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LEAN SYSTEMS

Continuous improvement using Lean System approach

Productions and Operations Management

Nouman Hashmat
Lean systems

Term Report:
Submitted to:
Engr. Imran Iqbal
Submitted by:
Abdul Haseeb 2k13-Che-99
M.Nouman Hashmat 2k13-Che-101
Raja Mubashir Ahmad 2k13-Che-83
M.Qasim Dhareja 2k13-Che-103
Bilawal Hattar 2k13-Che-118

Section:
“C”
Date:
November 25th,2016

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Lean systems

Contents
1. Lean systems: ........................................................................................................................................... 4
1.1 Def:...................................................................................................................................................... 4
1.2 Explanation: ........................................................................................................................................ 4
1.2.1 Lean Systems across the Organization: ...................................................................................... 4
2.1 Concept of continuous improvement:................................................................................................... 5
2.2 Introduction:....................................................................................................................................... 6
2.2.1 just-in-time (JIT) philosophy: ...................................................................................................... 6
2.2.2 Explanation: ................................................................................................................................. 6
JIT system: .................................................................................................................................................... 7
Conclusion: ................................................................................................................................................. 11
References .................................................................................................................................................. 12

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Lean systems

Abstract:
Operations systems that maximize the value added by each of a company’s activities by removing
waste and delays from them.
Lean systems affect a firm’s internal linkages between its core and supporting processes
and its external linkages with its customers and suppliers.
The design of supply chains using the lean systems approach is important to various
departments and functional areas across the organization.
The goals of a lean system are thus to eliminate the eight types of waste, produce services
and products only as needed, and to continuously improve the value-added benefits of
operations.

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Lean systems

1. Lean systems:

1.1 Def: “Operations systems that maximize the value added by each of a company’s
activities by removing waste and delays from them”.

1.2 Explanation:
1.2.1 Lean Systems across the Organization:

Lean systems affect a firm’s internal linkages between its core and supporting processes and its
external linkages with its customers and suppliers. The design of supply chains using the lean
systems approach is important to various departments and functional areas across the
organization.

Marketing relies on lean systems to deliver high-quality services or products on time and
at reasonable prices. Human resources must put in place the right incentive systems that reward
teamwork, and also recruit, train, and evaluate the employees needed to create a flexible
Workforce that can successfully operate a lean system. Engineering must design products that
use more common parts, so that fewer setups are required and focused factories can be used.

Operations is responsible for maintaining close ties with suppliers, designing the lean
system, and using it in the production of services or goods. Accounting must adjust its billing and
cost accounting practices to provide the support needed to manage lean systems. Finally, top
management must embrace the lean philosophy and make it a part of organizational culture and
learning, as was done by Panasonic in the opening vignette.

Example:

Panasonic Corporation is a learning organization and an excellent example of an approach for


designing supply chains known as lean systems, which allow firms like Panasonic to continuously
improve its operations and spread the lessons learned across the entire corporation.
Lean systems are operations systems that maximize the value added by each of a
company’s activities by removing waste and delays from them. They encompass the company’s
operations strategy, process design, quality management, constraint management, layout
design, supply chain design, and technology and inventory management, and can be used by both
service and manufacturing Firms. Like a manufacturer, each service business takes an order from
a customer, delivers the service, and then collects revenue. Each service business purchases
services or items, receives and pays for them, and hires and pays employees. Each of these
activities bears considerable similarity to those in manufacturing firms. They also typically contain
huge amounts of waste.

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Lean systems

Continuous Improvement Using a Lean Systems Approach:

2.1 Concept of continuous improvement:


Continuous improvement, based on a Japanese concept called kaizen, is the philosophy of
continually seeking ways to improve processes.
Continuous improvement involves:
 Identifying benchmarks of excellent practice
 instilling a sense of employee ownership in the process
The focus of continuous improvement is to reduce waste:
 Reducing the length of time required to process requests for loans at a bank
 The amount of scrap generated at a milling machine
 The number of employee injuries at a construction site

The basis of the continuous improvement philosophy are the beliefs that virtually any aspect of
a process can be improved and that the people most closely associated with a process are in
the best position to identify the changes that should be made. The idea is not to wait until a
massive problem occurs before acting.

Most firms actively engaged in continuous improvement train their work teams to use the
plan-do-study-act cycle for problem solving. Another name for this approach is the Deming
Wheel, named after the renowned statistician.
1. Plan. The team selects a process (an activity, method, machine, or policy) that needs
improvement. The team then documents the selected process, usually by analyzing related
data; sets qualitative goals for improvement; and discusses various ways to achieve the goals.
After assessing the benefits and costs of the alternatives, the team develops a plan with
quantifiable measures for improvement.
2. Do. The team implements the plan and monitors progress. Data are collected continuously
to measure the improvements in the process. Any changes in the process are documented, and
revision are made as needed.
3. Study. The team analyzes the data collected during the do step to find out how closely the
results correspond to the goals set in the plan step. If major shortcomings exist, the team
reevaluates the plan or stops the project.
4 .Act. If the results are successful, the team documents the revised process so that it becomes
the standard procedure for all who may use it. The team may then instruct other employees in
the use of the revised process.

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2.2 Introduction:

2.2.1 just-in-time (JIT) philosophy:


The belief that waste can be eliminated by cutting unnecessary capacity or inventory and
removing non-value added activities in operations.

One of the most popular systems that incorporate the generic elements of lean systems is the
just-in-time (JIT) system. According to Taiichi Ohno, one of the earlier pioneers at Toyota
Corporation, the just-in-time (JIT) philosophy is simple but powerful.

2.2.2 Explanation:
The goals of a lean system are thus to eliminate the eight types of waste, produce services
and products only as needed, and to continuously improve the value-added benefits of
operations.
A JIT system organizes the resources, information flows, and decision rules that enable a
Firm to realize the benefits of JIT principles.

Table#1: The Eight Types of Waste:

Waste Definition

1. Overproduction Manufacturing an item before it is needed, making it difficult to


detect defects and creating excessive lead times and Inventory.

2. Inappropriate Processing Using expensive high precision equipment when simpler


machines 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.
3. 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.

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4. 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.
5. Motion Unnecessary effort related to the ergonomics of bending,
stretching, reaching, lifting, and walking. Jobs with
excessive motion should be redesigned.
6. Inventory Excess inventory hides problems on the shop floor,
consumes space, increases lead times, and inhibits
communication. Work-in-process inventory is a direct
result of overproduction and waiting.
7. 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.
8.Underutilization of Employees Failure of the firm to learn from and capitalize on its
employees’ knowledge and creativity impedes long-term
efforts to eliminate waste.

JIT system:

A system that organizes the resources, information flows, and decision rules that enable a firm
to realize the benefits of JIT principles.

By spotlighting areas that need improvement, lean systems lead to continuous


improvement in quality and productivity. 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. Lean systems
provide the mechanism for management to reveal the problems by systematically lowering
capacities or inventories until the problems are exposed.

For Example:
The figure characterizes the philosophy behind the continuous improvement with lean
system.

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In services, the water surface represents service system capacity, such as staff levels. In
manufacturing, the water surface represents product and component inventory levels. The rocks
represent problems encountered in the fulfillment of services or products. When the water
surface is high enough, the boat passes over the rocks because the high level of capacity or
inventory covers up problems.

As capacity or inventory shrinks, rocks are exposed. Ultimately, the boat will hit a rock if the water
surface falls far enough. Through lean systems, workers, supervisors, engineers, and analysts
apply methods for continuous improvement to demolish the exposed rock. The coordination
required to achieve smooth material flows in lean systems identifies problems in time for
corrective action to be taken.

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 .

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For example
A Kawasaki plant in Lincoln, Nebraska, periodically cuts its safety stocks almost to zero. The
problems at the plant are exposed, recorded, and later assigned to employees as improvement
projects. After improvements are made, inventories are permanently cut to the new level.

 Many firms use this trial-and-error process to develop more efficient manufacturing
operations. In addition, workers using special presses often fabricate parts on the
assembly line in exactly the quantities needed. Service processes, such as scheduling,
billing, order taking, accounting, and financial planning, can be improved with lean
systems, too.

 In service operations, a common approach used by managers is to 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:

1. Improving the firm work process


2. Providing employees with additional training
3. Finding higher quality suppliers

 Eliminating capacity imbalances might involve revising the firm’s master production
schedule and improving the flexibility of its workforce. Irrespective of which problem is
solved, there are always new ones that can be addressed to enhance system
performance.

 Oftentimes, continuous improvement occurs


1. with the ongoing involvement
2. New ideas from employees
These factors play an important role in implementing the JIT philosophy.

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Example:
In 2007 alone, about 740,000 corporate-wide improvement suggestions were received at Toyota.
A large majority of them got implemented, and employees making those suggestions received
rewards ranging from 500 yen (about $5) to upwards of 50,000 yen (about $500) depending upon
their bottom line impact.

Reference:

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Conclusion:
It is wasteful to incur costs which do not add value to the product for the customer. Yet, many
organizations have numerous costs that produce no tangible benefit. Programs to cut such waste
are called “lean.” They were developed by the Japanese manufacturers and especially Toyota.
Elimination of waste (time and material) and smoothing work flows (balancing process rates) is
at the core of lean. The Japanese goal of removing waste and unevenness has been highly
successful in both manufacturing and service industries (such as healthcare). When operating
costs begin to matter, lean is often brought into the system. It should always have been endorsed
because it is an important aid in developing new products properly and faster

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References
 Krajewski, L. J., Ritzman, L. P., & Malhotra, M. K. (n.d.). Operations Management
(Third ed.). Processes and supply chain.

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