Just-in-Time SystemsAn integrated management system developed by Taiichi Ohno, VP of Toyota Motor CompanyIt takes Toyota 20 years to perfect the systemEarly Studies1977 Hertz Repair StudyQuasar Plant Productivity StudyTwo Fundamental ConceptsElimination of WasteRespect for People

1977 Hertz Repair Study

ModelRepair per 100 vehicle(first 12,000 miles)Ford326Chev425Pinto306Toyota 55

Quasar Benchmarking Study

UnderMotorolaUnder MatsushitaDirect Labor Employees1,0001,000Indirect Employees 600 300 Total1,6001,300Daily Production1,0002,000Assembly Repair130%6%Annual Warranty Cost ($M)$16$2

JITs Management Philosophy Elimination of WasteFocused Factory NetworkGroup TechnologyJidoka Quality at the SourceJust-in-Time Production (little JIT)Kanban SystemUniform Plant LoadingMinimize setup times

Focused Factory Networks Small Specialized plants# Employees# Plants 1000+

Group Technology Key conceptsGroup products into product familiesAssign a set of dissimilar machine to each familyArrange machines in a narrow UUse multifunctional workersWhy Product families? job shop move a job from department to departmentCincinnati Miracrons StudyMove time + setup + queue time: 90-95% of the total processing timeRun Time: 5-10%

Group Technology (cond)Job Shop LayoutInputOutput

Group Technology (cond)Convert Job Shop Layout to Group Technology Layout (Cellular Manufacturing)Classification and Coding SchemeAssign a code number to each part (products)Assign products with similar codes to a family Production Flow AnalysisForm product families based on manufacturing similarities

Group Technology (cond)A set of machines dedicated to processing one or more familyArrange machines in a narrow UWorkers rotate among several machines

Group Technology (cond)Advantages Reduce cycle timeMove time Queue timeSet up timeAdjust the output rate by increasing or decreasing the number of workers in a cellFacilitate job trainingPromote job satisfaction

Jidoka: Quality at the SourceStop everything when something goes wrongInstead of using QC staff, each worker becomes his or her own inspectorAvoid batch processing: give each person only on part to work on at a timeAutonomation: automatic control of defectFoolproof systemsVisual control (call light, Andon, and stop watch)

Just-in-Time ProductionWhat is JIT? provideNecessary products (services)Necessary quantitiesNecessary timeWork well in a repetitive processing environmentThe ideal lot size is one (Inventory is evil!)Typical internal lot sizes are 1/10 of a days production Makes no allowances for contingenciesJIT Vs. Just-in-case Philosophy

Little JIT (Cond)UnreliabledeliveryMachine BreakdownsAbsenteeismPoor QualityInventory covers up problems

Kanban Control Kanban = CardProduction Kanban: Authorizes the manufacturing of a container of materialWithdrawal Kanban: Authorizes the withdrawal and the move of one containerKanban FlowKanban Rule: No Kanban card, no production or movement of materialCan accommodate 10%-20% of changes in planned productionCan easily extend to suppliers (supplier Kanban)

Uniform Plant LoadingKanban system cannot function smoothly if parts withdrawal is irregularHow to ensure smooth productionMixed model assembly line: an assembly produces small quantities of several products at the same time.Avoid the reaction wave in response to schedule variationFreeze monthly production rateProduce the same mix of products every dayDetermine the sequence for introducing products to the same assembly line (Goal Chasing Algorithm)

Uniform Plant Loading (cond)One production cycle consists of 4 units of As, 3 units of Bs, 2 Cs, and I DThe sequence for producing this cycle is determined by the Goal Chasing Algorithm to ensure a constant parts consumption

(480 min * 2 shifts) / 1000= 0.96 min/unit

ModelsMonthly DemandDaily demandCycle TimeProduction CycleA8,0004004B6,0003003C4,0002002D2,0001001Total20,0001,00010

Goal Chasing AlgorithmObjective: maintain a constant parts consumption rate (create a constant demand)Principle: minimize the difference between the ideal parts consumption and actual parts consumptionProduction sequenceUnitsActual parts consumptionIdeal parts consumption

Minimize Setup TimesAttanept to achieve a single-digit setup (less than one minute)Relationship between setup time and inventory level Example: Hood and Fender press comparison (800-ton press)

ToyotaUSASwedenGermanySetup time10 minutes6 hours4 hours4 hoursSetups/day31-Lot size (inventory)1 day10 days1 month-

Minimize Setup Times (cond)Separate internal setup from external setupInternal setup: has to be performed while the machine is stoppedExternal setup: can be performed while the machine is runningConvert internal setup to external setupEliminate the adjustment processAbolish the setup stepProduce more than one parts at the same time (one die, two parts)

JITs Management Philosophy (cond)Respect for PeopleLife time employeeCompany-wide unionsAttitude toward workersAutomation/RoboticsBottom-Round ManagementSubcontractorQuality Circle

Life time Employment1/3 of workforce (permanent workers)No layoff or firing of the regular workersMandatory retirement at age 55Lump sum compensationAdvantagesJob stability and lifetime trainingOpening for young peopleTeam spirit and loyaltyForced savings

Company UnionsIncluded everybody in the company (did not matter what skills were)The relationship between the union and management is cooperativeCompensation (based on bonus, up to 50% of salaries) reinforces the harmony relationship

Attitude Toward WorkersDo not look at people like human machinesIf a machine can do a job, then a person should not do it (human dignity)Give opportunity for workers to do more (what workers are doing is only tapping their capability)The Japanese spend more for employee training and education than any other industrial nation.

Automation/ RoboticsAutomation and robotics are not considered staff-cutting moves; eliminates dull jobsJapan has invested as much as 1/ of its GNP in capital investmentInvested first in low-cost enhancementJapan had about 5 times of the number of programmable robots (some very simple) as the United StatesEmployees often initiate automation projects

Bottom-Round ManagementMore than 100 million people crowded on an island about the size of California, 80% of which is mountainousThe importance of the group superseded that of individualDecisions are made at the lowest possible level and involved all potentially interested partiesA very slow decision making process (quick implementation)

Problems + solutionsRecommen-dationsRecommen-dationsCompany hierarchy

Subcontractor NetworksThe bulk of the subcontractors have fewer than 30 employeesMore than 90% of all Japanese companies are part of am enormous subcontractor networkSole-source arrangementMutual trustNo inspection, no paperwork, no delayHelp vendors improve their manufacturing systemProvide financial help

Quality CirclesThe OC circles at Toyota mirror its formal organizational structureA QC circle is made of a foreman and his subordinatesAll employees must participate in some circlesDiscuss problems encountered and devise solutions to their management Education & training Problems solving and presentation skillsAdvisor and trainer coursesInspection tours to U.S. and Europe

Quality Circles (cond)Reward SystemsTopic Recommendation awards the individual topic registered by a circleEffort Prize (momentary rewards): when a topic is completedAdvisor Prize: 1/3 of the Topics RecommendationsCoordinator Prize: 1/3 of the Advisor PrizeGold and Silver Prize (at the plant level)QC circle-Toyota PrizeAll-Japan QC Circles Contest

Quality Circles (cond)Nissan spent $30,000+ to train each assembly worker (Smyrna, Tennessee) before they started on the jobEffectsToyota: 5 million suggestions a year (500/employee)Cannon: 900,000 suggestions, 78 suggestions per employeesMatsushita: 6.5 million suggestions a year

Principles of Continuous ImprovementCreate a mind-set for improvementTry and try againThink; Dont buy improvementWork in teamsRecognize improvement knows no limits