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How to Implement Lean Manufacturing About the Author LONNIE WILSON has been teaching and implementing Lean techniques for more than 39 years. His experience spans 20 years with an international oil company where he held a number of management positions. In 1990 he founded Quality Consultants which teaches and applies Lean techniques to small entrepreneurs and Fortune 500 firms, principally in the United States, Mexico, and Canada. How to Implement Lean Manufacturing Lonnie Wilson New York Chicago San Francisco Lisbon London Madrid Mexico City Milan New Delhi San Juan Seoul Singapore Sydney Toronto Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. ISBN: 978-0-07-162508-1 MHID: 0-07-162508-9 The material in this eBook also appears in the print version of this title: ISBN: 978-0-07-162507-4, MHID: 0-07-162507-0. All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps. McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. To contact a representative please e-mail us at [email protected]. Information contained in this work has been obtained by The McGraw-Hill Companies, Inc. (“McGraw-Hill”) from sources believed to be reliable. However, neither McGraw-Hill nor its authors guarantee the accuracy or completeness of any infor- mation published herein, and neither McGraw-Hill nor its authors shall be responsible for any errors, omissions, or damages arising out of use of this information. This work is published with the understanding that McGraw-Hill and its authors are supplying information but are not attempting to render engineering or other professional services. If such services are required, the assistance of an appropriate professional should be sought. TERMS OF USE This is a copyrighted work and The McGraw-Hill Companies, Inc. (“McGraw-Hill”) and its licensors reserve all rights in and to the work. Use of this work is subject to these terms. Except as permitted under the Copyright Act of 1976 and the right to store and retrieve one copy of the work, you may not decompile, disassemble, reverse engineer, reproduce, modify, create derivative works based upon, transmit, distribute, disseminate, sell, publish or sublicense the work or any part of it without McGraw-Hill’s prior consent. You may use the work for your own noncommercial and personal use; any other use of the work is strictly prohibited. Your right to use the work may be terminated if you fail to comply with these terms. THE WORK IS PROVIDED “AS IS.” McGRAW-HILL AND ITS LICENSORS MAKE NO GUARANTEES OR WAR- RANTIES AS TO THE ACCURACY, ADEQUACY OR COMPLETENESS OF OR RESULTS TO BE OBTAINED FROM USING THE WORK, INCLUDING ANY INFORMATION THAT CAN BE ACCESSED THROUGH THE WORK VIA HYPERLINK OR OTHERWISE, AND EXPRESSLY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, INCLUD- ING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. McGraw-Hill and its licensors do not warrant or guarantee that the functions contained in the work will meet your requirements or that its operation will be uninterrupted or error free. Neither McGraw-Hill nor its licensors shall be liable to you or anyone else for any inaccuracy, error or omission, regardless of cause, in the work or for any damages resulting therefrom. McGraw-Hill has no responsibility for the content of any information accessed through the work. Under no circumstances shall McGraw-Hill and/or its licensors be liable for any indirect, incidental, special, punitive, consequential or similar damages that result from the use of or inability to use the work, even if any of them has been advised of the possibility of such damages. This limitation of liability shall apply to any claim or cause whatsoever whether such claim or cause arises in contract, tort or otherwise. Contents Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv 1 What Is the Perspective of This Book? . . . . . . . . . . . . . . . . . . . . . . . . . 1 From a Practical Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 From an Engineering Viewpoint without Much Cultural Advice . . . 1 This Book Has a “How to” Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . 7 And to Those in Manufacturing Who Seek Huge Gains . . . . . . . . . . . 8 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2 Lean Manufacturing and the Toyota Production System . . . . . . . . . 9 The Popular Defi nition of Lean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 What Is Lean? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 What Did Ohno Say about the Toyota Production System? . . . . . . . . 10 The TPS and Lean Manufacturing Defi ned . . . . . . . . . . . . . . . . . . . . . . 10 Who Developed the TPS? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 The Two Pillars of the TPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 What Is Really Different about the TPS? . . . . . . . . . . . . . . . . . . . . . . . . . 12 The Behavioral Defi nition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 The Business Defi nition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Several Revolutionary Concepts in the TPS . . . . . . . . . . . . . . . . . . . . . . 22 The TPS Is Not a Complete Manufacturing System . . . . . . . . . . . . . . . 26 A Critical and Comparative Analysis of Various Philosophies . . . . . . 28 Where Lean Will Not Work… or Not Work Quite so Well . . . . . . . . . . 32 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 3 Inventory and Variation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Just Why Do I Have and Why Do I Need the Inventory? . . . . . . . . . . 42 What Is So Bad about Inventory? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 About Variation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Buffers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Kanban . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Kanban Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Finished Goods Inventory Calculations . . . . . . . . . . . . . . . . . . . . . . . . . 52 Kanban Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Make-to-Stock versus Make-to-Order Production Systems . . . . . . . . . 56 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 4 Lean Manufacturing Simplifi ed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 The Philosophy and Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 v vi Contents The Foundation of Quality Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Quantity Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 5 The Signifi cance of Lead Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Some History of Lead Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Benefi ts of Lead-Time Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Excalibur Machine Shop, Lead-Time Reductions . . . . . . . . . . . . . . . . . 75 Techniques to Reduce Lead Times . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 6 How to Do Lean—Cultural Change Fundamentals . . . . . . . . . . . . . . 87 Three Fundamental Issues of Cultural Change . . . . . . . . . . . . . . . . . . . 87 Some Cultural Aspects of a Lean Implementation Worthy of Further Thought . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 Appendix A—Problem Solving and Standardization: How Are They Similar? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 7 How to Do Lean—The Four Strategies to Becoming Lean . . . . . . . . 111 Overview of the Lean Implementation Strategies . . . . . . . . . . . . . . . . . 111 Implementing Lean Strategies on the Production Line . . . . . . . . . . . . 112 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 Appendix A—The Takt Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 Appendix B—The Basic Time Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 Appendix C—The Balancing Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 Appendix D—The Spaghetti Diagram . . . . . . . . . . . . . . . . . . . . . . . . . . 127 Appendix E—Value Stream Mapping . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 8 How to Implement Lean—The Prescription for the Lean Project . . . 135 An Overview on How to Implement Lean . . . . . . . . . . . . . . . . . . . . . . . 135 A Key Question to the Implementation . . . . . . . . . . . . . . . . . . . . . . . . . 136 Step 1: Assess the Three Fundamental Issues to Cultural Change . . . 138 Step 2: Complete a Systemwide Evaluation of the Present State . . . . 139 Step 3: Perform an Educational Evaluation . . . . . . . . . . . . . . . . . . . . . . 144 Step 4: Document the Current Condition . . . . . . . . . . . . . . . . . . . . . . . . 146 Step 5: Redesign to Reduce Wastes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 Step 6: Evaluate and Determine the Goals for This Line . . . . . . . . . . . 146 Step 7: Implement the Kaizen Activities . . . . . . . . . . . . . . . . . . . . . . . . . 146 Step 8: Evaluate the Newly Formed Present State, Stress the System, Then Return to Step 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 Lean Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 What to Do with the Plan? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 Appendix A—The Second Commitment Evaluation of Management Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 9 Planning and Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 Some Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 Contents vii Hoshin–Kanri Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Why Are Goals and Goal Deployment So Important? . . . . . . . . . . . . . 155 Policy Deployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 Leadership in Goal Development, Deployment, and Determining What “Should Be” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 10 Sustaining the Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 Why Is It So Important? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 How Do We Know There Is a Loss? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 What Is Process Gain? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 11 Cultures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 Background Information on Cultures . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 The Toyota Production System and Its Culture . . . . . . . . . . . . . . . . . . . 185 What Should We Do with Our Lean Culture? . . . . . . . . . . . . . . . . . . . . 187 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 12 Constraint Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 Bottleneck Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194 13 Cellular Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 Cellular Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 The Gamma Line Redesign to Cellular Manufacturing . . . . . . . . . . . . 197 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209 14 The Story of the Alpha Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211 How I Got Involved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211 Initial Efforts to Implement Cultural Change . . . . . . . . . . . . . . . . . . . . 211 Some of the Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214 Continuous Improvement, as It Should Be . . . . . . . . . . . . . . . . . . . . . . . 215 The Cool Story of SPC: SPC Done Right! . . . . . . . . . . . . . . . . . . . . . . . . 215 How Did the Alpha Line Management Team Handle the Fundamentals of Cultural Change? . . . . . . . . . . . . . . . . . . . . . . . . . . 218 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 15 The Story of the Bravo Line: A Tale of Reduced Lead Times and Lots of Early Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Background Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Implementing the Prescription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 The Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233 16 Using the Prescription—Three Case Studies . . . . . . . . . . . . . . . . . . . . 235 Why These Case Studies? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235 Lean Preparation Done Well: The Story of Larana Manufacturing . . . 236 viii Contents The Zeta Cell: A Great Example of Applying the Four Strategies to Reduce Waste and Achieve Huge Early Gains . . . . . . . . . . . . . . . 244 The Case of the QED Motors Company: Another Great Example of Huge Early Gains on an Entire Value Stream . . . . . . . . . . . . . . . . 254 Applying the Second Prescription at QED Motors—How to Implement Lean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259 17 The Precursors to Lean Not Handled Well . . . . . . . . . . . . . . . . . . . . . . 273 Background to the ABC Widgets Story . . . . . . . . . . . . . . . . . . . . . . . . . . 273 We Analyze the Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274 Summary of Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280 How Did the Management Team from ABC Widgets Handle the Fundamentals of Cultural Change? . . . . . . . . . . . . . . . . . . . . . . . 281 The Real Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282 Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282 18 An Experiment in Variation, Dependent Events, and Inventory . . . 285 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285 The Experiment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286 19 Assessment Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291 The Five Tests of Management Commitment to Lean Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291 The Ten Most Common Reasons Lean Initiatives Fail (in Part or Totally) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292 The Five Precursors to Implementing a Lean Initiative . . . . . . . . . . . . 292 Process Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 20 A House of Lean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301 Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311 Preface Why I Am Writing This Book I am writing this book for several reasons. First, I have been asked to. On numerous occasions, clients have asked me to write a book. The first time was on the subject of measurement system analysis (MSA); the second on statistical process control (SPC); the third time on statistical problem solving—and in the past five years I have been asked on no less than three occasions to condense my thoughts on Lean Manufacturing into book form. Writing a book is also somethingI have wanted to do, but just never had the time to do so. However, in the end, it was other reasons (which I later list in this chapter) that drove me to the effort. Second, I am very tired of seeing managers everywhere looking for this “silver bullet” called Lean “I Manufacturing. They see it as a catch-all for attacking n the choice between all their business woes—including poor profitability changing one’s mind and prov- and low levels of competitiveness—and transforming ing there’s no reason to do so, their business into the pinnacle of profitability. I want most people get busy on the to stand up and yell at the top of my lungs and make ” proof. it very clear that there is no silver bullet. In this regard, John Kenneth Galbraith I now offer up three quotes here. Third, as a consultant I frequently find myself quite frustrated in being unable to sell Lean “M Manufacturing to a facility that desperately needs it. en stumble over the Maybe this book can put my thoughts into a clear truth from time to time, but and convincing format that I am unable to otherwise most pick themselves up and convey. hurry off as if nothing hap- Perhaps I get particularly frustrated because I pened.” embody a tough combination of characteristics. For Sir Winston Churchill instance, I am reasonably talented in what I do, which sadly helps me less than you would think when it “O comes to selling the concept of Lean Manufacturing. pportunity is missed In addition, I am burdened with a high degree of by most people because it is frankness. And finally, I am one of the world’s worst dressed in overalls and looks salesmen. I laughingly tell people I could not sell free ” water to millionaires dying of thirst in the desert. like work. Maybe I’m not that bad—but when it comes to selling Thomas Edison things, both physical and ideological, I have a lot of ix

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