1. JIT 1 JIT -Just in time Often called lean production or Toyota Production System (TPS) JIT is a philosophy whereby we continuously attempt to drive all waste out of our production system. Waste is anything other than the minimal amount (of any resource) absolutely essential to production. Goal - produce exactly what we need when we need it.

2. JIT 2 Linkages Marketing - higher levels of customization at lower costs Finance - should like investments that over time reduce waste Accounting - need to change view of inventory Human resources - new and different skills MIS - information systems often underpin these efforts

3. JIT 3 Building on TQM Note our goal in TQM was to eliminate variance from our processes. –And as we will discuss later JIT does require perfect quality –However, we can have no variance in a process - yet the process is in and of itself wasteful so this is a next step. B-ball playing robot / double entering data –Also note that TQM is strong on philosophy and weak on tools - JIT is the opposite

4. JIT 4 Unlike TQM Many companies are still working on being JIT today – and they will use the term. They may also talk about being lean – or doing lean manufacturing. The ideas of lean and JIT are basically the same. The real key is the tools to drive out waste are often valuable even to companies who are not JIT

5. JIT 5 JIT background JIT is a pull system as opposed to a push system. Produce in lot sizes of one- that are pulled through the system based on customer orders. Waste occurs because of variability in: –employees, machines, suppliers –as we reduce variability we reduce waste (remember quality ?)

6. JIT 6 Inventory as an example What is it? Types? Why do we have it? Firms hold inventory to: –decouple activities –provide a buffer (safety stock) supplier reliability quality etc. –Reduce unit prices From a JIT perspective inventory is being used to mask the problem not to solve it. Is inventory an asset?

7. JIT 7 Inventory hides problems Late deliveries Scrap Absenteeism Set-up costs Unbalanced line Rework Inventory Level

8. JIT 8 JIT and inventory As we reduce inventory we expose problems - forcing us to solve the problem which does what ? Small lots -preferably batches of 1: –as batch size increases what happens to WIP ? Costs ? –But beyond inventory buffers there are rational reasons to produce in large lots- what are they and why do we care?

9. JIT 9 Set-up time reduction - a key to small batches Analyze set-up process (note this is a quality tool as well). –Eliminate any unnecessary steps –Redesign work to speed up remaining steps –Internal verses external set-ups much of a set-up can be done off line (external) - while the machine is running. –Using two fixtures instead of one for dies –Kitting internal steps should be only ones performed when machine is stopped

10. JIT 10 Set-up examples Stamping dies Molds at Boeing Kitting for Hospitals –Time and quality implications MSFCU – early adopter if IT in banking A place it is needed- the typical health care setting –This is as much about quality as time – somewhere between 1 and 200,000 people a year die in our health care system because of mistakes- most of which deal with transmitting information

11. JIT 11 Scheduling If we can reduce set-up times / costs to the point where batch sizes of one are possible we can change our schedule: Old schedule: –AAAA BBBBBBBBBBBBBB CCCCCCCC AAAAAAAAAA New schedule: –AA B A B C B A C AA B CC A B A B C BB C AA CCC A B A This schedule is customer driven which means we are eliminating what ?

12. JIT 12 Kanban - a scheduling and CI tool Parts are produced or ordered as needed down-stream (pull). The two bin system. What is the ultimate size of the bins? Other Kanban signals. Why is this so effective ?

13. JIT 13 Product design We can not reduce inventory and schedule to produce in lots of one unless we also focus on the product. A story: –Detroit Diesel vs. Caterpillar (the modular engine) What does DD have that CAT does not ?

14. JIT 14 Characteristics of JIT products As few parts as possible. –reduce operations –reduce opportunities for errors Rathyon’s new carbon planes As many standard parts as possible. –Why – may make remanufacturing easier Modularity – also helps with remanufacturing Services

15. JIT 15 JIT processes We have just noted that JIT requires products and services that are designed to be easily produced - what else can we do to ensure that the process eliminates waste ? –distance reduction –delivery to point of use –flexibility set-up times (again) –space reduction

16. JIT 16 JIT processes Studies indicate that 95% of the time it takes for a product to get through a manufacturing system is wasted - in other words it is worked on for only 5% of the time !!!! –Think about this in a service context - dog hair cuts The first thing we need to do is reduce inventories –Sitting time is wasted time –Layout can facilitate inventory Design with no place to store. WHY ? The second issue is movement

17. JIT 17 JIT processes - distance and flexibility The shorter a distance a product travels the less time it takes and the less need there is for a buffer. –How does designing for no inventory aid this? –Cellular layouts rather than functional layouts for fabrication. –Services? Flexible processes: –Much of today’s automation can do a large number of tasks - if equipment is flexible what is the implication for JIT ? What does flexibility imply about set-ups ? –Services?

18. JIT 18 Suppliers and JIT Fact: on average 56% of the total cost of a manufactured item is purchased parts - in other words our suppliers are responsible for over half of our products !!!! JIT is dependent on suppliers who can: –deliver on time every time –deliver perfect quality every time (w/o inspection) –work with our company to reduce waste

19. JIT 19 Waste can occur anywhere in the supply chain Many companies view JIT as a way to push inventory back on their suppliers - this is far from optimal ! –GM’s box supplier –Len industries and Chrysler’s inability to forecast –What does having suppliers hold inventory indicate ? Inventory in transit adds no value to either company

20. JIT 20 Outcomes of JIT relationships (we hope) No unnecessary activities: –incoming inspection –warehousing No in plant inventories: –small lots as needed Limited in transit inventories Elimination of poor suppliers –suppliers who can not or will not deliver what is needed when it is needed with perfect quality must be improved or eliminated

21. JIT 21 Location of suppliers One of the major consequences of JIT is the location of suppliers. –Move closer to final assembly plant In a restaurant who do you want to buy produce from? (service) –Move into final assembly plant VW Brazil Mercedes Alabama –Plant location decisions are therefore effected by supplier locations as well

22. JIT 22 Quality and JIT Suppliers must deliver perfect quality ! We must make parts right the first time, every time. –scrap and rework are serious forms of waste especially with no inventory By removing inventory from the system JIT enables quality improvements because problems must be fixed immediately. JIT products and process are also simpler which should decrease variance and increase quality

23. JIT 23 Preventive maintenance You can pay me now or you can pay me later: –Maintenance can be scheduled (PM) or done as needed (run it until it breaks). What do most companies do ? –Why is PM so hard to do ? measurement systems push systems poor understanding of process fear of missing due dates

24. JIT 24 Why does JIT require PM What does running equipment until it breaks add to the system ? We can schedule PM at times when the plant is closed, or when we are not running at full capacity. –Atlas tool and die and the 3rd shift –When do breakdowns often occur? Is a process producing good parts if it is near the breaking point ?

25. JIT 25 Making PM work Measurement Systems –focus on uptime as opposed to planned up time –rewards based purely on utilization are a problem Training –management - must understand the notion of unplanned variation and meeting due dates. –operators (also note how measurement can be dysfunctional here) - Machining at Masco-tech.

26. JIT 26 Operational employees In most situations JIT requires increased knowledge and commitment from employees. –Deming notes that most quality problems are the fault of the system; However any quality problem can stop a JIT system. –Employees are needed to make continuos improvement. –Employees will generally be the first ones to recognize a problem.

27. JIT 27 Operational employees Cont. Generally employees should be empowered to: –stop the line –make suggestions and improvements –expand the depth and breadth of their jobs However; –some employees do not want this responsibility –like suppliers, employees will only make these changes if they trust management !

28. JIT 28 Top management support JIT is a philosophy that pervades a company, and as such it must be supported from the top. –like all strategic initiatives what top management supports is what will get done –This support must be long term - JIT does not occur overnight !!!

29. JIT 29 Some key points Is JIT just for manufacturing? IS JIT for everyone ? Are most of the elements of JIT for everyone? Are the Japanese really the only ones who can do this? –A sidebar on business history

30. JIT 30 JIT wrap-up JIT is an all encompassing philosophy that includes manufacturing, purchasing, logistics and operational employees. The elements are difficult to achieve and may not be appropriate for some companies. However, the elements of JIT, summed or taken individually, all contribute to faster better and cheaper- so there is something here for all companies

31. JIT 31 JIT: Faster Less inventory- faster throughput Improved scheduling- faster delivery and more on time delivery Products- simpler, hence faster to assemble Layout- less wasted space and movement, hence faster product movements Suppliers - deliver faster and more dependably Quality- doing it right the first time is faster than rework Preventive maintenance: predicable downtime for increased on time delivery People: help to optimize system and reduce time for set- ups and such

32. JIT 32 JIT: Better Less inventory- no hidden problems Improved scheduling- less inventory Products- simpler, hence easier to assemble correctly Layout- less wasted space and movement, hence fewer chances to make mistakes Suppliers - deliver perfect quality Quality- Duh Preventive maintenance: reduce the time a machine is out of control People: help to optimize system and reduce defects

33. JIT 33 JIT: Cheaper Less inventory- lower inventory costs Improved scheduling- less expediting and or lost orders Products- simpler, hence cheaper to make Layout- less wasted space and movement, hence fewer employees and smaller plant Suppliers - lower inventory costs Quality- doing it weight the first time Preventive maintenance: predicable downtime for increased on time delivery People: help to optimize system and reduce costs for set- ups and such