paglialunga mgt314 chapter 16

Transparency Masters to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 0745816-1

Operations Operations ManagementManagement

Just-in-Time and Lean Production Just-in-Time and Lean Production SystemsSystems

Chapter 16Chapter 16



OutlineOutline JUST-IN-TIME AND LEAN PRODUCTION GLOBAL COMPANY PROFILE: GREEN GEAR

CYCLING SUPPLIERS

Goals of JIT Partnerships Concerns of Suppliers

JIT LAYOUT Distance Reduction Increased Flexibility Impact on Employees Reduced Space and Inventory



Outline - ContinuedOutline - Continued INVENTORY

Reduce Variability Reduce Inventory Reduce Lot Sizes Reduce Setup Costs

SCHEDULING Level Schedules Kanban

QUALITY EMPLOYEE EMPOWERMENT LEAN PRODUCTION JIT IN SERVICES



Learning ObjectivesLearning ObjectivesWhen you complete this supplement, you should

be able to :Identify or Define:

Types of waste Variability Kanban

Describe or Explain: Just-in-Time (JIT) philosophy Pull systems Push systems The goals of JIT partnerships Lean Production



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

© 1995 Corel Corp.

Introductory QuotationIntroductory Quotation



Green Gear CyclingGreen Gear Cycling Designs and manufacturers high performance

travel bicycles (bike-in-a-suitcase!) Strategy is mass customization with low inventory,

work cells, and elimination of machine setups. Major focus on JIT and supply-chain management. Two lines with seven work cells One day throughput time Focus on quality



Supplier – Production – Distribution Supplier – Production – Distribution SystemSystem

Supplier DistributionInventories

Raw materialin-transit

Sub-assemblyparts in-transit

Maintenance,repair, and orderingsupplies in-transit

Raw MaterialInventory

Work-in-processInventory

FactoryFinishedGoods

Inventory

ComponentInventory

MROInventory

PurchasingProduction and

Inventory ControlShipping and

Traffic

RetailerInventory

Orders

WarehouseInventory

Productions Inventories Customer DistributionInventories

Orders



Management philosophy of continuous and forced problem solving

Supplies and components are ‘pulled’ through system to arrive where they are needed when they are needed.

What is Just-in-Time?What is Just-in-Time?



Lean ProductionLean Production

Lean Production supplies customers with exactly what the customer wants, when the customer wants, without waste, through continuous improvement.



Attacks waste Anything not adding value to the product

From the customer’s perspective

Exposes problems and bottlenecks caused by variability Deviation from optimum

Achieves streamlined production By reducing inventory

What Does Just-in-Time Do?What Does Just-in-Time Do?



Overproduction Waiting Transportation Inefficient processing Inventory Unnecessary motion Product defects

© 1995 Corel Corp.

Types of WasteTypes of Waste



Waste Reduction (%)

82%

50%

50%

30%

30%

20%

40%

0% 20% 40% 60% 80% 100%

Work-in-Process Inventory

Raw Material Inventory

Lead Time

Space

Finished Goods Inventory

Scrap

Setup Time

JIT Reduced WasteJIT Reduced Wasteat Hewlett-Packardat Hewlett-Packard



Push versus PullPush versus Pull

Push system: material is pushed into downstream workstations regardless of whether resources are available

Pull system: material is pulled to a workstation just as it is needed



Suppliers reduced number of vendors supportive supplier relationships quality deliveries on time

Layout work-cell layouts with testing at each step of the process group technology movable, changeable, flexible machinery high level of workplace organization and neatness reduced space for inventory delivery direct to work areas

JIT Contribution to Competitive JIT Contribution to Competitive AdvantageAdvantage



Inventory small lot sizes low setup times specialized bins for holding set number of parts

Scheduling zero deviation from schedules level schedules suppliers informed of schedules Kanban techniques

JIT Contribution to Competitive JIT Contribution to Competitive Advantage - ContinuedAdvantage - Continued




Preventive Maintenance scheduled daily routine operator involvement

Quality Production statistical process control quality by suppliers quality within firm




Employee Empowerment empowered and cross-trained employees few job classifications to ensure flexibility of employees training support

Commitment support of management, employees, and suppliers



ResultsResults

Queue and delay reduction, speedier throughput, freed assets, and winning orders

Quality improvement, reduces waste and wins orders Cost reduction increases margin or reduces selling

price Variability reductions in the workplace reduces waste

and wins orders Rework reduction, reduces waste and wins orders



YieldingYielding

Faster response to the customer at lower cost and higher quality

A competitive advantage!



Suppliers

Preventive Maintenance

Layout

Inventory

Scheduling

Quality

Employee Empowerment

JIT

Just-in-TimeJust-in-TimeSuccess FactorsSuccess Factors



Few Nearby Repeat business Analysis and support to enable desirable suppliers to

become or stay price competitive Competitive bidding mostly limited to new purchases Buyer resists vertical integration and subsequent wipeout

of supplier business Suppliers encouraged to extend JIT to their suppliers (2nd

and 3rd tier suppliers)

Characteristics of JIT PartnershipsCharacteristics of JIT PartnershipsSuppliers



Characteristics of JIT Partnerships Characteristics of JIT Partnerships Quantities

Steady output rate Frequent deliveries in small-lot quantities Long-term contract agreements Minimal or no paperwork (use EDI or internet) Delivery quantities fixed for whole contract term Little or no permissible overage or underage Suppliers package in exact quantities Suppliers reduce their production lot sizes



Minimal product specifications imposed on suppliers

Help suppliers meet quality requirements Close relationship between buyers’ and

suppliers quality assurance people Suppliers use poka-yoke and process control

charts instead of lot-sampling techniques

Characteristics of JIT Partnerships Characteristics of JIT Partnerships Quality



Characteristics of JIT Partnerships Characteristics of JIT Partnerships Shipping

Scheduling of inbound freight Gain control by use of company-owned or

contract shipping and warehousing Use of Advanced Shipping Notice (ASN)



Goals of JIT partnershipsGoals of JIT partnerships

Elimination of unnecessary activitiesElimination of in-plant inventoryElimination of in-transit inventoryElimination of poor suppliers



Diversification Poor customer scheduling Frequent engineering changes Quality assurance Small lot sizes Physical proximity

Concerns of SuppliersConcerns of Suppliers



Streamlined ProductionStreamlined Production

Flow with JIT

Traditional Flow

CustomersSuppliers

Customers

Suppliers

Production Process (stream of water)

Inventory (stagnant ponds) Material

(water in stream)



JIT objective: Reduce movement of people and material Movement is waste!

JIT requires Work cells for product families Moveable or changeable machines Short distances Little space for inventory Delivery directly to work areas

LayoutLayout



Process Layout Work Cell

Saw

Lathe

Grinder

HeatTreat

Lathe

Lathe

Lathe Saw

HeatTreat

Grinder

Grinder

Press

Press 1

1

2

3

45

2

6

Saw

Press

Work Cell versusWork Cell versus Process Layout Process Layout



Inventory Hides Problems Just as Inventory Hides Problems Just as Water in a Lake Hides RocksWater in a Lake Hides Rocks

ScrapSetup time

Late deliveries

Quality problems

Process downtime

ScrapSetup time

Late deliveries

Quality problems

Process downtime

Inventory level

Inventory level



Scrap

Work in process inventory level(hides problems)

Unreliable Vendors

Capacity Imbalances

Lowering InventoryLowering Inventory Reduces Waste Reduces Waste



Scrap

Reducing inventory revealsproblems so they can be solved.

Unreliable Vendors

Capacity Imbalances

WIP




Customer orders 10

Lot size = 5Lot 1 Lot 2

Lot size = 2Lot 1 Lot 2 Lot 3 Lot 4 Lot 5

Reducing Lot Sizes Increases the Reducing Lot Sizes Increases the Number of LotsNumber of Lots



Unless Setup Costs are ReducedUnless Setup Costs are Reduced

Lot Size

Cost

Holding CostTotal Cost

Setup Cost

Original optimal lot size

New optimal lot size



Steps to Reduce Setup TimeSteps to Reduce Setup TimeInitial Setup Time

Separate setup into preparation, and actual setup, doing as much as possible while the machine/process

is running (save 30 minutes)

Move material closer and improve material handling (save 20 minutes)

Standardize and improve tooling (save

15 minutes)

90 min

60 min

45 min

25 min

15 minUse one-touch system to

eliminate adjustments (save 10 minutes)

Training operators and standardizing work procedures (save 2

minutes)

Step 1

Step 2

Step 3

Step 513 min

Step 4



A

A A B B B C

JIT Small Lots

Large-Lot Approach

Time

Time

A A B B B C

A A A B B B B B B C C

JIT produces same amount in same time if setup times are lowered

Small versus Large LotsSmall versus Large Lots

Small lots also increase flexibility to meet customer demands



Japanese word for card Pronounced ‘kahn-bahn’ (not ‘can-ban’)

Authorizes production from downstream operations ‘Pulls’ material through plant

May be a card, flag, verbal signal etc. Used often with fixed-size containers

Add or remove containers to change production rate

KanbanKanban



Diagram of Outbound Stockpoint Diagram of Outbound Stockpoint with Warning-Signal Markerwith Warning-Signal Marker



Kanban Signals “Pull” Material Kanban Signals “Pull” Material Through the ProcessThrough the Process



JIT in ServicesJIT in Services

All the techniques used in

manufacturing are used in services

SuppliersSuppliers

LayoutsLayouts

InventoryInventory

SchedulingScheduling



Attributes of Lean Producers - TheyAttributes of Lean Producers - They use JIT to eliminate virtually all inventory build systems to help employees product a perfect part every

time reduce space requirements develop close relationships with suppliers educate suppliers eliminate all but value-added activities develop the workforce make jobs more challenging reduce the number of job classes and build worker flexibility

paglialunga mgt314 chapter 16

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