Chapter 13 Chapter 13

Lean SystemsLean Systems

APICS Definition of JITAPICS Definition of JIT

“A philosophy of manufacturing based on planned elimination of waste & continuous improvement of productivity.” …...

APICS Definition of JITAPICS Definition of JIT

“The primary elements of just-in-time are to:– Have only required inventory when needed,

– Improve quality to zero defects,

– Reduce lead times by reducing setup times, queue lengths, & lot sizes,

– Incrementally revise operations themselves, and

– Accomplish these things at minimum cost”.

APICS Definition of Lean APICS Definition of Lean ManufacturingManufacturing

“A philosophy of production that emphasizes minimization of amount of all resources (including time) used in various activities of enterprise. It involves:– … Identifying & eliminating non-value-adding

activities,– … Employing teams of multi-skilled workers,– … Using highly flexible, automated machines”

Calculate Number of ContainersCalculate Number of Containers

( )(1 )

where:

k = number containers

d = expected daily demand

w = avg waiting + material handling times

p = avg processing time

c = number parts in container

= policy variable

d w pk

c

Traditional View of ManufacturingTraditional View of Manufacturing• Key objective was to fully utilize capacity

so that more products were produced by fewer workers & machines.

• How? With large queues of in-process inventory waiting at work centers.

• Workers & machines never had to wait for product to work on, so capacity utilization was high & production costs were low.

• Result: products spent most of their time in manufacturing just waiting

JIT Manufacturing PhilosophyJIT Manufacturing Philosophy

• Main objective of JIT manufacturing is to reduce manufacturing lead times

• This is primarily achieved by drastic reductions in work-in-process (WIP)

• The result is a smooth, uninterrupted flow of small lots of products throughout production

Characteristics of Lean Systems: Characteristics of Lean Systems: Just-in-TimeJust-in-Time Pull method of materials flowPull method of materials flow Consistently high qualityConsistently high quality Small lot sizesSmall lot sizes Uniform workstation loadsUniform workstation loads Standardized components and work methodsStandardized components and work methods Close supplier tiesClose supplier ties Flexible workforceFlexible workforce Line flowsLine flows Automated productionAutomated production Preventive maintenancePreventive maintenance

Pull vs. Push SystemPull vs. Push System

• Push—production of item begins before customer demand

• Pull—production of item is triggered by customer demand

Consistently High QualityConsistently High Quality

• Eliminate scrap & rework to achieve uniform product flow

• Quality at the source—workers serve as their own quality inspector

• Supplier quality must be 3 or better

• Stopping assembly line probably means missed deliveries

Small Lot SizesSmall Lot Sizes

• As small as possible to eliminate carrying inventory

• Small lots cut lead times

• Small lots help achieve level workload

• But, small lots– Increase setups– Drive shorter setup times

Reducing InventoriesReducing Inventoriesthrough Setup Time Reductionthrough Setup Time Reduction

• Central to JIT is reduction of production lot sizes so inventory levels are reduced

• Smaller lot sizes result in more machine setups

• More machine setups, if they are lengthy, result in:– Increased production costs– Lost capacity (idle machines during setup)

• Answer is: REDUCE MACHINE SETUP TIMES

Uniform Workstation LoadsUniform Workstation Loads

• Same quantity and type products each day– Difficult to impossible in a job shop

• Mixed-model assembly– Produce a mix of products in small lots

Working Toward Repetitive Working Toward Repetitive ManufacturingManufacturing

• Reduce Setup Times & Lot Sizes to Reduce Inventories

• Change Factory Layout to Allow Streamlined Flows

• Convert Process-Focused Layout to Cellular Manufacturing (CM) Centers

• Install Flexible Manufacturing Systems (FMS)• …..more

Working Toward Repetitive Working Toward Repetitive ManufacturingManufacturing• Standardize Parts Designs

• Train Workers for Several Jobs

• Implement Preventive Maintenance (PM) Programs

• Install Effective Quality Control Programs

• Develop an Effective Subcontractor Network

Standardized Components Standardized Components & Work Methods& Work Methods

• Productivity tends to increase with increased repetition

• Standardization of components reduces raw material inventory requirements

Closer Supplier TiesCloser Supplier Ties

• Close relationship required• Frequent delivery often directly to the

assembly line• Consistently high quality• JIT manufacturers usually seek:

– Local suppliers– Reduced inventory in supplier’s warehouse also– Long-term partnerships with suppliers

Flexible WorkforceFlexible Workforce

• Workers can perform multiple jobs

• Workers rotate to other jobs based on vacations, relieve bottlenecks, or even relieve boredom

Line FlowsLine Flows

• Can reduce setups

• One worker multiple machines (OWMM)– One worker may follow product through

entire manufacturing operation

Automated ProductionAutomated Production

• Important part of JIT

• However, for some tasks humans consistently outperform machines

Preventive MaintenancePreventive Maintenance

• Scheduled downtime to maintain equipment & reduce unscheduled maintenance

• Use skilled technicians to maintain high-tech machines

Changes Required for JITChanges Required for JIT

• JIT requires certain changes to factory & way it is managed:– Stabilize production schedules– Make factories more focused– Increase work center capacities– Improve product quality– Cross-train workers– Reduce equipment breakdowns– Develop long-term supplier relations

Eliminating Waste in ManufacturingEliminating Waste in Manufacturing• Make only what is needed now.• Reduce waiting by coordinating flows &

balancing loads.• Reduce or eliminate material handling &

shipping.• Eliminate unneeded production steps.• Reduce setup times & increase production rates.• Eliminate unnecessary human motions.• Eliminate defects & inspection.

People Make JIT WorkPeople Make JIT Work

• JIT has strong element of training & involvement of workers.

• Culture of mutual trust & teamwork must be developed.

• Attitude of loyalty to team & self-discipline must be developed.

• Another crucial element of jit is empowerment of workers, giving them authority to solve production problems.

Elements of JIT PurchasingElements of JIT Purchasing• Cooperative & long-term relationship between

customer & supplier.• Supplier selection based not only on price, but also

delivery schedules, product quality, & mutual trust.• Suppliers usually located near factory.• Deliveries directly to production line.• Parts delivered in small, standard-size containers

with minimum of paperwork & in exact quantities.• Delivered material is of near-perfect quality.

Benefits of JITBenefits of JIT• Inventory levels drastically reduced:

– Frees up working capital for other projects– Less space is needed– Customer responsiveness increases

• Total product cycle time drops• Product quality is improved• Scrap & rework costs go down• Forces managers to fix problems & eliminate

waste .... or it won’t work!

Uncovering Production ProblemsUncovering Production Problems

QualityQualityProblemsProblems

MaterialMaterialShortagesShortages

MachineMachineBreakdownsBreakdowns

WorkloadWorkloadImbalancesImbalances

WorkerWorkerAbsenteeismAbsenteeism

Out-of-SpecOut-of-SpecMaterialsMaterials

QualityQualityProblemsProblems

In-ProcessIn-ProcessInventoryInventory

ProductionProductionProblemsProblems

We Must Lower Water We Must Lower Water Level!Level!

Lot Size and Cycle InventoryLot Size and Cycle Inventory

Lot size = 100

On

-han

d in

ven

tory

5 10 15 20 25 30

Time (hours)

100 –

75 –

50 –

25 –

0 –

Average cycle inventory

Lot Size and Cycle InventoryLot Size and Cycle Inventory

Average cycle inventory

Lot size = 100

On

-han

d in

ven

tory

5 10 15 20 25 30

Time (hours)

100 –

75 –

50 –

25 –

0 –

Lot Size and Cycle InventoryLot Size and Cycle Inventory

Average cycle inventory

Lot size = 100

Lot size = 50On

-han

d in

ven

tory

5 10 15 20 25 30

Time (hours)

100 –

75 –

50 –

25 –

0 –

Lot Size and Cycle InventoryLot Size and Cycle Inventory

Average cycle inventory

Lot size = 100

Lot size = 50On

-han

d in

ven

tory

5 10 15 20 25 30

Time (hours)

100 –

75 –

50 –

25 –

0 –

Lot Size and Cycle InventoryLot Size and Cycle Inventory

Average cycle inventory

Lot size = 100

Lot size = 50On

-han

d in

ven

tory

5 10 15 20 25 30

Time (hours)

100 –

75 –

50 –

25 –

0 –

Kanban Production ControlKanban Production Control• At core of JIT manufacturing at Toyota is

kanban, an amazingly simple system of planning & controlling production.

• Kanban, in Japanese, means card or marquee.

• Kanban is means of signaling to upstream workstation that downstream workstation is ready for upstream workstation to produce another batch of parts.

Kanbans & Other SignalsKanbans & Other Signals

• There are two types of kanban cards:– A conveyance card (c-kanban)– A production card (p-kanban)

• Signals come in many forms other than cards, including:– An empty crate– An empty designated location on floor

Conveyance KanbanConveyance Kanban

Conveyance Kanban CardConveyance Kanban Card

Part number to produce: M471-36 Part description: Valve HousingPart number to produce: M471-36 Part description: Valve Housing

Lot size needed: 40Lot size needed: 40 Container type: RED Crate Container type: RED Crate

Card number: 2 of 5Card number: 2 of 5 Retrieval storage location: NW53D Retrieval storage location: NW53D

From work center: 22From work center: 22 To work center: 35 To work center: 35

Production KanbanProduction Kanban

Production Kanban CardProduction Kanban Card

Part number to produce: M471-36 Part description: Valve Part number to produce: M471-36 Part description: Valve HousingHousing

Lot size needed: 40Lot size needed: 40 Container type: RED crate Container type: RED crate

Card number: 4 of 5Card number: 4 of 5 Completed storage location: Completed storage location: NW53DNW53D

From work center: 22From work center: 22 To work center: 35 To work center: 35

Materials required:Materials required:Material no. 744BMaterial no. 744B Storage location: NW48CStorage location: NW48CPart no. B238-5Part no. B238-5 Storage location: Storage location:

NW47BNW47B

Flow of Kanban Cards & Flow of Kanban Cards & ContainersContainers

In-ProcessIn-ProcessStorageStorage

Parts FlowParts Flow

DownstreamWC #2

UpstreamWC #1

Full Container & Full Container & P-KanbanP-Kanban

P-Kanban & P-Kanban & Empty ContainerEmpty Container

C-Kanban & C-Kanban & Empty ContainerEmpty Container

Full Container & Full Container & C-KanbanC-Kanban

Containers in a Kanban SystemContainers in a Kanban System• Kanban is a simple idea of replacement of

containers of parts, one at a time• Containers are reserved for specific parts,

are purposely kept small, & always contain same standard number of parts for each part number

• At Toyota containers must not hold more than about 10% of day’s requirements.

• There is minimum of two containers for each part number, one at upstream “producing” work center & one at downstream “using” work center

Storage area

Empty containers

Full containers

Single-Card Kanban SystemSingle-Card Kanban SystemReceiving post

Kanban card for product 1

Kanban card for product 2

Fabrication cell

O1

O2

O3

O2

Assembly line 1

Assembly line 2

Storage area

Empty containers

Full containers

Single-Card Kanban SystemSingle-Card Kanban SystemReceiving post

Kanban card for product 1

Kanban card for product 2

Fabrication cell

O1

O2

O3

O2

Assembly line 1

Assembly line 2

Storage area

Empty containers

Full containers

Single-Card Kanban SystemSingle-Card Kanban SystemReceiving post

Kanban card for product 1

Kanban card for product 2

Fabrication cell

O1

O2

O3

O2

Assembly line 1

Assembly line 2

Storage area

Empty containers

Full containers

Single-Card Kanban SystemSingle-Card Kanban SystemReceiving post

Kanban card for product 1

Kanban card for product 2

Fabrication cell

O1

O2

O3

O2

Assembly line 1

Assembly line 2

Storage area

Empty containers

Full containers

Single-Card Kanban SystemSingle-Card Kanban SystemReceiving post

Kanban card for product 1

Kanban card for product 2

Fabrication cell

O1

O2

O3

O2

Assembly line 1

Assembly line 2

Storage area

Empty containers

Full containers

Single-Card Kanban SystemSingle-Card Kanban SystemReceiving post

Kanban card for product 1

Kanban card for product 2

Fabrication cell

O1

O2

O3

O2

Assembly line 1

Assembly line 2

Storage area

Empty containers

Full containers

Single-Card Kanban SystemSingle-Card Kanban SystemReceiving post

Kanban card for product 1

Kanban card for product 2

Fabrication cell

O1

O2

O3

O2

Assembly line 1

Assembly line 2

Single-Card Kanban SystemSingle-Card Kanban SystemK

AN

BA

N

Part N

um

ber:

1234567Z

Lo

cation

:A

isle 5B

in 47

Lo

t Qu

antity:

6

Su

pp

lier:W

S 83

Cu

stom

er:W

S 116

Each container must have a cardEach container must have a card Assembly always withdraws from Assembly always withdraws from

fabrication (pull system)fabrication (pull system) Containers cannot be moved Containers cannot be moved

without a kanbanwithout a kanban Containers should contain the Containers should contain the

same number of partssame number of parts Only good parts are passed alongOnly good parts are passed along Production should not exceed Production should not exceed

authorizationauthorization

Lean Systems in ServicesLean Systems in Services

Consistently high quality Uniform facility loads Standardized work methods Close supplier ties Flexible workforce Automation Preventive maintenance Pull method of materials flow Line flows

Operational BenefitsOperational Benefits

Reduce space requirements Reduce inventory investment Reduce lead times Increase labor productivity Increase equipment utilization Reduce paperwork and simple

planning systems Valid priorities for scheduling Workforce participation Increase product quality

Implementation IssuesImplementation Issues• Organizational considerationsOrganizational considerations

– Human cost of JIT systemsHuman cost of JIT systems

– Cooperation and trustCooperation and trust

– Reward systems and labor Reward systems and labor classificationsclassifications

• Process considerationsProcess considerations

• Inventory and schedulingInventory and scheduling– MPS stabilityMPS stability

– SetupsSetups

– Purchasing and logisticsPurchasing and logistics