production/operations management

Introduction to P/OM

•Management

•P/OM and SCM

•DSS

•QMS/OPI

•Theory of Constraints

•The Goal

Introduction to Supply Chain Management•SCM – Acquisition•SCM – Maintain•SCM – Transform•SCM – DistributeWebster Chapters•Information Technology•Foundations•Demand Management•Supply Management•Inventory Management•Capacity Management•Production Management•Transportation Management•Quality Management

POM Tools•Forecasting•Lean Manufacturing•Project Management•Simulation•Statistical Process Control

Production/Operations Management

Dr. Eliot Elfner

St. Norbert College

Spring 2009

Lean Manufacturing and Quality Processes

2


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



TOPICS

• Discussion of topics– Lean Manufacturing– Quality Processes

3


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Lean Production

• Lean Production can be defined as an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods)

• Lean Production also involves the elimination of waste in production effort

• Lean Production also involves the timing of production resources (i.e., parts arrive at the next workstation “just in time”)

4


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



The Toyota Production System

• Based on two philosophies:– 1. Elimination of waste

– 2. Respect for people

5


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Elimination of Waste

1. Focused factory networks

2. Group technology

3. Quality at the source

4. JIT production

5. Uniform plant loading

6. Kanban production control system

7. Minimized setup times

6


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Minimizing Waste: Focused Factory

Networks

CoordinationSystem

Integration

These are small specialized plants that limit the range of products produced (sometimes only one type of product for an entire facility)

These are small specialized plants that limit the range of products produced (sometimes only one type of product for an entire facility)

Some plants in Japan have as few as 30 and as many as 1000 employees

Some plants in Japan have as few as 30 and as many as 1000 employees

7


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Minimizing Waste:Group Technology (Part 1)

• Using Departmental Specialization for plant layout

can cause a lot of unnecessary material movement • Using Departmental Specialization for plant layout

can cause a lot of unnecessary material movement

Note how the flow lines are going back and forth

Note how the flow lines are going back and forth

Saw Saw

Lathe PressPress

Grinder

LatheLathe

Saw

Press

Heat Treat

Grinder

8


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Minimizing Waste: Group Technology (Part 2)

• Revising by using Group Technology Cells can reduce movement and improve product flow

• Revising by using Group Technology Cells can reduce movement and improve product flow

Press

Lathe

Grinder

Grinder

A

2

BSaw

Heat Treat

LatheSaw Lathe

PressLathe

1

9


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Minimizing Waste: Uniform Plant Loading (heijunka)

Suppose we operate a production plant that produces a single product. The schedule of production for this product could be accomplished using either of the two plant loading schedules below.

Suppose we operate a production plant that produces a single product. The schedule of production for this product could be accomplished using either of the two plant loading schedules below.

Not uniform Jan. Units Feb. Units Mar. Units Total 1,200 3,500 4,300 9,000

Uniform Jan. Units Feb. Units Mar. Units Total 3,000 3,000 3,000 9,000

How does the uniform loading help save labor costs?How does the uniform loading help save labor costs?

10


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Minimizing Waste: Inventory Hides Problems

Work inprocess queues(banks)

Changeorders

Engineering designredundancies

Vendordelinquencies

Scrap

Designbacklogs

Machine downtime

Decisionbacklogs

Inspectionbacklogs

Paperworkbacklog

Example: By identifying defective items from a vendor early in the production process the downstream work is saved

Example: By identifying defective work by employees upstream, the downstream work is saved

11


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Minimizing Waste: Kanban Production Control Systems

Storage

Part AMachine Center Assembly

Line

Material Flow

Card (signal) Flow

Withdrawal kanban

Once the Production kanban is received, the Machine Center produces a unit to replace the one taken by the Assembly Line people in the first place

This puts the system back were it was before the item was pulled

The process begins by the Assembly Line people pulling Part A from Storage

Production kanban

Storage

Part A

12


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Determining the Number of Kanbans Needed

• Setting up a kanban system requires determining the number of kanbans cards (or containers) needed

• Each container represents the minimum production lot size

• An accurate estimate of the lead time required to produce a container is key to determining how many kanbans are required

13


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



The Number of Kanban Card Sets

• k = Number of kanban card sets (a set is a card)• D = Average number of units demanded over some

time period• L = lead time to replenish an order (same units of

time as demand)• S = Safety stock expressed as a percentage of

demand during leadtime• C = Container size

k = Expected Demand During Lead Time + Safety Stock

Size of the Container

k =DL(1+S)

C

14


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Example of Kanban Card Determination: Problem Data

• A switch assembly is assembled in batches of 4 units from an “upstream” assembly area and delivered in a special container to a “downstream” control-panel assembly operation

• The control-panel assembly area requires 5 switch assemblies per hour

• The switch assembly area can produce a container of switch assemblies in 2 hours

• Safety stock has been set at 10% of needed inventory

15


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Example of Kanban Card Determination: Calculations

Always round up!

k = Expected Demand During Lead Time + Safety Stock

Size of the Container

k =DL(1+S)

C=

(5)*(1)*(1.1)

4= 2.75, or 3

16


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Respect for People

• Level payrolls

• Cooperative employee unions

• Subcontractor networks

• Bottom-round management style

• Quality circles (Small Group Involvement Activities or SGIA’s)

17


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Toyota Production System’sFour Rules

1. All work shall be highly specified as to content, sequence, timing, and outcome

2. Every customer-supplier connection must be direct, and there must be an unambiguous yes-or-no way to send requests and receive responses

3. The pathway for every product and service must be simple and direct

4. Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization

18


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Lean Implementation Requirements: Design Flow Process

• Link operations

• Balance workstation capacities

• Redesign layout for flow

• Emphasize preventive maintenance

• Reduce lot sizes

• Reduce setup/changeover time

19


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Lean Implementation Requirements: Total Quality Control

• Worker responsibility

• Measure SQC

• Enforce compliance

• Fail-safe methods

• Automatic inspection

20


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Lean Implementation Requirements: Stabilize Schedule

• Level schedule

• Underutilize capacity

• Establish freeze windows

21


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Lean Implementation Requirements: Kanban-Pull

• Demand pull

• Backflush

• Reduce lot sizes

22


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Lean Implementation Requirements: Work with Vendors

• Reduce lead times

• Frequent deliveries

• Project usage requirements

• Quality expectations

23


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Lean Implementation Requirements: Reduce Inventory More

• Look for other areas

• Stores

• Transit

• Carousels

• Conveyors

24


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Lean Implementation Requirements: Improve Product Design

• Standard product configuration

• Standardize and reduce number of parts

• Process design with product design

• Quality expectations

25


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Lean Implementation Requirements: Concurrently Solve Problems

• Root cause

• Solve permanently

• Team approach

• Line and specialist responsibility

• Continual education

26


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Lean Implementation Requirements: Measure Performance

• Emphasize improvement

• Track trends

27


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Lean in Services (Examples)

• Organize Problem-Solving Groups

• Upgrade Housekeeping

• Upgrade Quality

• Clarify Process Flows

• Revise Equipment and Process Technologies

28


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Lean in Services (Examples)

• Level the Facility Load

• Eliminate Unnecessary Activities

• Reorganize Physical Configuration

• Introduce Demand-Pull Scheduling

• Develop Supplier Networks

29


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Quality ProcessesA little history

• Post WWII Japan – almost a clean slate

– Limited resources, low volumes new approach

• Influences

– TWI – employees involved in process improvement

– Deming & Juran

• Poor quality is responsibility of management

• Tools for process improvement

Formative years of TQM & JIT

30


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Total Quality Management

TQM is an organization-wide effort directed towards the continuous improvement of quality

• One simple definition of high quality is: “exceeds customers’ expectations”– Key point—quality is tied to view of

customer (e.g., not specifications)

In brief…

31


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Putting TQM principlesinto practice

Customer focus

Employee empowerment

Data-based decision making – “management by fact”

Continuous improvement in quality – how?

32


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Definitions of Quality

• Quality as “Excellence”• Quality as “Conformance to

Specifications”• Quality as “Fitness for Use”• Quality as “Value for the Price”

33


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Total Quality Management

• Philosophy of management

• Part of mission/vision/purpose

• Implemented through long range strategic planning

34


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Quality Related Product Characteristics

• Reliability

• Durability

• Serviceability

35


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Quality-Related Service Characteristics

• Reliability

• Tangibles

• Responsiveness

• Assurance

• Empathy

36


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Quality Specifications

• Design quality: Inherent value of the product in the marketplace

– Dimensions include: • Performance

• Features

• Reliability/Durability

• Serviceability

• Aesthetics

• Perceived Quality.

• Conformance quality: Degree to which the product or service design specifications are met

37


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Costs of Quality

External Failure Costs

Appraisal Costs

Prevention Costs

Internal FailureCosts

Costs ofQuality

38


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



• Series of standards agreed upon by the International Organization for Standardization (ISO)

• Adopted in 1987

• More than 100 countries

• A prerequisite for global competition?

• ISO 9000 directs you to "document what you do and then do as you documented"

ISO 9000

39


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Six Sigma Quality

A philosophy and set of methods companies use to eliminate defects in their products and processes

Seeks to reduce variation in the processes that lead to product defects

The name, “six sigma” refers to the variation that exists within plus or minus three standard deviations of the process outputs

40


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Six Sigma Quality (con’t)

• Six Sigma allows managers to readily describe process performance using a common metric: Defects Per Million Opportunities (DPMO)

1,000,000 x

No. of units x

Number of defects

DPMO

Number of opportunities for error per unit

41


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Example of Defects Per Million Opportunities (DPMO) calculation. Suppose we observe 200 letters delivered incorrectly to the wrong addresses in a small city during a single day when a total of 200,000 letters were delivered. What is the DPMO in this situation?

Example of Defects Per Million Opportunities (DPMO) calculation. Suppose we observe 200 letters delivered incorrectly to the wrong addresses in a small city during a single day when a total of 200,000 letters were delivered. What is the DPMO in this situation?

000,1 1,000,000 x

200,000 x 1

200DPMO

000,1 1,000,000 x

200,000 x 1

200DPMO

So, for every one million letters delivered this city’s postal managers can expect to have 1,000 letters incorrectly sent to the wrong address.

So, for every one million letters delivered this city’s postal managers can expect to have 1,000 letters incorrectly sent to the wrong address.

Cost of Quality: What might that DPMO mean in terms of over-time employment to correct the errors?

Cost of Quality: What might that DPMO mean in terms of over-time employment to correct the errors?

Six Sigma Quality (con’t)

42


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Six Sigma Quality:DMAIC Cycle

• Define, Measure, Analyze, Improve, and Control (DMAIC)

• Developed by General Electric as a means of focusing effort on quality using a methodological approach

• Overall focus of the methodology is to understand and achieve what the customer wants

• A 6-sigma program seeks to reduce the variation in the processes that lead to these defects

• DMAIC consists of five steps….

43


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Six Sigma Quality:DMAIC Cycle (con’t)

1. Define (D)

2. Measure (M)

3. Analyze (A)

4. Improve (I)

5. Control (C)

Customers and their priorities

Process and its performance

Causes of defects

Remove causes of defects

Maintain quality

44


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Total Quality Requirements

• Strategic Quality Planning• Clear Focus on Customer Satisfaction• Continuous Improvement of Key

Processes• Effective Collection & Analysis of

Information• Effective Use of Teamwork and

Training• Effective Design of Products and

Services• Effective Leadership

45


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Components of anOPI Culture

OPI as CentralFocus of

Mission Statement

StakeholderLinkages

Passionate Commitment

to Continuous Improvement

Commitment toEducation/TrainingTeam Development

Bias TowardEvidence Based

DecisionMaking

CULTURE OFONGOINGPROCESS

IMPROVEMENT

46


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Characteristics ofOPI Systems

• Vision/mission/purpose for quality

• Focus on supplier/customer linkages

• PASSIONATE commitment to continuous improvement

• Commitment to teaming/training

• Bias for data based decision making

47


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Strategic Quality Management

Using the quality of products and services to increase a

company’s share of the market

48


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Implementing TQMIdentify Critical Business Issues

Secure top management commitment

Provide initial training

Identify customer requirements

Identify key processes

Provide specific skills training

Collect and analyze data

Change the process

Req’mts met?

Continue to improve processes

no

yes


•Management

•P/OM and SCM

•DSS

•QMS/OPI


•The Goal



Production/Operations Management

Dr. Eliot Elfner

St. Norbert College

Spring 2009

Lean Manufacturing and Quality Processes

The End

production/operations management

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