©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

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JIT/Lean Production

Some Statistics from1986 ...

Framingham (GM) 40.7 hours 130 defects 2 weeks

Toyota Takaoka 16 hours 45 defects 2 hours

A comparison of:1) assembly hours2) defects per 100 cars3) average inventory levels

Post World War II

Growing and rebuilding world economy Demand > Supply US Manufacturing:

Higher volumes Capital substitution “Breakthrough” improvements “The production problem has been solved”

View from Japan

Very little capital War-ravaged workforce Little space Poor or no raw materials Lower demand levels Little access to latest technologies

U.S. methods would not work

Japanese Approach to Operations

Maximize use of people

Simplify first, add technology second

Gradual, but continuous improvement

Minimize waste (including poor quality)

Led to the development of the approach known as Just-in-Time

The Toyota Production System

Based on two philosophies:1. Elimination of waste

2. Respect for people

Just-in-Time

Repetitive production system

in which processing and movement of materials and goods occur just as they are

needed

Pre-JIT: Traditional Mass Production

Big lot sizesLots of inventory”PUSH” material to nextstage

Lowerper unit

cost

Big purchase shipments

Big “pushes” of finished goodsto warehouses or customers

???

Post-JIT: “Lean Production”

Tighter coordination along the supply chainGoods are pulled along

— only make and ship what is neededSmaller lotsFaster setupsLess inventory, storage space”PULL” material to next stage

Minimalor no

inventoryholding

cost

Smaller shipments

Goods are pulled out ofplant by customer demand

JIT Goals(throughout the supply chain)

Eliminate disruptions Make the system flexible Reduce setup times and lead times Minimize inventory Eliminate waste

Waste

Definition:

Waste is ‘anything other than the minimum amount of equipment, materials, parts, space, and worker’s time, which are absolutely essential to add value to the product.’

— Shoichiro Toyoda President, Toyota

Forms of Waste:

Overproduction Waiting time Transportation Processing Inventory Motion Product Defects

Elimination of Waste

1. Focused factory networks2. Group technology3. Quality at the source4. JIT production5. Uniform plant loading6. Kanban production control system7. Minimized setup times 8. Jidoka and Poka-Yoke

Inventory as a Waste

Requires more storage space Requires tracking and counting Increases movement activity Hides yield, scrap, and rework problems Increases risk of loss from theft, damage,

obsolescence

Examples of Eliminating “Wastes”

Big Bob’s Automotive Axles:

Wheels boughtfrom outsidesupplier

Axles made andassembled in house

BEFORE: Shipping in Wheels

Bob’s

Wheels

Warehouse

Truck Cost: $500 (from Peoria)

Maximum load of wheels: 10,000

Weekly demand of wheels: 500

AFTER: Shipping in Wheels

Truck Cost: $50 (from Burlington)

Maximum load of wheels: 500

Weekly demand of wheels: 500

What wastes have been reduced?

Bob’sWheels

Process Design

“Focused Factories” Group Technology Simplified layouts with little storage space Jidoka and Poka-Yoke Minimum setups

Personnel and Organizational Elements

Workers as assets

Cross-trained workers

Greater responsibility at lower levels

Leaders as facilitators, not order givers

Planning and Control Systems

“Small” JIT

Stable and level schedules

Mixed Model Scheduling

“Push” versus “Pull”

Kanban Systems

Kanban

Uses simple visual signals to control production

Examples:

empty slot in hamburger chute

empty space on floor

kanban card

Kanban Example

Workcenter B uses parts produced by Workcenter A

How can we control the flow of materials so that B alwayshas parts and A doesn’t overproduce?

Workcenter A Workcenter B

When a container is opened by Workcenter B, its kanban card is removed and sent back to Workcenter A.This is a signal to Workcenter A to produce another box of parts.

Kanban card: Signal to produceWorkcenter A Workcenter B

Kanban Card

Empty Box: Signal to pull

Empty box sent back. Signal to pull another full box intoWorkcenter B.Question: How many kanban cards here? Why?

Workcenter A Workcenter B

How Many Kanbans?

y = number of kanban cardsD = demand per unit of timeT = lead timeC = container capacityX = fudge factor

Cx)DT(1

y

Lean Production

Lean Production can be defined as an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods)

Lean Production also involves the elimination of waste in production effort

Lean Production also involves the timing of production resources (i.e., parts arrive at the next workstation “just in time”)

Minimizing Waste: Focused Factory Networks

CoordinationSystem Integration

These are small specialized plants that limit the range of products produced (sometimes only one type of product for an entire facility)

These are small specialized plants that limit the range of products produced (sometimes only one type of product for an entire facility)

Some plants in Japan have as few as 30 and as many as 1000 employees

Some plants in Japan have as few as 30 and as many as 1000 employees

Minimizing Waste: Group Technology (Part 1)

Using Departmental Specialization for plant layout can cause a lot of unnecessary material movement

Using Departmental Specialization for plant layout can cause a lot of unnecessary material movement

Saw Saw

Lathe PressPress

Grinder

LatheLathe

Saw

Press

Heat Treat

Grinder

Note how the flow lines are going back and forthNote how the flow lines are going back and forth

Minimizing Waste: Group Technology (Part 2)

Revising by using Group Technology Cells can reduce movement and improve product flow

Revising by using Group Technology Cells can reduce movement and improve product flow

Press

Lathe

Grinder

Grinder

A

2

BSaw

Heat Treat

LatheSaw Lathe

PressLathe

1

Minimizing Waste: Uniform Plant Loading (heijunka)

Not uniform Jan. Units Feb. Units Mar. Units Total

1,200 3,500 4,300 9,000

Uniform Jan. Units Feb. Units Mar. Units Total

3,000 3,000 3,000 9,000

Suppose we operate a production plant that produces a single product. The schedule of production for this product could be accomplished using either of the two plant loading schedules below.

Suppose we operate a production plant that produces a single product. The schedule of production for this product could be accomplished using either of the two plant loading schedules below.

How does the uniform loading help save labor costs?How does the uniform loading help save labor costs?

or

Minimizing Waste: Inventory Hides Problems

Work in

process

queues

(banks)

Change

orders

Engineering design

redundancies

Vendor

delinquencies

Scrap

Design

backlogs

Machine

downtime

Decision

backlogsInspection

backlogs

Paperwork

backlog

Example: By identifying defective items from a vendor early in the production process the downstream work is saved

Example: By identifying defective work by employees upstream, the downstream work is saved

Respect for People

Level payrolls

Cooperative employee unions

Subcontractor networks

Bottom-round management style

Quality circles (Small Group Involvement Activities or SGIA’s)

Toyota Production System’s Four Rules1. All work shall be highly specified as to content, sequence, timing,

and outcome

2. Every customer-supplier connection must be direct, and there must be an unambiguous yes-or-no way to send requests and receive responses

3. The pathway for every product and service must be simple and direct

4. Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization

Lean Implementation Requirements: Total Quality Control

Worker responsibility

Measure SQC

Enforce compliance

Fail-safe methods

Automatic inspection

Lean Implementation Requirements: Stabilize Schedule

Level schedule

Underutilize capacity

Establish freeze windows

Lean Implementation Requirements: Kanban-Pull

Demand pull

Backflush

Reduce lot sizes

Lean Implementation Requirements: Work with Vendors

Reduce lead times

Frequent deliveries

Project usage requirements

Quality expectations

Lean Implementation Requirements: Reduce Inventory More

Look for other areas

Stores

Transit

Carousels

Conveyors

Lean Implementation Requirements: Improve Product Design

Standard product configuration

Standardize and reduce number of parts

Process design with product design

Quality expectations

Lean Implementation Requirements: Concurrently Solve Problems

Root cause Solve permanently

Team approach

Line and specialist responsibility

Continual education

Lean Implementation Requirements: Measure Performance

Emphasize improvement

Track trends

Lean in Services (Examples)

Organize Problem-Solving Groups

Upgrade Housekeeping

Upgrade Quality

Clarify Process Flows

Revise Equipment and Process Technologies

Lean in Services (Examples)

Level the Facility Load

Eliminate Unnecessary Activities

Reorganize Physical Configuration

Introduce Demand-Pull Scheduling

Develop Supplier Networks