S12-1 Operations Management Just-in-Time and Lean Production Systems Chapter 16.
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S12-1 Operations Management Just-in-Time and Lean Production Systems Chapter 16
S12-2 Just-In-Time and Lean Production. Role of inventory. Just-In-Time components. Suppliers. Layout. Scheduling. Quality. Lean Production. Outline
S12-3 Just-In-Time Management philosophy of continuous problem solving. Internal focus on production scheduling, inventory, layout, quality, suppliers, etc. Produce “just-in-time”, only to meet actual demand. Lean Production Extension of Just-In-Time to eliminate waste (“fat”). External focus on satisfying the customer. Originated in Japan; Popularized by Toyota; now used globally. Just-in-Time and Lean Production
S12-4 Demand is uncertain and variable. Same equipment/people are used to make a variety of products, and switching products takes time. Things go wrong: Materials are defective. Deliveries are variable (late). Equipment fails, people make mistakes, etc. Production documents are incorrect. Why is Production Difficult?
S12-5 Use inventory to: Match supply with varying demand. Allow production of a variety of products on the same equipment. Overcome defective materials, late deliveries, equipment failures, mistakes, etc. One Solution: Inventory
S12-6 Forecast demand. Produce in large lots (to reduce expensive setups). PUSH product to customer. Large lot sizes mean: Large work-in-process inventories. Large final product inventories. Slow response to changes and defects. “Traditional” Production
S12-7 Produce in small lots to replenish stock actually sold. Sales PULL product (and parts) through plant. Supplies and components are ‘pulled’ through system to arrive where they are needed when they are needed. Small lot sizes mean: Small work-in-process inventories. Small final product inventories. Quick response to changes and defects. “Just-in-Time” Production
S12-8 Push versus Pull Push system: Material is pushed (according to forecasts) downstream (along assembly line, to warehouses, etc.). Pull system: Material is pulled (by sales to customers) downstream (along assembly line, to warehouses, etc.) just as it is needed.
S12-9 Just-in-time requires identifying and solving problems that create inventory. Reduce setup costs to switch products. Eliminate all waste: Defective materials, late deliveries, equipment failures, mistakes, etc. Just-In-Time is Not Easy
S12-11 Reduces waste and improves quality. Waste = Anything not adding value to the product. Exposes problems caused by variability. Variability in demand, deliveries, materials, equipment, etc. Streamlines production b y reducing inventory. Reduces delays and increases throughput. Benefits: Reduced cost and/or increased profit. Faster response to the customer. What Does Just-in-Time Do?
S12-13 JIT objective: Eliminate inventory. Hold minimum inventory to keep system running. JIT requires: Small lot sizes. Low setup times. Just-in-time deliveries. Deliveries direct to point of use (not stockroom). Inventory
S12-14 Scrap Work in process inventory level (hides problems) Unreliable Vendors Capacity Imbalances Lowering Inventory Reduces Waste
S12-15 Scrap Reducing inventory reveals problems so they can be solved. Unreliable Vendors Capacity Imbalances WIP Lowering Inventory Reduces Waste
S12-16 Large Lot Sizes = Large Inventory Time Inventory Level Lot Size 200 Average inventory = 100 Average inventory = (Lot size)/2
S12-17 To Lower Inventory, Reduce Lot Size Time Inventory Level Lot Size 200 Average inventory = (Lot size)/2 Lot Size 80 Average inventory = 40
S12-18 EPQ Minimizes Total Costs Lot Size Cost Holding Cost Total Cost Setup Cost Optimal Lot Size
S12-19 Reducing Setup Costs Reduces Lot Size and Total Cost! Lot Size Cost Holding Cost Total Cost Setup Cost Original optimal lot size New optimal lot size
S12-20 Separate setup into preparation (while machine is running) and actual setup (while machine is stopped). Do as much as possible while the machine is running. Move material closer and improve material handling. Standardize and improve tooling. Steps to Reduce Setup Time
S12-21 JIT objective: Frequent on-time deliveries of small lots of high quality. Buyer and supplier form JIT partnerships to eliminate: Unnecessary activities. In-plant inventory. In-transit inventory. Suppliers
S12-22 JIT objective: Reduce movement of people and material. JIT requires: Delivery directly to work areas – not to stockroom. Short distances to ensure on-time deliveries. Little space for inventory. Flexibility: Moveable or changeable machines. Layout
S12-23 JIT objective: Simple system to pull product through plant in small lots. JIT requires: Communicating schedules to suppliers. “Level” schedules: production each day equals demand. Freezing part of schedule nearest due date. Small lots. Kanban techniques. Scheduling
S12-24 Japanese word for card. Authorizes production from downstream operations. ‘Pulls’ material through plant. May be a card, flag, verbal signal etc. Used often with fixed-size containers. Add/remove containers to change production rate. Kanban
S12-25 Kanban Signals “Pull” Material Through the Process
S12-26 JIT objective: Prevent failure. Cleanliness and simplicity are keys. Maintain equipment so it does not break. JIT requires: Scheduled & daily preventive maintenance. Operator performs preventive maintenance. Operator knows machine and is responsible for product quality. Preventive Maintenance (PM)
S12-27 JIT exposes quality problems by reducing inventory. JIT limits number of defects produced with small lots. JIT requires TQM. Statistical process control. Worker involvement & empowerment. Immediate feedback. Quality
S12-28 Lean Production Use JIT to eliminate virtually all inventory. Eliminate all but value-added activities. Build systems to help employees produce a perfect part every time. Reduce space requirements. Develop partnerships with suppliers. Educate suppliers and workers. Enrich jobs.
S12-29 JIT/Lean Production Partnerships To achieve frequent deliveries of high quality small-lot quantities: Use few suppliers, each with a larger share of business and longer-term contracts. Helps ensure quality and reliability. Prefer nearby suppliers for reliable scheduling. Example: 4 deliveries each day, 2 hours apart. Suppliers encouraged to extend JIT to their suppliers.
S12-30 Just-In-Time and Japan Area of Japan = 144,000 square miles. California = 158,000 square miles Missouri = 70,000 square miles Population of Japan is about 1/2 of USA. Japan is islands ( 80% mountainous). Land is expensive. Facilities are not far apart. Natural resources are limited. Minimizing waste is crucial.