JIT and Lean Systems

Operations Management

Chapter 15 JIT and Lean OperationsPowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 7eOperations Management, 9e

2008 Prentice Hall, Inc.15 #1Learning ObjectivesWhen you complete this chapter you should be able to:Define just-in-time, TPS (Toyota Production System), and lean operationsDefine the seven wastes and the 5 SsExplain JIT partnershipsDetermine optimal setup time 2008 Prentice Hall, Inc.15 #2Learning ObjectivesWhen you complete this chapter you should be able to:Define kanbanCompute the required number of kanbansExplain the principles of the Toyota Production System 2008 Prentice Hall, Inc.15 #3

Toyota Motor CorporationLargest vehicle manufacturer in the world with annual sales of over 9 million vehiclesSuccess due to two techniques, JIT and TPSContinual problem solving is central to JITEliminating excess inventory makes problems immediately evident 2008 Prentice Hall, Inc.15 #4

Toyota Motor CorporationCentral to TPS is a continuing effort to produce products under ideal conditionsRespect for people is fundamentalSmall building but high levels of productionSubassemblies are transferred to the assembly line on a JIT basisHigh quality and low assembly time per vehicle 2008 Prentice Hall, Inc.15 #5Just-In-Time, TPS, and Lean OperationsJIT is a philosophy of continuous and forced problem solving via a focus on throughput and reduced inventoryTPS emphasizes continuous improvement, respect for people, and standard work practicesLean production supplies the customer with their exact wants when the customer wants it without waste 2008 Prentice Hall, Inc.15 #6Just-In-Time, TPS, and Lean OperationsJIT emphasizes forced problem solvingTPS emphasizes employee learning and empowerment in an assembly-line environmentLean operations emphasize understanding the customer 2008 Prentice Hall, Inc.15 #7Eliminate WasteWaste is anything that does not add value from the customer point of viewStorage, inspection, delay, waiting in queues, and defective products do not add value and are 100% waste 2008 Prentice Hall, Inc.15 #8Ohnos Seven WastesOverproductionQueuesTransportationInventoryMotionOverprocessingDefective products 2008 Prentice Hall, Inc.15 #9Eliminate WasteOther resources such as energy, water, and air are often wastedEfficient, ethical, and socially responsible production minimizes inputs, reduces wasteTraditional housekeeping has been expanded to the 5 Ss 2008 Prentice Hall, Inc.15 #10The 5 SsSort/segregate when in doubt, throw it outSimplify/straighten methods analysis toolsShine/sweep clean dailyStandardize remove variations from processesSustain/self-discipline review work and recognize progress 2008 Prentice Hall, Inc.15 #The 5 SsSort/segregate when in doubt, throw it outSimplify/straighten methods analysis toolsShine/sweep clean dailyStandardize remove variations from processesSustain/self-discipline review work and recognize progressTwo additional SsSafety build in good practicesSupport/maintenance reduce variability and unplanned downtime 2008 Prentice Hall, Inc.15 #Remove VariabilityJIT systems require managers to reduce variability caused by both internal and external factorsVariability is any deviation from the optimum processInventory hides variabilityLess variability results in less waste 2008 Prentice Hall, Inc.15 #13Sources of VariabilityIncomplete or inaccurate drawings or specificationsPoor production processes resulting in incorrect quantities, late, or non-conforming unitsUnknown customer demands 2008 Prentice Hall, Inc.15 #14Sources of VariabilityIncomplete or inaccurate drawings or specificationsPoor production processes resulting in incorrect quantities, late, or non-conforming unitsUnknown customer demandsBoth JIT and inventory reduction are effective tools in identifying causes of variability 2008 Prentice Hall, Inc.15 #15Improve ThroughputThe time it takes to move an order from receipt to deliveryThe time between the arrival of raw materials and the shipping of the finished order is called manufacturing cycle timeA pull system increases throughput 2008 Prentice Hall, Inc.15 #16Improve ThroughputBy pulling material in small lots, inventory cushions are removed, exposing problems and emphasizing continual improvementManufacturing cycle time is reducedPush systems dump orders on the downstream stations regardless of the need 2008 Prentice Hall, Inc.15 #17Just-In-Time (JIT)Powerful strategy for improving operationsMaterials arrive where they are needed when they are neededIdentifying problems and driving out waste reduces costs and variability and improves throughputRequires a meaningful buyer-supplier relationship

2008 Prentice Hall, Inc.15 #

JIT and Competitive AdvantageFigure 16.1 2008 Prentice Hall, Inc.15 #19JIT and Competitive AdvantageFigure 16.1

2008 Prentice Hall, Inc.15 #20JIT PartnershipsJIT partnerships exist when a supplier and purchaser work together to remove waste and drive down costsFour goals of JIT partnerships are:Removal of unnecessary activitiesRemoval of in-plant inventoryRemoval of in-transit inventoryImproved quality and reliability 2008 Prentice Hall, Inc.15 #21JIT Partnerships

Figure 16.2 2008 Prentice Hall, Inc.15 #22Concerns of SuppliersDiversification ties to only one customer increases riskScheduling dont believe customers can create a smooth scheduleChanges short lead times mean engineering or specification changes can create problemsQuality limited by capital budgets, processes, or technologyLot sizes small lot sizes may transfer costs to suppliers 2008 Prentice Hall, Inc.15 #23JIT LayoutTable 16.1Reduce waste due to movementJIT Layout TacticsBuild work cells for families of productsInclude a large number operations in a small areaMinimize distanceDesign little space for inventoryImprove employee communicationUse poka-yoke devicesBuild flexible or movable equipmentCross-train workers to add flexibility 2008 Prentice Hall, Inc.15 #24Distance ReductionLarge lots and long production lines with single-purpose machinery are being replaced by smaller flexible cellsOften U-shaped for shorter paths and improved communicationOften using group technology concepts 2008 Prentice Hall, Inc.15 #25Increased FlexibilityCells designed to be rearranged as volume or designs changeApplicable in office environments as well as production settingsFacilitates both product and process improvement 2008 Prentice Hall, Inc.15 #26Impact on EmployeesEmployees are cross trained for flexibility and efficiencyImproved communications facilitate the passing on of important information about the processWith little or no inventory buffer, getting it right the first time is critical 2008 Prentice Hall, Inc.15 #27Reduced Space and InventoryWith reduced space, inventory must be in very small lotsUnits are always moving because there is no storage 2008 Prentice Hall, Inc.15 #28InventoryInventory is at the minimum level necessary to keep operations runningJIT Inventory TacticsUse a pull system to move inventoryReduce lot sizesDevelop just-in-time delivery systems with suppliersDeliver directly to point of usePerform to scheduleReduce setup timeUse group technologyTable 16.2 2008 Prentice Hall, Inc.15 #29Reduce Lot SizesFigure 16.4200 100 InventoryTimeQ2When average order size = 100average inventory is 50Q1When average order size = 200average inventory is 100 2008 Prentice Hall, Inc.15 #30Reduce Lot SizesIdeal situation is to have lot sizes of one pulled from one process to the nextOften not feasibleCan use EOQ analysis to calculate desired setup timeTwo key changes necessaryImprove material handlingReduce setup time 2008 Prentice Hall, Inc.15 #31Reduce Setup CostsHigh setup costs encourage large lot sizesReducing setup costs reduces lot size and reduces average inventorySetup time can be reduced through preparation prior to shutdown and changeover 2008 Prentice Hall, Inc.15 #32Reduce Setup TimesFigure 16.6Use one-touch system to eliminate adjustments (save 10 minutes)Step 4Step 5Training operators and standardizing work procedures (save 2 minutes)Initial Setup TimeStep 2Move material closer and improve material handling (save 20 minutes)Step 1Separate setup into preparation and actual setup, doing as much as possible while the machine/process is operating (save 30 minutes)Step 3Standardize and improve tooling (save 15 minutes)90 min 60 min 45 min 25 min 15 min 13 min Repeat cycle until subminute setup is achievedStep 6 2008 Prentice Hall, Inc.15 #33JIT SchedulingSchedules must be communicated inside and outside the organizationLevel schedulesProcess frequent small batchesFreezing the schedule helps stabilityKanbanSignals used in a pull system 2008 Prentice Hall, Inc.15 #34Table 16.3Better scheduling improves performanceJIT Scheduling TacticsCommunicate schedules to suppliersMake level schedulesFreeze part of the schedulePerform to scheduleSeek one-piece-make and one-piece moveEliminate wasteProduce in small lotsUse kanbansMake each operation produce a perfect partJIT Scheduling 2008 Prentice Hall, Inc.15 #35Level SchedulesProcess frequent small batches rather than a few large batchesMake and move small lots so the level schedule is economicalJelly bean schedulingFreezing the schedule closest to the due dates can improve performance 2008 Prentice Hall, Inc.15 #Scheduling Small LotsABCAAABBBBBCJIT Level Material-Use ApproachACAAABBBBBCCBBBBAALarge-Lot ApproachTimeFigure 16.7 2008 Prentice Hall, Inc.15 #37KanbanKanban is the Japanese word for cardThe card is an authorization for the next container of material to be producedA sequence of kanbans pulls material through the processMany different sorts of signals are used, but the system is still called a kanban

2008 Prentice Hall, Inc.15 #38KanbanUser removes a standard sized containerSignal is seen by the producing department as authorization to replenish

Part numbers mark locationSignal marker on boxesFigure 16.8 2008 Prentice Hall, Inc.15 #39KanbanFigure 16.9

Work cellRaw Material SupplierKanbanPurchased Parts Supplier

Sub-assembly

ShipKanbanKanbanKanbanKanbanFinished goodsCustomer order

Final assemblyKanban 2008 Prentice Hall, Inc.15 #40More KanbanWhen the producer and user are not in visual contact, a card can be usedWhen the producer and user are in visual contact, a light or flag or empty spot on the floor may be adequateSince several components may be required, several different kanban techniques may be employed

2008 Prentice Hall, Inc.15 #41More KanbanUsually each card controls a specific quantity or partsMultiple card systems may be used if there are several components or different lot sizesIn an MRP system, the schedule can be thought of as a build authorization and the kanban a type of pull system that initiates actual production 2008 Prentice Hall, Inc.15 #42More KanbanKanban cards provide a direct control and limit on the amount of work-in-process between cellsIf there is an immediate storage area, a two-card system can be used with one card circulating between the user and storage area and the other between the storage area and the producer 2008 Prentice Hall, Inc.15 #43Advantages of KanbanAllow only limited amount of faulty or delayed materialProblems are immediately evidentPuts downward pressure on bad aspects of inventoryStandardized containers reduce weight, disposal costs, wasted space, and labor 2008 Prentice Hall, Inc.15 #44QualityStrong relationshipJIT cuts the cost of obtaining good quality because JIT exposes poor qualityBecause lead times are shorter, quality problems are exposed soonerBetter quality means fewer buffers and allows simpler JIT systems to be used 2008 Prentice Hall, Inc.15 #45JIT Quality TacticsUse statistical process controlEmpower employeesBuild fail-safe methods (poka-yoke, checklists, etc.)Expose poor quality with small lot JITProvide immediate feedbackTable 16.4 2008 Prentice Hall, Inc.15 #46Toyota Production SystemContinuous improvementBuild an organizational culture and value system that stresses improvement of all processesPart of everyones jobRespect for peoplePeople are treated as knowledge workersEngage mental and physical capabilitiesEmpower employees

2008 Prentice Hall, Inc.15 #47Toyota Production SystemStandard work practiceWork shall be completely specified as to content, sequence, timing, and outcomeInternal and external customer-supplier connection are directProduct and service flows must be simple and directAny improvement must be made in accordance with the scientific method at the lowest possible level of the organization 2008 Prentice Hall, Inc.15 #48Lean OperationsDifferent from JIT in that it is externally focused on the customerStarts with understanding what the customer wantsOptimize the entire process from the customers perspective 2008 Prentice Hall, Inc.15 #49Building a Lean OrganizationTransitioning to a lean system can be difficultLean systems tend to have the following attributesUse JIT techniquesBuild systems that help employees produce perfect partsReduce space requirements 2008 Prentice Hall, Inc.15 #50Building a Lean OrganizationDevelop partnerships with suppliersEducate suppliersEliminate all but value-added activitiesDevelop employeesMake jobs challengingBuild worker flexibility 2008 Prentice Hall, Inc.15 #51Exercise for review in the next sessionPlease read the case entitled JIT after the fire (pages 628 and 629 in Chapter 15 of Heizer and Renders Operations Management book) and discuss in your groups the three discussion questions. 2008 Prentice Hall, Inc.15 #