Just-in-Time Systems

Reducing Variance, Waste and Lead Time in the Supply Chain

Topics to be Covered Review of JIT & Waste Objectives of JIT JIT Principles JIT and Variance JIT Tools and Procedures

JIT: Definitions? JIT Head Chicken JIT Oh JIT (O´JIT) Tough JIT Strate JITs

JIT Planes Bull JIT Le JIT JIT Lag When the JIT hits

the fan.

What is JIT?

a corporate system designed to produce output within the minimum lead time and at the lowest total cost by continuously identifying and eliminating all forms of corporate waste and variance.

a corporate strategy a philosophy Focus of JIT: • variance & waste

Waste Types

Chrysler Video on Waste

Seven Basic Types of Waste

Transportation waste Process Waste Inventory Waste Waste of motion Waste from product defects Waiting time Overproduction

Common Causes of Waste Layout (distance) Long setup time Incapable

processes Poor maintenance Poor work

methods Lack of training

Inconsistent performance measures

Ineffective production planning

Lack of workplace organization

Poor supply quality/reliability

Objective of JIT Produce only the products the

customer wants. Produce products only at the rate

that the customer wants them. Produce with perfect quality Produce with minimum lead time. Produce products with only those

features the customer wants.

Objectives Produce with no waste of labor,

material or equipment -- every movement must have a purpose so that there is zero idle inventory.

Produce with methods that allow for the development of people

JIT Principles

Create flow production • one piece flow

• machines in order of processes • small and inexpensive equipment • U cell layout, counter clockwise • multi-process handling workers • easy moving/standing operations • standard operations defined

JIT Principles - Slide 2 Establish “TAKT” time • rate at which the customer

buys a product Build Pull Product • use of kanban system

JIT Tactics Single Minute

Exchange of Dies (SMED)

Statistical Process Control

Use of standard containers

Doable stable schedules with adequate visibility

TAKT-Time 5-S Program Kaizen Event

Visual control Flexible workers Tools at the point of

need Product redesign Group Technology Total Productive

Maintenance

Balanced Production Three elements • TAKT time • Work sequence • Standard WIP Objective • Build at rate that the customer wants

work • Balance the system to maximize efficiency at this rate

TAKT Time Example Net Available Operating Time • Time per shift 480´ (minutes) • Breaks (2 @ 10´) - 20´ • Clean-up - 20’ • Lunch - 30’ • NAOT/shift 410´ Customer Requirements • Monthly 26,000 units/month

• No. Working Days 20 days/month • CR/Day 1,300 units/day TAKT Time • 410’ x 60” x 3 shifts (73,800) divided by

1,300 • 57.769 seconds per part or 57"

TAKT Time TAKT • the beat • (Net Available Operating

Time) / Customer Requirements • time periods must be

consistent Example of calculation

SMED Setup reduction Elements • Internal Setup • setup while machine idle • External Setup • setup while machine busy • Adjustment • run-ins, calibration

SMED Process Study current process • “as is” • video tape • Who owns the video tape? Convert internal to external setup Eliminate the need for Adjustment Eliminate need for fastening Goal • setup time < 10 minutes

Push Vs. Pull Scheduling Push Scheduling • traditional approach • “move the job on when finished” • problems - creates excessive inventory Pull scheduling • coordinated production • driven by demand (pulled through

system) • extensive use of visual triggers (production/withdrawal kanbans)

Visual Control A system for making problems obvious

without the need for sophisticated monitoring computer systems

• Andon light system • Kanbans Create a sense of urgency Clearly identify where the problems are

located

Supplier Partnerships Reliance on suppliers for • problem solving expertise • quality at the source • timely communication • participants in cost reduction

programs Increased reliance on supplier

certification

Standardization/Simplification Eliminate inherent sources of variance eliminate opportunity for human discretion

error Examples • Container sizes • MacDonalds with interaction with

customers Consistent with Deming Wheel • Standarize expose problems solve problems implement new methods

Other Techniques Milk runs Poka-Yoke Systems Continuous Improvement Programs

(CIP)

Video

JIT at McDonalds

JIT - Day 2

New Developments in JIT

JIT & Lean Manufacturing Lean Manufacturing • Doing more with less • Less of: • materials, time, resources • overhead, people • waste • money JIT is a subset of Lean

Manufacturing Now seen as most applicable to

mass production settings

Kaizen Event A relatively new concept • Kaizen Blitz, Gemba Kaizen Process focused Operates at two levels • on-going process of identifying

opportunities for improvement

• strategic, top management

•short-term project lasting 1-4 days • training, documentation of process “as is”,

identification of potential improvements, implementation, presentation, action list

Kaizen Events - Key Traits Very short-term, finite in life Highly focused Creativity before capital Team-oriented Action-Oriented Verifiable Metrics Repetitive

Kaizen Event Process Top management buy-in • Public Kaizen Events Assessment of current processes • top management

• Target Processes • training • documentation - “as is” • opportunities • change • presentation/action list

Typical Metrics Floor space occupied by process being

assessed Operators required per day Distance traveled by an order within the

process WIP Inventory Setup (measured in minutes) Quality recommendations generated Safety Improvements implemented

Application of Kaizen Events Shop floor Finance • 401 K plan Purchasing Health Care Services

Example of Impact of Kaizen Event Impact of Kaizen Events - Overall Benefits (January 1, 1996 through December 31, 1996

Improvement M________ Before Kaizen Achievement Improvement

Floor Space ( ) 56,000 39,000 30%

Operators/Day 165 125 24%

Distance Traveled 91,000 ft. 15,000 ft. 34%

Inventory (WIP pieces) 4,760,000 2,570,000 46%

Setup Time Reduction 1,660 _______ 1,660 _________ 72%

Safety Improvements 200 improvements implement

JIT 11 Based on system developed by

Bose of Framingham, MA Integration of JIT principles and

practices into the supply chain JIT II • long term collaborative relationships

with suppliers present • suppliers to place personnel in plants

of the buying organization

Limitations of JIT Preconditions to JIT • trust must be present • labor/management • suppliers/consumers

• recognition of processes • familiarity with problem solving • quality at the source • agreement over value and waste

Limitations of JIT Right Settings • applicable in growth to maturity phases of Product Life Cycle • standard product • Steinway and JIT

• standard/fixed pay-rate • problems with piece-rate scheme Universal agreement that change

needed

Theoretical Benefits of JIT Unpleasant surprises

eliminated Less

computerization • visual control Improved quality WIP reduced Better

communications

Less pressure on receiving docks and incoming inspection areas

Lower costs Change in attitude • Defects are

treasures

Dealing with Variance Four major stances: • Buffer against it • Ignore it • Manage it • Eliminate it All forms of variance create cost

JIT & Variance Variance a fact of life Comes from many sources • internal scheduling changes, scheduling practices,

manufacturing planning & control systems,

absenteeism, process variability

• external changes in forecasts, actual demand, customer

requested changes, government, competition, vendors

Cycle Times Operator Cycle Time • total time required for a worker to complete one cycle of an operation Machine Cycle Time • total time for a machine to finish

one complete cycle • includes loading and unloading

Some Interesting Calculations • No. of Operators • Sum OCT/(TAKT TIME) • Example • OCT for Operator 1 = 13" • OCT for Operator 2 = 9" • OCT for Operator 3 = 11" • OCT for Operator 4 = 10" • Total 43"

• TAKT Time 16.5" • Number of Operators • 43/16.5 = 2.606 or 3 operators

The 5-S Program

Seiri • segregate and discard • get rid of what is not needed Seiton • arrange and identify for ease of use • a place for everything and everything

in its place Seiso • Clean Daily • clean work place enhances quality

The 5-S Program Seiketsu • Revisit frequently • revisit the first 3 steps to maintain

workplace safety and effectiveness Shitsuki • Motivate to sustain • promote adherence through visual

performance measurement tools

Next Day JIT in Service Sectors New developments in JIT • Lean Manufacturing • Agile Enterprise • JIT II • Gemba Kaizen • Quick Response Systems

Topics to be Covered JIT and Lean Manufacturing JIT in Services Kaizen Events JIT II Gemba Kaizen Agile Enterprise Limitations of JIT

JIT in Services Service Traits • strong emphasis on process • avoidance of inventory • emphasis on people and their

importance to process • recognition of need for continuous

improvement • “defects are treasures”

JIT in Services Elements of JIT most applicable • Synchronization and balance of

information and work flows • Total visibility of all components of the

process • Continuous improvement of the process • Holistic approach to the elimination of

waste • Flexibility in use of resources • Respect for people

JIT in Services Key Issues • Equipment/people focus • Customer contact per transaction • Degree of discretion • Degree of customization • Location of value-added processes • Product/process focus

Gemba Kaizen

Waste reduction through the execution system

Gemba • heart of the system Essence of Gemba Kaizen • to eliminate waste, you must have

contact with the system that you are managing

• the contact must be real and not through

computers

Agile Enterprise New development Associated with Iaccoca Institute of

LeHigh University Merging flexibility with JIT Much broader than Lean Enterprise Recognition that the environment • always changing

• unpredictably undergoing change

Agile Enterprise - Traits Rapidly bring to market products that

are variable combinations of hardware, information and services.

Design products that are easily configurable and ungradable.

Produce to individual customer orders in arbitrary order quantities.

Bring out a continuously changing array of models within longer-lived product families

Agile Enterprise - Traits Fragment mass markets into niche

markets. Maintain and foster continuous, rather

than single-instance, sales relationships by continually adding value to current customers.

Cooperate intensively with other companies, including competitors, to create global product resources.

Agile Enterprise

Attempt to bring together a number of different trends

• greater focus on product development • greater reliance on suppliers • greater concern with speed • more emphasis on effective and

intelligent integration • greater use of technology • information

Other Tactics Kaizen/Continuous Improvement Manufacturing Cells Business Process Reengineering Milk run logistics Supplier certification Direct delivery to point of use