Chapter 8 – Lean Systems
Allow firms to continuously improve its operations and spread the lessons learned across
the entire corporation. Are systems that maximize the value added by each of a company’s
activities by removing waste and delays from them.
One of the most popular systems that incorporate the generic element of lean systems is
the just – in – time system. The belief that wastes can be eliminated by cutting unnecessary
capacity or inventory and removing non – value – added activities in operations.
The goals of lean systems are thus to eliminate eight types of waste, produce services and
products only as needed, and continuously improve the value – added benefits of
operations.
OVERPRODUCTION: Manufacturing an item before it is needed, by making it difficult to
detect defects and creating excessive lead times and inventory.
INAPPROPRIATE PROCESSING: Using expensive high precision equipment when
simple machine would suffice. It leads to overutilization of expensive capital assets.
Investment in smaller flexible equipment, immaculately maintained older machines, and
combining process steps where appropriate reduce the waste associated with inappropriate
processing.
WAITING: 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 product’s lead time to be spent waiting.
TRANSPORTATION: Excessive movement and material handling of product between
processes, which can cause damage and deterioration of product quality without adding
any significant customer value.
MOTION: Unnecessary effort related to the ergonomics of bending, stretching, reaching,
lifting, and walking. Jobs with excessive motion should be redesigned.
INVENTORY: Excess inventory hides problems on the shop floor, consumes space,
increases lead-time, and inhibits communication. Work – in – process inventory is a direct
result of overproduction and waiting.
DEFECTS: Quality defects result 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.
UNDERUTILIZATION OF EMPLOYEES: Failure of the firm from and capitalize on its
employees’ knowledge and creativity impedes long – term efforts to eliminate waste.
JIT Systems: A system that organizes the resources, information flows, and decision rules
that enable a firm to realize the benefits of JIT principles.
The Japanese term for this approach to process improvement is kaizen. The key to kaizen
is the understanding that excess capacity or inventory hides underlying problems with the
processes that produce a service or product.
Maintaining low inventories, periodically stressing the system to identify problems, and
focusing on the elements of the lean system lie at the heart of continuous improvement.
Ways to minimize the business problems as Scrap, Unreliable suppliers, Capacity
imbalance
•Trial – and – error process: Develop more efficient manufacturing operations.
•Place stress on the system by reducing the number of employees doing a particular
activity or series of activities until the process begins to slow or come to a halt.
•Eliminating the problem of too much scrap might require improving the firm’s
work processes, providing employees with additional training, or finding higher –
quality suppliers.
Supply Chain Consideration in Lean Systems
Close Supplier Ties
Firms need to have a close relationship with their suppliers.
The lean system philosophy is to look ways to improve efficiency and reduce inventories
throughout the supply chain. Close cooperation between companies and their suppliers can
be a win – win situation for everyone.
Consider supplier to be partners in a venture, wherein both parties have an interest in
maintaining long – term, profitable relationship.
A particular close form to supplier partnerships is through the JIT II Systems, where the
supplier is brought into the plant to be an active member of the purchasing office of the
customer. The in – plant representative is on the full – time at the supplier’s expense and is
empowered to plan and schedule the replenishment of materials fro the supplier.
Small Lot Sizes
Lot: A quantity of items that are processed together.
Small lots have the advantage of reducing the average level of inventory relative to large
lots. Small lots pass through the system faster than larger lots since they do not keep
materials wasting.
Disadvantage of setup frequency > A setup is the group of activities needed to change or
readjust a process between successive lots or items, sometimes referred to as changeover.
Setup times must be brief to realize the benefits of small lot production.
Single – digit setup: The goal of having a setup time of less then 10 minutes.
Process Considerations in Lean Systems
Pull Method:
A method in which customer demand activates production of the service
or item.
Push Method
: A method in which production of the item begins in advance of
