1. Lean Systems and JIT

2. Lean Production
Lean Production can be defined as an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods)
Lean Production also involves the elimination of waste in production effort
Lean Production also involves the timing of production resources (i.e., parts arrive at the next workstation “just in time”)
Adding value 3

3. Overview of JIT Toyota Production System (post-WWII)
reducing costs, eliminating waste, and improving productivity
Just-in-Time (1980s)
way of planning operations
reduces variability of demand
enhances responsiveness
conducts value-adding operations as close to consumption as possible

4. JIT and Lean Management
Big JIT (also called Lean Management)
is a philosophy of operations management that seeks to eliminate waste in all aspects of a firm’s production activities:
human relations, vendor relations, technology, and the management of materials and inventory
Little JIT
focuses more narrowly on scheduling goods inventory and providing service resources where and when needed
Question: If you had a 7 a.m. flight out of Newark, what time would you leave Allentown? A 7 p.m. flight? Is there a difference in elapsed time? Why? 3

5. The Toyota Production System
Based on two philosophies:
1. Elimination of waste
2. Respect for people
Toyota Production System Video 5

6. Toyota Production System’s Four Rules
All work shall be highly specified as to content, sequence, timing, and outcome
Every customer-supplier connection must be direct, and there must be an unambiguous yes-or-no way to send requests and receive responses
The pathway for every product and service must be simple and direct
Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization 21

7. Waste in Operations Waste from overproduction Waste of waiting time
Transportation waste
Inventory waste
Processing waste
Waste of motion
Waste from product defects
Underutilization of people 6

8. Exercise
Take an activity from a job or personal life (e.g. a sport, study, Muhlenberg processes, a class)
Identify areas of waste
Identify opportunities for eliminating waste and improving the performance
Write down and share with the class

9. Minimizing Waste: Inventory Hides Problems
Example: By identifying defective items from a vendor early in the production process the downstream work is saved
Work in
process
queues
(banks)
Change
orders
Engineering design
redundancies
Vendor
delinquencies
Scrap
Design
backlogs
Machine
downtime
Decision
Inspection
Paperwork
backlog
Example: By identifying defective work by employees upstream, the downstream work is saved 14

10. Here the customer starts the process, pulling an inventory item from Final Assembly…
JIT Demand-Pull Logic
Customers
Sub
Fab
Vendor
Final
Assembly
Then sub-assembly work is pulled forward by that demand…
The process continues throughout the entire production process and supply chain 4

11. SUPPLY CHAIN AND E-COMMERCE CONSIDERATIONS IN JIT
Supplier structural improvements
reduced inventory at suppliers results in lower fixed costs
suppliers provide small quantities with frequent deliveries
Supplier infrastructural improvements
emphasis on win-win relationship
Customer structural improvements
design for manufacturability and procurement
establish EDI systems to remove demand uncertainty
reduce inventories of purchased materials
Customer infrastructural improvements
frequent small orders
eliminate just-in-case inventories
smoother demand patterns

12. SCHEDULING AND CAPACITY MANAGEMENT IN JIT SYSTEMS
JIT planning and control:
relies on a level master schedule
prefers excess capacity to excess inventory
works with suppliers and customers to reduce complexity & uncertainty
improves system’s responsiveness to customer requirements
Level master schedule:
same mix of product-service bundles created repeatedly for period for which the master schedule is frozen
Independent demand inventory models balance order and holding costs
economics are just as valid for JIT systems

13. JIT in Services (Examples)
Organize Problem-Solving Groups
Upgrade Housekeeping
Upgrade Quality
Clarify Process Flows
Revise Equipment and Process Technologies
Level the Facility Load
Eliminate Unnecessary Activities
Reorganize Physical Configuration
Introduce Demand-Pull Scheduling
Develop Supplier Networks 30

14. Supplier Networks: Trends In Supplier Policies
1. Locate near to the customer
2. Consider establishing small warehouses near to the customer or consolidating warehouses with other suppliers
3. Use standardized containers and make deliveries according to a precise delivery schedule
4. Become a certified supplier and accept payment at regular intervals rather than upon delivery

15. Potential Supplier Concerns with JIT Purchasing
Desire for diversification
-- concerned about all business stemming from single customer.
Poor customer scheduling
-- concerned that customer will be unable to develop smooth, consistent schedule.
Engineering changes
-- concerned that customer will promulgate frequent engineering changes with inadequate lead time.
Quality assurance
-- production with zero defects may be considered unrealistic.
Small lot sizes
-- many suppliers are unaccustomed to working with small lot sizes.
Proximity
-- delivery of small lot sizes over long distances may not be economical.

16. Critique of JIT Contrast pragmatic JIT vs. romantic JIT Pragmatic JIT
focuses on concrete details of production process
use practical tools to address problems
continuous improvement
Romantic JIT
appeals to “revolutionary rhetoric”
cutting inventories is a prompt to reform
against tradeoffs
HBR: Does Manufacturing Need a JIT Revolution? By Paul Zipkin

17. Critique of JIT Problems System of beliefs and collection of methods
Successes due to genius of Ohno and Shingo (of Toyota) – they did make tradeoffs
Moves inventories to suppliers but does not reduce overall
Workers in JIT environments under high levels of pressure -- burn out!
HBR: Does Manufacturing Need a JIT Revolution? By Paul Zipkin