Implementing Lean: transferring Toyota Production System concepts to a manufacturing plant

From the archives of onesixsigma, a fascinating case study detailing the quest to improve quality and reduce lead-time.

Introduction

The overall objective was to improve the business condition. That is, to improve quality and reduce lead-time and cost at the same time. It is easy to reduce labour when increasing inventory or vice versa. A true kaizen reduces labour and inventory, whilst simultaneously increasing quality. Nobody was laid-off as direct result of this Lean/Toyota Production System effort.

Our approach to implementing Lean included:

• Analysis to find the biggest problem, develop a target condition supported by a strategy and specific milestones;
• Increasing stability through problem solving;
• Continuous flow through connecting processes (assembly line) and eliminating changeover (outsourcing in this case);
• Meaningful work to people (Jidoka);
• Standardised work and workplace organisation;
• Heijunka, or level production;
• Demand pull manufacturing (SEQUENTIAL pull system)

Material and information flow of initial condition (current Value Stream Mapping).

Purpose of material&information flow of initial condition

To visually capture the current condition of the shop floor to gain consensus on the biggest problem. It is the equivalent of standardised work of initial condition for management.

Biggest Problem

The company's manufacturing lead-time, from receiving the order to shipping the order, is greater than the customer lead-time. As a Result,production must be based on a forecast, while actual customer order fluctuation is directly passed on to the shop floor, forcing the need to carry resources to cover for peak demand. Excess resources hide problems, further necessitating resources (time, labour, inventory and capital) to cover for lack of operational availability.

On the initial condition you can see that our processes were all disconnected. Each process was producing in a batch and sending the sub-assembly to the warehouse where it would wait until an order would come through. This situation created a long lead-time, forcing us to work on a forecast. Since the customer was only giving us 2 or 3 weeks to ship and it was taking 8 to 9 weeks to build, we had to start all the subassembly based on a forecast. Making to forecast is not accurate and results in excess inventory of some parts and a shortage of others. As a result, final configuration had to start earlier. To summarise, all problems were pushed to final configuration where we would scramble at the last minute to make the order. In Lean, we do not pass defects on to the following process and that is hard to do.

Material&Information Flow of Target Condition (Future Value Stream Mapping)

 Purpose of Material&Information Flow of Target Condition

A tool for management to reach agreement on steps, methods and resources required to attack and fix those problems.

Shared Vision of the Future

The company's manufacturing lead-time, from receiving the order to shipping the order, is below customer lead time. Production can be scheduled based on actual customer demand. Excess lead time can be used to level the order fluctuation, thus eliminating the need for carrying resources to cover for peak demand.

The facility becomes a centre for operational excellence, where resources (sales, engineering, planning, and manufacturing) are set against actual customer demand (rate of operation equals demand, operational availability is 100%).

Supply chain is established internally and externally to the company. We achieve highest quality, lowest lead time and lowest cost.

Continuous Flow

In reducing the lead-time our strategy was to connect processes in a continuous flow and eliminate changeover. In creating a continuous flow we determined takt time and, against the work content, the size of the part and the number of people who could work simultaneously, we established pitches 

The rule is that the following pitch pulls from the preceding pitch at the actual pace of the customer demand, or Takt Time. Before, we used to push the work until it would stop at the bottleneck station.

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