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Just-in-Time and Lean Operations

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Presentation on theme: "Just-in-Time and Lean Operations"— Presentation transcript:

1 Just-in-Time and Lean Operations

2 What is JIT ? Producing only what is needed, when it is needed (not early, not late; not less, not more) Achieving high volume production using minimal inventories An integrated but simplified system JIT’s mandate: Elimination of all waste in production effort

3 Just-in-Time Just-in-time (JIT): A highly coordinated processing system in which goods move through the system, and services are performed, just as they are needed Supplies and components are ‘pulled’ through the system to arrive where they are needed when they are needed (just-in-time) A management philosophy of continuous and forced problem solving by attacking the root causes

4 Lean Production JIT   lean production
Lean Production system is a flexible one that supplies customers high quality goods and services (exactly what the customer wants, when the customer wants), with minimal resources (without waste), through continuous improvement Lean systems are: Demand driven Focused on waste reduction Have a culture that is dedicated to excellence and continuous improvement

5 What Does Just-in-Time Do?
Attacks waste (anything not adding value to the product) Achieves streamlined production by reducing inventory Exposes problems and bottlenecks caused by variability

6 Goal of JIT The ultimate goal of JIT is a balanced system.
Achieves a smooth, rapid flow of materials through the system

7 Summary:JIT Goals and Building Blocks
Eliminate disruptions Make the system flexible Eliminate waste A balanced rapid flow Ultimate Goal Supporting Goals Building Blocks

8 Quotation by Shoichiro Toyoda
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 © 1995 Corel Corp.

9 Sources of Waste Overproduction Waiting Unnecessary transportation
Inventory Inefficient work methods Inefficient processing Unnecessary motions Product defects

10 Waste in Operations (1 of 3)

11 Waste in Operations (2 of 3)

12 Waste in Operations (3 of 3)

13 Minimizing Waste: Focused Factory Networks
These are small specialized plants that limit the range of products produced (sometimes only one type of product for an entire facility) Minimizing Waste: Focused Factory Networks Some plants in Japan have as few as 30 and as many as 1000 employees Coordination System Integration

14 JIT Reduced Waste at Hewlett-Packard
Waste Reduction (%) 82% 50% 30% 20% 40% 0% 60% 80% 100% Work-in-Process Inventory Raw Material Inventory Lead Time Space Finished Goods Inventory Scrap Setup Time

15 JIT Building Blocks In order to achieve competitive advantage through JIT, the necessary building blocks should be installed The building blocks can also be regarded as JIT success factors or the basic elements of JIT

16 JIT Building Blocks Product Design Principles Flexible Resources
Cellular Layouts Pull Production System Kanban Control System Small Lot Production Quick Setups Uniform Production Levels

17 JIT Building Blocks Reduced Inventories
Supplier Relationships (Supplier Networks) Level Scheduling Employee Empowerment Quality (at the source) Continuous improvement Preventive Maintenance (Total Productive Maintenance) Commitment

18 1. Product & Process Design Principles
Process design with product design Standard product configuration and standart parts Reduced number of parts Modular design Concurrent engineering Highly capable production systems

19 2. Flexible Resources Multifunctional workers General purpose machines
Study operators & improve operations

20 Standard Operating Routine for a Worker
Sheet 1 Worker: Russell Cycle Time: 2 min Order of Operations time Operations :10 :20 :30 :40 :50 1:00 1:10 1:20 1:30 1:40 1:50 2:00 Pick up material Unload/ load machine 1 load machine 2 load machine 3 Inspect/ pack

21 3. Layout JIT objective: Reduce movement of people and material
Movement is waste! JIT requires work-cells for product families (group technology) movable, changeable, flexible machinery short distances high level of workplace organization and neatness reduced space for inventory delivery directly to work areas balanced workstation capacities

22 Cellular Layouts Group dissimilar machines in manufacturing cell to produce family of parts Work flows in one direction through cell Cycle time adjusted by changing worker paths

23 Work Cell versus Process Layout
Saw Lathe Grinder Heat Treat Press 1 2 3 4 5 6 Using work cells can reduce unnecessary material movement

24 Manufacturing Cell with Worker Routes
3 Cell 1

25 Worker Routes Lengthened as Volume Decreases
Cell 5 Worker 2 Cell 2 Worker 1 Cell 1 Worker 3 Cell 3 Cell 4

26 Layout Tactics Build work cells for families of products
Minimize distance Design little space for inventory Improve employee communication Use poka-yoke devices Build flexible or movable equipment Cross train workers to add flexibility to layout

27 4. The Pull System Material is pulled through the system when needed
Reversal of traditional push system where material is pushed according to a schedule Forces cooperation Prevent over and underproduction

28 Pull System & Kanban Control
Pull system: System for moving work where a workstation pulls output from the preceding station just as it is needed. (e.g. Kanban) vs. Push system: System for moving work where output is pushed to the next station as it is completed

29 5. Kanban Production Control System (1 of 2)
Kanban: Japanese word for card, or may be a flag, ball etc. Paperless production control system Card or other device that communicates demand for work or materials from the preceding station Kanban card indicates standard quantity of production Used often with fixed sized container

30 5. Kanban Production Control System (2 of 2)
The kanban cards provide direct control (limit) on the amount of work-in-process between cells. Derived from two-bin inventory system Maintains discipline of pull production Production kanban authorizes production Withdrawal kanban authorizes movement of goods

31 A Sample Kanban

32 The Origin of Kanban a) Two-bin inventory system b) Kanban inventory system Reorder card Bin 1 Bin 2 Q - R Kanban R Q = order quantity R = reorder point - demand during lead time

33 Determining the Number of Kanbans
No. of Kanbans = average demand during lead time + safety stock container size N = dL + S C where N = number of kanbans or containers d = average demand over some time period L = lead time to replenish an order S = safety stock C = container size

34 Determining the Number of Kanbans
d = 150 bottles per hour L = 30 minutes = 0.5 hours S = 0.10(150 x 0.5) = 7.5 C = 25 bottles N = = = = 3.3 kanbans or containers dL + S C (150 x 0.5) + 7.5 25 Round up to 4 (to allow some slack) or down to 3 (to force improvement)

35 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

36 Kanban Signals “Pull” Material Through the Process
This puts the system back were it was before the item was pulled Once the Production kanban is received, the Machine Center produces a unit to replace the one taken by the Assembly Line people in the first place Withdrawal kanban Storage Part A Storage Part A Machine Center Assembly Line Production kanban Material Flow Card (signal) Flow The process begins by the Assembly Line people pulling Part A from Storage

37 Determination of the Number of Kanbans Needed
Setting up a kanban system requires determining the number of kanbans (or containers) needed. Each container represents the minimum production lot size An accurate estimate of lead time required to produce a container is key to determining how many kanbans are required

38 6. Small-Lot Production Requires less space & capital investment
Moves processes closer together Makes quality problems easier to detect Makes processes more dependent on each other

39 Benefits of Small Lot Sizes
Reduces inventory Less storage space Less rework Problems are more apparent Increases flexibility Easier to balance operations

40 To Lower Inventory, Reduce Lot Sizes
Time Inventory Level Lot Size 200 Lot Size 80 Average inventory = 100 Average inventory = 40 Average inventory = (Lot size)/2

41 Reducing Lot Sizes Increases the Number of Lots
Customer orders 10 Lot size = 5 Lot 1 Lot 2 Lot size = 2 Lot 1 Lot 2 Lot 3 Lot 4 Lot 5

42 …Which Increases Inventory Costs
Total Cost Holding Cost Setup Cost Smaller Lot Size Optimal Lot Size Lot Size

43 Unless Setup Costs are Reduced
Lot Size Cost Holding Cost Total Cost Setup Cost Original optimal lot size New optimal lot size

44 Frequent Orders can Reduce Average Inventory
Time Inventory 100 200 Q1 When average order size = 200, average inventory is 100 Q2 When average order size = 100, average inventory is 50

45 Lower Total Cost Requires Small Lot Sizes and Lower Setup Costs
Sum of ordering and holding cost T1 T2 S2 S1 Cost

46 7. Quick Setups: Steps to Reduce Setup Time
90 min Separate setup into preparation, and actual setup, doing as much as possible while the machine/process is running (save 30 minutes) Step 1 Initial Setup Time 60 min Move material closer and improve material handling (save 20 minutes) Step 2 45 min Standardize and improve tooling (save 15 minutes) Step 3 25 min Use one-touch system to eliminate adjustments (save 10 minutes) Training operators and standardizing work procedures (save 2 minutes) Step 4 15 min 13 min Step 5

47 SMED Principles Separate internal setup from external setup
Convert internal setup to external setup Streamline all aspects of setup Perform setup activities in parallel or eliminate them entirely

48 Common Techniques for Reducing Setup Time

49 Common Techniques for Reducing Setup Time

50 Common Techniques for Reducing Setup Time

51 8. Uniform Production Results from smoothing production requirements
Kanban systems can handle +/- 10% demand changes Smooths demand across planning horizon Mixed-model assembly steadies component production

52 9. Inventories Small lot sizes & low setup times
Limited work-in-process Little inventory storage Specialized bins for holding previously set number of parts

53 Inventory Traditional: 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 the system running

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

55 Inventory Hides Problems Just as Water in a Lake Hides Rocks
Inventory level Scrap Setup time Late deliveries Quality problems Process downtime Unreliable supplier Setup time Late deliveries Quality problems Process downtime Inventory level İnefficient layout Bad design Machine breakdown

56 Lowering Inventory Reduces Waste
Scrap Work in process inventory level (hides problems) Unreliable Vendors Capacity Imbalances

57 Lowering Inventory Reduces Waste
Scrap Reducing inventory exposes problems so they can be solved. Unreliable Vendors Capacity Imbalances WIP

58 Lowering Inventory Reduces Waste
Scrap Reducing inventory reveals problems so they can be solved. Unreliable Vendors Capacity Imbalances WIP

59 10. Supplier Relationships
Reduced number of vendors Supportive supplier relationships Quality deliveries on time Frequent deliveries in small lot quantities Reduced lead times

60 Suppliers JIT partnerships are formed JIT partnerships eliminate:
Some unnecessary activities In-plant inventory In-transit inventory Poor suppliers

61 Characteristics of JIT Partnerships Suppliers
Few Nearby Long-term relationships Analysis and support to enable desirable suppliers to become or stay price competitive Buyer resists vertical integration and subsequent wipeout of supplier business Suppliers encouraged to extend JIT to their suppliers (2nd and 3rd tier suppliers)

62 Characteristics of JIT Partnerships Quantities
Steady output rate Frequent deliveries in small-lot quantities Long-term contract agreements Minimal or no paperwork (use EDI or internet) Delivery quantities fixed for whole contract term Little or no permissible overage or underage Suppliers package in exact quantities Suppliers also reduce their production lot sizes

63 Characteristics of JIT Partnerships
Quality Minimal product specifications imposed on suppliers Help suppliers meet quality requirements Close relationship between buyers’ and suppliers quality assurance people Suppliers use poka-yoke and process control charts instead of lot-sampling techniques

64 Goals of JIT Partnerships
Elimination of unnecessary activities Elimination of in-plant inventory Elimination of in-transit inventory Elimination of poor suppliers

65 Supplier Policies Locate near to the customer
Use small, side loaded trucks and ship mixed loads Consider establishing small warehouses near to the customer or consolidating warehouses with other suppliers Use standardized containers and make deliveries according to a precise delivery schedule Become a certified supplier and accept payment at regular intervals rather than upon delivery

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

67 11. Scheduling Involves timing of operations
Scheduling in JIT requires Level loading (level schedules) Zero deviation from schedules Suppliers informed about schedules Small lots Kanban techniques

68 JIT Scheduling Tactics
Scheduling in JIT requires (1 of 2): Communicating the schedule to suppliers Making level schedules Freezing part of the schedule Performing to schedule Seeking one-piece-make and one-piece-move

69 JIT Scheduling Tactics
Scheduling in JIT requires (2 of 2): Elimination ofwaste Producing in small lots Using kanbans Making each operation produce a perfect part Zero deviation from schedules

70 Level Schedules Reduce ripple effect of small variations in schedules (e.g., final assembly) Production quantities evenly distributed over time (e.g., 7/day) Build same mix of products every day Results in many small lots Item Monthly Quantity Daily Quantity A B 60 3

71 Small versus Large Lots
JIT produces same amount in same time if setup times are lowered JIT Small Lots A A B B B C A A B B B C Time Small lots also increase flexibility to meet customer demands Large-Lot Approach A A A A B B B B B B C C Time

72 Comparison of Level and Large Lot Material-use Approaches

73 Mixed-Model Sequencing

74 12. Employee Empowerment Employee empowerment
Workers are assets Employee empowerment Empowered and cross-trained employees (to help clear bottlenecks) Get employees involved in product & process (employees know the job best!) Few job classifications to ensure flexibility of employees Training support

75 13. Quality Production JIT exposes quality problems by reducing inventory JIT eliminates number defects with small lots JIT requires quality by suppliers Team approach and continuous improvement are important for ensuring quality Quality is maintained by the following procedure: Find the root cause of the problem, solve permanently and use team approach in solving the problems

76 Quality Production JIT requires TQM Statistical process control
Continuous improvement Worker involvement & empowered employees Inspect own work Quality circles Immediate feedback Failsafe methods such as poka-yoke Quality at the source

77 Quality Production JIT requires 1) Quality within the firm
Autonomation (jidoka): automatic detection of defects during production 2) Quality by suppliers

78 Quality at the Source Jidoka is authority to stop production line
Andon lights signal quality problems Undercapacity scheduling allows for planning, problem solving & maintenance Visual control makes problems visible Poka-yoke prevents defects

79 Visual Control

80 Visual Control

81 Visual Control

82 Kaizen Continuous improvement Requires total employment involvement
Essence of JIT is willingness of workers to Spot quality problems Halt production when necessary Generate ideas for improvement Analyze problems Perform different functions

83 14. Preventive Maintenance
All activities involved in keeping equipment in working order Done to prevent failure JIT requires Scheduled & daily PM Operator involvement in PM Knows machines Responsible for product quality

84 Total Productive Maintenance (TPM)
Breakdown maintenance Repairs to make failed machine operational Preventive maintenance System of periodic inspection & maintenance to keep machines operating TPM combines preventive maintenance & total quality concepts

85 TPM Requires Management to:
Design products that can be easily produced on existing machines Design machines for easier operation, changeover, maintenance Train & retrain workers to operate machines Purchase machines that maximize productive potential Design preventive maintenance plan spanning life of machine

86 15. Bottom-round Management Style & Commitment
Support of management, employees and suppliers Any improvement must be made in accordance with the scientific method, under the quidance of a teacher, at the lowest possible level in the organization (Toyota Production System’s work rule)

87 Streamlined Production
Flow with JIT Traditional Flow Customers Suppliers Production Process (stream of water) Inventory (stagnant ponds) Material (water in stream)

88 Results Queue and delay reduction, speedier throughput, freed assets, and winning orders Quality improvement, reduces waste and wins orders Cost reduction increases margin or reduces selling price Variability reductions in the workplace reduces waste and wins orders Rework reduction, reduces waste and wins orders

89 Faster response to the customer at lower cost and higher quality
Yielding Faster response to the customer at lower cost and higher quality A competitive advantage!

90 Summary: Just-In-Time Production
Management philosophy “Pull” system though the plant WHAT IT IS Attacks waste Exposes problems and bottlenecks Achieves streamlined production WHAT IT DOES Employee participation Industrial engineering/basics Continuing improvement Total quality control Small lot sizes WHAT IT REQUIRES Stable environment WHAT IT ASSUMES

91 Comparison of JIT and Traditional Systems
Factor Traditional JIT Inventory Much to offset forecast errors, late deliveries Minimal necessary to operate Deliveries Few, large Many, small Lot sizes Large Small Setup; runs Few, long runs Many, short runs Vendors Long-term relationships are unusual Partners Workers Necessary to do the work Assets

92 Transitioning to a JIT System
Get top management commitment Decide which parts need most effort Obtain support of workers Start by trying to reduce setup times Gradually convert operations Convert suppliers to JIT Prepare for obstacles

93 Obstacles to Conversion
Management may not be committed Workers/management may not be cooperative Suppliers may resist Why?

94 Benefits of JIT Reduced inventory Better relations with suppliers
Improved quality Lower costs Reduced space requirements Shorter lead time Increased productivity Greater flexibility Reduced scrap and rework Better relations with suppliers Simplified scheduling and control activities Increased capacity Increased equipment utilization Better use of human resources More product variety

95 JIT in Services (1 of 3) The basic goal of the demand flow technology in the service organization is to provide optimum response to the customer with the highest quality service and lowest possible cost.

96 JIT in Services (2 of 3) All the techniques used in manufacturing are used in services Level the facility load & eliminate disruptions and unnecessary activities Reorganize physical configuration Introduce demand-pull scheduling Develop supplier networks

97 JIT in Services (3 of 3) . All the techniques used in manufacturing are used in services Make the system flexible Eliminate waste Simplify the process Organize problem solving groups Upgrade quality

98 JIT Implementation Use JIT to finely tune an operating system
Somewhat different in USA than Japan JIT is still evolving JIT isn’t for everyone

99 Attributes of Lean Producers - They
use JIT to eliminate virtually all inventory build systems to help employees produce a perfect part every time reduce space requirements develop close relationships with suppliers educate suppliers

100 Attributes of Lean Producers - They
eliminate all but value-added activities develop the workforce make jobs more challenging reduce the number of job classes and build worker flexibility

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