2. Lean Management
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.
3. Origin
Started by Japanese manufacturers in automobile
industry.
Replicated in other sectors all over the world.
Underlying Principle:
“Less is more productive”
i.e. in order to stay competitive, organizations are
required to deliver better quality products and
services using fewer resources.
4. Key Principals of Lean
Thinking
Value - what customers are willing to pay for;
Value Stream – the sequence of processes to deliver value;
Flow – organizing Value Stream to be continuous;
Pulls – responding to downstream customer demand;
Perfection – relentless continuous improvement (culture);
6. Accrued Benefits
Tools and
Techniques used
Basic enabling
mechanism
Basic premise
Less is more Productive
•Process mapping,
non- value added
analysis
•Continuous
improvement
•Kaizens, small
group improvement
•Benchmarking
•Quality Circles
Total Quality
Management
• Manufacturing
architectural
changes
•Set-up time
reduction
•Small lot size
processing
•Pull scheduling
•Simplified operation
control(kanban)
JIT
Eliminating waste and creating value stream for
product & services
7. Just-In-Time (JIT)
Powerful strategy for improving operations
Materials arrive where they
are needed when they are
needed
Identifying problems and
driving out waste reduces
costs and variability and
improves throughput
Requires a meaningful
buyer-supplier relationship
9. 1. Eliminate Waste
Waste is anything that does not add value from
the customer point of view
Storage, inspection, delay, waiting in queues, and
defective products do not add value and are 100%
waste
11. 2. Remove Variability
Variability is any deviation from the optimum
process
Lean systems require managers to reduce
variability caused by both internal and external
factors
Inventory hides variability
Less variability results in less waste
12. 2. Remove Variability
Lean systems require managers to reduce
variability caused by both internal and external
factors
Variability is any deviation from the optimum
process
Inventory hides variability
Less variability results in less waste
13. 3. Improve Throughput
Push systems dump orders on the downstream
stations regardless of the need
By pulling material in small lots, inventory cushions
are removed, exposing problems and emphasizing
continual improvement
The time it takes to move an order from receipt to
delivery is reduced.
14. Core Logic of JIT
Inventory level
Process
downtime
Scrap
Setup
time
Quality
problems
Late deliveries
15. Core Logic of JIT
Inventory
level
Process
downtime
Scrap
Setup
time
Quality
problems
Late deliveries
16. Core Logic of JIT
Inventory
level
No scrap
Setup
time
reduced
Quality
problems
removed
Late
deliveries
Process
downtime
removed
19. JIT Layout
Reduce waste due to movement
JIT Layout Tactics
Changes in Manufacturing Architecture
Build work cells for families of products
Include a large number operations in a small area
Minimize distance
Design little space for inventory
Improve employee communication
Use poka-yoke (fail safe) devices
Build flexible or movable equipment
Cross-train workers to add flexibility
20. JIT Inventory
Inventory is at the minimum level necessary
to keep operations running
JIT Inventory Tactics
Use a pull system to move inventory
Reduce lot sizes
Reduce setup time
Develop just-in-time delivery systems with suppliers
Deliver directly to point of use
Perform to schedule
Use group technology
21. JIT Quality
JIT cuts the cost of obtaining good quality because
JIT exposes poor quality very soon
JIT Quality Tactics
Use statistical process control
Empower employees
Build fail-safe methods (poka-yoke, checklists, etc.)
Expose poor quality with small lot JIT
Provide immediate feedback
23. Push Scheduling
Forecasts drive the entire production.
Detailed forecasts of demand are made and then refined further on the basis
of recent information to provide the input for an MPS/MRP system to derive
the detailed week-by-week schedule for each work centre in the
manufacturing System.
The actual off take by the customer (or the market) is not taken directly into
consideration.
Instead, it needs to be factored into the forecasting/demand management
module well in advance.
Once the planning is finalized and released to the production shop, raw
material is issued from the stores to respective work centres and the finished
goods stores.
As a result of this method, planning drives production and determines the
availability of finished goods.
It is generally assumed that the planning premise is good. Therefore, when the
customer order arrives, the item is picked up from the finished goods stores
and shipped.
24.
25. Pull scheduling
A pull-type scheduling works with the supermarket logic.
A customer order triggers production in a pull-scheduling system.
Assume that customer demand for 50 units of an item is met with
available finished goods in the stores.
Since 50 units are dispatched, an order will be placed with the final
assembly shop to assemble 50 units of product so that stocks are
replenished.
In the process of assembling 50 units, the final assembly would have
consumed the required number of sub-assemblies as specified by the
product structure.
Therefore, respective orders will be placed to the feeder shops to
manufacture the sub-assemblies to the extent of replenishing the stock of
sub-assemblies consumed.
The information passes in this manner up to the raw material stores.
At each stage of manufacturing, the shop pulls a certain quantity of input
material and the preceding shop responds to the pull.
26.
27. The choice between a pull-type
system and a push type system
• The choice between a pull-type system and a push type system is
dictated by several factors governing the operation of a
manufacturing system.
• Pull-type scheduling cannot be implemented in all manufacturing
systems.
• It requires that the manufacturing system have sufficient flexibility to
respond swiftly to changes.
• Moreover, it implies that the organization is customer-focused and
has low demand variations.
• On the other hand, if the manufacturing system works with long lead
time and a greater emphasis on utilization-based measures of
performance, the push method of scheduling may be appropriate.
• However, since the actual customer demand is not directly
incorporated into the scheduling exercise, build-up of inventory may
take place in a push system.
• Moreover, an organization practising push-scheduling tends to be
internally focused
28.
29. KANBAN
Production control is primarily achieved by passing
information pertaining to production to the
respective work centers.
The information typically consists of an authorization
to produce a certain quantity of items begining at a
particular time.
Although this appears to be simple task , traditional
manufacturing have experienced difficulties in
performing this task.
This is partly due to bad structures emphasizing
functional orientation.
30. JIT system make architectural changes and simplify
the planning and control process to a large extent.
Therefore, it is possible to devise alternative
methods for production control.
Typically, JIT manufacturers utilize a concept known
as kanban.
Kanban is a Japanese word which denotes a card or
a visual signal.
The logic of kanban as a production control tool
based on the stock replenishment process an a
supermarket.
31. The working of the dual-card kanban
system
• In dual-card kanban, two are used for planning and control
purposes.
• These are production kanban (P-kanban) and conveyance
kanban (C-kanban).
• Irrespective of the type of Kanban, each of them have basic
information about the item, its specifications, details about
the preceding and succeeding process and the quantity of
items associated with each such Kanban.
• A P-Kanban basically serves as the authorization for
production of the number of items indicated in the Kanban.
For example, if a P-Kanban has the indicated quantity to be
40 units, then each such P-Kanban serves as an authorization
for the work centre to manufacture 40 units.
• In a similar fashion, a C-Kanban serves as the authorization
to move that many units from the preceding process to the
succeeding process, where it is used for processing.
32. structural features of the
manufacturing system
• Preceding and Succeeding Processes: The
basic element of material flow in a JIT system
is between a pair of processes.
• The preceding process feeds the required
components to the succeeding process.
• A pair-wise relationship of such preceding
and succeeding process is primarily
responsible for cascading the pull effect from
the final customer down to the raw material
stores, as we have already seen.
33. Inbound buffer
Every process has a designated space for inbound
buffer.
The inbound buffer has provisions for storing the
components moved from a preceding process using a CKanban.
Therefore, each full container of inbound buffer will
have a C-Kanban attached to it.
However after utilizing the components for processing,
the empty container is usually returned to the inbound
buffer and the associated C-Kanban to a Kanban post
(or holder).
34. Kanban Post
• The number of C-Kanbans and the P-Kanbans and
the quantity of each Kanban associated with each
item of inventory in a manufacturing system is a
design issue.
• However, since more than one P-Kanban and CKanban may be there for each item of inventory,
and since several items may be produced in a
particular work centre, it is typical to have a Kanban
post to hold these Kanbans systematically.
• Moreover, the Kanban post also serves as a visual
control aid to production control.
35. Outbound buffer
Just as in inbound buffer, each process in an outbound
buffer has a designated place to store the components
after processing is completed.
Since processing is always authorized only by a PKanban, we would expect every full container to have a
P-Kanban attached to it.
The succeeding process would have left empty
containers in the outbound area, which need to be
subsequently replenished by the process.
The associated P-Kanban will be deposited in a Kanban
post (or holder).
36.
37. Step 1:
• The succeeding process begins one cycle of
production as soon as P-Kanbans (which
authorize the production) and empty containers
are available.
• One P-Kanban is drawn from the Kanban post
and an empty container is picked up from the
outbound buffer.
Step 2 :
• In order to begin production, one full container
with an attached C-Kanban is moved from the
inbound buffer area to the processing area.
• The C-Kanban is detached from the container and
displayed at the Kanban post.
• Production of components begins.
38. • Step 3:
• As production is completed, the P-Kanban is
attached to the full container of finished item and
the container is moved to the outbound area.
• Similarly, the empty container (since all
components are used up for manufacturing) is
moved back to the inbound buffer area.
• Since the succeeding process pulled out one full
container of components from the inbound buffer
area, used it for manufacture and returned back
the empty container, it will trigger action in the
preceding process to replenish what the
succeeding process consumed.
• The remaining steps describe this process.
39. Step 4:
• One empty container from the input buffer area of
a succeeding process and a C-Kanban from the
Kanban post of the succeeding process will be
taken to the outbound buffer area of the
preceding process for replenishment.
Step 5:
• Swapping of Kanban cards between containers
takes place at the outbound buffer area of the
preceding process.
• What this means is that the P-Kanban attached to
the full container will be replaced by C-Kanban.
40. Step 6:
• As a result of this swapping operation, the full
container and C-Kanban will return to the
inbound buffer area of the succeeding process.
Step 7:
• The empty container will be placed in the
outbound buffer area of the preceding process.
• The P-Kanban will be displayed at the Kanban
post of the preceding process.
41. • It may be noted that using this 7-step process,
we have ensured that empty containers and PKanbans are available at the preceding
process.
• Therefore, we can return to step 1 above and
perform one more iteration of moving empty
containers and P-Kanbans to an earlier
process.
• This how the pull effect cascades through the
system.
42. Design of kanban quantities
Follow FOQ fixed order quantity system
Oder is placed for an item when stock level reaches
the reorder point.
The quantity order is a fixed number arrived on the
basis of some considerations.
Two bin system : Implementation of FOQ
Material is stocked in two bins
One large bin and other small bin.
43. As soon as the larger bin is empty , an order is
placed and items from the small bin are consumed.
The quantity in the small bin corresponds to the
demand to the demand during the lead time for
replenishment of the item, plus some safety stock.
Therefore at about he time the smaller bin gets
empty, the orders arrives.
These inputs are used for computing the container
size and the number of kanbans required in a JIT
system.
44. Standard containers
• In a JIT system material, flow control is obtained
through the use of predetermined quantities
stored in standard containers.
• Generally container of small quantities are
recommended.
• Smaller containers are easy to move between
station , require lesser space to store, provide
better methods of access and material handling
and permit the build-up of lesser buffer quantities
in the system.
• The thumb rule is to have about 10 percent of
daily demand as per the quantity of the container.
45. Numbers of kanban
•
•
•
•
•
•
•
Demand rate = D
Number of kanbans = K
Production lead time = P
Conveyance lead time = C
Safety factor = α
Container size = Q
K =D(P+C) (1+ α)/Q
46. Operations: Improvement Options???
1970s precedence – The Japan story
Cost cutting and lead time reduction
Continuous improvement methods
In 1976, 49% in 30 mins, by 1981, 62% within 100 secs !!!
Continuous Improvement of operations (Step, Ramp n Hybrid)
Radical Improvement (Technology, capacity Upgradation and
addition of new plants)
47. RI
Innovation
Sporadic but
Substantial change
Investments
required
High productivity
CI
Systematic
Optimizes available
resources,
technology and
capacity
Reduces wastage
Quality
Operational
efficiency
Low production cost
Iterative increments
Economies of scales
Business,
Manufacturing,
Business processes
like marketing
finance and CRM.
Steel and
Petrochemical
processes.
48. The Continuous Improvement Process
Measure
Improvement
Create a
Context
Monitor
improvements
Paraphernalia
for
employees
Organizational
Structure
49. • Context: Provides perspective and meaningful application of tools and techniques.
Include benchmarking exercises, TPM, TQM initiatives, preparing the organization
for int’l awards like TPM Prize, Shingo Prize.
• Measurement Methodology: Assesses improvement efforts, quantifies
improvements. E.g. set of lead time measures may be used for a no. of processes,
schedule adherence and on-time delivery index.
• Application of tools and techniques: Quality circle tools like Poka-Yoke and the
mistake-proofing method enables defect elimination and production improvement.
• Organizational Structures: calls for large no. of small groups of employees from
same or different functional areas or skills.
• Monitor and recognize efforts: Identifies opportunities, establishes checks and
balances, ensures role and goal congruence among various teams.
50. Tools for Continuous Improvement
– Kaizen (“Change for the
better”- 5s)
• Seiri, or sort
• Seiton or set in order
• Seiso or scrub
• Seiketsu or
standardize
• Shitsuki or sustain
Process
Mapping
Non-valueadded
analysis
Business
process reengineering
QC Tools
Kaizen
52. • Task Force:
– Create a team of managers who implement continuous improvement
culture, and act as change agents.
– Gets constant support from top management.
– Talk to various groups of the workforce, the union, support functions.
– Communicate the need for changes and solicit employees’ support.
– Prepare project proposal outlining steps for change implementation
(Budgeting, chronological ordering, resource identification, monitoring
and controlling of the project).
53. • Quality Circles:
– Small group of employees provided with paraphernalia to identify and
solve problems by implementing required changes in the business
processes.
– Typically, 8-12 employees, either from the same or different work
areas, meet at regular intervals for about 90 mins a week, to discuss
various problems and possible solutions to eliminate them.
– Instead of focusing on several issues at the same time, they work with
one problem at a time.
– Quality Circles are allowed to meet during working hours at predesignated time.
54. • Project-based Small Group Improvement Activities
(SGIA)
– Alternative term to describe Quality Circles, used for any
business process improvement including quality improvements.
– Based on Quality Circles’ experience, certain improvements were
made for directing SGIA activities.
– Done on a project-by-project basis.
– Targets established, process mapping done, improvement projects
identified.
55. • Visual Control Aids for Improvement:
– Triggers improvement initiatives, motivates employees.
– Convince management to support such projects and
provide them with verifiable and direct results.
– Serve as formal mechanism for employees to perform
SGIA.
– Involves:
• Identifying core operational measures
• Creating visual information system
• Setting up a visual control display board (3 sets of measures,
operational, improvement and performance).
• Facilitates employees for conducing SGIA.
56. Lean Operations
Lean operations are externally focused on the
customer
Starts with understanding what the customer
wants
Optimize the entire process from the customer’s
perspective
57. Main Principals
Identify the customer
Map the flow
Make a product or service flow
Create polls based on customer demands
Continually find ways to improve
58. Organizational Challenges in Lean
Management
JIT
Implementation
Issues
Cultural and
Human Issues
Resistance to
change
Incentives and
reward systems
Tangibility of
improvements
59. • Bottlenecks in attaining Lean Management:
–
–
–
–
–
–
Mindsets, people and culture issues
Varying role of top management in transformation process
Lack of top management vision
Practice preach gap
Reluctance to empower people at the lower levels
Oblivion in bringing about improvements, where and how.
– JIT Implementation:
• Thinkers vs. doers
• Process industries vs. automobile (manufacturing) industries
• Lack of internalization, varying degrees of conviction and clarity.
61. What is Lean … really?
Lean is a production practice that considers the expenditure of resources for any goal other
than the creation of value for the end customer to be wasteful, and thus a target for
elimination. Working from the perspective of the customer who consumes the product or
services, “value” is defined as any action or process that a customer would be willing to pay
for ….
Lean, whether in Services or manufacturing …
•
•
•
•
•
•
•
•
•
is based on the premise that anywhere work is being done, waste is being generated …
and should be minimized or removed …
is about doing more (customer value) with less (resources) …
is about removing complexity …
is about reducing inventory and WIP …
is about improving flow, pull instead of push …
is about doing things faster …
is about reducing costs …
Is about increasing capacity
is not about eliminating people
62. It can be used at any level of the organization and applied to any
process or work area, services, transactional, or manufacturing …
It is a mentality, a way of thinking, as well as a tool set
It can quickly help a team (or individual) understand any business
process in a way that allows waste to be identified and removed to
reduce costs, improve cycle time, and improve quality.
63. Manufacturing or Services
There are Common Elements
Goal is to Drive Performance whether in mfg or
services. It is Systems thinking irrespective of
deliverable and improvement tools.
Driving Performance improvement isn’t a Lean
initiative, it’s a business initiative.
Significant improvements in both services and
manufacturing can be realized through “Lean thinking”,
and recognizing opportunities to improve through Lean
“lenses”
64. Unique Aspects of Services
Examples of Types of Work
Service - Installation & Integration Of Hardware or
HR Recruiting
Transactional - Mortgage Operations or Credit
Review
Analytical - Finance Department
Creative - Designing Published Content for Mobile
Devices, software development
65. Unique Aspects of Services
• There is typically greater involvement of customers in the
production process. In many cases, the customer is a
supplier to the process.
– Sometimes the involvement is so ingrained in the
process that you really end up with co-production with
the customer.
• Since services processes are often very people-centric (vs.
machine-centric), it is very difficult to get to real
standardization.
• Quality is an experience, not just a measurement against
specifications. The inability to standardize the process
makes it very difficult to standardize quality. The
customer’s definition of quality is a perception, subjective
vs. objective
66. Unique Aspects of Services
• There is much less visibility to what is actually happening.
Information is flowing, not product, and that information
can be digital, paper, or even verbal. And, HOW it flows
often has little or no standardization
• IT systems play a much bigger role. They enable the
process, but can also be a rigid constraint on the process.
There may be multiple and often un-integrated systems.
Workarounds persist in the form of excel spreadsheets,
word docs, etc
• WIP and inventory are often hidden and ignored, but they
are there and can have the same negative impacts as in a
manufacturing environment (e.g. wasted resources, longer
lead times, more variation
67. Lean’s fundamental focus of eliminating
waste aligns well with the concept of
preserving value with less work and
doing more with less. Lean thinking
provides specific “lenses” for looking for
different types of waste in your services
or backoffice processes …
68. Examples of Waste in Services
• Transportation (Handling). Movement of paperwork, multiple
hand-offs of electronic data, approvals, excessive email
attachments and distributing unnecessary cc copies to people
who don't really need to know
• Inventory. Purchasing or making things before they are
needed (e.g. office supplies, literature...). Things waiting in an
in-box, unread email and all forms of batch processing create
inventory
• Human Motion. Walking to copier, printer, fax... Walking
between offices. Central filing. Unnecessary meetings …
• Waiting. Slow computer speed. System downtime (computer,
fax, phone...). Waiting for approvals, waiting for customer
information or waiting for clarification or correction of work
received from upstream process create much waste in office
and business systems.
69. Examples of Waste in Services
• Overproduction. Printing paperwork or processing an order
before it is needed. (things can change) Any processing that
is done on a routine schedule - regardless of current demand
• Over-processing. Relying on inspections, rather than
designing the process to eliminate errors. Re-entering data
into multiple information systems, making extra copies,
generating unused reports, and unnecessarily cumbersome
processes are overprocessing. Demand-side waste can
create over-processing
• Defects. Data entry errors or invoice errors. Engineering
change orders, design flaws, employee turnover and
miscommunication are all ‘defects’ in office processes
70. Examples – Constraints
1. Physical constraint – People, tools, systems, etc.
2. Managerial constraint – Policies that require
levels of sign off or work hour requirements that
do not match well with the arrival of work.
3. Behavioral constraint – Worker or supervisor
tendencies to: “get the easy ones out of the way
first,” or “I’ve done my part, it’s too bad that the
next step in the process wasn’t able to handle
the volume and didn’t complete everything on
time.”
71. Differences in Application
Example - Material & Information Flow
Manufacturing
Service
What is flowing
Various stages of manufacturing
inputs ranging from raw materials to
shipped finished goods. It is all VERY
visible.
Various forms of information,
documents, etc in paper, digital, or
even verbal form. Flows in many
cases are not visible.
Information Flow
Highly structured with formalized IT
systems. Very specific instructions for
operators
Multiple and often unintegrated
systems. Workarounds persist in the
form of excel spreadsheets, word
docs, etc
Schedule Notification
Multiple points around VSM
Work is loosely scheduled or
unscheduled
Material Flow
Yes
Sometimes
72. The Practical Challenge - Project
Selection
“Give me six hours to chop down a tree
and I will spend the first four sharpening
the axe”
Abraham Lincoln
74. TPS CONCEPT….
A production system which is steeped in the philosophy of "the complete
elimination of all waste" imbuing all aspects of production in pursuit of the most
efficient methods.
Toyota Motor Corporation's vehicle production system is a way of "making
things" that is sometimes referred to as a "lean manufacturing system" or a
"Just-in-Time (JIT) system," and has come to be well known and studied
worldwide.
The Toyota Production System (TPS) was established based on two concepts:
The first is called "jidoka" (which can be loosely translated as "automation with
a human touch") which means that when a problem occurs, the equipment
stops immediately, preventing defective products from being produced;
The second is the concept of "Just-in-Time,“ in which each process produces only
what is needed by the next process in a continuous flow.
75. JIDOKA
“ Highlighting/visualization of problems ”
Quality must be built in during the manufacturing process!
If equipment malfunction or a defective part is discovered, the affected machine
automatically stops, and operators cease production and correct the problem.
For the Just-in-Time system to function, all of the parts that are made and
supplied must meet predetermined quality standards. This is achieved through
jidoka.
Jidoka means that a machine safely stops when the normal processing is
completed. It also means that, should a quality / equipment problem arise, the
machine detects the problem on its own and stops, preventing defective
products from being produced. As a result, only products satisfying quality
standards will be passed on to the following processes on the production line.
Since a machine automatically stops when processing is completed or when a
problem arises and is communicated via the "andon" (problem display board),
operators can confidently continue performing work at another machine, as well
as easily identify the problem's cause to prevent its recurrence. This means that
each operator can be in charge of many machines, resulting in higher
productivity, while continuous improvements lead to greater processing
capacity.
76. JIT
“Productivity improvement”
- Making only "what is needed, when it is needed, and in the amount needed!"
Producing quality products efficiently through the complete elimination of waste,
inconsistencies, and unreasonable requirements on the production line.
In order to deliver a vehicle ordered by a customer as quickly as possible, the vehicle
is efficiently built within the shortest possible period of time by adhering to the
following:
–
When a vehicle order is received, a production instruction must be issued to the
beginning of the vehicle production line as soon as possible.
–
The assembly line must be stocked with required number of all needed parts so that
any type of ordered vehicle can be assembled.
–
The assembly line must replace the parts used by retrieving the same number of
parts from the parts-producing process (the preceding process).
–
The preceding process must be stocked with small numbers of all types of parts and
produce only the numbers of parts that were retrieved by an operator from the next
process.
77. JIT- Philosophy of complete elimination
of waste
• "Just-in-Time" means making "only what
is needed, when it is needed, and in the
amount needed."
• For example, to efficiently produce a
large number of automobiles, which
can consist of around 30,000 parts, it
is necessary to create a detailed production
plan that includes parts procurement.
• Supplying "what is needed, when it is needed, and in the amount
needed" according to this production plan can eliminate waste,
inconsistencies, and unreasonable requirements, resulting in
improved productivity.
78. KANBAN SYSTEM...
In the TPS, a unique production control method called the "kanban
system" plays an integral role.
Also called the "Supermarket method" because the idea behind it was
borrowed from supermarkets.
Such mass merchandizing stores use product control cards upon which
product-related information, such as a product's name, code and storage
location, are entered.
Because Toyota employed kanban signs for use in their production
processes, the method came to be called the "kanban system."
At Toyota, when a process refers to a preceding process to retrieve parts,
it uses a kanban to communicate which parts have been used.
79. SUPERMARKET concept ???
• A supermarket stocks the items needed by its customers
when they are needed in the quantity needed, and has all
of these items available for sale at any given time.
Taiichi Ohno (a former Toyota vice president), who
promoted the idea of Just-in-Time, applied this concept,
equating the supermarket and the customer with the
preceding process and the next process, respectively.
• By having the next process (the customer) go to the
preceding process (the supermarket) to retrieve the
necessary parts when they are needed and in the amount
needed, it was possible to improve upon the existing
inefficient production system.
• No longer were the preceding processes making excess
parts and delivering them to the next process.
83. History ….
A US-based motorcycle manufacturing company
It faced fierce competition from Japanese automobile
companies Suzuki , Yamaha , Kawasaki , and Honda in the
1960s
It tried to understand the different processes and practices
of these companies because of which their operating costs
were 30% less than its own(Dumping Case)
3 practices were noticed:
– JIT manufacturing
– Employee involvement
– The use of statistical process control
84. History Contd….
Harley-Davidson successfully adopted
Japanese manufacturing principles which
many considered were impossible for US
manufacturers to achieve because of cultural
and political reasons.
After implementing these Japanese
techniques, Harley-Davidson succeeded in
manufacturing high quality motorcycles at
lower cost.
85. JIT Environment at HARLEY
DAVIDSON!!!!!
Some of Harley-Davidson’s specific JIT goals are:
–
–
–
–
–
–
Reduction of inventory within the entire supply chain
Greater flexibility of supply chain
Improved product quality
Reduction of overall costs within the supply chain
Reduction in overall procurement lead time
Reduction in delivery lead time for Harley-Davidson
customers
– Improved competitive position in the market
86. JIT Manufacturing…
Harley-Davidson relies heavily upon its suppliers to
produce the right products, at the right quality
level, delivered in the exact quantity precisely when
they are needed, and in the manner HarleyDavidson requires them to be delivered.
The JIT Environment begins with involvement in
the Supplier Selection Process: the ability to meet
quality, cost, and delivery expectations
Emphasis continues during Product Development
Process
87. JIT Manufacturing…
Harley-Davidson and the supplier work together simplify and
standardize, as much as possible, the product and processes
utilized to manufacture the product: Reduces the overall
lead time for the product
Philosophy- “Working on potential issues early in the
product life cycle, minimizes the chance that suppliers will
be unable to provide products when they are needed during
the normal production cycle.”
The focus of Harley-Davidson’s JIT environment is providing
an efficient supply chain that minimizes waste, increases
flexibility, reduces inventory, and minimizes the overall lead
time for material replenishment.
88. Employee Involvement
Successful implementation of any company program
occurs when there is a commitment at all levels of the
organization.
Top management not only directs but takes direction
from the lower level employees.
Top management encourages education for employees
of company objectives and develops a trust that
employees will execute the right decisions.
Employees in return also learn techniques to
continuously improve the quality of Harley's
manufacturing processes.
89. Statistical Operator Control
SOC involves using simple statistical techniques and control
charts to monitor the variation in a work process
Harley decided to hand the SOC approach down to its
employees on the floor.
With statistical methods , the operator was now able to
answer two crucial questions :
– Is the process in control (operating in a stable, predictable range
of variation)?
– Is the process capable (able, consistently, to remain with in the
specifications
“Combination of Employee Involvement and Statistical
Operator Control lead to an improved quality in Harley
motorcycles”
