Lean for the Process Industries
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1 Lean for the Process Industries Dealing with Complexity PETER L KING Ltfi] CRC Press \ V J Taylor & Francis Croup Boca Raton London New York CRC Press is an imprint of the Taylor & Francis Croup, an informa business A PRODUCTIVITY PRESS BOOK
2 Contents Acknowledgments Introduction xv xvii PART I Lean and the Process Industries Chapter 1 Lean Overview: Principles and Tools 3 Origins of Lean 3 TPS Becomes the New Production Paradigm 6 Essence of Lean 8 Fourteen Lean Tools 11 Lean Tool 1: Value Stream Mapping (VSM) 11 ' Lean Tool 2: Takt Time 11 Lean Tool 3: Kaizen 12 Lean Tool 4: 5S 12 "Lean Tool 5: Jidoka 12 Lean Tool 6: Single Minute Exchange of Dies (SMED)...13 Lean Tool 7: Poka-Yoke 13 Lean Tool 8: Five Whys 13 Lean Tool 9: Standard Work 13 Lean Tool 10: Total Productive Maintenance (TPM) 14 Lean Tool 11: Cellular Manufacturing 14 Lean Tool 12: Heijunka 14 Lean Tool 13: Just-In-Time (Pull) 15 Lean Tool 14: Kanban 15 Further Information 15 Lean Today 16 Summary 17 Chapter 2 Distinguishing Characteristics of Process Industry Manufacturing 19 Process Industries versus Assembly Operations 19
3 vi Contents Characteristics That Distinguish the Process Industries 21 The Three Vs: Volume, Variety, and Variability 21 Capital Intensive versus Labor Intensive 22 Throughput Is Limited by Equipment Rather Than by Labor 23 Equipment Is Large and Difficult to Relocate 24 Processes Are Difficult to Stop and Restart 24 Product Changeover Issues Are Complex 24 Finished Product Inventory versus WIP 25 Hidden WIP 26 Material Flow Patterns in Assembly and Process Plants (SKU Fan Out) 26 Examples of "V" Type Process in Process Plants 28 Product Differentiation Points. 32 Summary 33 Chapter 3 The Seven (or Eight, or Nine) Wastes in the Process Industries 37 Value and Waste.:-. x 37 Waste of Overproduction 38 Waste of Time on Hand (Waiting) 40 Waste in Transportation : 42 Waste of Processing Itself...' 43 Waste of Stock on Hand (Inventory) 44 Capacity Differences: Rate Synchronization 45 Bottleneck Protection 46 Campaign Sizes 46 Inappropriate Product Differentiation 46 Tank Heels 47 Waste of Movement 47 Waste of Making Defective Parts 48 Waste of Human Creativity 49 Time as a Waste 50 Necessary versus Unnecessary Waste 51 Summary 52
4 Contents vii PART II Seeing the Waste Chapter 4 Value Stream Mapping the Process Industries 57 Introduction to Value Stream Mapping 57 Benefits of a Value Stream Map 58 Generating the Map 59 Direction of Flow 60 Product Families 60 Takt and Cycle Time 61 Takt Time 61 Cycle Time 62 Takt Rate versus Takt Time 63 Units of Production 63 Where td'begin 66 Level of Detail 66 Process Box '. 68 Data Boxes 69 Customer Data Box 69 Process Step Data Box 70 Inventory Data Box 73 Transportation Data Box 74 Supplier Data Box 75 Information Flow 75 The Timeline 78 An Example VSM 81 Additional VSM Best Practices 81 Parallel Equipment 81 Logical Flow versus Geographic Arrangement 84 Summary 88 Chapter 5 Reading and Analyzing the Current State Value Stream Map 89 Analyzing the Current State Map 89 Voice of the Customer 90 Waste 90 Non-Value-Adding Activities 91
5 viii Contents Flow and Bottlenecks 91 Variability 92 Other Opportunities 92 Learning from Material Flow 93 Learning from Information Flow 98 Tools to Get to Root Cause 101 The Five Whys (5W) 101 Detailed Process Mapping 102 The Ishikawa Diagram 102 Cross-Functional Process Mapping 102 Creating the Future State VSM 104 Summary 107 PART HI -V Lean Tools Needing Little Modification Chapter 6 Total Productive Maintenance TPM and Lean Synergy 112 TPM in the Process Industries 113 TPM and Reliability-Centered Maintenance 114 The Benefits of TPM 114 TPM Measures 114 Overall Equipment Effectiveness 115 Availability 115 Performance 115 Quality 116 UPtime 116 Calculation of OEE and UPtime 118 Calculation of OEE 118 Calculation of UPtime 120 VSM Data Boxes: OEE or UPtime 120 Summary 121 Chapter 7 Setup Reduction and SMED 123 SMED and Its Origins 123 Ill
6 Contents ix SMED Concepts 124 Product Transitions in the Process Industries 126 A Changeover Where All Tasks Are Completely Manual 127 A Changeover Completely in Chemistry and/or Physics 128 A Changeover That Includes a Combination of Manual Tasks and Chemistry/Physics 128 SMED beyond Product Changes 130 A Non-Manufacturing Example 131 Summary 132 Chapter 8 Visual Management 135 Introduction to the Visual Plant 135 Visual Work.Area 137 Visual Displays 138 Visual Scheduling 139 Andons 144 Metrics 144 Management by Sight and Frequent Communication 145 Process Industry Challenges 145 Summary 147 Chapter 9 Kaizen Events 149 Kaizen by Specific Events 149 Quality Circles versus Kaizen Events 151 Steps in the Kaizen Event Process 151 Planning 152 Conducting the Event 153 Following-Up 154 ^Appropriate Event Scope Areas 154 Kaizen Dangers: The Root Causes of Kaizen Failures 155 Process Industry Unique Requirements 157 Kaizen Events as Six Sigma Projects 158 Summary 160
7 x Contents PART IV, Lean Tools Needing a Different Approach Chapter 10 Finding, Managing, and Improving Bottlenecks 163 Bottlenecks in Process Plants 163 Moving Bottlenecks 165 Recognizing Covert Bottlenecks 167 The Root Causes of Bottlenecks 168 Bottleneck Management: Theory of Constraints 171 Widening the Bottleneck: Lurking Bottlenecks 174 Summary 175 Chapter 11 Cellular Manufacturing in the Process Industries 177 The Process Layout (Pre-Cellular Manufacturing in Assembly Plants) 177 The Product Layout (Cellular Manufacturing in Assembly Plants) 178 Cell Application in the Process Industries 180 Typical Process Plant Equipment Configurations 181 Virtual Cells....? ~ 185 Case Study: Virtual Cell Implementation in a Synthetic Rubber Production Facility 189 The Result: Synthetic Rubber Virtual Work Cells 193 Steps in Virtual Work Cell Design 195 Step 1: Start with the Current State Value Stream Map..195 Step 2: Determine Preliminary Asset Groups or Virtual Cells 196 Step 3: Determine Preliminary Product Groupings (Group Technology) 196 Step 4: Assign Each Product Group to a Manufacturing Cell 196 Step 5: Define a Few Swing Products 198 Step 6: Review the Plan 198 Step 7: Document Virtual Cell Arrangements, Flow Patterns, Product Lineups, and Operating Rules 199 Step 8: Mark Each Cell Visually 199
8 Contents xi Step 9: Modify Scheduling Processes Accordingly 199 Step 10: Ensure that Appropriate Managing Processes Are in Place 199 Summary 201 Chapter 12 Product Wheels: Production Scheduling, Production Sequencing, Production Leveling 203 Solutions in Assembly Processes 203 Process Industry Challenges 205 A Process Industry Solution: The Product Wheel Concept 206 Product Wheel Design 209 Step 1: Determine Which Process Steps Should Be Scheduled by Product Wheels 211 Step 2: Analyze Product Demand Variability 212 Step 3: Determine the Optimum Sequence 215 Step 4: Calculate Shortest Wheel Time Possible (Available Time Model) 216 Step 5: Estimate Economic Optimum Wheel Time "(the EOQ Model) 217 Step 6: Determine the Wheel Time (Making the Choice) 219 Step 7: Calculate Inventory Requirements 222 Step 8: Fine-Tune the Design Step 9: Revise the Current Scheduling Process 225 Step 10: Create a Visual Display 225 Benefits of Product Wheels 226 Some Additional Points 227 Summary 228 Chapter 13 Postponement in the Process Industries: Finish to Order 229 Finish to Order 230 Examples of Finish to Order: FTO in Assembly 230 FTO in the Process Industries 232 FTO within Process Plants 232
9 xii Contents The Benefits of FTO 233,' Example of FTO in a Process Plant 234 A Further Example: Bond to Order 237 Summary 240 Chapter 14 Pull Replenishment Systems 241 What Is Pull? 241 Pull in Assembly 243 Difficulties in Process Plants 245 Push-Pull Interface 246 ConWIP 250 Development of Pull on the Sheet Goods Process 254 Visual Signals 258 When to Start Pulling: The Sequence of Implementation 260 Creating Pull 261 Value Stream Focus 263 Traditional Pull Strategies and Signals 265 Push in Real Life 266 Summary 267 Chapter 15 Supermarket Design 269 Understanding the Supermarket Concept 270 Inventory Types and Supermarkets 271 Inventory Components Defined: Cycle Stock and Safety Stock 272 Calculating Cycle Stock 275 Calculating Cycle Stock: Fixed Interval Replenishment Model 275 Calculating Cycle Stock: Fixed Quantity Replenishment Model 278 Calculating Safety Stock 281 Variability in Demand 281 Variability in Lead Time 283 Combined Variability 284 Cycle Service Level and Fill Rate 284 Example: The Product Wheel for Forming Machine 1 286
10 Contents xiii Alternatives to Safety Stock 290 Signaling Methods 291 The Role of Forecasting 292 Summary 293 Chapter 16 The Importance of Leadership and Robust Business Processes 295 Business Practices and Targets 296 ABC Classification 296 Customer Lead Times 297 Customer Service Levels 298 MTS, MTO, and FTO 298 Demand Variability Analysis 298 ^Protection (Safety Stock or Contingency Processes) SKU Rationalization 299 Integrated Business and Operations Planning 300 Poor Business Practices 300 Dictating Low Safety Stock Levels 300 Expecting Abnormally Short Lead Times 300 Expecting Perfect Customer Service 301 Reducing Inventory at Year End 301 Pulling Next Quarter's Sales Ahead 301 Obsessing over Cost Reduction 302 / Inappropriate Use of Metrics 302 Summary 303 PART V Appendices Appendix A: Determination of Appropriate Raw Material Inventory 307 Appendix B: References 311 Index 313 About the Author 333
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