source is to use poka-yoke, or mistake proofing
methods aimed a designing fail-safe systems that
attack and minimize human error. A company makes
modular products. The company could use the pokayoke method for making different parts of the modular
product in such a way that allows them to be
assembled in only one way the correct way. Similarly,
a companys shipping boxes could be designed to be
packed only in a certain way to minimize damage and
eliminate all chances of mistakes. At Toyota plants,
every vehicle being assembled is accompanied by an
RFID chip containing information on how many nuts
and bolts need to be tightened on that vehicle for a
given operation at a given workstation. A green light
comes on when the right number of nuts have been
tightened. Only the does the vehicle move forward on
the assembly line.
Error-proofing makes it difficult or impossible to do
the job the wrong way.
Slots and keys, for example, prevent parts from

Shigeo
Shingo
The term
adopted, by
Shigeo
Shingoas part
of theToyota
Production
system

ANDON
Another tool for implementing quality at the
source is andon, which gives machines and
machine operators the ability to signal the
occurrence of any abnormal condition such as
tool malfunction, shortage of parts, or the
product being made outside the desired
specifications. It can take the form of audio
alarms, blinking lights, LCD text displays, or
chords that can be pulled by workers to ask for
help or stop the production line, if needed.
Stopping a production line can, however, cost a
company
hugely.
Needless
to
say,
management must realize the enormous
responsibility this method puts on employees
and must prepare them properly.

Ishikawa Diagram (Fish Bone Diagram)

Cause-and-Effect Diagram

Kaoru Ishikawa
The technique was first developed by Kaoru Ishikawa.
The cause-and-effect diagram sometimes is called a
fishbone diagram. The main performance gap is labeled as
the fishs head, the major categories of potential causes
as structural bones, and the likely specific causes as ribs.
When constructing and using a cause-and-effect diagram
an analyst identifies all the major categories of potential
causes for the problem. These might be personnel,
machines, materials, and processes. For each major
category the analyst lists all the likely causes for the
performance gap. Under personnel might be listed lack of
training, poor communication, and absenteeism.
Creative thinking helps the analyst identify and properly
classify all suspected causes. The analyst then
systematically investigates the causes listed on the
diagram for each major category, updating the chart as
new causes become apparent. The process of constructing

FINDING OUT THE ROOT CAUSE OF POOR DELIVERY RELIABILITY

SUPPLY
SOURC
ES

PURCHASI
NG
SYSTEMS

Multipl
e
Unrelia
ble
No ESI
Vendor
s
No
Supplier
Joint
Planning

No self
certified
vendor

Fragmented,
not
coordinated

Low Morale

Little focus on
Evaluation &
Rating
No
Upstream
Managemen
Inspection t
& Rework

Frequent
changes

No Vendor
Certification
Programme
Adhoc
No
PQC

PLANNING
PROCESSE
S

QUALITY
MANGEME
NT

No TQM

No crossfunctional
process

No
Partnership

Forecasts
not
integrated
with
market&
Manual
discrete

PEOPLE

INFORMATIO
N
MANAGEMEN

Low
Motivation

POOR
DELIVERY
RELIABILI
Discrete
TY
and non-

continuous
No
compatibility
with suppliers
or customers
Too manysystems
manual
interventions

FINDING OUT THE ROOT CAUSE OF HIGH INVENTORY

SUPPLIE
RS
Poor Quality of
Supplied Parts

PLANNING
Inaccurate
Forecast
Frequent changes in
forecast
Limited visibility to
marketing and customer
plans
No Review
No Rolling Plan

Unreliable Supplier
Base
No Self Certified
Vendor
Multiple Supplier

Changes in shopfloor
schedule

Low Supplier Morale

HIGH
INVENTOR
Y
No Process Control

Over
ordering
Ordering not as per
plan

Vendors are
ignorant of
specifications

Lack of coordination

High rejection
Poor morale of
Staff

Lack of rework

PURCHASE
& STORES

QUALITY

Lean Quality Circle

Quality Circle (QC) activities are in practice in
Japan since 1962. This was adopted by many
countries including India where Quality Circle
activities commenced from 1981.
Quality Circle activities are carried out by a small
group of First Line employees, normally number
of members are 6 to 8 in a group, who operate
autonomously in solving problems found in their
work place, products and services. They use
simple Quality Circle tools and techniques for
which they were trained. These activities aim at
promoting self and mutual development of
members, enhance capabilities, and contribute to
building a pleasant and vibrant work place in
addition to solving chronic quality problems

Problem Solving Steps followed by

conventional QC
Step
Step
Step
Step
Step
Step
Step
Step
Step
Step
Step
Step

1
2
3
4
5
6
7
8
9
10 11 12 -

- Identification of Problems
- Selection of Problem
- Define the Problem
- Analysis of the Problem
- Identification of causes
- Finding out the root causes
- Data Analysis
- Developing Solution
- Foreseeing probable resistance
Trial implementation and check performance
Regular implementation
Follow up review

Overview of the simple Tools & Techniques

No.
1.
2.
3.

4.

5.
6.

7.

8.

9.

Name of Tool
Flow Diagram

Purpose / use
To enable understanding of the process/flow and locate a
problem
Brainstorming
For generation of ideas in problem listing; listing of
causes in problem analysis and for finding solutions.
Data Collection
To understand the magnitude of the problem and
understand the problem. It is the foundation for statistical
analysis.
Graphs
Presentation of large amount of data in a cohesive
manner in the pictorial form to enable better
understanding of the data and the problem and also to
comprehend the trend at a glance.
Stratification
To segregate data according to contributing source
(Suppliers, machines, operators, etc.)
Cause
&
Effect To map out all probable causes and relate the logical
Diagram
linking of causes to the problem to help narrow down to
the cause or causes.
Pareto Chart
For identification / selection of major problem or area for
improvement or control; to differentiate between vital and
trivial problems.
Scatter Diagram
For examining relationship between two variables, nature
and strength of relationship between process factors and
product quality. In a way, it is also a cause and effect
approach between two variables.
Histogram
For study of process variation and asses process

Emergence of Knowledge Workers

Need for higher challenges and emergence of Lean
Quality Circles
Emergence of Knowledge Workers who has learned to use advanced
statistical tools like process capability, six sigma levels, design of
experiments etc and who can view the organization holistically and
not only from section or departments perspective gave rise to Lean
Quality Circle (LQC) concept. In LQC, the 12 problem solving steps
of conventional QC are reduced to Five Steps using the similar
concept as used by six sigma teams, as DMAIC; D (Define), M
(Measure), A (Analyse), I (Improve) and C (Control). In LQC, unlike
conventional QC, where members are from same workplace, the
members are from cross-functional areas and even two members
can form a LQC group. Unlike conventional QC, in LQC the team
meetings take place as per the need and there are no regular fixed
meetings. Management can also assign chronic quality problem to
LQC team, whereas in conventional QC the members choose their
own problems from their work place. In LQC, gain in terms of space,
time, people, money, safety are important whereas in conventional
QC, learning and solving work related issues are important. In
summary, Lean Quality Circles work on the principles of Lean
where the Circles are focused with few Knowledge Workers who
form cross functional team to bring larger gains for the organization

FIVE S Practices
Five S (5S) is a methodology for organizing, cleaning, developing, and
sustaining a productive work environment. It represents five related terms,
each beginning with an S, that describe workplace practices conducive to
visual controls and lean production. These five practices of sorting,
straightening, shining, standardizing and sustaining are done systematically
to achieve lean systems. They are not something that can be done as a
stand-alone program. As such, they serve as an enabler and an essential
foundation of lean systems. Table below shows the terms represent the 5S
and5S
TERM
DEFINITION
what
they imply.
1. Sort
Separate needed items from unneeded items (including
tools, parts, materials and paperwork) and discard the
unneeded.
2. Straighten Neatly arrange what is left with a place for everything and
everything in its place. Organize the work area so that it is
easy to find what is needed.
3. Shine
Clean and wash the work area and make it shine.
4. Standardiz Establish schedules and methods of performing the
e
cleaning and sorting. Formalize the cleanliness that results
from regularly doing the first three S practices so that
perpetual cleanliness and a state of readiness are
maintained.
5. Sustain
Create discipline to perform the first four S practices,
whereby everyone understand, obeys, and practice the
rules when in the plant, implement, mechanisms to sustain

Its commonly accepted that 5S forms an important cornerstone of

waste reduction and removal of unneeded tasks, activities, and
materials. 5S practices can enable workers to visually see
everything differently, prioritize tasks, and achieve a greater degree
of focus. They can also be applied to a diverse range of
manufacturing and service settings including organizing work
spaces, offices, tool rooms, shop floors, and the like.
Implementation of 5S practices have been shown to lead to lowered
costs, improved on time delivery and productivity, higher product
quality, better use of floor space, and a safe working environment. It
also builds the discipline needed to make the lean systems work
FIVE
well.S (5S)
1S
2S
3S
4S
5S

SEIRI (Shift and Sort)

(Organize)
SEITON (Stabilize)
(Orderliness)
SEISO (Shine)
(Cleanliness)
SEIKETSU (Standardize) (Adherence)
SHITSUKE (Sustain)
(Self-discipline)

Five S Score Board

Objective
To highlight the information related to
concerned zone about the details of
the members, Five S score obtained,
problems identified and graphical
representation of the score achieved
for the successive audits.

Details on the Five S Score Board

Group / Zone name:

SCORE

Leader :

Dy Leader:

Jan

Members:

Feb

1.

Mar

2.

..

3.

..

4.

Nov

5.

Dec

Average

Problem of the section

1.
2.
3.
4.

Graph

Date of

Score
%

S.N
Problem
Identification

5.
6.

Jan Feb Mar Apr

FIVE S AUDIT SHEET (PLANT)

Dept./ Section _____________________

Date

Zone Name ________________________

Zone No. ________________

Sl. No.

Check Item

Evaluation Criteria

Parts & Material

i)
ii)
iii)

How spare parts/ work in progress kept?

Are they having proper identification?
Is their proper place for materials
a. To be repaired
b. To be replaced
c. for disposable and defective items

Machine &
Equipment

i)
ii)
iii)

How equipments are identified?

Do they have caution boards in unsafe areas?
Do they have proper guards in required area as per safety
requirements?
How clean equipments are?

iv)
3

Visual Control

Can all unnecessary items be distinguished at a glance?

Standard for disposal

Is there clear standards for disposal?

Storage Labels

i)
ii)
iii)
iv)

Ease of use

Is Storage designed for easy and faster access?

Orderly Storage

Is everything stored in a fixed location?

________________

Do they stock and store at prefixed place?

Condition of items in almirahs and tool boxes
Have they been properly identified
Is storage space properly marked for maximum and minimum level
of storing?

Marks

Sl. No.

Check Item

Evaluation Criteria

Floors

i)
ii)

Are there grooves, cracks or bumps on the floor which hinder work
or safety?
Is the floor always clean (bolts, nuts components papers and other
materials are not found on the floor)?

10

Working Area

i)
ii)
iii)

How clean and neat?

Do they have adequate lighting and ventilation?
Are safety measures proper and is noise level with in control?

11

Lubrication

i)
ii)

Have they marked in proper place lubrication point schedules?

Have they provided lubricant identification marking and oil
spillage tray?

12

Wastage Storage

System of waste storage and removal

13

Lunch Room

i)
ii)
iii)
iv)

Is there spillage of water inside the lunch room?

Is there any foul odour
Is condition of lighting and ventilation system is proper?
How they ensure general cleaning and neatness?

14

Water Taps

i)
ii)
iii)

Are they neat and clean?

Is there any water leakage?
Is there sign board for drinking water and display of water
conservation related slogans?

15

Toilets

i)
ii)
iii)
iv)

Is there any water leakage?

Is there any foul odour?
Condition of lighting and ventilation system
General cleaning and neatness

16

General Alertness

Do all employees use safety appliances?

Marks

Sl. No.

Check Item

Evaluation Criteria

Marks

17

Uniform

Has wearing uniform become a habit?

18

Participation

What is the level of participation of all employees in Five S activities?

19

Retrievability

Is it possible to retrieve of all items in one minute?

20

Rules and
Regulation

Are all rules and regulation strictly observed?

Total

Auditors Name and Signature

Marking Criteria
1 = Very Bad
2 = Bad
3 = Average
4 = Good
5 = Very Good

HOME ASSIGNMENT

Please conduct an 5S Audit of

your workplace and submit in
next class

Kanban System
One of the most publicized aspects of lean
systems, and the TPS in particular is the Kanban
system developed by Toyota. Kanban meaning
card or visible record in Japanese, refers to
cards used to control the flow of production
through a factory. In the most basic kanban
system, a card is attached to each container of
items produced. The container holds a given
percent of the daily production requirements for
an item. When the user of the parts empties a
container, the card is removed from the container
and put on receiving post. The empty container is
then taken to the storage area and the card
signals the need to produce another container of
the part. When the container has been refilled, the
card is put back on the container, which is then
returned to a storage area. The cycle begin again
when the user of the parts retrieves the container

GLASS WALL MANAGEMENT

Lean System whether in a manufacturing or in a service organization can
never be implemented without changing the culture of an organization. It
is thus highly recommended to go for a transparent work place culture
where all members of the organization can view the discrepancies in the
process vis--vis the best competition in the market place. Knowledge of
discrepancy stimulates the motivation for change. This is a proven and
established concept followed by many global organizations such as
Philips world-wide, Motorola and others
ENERGY FOR CHANGE

AWARENESS OF DISCREPENCY

GLASS WALL MANAGEMENT

MINI
COMPANY
TECHNIQUE

Like Glass Wall Management, the Mini Company Technique is

related to change of organizational culture to facilitate
introduction of lean system in a manufacturing or in a service
organization. This concept works on the power of employee
empowerment, where the feeling of ownership enhances the
level of organizational commitment of the employee and helps
in rapid implementation of lean system.

Lean Building Blocks

The Lean Factory

PULL / Kanban

Cellular Layout

TPM

Mistake Proofing

Quick Setups

Standard Work

Batch Reduction

5S System

Visual
Controls

Self
Inspection

Value
Stream
Mapping
41

Value Stream Mapping

Value Stream Mapping (VSM) is a widely

used qualitative lean tool aimed at eliminating
waste or muda. Waste in many processes can
be as high as 60 percent. Value Stream mapping
is helpful because it creates a visual map of
every process involved in the flow of materials
and information in a products value chain.
These maps consist of a current state drawing,
a future state drawing and an implementation
plan. Value Stream Mapping spans the entire
supply chain, from the firms receipt of raw
materials to the delivery of the finished good to
the customer. Thus, it tends to be broader in
scope.
Creating
such
a
big
picture
representation helps managers identify the
source of wasteful non-value-added activities.