Operations Management & Performance Modeling
1 Operations Strategy
2 Process Analysis
3 Lean Operations
– Class 3b: House Game
– Class 4a: The Paradigm of Lean Operations: The ideal
– Class 4b: Getting to the ideal with Product Variety: TPS
» Managing variety/flexibility
» Toyota Production System
4
5
6
7
OM&PM/Class 4b
Supply Chain Management
Capacity Management in Services
Total Quality Management
Business Process Reengineering
1
How to run Lean Operations:
Managing Variety

Monthly Production Requirement:
Model
Sedan
Station
Wagon
Quantity
10,000
10,000
 How should production be scheduled for the month?
OM&PM/Class 4b
2
Synchronize: Heijunka
Mixed Level/Balanced Production
Batch Production Schedule
(AAAABBBB..)
Product
Apr/12.................15...........................30
Mixed Production Schedule
(ABAB...)
Apr/12....................15.......................30
A
B
FGI
FGI
time
OM&PM/Class 4b
time
3
Synchronize: Heijunka
Uniform Plant Loading

This does not mean building a single product.

Rather:
– maintain a stable mix of products,
– and firm frozen schedules based on actual orders

Benefits:

Costs:
OM&PM/Class 4b
Must reduce scale economies
4
Reducing Waste:
Reduced Setup Times
 What

are the consequences of long setup times?
A requirement for small-lot-size, mixed-model
production?
OM&PM/Class 4b
5
Reducing Waste:
Mixed-Load Pickup and Delivery
Part A Plant
Part B Plant
Assembly
Line
Individual
Pickup
Part C Plant
Part A Plant
Part B Plant
Assembly
Line
Mixed-Load
Pickup
Part C Plant
OM&PM/Class 4b
6
Reducing Waste:
Quality at the Source
Defects
Found at:
Impact to the
Company
OM&PM/Class 4b
Own Process
Next Process
End of Line
Final
Inspection
End User’s
Hand
$
$
$
$
$
 Very
Minor
 Minor
Delay
 Rework
 Resched.
of work
 Significant
Rework
 Delay in
Delivery
 Additional
Inspection
 Warranty
costs
 Administra
tive costs
 Reputation
 Loss of
Market
Share
7
Reducing Waste:
Quality at the Source
 Fool-proof/Fail-safe

design (Poka-Yoke)
Inspection
– Self
– Automated (Jidoka)

Line-stopping empowerment (Andon)
 Human infrastructure
OM&PM/Class 4b
8
Continuous Improvement: Kaizen
 Increase
visibility of waste
 Targeted improvements
– Active worker involvement
– Time for experimentation
– Supplier involvement

Exploratory stress
 Human infrastructure
OM&PM/Class 4b
9
Lean Operations:
Best Implementation is TPS
 TPS
is a production management system that aims for
the “ideal” through continuous improvement
 Includes, but goes way beyond JIT. Pillars:
– Synchronization: through JIT + Heijunka
– Quality at Source: through Jidoka
– Continuous Improvement (Kaizen): through empowerment,
visibility & stress
OM&PM/Class 4b
....
10
Class 4b: Learning Objectives

Lean Operations: In Search for the Holy Grail and zero Waste
– Efficient Workflow: Cellular Layout
– Level Mixed Production: Heijunka
» Reduced batch sizes
– Pull Execution: Kanbans
– Quality at source: Jidoka
– Continuous Improvement: Kaizen
OM&PM/Class 4b
Flow Synchronization
Low Cost
Get ever closer to ideal
11