1 1 Slide Just-in-Time and Lean Production Systems Professor Ahmadi

2 2 Slide Waste is anything other than the minimum amount of equipment, materials, parts, space, and worker’s time, which are absolutely essential to add value to the product. Shoichiro Toyoda President, Toyota President, Toyota Introductory Quotation

3 3 Slide n Overproduction n Waiting n Transportation n Inefficient processing n Inventory n Unnecessary motion n Product defects Types of Waste

4 4 Slide n Management philosophy of continuous and forced problem solving n Supplies and components are ‘pulled’ through system to arrive where they are needed when they are needed. What Does Just-in-Time Do? n Attacks waste Anything not adding value to the productAnything not adding value to the product  From the customer’s perspective n Exposes problems and bottlenecks caused by variability Deviation from optimumDeviation from optimum n Achieves streamlined production By reducing inventoryBy reducing inventory What is Just-in-Time?

5 5 Slide Push versus Pull n Push system: material is pushed into downstream workstations regardless of whether resources are available n Pull system: material is pulled to a workstation just as it is needed

6 6 Slide n Suppliers reduced number of vendorsreduced number of vendors supportive supplier relationshipssupportive supplier relationships quality deliveries on timequality deliveries on time n Layout work-cell layouts with testing at each step of the processwork-cell layouts with testing at each step of the process movable, changeable, flexible machinerymovable, changeable, flexible machinery high level of workplace organization and neatnesshigh level of workplace organization and neatness reduced space for inventoryreduced space for inventory delivery direct to work areasdelivery direct to work areas JIT Contribution to Competitive Advantage

7 7 Slide n Inventory small lot sizessmall lot sizes low setup timeslow setup times specialized bins for holding set number of partsspecialized bins for holding set number of parts n Scheduling zero deviation from scheduleszero deviation from schedules level scheduleslevel schedules suppliers informed of schedulessuppliers informed of schedules Kanban techniquesKanban techniques JIT Contribution to Competitive Advantage - Continued

8 8 Slide JIT Contribution to Competitive Advantage - Continued n Preventive Maintenance scheduledscheduled daily routinedaily routine operator involvementoperator involvement n Quality Production statistical process controlstatistical process control quality by suppliersquality by suppliers quality within firmquality within firm

9 9 Slide JIT Contribution to Competitive Advantage - Continued n Employee Empowerment empowered and cross-trained employeesempowered and cross-trained employees few job classifications to ensure flexibility of employeesfew job classifications to ensure flexibility of employees training supporttraining support n Commitment support of management, employees, and supplierssupport of management, employees, and suppliers

10 Slide Results n Queue and delay reduction, speedier throughput, freed assets n Quality improvement, reduces waste and wins orders n Cost reduction which reduces selling price n Variability reductions in the workplace reduces waste n Rework reduction, reduces waste and wins orders n Faster response to the customer at lower cost and higher quality, which leads to: A competitive advantage !

11 Slide Suppliers Preventive Maintenance Layout Inventory Scheduling Quality Employee Empowerment JIT Just-in-Time Success Factors

12 Slide Goals of JIT Partnership with Suppliers n JIT partnerships eliminate Unnecessary activitiesUnnecessary activities In - plant inventoryIn - plant inventory In - transit inventoryIn - transit inventory Poor suppliersPoor suppliers Suppliers

13 Slide Goals of JIT partnerships  Elimination of unnecessary activities  Elimination of in-plant inventory  Elimination of in-transit inventory  Elimination of poor suppliers

14 Slide n Diversification n Poor customer scheduling n Frequent engineering changes n Quality assurance n Small lot sizes n Physical proximity Concerns of Suppliers

15 Slide n JIT objective: Reduce movement of people and material Movement is waste!Movement is waste! n JIT requires Work cells for product familiesWork cells for product families Moveable or changeable machinesMoveable or changeable machines Short distancesShort distances Little space for inventoryLittle space for inventory Delivery directly to work areasDelivery directly to work areas Layout

16 Slide n Traditional: inventory exists in case problems arise n JIT objective: eliminate inventory n JIT requires Small lot sizesSmall lot sizes Low setup timeLow setup time Containers for fixed number of partsContainers for fixed number of parts n JIT inventory: Minimum inventory to keep system running Inventory

17 Slide Lot Size Example (See page 635 of your textbook) D=Annual demand = 400,000 units d=Daily demand = 400,000/250 = 1,600 per day p=Daily production rate = 4,000 units Q=EOQ desired = 400 H=Holding cost = $20 per unit S=Setup cost (to be determined) Q = 2DS H (1 - d/p ) Q2 =Q2 =Q2 =Q2 =2DS S = = = $2.40 ( Q 2 )( H )(1 - d/p ) 2 D (3,200,000)(0.6)800,000

18 Slide JIT Inventory Tactics n Use a pull system to move inventory n Reduce lot size n Reduce setup time n Develop Just-in-Time delivery systems with suppliers n Deliver directly to point of use n Perform-to-schedule n Reduce setup time

19 Slide JIT Scheduling Tactics n Communicate the schedule to suppliers n Make level schedules n Perform to schedule n Eliminate waste n Produce in small lots n Use kanbans n Make each operation produce a perfect part

20 Slide n Japanese word for card Pronounced ‘kahn-bahn’ (not ‘can-ban’)Pronounced ‘kahn-bahn’ (not ‘can-ban’) n Authorizes production from downstream operations ‘Pulls’ material through plant‘Pulls’ material through plant n May be a card, flag, verbal signal etc. n Used often with fixed-size containers Add or remove containers to change production rateAdd or remove containers to change production rate Kanban

21 Slide Kanban: Additional Points n When producer and user are not in visual contact, a card may be used; otherwise, a light, flag, or empty spot on the floor may work. n Because a pull station may require several re-supply components, several Kanban pull techniques can be used at the same station. n Usually, each card controls a specific quantity of parts, although multiple card systems can be used if the producing cell produces several components or the lot size is different from the move size. n In an MRP system, the schedule can be thought of as a “build” authorization and the Kanban as a type of “pull” system that initiates the actual production.

22 Slide Kanban: Additional Points - Continued n The Kanban cards provide direct control (limit) on the amount of work-in-process between cells. n If there is an intermediate storage area, a two-card system may be used; one card circulates between user and storage area, and the other circulates between the storage area and the producing area.

23 Slide The Number of Cards or Containers  Need to know the lead time needed to produce a container of parts  Need to know the amount of safety stock needed Number of kanbans = Demand during Safety lead time+stock Size of container

24 Slide Number of Kanbans Example (See page 640 of your textbook) Daily demand =500 cakes Production lead time =2 days (wait time + material handling time + processing time) Safety stock =1/2 day Container size =250 cakes Demand during lead time = 2 days x 500 cakes = 1,000 Number of kanbans = = 5 1,

25 Slide n JIT reduces inventory n JIT limits number defects with small lots n JIT requires TQM Statistical process controlStatistical process control Worker involvementWorker involvement  Inspect own work  Quality circles Immediate feedbackImmediate feedback Quality

26 Slide JIT Quality Tactics n Use statistical process control n Empower employees n Build failsafe methods (checklists, etc.) n Provide immediate feedback

27 Slide n Get employees involved in product & process improvements Employees know job best!Employees know job best! n JIT requires EmpowermentEmpowerment Cross-trainingCross-training Training supportTraining support Few job classificationsFew job classifications Employee Empowerment

28 Slide Lean Production Lean Production supplies customers with exactly what the customer wants, when the customer wants, without waste, through continuous improvement.

29 Slide Attributes of Lean Producers n use JIT to eliminate virtually all inventory n build systems to help employees produce a perfect part every time n reduce space requirements n develop close relationships with suppliers n educate suppliers n eliminate all but value-added activities n make jobs more challenging n reduce the number of job classes and build worker flexibility