Contents
Introduction xiii
Chapter 1 Lean Basics 1
Materials Management 1
Traditional Planning and Control Framework 2
Enterprise Resource Planning (ERP) 2
Problems with ERP in Make-to-Order Environments 4
What Is at Issue? 4
Five Lean Principles 6
Specify What Creates Value from the Customer’s Perspective 7
Identify All Steps across the Whole Value Stream 7
Make Those Actions That Create Value Flow 7
Only Make What Is Pulled by the Customer Just inTime 7
Strive for Perfection by Continually Removing Successive Layers of Waste 7
Lean Focuses on Three Major Areas of Waste 9
House of Toyota Framework 9
House of Toyota: Operational Stability 10
House of Toyota: Just in Time 11
House of Toyota: Jidoka 12
House of Toyota: Goals 12
House of Toyota: Improvement and Respect 13
Lean: Additional Considerations 14
A Toyota Leader’s View of the Toyota Production System 15
Technical 16
Management 16
Philosophy/Basic Thinking 17
Planning and Control Hierarchy 17
Lean Planning and Control Chart 18
Leveling Production 20
Pull Systems 21
Flow 21
Interval as Lot Size 22
Chapter 2 E xecutive S&OP , Forecasting, and Customer
Relationships 23
Executive Sales and Operations Planning 23
Role of Executive S&OP in Lean 23
Lean Manufacturing 24
Executive S&OP 24
What Is Executive S&OP? 24
Executive S&OP Focus 25
Executive S&OP Process 26
Product Families 28
Aligning Families and Resources 29
Takt Time and Executive S&OP 30
What Does Takt Time Do? 31
Forecasting 31
Forecasting Perspective 32
Forecasting Basics 32
Demand Patterns 33
Dependent vs. Independent Demand 33
What Should Be Forecast? 33
General Methods of Forecasting 33
Qualitative Techniques 34
Quantitative Techniques 34
Extrinsic Techniques 35
Pyramid Forecasting 35
Forecasting as a Process 36
Ways to a Better Forecast 37
An Alternative to Forecasting: Supplier Partnerships 37
Developing Suppliers as Partners 38
Partners vs. Vendors 38
Chapter 3 Leveli ng and Heijunka 41
Leveling Value Streams 41
Mix and Volume Variability Definitions 43
Buffer with Finished Goods Inventory (a la TPS): Make to Stock 43
Stock Amount 43
Bill of Materials Shape Helps Dictate Strategy 44
How Lean Fits In: Make to Stock 45
Leveling Production Mix vs. Sales Mix: Heijunka Scheduling 46
Leveling Mix 47
Leveling Mix in a High-Product-Mix Environment 48
Buffer Demand Variability with Lead Time (Backlog): Make to Order 52
BOM Shape 52
How Lean Fits In 53
Managing Backlog 53
Chase 54
Takt Time and Chase 55
Hybrid 56
BOM Shape 56
How Lean Fits In: Postponement 57
MPS and Heijunka 57
Master Production Schedule 57
The Master Schedule 58
Heijunka 59
Work Like the Tortoise, Not the Hare 59
Concluding Observations 62
Chapter 4 D ependent Demand Materials 65
Benefits of Creating Flow 66
Batch Manufacturing 67
Lean Process Flow 67
Operator Balance Chart 69
Batch Flow 71
One-Piece Flow 72
First-in–First-Out Flow 73
Typical FIFO Lane Rules 74
Material Planning 74
Material Planning Horizons 74
Long-Term Planning 75
Short-Term Planning 76
Execution 81
Mix Issues 82
Chapter 5 C apacity Management and Shop Floor Control 83
Issues with Traditional Capacity Planning 87
Capacity Planning in Lean 88
Value Stream Loops 89
Capacity and Pull 93
Standardized Work in Process 99
Shop Floor Control 100
Heijunka, Flow, and Visual Control as Shop Floor Control 102
Staffing and Takt Time 104
Operator Balance Chart 105
Chapter 6 Inventory Management 107
Traditional Inventory Management 108
The Importance of Inventory Management: Customer Satisfaction and
Company Financials 108
Concepts of Traditional Inventory Management 109
Order Quantity 112
When to Order 112
Lean Inventory Management 114
Inventory as Waste 114
Inventory Management in Lean 115
Visual Control 115
Approaches to Reducing Inventories 116
Supermarket Sizing as a Way to Reduce Inventory 117
Kanban Sizing 118
Constant Quantity, Nonconstant Cycle (Timing) 118
Constant Cycle, Nonconstant Quantity 118
Supermarket Sizing 119
WIP Inventory: FIFO Management 119
Reducing Pipeline Inventory: Kanban—Visual Card 120
Inventory Reduction through Reducing Lot Sizes 121
Point of Sale Data 123
Chapter 7 Lot Sizing 125
Lot Sizing in Lean 125
One Piece 125
Every Part Every Interval (EPEI) 126
Why Should We Strive for Smaller Intervals? 127
So How Do We Determine the Interval? 129
An Example: Murphy’s Toys Trim Data 130
Interval and Capacity 132
Balancing Work (Operator Balance Charts) 132
Lot Sizing as Part of Scheduling 133
Applying the EPEI to Traditional Planning Systems: The Period Order Quantity 133
Mix Issues 134
Volume Variability 135
Mix Variability 135
Making Sense of High-Mix Value Streams 137
What Do We Gain by Increasing the Interval? 137
Interval as Goal Setting 139
High-Mix Interval 140
Determining the Interval 140
Interval in Value Stream Loops 141
Chapter 8 Warehousing and Logistics 143
Traditional Physical Control of Inventories 143
Traditional Relationships 144
Packaging—Readying an Item for Shipment 145
Overall Warehouse Setup and Item Locations 145
Traditional Logistics 145
Logistics Skill 146
Freight Cost 146
Distribution Requirements Planning 147
Lean Warehousing 148
Controlling Space 153
Controlling Labor 156
Lean Logistics 158
Inbound Logistics 159
Outbound Logistics 161
Zone Skipping 162
Packaging 162
Product Availability and Its Effect on Logistics 162
Collaboration 164
Visibility and Reliability 165
Chapter 9 Quali ty Control 167
Lean Quality 168
Lean and Total Quality Management—Visual Control 170
Poka-Yoke Methods and Examples 171
Lean and Quality Control—Jidoka/Autonomation 171
Lean and Total Quality Control Management—Companywide 172
TS 16949 173
Seven Lean Quality Tools 175
Chapter 10 P urchasing 181
Developing a Systems Perspective for Purchasing 181
Traditional Purchasing 182
Lean Purchasing 183
Keiretsu 184
Lean Partnership 185
Quality 187
Supplier Quality Audits 188
Cost 188
Lean Purchasing and the “China Price” 190
Delivery 192
Improving Delivery and Flexibility by Reducing Lead Times and Lot Sizes 193
Reducing Supplier Base 194
Keeping Critical Items Internal 194
Measuring Delivery Performance 195
Supplier Scorecard 195
Technological Capabilities 196
Design and Development 196
Chapter 11 Lean System 199
Summary and Conclusions 219
Appendix 1: The Myth of the Bell -Shaped Curve: Inventory Level
and Customer Service 221
Appendix 2: The Bullw hip Eff ect 225
Appendix 3: Lean Implementation Methodology 229
Lean Transformation Methodology 229
Approach for Implementing a Production Lean Transformation 229
Executive Overview 230
Lean Assessment and Data Readiness 230
Product Family Creation 231
Value Stream Maps—Current and Future State Maps 231
Takt Planning Decisions 232
Demand Analysis and Leveling Strategy 232
Equipment and Interval Decisions 232
Standard Work and Operator Balance Charts 233
Shared Resources Approach 233
FIFO and Flow Creation 234
WIP Burn-Down Plan 234
Supermarket Management 234
Demand Leveling and Heijunka Creation 235
Visual Factory—5S/Visual Workplace Training 235
Continuous Improvement 235
Quality 235
Metrics 236
Appendix 4: Using Your Value Stream Map for Green Initiatives
and Risk Management 237
Lean Green 238
Risk Management 240