Adventures in production planning and scheduling

Adventures in Production Planning and Scheduling:

Notes on Lean Manufacturing.

For the WAIB 34th Annual Meeting. Scottsdale, Arizona – September, 2006

by Dave Williams – williams@rand.org

Lean Manufacturing

Lean Manufacturing is another name for the Toyota Production System.

Lean Manufacturing

It was fashioned from the ideas of 2 men:

Sakichi Toyoda

Henry Ford

Lean Manufacturing

The Toyota Production System is a logical approach to two things:

Lean Manufacturing

The Toyota Production System is a logical approach to two things:

Quality,

and Time

Lean Manufacturing: TPS

Jidoka

Heijunka

Jidoka.Andon

Heijunka

Jidoka.Andon

Heijunka.JIT

Lean Manufacturing: the Goal

Zero-Defects

Zero-Inventory

Lean Manufacturing: full synthesis

Jidoka.Andon

Heijunka.JIT

Lean Manufacturing

First steps into Lean Manufacturing:

1. Mutual Trust between workers and management

2. Multi-skilled workforce

3. Good relationships with suppliers

4. Extremely high quality product

5. Fast set up times < 10 min (a.k.a. SMED - Single Minute Exchange of Dies)

6. Highly reliable equipment

7. A Stable master production schedule

Optional Tools:

Lean Manufacturing

Optional Tools:

– 5S (A common sense approach to ergonomics)

Image source: 5S for Operators: 5 Pillars of the Visual Workplace, Productivity Press, 1995

Lean Manufacturing

Optional Tools:

– 5S– Kanban (A system of currency for inventory transactions)

Image source: unknown

Lean Manufacturing

Optional Tools:

– 5S– Kanban– Kaizen Events (1 to 2 weeks of team-driven improvements)

Lean Manufacturing

Clockwise from Henry Ford:

1. Sakichi Toyoda2. Kiichiro Toyoda3. Eiji Toyoda4. Taichii Ohno5. Shigeo Shingo

Lean Manufacturing: observations

Implementing the Toyota Production System is psychologically improbable assuming Kahneman and Tversky’s Prospect Theory.

When taken together, the resulting system is a so called ‘Hot’ system – Highly Optimized within Tolerances.

Distributed robustness comes from Keiretsu.

Is Lean the best choice?

Many Alternatives

APS (Advanced Planning Systems)

CONWIP (Constant Work in Progress)

CRM (Customer Relationship Management)

DRP (Distribution Resource Planning)

MRP I (Material Requirements Planning)

MRP II (Manufacturing Resource Planning)

ERP (Enterprise Resource Planning)

JIT (Just in Time)

Lean (What is this anyways?)

Six Sigma (Statistics for Managers!)

Lean Six Sigma (What statistics? What Managers? What?)

OPT (Optimized Production Technology)

SPC (Statistical Process Control)

TOC (Theory of Constraints)

TPS (Toyota Production System) TPM (Total Productive Maintenance)

TQM (Total Quality Management)

Is there a more general connection between all of these models?

Perhaps related to these factors:

• Volume and Variety

• Technology Factors

• Economies of scale, scope, network effects and learning

• The Man – Machine interface

The Product-Process MatrixUnit Volume Per SKU

Number of Different SKUs

Zone 1

Zone 2

Zone 3

Zone 4

The Product-Process MatrixProcess

Product Mix

Job Shop

Custom madefew of each

Product Mix

Inventor’s Studio

One of a Kind

Zone 1

Job Shop

Batch Flow

Line Flow People Paced

Many low volume products

Product Mix

Inventor’s Studio

One of a Kind

Zone 1

Zone 2

Job Shop

Batch Flow

Line Flow Machine Paced

Several high volume products

Product Mix

Inventor’s Studio

One of a Kind

Zone 1

Zone 2

Zone 3

Pure AutomationTechnology Paced

Job Shop

Batch Flow

GlobalCommodity

Product Mix

Inventor’s Studio

One of a Kind

Zone 1

Zone 2

Zone 3

Zone 4

GlobalCommodity

Job Shop

Batch Flow

Product Mix

Inventor’s Studio

One of a Kind

Zone 1

Zone 2

Zone 3

Zone 4

GlobalCommodity

Job Shop

Batch Flow

Product Mix

Inventor’s Studio

One of a Kind

Design HousesAerospaceCommercial Printers

Industrial MachineryApparel

AutomotiveSteel ProductsRubber Products

Electronics ManufacturingPharmaceuticals, Specialty Chemicals

Major ChemicalsPaper, Oil, Steel, Beer, Soda

GlobalCommodity

Job Shop

Batch Flow

Product Mix

Inventor’s Studio

One of a Kind

Design HousesAerospaceCommercial Printers

Industrial MachineryApparel

AutomotiveSteel ProductsRubber Products

Electronics ManufacturingPharmaceuticals, Specialty Chemicals

Major ChemicalsPaper, Oil, Steel, Beer, Soda

GlobalCommodity

Job Shop

Batch Flow

Product Mix

Inventor’s Studio

One of a Kind

Zone 1

Zone 2

Zone 3

Zone 4

GlobalCommodity

Job Shop

Batch Flow

Product Mix

Inventor’s Studio

One of a Kind

Sequencing Rules

Zone 2

Zone 3

Zone 4

GlobalCommodity

Sequencing Rules

Job Shop

Batch Flow

Product Mix

Inventor’s Studio

One of a Kind

Theory of Constraints

Zone 3

Zone 4

GlobalCommodity

Sequencing Rules

Job Shop

Batch Flow

Product Mix

Inventor’s Studio

One of a Kind

Zone 3

Periodic Review

GlobalCommodity

Sequencing Rules

Job Shop

Batch Flow

Product Mix

Inventor’s Studio

One of a Kind

Zone 3 ?

Periodic Review

GlobalCommodity

Sequencing Rules

Job Shop

Batch Flow

Product Mix

Inventor’s Studio

One of a Kind

MRP and JIT

Periodic Review

The Product-Process Matrix

MRP and JIT

GlobalCommodity

The Product-Process Matrix

MRP and JIT

GlobalCommodity

JIT vs. MRP: hot vs. cold systems

The opposite of ‘Lean’ is not ‘Wasteful’

The alternative to ‘Lean’ is simply a schedule, otherwise known as a material requirements plan, based on forecasts.

The distinction, in the abstract, is a matter of systems design.

JIT: Hot

MRP: Cold

see Farmer et al., 2002

The distinction, in the abstract, is a matter of systems design.

JIT: Highly Optimized within Tolerances

MRP: Constrained Optimization with Limited Deviations

see Farmer et al., 2002

The Japanese Report not to Forecast

“Operations managers from nearly 1500 major corporations were asked to rank their concerns on various aspects of manufacturing management.* European and North American executives ranked sales forecasting at number 5 and number 4, respectively. Interestingly enough, sales forecasting did not even appear in the list among Japanese managers.”From:

Henry C Co, Moosa Sharafali, Overplanning factor in Toyota's formula for computing the number of kanban

IIE Transactions. Norcross: May 1997.Vol.29, Iss. 5; pg. 409, 7 pgs

*With reference to:

Ferdows, K., Miller, J.G., Nakane, J. and Vollman, T.E., (1985) Evolving global manufacturing strategies: projections into the 1990s. International Journal of Operations Production Management, 6(4), 5-14.

It’s good to have friends

Toyota Motor Shows Its MettleAfter Fire Destroys Parts PlantWall Street Journal 8 May 1997

“Fire incinerated main source of brake valve”

“No Foreign Help Required”

“320 cellular phones, 230 extra phone lines and several dozen sleeping bags for executives”

“36 suppliers, aided by more than 150 other subcontractors”

“tribal groups… Japanese auto makers' blood pacts with their suppliers”

Lean Manufacturing

Further reference:

– Liker, Jeffrey R., The Toyota Way, 2004

– Silver, Edward A., Pyke, David, F., Peterson, Rein, Inventory Management and Production Planning and Scheduling, 1998.

A Word from George Box:1.Every model is an approximation.

2.All models are wrong, some models are useful.

3.Don’t fall in love with a model…

In Statistics for Experimenters , 2005.

(George Box invented the ARIMA model of forecasting)

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