1. Lecture 27 Just-in-Time Manufacturing
Books
Introduction to Materials Management, Sixth Edition, J. R. Tony Arnold, P.E., CFPIM, CIRM, Fleming College, Emeritus, Stephen N. Chapman, Ph.D., CFPIM, North Carolina State University, Lloyd M. Clive, P.E., CFPIM, Fleming College
Operations Management for Competitive Advantage, 11th Edition, by Chase, Jacobs, and Aquilano, 2005, N.Y.: McGraw-Hill/Irwin.
Operations Management, 11/E, Jay Heizer, Texas Lutheran University, Barry Render, Graduate School of Business, Rollins College, Prentice Hall

2. Objectives Origin of JIT Supply Chain Characteristics of JIT
Importance of JIT
JIT, TPS, Lean Production
Eliminating Waste
Seven Sources of Waste
5S’s
Function of JIT inventory
Supplier partnership
Advantages of setup reduction
Sources of variability
JIT and competitive advantage

3. Toyota Motor Corporation
Largest vehicle manufacturer in the world with annual sales of over 9 million vehicles
Success due to two techniques, JIT and TPS
Continual problem solving is central to JIT
Eliminating excess inventory makes problems immediately evident

4. Toyota Motor Corporation
Central to TPS is a continuing effort to produce products under ideal conditions
Respect for people is fundamental
Small building but high levels of production
Subassemblies are transferred to the assembly line on a JIT basis
High quality and low assembly time per vehicle

5. Origins of JIT
The Toyota Production System
by Taiichi Ohno
Various titles by Shigeo Shingo

6. Supply Chain (Logistics System)
SUPPLIERS
CUSTOMER
DISTRIBUTION
SYSTEM
MANUFACTURER
Manufacturing
Planning and
Control
Physical Distribution
Physical
Supply
DOMINANT FLOW OF PRODUCTS AND SERVICES
DOMINANT FLOW OF DEMAND & DESIGN INFORMATION

7. Characteristics of JIT Environments
Flow manufacturing
Process flexibility
Total quality management
Total productive maintenance

8. Characteristics of JIT Environments
Uninterrupted flow
Continuous process improvement
Supplier partnerships
Total employee involvement

9. Importance of JIT
JIT is not primarily an inventory reduction program. Its primary purpose is to focus attention on problems.

10. Out of the Crisis Deming on: JIT
The great advantage of the [JIT] system is the discipline behind it - processes in control; quality, quantity, and regularity predictable.
Out of the Crisis

11. Just-In-Time, TPS, and Lean Operations
JIT is a philosophy of continuous and forced problem solving via a focus on throughput and reduced inventory
TPS emphasizes continuous improvement, respect for people, and standard work practices
Lean production supplies the customer with their exact wants when the customer wants it without waste

12. Just-In-Time, TPS, and Lean Operations
JIT emphasizes forced problem solving
TPS emphasizes employee learning and empowerment in an assembly-line environment
Lean operations emphasize understanding the customer

13. Eliminate Waste
Waste is anything that does not add value from the customer point of view
Storage, inspection, delay, waiting in queues, and defective products do not add value and are 100% waste

14. Ohno’s Seven Wastes Overproduction Queues Transportation Inventory
Motion
Overprocessing
Defective products

15. Seven Sources of Waste The process Methods Movement Product defects
Waiting time
Over-production
Inventory

16. Eliminate Waste
Other resources such as energy, water, and air are often wasted
Efficient, ethical, and socially responsible production minimizes inputs, reduces waste
Traditional “housekeeping” has been expanded to the 5 Ss

17. 5S’s Sort:Organization (Seiri) Set in order: Orderliness (Seiton)
Shine: Cleanliness (Shitsuke)
Standardized Cleanup (Seiso)
Sustain: Discipline (Seiketsu)

18. The 5 Ss Sort/segregate – when in doubt, throw it out
Simplify/straighten – methods analysis tools
Shine/sweep – clean daily
Standardize – remove variations from processes
Sustain/self-discipline – review work and recognize progress

19. The 5 Ss Two additional Ss Safety – build in good practices
Sort/segregate – when in doubt, throw it out
Simplify/straighten – methods analysis tools
Shine/sweep – clean daily
Standardize – remove variations from processes
Sustain/self-discipline – review work and recognize progress
Two additional Ss
Safety – build in good practices
Support/maintenance – reduce variability and unplanned downtime

20. JIT
Two Basic Questions
How much to order?
When to order?

21. The Functions of Inventory
To meet anticipated demand
To de-couple production and distribution processes
To take advantage of quantity discounts
To hedge against inflation
To protect against stockouts
To permit operations to continue smoothly

22. Types of Inventory Raw Material Inventory
Work-In-Process Inventory (WIP)
Finished Goods Inventory
Maintenance/Repair/Operating Supplies (MRO)

23. Inventory Turns
Inventory turns: a measure of how effectively inventories are being used. The ratio of Annual Cost of Goods Sold divided by average inventory in dollars

24. Just-in-Time Inventory
Just-in-time inventory is the minimum inventory necessary to keep a perfect system running.
The exact amount of goods arrive at the moment they are needed, not a minute before or a minute after the units are required.

25. Supplier Partnerships
Commitment
Communication
Change
Principles
Time together
Appreciation / Feedback

26. Advantages of Setup Reduction
Reduced EOQ
Reduced queue & mfg. Lead time
Reduced WIP
Improved quality
Improved process and material flow

27. Inventory Management Terms
Holding Costs
The costs associated with holding or “carrying” inventory over time.
Ordering Costs
Includes costs of supplies, forms, order processing, clerical support, etc.
Setup Costs
The costs to prepare a machine or process for manufacturing an order.
Safety Stock
Extra stock held to prevent a stockout, held for uneven demand.

28. Danger of Blind JIT Implementation
Coupling your customers to problems
Inadequate resources to address problems in a timely manner

29. Remove Variability
JIT systems require managers to reduce variability caused by both internal and external factors
Variability is any deviation from the optimum process
Inventory hides variability
Less variability results in less waste

30. Sources of Variability
Incomplete or inaccurate drawings or specifications
Poor production processes resulting in incorrect quantities, late, or non-conforming units
Unknown customer demands

31. Sources of Variability
Incomplete or inaccurate drawings or specifications
Poor production processes resulting in incorrect quantities, late, or non-conforming units
Unknown customer demands
Both JIT and inventory reduction are effective tools in identifying causes of variability

32. Improve Throughput
The time it takes to move an order from receipt to delivery
The time between the arrival of raw materials and the shipping of the finished order is called manufacturing cycle time
A pull system increases throughput

33. Improve Throughput
By pulling material in small lots, inventory cushions are removed, exposing problems and emphasizing continual improvement
Manufacturing cycle time is reduced
Push systems dump orders on the downstream stations regardless of the need

34. Just-In-Time (JIT) Powerful strategy for improving operations
Materials arrive where they are needed when they are needed
Identifying problems and driving out waste reduces costs and variability and improves throughput
Requires a meaningful buyer-supplier relationship

35. JIT and Competitive Advantage

36. JIT and Competitive Advantage

37. JIT Partnerships
JIT partnerships exist when a supplier and purchaser work together to remove waste and drive down costs
Four goals of JIT partnerships are:
Removal of unnecessary activities
Removal of in-plant inventory
Removal of in-transit inventory
Improved quality and reliability

38. JIT Partnerships

39. Concerns of Suppliers
Diversification – ties to only one customer increases risk
Scheduling – don’t believe customers can create a smooth schedule
Changes – short lead times mean engineering or specification changes can create problems
Quality – limited by capital budgets, processes, or technology
Lot sizes – small lot sizes may transfer costs to suppliers

40. End of Lecture 27