Just In Time and Lean Management


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Just In Time and Lean Management

  1. 1. Presented by: Nitish Garg Pranay Kaparwan Rachna Kralia Ruhi Beri Sakshi Rangaroo
  2. 2. Lean Management  A systematic approach to identifying and eliminating waste (non-value added activities) through continuous improvement by flowing the product at the pull of the customer in pursuit of perfection.
  3. 3. Origin  Started by Japanese manufacturers in automobile industry.  Replicated in other sectors all over the world. Underlying Principle: “Less is more productive” i.e. in order to stay competitive, organizations are required to deliver better quality products and services using fewer resources.
  4. 4. Key Principals of Lean Thinking  Value - what customers are willing to pay for;  Value Stream – the sequence of processes to deliver value;  Flow – organizing Value Stream to be continuous;  Pulls – responding to downstream customer demand;  Perfection – relentless continuous improvement (culture);
  5. 5. VIDEO!!!
  6. 6. Accrued Benefits Tools and Techniques used Basic enabling mechanism Basic premise Less is more Productive •Process mapping, non- value added analysis •Continuous improvement •Kaizens, small group improvement •Benchmarking •Quality Circles Total Quality Management • Manufacturing architectural changes •Set-up time reduction •Small lot size processing •Pull scheduling •Simplified operation control(kanban) JIT Eliminating waste and creating value stream for product & services
  7. 7. Just-In-Time (JIT)  Powerful strategy for improving operations  Materials arrive where they are needed when they are needed  Identifying problems and driving out waste reduces costs and variability and improves throughput  Requires a meaningful buyer-supplier relationship
  8. 8. JIT Concepts  Eliminate waste  Remove variability  Improve throughput
  9. 9. 1. 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
  10. 10. Ohno’s Seven Wastes  Overproduction  Queues  Transportation  Inventory  Motion  Overprocessing  Defective products
  11. 11. 2. Remove Variability  Variability is any deviation from the optimum process  Lean systems require managers to reduce variability caused by both internal and external factors  Inventory hides variability  Less variability results in less waste
  12. 12. 2. Remove Variability  Lean 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
  13. 13. 3. Improve Throughput  Push systems dump orders on the downstream stations regardless of the need  By pulling material in small lots, inventory cushions are removed, exposing problems and emphasizing continual improvement  The time it takes to move an order from receipt to delivery is reduced.
  14. 14. Core Logic of JIT Inventory level Process downtime Scrap Setup time Quality problems Late deliveries
  15. 15. Core Logic of JIT Inventory level Process downtime Scrap Setup time Quality problems Late deliveries
  16. 16. Core Logic of JIT Inventory level No scrap Setup time reduced Quality problems removed Late deliveries Process downtime removed
  17. 17. JIT and Competitive Advantage
  18. 18. JIT and Competitive Advantage
  19. 19. JIT Layout Reduce waste due to movement JIT Layout Tactics Changes in Manufacturing Architecture Build work cells for families of products Include a large number operations in a small area Minimize distance Design little space for inventory Improve employee communication Use poka-yoke (fail safe) devices Build flexible or movable equipment Cross-train workers to add flexibility
  20. 20. JIT Inventory Inventory is at the minimum level necessary to keep operations running JIT Inventory Tactics Use a pull system to move inventory Reduce lot sizes Reduce setup time Develop just-in-time delivery systems with suppliers Deliver directly to point of use Perform to schedule Use group technology
  21. 21. JIT Quality JIT cuts the cost of obtaining good quality because JIT exposes poor quality very soon JIT Quality Tactics Use statistical process control Empower employees Build fail-safe methods (poka-yoke, checklists, etc.) Expose poor quality with small lot JIT Provide immediate feedback
  22. 22. JIT planning & control –JIT scheduling Kanban system, push & pull scheduling.
  23. 23. Push Scheduling  Forecasts drive the entire production.  Detailed forecasts of demand are made and then refined further on the basis of recent information to provide the input for an MPS/MRP system to derive the detailed week-by-week schedule for each work centre in the manufacturing System.  The actual off take by the customer (or the market) is not taken directly into consideration.  Instead, it needs to be factored into the forecasting/demand management module well in advance.  Once the planning is finalized and released to the production shop, raw material is issued from the stores to respective work centres and the finished goods stores.  As a result of this method, planning drives production and determines the availability of finished goods.  It is generally assumed that the planning premise is good. Therefore, when the customer order arrives, the item is picked up from the finished goods stores and shipped.
  24. 24. Pull scheduling  A pull-type scheduling works with the supermarket logic.  A customer order triggers production in a pull-scheduling system.  Assume that customer demand for 50 units of an item is met with available finished goods in the stores.  Since 50 units are dispatched, an order will be placed with the final assembly shop to assemble 50 units of product so that stocks are replenished.  In the process of assembling 50 units, the final assembly would have consumed the required number of sub-assemblies as specified by the product structure.  Therefore, respective orders will be placed to the feeder shops to manufacture the sub-assemblies to the extent of replenishing the stock of sub-assemblies consumed.  The information passes in this manner up to the raw material stores.  At each stage of manufacturing, the shop pulls a certain quantity of input material and the preceding shop responds to the pull.
  25. 25. The choice between a pull-type system and a push type system • The choice between a pull-type system and a push type system is dictated by several factors governing the operation of a manufacturing system. • Pull-type scheduling cannot be implemented in all manufacturing systems. • It requires that the manufacturing system have sufficient flexibility to respond swiftly to changes. • Moreover, it implies that the organization is customer-focused and has low demand variations. • On the other hand, if the manufacturing system works with long lead time and a greater emphasis on utilization-based measures of performance, the push method of scheduling may be appropriate. • However, since the actual customer demand is not directly incorporated into the scheduling exercise, build-up of inventory may take place in a push system. • Moreover, an organization practising push-scheduling tends to be internally focused
  26. 26. KANBAN  Production control is primarily achieved by passing information pertaining to production to the respective work centers.  The information typically consists of an authorization to produce a certain quantity of items begining at a particular time.  Although this appears to be simple task , traditional manufacturing have experienced difficulties in performing this task.  This is partly due to bad structures emphasizing functional orientation.
  27. 27.  JIT system make architectural changes and simplify the planning and control process to a large extent.  Therefore, it is possible to devise alternative methods for production control.  Typically, JIT manufacturers utilize a concept known as kanban.  Kanban is a Japanese word which denotes a card or a visual signal.  The logic of kanban as a production control tool based on the stock replenishment process an a supermarket.
  28. 28. The working of the dual-card kanban system • In dual-card kanban, two are used for planning and control purposes. • These are production kanban (P-kanban) and conveyance kanban (C-kanban). • Irrespective of the type of Kanban, each of them have basic information about the item, its specifications, details about the preceding and succeeding process and the quantity of items associated with each such Kanban. • A P-Kanban basically serves as the authorization for production of the number of items indicated in the Kanban. For example, if a P-Kanban has the indicated quantity to be 40 units, then each such P-Kanban serves as an authorization for the work centre to manufacture 40 units. • In a similar fashion, a C-Kanban serves as the authorization to move that many units from the preceding process to the succeeding process, where it is used for processing.
  29. 29. structural features of the manufacturing system • Preceding and Succeeding Processes: The basic element of material flow in a JIT system is between a pair of processes. • The preceding process feeds the required components to the succeeding process. • A pair-wise relationship of such preceding and succeeding process is primarily responsible for cascading the pull effect from the final customer down to the raw material stores, as we have already seen.
  30. 30. Inbound buffer  Every process has a designated space for inbound buffer.  The inbound buffer has provisions for storing the components moved from a preceding process using a CKanban.  Therefore, each full container of inbound buffer will have a C-Kanban attached to it.  However after utilizing the components for processing, the empty container is usually returned to the inbound buffer and the associated C-Kanban to a Kanban post (or holder).
  31. 31. Kanban Post • The number of C-Kanbans and the P-Kanbans and the quantity of each Kanban associated with each item of inventory in a manufacturing system is a design issue. • However, since more than one P-Kanban and CKanban may be there for each item of inventory, and since several items may be produced in a particular work centre, it is typical to have a Kanban post to hold these Kanbans systematically. • Moreover, the Kanban post also serves as a visual control aid to production control.
  32. 32. Outbound buffer  Just as in inbound buffer, each process in an outbound buffer has a designated place to store the components after processing is completed.  Since processing is always authorized only by a PKanban, we would expect every full container to have a P-Kanban attached to it.  The succeeding process would have left empty containers in the outbound area, which need to be subsequently replenished by the process.  The associated P-Kanban will be deposited in a Kanban post (or holder).
  33. 33. Step 1: • The succeeding process begins one cycle of production as soon as P-Kanbans (which authorize the production) and empty containers are available. • One P-Kanban is drawn from the Kanban post and an empty container is picked up from the outbound buffer. Step 2 : • In order to begin production, one full container with an attached C-Kanban is moved from the inbound buffer area to the processing area. • The C-Kanban is detached from the container and displayed at the Kanban post. • Production of components begins.
  34. 34. • Step 3: • As production is completed, the P-Kanban is attached to the full container of finished item and the container is moved to the outbound area. • Similarly, the empty container (since all components are used up for manufacturing) is moved back to the inbound buffer area. • Since the succeeding process pulled out one full container of components from the inbound buffer area, used it for manufacture and returned back the empty container, it will trigger action in the preceding process to replenish what the succeeding process consumed. • The remaining steps describe this process.
  35. 35. Step 4: • One empty container from the input buffer area of a succeeding process and a C-Kanban from the Kanban post of the succeeding process will be taken to the outbound buffer area of the preceding process for replenishment. Step 5: • Swapping of Kanban cards between containers takes place at the outbound buffer area of the preceding process. • What this means is that the P-Kanban attached to the full container will be replaced by C-Kanban.
  36. 36. Step 6: • As a result of this swapping operation, the full container and C-Kanban will return to the inbound buffer area of the succeeding process. Step 7: • The empty container will be placed in the outbound buffer area of the preceding process. • The P-Kanban will be displayed at the Kanban post of the preceding process.
  37. 37. • It may be noted that using this 7-step process, we have ensured that empty containers and PKanbans are available at the preceding process. • Therefore, we can return to step 1 above and perform one more iteration of moving empty containers and P-Kanbans to an earlier process. • This how the pull effect cascades through the system.
  38. 38. Design of kanban quantities  Follow FOQ fixed order quantity system  Oder is placed for an item when stock level reaches the reorder point.  The quantity order is a fixed number arrived on the basis of some considerations.  Two bin system : Implementation of FOQ  Material is stocked in two bins  One large bin and other small bin.
  39. 39.  As soon as the larger bin is empty , an order is placed and items from the small bin are consumed.  The quantity in the small bin corresponds to the demand to the demand during the lead time for replenishment of the item, plus some safety stock.  Therefore at about he time the smaller bin gets empty, the orders arrives.  These inputs are used for computing the container size and the number of kanbans required in a JIT system.
  40. 40. Standard containers • In a JIT system material, flow control is obtained through the use of predetermined quantities stored in standard containers. • Generally container of small quantities are recommended. • Smaller containers are easy to move between station , require lesser space to store, provide better methods of access and material handling and permit the build-up of lesser buffer quantities in the system. • The thumb rule is to have about 10 percent of daily demand as per the quantity of the container.
  41. 41. Numbers of kanban • • • • • • • Demand rate = D Number of kanbans = K Production lead time = P Conveyance lead time = C Safety factor = α Container size = Q K =D(P+C) (1+ α)/Q
  42. 42. Operations: Improvement Options???  1970s precedence – The Japan story  Cost cutting and lead time reduction  Continuous improvement methods  In 1976, 49% in 30 mins, by 1981, 62% within 100 secs !!!  Continuous Improvement of operations (Step, Ramp n Hybrid)  Radical Improvement (Technology, capacity Upgradation and addition of new plants)
  43. 43. RI Innovation Sporadic but Substantial change Investments required High productivity CI Systematic Optimizes available resources, technology and capacity Reduces wastage Quality Operational efficiency Low production cost Iterative increments Economies of scales Business, Manufacturing, Business processes like marketing finance and CRM. Steel and Petrochemical processes.
  44. 44. The Continuous Improvement Process Measure Improvement Create a Context Monitor improvements Paraphernalia for employees Organizational Structure
  45. 45. • Context: Provides perspective and meaningful application of tools and techniques. Include benchmarking exercises, TPM, TQM initiatives, preparing the organization for int’l awards like TPM Prize, Shingo Prize. • Measurement Methodology: Assesses improvement efforts, quantifies improvements. E.g. set of lead time measures may be used for a no. of processes, schedule adherence and on-time delivery index. • Application of tools and techniques: Quality circle tools like Poka-Yoke and the mistake-proofing method enables defect elimination and production improvement. • Organizational Structures: calls for large no. of small groups of employees from same or different functional areas or skills. • Monitor and recognize efforts: Identifies opportunities, establishes checks and balances, ensures role and goal congruence among various teams.
  46. 46. Tools for Continuous Improvement – Kaizen (“Change for the better”- 5s) • Seiri, or sort • Seiton or set in order • Seiso or scrub • Seiketsu or standardize • Shitsuki or sustain Process Mapping Non-valueadded analysis Business process reengineering QC Tools Kaizen
  47. 47. Quality Circles Task Force Organization for continuous improvement SGIA Visual Control Aids
  48. 48. • Task Force: – Create a team of managers who implement continuous improvement culture, and act as change agents. – Gets constant support from top management. – Talk to various groups of the workforce, the union, support functions. – Communicate the need for changes and solicit employees’ support. – Prepare project proposal outlining steps for change implementation (Budgeting, chronological ordering, resource identification, monitoring and controlling of the project).
  49. 49. • Quality Circles: – Small group of employees provided with paraphernalia to identify and solve problems by implementing required changes in the business processes. – Typically, 8-12 employees, either from the same or different work areas, meet at regular intervals for about 90 mins a week, to discuss various problems and possible solutions to eliminate them. – Instead of focusing on several issues at the same time, they work with one problem at a time. – Quality Circles are allowed to meet during working hours at predesignated time.
  50. 50. • Project-based Small Group Improvement Activities (SGIA) – Alternative term to describe Quality Circles, used for any business process improvement including quality improvements. – Based on Quality Circles’ experience, certain improvements were made for directing SGIA activities. – Done on a project-by-project basis. – Targets established, process mapping done, improvement projects identified.
  51. 51. • Visual Control Aids for Improvement: – Triggers improvement initiatives, motivates employees. – Convince management to support such projects and provide them with verifiable and direct results. – Serve as formal mechanism for employees to perform SGIA. – Involves: • Identifying core operational measures • Creating visual information system • Setting up a visual control display board (3 sets of measures, operational, improvement and performance). • Facilitates employees for conducing SGIA.
  52. 52. Lean Operations  Lean operations are externally focused on the customer  Starts with understanding what the customer wants  Optimize the entire process from the customer’s perspective
  53. 53. Main Principals  Identify the customer  Map the flow  Make a product or service flow  Create polls based on customer demands  Continually find ways to improve
  54. 54. Organizational Challenges in Lean Management JIT Implementation Issues Cultural and Human Issues Resistance to change Incentives and reward systems Tangibility of improvements
  55. 55. • Bottlenecks in attaining Lean Management: – – – – – – Mindsets, people and culture issues Varying role of top management in transformation process Lack of top management vision Practice preach gap Reluctance to empower people at the lower levels Oblivion in bringing about improvements, where and how. – JIT Implementation: • Thinkers vs. doers • Process industries vs. automobile (manufacturing) industries • Lack of internalization, varying degrees of conviction and clarity.
  56. 56. Lean in Services Overview
  57. 57. What is Lean … really? Lean is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes the product or services, “value” is defined as any action or process that a customer would be willing to pay for …. Lean, whether in Services or manufacturing … • • • • • • • • • is based on the premise that anywhere work is being done, waste is being generated … and should be minimized or removed … is about doing more (customer value) with less (resources) … is about removing complexity … is about reducing inventory and WIP … is about improving flow, pull instead of push … is about doing things faster … is about reducing costs … Is about increasing capacity is not about eliminating people
  58. 58.  It can be used at any level of the organization and applied to any process or work area, services, transactional, or manufacturing …  It is a mentality, a way of thinking, as well as a tool set  It can quickly help a team (or individual) understand any business process in a way that allows waste to be identified and removed to reduce costs, improve cycle time, and improve quality.
  59. 59. Manufacturing or Services There are Common Elements  Goal is to Drive Performance whether in mfg or services. It is Systems thinking irrespective of deliverable and improvement tools.  Driving Performance improvement isn’t a Lean initiative, it’s a business initiative.  Significant improvements in both services and manufacturing can be realized through “Lean thinking”, and recognizing opportunities to improve through Lean “lenses”
  60. 60. Unique Aspects of Services Examples of Types of Work  Service - Installation & Integration Of Hardware or HR Recruiting  Transactional - Mortgage Operations or Credit Review  Analytical - Finance Department  Creative - Designing Published Content for Mobile Devices, software development
  61. 61. Unique Aspects of Services • There is typically greater involvement of customers in the production process. In many cases, the customer is a supplier to the process. – Sometimes the involvement is so ingrained in the process that you really end up with co-production with the customer. • Since services processes are often very people-centric (vs. machine-centric), it is very difficult to get to real standardization. • Quality is an experience, not just a measurement against specifications. The inability to standardize the process makes it very difficult to standardize quality. The customer’s definition of quality is a perception, subjective vs. objective
  62. 62. Unique Aspects of Services • There is much less visibility to what is actually happening. Information is flowing, not product, and that information can be digital, paper, or even verbal. And, HOW it flows often has little or no standardization • IT systems play a much bigger role. They enable the process, but can also be a rigid constraint on the process. There may be multiple and often un-integrated systems. Workarounds persist in the form of excel spreadsheets, word docs, etc • WIP and inventory are often hidden and ignored, but they are there and can have the same negative impacts as in a manufacturing environment (e.g. wasted resources, longer lead times, more variation
  63. 63. Lean’s fundamental focus of eliminating waste aligns well with the concept of preserving value with less work and doing more with less. Lean thinking provides specific “lenses” for looking for different types of waste in your services or backoffice processes …
  64. 64. Examples of Waste in Services • Transportation (Handling). Movement of paperwork, multiple hand-offs of electronic data, approvals, excessive email attachments and distributing unnecessary cc copies to people who don't really need to know • Inventory. Purchasing or making things before they are needed (e.g. office supplies, literature...). Things waiting in an in-box, unread email and all forms of batch processing create inventory • Human Motion. Walking to copier, printer, fax... Walking between offices. Central filing. Unnecessary meetings … • Waiting. Slow computer speed. System downtime (computer, fax, phone...). Waiting for approvals, waiting for customer information or waiting for clarification or correction of work received from upstream process create much waste in office and business systems.
  65. 65. Examples of Waste in Services • Overproduction. Printing paperwork or processing an order before it is needed. (things can change) Any processing that is done on a routine schedule - regardless of current demand • Over-processing. Relying on inspections, rather than designing the process to eliminate errors. Re-entering data into multiple information systems, making extra copies, generating unused reports, and unnecessarily cumbersome processes are overprocessing. Demand-side waste can create over-processing • Defects. Data entry errors or invoice errors. Engineering change orders, design flaws, employee turnover and miscommunication are all ‘defects’ in office processes
  66. 66. Examples – Constraints 1. Physical constraint – People, tools, systems, etc. 2. Managerial constraint – Policies that require levels of sign off or work hour requirements that do not match well with the arrival of work. 3. Behavioral constraint – Worker or supervisor tendencies to: “get the easy ones out of the way first,” or “I’ve done my part, it’s too bad that the next step in the process wasn’t able to handle the volume and didn’t complete everything on time.”
  67. 67. Differences in Application Example - Material & Information Flow Manufacturing Service What is flowing Various stages of manufacturing inputs ranging from raw materials to shipped finished goods. It is all VERY visible. Various forms of information, documents, etc in paper, digital, or even verbal form. Flows in many cases are not visible. Information Flow Highly structured with formalized IT systems. Very specific instructions for operators Multiple and often unintegrated systems. Workarounds persist in the form of excel spreadsheets, word docs, etc Schedule Notification Multiple points around VSM Work is loosely scheduled or unscheduled Material Flow Yes Sometimes
  68. 68. The Practical Challenge - Project Selection “Give me six hours to chop down a tree and I will spend the first four sharpening the axe” Abraham Lincoln
  69. 69. TOYOTA PRODUCTION SYSTEM Improvements must be Made!!!!!!!!!
  70. 70. TPS CONCEPT….  A production system which is steeped in the philosophy of "the complete elimination of all waste" imbuing all aspects of production in pursuit of the most efficient methods.  Toyota Motor Corporation's vehicle production system is a way of "making things" that is sometimes referred to as a "lean manufacturing system" or a "Just-in-Time (JIT) system," and has come to be well known and studied worldwide.  The Toyota Production System (TPS) was established based on two concepts:  The first is called "jidoka" (which can be loosely translated as "automation with a human touch") which means that when a problem occurs, the equipment stops immediately, preventing defective products from being produced;  The second is the concept of "Just-in-Time,“ in which each process produces only what is needed by the next process in a continuous flow.
  71. 71. JIDOKA “ Highlighting/visualization of problems ”  Quality must be built in during the manufacturing process!  If equipment malfunction or a defective part is discovered, the affected machine automatically stops, and operators cease production and correct the problem. For the Just-in-Time system to function, all of the parts that are made and supplied must meet predetermined quality standards. This is achieved through jidoka.  Jidoka means that a machine safely stops when the normal processing is completed. It also means that, should a quality / equipment problem arise, the machine detects the problem on its own and stops, preventing defective products from being produced. As a result, only products satisfying quality standards will be passed on to the following processes on the production line.  Since a machine automatically stops when processing is completed or when a problem arises and is communicated via the "andon" (problem display board), operators can confidently continue performing work at another machine, as well as easily identify the problem's cause to prevent its recurrence. This means that each operator can be in charge of many machines, resulting in higher productivity, while continuous improvements lead to greater processing capacity.
  72. 72. JIT “Productivity improvement”  - Making only "what is needed, when it is needed, and in the amount needed!"  Producing quality products efficiently through the complete elimination of waste, inconsistencies, and unreasonable requirements on the production line. In order to deliver a vehicle ordered by a customer as quickly as possible, the vehicle is efficiently built within the shortest possible period of time by adhering to the following: – When a vehicle order is received, a production instruction must be issued to the beginning of the vehicle production line as soon as possible. – The assembly line must be stocked with required number of all needed parts so that any type of ordered vehicle can be assembled. – The assembly line must replace the parts used by retrieving the same number of parts from the parts-producing process (the preceding process). – The preceding process must be stocked with small numbers of all types of parts and produce only the numbers of parts that were retrieved by an operator from the next process.
  73. 73. JIT- Philosophy of complete elimination of waste • "Just-in-Time" means making "only what is needed, when it is needed, and in the amount needed." • For example, to efficiently produce a large number of automobiles, which can consist of around 30,000 parts, it is necessary to create a detailed production plan that includes parts procurement. • Supplying "what is needed, when it is needed, and in the amount needed" according to this production plan can eliminate waste, inconsistencies, and unreasonable requirements, resulting in improved productivity.
  74. 74. KANBAN SYSTEM...  In the TPS, a unique production control method called the "kanban system" plays an integral role.  Also called the "Supermarket method" because the idea behind it was borrowed from supermarkets.  Such mass merchandizing stores use product control cards upon which product-related information, such as a product's name, code and storage location, are entered.  Because Toyota employed kanban signs for use in their production processes, the method came to be called the "kanban system."  At Toyota, when a process refers to a preceding process to retrieve parts, it uses a kanban to communicate which parts have been used.
  75. 75. SUPERMARKET concept ??? • A supermarket stocks the items needed by its customers when they are needed in the quantity needed, and has all of these items available for sale at any given time. Taiichi Ohno (a former Toyota vice president), who promoted the idea of Just-in-Time, applied this concept, equating the supermarket and the customer with the preceding process and the next process, respectively. • By having the next process (the customer) go to the preceding process (the supermarket) to retrieve the necessary parts when they are needed and in the amount needed, it was possible to improve upon the existing inefficient production system. • No longer were the preceding processes making excess parts and delivering them to the next process.
  76. 76. Conceptual diagram of the Kanban System
  77. 77. Illustration Of the Toyota production System • Illustration Of the Toyota production System
  78. 78. HARLEY DAVIDSON!!! If you're only going to get a few parts, they all have to be good ones(Reid)
  79. 79. History ….  A US-based motorcycle manufacturing company  It faced fierce competition from Japanese automobile companies Suzuki , Yamaha , Kawasaki , and Honda in the 1960s  It tried to understand the different processes and practices of these companies because of which their operating costs were 30% less than its own(Dumping Case)  3 practices were noticed: – JIT manufacturing – Employee involvement – The use of statistical process control
  80. 80. History Contd….  Harley-Davidson successfully adopted Japanese manufacturing principles which many considered were impossible for US manufacturers to achieve because of cultural and political reasons.  After implementing these Japanese techniques, Harley-Davidson succeeded in manufacturing high quality motorcycles at lower cost.
  81. 81. JIT Environment at HARLEY DAVIDSON!!!!!  Some of Harley-Davidson’s specific JIT goals are: – – – – – – Reduction of inventory within the entire supply chain Greater flexibility of supply chain Improved product quality Reduction of overall costs within the supply chain Reduction in overall procurement lead time Reduction in delivery lead time for Harley-Davidson customers – Improved competitive position in the market
  82. 82. JIT Manufacturing…  Harley-Davidson relies heavily upon its suppliers to produce the right products, at the right quality level, delivered in the exact quantity precisely when they are needed, and in the manner HarleyDavidson requires them to be delivered.  The JIT Environment begins with involvement in the Supplier Selection Process: the ability to meet quality, cost, and delivery expectations  Emphasis continues during Product Development Process
  83. 83. JIT Manufacturing…  Harley-Davidson and the supplier work together simplify and standardize, as much as possible, the product and processes utilized to manufacture the product: Reduces the overall lead time for the product  Philosophy- “Working on potential issues early in the product life cycle, minimizes the chance that suppliers will be unable to provide products when they are needed during the normal production cycle.”  The focus of Harley-Davidson’s JIT environment is providing an efficient supply chain that minimizes waste, increases flexibility, reduces inventory, and minimizes the overall lead time for material replenishment.
  84. 84. Employee Involvement  Successful implementation of any company program occurs when there is a commitment at all levels of the organization.  Top management not only directs but takes direction from the lower level employees.  Top management encourages education for employees of company objectives and develops a trust that employees will execute the right decisions.  Employees in return also learn techniques to continuously improve the quality of Harley's manufacturing processes.
  85. 85. Statistical Operator Control  SOC involves using simple statistical techniques and control charts to monitor the variation in a work process  Harley decided to hand the SOC approach down to its employees on the floor.  With statistical methods , the operator was now able to answer two crucial questions : – Is the process in control (operating in a stable, predictable range of variation)? – Is the process capable (able, consistently, to remain with in the specifications “Combination of Employee Involvement and Statistical Operator Control lead to an improved quality in Harley motorcycles”