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Tuesday, April 20, 2010

Laws of Manufacturing

Manufacturing operations are governed by a series of laws.  Wallace J. Hopp and Mark L. Spearman, developed and mathematically proved a series of fundamental relationships in manufacturing.  These were captured in their book Factory Physics.  The "laws" of Factory Physics describe the underlying logistical behavior of manufacturing systems, including the fundamental relationships between basic performance measures such as throughput, Work-In-Process, manufacturing cycle time, and process variability. By understanding these relationships, and using the powerful analytical tools described in the text, managers can diagnose their manufacturing systems and make major improvements in throughput, cycle time, customer service, and quality.

In particular, these laws of manufacturing give managers a way to identify the largest sources of waste and variability and to compute the effect of alternative improvements before implementing them. 

Here, the top ten laws of manufacturing by Hopp and Spearman are summarized:

  1. Little's Law: Work in progress = Throughput X Lead Time.  This is the basis of Factory Physics.  So if the throughput is 100 units per week and the lead time is 2 weeks, then the WIP is 200 units.
  2. Law of Capacity: In steady state, all plants will release work at an average rate that is strictly less than the average capacity.
  3. Law of Inventory: In an unconstrained system, inventory builds relentlessly.
  4. Law of Bottleneck: Accumulation of inventory is not necessarily an indication of a bottleneck (or a constraint).
  5. Law of Variability: Increasing variability always degrades the performance of production system.
  6. Law of Corollary: In a line where releases are independent of completions, variability early in a routing increases cycle time more than equivalent variability later in the routing.
  7. Law of Conservation of Material: In a stable system, over the long run, the rate out of a system will equal the rate in, less any yield loss plus any parts production within the system.
  8. Law of Utilization: If a workstation increases utilization without making any other changes, average WIP and lead time will increase in a highly non-linear fashion.
  9. Law of Move Batching: Cycle times over a segment of a routing are roughly proportional to the transfer batch sizes used over that segment, provided there is no waiting for the conveyance device.
  10. Law of Variability Buffering: Variability in a production system will be buffered by some combination of inventory, capacity, or time.
For Lean, the implications of these laws are profound.  Variation is the enemy of planning and control systems must recognize these laws.  The laws of manufacturing are of prime importance for a deeper understanding of scheduling.

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