1 Just-in-time

2 Supply Networks  organisations connected by server-client links - upstream/downstream - that service processes & activities (operations) bringing added value to each client & ultimately the end customer. Supply Chain Performance  Delivery, Quality, Time, Cost

3 Flows of products, services & information second-tier suppliers first-tier suppliers first-tier customers second-tier customers For Company A Internal supply network Immediate supply network Total supply network Company B Company C X X X XX Supply sideDemand side Up stream Down stream

4 Just in Time  History - Japan  1980s conclusion  Japanese industry worked “smart” - JIT  Western industry worked JUST IN CASE  Think of JIT as minimum stock production  Type of relationship: close & intimate? JIT  internal JIT - in client-server stream  external JIT

5 Japanese experience Waste in operations from  overproduction  waiting time  transportation  inventory waste  processing  motion/movement  product defects  concentrate effort on shop floor  CQI focus  staff ownership of problems

6 Minimizing Waste: Inventory Hides Problems Work in process queues (banks) Change orders Engineering design redundancies Vendor delinquencies Scrap Design backlogs Machine downtime Decision backlogs Inspection backlogs Paperwork backlog identify defects from a supplier early in the process saves the downstream work identify defective work from upstream stations, saves the downstream work

7 Forecast random orders Master production schedule (MPS) MRP1 Design changes Bill of material Stock movements Inventory record Reports 7 Aggregate Plan (product groups) Firm orders From Aggregate to MPS to MRP1 Time-phased plan how many + when we will build each end item. MRP2 JIT

8 Material Requirements Planning & JIT  backdrop to JIT  dependent demand (depends on known orders)  info. system to determine  no. of parts, components, materials needed  scheduling - when  orders for materials should be released,  based on lead times.  batches to be ordered/produced/delivered etc

9 Operating an MRP System  Should MRP carry “safety stock”?  How much “safety stock” should be carried?  Issue of “safety lead time”  Danger of “informal” system driving out the “formal” system  Expansion of MRP to other functions (finance, HRM, etc.) of business  JIT - and the supplier-client partnership  shared information systems to "call" contractually agreed stock/materials

10 Just-In-Time (JIT)  a system for high-volume production with minimal inventory (raw materials, WIP, finished goods).  involves  timed workstation JIT  reduced ‘buffer’ stocks  no waste in production system  a “Pull” system thru the plant  a management philosophy  expose problems & bottlenecks  Take away ‘security blanket”  streamlined production  factory & warehouse networks participation industrial engineering/basics continuing improvement TQM reducing set up times smaller lot/order sizes sizes stable environment supply partnership Requires

11 Suppliers & JIT  Suppliers are crucial  Supplier gets  Long-term guaranteed contract  Steady demand  E-procurement involvement (minimal paperwork)  Buyer gets  Quality comp[onents  Guaranteed delivery times  Good prices  Supplier selection  Close to plant  Quality product  Good labour relations  Fewer suppliers (keiretsu)

12 JIT and Demand-Pull Customer Supplier Final Assembly Fabric Subass Call (Kanban) & Pull

13 Client Server Streaming Avoid too much material stocks & WIP Increase materials coordination & movement Bin Saw Supplier's local warehouse Finished Goods Warehouse Grinder Lathe Bin Call for more Materials warehouse Bin Customer JIT deliveries Call for more

14 What is kanban?  developed at Toyota 1950s to manage line material flows.  Kanban ( Kan=card, Ban= signal )  simple movement system  “cards” to signal & communicate reorder information  boxes/containers to take “lots” of parts from one work station to another (client-server).  Server only delivers components to client work station as & when needed (called/pulled).  minimise storage in the production area.  Workstations only produce/deliver components when called (they receive card + empty container).  The work-station produces enough to fill the container  Kanban = an authorization to produce more inventory  We thus limit the amount of inventory in process.

15 Minimizing Waste: Kanban Control System Bin Part A Machine Center Assembly Line Material Flow Card (signal) Flow withdrawal kanban production kanban

16 What does a Kanban card look like? Kanban No part No: 66789X description 16ga. Copper Wire units Ft. reorder/lot qty 20 store location Row 12, Bin 6 supplier BICC supplier tel supplier part RT45502 routing process Name/location of next proces Name/location of preceding process container type & capacity number of containers released accurate data: correct part nos, quantities & measure'tsaccurate data: correct part nos, quantities & measure'ts visible - chart if material ordered & whenvisible - chart if material ordered & when fool proof for no stockoutsfool proof for no stockouts minimum inventoryminimum inventory clear & complete info. to suppliersclear & complete info. to suppliers link inventory directly to demandlink inventory directly to demand Tie in with POP: issuing orders, receiving & authorising accounts payableTie in with POP: issuing orders, receiving & authorising accounts payable accurate data: correct part nos, quantities & measure'tsaccurate data: correct part nos, quantities & measure'ts visible - chart if material ordered & whenvisible - chart if material ordered & when fool proof for no stockoutsfool proof for no stockouts minimum inventoryminimum inventory clear & complete info. to suppliersclear & complete info. to suppliers link inventory directly to demandlink inventory directly to demand Tie in with POP: issuing orders, receiving & authorising accounts payableTie in with POP: issuing orders, receiving & authorising accounts payable

17 C SdL)(1   k capacity of container Expected demand during lead time + safety stock  k = No. of kanbans in card set d = Average No. of units demanded over the period L = lead time to replenish order (same units of time as demand) S = Safety stock as % of demand during lead time C = Container size How many Kanbans?  Each container = minimum replenishment lot size.  Calculate lead time required to produce a "container"

18 Example  A switch is assembled in batches of 4 units at an “upstream” work area.  delivered in a bin to a “downstream” control-panel assembly area that requires 5 switch assemblies/hour.  The switch assembly area can produce a bin of switch assemblies in 2 hours.  Safety stock = 10% of needed inventory or 3 4 5(2)(1.1)  C dL (1  S) k size of container Expected demand during lead time + safety stock 

19 JIT Requirements 1 Kanban Pull  Demand pull  Back flush  Reduce batch/lot sizes Work with suppliers  Reduce lead times  Frequent deliveries  Project usage requirements  Quality expectations Reduce inventory in  Stores  Transit  Carousels  Conveyors  calculation from MRP & EOQs

20 JIT Requirements 2 Quality  Worker responsibility  SQC  Enforce compliance  Fail-safe methods  Automatic inspection Stabilise Schedule  Level schedule  Under utilize capacity  Establish freeze windows Operations Design  Link operations  Balance workstation capacities  Review layout for flow  Stress preventive maintenance  Reduce lot sizes  Reduce setup/changeover time People Focus  pay harmonisation  supportive unions  subcontractor networks  hands-on manager style  quality commitment & group involvement

21 JIT Requirements 3 Product Design Improvement  DFM & process design  Modules & fewer parts  Quality standards  upgrade housekeeping  clarify process flows  revise equipment & process technologies Problem-solving  Root problem  Long-term solution  Team contribution  Line-specialist cooperation  Learning  Measure performance  CQI  Monitor & report Problem-solving  Root problem  Long-term solution  Team contribution  Line-specialist cooperation  Learning  Measure performance  CQI  Monitor & report

22 "Re-engineering" & Kanban Modern production methods  1. Modular/cell production 9 group technology).  2. Reduce set up, lead and waiting times between procedures.  3. Flow-of-products-oriented layout of processes & machines layout. Products flow smoothly from start to finish, parts do not sit waiting to be worked on, forklift trucks do not travel kilometres to move parts from one area of the plant to another.  4. Flexible manufacturing of mixed models  5. Theory of Constraints - drum-rope-buffer (Goldratt). Building in extra redundancy.  6. Total Preventive Maintenance, prevent machines from breaking down or malfunctioning during production time  7. Team-Work & Autonomation (decision by worker to stop line)  8. Kaizen: Continuous improvement  9. Housekeeping

23 Down-side of Kanban  more complex in shared-resource situations e.g. upstream server makes several parts. Each needs a separate signalling card - so the up-stream station will receive random calls for different parts - creating a scheduling & queuing situation.  client request to make/send more must wait if other parts have to be made so buffer stocks are needed.  Kanban assumes stable repetitive production & is less suited to industries where mix &volumes fluctuate.  It doesn't eliminate variability, unpredictable & lengthy down times present problems.  Poor quality (scrap &rework) affect functioning even though these are exposed. Excess inventory does not mask these effects.

24 Further Information from  ProModel.com   search on Kanban  Birmingham University PRISM - see Kanban Network (Ciardo & Tilgner)  MidWest Tool Com - Controlling Serial Production Lines Using Kanbans - download file.  Hugh Campbell - Kanban and MRP to Manage Purchased Parts and Materials  Kanban's - Simplicity at its best - Brian Willcox