1. Operations Management
Lean Production
Ron Tibben-Lembke
Operations Management

2. Just In Time-- What is It?
Integrated set of activities designed to achieve high-volume production using minimal inventories of raw materials, WIP, and FGI.
Big JIT A.k.a. “lean production” -- Eliminate waste in all aspects of production activities
Little JIT – scheduling goods inventories and production, as needed
Also known as Stockless Production, Toyota Production System

3. Toyoda Automatic Loom
Sakichi Toyoda ( ) – Invented a loom which stops automatically if the thread breaks.
His son Kiirchiro, started the automotive department of Toyoda Loom Works.

4. JIT Origins in Japan Post-WWII Japanese industry in ruins
“Catch up to Americans in 4 years!”
Kiichirō Toyoda, 1946
Toyoda made delivery trucks and motorcycles, and not many of either

5. -- the early years
First two Toyopet Crowns arrive U.S. 1957

6. Ohno – Reduce Waste
If Americans are 9x as productive, we must be wasting something. (p.3)
“The basis of the Toyota production system is the absolute elimination of waste.” (Ohno, p. 4)

7. Waste
Waste is ‘anything other than the minimum amount of equipment, materials, parts, space, and workers’ time which are absolutely essential to add value to the product.
--Shoichiro Toyoda President, Toyota Motor Co.
If you put your mind to it, you can squeeze water from a dry towel.
-- Eiji Toyoda, President

8. Elimination of Waste
Knew they wouldn’t beat U.S. with product innovation, concentrated on licensing patents, and producing more efficiently
Costs prevented mass-production, volume strategy of American firms.
Find ways to reduce waste, cost
Shigeo Shingo (at right)
& Taiichi Ohno, pioneers

9. Two Pillars of Toyota System
Just-in-Time: a flow of right parts, at the right time, in the right quantity
Autonomation: ‘Automation with a human touch’
(make machine mistake-proof)
Workers don’t have to baby-sit machines
Stop automatically if downstream machine stops

10. Couldn’t Emulate GM GM huge batches in huge factories
Japan’s area is 10% less than California and 70% agricultural.
Put entire population of CA into 30% of state, then add 6 times as many people. (and you thought LA was crowded).
Land extremely expensive
Sprawling factories not an option

11. Small Batches
GM’s large batches require large amounts of storage space.
GM produces in large batches because of significant setup costs.
If Toyota had the same large setup costs, it could never afford small batches.
Reduce setup cost to reduce batch size.
GM didn’t think of doing this.

12. 7 Types of Waste (Ohno 1988) Overproduction
Time on Hand (waiting time)
Transportation
Stock on Hand - Inventory
Waste of Processing itself
Movement
Making Defective Products

13. Seven Elements to Eliminate Waste
Focused Factories
Group Technology
Quality at the Source
JIT production
Uniform Plant Loading
Kanban production control system
Minimized setup times

14. Focused Factories Small, specialized plants
No huge, vertically integrated plants
30 -1,000 workers
Tom Peters

15. Group Technology-Layout
Not enough WIP to have 1 person run 4 milling machines
Don’t departmentalize, organize machines by product type
Cellular layout
Much less inventory sitting around
Batch size of one

16. Cross Training
To maintain the flow, workers have to be able to help out as needed
Rotate workers through jobs:
Keep skills sharp (managers too - prove they know what they’re doing)
Reduce boredom & fatigue
Expand understanding of overall picture
Increase potential for new ideas

17. Employee Input Employee has a brain, why not use it?
Quality circles look for ways to improve
Emphasis on Continuous Process Improvement

18. Total Quality Management
Not a lot of parts to sift through to find a good one
Can’t afford high defect rates
Since low WIP, get quick feedback on errors

19. Ask ‘Why’ 5 Times
5W = 1H
1. Why did the machine stop? Overload and fuse blew
2. Why the overload? Not lubricated
3. Why not lubricated? Oil pump not pumping?
4. Why not pumping? Pump shaft worn out.
5. Why worn out? No screen, scrap got in

20. Just-in-Time
Downstream processes take parts from upstream as they need.
Like an American Supermarket:
Get what you want
when you want it
in the quantity you want.

21. Kanban Japanese for ‘signboard’
Method Toyota used for implementing JIT
Each work station has a fixed # kanbans.
In order to produce, you need both material to work on, and an available kanban.

22. Kanban Worker 2 finishes a part, outbound moves over
Flow of work 2 3
Worker 2 finishes a part, outbound moves over
2 gets another part to work on:
2 takes off 1’s green tag giving it back to 1, and
puts on her blue tag and moves it into position.

23. Kanban When 3 finishes a part, Finished parts move over one spot
Flow of work 2 3
When 3 finishes a part,
Finished parts move over one spot
He has to have a red tag available to put on,
He gets a part from 2’s outbound pile,
And gives the blue back to 2

24. Kanban When 3 finishes a part,
Flow of work 2 3
When 3 finishes a part,
Finished parts move over one spot
He has to have a red tag available to put on,
He gets a part from 2’s outbound pile,
And gives the blue back to 2
3’s production will be taken by 4, offstage right.
Tag goes back into 3’s bin

25. Kanbans 2 3 Red finishes his part next. 2 3
But 4 hasn’t freed up any of the red kanbans, so there is nothing for 3 to work on now.
3 could maintain his machine, or see if 4 needs help 2 3

26. How is this Different? Processes can become idled (blocked) or starved
This makes you painfully aware of problems in your system.
Material moves through the system so quickly no in-process recordkeeping is needed.

27. Importance of Flow Ohno was very clear about this:
“Kanban is a tool for realizing just-in-time. For this tool to work fairly well, the process must be managed to flow as much as possible. This is really the basic condition. Other important conditions are leveling the product as much as possible, and always working in accordance with standard work methods.
-- Ohno, 1988, p. 3

28. Performance and WIP Level
Less WIP means products go through system faster
reducing the WIP makes you more sensitive to problems, helps you find problems faster
Stream and Rocks analogy:
Inventory (WIP) is like water in a stream
It hides the rocks
Rocks force you to keep a lot of water (WIP) in the stream

29. Lowering Inventory Reduces Waste
WIP hides problems

30. Lowering Inventory Reduces Waste
WIP hides problems

31. Lowering Inventory Reduces Waste
Reducing WIP makes
problem very visible
STOP

32. Lowering Inventory Reduces Waste
Remove problem, run
With less WIP

33. Lowering Inventory Reduces Waste
Reduce WIP again to find
new problems

34. A contrasting opinion
“Inventory is not the root of all evil, inventory is the flower of all evil.
- Robert Inman,
General Motors

35. Setup Reduction Can’t afford to do huge runs
Have to produce in small batches
Toyota Die Change: 3 hours down to 3 SMED: under ten minutes
Techniques
Make internal setups into External
Eliminate Adjustments
Eliminate the Setup

36. Capacity Buffers
System is inflexible, no inventory buffers, so to respond, need excess capacity
Schedule less than 24 hours per day
‘Two-Shifting’
Cross Training

37. What about making several products?
Each station has to keep on hand parts to satisfy anything downstream station might ask for
Want to avoid many parts for each of several products
This means more WIP, more inventory, more expense, unless we produce in smaller batches

38. Production Smoothing & Sequencing
Master production schedule: 10,000 /mo.
500 day, 250 a shift
480 minutes means 1 every 1.92 minutes
Sequencing:
If mix is 50% A, 25% B, 25% C, produce
A-B-A-C-A-B-A-C…

39. Suppliers Buyer & Supplier form JIT partnerships
JIT partnerships eliminate:
Unnecessary activities
In-plant inventory
In-transit inventory
Poor suppliers

40. Characteristics of JIT Partnershps
Few, nearby suppliers
Supplier just like in-house upstream process
Long-term contract agreements
Steady supply rate
Frequent deliveries in small lots
Buyer helps suppliers meet quality
Suppliers use process control charts
Buyer schedules inbound freight

41. Supplier Worries Lack of flexibility Poor customer scheduling
Long-term contract with 1 customer
Poor customer scheduling
Frequent engineering changes
Strict quality assurance
Small lot sizes
Close physical proximity

42. Supplier Relationships
American model:
keep your nose out of my plant.
Gain info to force price cuts
Lack of trust between suppliers
Firm encourages suppliers to share knowledge, because they don’t worry about competing
Firm helps supplier increase quality, reduce costs

43. Preventative Maintenance
Unexpected loss of production is fatal to system and must be prevented
Additional maintenance can prevent downtime, or minimize length of interruptions, when they do occur

44. Inventory Traditionally, inventory exists in case problems arise.
JIT objective: Eliminate inventory
JIT requires
Small lot sizes
Low setup time
Containers for fixed number of parts
JIT inventory: Minimum inventory to keep system running.

45. Lessons Learned from JIT
The environment can be a control - don’t take setups for granted
Operational details are very important (Ford, Carnegie)
Controlling WIP is important
Flexibility is an asset
Quality can come first
Continual improvement is necessary for survival

46. What is not JIT
Having shipments come in just when you need them does not mean JIT goals accomplished
If supplier still produces in large lots, but delivers in small, you have just forced supplier to incur the holding costs

47. System Requirements Runs with very little inventory
Requires high quality
Management philosophy of continuous and forced problem solving
Elimination of waste

48. Lean Tools Value Stream mapping Takt time (German for pace or beat)
available work time per shift =
Customer demand per shift
Cycle time = how often a piece comes off of production line

49. Where to get more information
Taiichi Ohno - Toyota Production System
Schonberger - Japanese Manufacturing Techniques
Factory Physics - Hopp & Spearman
Shigeo Shingo - Toyota Production System

50. JIT Books in English
1981 –Shigeo Shingo – “Study of the Toyota Production System”
1982 – Richard Schonberger – “Japanese Manufacturing Techniques”
1983 – Richard Hall “Zero Inventories”
1988 – Taiichi Ohno – “Toyota Production System”
1989 – Shigeo Shingo – “Study of the Toyota Production System”