1. JIT & Lean Operations
Chapter 14
MIS 373: Basic Operations Management

2. Learning Objectives After this lecture, students will be able to
Explain the terms lean operations and JIT.
Describe the main characteristics of lean systems.
List some of the benefits and some of the risks of lean operation.
List the three goals of a lean system and explain the importance of each.
MIS 373: Basic Operations Management

3. Lean Operations Lean operation
A flexible system of operation that uses considerably less resources than a traditional system
Tend to achieve
Greater productivity
Lower costs
Shorter cycle times
Higher quality
Goal:
Achieve a system that matches supply to customer demand; supply is synchronized to meet customer demand in a smooth uninterrupted flow
A balanced system
One that achieves a smooth, rapid flow of materials and/or work through the system
MIS 373: Basic Operations Management

4. Goals and building blocks of lean systems
MIS 373: Basic Operations Management

5. Lean: Supporting Goals
Eliminate disruptions
Poor quality (lean systems do not carry extra inventory), equipment breakdowns, schedule changes, late deliveries.
Make the system flexible
Mix of products, levels of output.
Require reducing setup-times & lead-times.
Eliminate waste, especially excess inventory
MIS 373: Basic Operations Management

6. Waste Seven sources of waste in lean systems: Inventory Overproduction
Idle resource, requires space, holding cost
Overproduction
Overuse of manufacturing resources
Waiting time
Require space, WIP
Unnecessary transporting
Handling cost
Processing waste
Unnecessary production steps, scrap, paperwork, redundancy (e.g., approvals)
Inefficient work methods
Reduced productivity, increased scrap, increased WIP
Product defects
Rework costs, customer dissatisfaction
MIS 373: Basic Operations Management

7. Lean: Building Blocks Product design Process design
Personnel/ organizational elements
Manufacturing planning and control
MIS 373: Basic Operations Management

8. Lean Services
In service the focus is often on the time needed to perform the service - speed is often the order winner
Provide services when they are needed
Lean benefits can be achieved in the following ways:
Eliminate disruptions
e.g., avoid having service providers also answer phones.
Make system flexible
Train workers to handle more variety.
Reduce setup and lead times
Estimate what parts and tools are frequently needed and have them on hand
Eliminate waste
Eliminate errors and duplicate work.
Minimize WIP
e.g., orders waiting to be processed, calls waiting to be answered, packages waiting for delivery, truck waiting to be loaded/unloaded etc.
Simplify the process
e.g., self-service systems such as in retail, ATMs, vending machines, service systems
MIS 373: Basic Operations Management

9. Lean vs. Traditional Philosophies
Factor
Traditional
Lean
Inventory
Much to offset forecast errors, late deliveries
Minimal necessary to operate
Deliveries
Few, large
Many, small
Lot sizes
Large
Small
Vendors
Long-term relationships are unusual
Partners
Workers
Necessary to do the work
Assets
MIS 373: Basic Operations Management

10. Transitioning to Lean Systems
Make sure top management is committed and that they know what will be required
Decide which parts/processes will need the most effort to convert
Obtain support and cooperation of workers. Reassure workers that their jobs are secure.
Begin by trying to reduce setup times while maintaining the current system
Gradually convert operations, begin at the end and work backwards. At each stage, make sure the conversion has been successful before moving on.
Convert suppliers to JIT. Narrow the list of vendors.
Prepare for obstacles
MIS 373: Basic Operations Management

11. Obstacles to Conversion
Management may not be fully committed or willing to devote the necessary resources to conversion
Workers/management may not be cooperative. Management losses control as more responsibility is shifted to the workers. Workers have increased responsibility.
It can be difficult to change the organizational culture to one consistent with the lean philosophy
Suppliers may resist:
Not enough assistance from buyer to perform transformation
Uneasy about long term commitment to buyer
Small frequent deliveries may be difficult
Burden of quality control
Frequent engineering changes that may result from buyer’s lean improvements
MIS 373: Basic Operations Management

12. Key Benefits/Risks of Lean Systems
Reduced waste
inventory levels
scrap and rework
space requirements
High quality
Flexibility
Reduced lead times
Increased productivity and equipment utilization
Key Risks:
Absence of buffers (personnel, inventory) to fall back on if something goes wrong.
Possible loss off sale and lost customers.
MIS 373: Basic Operations Management

13. Risks of JIT For Lean Factories, No Buffer (wsj.com 4/29/2011)
The just-in-time approach to manufacturing, which has swept the world's factories over the past two decades, has made a virtue out of keeping inventories lean. But some manufacturers think it has gone too far, and that having a little extra padding might be a healthier option.
Prior to the recession—and now in the recovery—we aren't just lean, we've become anorexic
One reason this recovery hasn't been faster is that demand is there—but there hasn't necessarily been product on the shelf to meet that demand

14. Jigsaw Decoding the DNA of the Toyota Production System
Lean Knowledge Work
Lean Start-Up
The Lean Service Machine

15. Key Points
Lean systems produce high-quality goods or services using fewer resources than traditional operations systems.
Lean thinking helps business organizations to become more productive, reduce costs, and be more market-responsive.
Lean operations are designed to eliminate waste (value stream mapping), minimize inventory (JIT deliveries), maximize work flow (small batches with quick changeovers), make only what is needed (demand pull), empower work teams, do it right the first time (quality at the source), and continually improve.
Despite the benefits, lean systems have some potential risks.
MIS 373: Basic Operations Management