Lean Manufacturing: Business Bottom-Line Based

278 Pages·2010·4.155 MB·\278

by  John X. Wang (Author)

LEAN
MANUFACTURING
Business Bottom-Line Based
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LEAN
MANUFACTURING
Business Bottom-Line Based
John X. Wang
Boca Raton London New York
CRC Press is an imprint of the
Taylor & Francis Group, an informa business
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CRC Press
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© 2011 by Taylor & Francis Group, LLC
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Version Date: 20140514
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The cities have engineered my dreams.
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Contents
Preface .....................................................................................................................xv
About the Author ...............................................................................................xvii
1. Introduction: Five Stages of Lean Manufacturing ..................................1
1.1 Lean Manufacturing ............................................................................1
1.2 Industrial Dynamics and Bullwhip Effect .......................................3
1.3 Three Toolboxes for Lean Manufacturing ........................................5
1.3.1 Toolbox 1: From 5S to Kanban ...............................................5
1.3.1.1 The 5S System ...........................................................5
1.3.1.2 Cellular Manufacturing ..........................................6
1.3.1.3 Kaizen ........................................................................7
1.3.1.4 Kanban .......................................................................7
1.3.2 Toolbox 2: From Lean Metrics to Standard Rate .................8
1.3.2.1 Lean Office ................................................................8
1.3.2.2 Single Minute Exchange of Die (SMED) ...............8
1.3.3 Toolbox 3: From Takt Time to Workflow Diagram .............8
1.3.3.1 Total Productive Maintenance..............................10
1.3.3.2 Value Stream Mapping ..........................................11
1.4 Let’s Play a “Lean” Game: Manufacturing a Gyrocopter .............11
1.4.1 Materials, Tools, and Steps for Manufacturing
the Gyrocopter .......................................................................12
1.4.2 Establish an Assembly Line for Manufacturing
Gyrocopters ............................................................................13
1.4.3 Develop Cost Functions for Manufacturing
Gyrocopters ............................................................................15
1.4.4 Ground Rules and Course for Playing the Lean
Manufacturing Game ...........................................................15
1.4.4.1 Ground Rules ..........................................................15
1.4.4.2 Course of the Game ...............................................16
1.4.4.3 End the Game .........................................................17
1.4.5 Bullwhip Effect Typical Results for Playing the Lean
Manufacturing Game ...........................................................17
1.5 Five Stages of Lean Manufacturing: Business Bottom-Line
Based ....................................................................................................19
2. Put Business Bottom Line First: Transfer Function
for Production Cost ......................................................................................23
2.1 Production Transfer Function ..........................................................23
2.2 Short-Term vs. Long-Term Production Transfer Functions ..........24
vii
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viii Contents
2.2.1 Lean Manufacturing: Optimize Short-Term
Production Transfer Function ..............................................24
2.2.2 Six Sigma: Optimize Long-Term Production
Transfer Function ..................................................................24
2.3 Short-Term Transfer Function for Production ................................25
2.4 Transfer Function for Marginal Cost ...............................................27
2.5 The Law of Diminishing Returns: Key to Understanding
Lean Manufacturing ..........................................................................29
2.6 Transfer Function for Average Fixed Cost ......................................30
2.7 Transfer Function for Average Variable Cost .................................32
2.8 Transfer Function for Average Total Cost .......................................33
2.9 Transfer Function for Long-Term Cost Analysis ...........................35
2.10 Goal Tree and Success Analysis: From Goal Setting
to Successful Goal Setting .................................................................38
3. Understanding the Voice of Customers: The Essential Elements ......43
3.1 Voice of Customers: Relentlessly Customer Focused ....................43
3.2 Voice-of-Customers Capability: Critical Elements ........................45
3.2.1 Top-Level Leadership and Sponsorship ............................46
3.2.2 Turn Voice of Customers into Stories with Business
Values ......................................................................................46
3.2.3 Independent but with Traction across the
Organization and Beyond ....................................................47
3.2.4 Strategic Asset Informing Policy, Strategy,
Operations, and Communications ......................................47
3.2.5 Right Level and Mix of Skills and Experience in the
Team and Wider Networks ..................................................48
3.3 Voice of Customers’ Role and Responsibilities ..............................49
3.4 Analyzing Voice of Customers: Law of Demand ..........................50
3.4.1 The Law of Diminishing Marginal Utility ........................51
3.4.2 The Law of Equi-Marginal Utility per Dollar ...................51
3.4.3 Condition of Consumer Optimum: Utility
Maximization .........................................................................53
3.5 Maximizing Utility to Customers ....................................................53
3.5.1 Use Indifference Curve to Represent Customers’
Level of Preference ................................................................54
3.5.1.1 Degree of Substitution ...........................................54
3.5.1.2 Perfect Substitution ................................................55
3.5.1.3 Perfect Complements .............................................56
3.5.2 Use Budget Line to Reflect Customers’
Purchase Power .....................................................................57
3.5.2.1 Budget Line, Consumption Possibility Line,
Budget Constraint ..................................................57
3.5.2.2 Budget Equation .....................................................58
3.5.2.3 Shifts of Budget Line ..............................................58
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Contents ix
3.5.2.4 A Change in Prices .................................................59
3.5.2.5 A Change in Income ..............................................59
3.5.2.6 Consumer Optimum .............................................60
3.6 Kano Model: Integrate the Elements for Voice of Customers ......61
4. Balance Production and Demand: Value Stream Mapping .................63
4.1 What Are Value Streams? .................................................................63
4.2 What Is Value Stream Mapping? ......................................................64
4.3 How to Complete Value Stream Mapping ......................................66
4.4 Guidelines for Developing Value Stream Mapping ......................68
4.5 Kaizen Event Analysis for Value Stream Mapping .......................71
4.5.1 Purpose ...................................................................................71
4.5.2 Benefits ....................................................................................71
4.5.3 Kaizen Event Analysis Guideline .......................................72
4.6 Business Bottom-Line Analysis of Value Streams .........................73
4.6.1 Value Stream Measures ........................................................74
4.6.2 Traditional Product-Costing Systems: Problems
with Overhead .......................................................................76
4.6.3 Activity-Based Costing (ABC) .............................................77
4.6.4 How Is Activity-Based Costing Different from
Traditional Product Costing ................................................79
5. From Lognormal to Cobb–Douglas Distribution:
Lean Production Analysis ...........................................................................83
5.1 Technology: The Production Function ............................................83
5.2 Long-Run and Short-Run Production Functions ...........................84
5.2.1 Long-Run Production Function ...........................................85
5.2.2 Short-Run Production Function ..........................................86
5.3 Three Stages of Production ...............................................................87
5.4 Lognormal Distribution ....................................................................92
5.5 Cobb–Douglas Production Function ...............................................94
5.6 Quantifying Additional Profit from Productivity Gains .............96
5.6.1 Could Sell More Products if Produced More ....................97
5.6.2 Could Not Sell More Products if Produced More .............97
5.7 Total Factor Productivity ...................................................................98
5.7.1 Constant Returns to Scale ....................................................98
5.7.2 Assess Total Factor Productivity .........................................99
5.7.3 New Product Development: Demands
for Factor Inputs ...................................................................101
6. Business Cycles and Demand Fluctuations: Time-Critical
Analysis and Decision Making ...............................................................103
6.1 Business Cycles and Demand Fluctuations .................................103
6.2 Regression Analysis: Understanding Customer
Demand Statistically ........................................................................107
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