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Just-in-Time and Lean Operations. Developments of JIT and Lean Operations 1960’s: Developed as Toyota Production System by Taiichi Ohno and his colleagues.

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Presentation on theme: "Just-in-Time and Lean Operations. Developments of JIT and Lean Operations 1960’s: Developed as Toyota Production System by Taiichi Ohno and his colleagues."— Presentation transcript:

1 Just-in-Time and Lean Operations

2 Developments of JIT and Lean Operations 1960’s: Developed as Toyota Production System by Taiichi Ohno and his colleagues 1970’s: U.S. and European auto makers began to apply JIT to improve quality and productivity 1990’s and beyond: Expanded the JIT concept to streamline all types of operations

3 Definition of JIT A set of techniques to increase productivity, improve quality, and reduce cost of an operations A management philosophy to promote elimination of waste and continuous improvement of productivity

4 What Could Be the Expected Benefits of JIT?

5 Expected Benefits of JIT Reduction in throughput times Reduction in WIP Improvement in quality Improvement in productivity Reduction in resource requirements Improvement in customer satisfaction improvements in return on assets

6 Main Elements of JIT Elimination of waste Quality at the source Balanced and flexible work flow Respect for people Continuous improvement (Kaizen) Simplification and visual control Focus on customer needs Partnerships with key suppliers

7 What is A “Waste?”

8 Wastes Anything that exceeds the minimum resources needed for the appropriate value Toyota’s seven deadly wastes: Overproduction (excessive production resources) Inventory Waiting Transportation Processing Motion Defective parts

9 Why is Inventory Reduction Important?

10 Importance of Inventory Reduction Inventory costs money - carrying costs, obsolescence costs, and opportunity costs Inventory covers up problems and bottlenecks. Inventory reduction forces organization and employees to eliminate sources of problems and work as a team.

11 Quality at the Source Jidoka – autonomation (automatic detection of defects, e.g., Poka-yoke) Employee empowerment Statistical process control Prevention orientation (elimination of root causes through PDSA cycle)

12 Balanced and Flexible Work Flow Yo-i-don (ready, set, go) system Stable production schedule Set-up time reduction Flow-shop and cellular layouts Shojinka (flexible & multi-skilled workforce) Teamwork Total productive maintenance (TPM)

13 Respect for People Productivity improvement needs employee support Demonstrate by providing cross-training opportunities creating a safe and equitable work environment encouraging people to achieve their potential by giving them greater responsibility and authority promoting teamwork (formal and informal) developing partnerships with unions

14 Continuous Improvement (Kaizen) Employee suggestion system Process improvement 5S’s Seiri - organization Seiton - tidiness Seiso - purity Seiketsu - cleanliness Shitsuke - discipline

15 Simplification and Visual Control Standard and simple product designs Andon boards Kanban pull system Flag systems Music as signals Performance display systems

16 Focus on Customer Needs Customer needs determine the “value” of a product or service Be responsive to customers needs (present and future) Strive to “delight,” not just “satisfy” customers

17 Partnerships with Suppliers Reduce number of suppliers Use long-term contracts Emphasize price, delivery, and services Improve communication Share information Develop local just-in-time delivery Provide technical support to suppliers

18 JIT Implementation Top management commitment Steering committee Education program Pilot project planning Employee training Pilot implementation Pilot post mortem Feedback to steering committee Expansion to next project

19 Advancements in JIT (JIT II) Backwards Integration of staff and line functions to suppliers (e.g., purchasing) Requires EDI or web access to materials and logistics systems On-site supplier representative(s) with transaction processing authority Goal: link suppliers’ cycle to firm’s cycle to mutually reduce wait and move times

20 How Can JIT Be Applied to Non- Manufacturing Operations?

21 JIT for Non-Manufacturing Operations (Lean Operations) Implement demand-pull operations Eliminate unnecessary activities Standardize process flows Increase process flexibility Reorganize physical layouts Upgrade housekeeping and workplace organization

22 JIT for Non-Manufacturing Operations (Lean Operations) Develop supplier partnership networks Level work load Organize problem-solving groups Improve quality Develop effective suggestion systems Cross-train employees Promote teamwork

23 What Are Toyota’s Secrets of Success?

24 Toyota’s Secrets of Success (Steve Spear, HBR, May 2004) There is no substitute for direct observation Proposed changes should always be structured as experiments Workers and managers should experiment as frequently as possible Managers should coach, not fix

25 Suggested Readings Monden, Yasuhiro (1993). Toyota Production System: An Integrated Approach to Just-In-Time, 3rd edition, Institute of Industrial Engineers. Womack, James P. and Jones, Daniel T. (2003). Lean Thinking: Banish Waste and Create Wealth in Your Corporation, The Free Press. Jeffrey K. Liker (2004). The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer, McGraw-Hill.

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