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JIT/Lean Operations

Good production systems require that managers address three issues that are pervasive and fundamental to operations management: eliminate waste, remove variability, and improve throughput

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Just-In-Time, Toyota Production System, 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

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BPM with Lean Principles

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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

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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

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Types of Waste in TPS

Muda: Waste, uselessness, idleness Mura: Unevenness, irregularity, non

uniformity Muri: unreasonableness, impossible,

beyond one's power, too difficult;

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Taiichi Ohno’s Seven Wastes (Muda)

Defective products: Costs of reworking and rescheduing Overprocessing: Providing a quality more than demanded

by the customer Waiting lines: Queues Non used employee talent (8th. Waste item!) Transportation: Costs and risks of demage Inventory: Costs, risks of obsolescence, thivery Motion: Risks the production process inflicts on workers

and machinery Excessive (Over) production: Producing more than demand

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Eliminate Waste

Other resources such as energy, water, and air are often wasted

Efficient, sustainable production minimizes inputs, reduces waste

Traditional “housekeeping” has been expanded to the 5 Ss

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The 5 Ss to Organize a Workspace for efficiency and effectiveness

Rules for identifying and storing the items used, maintaining the area and items, and sustaining the new order Sort/segregate – Identify unnecessary items and dispose of them

properly Simplify/straighten – Arrange all necessary items so they can be

easily selected for use Shine/sweep – Keep workplace clean, safe and easy to work Standardize – Maintain high standards of housekeeping and

workplace organization at all times. Sustain/self-discipline – Keep things working by performing regular

audits, Training and self-discipline

Two additional Ss

Safety – build in good practices

Support/maintenance – reduce variability and unplanned downtime

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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

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Sources of Variability

1. Incomplete or inaccurate drawings or specifications

2. Poor production processes resulting in incorrect quantities, late, or non-conforming units

3. Unknown customer demands

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Sources of Variability

1. Incomplete or inaccurate drawings or specifications

2. Poor production processes resulting in incorrect quantities, late, or non-conforming units

3. Unknown customer demandsBoth JIT and inventory

reduction are effective tools

in identifying causes of

variability

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Improve Throughput

Throughput time is the time it takes to move an order from receipt to delivery.

Manufacturing cycle time is the time between the arrival of raw materials and the shipping of the finished order

A pull system –produce to order- increases throughput rate

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Pull Systems/KanbanKanban system control the flow of resources in a production process by replacing only what has been consumed. They are customer order-driven production schedules based on actual demand and consumption rather than forecasting.

Implementing Pull Systems with Kanban can help you eliminate waste in handling, storing, and getting your product to the customer.

Benefits Reduce overall inventory Reduce work in process (WIP) Reduce order turnaround time Increase customer satisfaction Improve cash flow

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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 –make to stock-

dump orders on the downstream stations regardless of the need

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Lean Operations

Different from JIT in that it is externally focused on the customer

Starts with understanding what the customer wants

Optimize the entire process from the customer’s perspective

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Building a Lean Organization

Transitioning to a lean system can be difficult

Lean systems tend to have the following attributes Use JIT techniques Build systems that help employees

produce perfect parts Reduce space requirements

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Building a Lean Organization

Develop partnerships with suppliers Educate suppliers Eliminate all but value-added

activities Develop employees Make jobs challenging Build worker flexibility

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Lean Operations in Services

The JIT techniques used in manufacturing are used in services Suppliers Layouts Inventory Scheduling

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BPM with Lean Principles

• Lean system aims to decrease waste while attaining a high value as perceived by the customer.

• Value is a combination of purchase lead time, price and quality as perceived by the customer

• Waste includes everything that does not add value from the customer’s persepective

This results in significant improvements in Process time (30-50%)Process cost (25%30%)Stock levels (25-50%)Operational costs (5-30%)Efficiency (15-40%)Customer satisfaction (20-60%)Quality, Standardization

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Vehicle Identification System

Kaynak: Yalın Enstitü

• Shorter process duration

• Easier processes

• Higher customer satisfaction

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Quality

Cost

Time

Value is a function of quality, replenishment lead time and cost

Value

Kaynak: MBTürk- Yalın Ofis

Value as perceived by customer

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Understand the value as perceived by the customer

Analyze the value chain

Identify waste and eliminate

Small but continuous improvements-Keizen

Solve the source of the problem

Define standards for the processes

Measure the process performance with the KPI’s

Lean Principles

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Identify and Analyze the Value Chain

Cycle time: total duration of the process that includes all type of inefficiencies, i.e., waste

Time spent for value adding tasks

Time spent for non value adding but obligatory processes

Time spent for non value adding and nonobligatory processes

Keep

Improve

Eliminate

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Value chain for a fast food restaurant

Customer queues infront of the cashier 5 min.

Customer gives the order 1 min.

Cashier puts the extra cash delivered by the next cashier 1 min.

Customer repetats her order 1 min.

Order is prepared 3 min.

Extra waiting for the french fries 2 min.

Wrong drink is served 1 min.

Wait for the POS machine approval 2 min.

Payment and receipt 1 min.

Get the order 1 min.

Total cycle time 18 min.

Value adding time 3 min.

Value ratio %17

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Homework 8

Consider the registration process of our university

Describe the value chain for the current and your proposed process

Calculate the value ratio for the current and proposed process

Comment on the results

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