VALUE STREAM ANALYSIS AND LEAN MANUFACTURING SYSTEM

This week is about Lean Manufacturing and Total Quality Management and for a better understanding of the topic we have exposed to various cases including” Toyota Production System” and “Living in Dell” and other readings. These two cases provide an insight on how these two successful companies have managed to apply the process improvement methodologies to reduce and eventually eliminate wastes in the manufacturing system. I have managed to understand the three frameworks of process improvements: Six Sigma; Lean and the Theory of Constraints. This influenced my desire to explore more on the Lean Manufacturing Systems that is being employed by Toyota Company.

Lean Philosophy

Lean is a philosophy of no waste and can be extended further to the so called a philosophy of ‘‘a hundred small improvements every day’’ rather than ‘‘a home run once a year.’’ The emphasis is on excellence at the lowest, and highest, level of detail. The lean concept is based on a system-wide vision.

Value Stream

The lean philosophy leads us to the fundamental principles of lean which are basically two. One is the concept of value and the other is the system-wide vision when you evaluating your business “the value stream”.

With regard to the concept of value this can be divided into two: value-added and non-value-added. The term value added refers to activity that transforms the product or deliverable, in the view of the customer, to a more complete state. The product has been physically changed, and its value to the customer has increased. Conversely, the term non-value-added refers to activity that consumes time (people expense), material, and/or space (facilities expense), yet does not physically advance the product or increase its value.

The other fundamental principle of lean is the concept of system-wide view “the value stream”. This is the total cycle of activity, from initial customer contact through receiving payment for a product that has been delivered. The concept of value-stream analysis is critical foundation logic. If you change a piece let say in one area, then what is the ripple effect across the entire process? In addition, it is a concept in which the customer defines the metrics. It is a mindset of really being where you are.

Value stream is the important baseline to start the expedition of lean process. It is about defining your current state of operations, analyzing it for waste, and creating a desired future state and a highly detailed plan of execution to get there. This is typically done at the site level for best results.

The site level is much more practical in that a facility typically has discrete products that are being delivered to customers, usually all functions are represented, and a clean value-stream model that is under the control of the functions present in the facility can be constructed. This tool is an event-based process, meaning that a cross-functional team gets locked up for typically five days to deliver the goods. No interruptions, no escape. The common reaction to this requirement is: ‘‘Good heavens, my key people are far too busy to be sidelined for an entire week. It simply cannot be done.’’ This process is driven by the objective of eliminating waste, with all activity being categorized from the customers’ viewpoint.

The perspective of value stream is different from other improvement methodologies such as Total Quality Management and others that focus on improving function rather than a process, with value stream approach the focus is from the time when the customer demand is initially recognized to the time the product is shipped. The intention is to determine how significant the process can be accelerated and non-value adding activities eliminated. Thus an individual function is scrutinized vertically across the entire company.

The Value Stream Mapping

Lean Manufacturing System

In relation to the above discussion of Lean Philosophy then the definition of Lean Manufacturing System can be derived as a set of tools and methodologies that aims for the continuous elimination of all waste in the production process. Therefore it is a system of approach to identifying and eliminating waste (non-value added activities) through continuous improvement by streaming the product at the pull of the customer in pursuit of perfection. The major benefits of this system are lower production costs; increased output; and shorter production lead times.

Toyota is the major beneficiary from the application of the Lean Manufacturing System with years the company has continuously improving the system and uses it as a competitive advantage tool in the market. The summary of 7 Principles of Toyota Production System is given here-under:

      1.     Reduced Setup Times:

All setup practices are wasteful because they add no value and they tie up labor and equipment. By organizing procedures, using carts, and training workers to do their own setups, Toyota managed to slash setup times from months to hours and sometimes even minutes.

      2.     Small-Lot Production:

Producing things in large batches results in huge setup costs, high capital cost of high-speed dedicated machinery, larger inventories, extended lead times, and larger defect costs.

      3.     Employee Involvement and Empowerment: 

Toyota organized their workers by forming team and gave them the responsibility and training to do many specialized tasks.

      4.     Quality at the Source: 

To eliminate product defects, they must be discovered and corrected as soon as possible.  Since workers are at the best position to discover a defect and to immediately fix it, they are assigned this responsibility.

  

      5.     Equipment Maintenance: 

Toyota operators are assigned primary responsibility for basic maintenance since they are in the best position to defect signs of malfunctions.

      6.     Pull Production: 

To reduce inventory holding costs and lead times, Toyota developed the pull production method wherein the quantity of work performed at each stage of the process is dictated solely by demand for materials from the immediate next stage.

      7.     Supplier Involvement: 

Toyota treats its suppliers as partners, as integral elements of Toyota Production System (TPS). Suppliers are trained in ways to reduce setup times, inventories; defects, machine breakdowns etc., and take responsibility to deliver their best possible parts.

The summary of Lean Manufacturing Tools and Methodology

Conclusion

The Value Stream Analysis and the Lean Manufacturing System as holistic approach provides competitive advantage once modeled to fit into the company’s manufacturing system in line with culture and core values of the company. The system needs to be tailored in such a way that it concur with the company’s culture.

References

1.     Carreira, Bill. Lean Manufacturing That Works: Powerful Tools for Dramatically Reducing Waste and Maximizing Profits. New York: AMACOM, 2005.

2.     http://1000advices.com/guru/processes_lean_tps_7principles.html