Matching Supply with Demand:An Introduction to Operations Management

Gérard Cachon ChristianTerwiesch

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Demand: An Introduction to Operations Management as a required text for their course is free to use and modify these slides as desired. All others must obtain explicit written permission from the authors to

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Zero non-value added activities (muda)

Zero defects, zero breakdowns, zero inventory, zero set-up

Production flow synchronized with demand (JIT) One-unit-at-a-time flow Mixed model production (heijunka) Piece-by-piece transfer (ikko-nagashi) Match production demand based on Takt time Pull instead of push Supermarket / Kanban Make-to-order

Quality methods to reduce defects Fool-proofing (poka-yoke) and visual feed-back Detect-stop-alert (Jidoka) Defects at machines (original Jidoka) Defects in assembly (Andon cord) Build-in-quality (tsukurikomi)

Flexibility

Standardization of work

Worker involvementQuality circles (Kaizen)Fishbone diagrams (Ishikawa)Skill development / X-training

Reduction of VariabilityQuartile AnalysisStandard operating procedures

Adjustment of capacity to meet takt-timeMulti-task assignment (takotei-mochi)

Reduce inventory to expose defects

8.2

8.4 8.5

8.6

8.7

8.9

8.8

Net

opera-

ting

time

Idling

and minor

stop-pages

Re-duced

Speed

(quartile plot)

OEEDefects Start-upAvail-

able time

Break-down

Change-overs

Total

planned

up-time

30

55

100

45

Downtime losses

Availability rate

55 %

Speed losses

Performance rate

82 %

X X = OEE

30 %

Quality losses

Quality rate

67 %

Improve-ment potential

> 300%

Kanban

Direction of production flow

upstream downstream

Kanban

Kanban

Kanban

Authorize productionof next unit

Figure 8.13.: Simplified mechanics of a Kanban system

Figure 8.12.: Information turnaround time and its relationship with buffer size

71

2345

68

ITAT=7*1 minute

3

1

2

4

ITAT=2*1 minute

Good unit

Defective unit

Inventory in process

Buffer argument:“Increase inventory”

Toyota argument:“Decrease inventory”

Figure 8.14.: More or less inventory? A simple metaphor

Figure 8.15.: Tension between flow rate and inventory levels / ITAT

Flow Rate

Inventory

High

Low

High Inventory (Long ITAT)

Low Inventory (short ITAT)

Now

Frontier reflecting current process

Reduce inventory(blocking or starvingbecome more likely)

Increase inventory(smooth flow)

New frontier

Path advocated byToyota production system